Vacation Rental Properties

[Jeremy Pieroth]

I'm new to real estate investing and have been looking to buy properties for vacation rentals.  Does anyone have good books or resources to educate myself more?

I live in Southern CA and most of the stuff is not within my current budget. I have been looking into Palm Springs areas for 3/4 bedroom properties with pools. I have been working with a realtor, going through the MLS, and have identified a property management company that provides ROI on properties I'm interested in.

I'm open to looking into other markets that I can get a better bang for my buck.  Besides the Socal areas I have looked into the Poconos, Orlando, and various FL beach cities.  Any suggestions on what areas or markets I should be looking into invest?

With having a good property management company in place and making solid returns I don't see why it would matter how far I live from the property.  What is a good projected monthly return I can expect?

[Serena Kim]

@Jeremy Pieroth

Education - YouTube University. There are a ton of blogs out there (especially here in BiggerPockets), but I’ve found YouTuBe to be a great resource for learning about the short-term rental market (Airbnb)

Location - I like the Kissimmee area a lot (right next to Orlando, 15mins from the Parks). My thesis is that people will prefer private houses with private pools vs hotels going forward. So far, a good percentage of my guests told us they used to stay in hotels but wanted to try “this airbnb thing”, and they loved the experience. For investors, Florida provides a great investment opportunity, no state income tax, and very low costs

Return Expectations - that will vary greatly, but the below can serve as a starting point:

House cost: 250k (around zip code 34746/34747)

Remodel cost: 10-15k

Insurance: can vary greatly, but 1,500 a year avg is a good starting point

Average nightly rate: 100-150 now, later in the year higher (200-300)

Expenses (monthly):

Electricity: ~250

Internet: ~60

HVAC and Pool maintenance: ~150

Landscape - usually covers by HOA, but if not ~50-75

HOA: the lower the better, but 50 a month is a decent average

Property management - 15-25% depending on level of service and company. I manage my own

County Tourist Tax: 6% (airbnb now allows hosts to charge it to guests, nice feature)

With that you can create an excel spreadsheet to get the numbers. When I model this I use 5 scenarios: Bear, Slow, Average, Above Avg, and Bull. The numbers will depend on the property and location, but you could start with 70 a night with 20 nights booked as Bear, and 200 a night with 25 nights booked as Bull, and fill the middle.

Hope that helps, feel free to reach out with any questions.

Serena