All Forum Posts by: Alex Duncan

Hi Alex, I used to be in pharma sales and felt it was soul sucking. I’m thankful for it though because I spent a ton of time driving from doctor’s office to doctor’s office listening to BiggerPockets and real estate investing books. Today I’m a realtor and just purchased by 4th property near Denver and short term rental all of my properties. It’s the most lucrative way to invest in real estate. It is a bit more work but I don’t spend more than an hour or two a week managing all my properties because there are lots of great tools to automate it. I would consider comparing investing in a single family home versus condo- the returns are significantly higher when buying a cabin. 

Congratulations! 

Real Estate is one of the best ways to build wealth - and financial freedom! I was in your shoes as well, although didn't make quite as much ;) Through real estate, I was able to leave my W-2 last September and go full-time into the RE world. We short-term rent our house, and have short-term rented our investment properties as well. It's a great way to get in the game and get big returns. @James Carlson had great advice that I definitely echo. AirDNA is a great resource for the STR market.

I'd factor in seasonality as well - perhaps using the rental yourself in the lower seasons. Talking to local resources is key - agents and maybe reaching out to Airbnb hosts in the areas you want to be to see if they'd be willing to talk to you. I love the Fraser area, spend quite a lot of time there - and have a friend who just purchased a condo in WP. She does pay the management company to run the Airbnb - think a lot of the HOA's up there mandate that.

Cheers to you and feel free to reach out to chat more! I'm in Arvada.

@Alex Duncan

Congrats on the big first step. Most of our Airbnb investors are in the Denver and Colorado Springs metro areas, and the surrounding front-range mountain towns, but the concepts are the same. There are infinite steps you could take if you want to break down how to buy a vacation rental into the minutiae, but I'd follow the KISS model -- Keep It Simple Stupid. 

• First, know thy laws. First, make sure the city or county you're looking in allows short term rentals. Winter Park, Grand Lake, and Tabernash all allow them. But be aware -- and this is true for most mountain homes you see -- while the property has a city in the address line, they're likely actually in the unincorporated county and are subject to any county STR rules, not the city's. (Shameless plug: We're talking Airbnb laws in Colorado this Tuesday, though we won't cover details of the area you're interested in.) Also, if you're buying a condo, read the declarations. There should be a section for "Uses" and then likely a "leases" section. Most ski town condos allow STRs, but not all.
• Second, find a good agent. This means one that knows what you can and can't do and knows how to run numbers and help guide you in the STR rental model. The agent should be able to help you with the first part above and the third part below.
• Third, find a good lender. Just general good real estate purchase advice. What do you qualify for? What's the mortgage with 10% down and a second-home interest rate? What's the mortgage with 20% down and an investment loan rate?
• Fourth, start running specific property through AirDNA. You've got a rough idea of your mortgage (from step 3). Now look at AirDNA's revenue projections for specific properties. Take out 40-50% to be conservative for costs (including 25% for management), and see what's left. Is it more than the number from step 3? Good, that's cash flow, and hopefully there's a lot.
  • All sorts of ideas about what makes a "good" return. I hate the real estate rules. (See the recent death of the "1% Rule" as proof.) I see people say you should make $100k gross for every $500k in property price or that you should get 20% Cash on Cash. Those are good rules of thumb, but they're just that, and not every market will support that. 
• Fifth, buy a home, stage it, post it on Airbnb and VRBO, and start making money.

I wish you the best in your search. Cheers!

Hi Alex - I found myself in a similar position when we bought our first investment property in 2016.

We went the Airbnb route, and now have 3, with a 4th being built as new construction.

Decided on markets about 1.5-2.5 miles from Boston, where we live, and they ended up being both cash-flowing and appreciating markets.

Not to say that you should go with STRs. Just saying that it's an idea if you do your homework, build your systems, network with people already doing it, are willing to invest some hand-on time while you learn the space, and get a but lucky (regardless of how prepared we are, luck is always a factors in anything we do, isn't it?)

Fast forward to the end result (well 5+ years later), and looking at my portfolio of assets now, and I feel very comfortable in how diversified I am. The troubles in the stock market that impact my retirement accounts so far this year haven't been fun, but they certainly have not been devastating because my real estate is acting as a counterbalance. I wish I had figured this out a few years earlier. But I've doubled my annual income in that period without relying on raises from my W-2. And now we have a ton of tax benefits from the investments.