All Forum Posts by: Brian T. Grooms

Well said

Originally posted by @Michael Ablan:

@James Wise -  I self manage, but I'm going to be exiting that pretty soon.  I owned and managed 4 at once.  I'm selling 3 and keeping one.   Going to be purchasing 2x more and going only for A+ real estate moving forward.

My best advice is to bulletproof your property on the front end and treat your cleaning staff/maintenance man like gold.  They're the lifeblood of this business.

What does your PM do that you like?

Responsiveness to guests is key.  People will overlook some bs as long as they feel like they're being heard.

What does your PM do that you do not like?

Not forcing cleaning staff to do before/after pictures of every move out.   You need these for supporting docs when there's issues.

What does your PM charge you in relation to what they charge you for normal long term rentals?

I would charge 15% if I were to do this for other people.

What market are you in?

Upstate NY

What is your average nightly rate?

$250-$400.   On the water or on the golf course

What websites does your PM use outside of Airbnb and VRBO?

We use hostaway, which gives us a 3rd party website.  We use that website on facebook, expedia, ect

Are you happy with your PM? Why/Why not?

I'd only be happy with a PM whose capable of maintaining a 4.7+ star rating.  You're only able to do that by doing a great job

Investment Info:

Other other investment in Jerome.

Purchase price: $2,100,000

The Little Daisy Hotel. Originally built as a hotel in 1918 to house the labor force of The Little Daisy mine in Jerome. Meticulously restored by previous owners throughout the mid 90s and 2000s to replicate the original hotel while converting the property into a person residence. Now a 25,000 sq ft mansion with the best views in Arizona and close to Sedona and all of the numerous sights, adventures, and wine county that northern AZ and the Verde Valley have to offer. The Little Daisy is being redeveloped in the most unique vacation rental experience in AZ.

Any of you STR investors out there that can give a shout out to your management companies if you have them? Who are they and in what markets?

I know there are a lot of anti 3rd party management owners out there, I don't blame you for lots of reasons. But I also believe depending on your strategy good management companies do exist even if few and far between that bring you lots of value and worth paying for. 

What kind of returns are you guys seeing in those areas? Who are the best property managers? Do you have any success stories with management companies in those markets?

I have done literally every single aspect of the short term rental and vacation rental business. At this point I am no longer interested in operational aspects of the business and am searching for the best property managers. I have run a management business and set up numerous properties from scratch.

I believe management is key. The term "management" is broad and there are many responsibilities for a manager to take on. My philosophy now is start by finding the best managers in acceptable markets. Then I will look to invest in those markets after establishing a relationship with quality management. I would also note back up management plans in case my primary management solution does not work out for whatever reason.

There are so many bad "property managers" out there it is crazy. I estimate at least 80% are kind of garbage or just average at the absolute best. Many will cost you money by not only charging their commissions but also leaving money on the table with average pricing and marketing strategies, and most do not really have dialed in  property upkeep and maintenance regiments. Most property management companies are incentivized to to add "doors" to their management portfolio.

If you are like me and want to build a large portfolio of real estate in this niche then focus on identifying the best managers and various markets. It is actually a more important consideration than exactly which market has the highest returns on paper. Just find acceptable markets then search for management.

Any management recommendations would be greatly appreciated. If any of you are interested in AZ, I am happy to share my resources here.

Most of my experience is in Arizona, however in general you should do something to stay ahead of the "competition" or at least have your property be best in class. So if you are buying smaller properties and the STR nightly market is saturated with condos or smaller properties then you need to step up your design. If that is possible then you can maintain a competitive advantage.  There is usually quite high demand for the small properties, and in lots of markets a lot of them have an average and dated feel to them. So just do more up front to stay a couple steps ahead of the comps in your market and it will insure your properties maintains a high occupancy rate.

There are lots of reasons why large properties have advantages that I wont go into here, but they also have several disadvantages as well. Some of these include the high likelihood the homes are used as party houses, they are often in single family neighborhoods and wreck havoc in those neighborhoods when poorly managed (common). These properties also have higher holding and operating costs and take longer to turn over. There are more things that can go wrong, etc.

I have owned and operated numerous small vacation rentals including 1 and 2 bedroom condos and even studio guest houses. I have also managed 6 bedroom + properties. Currently I am redeveloping a 25,000 sq ft historic mansion into a boutique private STR.  So I do understand the advantages of large properties as well. Just saying it is easier to start with smaller units that are in high demand even if the market feels saturated. Just be at least slightly better than the competition with the product you are offering.

