Seeking advice on New condo for STR

[Madheshwaran R.]

Hi, I've been searching for an investment property in Branson and other areas. However, I couldn't find one that offers a good return in terms of cap rate and cash-on-cash (CoC) — the prices of homes are very high. I've come across this Tall Timbers new condo under construction. Could you please share your thoughts on whether it's worth investing in? If so, please recommend how many bedrooms to purchase. As a first-time investor, I'm nervous about making the buying decision.

[Bryant Xavier]

Hey, Madheshwaran

Fellow short term rental owner/operator here. I have 3 pieces of advice to consider. 

1) I’m unfamiliar with the specific condo you mentioned - but as a general rule of thumb when it comes to condos.. I would always check the condos fine print rules and regulations and see if short term rentals are allowed at the building. Sometimes condos have stipulations in their deed restrictions that go against doing short term leasing, so I would definitely get your agent or do the research yourself to ensure this isn’t the case at the building you’re looking at. It seems like the condo you linked is almost geared towards short term rentals, so you should be in the clear on this specific situation. 

2) I would take a look at some STR data either via a dynamic pricing software (pricelabs, wheelhouse, etc.) or take a look at Airdna to take a look to see what is the "sweet spot" is in terms of size of rentals in your market. I personally am in a college town and my target audience tends to be single travelers, and or couple(s) traveling to visit campus or visit their student at school.. so for me in my market the 1 bedroom / studio units are the best ROI in terms of occupancy and revenue per sqft, I believe.

3) I'd open up a convo with a few local hosts and see what their experiences have been and chat with them about their journey. Ask them what has brought them success, what works and what doesn't, etc. Most markets will have some sort of local STR host group on Facebook you can join, or I would even do a quick search via Airbnb and find a host that way and message them and ask them to lunch or coffee to pick their brain. Chatting with local hosts will do wonders in terms of advice and insights.

Hope this helps and have a great weekend! 

[Kevin Hintz]

The condo to be featured in Tall Timbers seems quite fascinating. Ordinarily for STRs, a two bedroom can do well well because it attracts more clients. As long as the potential rental income can support the acquisition, it is a good investment.

[John Mason]

Take a look at the HOA and see if it changes every year, HOA price increases can factor in on your profits with respect to Condos

[Andrew Steffens]

Just my 2 cents on condos, as a PM and broker in FL:

1 - Most do not work, whether restrictions on lease duration, or due to the numbers because HOA fees cause low ROI.

2 - Check rules in your state to make sure you are grandfathered in case HOA changes the rules.

3 - Most SFR do better than MF not just because of HOA but also because there are low barrier to entry for 1,2, even 3 bedroom units. For the 1/2 BR you are competing not only with other STR's but also in a sense hotels.

4 - The Tall Timbers being STR friendly will this cause saturation with a bunch of new units coming available in the same development?

That said I do manage some very successful condos.  They can be great if well vetted.  Good luck!

[John Underwood]

I would personally never buy a condo for a STR.

HOA fees

Too many rules

Rules can change

Usually too many other condos therefore nightly prices are depressed.

New assessments for upgrades or repairs can be costly and you must pay them. 

[Valerie Budd]

I'm a property manager and an investor in the Branson area since 2005 I know that development very well- it's definitely not a condo. It's a standalone cabin. The investors that are buying into this development are very quality high and once the builder is out and the homeowners over the HOA, it will be a really well run system. This development is going to be very unique to the Branson area as it is going to be spread out much more of a Big Cedar type feel. We are expecting even more visitors to our area due to the fully booked for the 2025 season of the new Thunderidge Amphitheater as well as more gold courses. I'd be happy to visit with you more detail.

[Madheshwaran R.]

Thank you all. I stand corrected—it is a cabin, not a condo. Nevertheless, I gather the general opinion that condos are not a preferred type for investment purpose.

[Madheshwaran R.]

Quote from @Bryant Xavier:

Hey, Madheshwaran

Fellow short term rental owner/operator here. I have 3 pieces of advice to consider. 

1) I’m unfamiliar with the specific condo you mentioned - but as a general rule of thumb when it comes to condos.. I would always check the condos fine print rules and regulations and see if short term rentals are allowed at the building. Sometimes condos have stipulations in their deed restrictions that go against doing short term leasing, so I would definitely get your agent or do the research yourself to ensure this isn’t the case at the building you’re looking at. It seems like the condo you linked is almost geared towards short term rentals, so you should be in the clear on this specific situation. 

