Are there any negatives to buying an already established STR?

Question

Pretty self explanatory question but anything I might be missing here? I found a profitable property already on AirBnB that works for my numbers. What are the drawbacks to this approach, if any?

Andrew Steffens · Answer

When I see a seemingly successful STR for sale the main question is why.  Check the numbers, try to assess if the neighbors are an issue, etc.  Some people have equity and want to cash out, some people are older and/or tired and want out.  Try to find their motivation.  There are often unsuccessful owners trying to get out and if you cannot figure out why they were unsuccessful it is hard to find out what you can do to turn it around.

Dan M. · Answer

Ask yourself why are they selling? What do they know that you dont?

Sarah Kensinger · Answer

I liked what Avery Carl said on Instagram a couple months ago. Don't bother asking why someone is selling their property, all realtors answer the same...."their client wants to move on to other opportunities". They are NOT going to tell you if there's something wrong. Just do your research and make the best educated decision.

Michael Baum · Answer

Hey @Kayla Prange. So we were looking at a beach house that needed a bit of work but overall in decent shape. It was a successful STR. Profit margin was a bit thin on their asking, especially seeing as I felt it needed maybe 15k to bring it up to snuff.

Doing that would increase the nightly rate by maybe 15-20%. Then it would be quite good.

The reason they were selling was they were retiring to TN. They owned 8 STRs in the area and this was their last one. They wanted to sell it before putting their primary on the market.

I went and spoke to the one neighbor (the other side is a church camp). They were cool with it. They did have some things they would like to see done to lower the noise a bit but I felt it was easy to do.

Bottom line, they took it off the market. I am going to call them direct next month and chat. Maybe they decided to pull it until spring. Maybe I can get in there with some owner financing and a low down. :)

John Underwood · Answer

Triple check their profitability numbers.

See if you can find out why they are selling a profitable property.

Ian Tyndall · Answer

Check with a local real estate agent to find out what they know about the place. Like it was stated before the neighbors could be an issue or there might be something regulatory on the horizon that is a threat. That being said, I have purchased two previous STRs that started cash flowing in 30 days and they are awesome. One case the owner was cleaning it herself and was tired of the work. The other case the owner was over extended and could not manage it well. The neighbors at the last location weren’t thrilled that we were keeping it a STR but they have been respectful.

Bruce Woodruff · Answer

Main thing I think about is that you'll be paying top dollar....for everything. I would rather buy a fixer and make it my own, then put it on VRBO. More money in your pocket and that's why we all do this, right?  (in part :-)

Brooklyn McCarty · Answer

Not everyone is selling because there is a issue with the property. Some people no longer wish to do it or maybe they are moving on to bigger and better things in their portfolio.

Nothing wrong with buying a existing STR. It can be nice if it's your first because they come furnished (keep in mind you will still have to replace and upgrade some things)

Just make sure it's in a area where STR are allowed and be sure to run the numbers for yourself and don't just rely on the previous owner's numbers.

John Morgan · Answer

@Kayla Prange

This is how I bought my first rental. No regrets!

Collin Hays · Answer

If the numbers work, the numbers work. Sometimes people are tired of it and want to do something else.  Or they have a lot of equity and they need the money.  Gramps died, kids are going to college, any number of things.

Are there any negatives to buying an already established STR?

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