Bend, OR New Construction STR

[Eric Gabbard]

I am interested in building a small home in southern Bend, OR (outside of the city limits where the STR restrictions are) or in La Pine with the end goal of turning it into a short-term rental. I am interested in hearing from anyone with experience in this type of thing!

I would like to purchase land in the area and have a roughly 800-1200 sqft 2/1 home built that could fit 4-6 people. The home would be built with STR in mind so it would include many amenities, unique architecture, large windows with a great view, and finishes that stand out on listing platforms. To finance this with a low down payment, my wife and I would live in the house for a year after construction is complete so that it can be considered a primary residence before it is listed.

My estimates on numbers...

Initial Purchase

Land purchase - $150,000

Home construction - $250,000

Down Payment (with 5% one-time close construction loan) - $20,000

Closing - $8,000

Monthly Expenses

PITI (including PMI) - $3,400

Utilities/Supplies/Maintenance - $700

*calling cleaning a wash because I charge for it

Monthly Rev

Occ - 70%

ADR - $250

Totals

Annual pre-tax profit - $15,000

CoC - Around 30%

Would love to hear thoughts on potential risks or any recommendations on people to work with!

[Eric Gabbard]

Quote from @Travis Timmons:

I would encourage you to buy your investments and rent your vacations. If you like the PNW or Bend, just go vacation there and get a better performing, lower hassle factor asset in another market. Or if you want to live there and possibly house hack, then do that, but don't invest in a place because you like it there. 

Context - I also live in Texas and bought a property in the PNW to rent and use. It has been my worst performing investment. It works just fine, is nothing catastrophic, and we are holding on to the place. It's also fun to use in the summer, but it would have been far better to just rent something for a month when we want to get away. 

Great advice. Luckily, those things don't have to be mutually exclusive. I like the area personally and also recognize it as a great place for an investment. After the period of time we live in the property so that we can consider it a primary residence, we would convert to STR and likely not use it for personal vacations at all.