STR in areas like Anna Maria Island (FL), etc with Higher price points

[Trent Barga]

Considering getting into STR in the area we vacation at yearly. One of the things I'm running into when running numbers is the purchase price vs. weekly rental rates. We would want to purchase a home so that would put us between 1.2 to 1.5 million. Using different str formulas and considering the extra taxes and fees for running a STR in those areas it looks like break even. Not looking to make 100k/year but would be selling 2 rentals (1031) to make purchase so perfect world would like to cover my $30k/year I currently make on the long term rentals.

Airdna showed $5500 avg weekly rental and $340/night. Ones I've considered and with the upgrades we would do I think we would be in the $6k weekly and 380-400/night range.

Would love to get opinions and thoughts from others who purchase in the higher price points and how they run numbers or make it work. Or if you have a youtube channel you could refer me to that would be great. The ones I've followed aren't doing the "higher" price point areas.

[Frank Barletta]

If the numbers don’t look right, you’re probably on to something. 

If your goal is to ultimately own this home, do what you can to maximize its return.

If your goal is to generate income and strong returns, the market at this time has many question marks and your risk profile should determine your next move. AirDNA isn’t going to cover the spread :)

[Sarah Kensinger]

I would run the numbers and analyze the property just like normal using Airdna projections. Then I would do some investigating on what the nightly rate is of other area properties that are higher end, and adjust my projections accordingly. Regardless of where the property falls in price, every property needs to be analyzed to make sure the numbers work and the COC return is worthwhile. If you would like some help analyzing a property, feel free to reach out!

[Kerry Baird]

@Trent Barga

I like watching STR Unfiltered with Bill Faeth. He buys big houses, one row back from the ocean, as well as cabins in drive in destinations. His YT videos show what he does to stand out, and to drive his income.

[Michael Baum]

Hey @Trent Barga, so what is your exposure if it doesn't cash flow? Can you absorb the losses?

This sounds like something you would use yourself regularly so you have to balance the family time with the profit margin.

1.2m is a big nut. How big a house are we talking about? Is it beachfront?

[Andrew Steffens]

I am very familiar with Anna Maria, its less than an hour south of the majority of our units.  First off be careful with the zoning there prior to purchase.  You are likely right that this is a breakeven investment.  There are other areas (like Pinellas/Hillsborough) a bit further North where you can cashflow well in the $800k-1.1M range.  If you are very specifically targeting this area, and you vacation in this area, this is more of a second home.  I think having a 2nd home that supports itself and is building equity is not the worst thing in the world!

[Trent Barga]

Quote from @Sarah Kensinger:

I would run the numbers and analyze the property just like normal using Airdna projections. Then I would do some investigating on what the nightly rate is of other area properties that are higher end, and adjust my projections accordingly. Regardless of where the property falls in price, every property needs to be analyzed to make sure the numbers work and the COC return is worthwhile. If you would like some help analyzing a property, feel free to reach out!

 Hey Sarah thanks I might just do that!

[Trent Barga]

Quote from @Kerry Baird:

@Trent Barga

I like watching STR Unfiltered with Bill Faeth. He buys big houses, one row back from the ocean, as well as cabins in drive in destinations. His YT videos show what he does to stand out, and to drive his income.

 Hey thanks Kerry I'll start watching those!

[Trent Barga]

Quote from @Michael Baum:

Hey @Trent Barga, so what is your exposure if it doesn't cash flow? Can you absorb the losses?

This sounds like something you would use yourself regularly so you have to balance the family time with the profit margin.

1.2m is a big nut. How big a house are we talking about? Is it beachfront?

 We'd be okay if it doesn't cashflow, however with current economy and such I'm trying to be more conservative with my "bets". Also, I'm not big on selling cash flow assets for non-cashflowing (not that rich ha). If it would cover itself I'd be able to go from $400k in assets to $1million+ with way better appreciation, Ohio isn't exactly bringing in the people like Florida, Texas, etc. Home run for me would be a property that could make me 3-5k per month on average. 

Correct we would definitely use it personally but not more than 1-2x per year. Homes are not getting cheaper especially landlock and just a few blocks from the beach.

[Trent Barga]

Quote from @Michael Baum:

Hey @Trent Barga, so what is your exposure if it doesn't cash flow? Can you absorb the losses?