2) I would take a look at some STR data either via a dynamic pricing software (pricelabs, wheelhouse, etc.) or take a look at Airdna to take a look to see what is the "sweet spot" is in terms of size of rentals in your market. I personally am in a college town and my target audience tends to be single travelers, and or couple(s) traveling to visit campus or visit their student at school.. so for me in my market the 1 bedroom / studio units are the best ROI in terms of occupancy and revenue per sqft, I believe.

3) I'd open up a convo with a few local hosts and see what their experiences have been and chat with them about their journey. Ask them what has brought them success, what works and what doesn't, etc. Most markets will have some sort of local STR host group on Facebook you can join, or I would even do a quick search via Airbnb and find a host that way and message them and ask them to lunch or coffee to pick their brain. Chatting with local hosts will do wonders in terms of advice and insights.

Hope this helps and have a great weekend! 

Thanks, Bryant. I apologize for referring to it as a condo. I understand your point. I'll network with investors and hosts to get a better idea.

[Madheshwaran R.]

Quote from @John Underwood:

I would personally never buy a condo for a STR.

HOA fees

Too many rules

Rules can change

Usually too many other condos therefore nightly prices are depressed.

New assessments for upgrades or repairs can be costly and you must pay them. 

Thanks, John. I apologize for referring to it as a condo; it's actually a cabin. Do you still discourage condos in the Florida Panhandle? I've noticed that oceanfront condos seem to be the only preferred option in the $400,000 to $500,000 price range.

[John Underwood]

Definitely beach front condos. Do a search you will like find really cheap nightly rates because there are so many of them. 

Insurance is another big ticket item for all beach areas, especially Florida.

I had some friends sell their ocean front condo on Hilton Head, that they had owned it a long time at a great interest rate.

Condo fees, property taxes and insurance made it not cash flow anymore.

So they were forced to sell.

[Madheshwaran R.]

Quote from @Andrew Steffens:

Just my 2 cents on condos, as a PM and broker in FL:

1 - Most do not work, whether restrictions on lease duration, or due to the numbers because HOA fees cause low ROI.

2 - Check rules in your state to make sure you are grandfathered in case HOA changes the rules.

3 - Most SFR do better than MF not just because of HOA but also because there are low barrier to entry for 1,2, even 3 bedroom units. For the 1/2 BR you are competing not only with other STR's but also in a sense hotels.

4 - The Tall Timbers being STR friendly will this cause saturation with a bunch of new units coming available in the same development?

That said I do manage some very successful condos.  They can be great if well vetted.  Good luck!

Thanks Andrew, it's actually a cabin—sorry about the confusion. I was also looking at condos in the Florida Panhandle but couldn't find any promising ones that offer a good return. Either the purchase prices are too high or the assessment fees are steep.

[Madheshwaran R.]

Quote from @Valerie Budd:

I'm a property manager and an investor in the Branson area since 2005 I know that development very well- it's definitely not a condo. It's a standalone cabin. The investors that are buying into this development are very quality high and once the builder is out and the homeowners over the HOA, it will be a really well run system. This development is going to be very unique to the Branson area as it is going to be spread out much more of a Big Cedar type feel. We are expecting even more visitors to our area due to the fully booked for the 2025 season of the new Thunderidge Amphitheater as well as more gold courses. I'd be happy to visit with you more detail.

Perfect, thanks for your insights. 

[Valerie Budd]

Quote from @Madheshwaran R.:

Quote from @Bryant Xavier:

Hey, Madheshwaran

Fellow short term rental owner/operator here. I have 3 pieces of advice to consider. 

1) I’m unfamiliar with the specific condo you mentioned - but as a general rule of thumb when it comes to condos.. I would always check the condos fine print rules and regulations and see if short term rentals are allowed at the building. Sometimes condos have stipulations in their deed restrictions that go against doing short term leasing, so I would definitely get your agent or do the research yourself to ensure this isn’t the case at the building you’re looking at. It seems like the condo you linked is almost geared towards short term rentals, so you should be in the clear on this specific situation. 

2) I would take a look at some STR data either via a dynamic pricing software (pricelabs, wheelhouse, etc.) or take a look at Airdna to take a look to see what is the "sweet spot" is in terms of size of rentals in your market. I personally am in a college town and my target audience tends to be single travelers, and or couple(s) traveling to visit campus or visit their student at school.. so for me in my market the 1 bedroom / studio units are the best ROI in terms of occupancy and revenue per sqft, I believe.

