Lender · Pawleys Island, SC · Member since 2020 · 3 posts · 2 votes
As a first time investor, should I put my $$ into an oceanfront vacation rental condo or a townhouse across from our local university for long term rental?
Depends on your location for vacation rentals. I've heard Charleston does really well however your market might be different. Check out airdna to get an idea of what rentals go for and if your area is good for vacation rentals as a start.
Hey @Rachel Pitts, that is a tough question. Both can work very well. By LTR do you mean to students? If so that is different.
By the university, you could do very well with a STR for visiting parents for games, guest speakers, professors and other professionals.
Student housing is always in demand, but it takes a toll on the property. My daughter stayed off campus after freshman year at Washington State University and each place was a dump. The kids loved it. Each place was big with 5-7 bedrooms. She really enjoyed it. But they were dumpy.
My son is getting ready to go to WSU this fall. Transferring in as a Junior after doing Running Start. That allowed him to do college classes for his last 2 years of high school. He is going to be an architect! He has to stay on campus for his first year but we are thinking of getting a small house near the school for him to rent and then rent out to other friends of his.
With the vacation rental, you can use it yourself and enjoying it occasionally. That is a bonus. What university? Have you checked on the prices vs per student averages?
Assuming regulations allow it in both areas, I'd go beach. I grew up in an SEC football town and toyed with the idea of doing an STR there before, but it ultimately made more sense to go with a true, mature, vacation rental market.
I'll throw this out there. I have a vacation rental near a university.
I get top dollar for graduation and football game weekends, when parents are moving their students back to school, etc.
If your close to Charleston I would think you could do well in that area, but check the regulations. I know Charleston has some stuff new rules.
Take a hard look at the beach. There is a lot of competition in most beach towns. I stayed at Vrbo condo in Myrtle beach and was surprised how cheap it was. That was because there were some many of them and the supply drove down prices.
@Rachel Pitts Since you live in and near a popular beach destination, I would focus on vacation rentals. The Myrtle area isn't known so much for it's schools/colleges, but they sure as hell attract a lot of vacationers and the prices there are MUCH better than here in Charleston. I'd stick to vacation rentals since you're in a popular area and probably know the market.
I would say focus on student housing. At some point the market will shift and folks will cut back on vacations and rates could do down.
Lllllllmmmmaaaaooooo... humans have been vacationing for thousands of years.... but you think perhaps in 2021 or 2022, the human race will suddenly “cut back on vacations”? Just chill at home more?
I agree with @Luke Carl here - find some LTRs & some STRs that are doing well. Then pick one & copy it. That’s how I’ve had so much success with STRs - Whenever I’m entering a new market, I just find a couple of properties in that market that are crushing it, and I copy them (while also finding 1 or 2 ways to improve upon their offerings as well)
Everyone has thier own opinion. A rental next to a university would be more stable than a vacation rental and more than likely when you to sell.more buyer for the rental over vacation rental.
Sorry @Roni E.. Mark is right. When economy goes down people go on vacation more often. They’ve got nothing else to do. Extravagant vacations perhaps not. Inexpensive gathering at the lake? All day.
You’re on the wrong forum if you want to talk about vacation rentals not making money. We’re all making money with...... vacation rentals. Hence the short term forum.
But you likely found us in the main page and didn’t realize. Not your fault :)
Hello, my response did not say won't make money with vacation rental. Over time I think a student housing project would be more stable than a vacation rental.
I have several student rental SFHs in a town with a large university. I have done well with them but in my area the competition is fierce. Crunch the numbers of what you think you can get the best return. If you decide to do student rentals just make sure to have cosigners on the lease with the students. Also renting by the room doesn't make since in my opinion for a smaller investor. Because it can create drama of roommates fighting and you having to babysit also when all the students sign one lease you have more options to get your money if one tenant leaves. Student As cosigner may not care about their credit but student B & C will probably feel differently and be willing to come out of pocket for student A to make sure they don't have a negative credit impact. You will have higher turnover but in my experience the wear and tear of my houses have not been anything major.
I would go vacation rental if the city has anything bringing in travelers other than just the University. Is there a military base, corporate offices, vacation destination or anything else in your area that you think would help bolster your bookings, especially in off season? I see you are in SC, feel free to message me!
@Rachel Pitts the answer is in the numbers. College rentals are really easy. We rent higher end finished houses. So we get a little bit better student that have parents paying the rent for the most part. We’ve never had a house trashed . Returns are pretty good. College rentals are all about how many bedroom you can have legally. In our area our units rent an average at 300 per bedroom. So our five and six beds are awesome cash flowers.
I self manage mine currently. I've got regular SFH houses with single families. Along with the college rentals. The college rentals are way easier. These kids expect dumps but when you give them something decent, they take pretty good care of them. Don't get me wrong every once in awhile you have to tell them to pickup the red cups up from the backyard.
I don’t own vacation properties but I would think you’d have a lot in hiring somebody to clean and flip the property in between each vacationer.
Either way the answer is in the numbers. Get the returns on investment and it doesn’t matter which way you go.
@Rachel Pitts the answer is in the numbers. College rentals are really easy. We rent higher end finished houses. So we get a little bit better student that have parents paying the rent for the most part. We’ve never had a house trashed . Returns are pretty good. College rentals are all about how many bedroom you can have legally. In our area our units rent an average at 300 per bedroom. So our five and six beds are awesome cash flowers.
I self manage mine currently. I've got regular SFH houses with single families. Along with the college rentals. The college rentals are way easier. These kids expect dumps but when you give them something decent, they take pretty good care of them. Don't get me wrong every once in awhile you have to tell them to pickup the red cups up from the backyard.
I don’t own vacation properties but I would think you’d have a lot in hiring somebody to clean and flip the property in between each vacationer.
Either way the answer is in the numbers. Get the returns on investment and it doesn’t matter which way you go.
Good Luck
Definitely more than 1 way to make money in real estate, that’s for sure! I like that 5-6 BR house in a college town you’ve got making $1500-$1800 per month, that’s pretty sweet.
Of course, $1500-$1800 is a bad weekend for one of my STR houses. Typically closer to $2k for a wknd, and $3k for a holiday wknd. And that doesn't count the additional profit from the cleaning fee. But of course, to each their own. There's no right or wrong answers here
@Mark Miles that’s some pretty sweet returns. I’d have to venture way out of my area to get that kinda of rate. Good for you.
Ha! I only wish I could get these kinds of returns locally. My STRs are typically 500-1000 miles away. I originally looked locally & then realized the big money makers in STR are down south - best decision I ever made was pushing myself out of my comfort zone re: long distance investing!
That said, you live in a college town so if you're able to buy up some solid student housing at good prices, all the more power to you - it's certainly easier than having to build up a team from hundreds of miles away!
As a first time investor, should I put my $$ into an oceanfront vacation rental condo or a townhouse across from our local university for long term rental?
Do you have the same question posted in the student investor forum? Haha.
Is the acquisition cost the same for oceanfront vacation rental versus college rental townhouse?
What is your initial analysis tell you about acquisition costs, daily/rental rates, occupancy rates, and (in the case of student housing) how most other student rentals are operated (by the room, 9 or 12 months out of the year, with or without utilities included)?
Lots of opinions here and these are very different markets, each with great potential for returns (I'm in both currently), but make no mistake about it: they're different markets with different challenges and opportunities. @Scott Schaar makes some great points about low expectations around college rentals, but understanding a bit more about your overall goals and assumptions would help the forum provide more informed opinions than just "STRs rock" in a STR forum.