Out of state investment for a beginner

[Lorraine Patterson]

I'm a newbie, and for my first investment I'm gearing towards an out of State STR, where I can also use as a vacation home and depending where I'm at in my life, retire there. Is an STR a bad idea as a first investment.....

[Luke Carl]

@Jake Miller I agree with almost all of your most recent statement. I’m in one of the top 5 vacation rental markets in the world and 40% is standard here. You can find 30% with a loophole if you shop around or 10% if you use Evolve but their occupancy tends to be a little lower. Jersey is not NYC. LOL

[Jake Miller]

Originally posted by @Luke Carl:

@Jake Miller I agree with almost all of your most recent statement. I’m in one of the top 5 vacation rental markets in the world and 40% is standard here. You can find 30% with a loophole if you shop around or 10% if you use Evolve but their occupancy tends to be a little lower. Jersey is not NYC. LOL

I definitely wouldn’t do it at 40%, too much profit loss to not simply hire your own on site managers. Evolve is crap though, they’re more of a listing agency then anything as a lot of times they don’t provide on site management and instead just handle all the easy virtual work. 

[Luke Carl]

@Jake Miller That’s why I “self manage from a distance” which as we can tell by this thread means different things to different people. And it’s why I’m writing a book about it. My phone rings non stop with people asking me to teach them how. Everyone except for the OP who I think we scared off 20 posts ago lol

[Jake Miller]

Originally posted by @Luke Carl:

@Jake Miller That’s why I “self manage from a distance” which as we can tell by this thread means different things to different people. And it’s why I’m writing a book about it. My phone rings non stop with people asking me to teach them how. Everyone except for the OP who I think we scared off 20 posts ago lol

 Ahh well more money for us 👍

[Tanner Marsey]

Short term rentals seem to net way more cash but you work harder and endure a lot more stress. All depends on what you're looking to do. I am probably going to purchase one OOS str in the next 6-12 months. Planning on going to a proven market and having a partner to minimize risk. Also going to buy something that I can use as a LTR if the STR route goes south or isn't worth the hassle anymore. Going to try and self manage. But also plan on paying all the necessary people slightly more than average to, hopefully, ensure compliance.

We will see how it goes.

Good luck.

[Paul Sandhu]

@Tanner Marsey  Your biggest enemy is going to be water.  It's mine.  I've had pipes freeze in winter and burst resulting in a big utility bill.  Sometimes there can be a roof leak and you have water damage.  Once the city was making some repairs on the main water line down the block and had the water shut off.  Some tenants were leaving and they left the water on in a sink.  When the city turned the water back on, the water started filling up the sink in an upstairs apartment.  It overflowed, and the ceiling downstairs was on the floor when I walked in.  A sump pump in a cellar went out, it flooded the CH/A unit and hot water tank.  Had a leaky supply line to an icemaker that ruined a kitchen floor.  Leaky p-traps under a sink.  Leaky wax rings under a toilet.  

[Ken Latchers]

I agree. I had a hot water heater burst and ruin two apartments. Remote managed LTR. One of the reasons I don't like remote... You want something done right...

Originally posted by @Paul Sandhu:

@Tanner Marsey  Your biggest enemy is going to be water.  It's mine.  I've had pipes freeze in winter and burst resulting in a big utility bill.  Sometimes there can be a roof leak and you have water damage.  Once the city was making some repairs on the main water line down the block and had the water shut off.  Some tenants were leaving and they left the water on in a sink.  When the city turned the water back on, the water started filling up the sink in an upstairs apartment.  It overflowed, and the ceiling downstairs was on the floor when I walked in.  A sump pump in a cellar went out, it flooded the CH/A unit and hot water tank.  Had a leaky supply line to an icemaker that ruined a kitchen floor.  Leaky p-traps under a sink.  Leaky wax rings under a toilet.  

[Tanner Marsey]

Originally posted by @Paul Sandhu:

@Tanner Marsey  Your biggest enemy is going to be water.  It's mine.  I've had pipes freeze in winter and burst resulting in a big utility bill.  Sometimes there can be a roof leak and you have water damage.  Once the city was making some repairs on the main water line down the block and had the water shut off.  Some tenants were leaving and they left the water on in a sink.  When the city turned the water back on, the water started filling up the sink in an upstairs apartment.  It overflowed, and the ceiling downstairs was on the floor when I walked in.  A sump pump in a cellar went out, it flooded the CH/A unit and hot water tank.  Had a leaky supply line to an icemaker that ruined a kitchen floor.  Leaky p-traps under a sink.  Leaky wax rings under a toilet.