3) I'd open up a convo with a few local hosts and see what their experiences have been and chat with them about their journey. Ask them what has brought them success, what works and what doesn't, etc. Most markets will have some sort of local STR host group on Facebook you can join, or I would even do a quick search via Airbnb and find a host that way and message them and ask them to lunch or coffee to pick their brain. Chatting with local hosts will do wonders in terms of advice and insights.

Hope this helps and have a great weekend! 

Thanks, Bryant. I apologize for referring to it as a condo. I understand your point. I'll network with investors and hosts to get a better idea.

The filing for the county is a COA not HOA which is very confusing for owners and investors.

[Michael Baum]

Looks like it could be a neat place @Madheshwaran R.

I am with @John Underwood on no condo's but this looks a lot like a Sunriver (Oregon).

Lot's of cabins of various sizes nestled in the woods. Looks like it will have good amenities.

Do you know (or @Valerie Budd) when completion for the main amenities will be completed? How about time to complete on the cabins themselves?

Is the developer offering financing? Maybe delayed mortgages based on completion time?

[Patricia Andriolo-Bull]

I would say it depends. Most people on here are SFH focused and in some areas I would agree. Where I am, those (SFH) don't pencil out, even with my high condo association fees. The one thing I agree with is that you are competing with a ton of properties if you go the condo route (referring to your comments re: the Panhandle). But It is still doable, you just need to stand out which is a lot more work and it takes some time to get there. Who is your ideal guest? I love hosting higher end couples. They love beachfront so the only option is a condo. I like to compare my condos to the JW Marriott on Marco Island. They could stay there for a one bed, $1000+ per night for an island view or stay in my 2 BD / 2 BA with spectacular views. Along with the condo fees come the amenities (gym, pickleball, boat docks, tennis, putting green, heated pool, etc.). If the amenities make the fees worth it, then it may not be a bad deal.

[Andrew Steffens]

Quote from @Madheshwaran R.:

Quote from @Andrew Steffens:

Just my 2 cents on condos, as a PM and broker in FL:

1 - Most do not work, whether restrictions on lease duration, or due to the numbers because HOA fees cause low ROI.

2 - Check rules in your state to make sure you are grandfathered in case HOA changes the rules.

3 - Most SFR do better than MF not just because of HOA but also because there are low barrier to entry for 1,2, even 3 bedroom units. For the 1/2 BR you are competing not only with other STR's but also in a sense hotels.

4 - The Tall Timbers being STR friendly will this cause saturation with a bunch of new units coming available in the same development?

That said I do manage some very successful condos.  They can be great if well vetted.  Good luck!

Thanks Andrew, it's actually a cabin—sorry about the confusion. I was also looking at condos in the Florida Panhandle but couldn't find any promising ones that offer a good return. Either the purchase prices are too high or the assessment fees are steep.

Ohh ok - probably a bit more optimistic outlook then but I am still wary of HOA's in general

[Trent Reeve]

Quote from @Andrew Steffens:

Just my 2 cents on condos, as a PM and broker in FL:

1 - Most do not work, whether restrictions on lease duration, or due to the numbers because HOA fees cause low ROI.

2 - Check rules in your state to make sure you are grandfathered in case HOA changes the rules.

3 - Most SFR do better than MF not just because of HOA but also because there are low barrier to entry for 1,2, even 3 bedroom units. For the 1/2 BR you are competing not only with other STR's but also in a sense hotels.

4 - The Tall Timbers being STR friendly will this cause saturation with a bunch of new units coming available in the same development?

That said I do manage some very successful condos.  They can be great if well vetted.  Good luck!

regarding your #1, i think its a case by case basis. Depending on the amenities offered, and many HOAs in my market will also pay water bill, possible cable/internet, pools, hot tub. How much would you have to pay monthly for landscaping, pool care, utilities? some HOA fees can be crazy, but to me it depends. You always have to run your numbers.

[Andrew Steffens]

Quote from @Trent Reeve:

Quote from @Andrew Steffens:

Just my 2 cents on condos, as a PM and broker in FL:

1 - Most do not work, whether restrictions on lease duration, or due to the numbers because HOA fees cause low ROI.

2 - Check rules in your state to make sure you are grandfathered in case HOA changes the rules.

3 - Most SFR do better than MF not just because of HOA but also because there are low barrier to entry for 1,2, even 3 bedroom units. For the 1/2 BR you are competing not only with other STR's but also in a sense hotels.

4 - The Tall Timbers being STR friendly will this cause saturation with a bunch of new units coming available in the same development?

