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.

[Michael Baum]

Quote from @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.

I totally agree with checking on non-warrantable, but these appear to be lots with stick built cabins. So I don't think that warrantable vs non is relevant.

Check out the site and see what you think. I am not 100% sure.

[Gary Nelson]

I wanted to follow up on your interest in this specific development, which is indeed an intriguing opportunity. If you haven’t had the chance yet, I recommend checking out the development’s standalone website. It’s packed with useful information that you may find helpful. Feel free to reach out if you'd like me to provide the link.

As you may know, the short-term rental (STR) market in Branson has been shifting recently. Finding a turn-key or new construction unit that is cash-flow positive in the first year can be challenging. If you're already pre-approved, I would recommend verifying that your lender can service a non-warrantable condo and is keeping the loan in-house.

It's completely normal to second-guess a decision like this—there's always some speculation involved. However, the potential upside remains strong. If you'd like, I’d be happy to hop on a call to go over the Branson market basics. You can also check out my website, where I have plenty of supporting data to help you make a more informed decision.

[Tanner Lewis]

Quote from @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.

True - I suggest getting a condo questionnaire upfront if you are unsure and reaching out to STR/condo-friendly lenders prior to putting it under contract.