All Forum Posts by: Brian Barch

For the right market this could be good.

It would have to be intuitive for the user.

in general, I’m not that interested in fad type amenities that don’t have mass appeal and add to the property value in general. In other words, I see the short term value in niche, but I would never want to become so niche that if I wanted to sell in 10 years I might be pigeon holing myself

Quote from @Leora Merrell:

Quote from @Chris Watson:

Quote from @Leora Merrell:

I agree with @Ken Boone. 

For the last 14 months I have watched a development, from the clearing of the the ground to being listed for sale, by one of our properties we just rehabbed. It's about a dozen, identical one bedroom "modern" cabins that sleep 6. They are all about 10 feet apart. Absolutely no view, they're right off the road. They listed them for sale 11 months ago at $699k or something like that. Absolutely insane. They advertised them as turnkey and "guaranteed $65k in income every year." Price then went to $649k. Then to $500 something. They were then delisted then relisted at $529k and now they're $499k with no guarantee but so many seller concessions. They are all still sitting there. It's been interesting.

 I get all the listings everyday and all pending/sold.  I have seen the ones you are talking about go pending and then back on market. $500k for a 1 bedroom even with a view is a stretch. I expect appraisals keep coming back too low for financing and they go back on market. If they wait too long on keeping the price high (above $459k) the appraisal for the 1 bedroom will not top $400k in a few months. 

There are a lot more listings lately in the area market but I am not sure if that will taper as summer comes. I call it the Winter Fear. Low returns like pre covid numbers coupled with low price/high headache guests have scared people to sell. They do not think the juice is worth the squeeze. Now take that and add the new inspection requirements and higher commercial property taxes. It is a perfect storm to separate the wheat from the chaff in the Smokies STR market.

 Re-listed now at $460k. Looks like they still have nearly all of them still available. They've got to be hurting.

 Can you post a link? I’m not from that market, solely asking out of curiosity 

Quote from @Matthew Masoud:

Quote from @James Carlson:

@Matthew Masoud

Love the post. (I like my original points better, of course, but this is a great discussion.) 

So much of my response can be boiled down to: 

1. Hating that Airbnb owns the STR market is not the same as having actual power to meaningfully break away from it.

2. Is the time and effort worth the marginal savings (if any)?

Owning Your Business Vs Operating within another business
I agree, owning your own business would be awesome, but this falls in category No. 1 -- it sucks, but what can you do about it?

OTA Customer Service
Ditto the first point.

Saving on Fees
I'm interested in this. A direct booking site still has to process a credit card payment. Am I missing something? That costs 1-3%, so are we saving anything? 

Getting on Google Travel
Again, I'm interested. If this got legs, this could send meaningful numbers your way. (Awesome!) Then again, if it got big, then everyone's on it, and you're lost in the shuffle again, likely only to rise to the top by paying some ad dollar to Google. 

Extending Reservations off other platforms
Can't recommend AGAINST this enough. Sure fire way to get kicked off the biggest growing STR platform.

Google SEO
When I type in "Denver vacation rental," my hand cramps up from scrolling so far down in an effort to find a non-corporate site. It doesn't exist. 

Like @Michael Baum said, SEO isn't a small-time game anymore. People get paid $90k a year to do this professionally to make sure the little guy doesn't get seen.

Diversification
Totally agree in diversification 

Thanks again for continuing the discussion. Cheers!

I think for the vast majority of STR owners your advice holds, that it's not worth the time. Once you get passed 3 rentals and want to keep scaling and really build a business out of it, it's time to get that site up!

Cheers!

I agree with aspects of both posts.  I think for the average 1 rental owner, it's simply too much fuss, and the opportunity cost of that time and energy is either relaxing, or doing other things to maximize bookings like interior design.

I think the industry in general suffers from bombarding new hosts with 10,000 things to do in month 1 (OTA, direct booking sites, linking calendars, specific smart locks, etc.) when in reality most owners should probably list on the most relevant platform for their area in year 1, develop a rhythm and learn a few basics, and then start looking into improvements from there.

Certainly with multiple properties it starts to become a more compelling argument. 