That said I do manage some very successful condos.  They can be great if well vetted.  Good luck!

regarding your #1, i think its a case by case basis. Depending on the amenities offered, and many HOAs in my market will also pay water bill, possible cable/internet, pools, hot tub. How much would you have to pay monthly for landscaping, pool care, utilities? some HOA fees can be crazy, but to me it depends. You always have to run your numbers.

 I agree somewhat - it depends on the revenue.  I currently am set to manage a penthouse that is gulf front that does $200k in revenue or more and can absorb some of the costs.  But for most small units off beach that may do $30k it is cost prohibitive and I have never seen one that fully offsets cost of utilities and some maintenance.  I do also have somwhat limited experience as mentioned above with condos and can only speak for Tampa area

[Madheshwaran R.]

Quote from @Michael Baum:

Looks like it could be a neat place @Madheshwaran R.

I am with @John Underwood on no condo's but this looks a lot like a Sunriver (Oregon).

Lot's of cabins of various sizes nestled in the woods. Looks like it will have good amenities.

Do you know (or @Valerie Budd) when completion for the main amenities will be completed? How about time to complete on the cabins themselves?

Is the developer offering financing? Maybe delayed mortgages based on completion time?

Hi Michael, yes, they have lot of amenities. I haven't discussed about the financing or contract yet. The cabins and main amenities are likely to complete by summar / Fall 2025. 

[Madheshwaran R.]

Quote from @Patricia Andriolo-Bull:

I would say it depends. Most people on here are SFH focused and in some areas I would agree. Where I am, those (SFH) don't pencil out, even with my high condo association fees. The one thing I agree with is that you are competing with a ton of properties if you go the condo route (referring to your comments re: the Panhandle). But It is still doable, you just need to stand out which is a lot more work and it takes some time to get there. Who is your ideal guest? I love hosting higher end couples. They love beachfront so the only option is a condo. I like to compare my condos to the JW Marriott on Marco Island. They could stay there for a one bed, $1000+ per night for an island view or stay in my 2 BD / 2 BA with spectacular views. Along with the condo fees come the amenities (gym, pickleball, boat docks, tennis, putting green, heated pool, etc.). If the amenities make the fees worth it, then it may not be a bad deal.

I didn't research the types of guests, but I relied on AirDna/Rabbu data for gross income from similar properties. I cross-verified this data by directly checking Airbnb as well. An agent also shared the gross income data for a couple of properties. However, the Net Operating Income (NOI) seems very low. For instance, a beachfront condo with a spectacular, beach view from the living room and balcony, priced around $600K, only generates a gross income of about $50K.

So far, I've checked SunDestin, Destin Seafarer and Pelican Beach Resorts, along with a few others.

[Timothy Hero]

Few things to consider:

Is it non-warrantable? This determines instantly if a lender will touch it.

Another factor: STR financing is getting harder to come by (at least in the DSCR space). 25% of the industry used to lend on STR's, now it's less than 10%.

And it being a condo, expect anywhere from 15-25 bps added to the rate. Lenders don't like condos.

[Valerie Budd]

Quote from @Michael Baum:

Looks like it could be a neat place @Madheshwaran R.

I am with @John Underwood on no condo's but this looks a lot like a Sunriver (Oregon).

Lot's of cabins of various sizes nestled in the woods. Looks like it will have good amenities.

Do you know (or @Valerie Budd) when completion for the main amenities will be completed? How about time to complete on the cabins themselves?

Is the developer offering financing? Maybe delayed mortgages based on completion time?

 Phase 1 will be done by end of November so that the owners can take advantage of the tax benefits for 2024 and rent in December.   

[Patricia Andriolo-Bull]

Quote from @Madheshwaran R.:

Quote from @Patricia Andriolo-Bull:

I would say it depends. Most people on here are SFH focused and in some areas I would agree. Where I am, those (SFH) don't pencil out, even with my high condo association fees. The one thing I agree with is that you are competing with a ton of properties if you go the condo route (referring to your comments re: the Panhandle). But It is still doable, you just need to stand out which is a lot more work and it takes some time to get there. Who is your ideal guest? I love hosting higher end couples. They love beachfront so the only option is a condo. I like to compare my condos to the JW Marriott on Marco Island. They could stay there for a one bed, $1000+ per night for an island view or stay in my 2 BD / 2 BA with spectacular views. Along with the condo fees come the amenities (gym, pickleball, boat docks, tennis, putting green, heated pool, etc.). If the amenities make the fees worth it, then it may not be a bad deal.

I didn't research the types of guests, but I relied on AirDna/Rabbu data for gross income from similar properties. I cross-verified this data by directly checking Airbnb as well. An agent also shared the gross income data for a couple of properties. However, the Net Operating Income (NOI) seems very low. For instance, a beachfront condo with a spectacular, beach view from the living room and balcony, priced around $600K, only generates a gross income of about $50K.

