First-time STR investment success in Scottsdale

[Brad Piper]

Investment Info:

Single-family residence other investment in Scottsdale.

Purchase price: $685,000

I went in with a business partner on a house in north Scottsdale, AZ to operate it as a STR. We decided if we were going to do it we wanted to do it correctly, so we hired a designer and had work done on the property for about 3 months before finally listing it. We used a property manager for the first 6-7 months, but have since switched to managing it on our own and we are loving it. We have about $100k in equity (both appreciation and property improvements) in about 10 months, and even though our listing is very fresh we are already receiving a solid net cash flow.

What made you interested in investing in this type of deal?

My business partner and I each had some long-term rentals, but all of our analysis pointed us towards the STR market. We love it and we have now done cash-out refinances on our LTRs and have pivoted into exclusively STRs.

How did you find this deal and how did you negotiate it?

We found and worked with a Realtor who helped us out really well. We put in a quick offer and didn't ask for much in negotiations.

How did you finance this deal?

DSCR loan

How did you add value to the deal?

Added a putting green, fixed the pool, painted some rooms, changed up landscaping all around the exterior of the house, and hired a designer to make the place look really nice.

What was the outcome?

We have about $100k in equity (both appreciation and property improvements) in about 10 months, and even though our listing is very fresh we are already receiving a solid net cash flow. We have since purchased another STR and are hunting for our 3rd currently.

Lessons learned? Challenges?

The big two lessons we learned would probably be about the property preparation, and to be weary of property managers. At least in the competitive Scottsdale market, it takes time and money to get a good listing ready. It really hurt to not list the property immediately, but are so glad we didn't because we weren't ready. We used a property manager that charged 24% but probably only did about 10% of the work. Since we got rid of them, we get to keep way more revenue and not do much more work!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Frank Apodaca with Barrett Financial was our lender, he's a mortgage broker that can lend all over the country. If you hit up Frank, mention my name to him! I work with him a lot. Our realtor was Ryan Loeding, he was quick and solid to work with, and his knowledge of investments (from his own experience) was helpful.