Strategies/Methods for STR Investing in a HIGH market.

[Mike Carroll]

Hello all, My name is Mike and I am new to BP and brand new into the world of REI. I am so excited to join this amazing community of bright, helpful individuals! I have recently finished a vacation home located in Bethany Beach, Delaware. This is a tricky market because the market is extremely high and very expensive to get into, being that it is a nice vacation rental area located right on the Atlantic Ocean. I happened to get a great deal and it should work out financially. But when I go to do my second deal, I am going to run into a predicament. That is, buy an extremely expensive home or property, spend a ton of money up front and on the back end with mortgages, and HOPE it rents out. The other option is to buy something off the coast a little. The problem with investing farther from the beach is that people don't want to vacation far from the beach. That market also does not have a high long term rental rate either. Does anyone have any insight to STR investing strategies? Is it just as simple as go big or go home? Higher risk = higher reward? Or is there some key methods and strategies anyone uses? Thanks everyone!

-Mike 

[Greg Dickerson]

Originally posted by @Mike Carroll:

Hello all, My name is Mike and I am new to BP and brand new into the world of REI. I am so excited to join this amazing community of bright, helpful individuals! I have recently finished a vacation home located in Bethany Beach, Delaware. This is a tricky market because the market is extremely high and very expensive to get into, being that it is a nice vacation rental area located right on the Atlantic Ocean. I happened to get a great deal and it should work out financially. But when I go to do my second deal, I am going to run into a predicament. That is, buy an extremely expensive home or property, spend a ton of money up front and on the back end with mortgages, and HOPE it rents out. The other option is to buy something off the coast a little. The problem with investing farther from the beach is that people don't want to vacation far from the beach. That market also does not have a high long term rental rate either. Does anyone have any insight to STR investing strategies? Is it just as simple as go big or go home? Higher risk = higher reward? Or is there some key methods and strategies anyone uses? Thanks everyone!

-Mike 

When buying STR you are essentially buying the equivalent of a commercial property or a business. It's all about cashflow. If you look at it from this perspective you can predict financial performance very accurately. You really only want to buy properties in proven vacation rental markets with a long history of consistent rents. This eliminates all the guesswork. If your goal is to accumulate the most cashflow per dollar spent there are lots of markets that you can find strong gross rent ratios like on the Outer Banks of NC, Carolina Beach, lots of coastal areas in Florida etc. Of course they are all taking a hit right now but this is very unusual circumstances.