All Forum Posts by: Alesandro Breguez

@Michael Kunis, it might be a bit premature to start a property management service contract now but I do recommend to run a very comprehensive due diligence before selecting the right company. My experience is that most are not reliable . Do not under estimate the on site presence. I recommend to be very hands on at the beginning so that you know all nuances of your STR business

@Troy Judge, I would invest some time to run a proper due diligence. Few things to consider:

1. Regulations: some townships are starting to regulate STRs and they have very high requirements for the locations. Not sure if the area you are planning to purchase the land will require it and if yes, not clear if the trailers would pass the requirements.

2. Financials: make sure you know the numbers. Have a look if trailers are booked and what typical ADRs are. Run different NOI and ROI scenarios to understand your best and worst cases scenarios.

3. Risks: you might want to investigate risk factors as safety, theft, infra structure of the land etc.

In overall, as first STR investment I would stick to a single family home located in a secure and established neighborhood.

I tried a couple of property management companies or ''want-to-be'' property managers and in overall I wasnt impressed and found them not professional enough. 

If you look at the overall numbers, the Poconos area has over 1,700 active SRT listings and +90% are owner-managed. If you are an owner and if you have the time to dedicated for your STR business - that's the ideal scenario because nobody else would have more vested interest than you in making it successful.

However, if you are an investor looking for passive income or planning to scale your STR business, its paramount to have professional help.

Most property management companies will charge either a flat fee or a percentage of the revenues that could vary from 10-20%. During a good season, an average 3-4BR property makes 6-8K in revenues, so you are handing over 1.2-1.6k in that month - that's a considerable stake of your margins.

Few property managers are willing to enter performance-based contracts where compensation are tied to clear performance indicators. That's for me a clear no-go signal.

How is your experience with property management companies so far?

Hi Guys, 

Glad to join this discussion! I have few units in Lake Harmony and Emerald Lakes and I admit that during my first year I struggled to find reliable workforce. It took me some time to put a robust team together but I assume this is not only the challenge in the Poconos, this is a general challenge in the hospitality industry.

I also went throught he STR license process which are now required by some townships.

Feel free to DM me and connect to exchange about best practices.

Here some variables that might influence the dynamics of the Supply/Demand of the market:

Supply:

More distressed sellers:

1. According to the Mortgage Bankers Association (MBA) the number of loans in forbearance in mortgage servicers' portfolios grew to 6.99% (as per May 5th, 2020). The coronavirus pandemic has already cost more than 30 million jobs, approx. 18% unemployment rate

Demand:

1. Less qualified buyers due to the increased lending requirements 
2. Buyers more cautious waiting for the ‘’ expected housing crash’’

1. BUT Inventory still low in some areas – this is a general statement as it has to be evaluated in specific by area

Do you see other drivers? Any thoughts?

Does anyone have the experience in lending in EU? Especially in Switzerland the rates are extremely low. Please share your experiences

We are already in a recession. 

According to major banks the GDP in Q1 is expected to drop by 7% while Q2 could reach 30% drop. Technically 2 consecutive quarterly GDP contractions define a recession. 

Currently (April 28, 2020) there are 27M jobless claims approximately 16% unemployment rate reaching the levels of 2008 in terms of unemployment. 

However, some differences I see in comparison to 2008:

1. Supply and Demand of houses: both are impacted, inventory is low (supply) and also less buyers (demand) who might be cautious to make major investments.

2. Lending regulations: this time they are much tighter -  which will avoid sub-prime mortgages and the huge collapse we saw in 2008 

3. Federal financial stimulus: the government acted much quicker this time injecting liquidity into the market with the stimulus packages. The question is the amount of $ in the market will translate into a fast V-shape recovery (this is what the stock market is pricing in now). Most likely it will be a slow recovery.

Any further thoughts?