Under Contract on my First STRs!

[Wesley Thompson]

My partners and I are under contract on 4 STR cabins in Tellico Plains, TN! The cabins already have strong rental history, occupancy rates, and historic revenue growth. We plan to introduce software and systems to maximize revenue growth and automate them as much as possible (we're all out of the area). We got a fantastic seller-finance deal with the opportunity to add more cabins into the portfolio from the seller; who is open to working with us on developing more cabins in the area! Really excited, can't wait to see this business grow!

[Wesley Thompson]

Quote from @Michael Baum:

Gratz on the purchase @Wesley Thompson!

Give us some details on the places? They are all in the same general area? They look pretty nice and ready to go. Did they come furnished?

What kind of deal did you make on the seller financing?

Can you provide some idea of purchase price and returns both historical and what your projections are?

Looks like a cool deal! I love to see these kinds of deals.

 The 4 small cabins on the top all convey fully furnished with all appliances and supplies. They're all in a gated development next door to each other, but enough space to not feel cramped. 

PP: $1,000,000 / DP: $370,000 / Seller Finance remainder at 4.5% / 30-year amortization with 10-year balloon / Interest Only payments for the first two years. 

1st-year projections are 14% CoC return, but none of my calculators are built for IO projections coupled with P&I projections so I have to work on that.

The 4 cabins gross nearly $150k per year and the seller's proforma puts them just above $100k/year net. Mine is much more conservative and I know there are some expenses they didn't include. 

The seller is building another home nearby which will be complete in 4-6 months. The 5th cabin (bottom two pics) is his current primary. We almost came to an agreement on that one too, but he has financing on it and a line of credit which funded the new build. We'd have to clear out both of those notes and he would seller finance the rest. However, that sounded almost like buying the new house for him. So when it's complete he's going to finance it (pending appraisal) clear out the line of credit and then we'll close out the financing with a down payment and he'll finance the rest to us.

We already have a comp for the cabin that did $30,000 gross in the last six months and we think we can do better!