New to the STR Game. .... What to do?

[Michael Lynch]

Hi,

My wife and I started flipping homes in 2015. We did pretty well. Six months ago we sold our last flip for $300,000. It was on a very busy road 8 miles from Holden Beach and we did not like the ranch layout of the home at all. It had too many walls, bathrooms too small, no open floor plan, etc.

After digging online for the past six months we found a home that is 400 sq. ft. bigger, open floor plan, very nice floors, walls, ceilings, new roof and HVAC, 3 car garage, etc. ..... It is so much better and it is only 2.5 miles from Holden Beach, NC. ..... So basically we took the money from one sale sitting in the bank and purchased this place for the exact same price, so we own it outright, or will in about 30 days at the closing. ..... I am a licensed plumber, but have knowledge in carpentry, electrical, drywall, painting, and usually do 90 percent of the rehab work on our flips myself.

Since this is a heavy tourist area, we are thinking about doing a STR. I am thinking that I would mow the grass, maintain the home, clean the home, and handle the marketing, ( VRBO / Airbnb ), at the beginning and see if I can handle it.

After going to VRBO online last night, I noticed that the nightly rental fees are all over the place. I saw a single wide mobile home 8 miles from the beach for $175 per night, then I saw a super nice beach cottage, 1 mile from the beach for $160.00. I saw doublewides 5 miles from the beach for $250.00 per night. So, I kept researching and found the same thing over and over. It's like some prices or homeowners were stuck in 2015 or something. ..... The home that we are buying is really nice. It is .6 acres, plenty of parking for boats and cars, no HOA, no restrictions, big side yard for volley ball net / badminton, horse shoes, corn hole, or whatever. The entire back yard has a chain link fence for small kids / pets.

This home went on the market. Four hours later we went to see it. While we were there other cars started showing up. The realtors said "With this price and location, it will go fast". We made an offer and got it under contract that evening. We pretty much met their price before a bidding war started. We were not going to get involved in a bidding war. I am wondering if we acted too fast and should have done this or that, but doublewides are going for $200,000 - $250,000 in this area with land half the size. There is just nothing worth buying except junk stick built homes or manufactured under $300,000 around here. We will own this home outright. We need to furnish it, set up the playground area, do some landscaping, etc. It will be a really nice weekly STR when we are done. Pricing it is the main concern right now. If it is too low, it might bring in the wrong type of people. ( Drunks, Druggies, or people who won't take care of it ) If we price it too high it may not rent. .... How do we know how to price it properly?

Our overhead or sweat labor will be Taxes, Insurance, Lawn maintenance, Cleaning every week, and General upkeep. I can repair pretty much of anything that goes wrong except HVAC, since I have never been to tech school in that career field.

Thanks!

[William Anderson]

Price is important but so is competition.  There are many more vacation rentals on the market now than five years ago and ABB estimates at least a 4% growth next year.  Many people do not know how to market or price their properties.  They jump in and when their property is not 80% full they start tinkering with a price.  This is why you see so many prices out there.

The more they drop the price, the more they are exposing themselves to poor-quality guests.  I always tell my clients that you can charge $50 per night and rent the property all year or you can charge $100 per night and rent it half of the year.  At the end of the year, the income is the same.  One has less wear and tear than the other.  

With an STR there are only so many ways to market. List on VRBO, ABB, and your own excellent site. Write great blog articles, post on the property on social media, and focus on obtaining 5-star ratings. This is about all you can do. My company does some other things too but that's our secret. Get that price up to the sweet spot. And, hope that some of those STRs sell to full-time residents.