Castle Rock- highest best use for House with View STR?

[Michael C.]

Hello all, 

I am trying to figure out if this custom home on the hill in Castle Rock Co is a good investment. 
The best strategy I see for it is as a Luxury STR, I'm just not sure the market supports this.
It is a newer hill top build in an older neighborhood with a 500-700k price range. Looking at local STR listings most are $250-400 a night around castle rock. 

It is a 4bed 3bath 3200sqft $1.2m custom home

Benefits- no HOA or rules restricting STR

-1mile (walkable) from historic downtown or from the Rock park

-house has nice views and is pretty secluded from neighbors and feels private
-assumable loan with much lower than market payment

Draw backs- high price -no comps, new house in older neighborhood. High price per square foot.
-interior floor plan not ideal for raising a family but looks ok for STR. More of an entertainment set up.

-yard not ideal -driveway is steep, not a lot of off street parking, back yard is a rocky hill

I think I would need $500-650 per night for it to work for STR or LTR of $6,500+.

Anyone have any insight or ideas for this property?

Thanks Mike.

https://redf.in/2SaOAV

[Eric DeNardo]

@Michael C.,

It could be a great luxury STR like you are thinking. I would look at the existing STR's and see what their bookings are like in the next couple of months. Also, we're in the best season for STR's right now in the Denver Metro. Winters can be tough so we use airDNA to get a sense of the Average Daily rate and occupancy for the year. I'd be happy to walk it through with you! I'll DM you.

[Michael C.]

@Eric DeNardo thanks for the replay.

AirDNA doesn’t necessarily account for property type. 
Just # beds baths and guests. 
It shows daily rate of $279. No way that works out.

It would have to be in a higher class than that. 

[Peter Hu]

Hey Michael,

This is certainly a big swing.  Do you have access to the paid version of airdna to find comparable properties that are cash flowing at 500-650 a night?  If not, It's possible for you the create the market with the best luxury experience in Castle Rock, but obviously a little risky.  Let me know if you want to poke around with our airdna account!

[Sarah Kensinger]

Quote from @Michael C.:

@Eric DeNardo thanks for the replay.

AirDNA doesn’t necessarily account for property type. 
Just # beds baths and guests. 
It shows daily rate of $279. No way that works out.

It would have to be in a higher class than that. 

Airdna does account for property type and the user would need to use the right comps for a luxury property. You need the paid subscription to get the right tools though.  

[Michael C.]

@Peter Hu

Thanks for reaching out. I don't have a subscription, this would be my first STR. I was looking on Rabbu because it's free. It showed 2 or 3 houses making $10k+ month in the area. Not sure if that is yearly average or just current high season. Looks to be a clear summer season April-Oct, then drops off in the winter a lot. Looking at Airbnb and VRBO directly it is showing quite a few vacancies even for the busy season. I'm not sure this area is a good STR market.
I think it would be making its own high in the market in a way, which is worrying also. 
This is out of my traditional buy box so any due diligence would be great. 

[Peter Hu]

Yeah, it's really useful to look at what other properties in the area are making exactly before deciding on such a big investment.  Just message me and I'd be happy to help!

[Rachel Gainsbrugh]

We do luxury AirBNB.  This is a Hard no for me.  The math is not mathing.