I have an accepted offer on a great little lake house, which is in a township that has a 6 night minimum for STR.
It doesn't appear anyone is abiding by this with STR in the area, based on the listings available. Knowing they could enforce this at anytime, and take your property from profitable to not, would this be a deal breaker for you?
Side note, I've also been told the township is difficult to work with and you can expect it to take 10-12 weeks to get your license. This also lends itself to not being STR friendly. Another red flag it seems?
Realtor · Albuquerque, NM · Member since 2014 · 109 posts · 79 votes
4y
Personally, I don't purchase properties that have negative cash flow with the hopes for appreciation. Who knows what this market is going to do. I personally do not believe we will see a crash, but do think we will see homes decline in value slightly over the next few years.
$14k per year is a pretty big nut to crack each year.
With AirBnB just the summer months, it’d be costing me around 12K a year. I do think it’ll appreciate nicely over the next few years with developments going in, and being on a desirable lake a couple hours from major cities. Things don’t stay on the market long. I’m not sure the buy and hold strategy is optimal for me. Maybe better than cash sitting in the bank.
Rental Property Investor · IN · Member since 2021 · 47 posts · 36 votes
4y
I would look elsewhere. That will be a sticking point over time with the property. Plenty of markets that at STR friendly...I would stick to those if possible. But...I am a 'rule follower' too, so it would just frustrate me :)
Realtor · Albuquerque, NM · Member since 2014 · 109 posts · 79 votes
4y
Personally, I don't purchase properties that have negative cash flow with the hopes for appreciation. Who knows what this market is going to do. I personally do not believe we will see a crash, but do think we will see homes decline in value slightly over the next few years.
$14k per year is a pretty big nut to crack each year.
Agreed, I was more debating running it as a STR ignoring the 6 day minimum until it becomes a problem since that's what everyone else is doing. I'm a rule follower though- so don't love that strategy.
Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
4y
I’m a risk taker and I like testing things. If you think it will appreciate nicely then go for it with the idea that you could always sell it if it doesn’t work out. Multiple options in real estate is good.
@John Underwood said this one best ~ You may be able to do well in the summer months. But, what does the off-season look like? Given it it Lakefront too you may be able to get away with a small number of bookings during the off-season but that isn't something I would bet on.
Otherwise, given how the current economy is what is your long-term outlook for the property? Hold for 10+ years? Or sell within 5-10? Would love to help out more! Don't hesitate to reach out!
P.S. if you haven't ran an analysis yet for the off season let me know and I'd love to chime in!
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
4y
Hey @Autumn G., it's not a deal breaker for summer. Do you know the occupancy for bumper time? Post the actual location, what lake/town is it in. I can run a few numbers and get a gander at the bumper time.
In our area (Lake Coeur d'Alene, Idaho) we are seasonal. We are right on the lake so June/July/August are booked solid. Now that we are established with all 5 star reviews on AirBNB and VRBO, May and Sept are usually booked solid as well. October bookings are spotty. April is usually 1/2 full.
The bumper time is almost always bikers riding the various bike trails. The Trail of the Coeur d'Alene's is 72 miles and runs right in front of our house. The Route of the Hiawatha's is another one. Fishing is big of course.
Thanks to everyone for the replies! Just an update on this, I called the township today to specifically ask about the 6 night minimum since no one appears to be following it in the area. They said they don't require reservations to be 6 nights, they just only allow you 1 reservation every 6 day period. So if someone books a Fri-Sun in the off season, you have to block off days before or after their visit.
I don't imagine booking a week at a time will be a problem if I make that a requirement in summer, and in the off season can bump it to weekends allowed. None of the homes in the area have hot tubs, so I'm thinking adding one and providing firewood for the fireplace will boost weekend/holiday performance in the winter months.
Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes
3y
This is definitely a dilemma, for me I would keep my options open and only move on this if you truly believe in it, I personally don't like to straight up break rules, especially when there is a potential threat of them coming down to enforce them. There are always more deals to be found that won't have these types of restrictions.
Hope this helps, let me know if you have any more questions