High Amenity Short-Term Rental

[Gabriel Graumann]

Investment Info:

Single-family residence buy & hold investment in Mesa.

Purchase price: $450,000
Cash invested: $85,000

Short-term rental that emphasizes on-site amenities, creating an environment that creates an unforgettable experience to each guest.

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

We wanted a portfolio that included a residential component that provides for long-term equity growth, while benefitting from the higher-than-average cash-flow that STR's provide.

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

The property was listed on the local MLS for over 30 days, so we came in with an all-cash offer with relatively short closing window at a discounted price. Offer was accepted with little changes to our terms.

How did you finance this deal?

Acquired it with cash on hand.

How did you add value to the deal?

Improvements included new flooring, fixtures, appliances and paint throughout the interior. On the exterior, we added a huge putting green, extended the covered patio, landscaping updates, added a hot tub and pool heater. Converted the garage into a media room and bunkhouse.

What was the outcome?

Once the property was furnished and created a steady 9 months of bookings, we leveraged the property to recapture 60% of the capital invested and a property management company handles all elements of the day-to-day obligations.

Lessons learned? Challenges?

Have an awareness of local policies that may impact the intended use as a STR. In our case, the large 3,500 lot master planned community we personally lived in was planning to vote to ban all STR's, of which there were more than 40 of at that time. We knew this change would remove 40+ properties in our local STR market, creating an opportunity to pick up additional bookings in a highly desirable area. We selected a property in an area with no HOA specifically for this reason.

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

As a licensed broker in AZ, I self-represented in the transaction.