Poconos STR - Thoughts?

[Jessica Celenza]

Anyone else active or getting into the Poconos for STR? My husband and I are looking to buy our first STR and targeted the Poconos since we live in the Philly area (about 2 hours away) and we've vacationed there dozens of times. The Poconos have ski resorts, indoor waterparks, lots of lakes, cute small towns and lots of outdoor activities like white water rafting and hiking. During COVID the area completely exploded with NY professionals needing an escape from the city, so house prices are super high right now. Houses that sold for $300-400k in 2019 are going for seven figures now.

We're extremely serious about getting started - we've spoken to several property managers to get an idea of revenue potential and several lenders. We have preapprovals ready to go and our finances are in order. We just need to find the right deal. We've ran a few scenarios, but with some high HOA fees (~$4k in Lake Harmony) and higher interest rates (6.125%), the cash flow potential is really only seen at the high end of the spectrum (60%+ occupancy, higher ADR). The realtors we've been working with have been sending over listings, but nothing that I haven't already seen on Zillow - not sure if that's the result of the people I'm working with or the market's inventory.

Any advice on how to find good deals in that area? 

[Scott K.]

As someone with a few airbnbs in the Poconos I don't think you're ready. I say this for a few reasons. 

1. You aren't anticipating how much rehab is typically needed when you buy an str. Even nice places need work. 

2. Decor and furniture add up. For a 3 bedroom expect to spend at least 10k

3. The biggest hurdles are labor related. Finding a good cleaner and Handyman, etc. I haven't heard you mention that. 

4. Don't trust evolve. They are not going to give you accurate numbers, it's inflated most likely since they want to get you to use them. They also consistently give awful experiences to guests, just check their average review rating on properties. 

5. 60 percent occupancy is very, very difficult. Poconos are a weekend mostly destination (except summer for very successful listings) 

6. Your estimate of housing prices is off. Houses that used to cost 300k in 2019 now cost 400k. It's roughly a 33 percent increase right now.