Waikiki or Colorado Springs?

[Liz Weiss]

I have FINALLY nailed down my top two choices for a destination to begin my first STR. I have done tons of research on both places and I understand the regulations for each. I am just wondering what others opinions are and why they would choose one over the other. Would you go for a tier 1 destination (Waikiki) or more of an emerging market like Colorado Springs?

I would be managing the rentals and living in whichever city I end up choosing.  I have lived in Hawaii before, but I have never lived in Colorado.  It seems like returns might be better in Hawaii when looking at the constant tourism and high occupancy, but its hard to tell if the margins are tighter there or in Colorado Springs.  The Springs are unsaturated, but the demand seems a lot lower.  I know on BP many of you have said to go for Colorado, but is there a reason it's better than Hawaii (besides the regulations)?

[Jon Crosby]

Hi @Liz Weiss! Congrats on taking the plunge into STR's! I love the commitment to your investments by moving to either location. I think the biggest question is whether or not you are prepared for the climate of Colorado in the winter vs always sunny Hawaii.

Beyond that, according to Zillow the median home price of property in Honolulu is $679k vs $262k in Colorado Springs.  The average ADR for Honolulu (according to AirDNA) is $160 with most rentals being Studios and 1 bedrooms and a 71% occupancy rate.  Versus C.S at $117 ADR with 53% occupancy rate and mostly 2/3 bedroom rentals.  

So, just with those ballpark numbers you are at $41k in revenue for Hawaii vs $23k for CS. Doing a simple revenue to property price ratios yields 6% for Honolulu and 8.7% for CS. On top of this you are likely going to have a higher cost of living in Hawaii and be much more prone to other ancillary operating expenses like HOA and excise taxes.

So, that is my 30,000 foot assessment of both markets in less then 5 minutes but for me STR"s and VR's all come down to one thing....where do I want to visit when I'm managing them (and in your case, where do you want to actually live). :-)

@Michael Greenberg is out of the Denver area and might have some insights on the CS market for you as well. 

Best of luck to you and please keep us posted on what you decide!  

Cheers!