St. George Vacation Rentals - Projected Income?

Question

Hey everyone! I'm under contract for my first vacation rental property! It's a 5 bedroom luxury townhouse in St. George. I've spoken with five different property managers about occupancy, nightly rental rates, and income projections and they are all over the board. Does anyone have experience with STG vacation rentals? If so any guidance or thoughts on what kind of income it could / should bring in would be helpful! Just trying to do due diligence. Thanks!

Dale Desmond · Answer

Occupancy is a strange moving target these days. Before 2020, we had about 35% average in Washington Co. In 2020, it was closer to 75% - 80%. So when people ask "What occupancy can I expect on the new vacation rental I want to buy?", it's a challenge. We are seeing higher occupancy for larger units (4,5,6+ bedrooms) because people travel in family groups & tournament groups & splitting costs on a larger unit. I think 2021 will be strong, but probably not as strong as 2020 IF things open up elsewhere (cruises, Hawaii, Mexico, Disney, etc...). People discovered STG that haven't visited in a while or at all. I really think things will settle in a 45% - 55% occupancy for 2021. Hopefully, it's higher!

Kevin Hill · Answer

@Justin Koopmans the PM company we use is Evolve Property Management - I wasn't sure I was allowed to put it here because it could be perceived as a promotion - but I don't have any stake or interest in this company besides the fact that I do business with them.  They also give you a list of cleaning crews they recommend in the area or you can pick your own and they will work with them - so it is very flexible!

Also if you could send me the list of approved zones for Nightly rentals in the area that would be awesome - I appreciate that

Justin Koopmans · Answer

@Kevin Hill Thank you for the response! That is super helpful to know what others are doing. I've heard some say that 50%+ occupancy is do-able but I was skeptical- that's awesome to hear that you're rocking at 65%! And those are very good questions - some I didn't even think of! I'm sending my agent an email right now.

You are correct on the St. George rules. But there are a few "select" developments that do allow the vacation rentals. You can find this list on the city's website (it is not entirely up to date for the most recent additions) but luckily we are included there! I'm happy to send over this list if you'd like it.

@Sofia Sharkey I'd love to see your analysis! As mentioned my rental is in St. George city itself - but I'm definitely curious about the other areas too. All the data I can look at would be super helpful! Is email the best way to share that? I'll PM you with my email - or just let me know what would be best. Thank you so much everyone for your responses!

Sofia Sharkey · Answer

@Justin Koopmans where exactly is the house (what area)? I did a full analysis on the income last year and can share the numbers with you. I have in my analysis Dixie springs, Zion village, Santa Clara, and a couple other trendy areas.

Justin Koopmans · Answer

Thank you @Dale Desmond! Those numbers are definitely helpful. Funny that 2020 was so much higher, but I guess it makes sense. And good news on the larger units being occupied more!

Justin Koopmans · Answer

@Kevin Hill thanks for the referral!

Justin Koopmans · Answer

Oh @Kevin Hill do you mind if I ask who your property manager is? As mentioned I've interviewed five and one of them charges 10% - I wonder if it's the same guy.... if not I'd definitely be interested in chatting with them if you're open to referring them!

Justin Koopmans · Answer

@Cason Acor thank you for the suggestion! I checked out AirBnB for the area - but I should also check out VRBO too.

Kevin Hill · Answer

@Sofia Sharkey I would love to see your analysis on Zion Village and Santa Clara!

Kevin Hill · Answer

I assume you are talking about a property in a city just outside of St. Geroge, right?  St. George proper has a city ordinance that doesn't allow nightly rentals. but the cities around it does. I would double-check that to make sure you are good.  The property you bought may think they have the rights to, but it makes come back to bite you in the rear if the city catches wind of what is going on.  But the last time I checked the laws in St. Geroge was about 1 year ago and things might have changed. I would also reach out to a few PM (property Management) companies that specialize in Vacation Rentals - if they have a significant footprint in the area then they can tell you what profits look like for your setup.  I own a property in Hurricane, UT.  It is a 5bd 5.5 bath townhouse with a private pool and we are turning about $68k a year gross at 65% occupancy.

Couple of other things to consider with vacation properties.  Does your property have a resort fee as well? I looked into buying a property at Arcadia Resorts (Santa Clara, UT) and when they wanted $850k+ for the house, plus we had to use their PM services (30% of rental fees), plus their cleanings services ($45/hr = $250 per cleaning) PLUS a $500 resort fee PLUS a $250 HOA - it left some pretty slim margins to work with

Questions to ask:

• Will they allow you to use your own PM group?  Our PM only takes 10% and there are a few others like them that are pretty reasonable
• Will your PM group limit the time you can spend at the property (since they don't make a commission on you staying there, they sometimes have a max # of days - though PMs like this are becoming less popular)
• Do you have to use a specific cleaning crew?
• Resort fees? HOA fees? other fees?
• How much control does the HOA have on your nightly pricing?

The last one can be both good and bad.  in our property, we have one neighbor that prices themselves at $75/night, which is insanely low so it makes it really hard to compete with them.  Fortunately, the HOA decided to require that we have a nightly minimum of $150/night - this helps protect everyone's opportunities.  But that can also get out of hand - if the HOA requires too high of a nightly - then you will have lower occupancy.