A quick note from a STR Property Manager & Operator to an eager STR Investor ; )

[Jake Mercer]

1.) Market Selection - Prioritize proximity to national parks, tourism destinations, mountain markets and markets that are less seasonal. Select markets with existing regulations and permitting. This allows you to safely minimize your risk category for next 5-10 years plus suppresses future supply and helps your longevity of consistent returns. Choose markets with tourism as a strong economic driver. Use online tools (AirDNA, Mashvisor, Rabbi) for market scores, market occupancy levels and increases in nightly rates (ADR) and occupancy over past year. Beginner investors! Start in second tier markets. That's what I did : ) We are projecting >20% cash on cash returns on our 2 single family homes and tiny home we are placing in what might call a "F" market ; ) .  

2.) Property Selection - Stay away from HOA! Pick an "under" supplied type of rental. Maybe it sleeps more than 90% of the listings in the market, has >4 bedrooms or bathrooms, has incredible views, is walking distance/close proximity to desirable areas within the market, has unique built in amenities, fenced in yard, etc... Know the numbers! Use Airbnb PRIMARILY for researching the local market. Find comparable listings and use their calendar, nightly rates, property description, reviews and future occupancy levels to make a good assessment THEN refer to AirDNA. AirDNA shows our 15 listing portfolio to making 10-15% less than what we actually make!

3.) Budget for the right furniture, photos and amenities! Use an interior designer or STR consultant who knows where to cut costs and where to invest to increase your ROI. Some amenities are more popularly searched and make sense to accommodate and to highlight! Jacuzzis and pools are shown to increase nightly rates 10-15%/night. Top 5 searched amenities include being pet friendly, smart locks, wifi, fully stocked kitchen, hot tub or jacuzzi.

4.) You are no longer in the business of real estate. You are now in the business of hospitality! If you are not willing to put in the extra hours to invest in a property and market specific pricing strategy, manage vendors and maintenance, be a super host with  communication, guest experience and review management then your business and cash flow will struggle. You need to take the time to learn how to do it right or build I the tools and operations to outsource or hire a full service property management company to make it hands off for you!

I hope you enjoyed these tips! My name is Jake Mercer and started in short term rentals 3 years ago. I started from scratch with rental arbitrage with only $10k and then grew it to a 15 property portfolio in the last few years. We will do close to multiple 6-figures in gross rev on Airbnb this year and we are building out our property management services, coaching/consulting services and investor solutions services. Happy to connect! I am located in the Raleigh, NC area so if you're local, I love coffee!