This sounds like something you would use yourself regularly so you have to balance the family time with the profit margin.

1.2m is a big nut. How big a house are we talking about? Is it beachfront?

 Not large 1500-2200 sqft, a block or two from the beach.

[Michael Baum]

Hey @Trent Barga, ok, well that sounds like something that would work for you, especially if you plan to use it.

Speaking of Ohio, have you thought of buying up a few places near where Intel is building the fab? Licking County.

There is a ton of labor coming to build it out, including a bunch of specialized folks once the building itself is erected. Outfitting an Intel fab is no mean feat.

There could be a play for short term longer stay rentals in the 3 month to a year range. Just the fiber runs alone would be in the miles.

3000 new jobs estimated.

[Sarah Kensinger]

Quote from @Michael Baum:

Hey @Trent Barga, ok, well that sounds like something that would work for you, especially if you plan to use it.

Speaking of Ohio, have you thought of buying up a few places near where Intel is building the fab? Licking County.

There is a ton of labor coming to build it out, including a bunch of specialized folks once the building itself is erected. Outfitting an Intel fab is no mean feat.

There could be a play for short term longer stay rentals in the 3 month to a year range. Just the fiber runs alone would be in the miles.

3000 new jobs estimated.

Here in Ohio STRs hardly cash flow well, your market is more grandma and grandpa coming to visit the grandchildren. The only exceptions are Cleveland and Hocking Hills area, and those can be very seasonal. The house marketing here is tough since a property no sooner hits the market and it's gone, especially with all the west coast investors buying everything up here.

[Michael Baum]

I did a quick search on properties near the build site and it is pretty pricey. I still think there is some money to be made on housing workers during construction until 2025.

[Jody Jubach]

Quote from @Sarah Kensinger:

Quote from @Michael Baum:

Hey @Trent Barga, ok, well that sounds like something that would work for you, especially if you plan to use it.

Speaking of Ohio, have you thought of buying up a few places near where Intel is building the fab? Licking County.

There is a ton of labor coming to build it out, including a bunch of specialized folks once the building itself is erected. Outfitting an Intel fab is no mean feat.

There could be a play for short term longer stay rentals in the 3 month to a year range. Just the fiber runs alone would be in the miles.

3000 new jobs estimated.

Here in Ohio STRs hardly cash flow well, your market is more grandma and grandpa coming to visit the grandchildren. The only exceptions are Cleveland and Hocking Hills area, and those can be very seasonal. The house marketing here is tough since a property no sooner hits the market and it's gone, especially with all the west coast investors buying everything up here.

Hocking Hills is slower January-February but the community is trying to have events like the Frozen Festival and winter hikes (the landscape is really beautiful with snow!) and who doesn’t love the thought of a log cabin sitting by the fire on a cold day ha!  So you should still have bookings especially Valentines Day weekend for couples. 

[January Johnson]

Quote from @Trent Barga:

Considering getting into STR in the area we vacation at yearly. One of the things I'm running into when running numbers is the purchase price vs. weekly rental rates. We would want to purchase a home so that would put us between 1.2 to 1.5 million. Using different str formulas and considering the extra taxes and fees for running a STR in those areas it looks like break even. Not looking to make 100k/year but would be selling 2 rentals (1031) to make purchase so perfect world would like to cover my $30k/year I currently make on the long term rentals.

Airdna showed $5500 avg weekly rental and $340/night. Ones I've considered and with the upgrades we would do I think we would be in the $6k weekly and 380-400/night range.

Would love to get opinions and thoughts from others who purchase in the higher price points and how they run numbers or make it work. Or if you have a youtube channel you could refer me to that would be great. The ones I've followed aren't doing the "higher" price point areas.

My rule of thumb is that the property must make at least 10% of its purchase price (and obviously more is better).  At 10%, it might just break even, so look for properties that can do 12-15%+.

But you make money on STRs in multiple ways (don't forget APPRECIATION!).

[Kaitlyn Sander]

Hey Trent! Just seeing your post now, I'm most only FB groups, I wish BP was bigger down here! We are a local PM here in AMI and we manage exactly that, $1M+ SFH's right on the Island, so I can definitely share income data with you to help identify best cash flow areas. If you happen to still be searching send me a message, the reports we can pull are from confirmed reservations, which shows an accurate breakdown monthly of what to expect!