Branson, MO vacation rentals - advice, property management, etc

[Lucy McDonald]

Hello BP Community! This is my first post, although I have been an active podcast listener and forum reader for over a year. After feeling as if I have done my due diligence and am financially ready to jump in and actually invest, I have been researching different opportunities and areas for investment. As everyone knows, investing locally in Colorado (especially Denver) is proving difficult, even for experienced investors, so unfortunately I've realized I may need to invest elsewhere. I have been generating a "short list" of different markets of interest, and one of the areas that seems promising for short term rentals is Branson, MO. It's proximity to Silver Dollar Theme Park lends itself to seemingly high vacation rental demands in peak seasons.

Does anyone have experience investing in the Branson area? If so, what works or doesn't work for you there in terms of property types? The market seems somewhat saturated with vacation rentals, however I have heard that people are still seeing substantial cash flow from properties there (and it seems that most properties I've looked at on VRBO are pretty much booked up!). Does anyone have any recommendations for property managers and/or real estate agents in the Branson area? I'm thinking it may be too late in the busy summer season to find and close on a property, so would it be to my advantage to wait until early next spring to purchase?

Additionally, what are your thoughts on doing a vacation rental as your first investment property? My thought is the cash flow may be better than long term rentals, providing me with a mechanism to more easily role into a second or a third property. I am concerned though about vacancies and potential issues with finding decent property management.

Thanks for taking the time to read my post. Looking forward to getting more involved in the BP community. 

[Caleb Rohn]

We are currently in the process of acquiring a few short term rental properties and have done a lot of research leading up to this point (12 months of research).  We put 2 units under contract last week (to be built), a 5 bedroom and a 9 bedroom.  I own long term rentals in Springfield, MO which is about an hour's drive from Branson.  I have been wanting to diversify into another market hence the move to the Branson area.  We are investing in STRs near the lake.  The location is great as it has wide lake views but also within 10 minutes of the main strip where the shows are and just over 10 minutes to Silver Dollar City.  After growing up on the lake and nearly a year of real estate research here is what I can tell you:

There are pros and cons right now in Branson related to STR:

Pros:  

-Branson is popular and growing in popularity - approximately 8 million visitors annually for a city of 10k population is pretty massive

-Peak season is definitely the summer months, but even September-December do relatively well from a tourist standpoint.  Really January through early March are the only dead times in Branson.  

-Branson has character - The strip is cheesy in many ways with it's Reno-like neon lights and signs but the area overall is very nice and the lake is absolutely gorgeous.  The large rolling hills can give some panoramic lake views that are breathtaking and make for some amazing sunset views.  Out of state friends we take to the lake always comment on how amazing and beautiful the lake is and how big it is. 

-Johnny Morris, owner of Bass Pro is pouring large amounts of capital into Branson - Golf courses, hiking areas, restaurants, glamping - Johnny provides it and he does everything first class. It feels like Johnny is angling to get a PGA tour event to Branson with all he is investing in golf and accommodations. Big Cedar Lodge, is a huge draw to Branson and they announced recently a multi-billion $ new hotel coming (this is both a pro and a con for STR's in my opinion). A rising tide raises all boats, but that new hotel will mean a lot more boats.

-Branson is centrally located in the country and therefore accessible by drive for many which is helpful in a Covid world

Cons

-Like most real estate across the country prices are rising insanely fast. My brother put a 5 bd 5ba STR new construction under contract 9 months ago for $382k, I just put the exact same house in the same development under contract last week for 499k. And if you're wondering about demand for that house @ 499k, 40 units in this development came on the market as part of the next phase of this development a week ago, all but 4 are pending and most didn't even hit the public market but were scooped up prior to.

-Zoning is a challenge - These large developers have spent the time and money to get their neighborhoods approved for STR. They are packing them in like sardines. I approached a few different property owners who had vacant land as I thought of building and most times was told STRs were not allowed due to zoning. Keep in mind the lake is huge and runs for miles, but the main channel is for sure your best bet for STR returns lakeside and closer to the 76 strip if you're not lakeside.

-I would be lying if I said oversaturation isn't a concern at least in the short term - About 2 years ago there was a huge influx of inventory that started to be developed especially for 5-10+ bed/bath houses. Basically last year and in the coming year this market will see hundreds of brand new medium to large houses specifically aimed at STR and they are NICE! They are decorated first class and have first class amenities. I can only assume these new properties will squeeze the returns of older properties and also they will be competing with each other. Developments include Branson Cove, Chateau Cove, Chateau Mountain, Lodges @ Table Rock Lake and a few others. Each of these developments has close to or more than 100 units, they are new and they are nice. A simple google search of those neighborhood names and you will see what I mean.

Oversaturation is my biggest concern short term and of course this short supply market has to give somewhere because prices just can't continue on this unsustainable path upward. It's hard right now to project occupancy rates with this new influx of nice inventory. I think the smaller 2-3 bedroom STR's are a little bit insulated though there are some large condo projects going on as well.

All that said I am very bullish on Branson long term. However, I think you need to be able to handle the potential for a slow start with your STR as competition grows.