Thats one thing that scares me. I try to stay away from areas with harsh winters. But a lot of those markets seems to have great returns. I guess it goes with the territory and I need to plan accordingly. Thanks for the insight. 

[Jackie Brassell]

I just purchased my first investment property a STR back in March. So far I'm happy with making the decision. I did my research for about a yr before deciding to make the jump.  I highly recommend you call @Luke Carl, he definitely gave me some great advice which help me decide to self manage our property which is 6hrs away. The process was a little tough in the first month or so but we managed to get through it and now starting get the hang of it.  I wish you the best in whatever you decide.

[Crystal Ball]

@Lorraine Patterson - a STR was my first investment after making money on all the primary residences I owned in multiple states. I made a lot of mistakes, it did NOT go as planned, and I learned a ton about STR companies and how shady most of them are. It depends on the market you invest in how easy it is to self manage. Labor is a HUGE challenge here in Panama City Beach especially post hurricane and most companies like #vacasa talk a big game but deliver HORRIBLE service, the worst employee morale & attrition rate of any company I've ever seen, and then charge fees they say they won't. We own a couple of businesses here, are very involved in our local Chamber and have a huge wealth of resources & contacts no matter which direction you want to go. I'm happy to share that network and my experiences! I now work with my personal realtor / mentor who owns 9+ LTR's, a very high end STR, and local businesses as well. Reach out if you have any questions along the way & enjoy the journey!! :)

[Jake Miller]

@Crystal Ball What she mentions is solid advice, if you do end up going with an STR these big companies like Vacasa and Evolve are not good options, all they care about is maximizing their profit for the least amount of effort. It's best to either hire your own on-site managers are find a local management company that is reputable.

[Reagen Natho]

I closed on my first STR in Pigeon Forge with @Avery Carl on April 15th. I listed it on both Airbnb & Vrbo April 28th. To date, I have 42 bookings for over 150 days in a month. I am self managing on the road wherever my husband is working from which is currently West Virginia. I found an awesome housekeeper/maintenance man husband and wife combo and they handle all my boots on the ground work and issues. I feel very confident that under the tutelage of @Lucas Carl I will continue to be successful. All you need is internet and a smart phone and you can manage your STR from anywhere in the world. I can't wait to buy my next property!

[Mike Shemp]

@Lorraine Patterson - We did exactly what you described.  We are first time investors and invested in a short-term rental in North Carolina which is about 7 hours from us.  So far it has been a very positive experience.  The most important thing is to make sure that if you are managing it yourself that you have a reliable cleaner, handyman, plumber, electrician, lawn, and appliance repair person.  And once you have your primary team in place, it wouldn't hurt to have the contact info of backup people ready to go in case someone is not available.  

We use RightSignature for handling the signing of short-term rental agreements.  I use a Mobile app called Due to remind me of when to send all the communications to the guests such as their Welcome Packet, day before check-in reminder, day before check-out reminder, etc.

Hope that helps!

SG

[Avery Carl]

Hey Lorraine! I invested in short term rentals as a strategy to build quick and heavy cash flow to support our long term rental buying without having to dip into my individual income. I'm a big fan of starting out with STR's. They definitely require work, but it does not take a genius. You can definitely do it! The key is to find the rockstar team members in the market you choose. Start with an agent and lender and build out from there. Check their history. How many deals are they closing? The vendors who are closing the most deals for their clients are going to (usually) be the ones with their finger on the pulse of the market, with more access to off market and pocket listings and vendor recommendations after you close (your cleaners, handymen, etc).

Bottom line here: YOU CAN DO IT. Just do your research and pick the market that best fits your needs and wants, then dive in! There are all kinds of people in all kinds of markets on this forum that have all found success in different ways. Your path to success is out there too. The hardest part is finding it, the easy part is pulling the trigger!

[Lorraine Patterson]

@Lucas Carl thank you for volunteering to help me, I will definitely be reaching out when I have my eyes wide open on a potentially good deal, I will reach out with questions...thanks again Lucas!!!

[Lorraine Patterson]

@Lucas Carl what top 5 are those if you don’t mind me asking :)

[Lorraine Patterson]

@Avery Carl thank you Avery for the good advice....

[Lorraine Patterson]

@Avery Carl I don’t expect easy I’m willing to put in the hard work for my investment...... i hear a lot of “it’s not easy “ not “passive”.....I never expected it would be.....

[Luke Carl]

@Lorraine Patterson The only market I would even consider is Gatlinburg/pigeon forge. The numbers work and it’s 100% tourism driven.

Orlando Big Bear Branson and Coffeeville, KS also get mentioned around here. 

Don’t worry about the folks that say it’s hard. I self manage 13 doors in 3 different markets with a day job and a family and it’s really no big deal.