Million dollar Cabin STR

[Nicole Masters]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $1,084,000
Cash invested: $216,800

We bought a 5 bed/3 bath 4,400 sq ft cabin in North Fork California. It was previously operating as a STR by owners who lived on the property and managed/cleaned it themselves. Most furnishings were out dated, so we implemented systems, updated furnishings, and raised the prices! The previous owners grossed about $112,000; and we're hoping to almost double that.

We've been barely breaking even since we bought the home in December, but are expecting our summer months to gross about $20,000.

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

My husband and I already own a STR in Joshua Tree and were looking for a mountain type property for our next STR. We also wanted a home that slept 15+ people as we think this will give us a unique advantage over other homes listed anywhere near them.

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

Our partners found this deal and brought it to us. We are split 50/50 on this home, and we met the at a local meetup in the area (just goes to show how much worth networking can bring you)! They originally brought the deal to us because we had stayed in consistent communication with them and continued to check in on their investing journey. We negotiated the price down from $1,250,000 to $1,084,000 because of expensive issues that came up in inspections.

How did you finance this deal?

This was actually very tricky! Because the home is on 8+ acres and is such unique property we had a hard time finding financing for the house. We originally had a DSCR loan that fell through part way through escrow. My husband called over 12 lenders before he found one willing to give us hard money. We ended up putting 20% down (10% for each couple), 50% hard money, and 20% seller financing. We're interest only for 18 months and will need to refi at that point.

How did you add value to the deal?

We added value by updating the furnishings, integrating systems, raising prices, and improving the overall functionality of the house as a business operation.

What was the outcome?

We purchase the house (the wife in the partnership and I are both realtors so we were able to represent ourselves and use the $30,000 commission towards the home). We've been booked for every weekend since we purchased the home!

Lessons learned? Challenges?

A tonnnn of challenges. We've had some really large maintenance expenses come up; $10,000 retaining wall, $9,000 water filter system, $1,000 hottub repair, $5,000 roof and car port repairs, etc. The most challenging part has been commuting back and foth (3.5 hour drive each way) every week to work on the property as it is rented out on the weekends. We are outsourcing a ton, but still wanted to bring the design element to it ourselves. We're still learning the lessons haha.

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

We were the agents on the transaction, but worked with an incredible hard money lender that made this deal happen for us!