So far, I've checked SunDestin, Destin Seafarer and Pelican Beach Resorts, along with a few others.

By way of example, I picked up an oceanfront condo in March for $640K, minimal work needed to be done, only changes for my aesthetic/brand purposes and here they come turn key so only updated what I really needed to (which also gives you an opportunity to cost segregate). I plan on grossing $90K but hoping to increase that over a few years. I was able to pick up my first one for $499K and am doing over $90k which is my comp for this one. The HOA fees are high but when I considered a SFH, insurance would have been 3 times as much, I'd have to care for lawn, pool and all utilities myself. There is a benefit for having most of that built into the association. As I look at 3-4 BDs here, they gross slightly more but the purchase price is 2-3 times as much as a condo. For me, condo was a no brainer. And now that we are in the swing of yet another hurricane, I have less to worry about to prep. All I do is bring in the balcony furniture. Boom. Done.

One other thought, what is your long term strategy?  Why are you getting into this?  My other purpose other than some hopeful appreciation over time is that my primary residence is 1 mile away.  It's a 3 BD which is tight when my two kids or extended family come.  I just became a grandma (Nonna) and I love the idea of having one condo for each of my two children (they are next door to each other) to stay at with their children, in the future.  There is more that goes into these decisions than pure financials sometimes.

[John Mason]

@Patricia Andriolo-Bull That is an amazing approach and plan..Congrats!!

[Madheshwaran R.]

Quote from @Patricia Andriolo-Bull:

Quote from @Madheshwaran R.:

Quote from @Patricia Andriolo-Bull:

I would say it depends. Most people on here are SFH focused and in some areas I would agree. Where I am, those (SFH) don't pencil out, even with my high condo association fees. The one thing I agree with is that you are competing with a ton of properties if you go the condo route (referring to your comments re: the Panhandle). But It is still doable, you just need to stand out which is a lot more work and it takes some time to get there. Who is your ideal guest? I love hosting higher end couples. They love beachfront so the only option is a condo. I like to compare my condos to the JW Marriott on Marco Island. They could stay there for a one bed, $1000+ per night for an island view or stay in my 2 BD / 2 BA with spectacular views. Along with the condo fees come the amenities (gym, pickleball, boat docks, tennis, putting green, heated pool, etc.). If the amenities make the fees worth it, then it may not be a bad deal.

I didn't research the types of guests, but I relied on AirDna/Rabbu data for gross income from similar properties. I cross-verified this data by directly checking Airbnb as well. An agent also shared the gross income data for a couple of properties. However, the Net Operating Income (NOI) seems very low. For instance, a beachfront condo with a spectacular, beach view from the living room and balcony, priced around $600K, only generates a gross income of about $50K.

So far, I've checked SunDestin, Destin Seafarer and Pelican Beach Resorts, along with a few others.

By way of example, I picked up an oceanfront condo in March for $640K, minimal work needed to be done, only changes for my aesthetic/brand purposes and here they come turn key so only updated what I really needed to (which also gives you an opportunity to cost segregate). I plan on grossing $90K but hoping to increase that over a few years. I was able to pick up my first one for $499K and am doing over $90k which is my comp for this one. The HOA fees are high but when I considered a SFH, insurance would have been 3 times as much, I'd have to care for lawn, pool and all utilities myself. There is a benefit for having most of that built into the association. As I look at 3-4 BDs here, they gross slightly more but the purchase price is 2-3 times as much as a condo. For me, condo was a no brainer. And now that we are in the swing of yet another hurricane, I have less to worry about to prep. All I do is bring in the balcony furniture. Boom. Done.

One other thought, what is your long term strategy?  Why are you getting into this?  My other purpose other than some hopeful appreciation over time is that my primary residence is 1 mile away.  It's a 3 BD which is tight when my two kids or extended family come.  I just became a grandma (Nonna) and I love the idea of having one condo for each of my two children (they are next door to each other) to stay at with their children, in the future.  There is more that goes into these decisions than pure financials sometimes.

Thank you for sharing your strategy and experience; it's very helpful. I'll continue my search.

However, I'm not considering permanently residing in or relocating to these condos in the future. I prefer to keep my business investments separate from my personal interests. Although our family enjoys beaches, if we decide to live in the city, we might opt for an inland residence to save money and visit the condos as needed. Ideally, I'm seeking an investment property that is self-sustaining and generates consistent long-term income.