First Short Term Rental Investment - Green Valley Lake, CA

[Brianna Billings]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $358,000
Cash invested: $45,000

This is my first short-term rental property investment, located in Green Valley Lake, CA. Owning and running a short term rental has been a great (and grueling) learning experience, and there have been a lot of lessons learned along the way. My favorite part about this process was being able to fix-up the home and make it an aesthetic and cozy place that people want to spend their vacation in.

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

My family has always traveled to Big Bear, CA at least once a year for New Years, and I loved the idea of owning a family cabin that we could stay in for years to come. I also was interested in learning about owning a Short-Term Rental, since the owner is in charge of furnishing and decorating the home to make it appealing to renters. Lastly, the returns on Airbnb's from a cash-flow perspective seemed substantial.

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

I found this deal driving in the area after viewing another property (that property was a former Airbnb that was listed for sale, but required a lot of work to get it to be livable). This property was appealing because the only upgrades required were cosmetic, and it had great bones. The previous owners had done a lot of improvements to get it to great living condition, and a lot of major upgrades were already complete (Washer/dryer, AC, heaters, Security, etc.).

How did you finance this deal?

This deal was financed using the 10% down vacation/second home loan.

How did you add value to the deal?

I added value to this deal by making a lot of cosmetic improvements. While the home itself was nice, it was not decorated to be a successful and eye-catching Airbnb. We used a consistent color scheme throughout (earthy green hues from Magnolia home), and printed old graphics of the Green Valley Lake area to put on the wall for travelers to get inspiration from. The theme of the accessories was tribal patterns layered with natural textures.

What was the outcome?

The outcome was an STR that was booked the majority of the year, and I did have "Super Host Status. However, I was not great at using the algorithm to my advantage for pricing, so the overall income was not what it should have been for the first year. In seeing this and also being overwhelmed with the constant demand of running an STR on top of my job (in which I work over 50 hours a week on a construction site), I decided to hire a property management company.

Lessons learned? Challenges?

My main lesson learned was once again (if you read my first rental investment story, my lesson learned was similar), to get help from experts. I ran the property for over a year and while I did a great job ensuring that renters were happy and we obtained great ratings, I did not have my grasp on the nightly rates, which lost me a lot of revenue. I hired a PM company that I am super happy with so far. They are small and new, but understand the algorithm and do a great job maximizing profit.

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

Yes. I would highly recommend "Rather Be Properties", for short-term rental management. In addition, I worked with Victoria Davis, with Compass Real Estate, who did a great job steering me in the right direction in investing in an area I knew little to nothing about. Highly recommend making sure that your agent lives in the town that you are investing in, because they are able to understand potential risks to certain areas, especially in snowy conditions (example: access, plowing, etc.).