Cash flowing parts of Galveston for STR?

Question

We’re visiting Galveston from Dallas and fell in love with the island and our VRBO rental in the pointe west resort. So much so that we’re thinking of buying a place of our own to rent out and stay when we want to. Preliminary research shows the HOA at Pointe West is over $1300/month which seems pretty high. We would need the unit rented at least a week every month just to make up for the HOA. Then there’s the mortgage, PM and other expenses. Does anyone with experience on the island know if there really are properties that cash flow here after all things considered or is this not a good idea? Doing some back of the napkin math and listings on Redfin right now it doesn’t look like anything listed right now makes sense from an investment perspective. Any insight or advice will be much appreciated. Thanks in advance!

Lyndsey Garza · Answer

Hi Lailu! I have been selling and managing vacation rental investments at Pointe West specifically since 2006. I was the sales director for both developers & also owned an independent brokerage, Pointe West Properties, and managed up to 64 homes in the community or West End. I would be very happy to help you with finding the right condo, listed on MLS or off-market deals that I know of out there.

The monthly fees are not as outrageous as they appear to be…Buyers tend to have “sticker shock” at first, but once they understand what all is included and Covered in that monthly cost, it’s way more palatable. Also, keep in mind that the community’s amenities are attract the guests who bring that revenue with them! I know PW better than any other Galveston broker, and am excited to have an opportunity to help you!

Jesus Roman · Answer

I hear great things about the multifamily market down in Galveston. Especially of investors that purchase multfimalies and run a short term rental business through them. I will say though that these investments only seem to make sense as short term rentals and not as regular lease rentals.

Lallu Tappu · Answer

Hmmm I haven’t yet, just based on what’s on the listing for the unit on Redfin.

Thanks all for the information. I’ll reach out to some of you individually.

Bruce C. · Answer

Have you called a realtor or the assoc?  Based on what I can see on HAR, the HOA is $3000-4000 per year, quite a bit lower than what you’re estimating

Karl McGarvey · Answer

@Zach Whitley no problem! Its the City’s new way to enforce their Tax since so many weren’t paying

Zach Whitley · Answer

I didn’t realize that it was being automatically disbursed to the city. I was aware it was being collected by AirBnB & VRBO but I didn’t know they were paying it for the owner. Thanks for the insight!

Karl McGarvey · Answer

@Zach Whitley HOT no longer needs to be factored as Airbnb and VRBO both recently began collecting each outside of an owners revenue and remits to the city on the owners behalf.

Galveston now mandates this for all STRs listed on those platforms.

Zach Whitley · Answer

@Lallu Tappu Don’t forget to also calculate your HOT which Galveston mandates. It is a killer market that seems to have doubled in value overnight. Possibly the California money relocating to Houston? Average days on market 10, tons of cash sales with quick closings, profitable AirBnB, square foot price ranging $235-$335 depending on area…

Off market is really difficult to find but I would lose the “resort” area, search for an off market in a good area, rehab it and then AirBnB it. Anything south central is going to be a huge money maker, and it is Galveston, everything is 5-10 minutes from the beach. Good luck and enjoy the Seawall traffic (it never grows on you lol)!

Karl McGarvey · Answer

@Lallu Tappu hello! I am a STR investor and agent on the Island. My partner @Holly Kaufman and I would love to help you get educated on the island market and expenses you should expect! Shoot me a message and we can connect!