Sell under-performing STR?

Question

My first STR cash flows.  The second STR is not cash flowing.  It’s taking the profits from the first STR to pay the bills.

Question- Do I sell the under performing STR?  And reinvest in something else?  Or ride this out until I have more equity to sell?  I’ve owned this second property for 14 months.

Sarah Kensinger · Answer

The first reaction to an underperforming STR is to sell, instead it should be "what can be changed to turn this property into a top performer". I would suggest considering and answering that question first, before placing a for sale sign up.

V.G Jason · Answer

STRs are extremely risky, volatile assets in this real estate class. I know I'll get in heat for this but unless you have the means to be in the top 5% in your market, don't invest there. And unless you can ideally keep leverage minimal(to none ideally) don't make it a STR. Meaning go big, or don't play ball. Everyone and their mom tried this STR route for quick cash flow, has become oversaturated, and now people are long furniture, slow sales and trying to pivot out. It's like they go with the wind.

If you can't weather the revenue rollercoaster don't leverage this.

Eliott Elias · Answer

Sell it before your situation gets worse. You don’t want to become a motivated seller.

Collin Hays · Answer

Easily one of the biggest lies being perpetuated in this investment class, and it's gotten a whole bunch of people in deep trouble.

John Carbone · Answer

Here is where I think people have a disconnect…if you have a poor performing STR, why would someone else pay to buy you out and have it as a STR themselves?

Michael Baum · Answer

Hey @David King. So there isn't anywhere near enough info for us to help.

Where is it located? Tell us about the place. Show us the listing.

Fill in a ton of blanks.

Scott K. · Answer

Either way, sell immediately. An STR should easily cash flow and then a healthy profit. I'd even tell you to sell if you were breaking even. That's not worth the effort to maintain.

Andrew Steffens · Answer

If the property is not performing well because it is not being managed correctly than maybe you can fix it/turn it around.  Maybe put some money and add an amenity like a hot tub or pool heater.

If this is a short problem like out of season etc, then maybe weather it.

If there is no way to fix the problem then I would say sell

But as others said there is not enough info to make a definitive decision.

Brian Barch · Answer

What are the details? Purchase price, how much you owe, fair market value, how negative is the cash flow?

Certainly there is an emotional component here, but this is basically a math problem we can solve for to determine the best outcome

Collin Hays · Answer

It's the Greater Fool play.  I've got one I'd like to ditch, myself.

Sell under-performing STR?

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