Short-Term Rental Investor in the Midwest

[Amanda M.]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $290,000
Cash invested: $70,000

Short-term rental cabin in a desirable local tourist area in the midwest. We renovated and updated it to add value. When we purchased the home it had 125 feet of inaccessible lakeshore. You had to go through a swamp. We added a beautiful scenic trail and a dock to provide access to the lake along with other updates. We've maintained 90% occupancy in key-season along with Super Host (Airbnb) and Premier Host (VRBO) status consistently.

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

We've been in the hospitality industry in other areas and really enjoy it. There's something so special about knowing you're helping people connect and build lifelong memories. We're also very passionate about the outdoors and everything our cabin provides and it's a destination we know well. It seemed like a no-brainer when we could utilize a second home loan for a low down-payment and get higher cash flow than other investment types too.

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

It was on the MLS

How did you finance this deal?

Second home loan with 10% down-payment

How did you add value to the deal?

Added access to the lake with a boardwalk going through the swamp and a nice dock and upgraded and refined some finishings, such as light fixtures, add missing trim, etc.

What was the outcome?

We're still holding it and getting about 15% COC return annually.

Lessons learned? Challenges?

It was a competitive time to buy, but now I think I would remove the emotion more out of it and know that there's always another deal. I think we could have gotten a better deal, but we had missed out on several others and felt like we had to have this one. I also learned how critical it is to have a strong knowledgeable team by your side willing to be creative and do whatever it takes. Our team was supportive, but throughout the process we were educating our team.

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

Our team was dedicated to helping us find our first investment property, but I wish they were more knowledgeable about investing, financing options, and understanding our priorities and negotiating. Given our experience, I think there's a big need for investor-friendly/knowledgeable so my husband and I both became licensed real estate agents to manage our own deals and cater to other investors like us.