Originally posted by @Jefferson Brown:

Originally posted by @Pearce Trenary:

@Jefferson Brown Thank you! The competition on the smaller condos does worry me and I believe a condo is harder to make to stick out whereas I believe smokies are
easy to stick out (campfire, hot tub, activities). Do you believe the smaller units may not be as desirable as other areas with the competition, HSA (will look for a low cost one), and insurance cost?

Completely agree on the need to stick out.  Especially as STRs become more and more popular you'll need something that keeps you ahead of the competition.

I'm not sure I understand your question but feel free to message me.

Good question and what about for the debt portion? Are you working with Local Banks?

Melanie is spot on.

I used to manage and operate vaction rental and STRs in Central Phoenix, Scottsdale, and Tempe. But no longer do 3rd party management. I turned properties in my personal portfolio in Downtown Phx and Old Town Scottsdale with Wanderjaunt. For larger luxury Scottsdale properties you may want to look into what Parson's Villas can do with your property.

Originally posted by @Melanie Johnston:

@Ryan Paltridge I have helped 3 BiggerPockets investors buy 4 STRs in Scottsdale in the last 12 months.

My recommendation would be to concentrate on zip codes in popular locations that also have more non-HOA options.

These would be 85251, 85250, 85257 for options near Old Town. Then 85254, which is further north and close to the TPC Scottsdale (home of the Phoenix Open) and shopping like Kierland Commons and Scottsdale Quarter.

There is also a Facebook group for Scottsdale STR operators, which a few of my clients find helpful.

Let me know if I can answer any questions for you.

Melanie

Hey Daniella,

Sounds like you may already be covered for AZ, but if you are looking for more in Northern AZ, the Verde Valley, or central Phoenix I know some excellent agents with STR experience. I am a licensed agent myself but rarely represent other buyers and sellers these days. I am currently based in Jerome and part time in Phoenix. My specialty is in STRs

I don't know the pocconos, but my first question for you in response is about your lot. Is located in an HOA? If it is you need to thoroughly understand the CC&Rs and rules of the HOA before you plan on creating an STR there.

Rules and Regulations around short term rentals can vary highly from place to place. But usually always the first place to start is understanding your HOA rules.

Hey Tanner,

You can get a reasonable answer about basic furnished property and short term rental management and come to an average acceptable number. Usually this is 20-35% for full service property management.

However, I have always looked at this space a little differently, more similar to the hotel and hospitality world. Although we are dealing with residential properties, you should be operating a hospitality business (at least this is more of my personal style). I know for my style I look for "property managers" that have a hospitality view and understand that their number 1 customer is actually the guests that book the properties and the then the real estate owners #2. I like "management" or professional "Hosts" that are almost more like my tenants that know how to run their own boutique hospitality business rather than managers that focus on managing as many properties as they can with less regard about the quality of the property and experience being created for guests.

There are all different types of markets, all different types of properties, and all different types of guests so lots of different strategies work. There are plenty of owners and managers out there still doing well with second hand furnishings and providing the bare minimum accommodations to budget travelers or short stay tenants.

Once you figure out your niche in your market this answer will reveal itself to you.

The key to quality vacation rentals that are more of hospitality experience is in the operations and management. The management and ongoing operations are the biggest challenge to do really well. As such if you are the type of management company that knows your value and how your operations and marketing are what is really driving the revenue then you should be able to charge much higher "fees" because you add value to make the higher levels of revenue possible with your ongoing operations and service.

Think about the property owner's other options. You need to deliver income to the owner that is higher than what they could otherwise earn with long term tenants. Then the majority of the rest of the income should go to your company because you have really created the ongoing value that drives revenue to the property.

The exception can be when and owner or developer has painstaking developed an incredible product they are entrusting you with where you don't have to do any of the initial set up and can more easily take the reins on ongoing operations of the property.

The best property managers are picky and often turn away lots of owners because they understand they have a brand to protect and because they know they bring a lot of value to the real estate owners or developers.

My goal as developer and investor in this niche now is to create an incredible product to hand off to professional high end manager that knows how to be host to guests and is hospitality focused. If they are actually really good at what they do 20-30% is totally fair and is a good trade for me.  This will not be the case for lots of properties and owners and there will be lots that of DIYers that will disagree with me.