When Your STR is Too Popular For You To Stay In It

Question

If all goes well with Monday's post-repairs inspection, we should close later in the week on a cabin that we want to use as a getaway for us + STR when we're not using it. It was a new build, shown completely furnished and the builder listed it for use as a STR after we saw it. We knew the place was special, that's why we jumped with a full-price offer. We had no idea just how many other people would think it's special.

The next available weekend is June 6th! There are bookings for the other weekends in June and only five random open days in March. While this is a good problem to have, I'm starting to stress about it for a few reasons I'll put below. I want to note that bookings will transfer, but we're under no contractual obligation to honor them. I'm trying to figure what the best thing is to do moving forward.

Reasons why I'm stressing:
1) There's a drone photo showing no other cabins around. It looks completely isolated. Except that this spring there's going to be a cabin built next door. By fall there might be others. Imagine showing up to a cabin you thought was isolated and finding construction going on?
2) I don't like the idea of renting out a cabin I haven't stayed in myself. I don't know if there's anything missing. It will be a royal PITA to do a one-night stay on a random Wednesday, but it could be done.
3) It's currently listed as pet-friendly with only a $30 pet fee. I'm highly allergic to cats (like super-allergic) and also allergic to most dogs. An extra $30/stay isn't enough for me to have to make myself a zombie on Benadryl in order to sleep there and not wake up with my eyes swollen shut because someone let their dog sleep in the bed.
4) I think it's been priced too low. It's led to incredibly high occupancy rate in the off-season, but I'd rather have a slightly lower occupancy rate in order to reduce wear and tear and leave some weekends open for personal use.

I'm at a loss on what to do about this. On one hand I like that it will probably cash flow (we expected to break even at best) and know there's issues with canceling reservations. On the other hand, I want to be able to enjoy this place too. Any suggestions? How have you handled it when you've purchased a popular existing STR?

JD Martin · Answer

The main thing I see: don't assume that just because you think it's "popular" right now that you will see this kind of action going forward. You could have just caught the right breeze, or the low rates might have given you a spurt. The area might just be extra popular at this time. You have no way of knowing what your booking rate is going to look like going forward. When I bought my STR, a couple of months after I closed I was killing it with bookings. They were so good I was exceeding my own projections. Last year was back to earth; a glut of available properties drove the rates down for everyone and a drop in visitors also increased vacancies. I use the property myself, but if I couldn't afford to keep the place vacant all year long I'd have been in trouble.

John Underwood · Answer

Id remove the drone photo.

Increase the pet fee.

You can always block days when you want to stay in the property.

Ask for  feedback from the first few people during their stay to see if there is anything you should have provided that you didn't.

Collin Hays · Answer

1. I wouldn't publish the drone photo.

2. It's a good idea to stay in your own place a few days before you rent it out.

3. Unless you are going to be staying at the place, I would leave it as pet friendly. Folks are going to bring their kitties and dogs regardless of what your policy is.  Over 50 percent of travelers are traveling with pets.

4. A high occupancy in the off season is really good. You didn't buy the house to preserve it, but for it to produce income. Reminds of a friend of mine - bought a brand new Camry but kept it in the garage the whole time because he was afraid someone might scratch it. Kind of defeated the purpose.

5. If it is breaking even, you are doing better than most. You don't want to cancel reservations; that will give you a bad rating. Make your own reservations in advance.

6. When you stay there, you are essentially renting it from yourself, because you are giving up lost rents while you are there.

Hector Escobar · Answer

I think you have a good problem in your hands. Most other people in STR would only wish they had this type of problem. That being said, the ball is in your court. I'm the same way as you, I like to enjoy my STRs; especially as someone who works remotely. So I would separate the days you want to enjoy it for yourself and if they're already booked, you hold every right to cancel them as long as you provide timely notices, full refunds, maybe even a slight discount for other dates, etc. Make it fair for your guests as well. The pet thing is something that will be tricky to navigate and it may be something you have to deal with at first, however, moving forward set your own rules to your liking. Personally, as an investor, I'm a fan of unique stays that allow for higher rates and less traffic. Just run your numbers adequately and leave a safety cushion to CYA in case bookings drop as you adapt new rules.

Dina Schmid · Answer

I do suspect once there are more new rentals in the area that we will go down with the increase in competition. Which will put it more in line with what we were expecting (and what our financial projections are based off of).

Andrew Steffens · Answer

Congrats on the early success!

From a revenue management standpoint, you are leaving money on the table.  Personally I would rather leave money on the table than be vacant but you should take a look at your prices, I suspect they are too low.

Good luck!

Michael Baum · Answer

Hey @Dina Schmid, everyone had some good ideas but...

No cats. They are much more allergenic than dogs overall. If you are also allergic to dogs, then no pets if you want to use it regularly.

Where are these bookings coming from? VRBO and AirBNB? If so, those bookings and the accounts go away. You will need to create new accounts. Then you can manage the calendar. You can just have people rebook if they want.

We bought our lake house for use to use on occasion as well. Frankly we don't use it as much as we thought. We haven't stayed as guests for 2 years. Our calendar fills up fast 9-12 months ahead of time so we have to plan that far ahead. Oftentimes the rest of our family can't make it so we just keep renting it and go somewhere else.

I am thinking you will find that will happen as well.

Can you tell us where it is located? What is the current nightly rate?

Dina Schmid · Answer

How far in advance do you allow people to book? It sounds like what you're doing is working. I think I'm coming to the acceptance that I won't be able to just pop in when I have a free weekend and that I'm going to have to plan far in advance. I wish I had control over how far in advance the calendar was open, but that is up to the PM.

Brian Barch · Answer

In 3 years I’ve never not had a weekend book out. Hell, most weekdays book out.

all this means, I have to block off months in advance, and not open up my calendar too far in the future

When Your STR is Too Popular For You To Stay In It

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