I could be different, but I actually desire a dumbed down roku TV (only) for the following reasons:

1) it's all my kids know and understand.  Mom and dad want to sleep in for an hour on vacation, and that one time where the kids woke us up to try and figure out something that wasn't Roku was enough to teach me that lesson, lol

2) If I'm watching more than maybe an hour of TV on vacation, I'm doing it all wrong!

In 2 years we've not had one complaint of the Roku only TV's.  I'm thankful to not have yet another subscription

No regrets here. Bought in 2022 (not due to COVID STR frenzy, its also personal use and plan to never sell) at peak interest rates and we are profitable even with one weekend/mo of personal use. Wish I would have done it sooner.

That said, I wouldn't advise someone to get into the game if the goal is short term cash flow unless they were super savvy.  If that's the case, most people would be better off putting your down payment into a CD paying 5.5% interest.

But if you have a long term horizon, use leverage appropriately, get personal use out of it, and actually enjoy the business part of it, it's a great asset to buy.

Several Thoughts here, from someone who owns a successful STR and uses it monthly for personal use:

1) don't give away 30%!!!!!  That's an oldschool PM.  Many modern options (none of them perfect, most adequate) that charge much less than that.  Keybee (9%) and awning.com (15%) are good starting points. Also, don't go with the place that limits owner stays.  Too controlling when you own the place, and frankly not needed.

2) To be honest, you may not get a more precise answer than a range of "losing" 5K a year, to making 5K/yr.  That's okay.  Whatever you make today, at todays rates, will only get better if rates go down and rents go up over time.  Who cares if you "lose" $5K/year if it makes you and your husband happy?  It'll appreciate more than that yearly.  Imagine 20 years from now.

Renting a personal place will force you to take better care of it than perhaps you would if it were solely for personal use.  i.e. you may personally be okay with weed overgrowth or bugs, but as a business you'll pay to have these things taken care of.

But it's also the best way to get started.  I mean, when you get personal joy out of it, what do you have to lose?  What's the difference if your projections are off by $5K in year 1.

Part of this is in how you phase it.  "lose $5K/year" could just as well have been "people will pay for 95% of our vacation home for us." Suddenly it doesn't sound so risky.  But if nothing else, shop around MUCH more for a PM.  That should help your projections a bit

1) understand financing options and most likely option for you

2) will you self manage or hire a PM?

3) do you want personal use out of it, or is this purely for investment's sake?

4) what is your budget and target area?

5) use free tools like AirDNA rentilizer, awning.com, etc to estimate revenue potential.  Aim for 15% of purchase price in yearly revenue

6) if you don't purchase turn-key, come up with a furnishing plan

7) get pro-photos, find a good cleaner, either via Turno or preferably by talking to locals

8) a lot of youtube videos will overcomplicate the start (launch of 5 platforms, build a direct booking site, get the worlds best smart lock, automate all sorts of messages, connect to dynamic pricing, etc.)  Not saying these aren't good ideas, but they can also be overwhelming.  I actually suggest you just start on Airbnb, price low but not too low so you get bookings but not trash bookings, and spend a few months learning the flow and working with cleaner.  You'll know when it's time to add on from there.

We got quotes from $160-180 to clean our small, all wood cabin.  When we found someone hourly, they agreed to $30/hr.  We usually pay $80-90 total.  It's also nice, because there have been times when a stain needed to be professionally laundered, or we need supplies from the store, and the cleaner does it and just charges her time.  It's never been excessive.

I think looking at the smokies for STR is a bit like looking at cyclical markets (coastal California, Vegas, FL, etc) for primary homes. It's a bit more boom and bust than the rest of the country.

throwing out a number here, but I’d be willing to bet 75%+ of STR owners either bought well, bought with a long term view, or enjoy personal use and this don’t really care about the next few years.

I mean, pick your asset class, shame on anyone who tried to get rich quick on a short term time horizon. It’s investing 101

Occupancy is the same for us but we did have to decrease prices by about 10-15% in order to hold occupancy.

that said, we are still doing great in NE GA mountains. We bought a place with a great view and amenities and not overly trendy (on purpose). We also get a lot of personal use out of it, so I’m mildly agnostic to 5-10% fluctuations. I bought for the long term.

people also overestimate how quickly giant, mature markets shift. Upswings and downswings often take years of slight changes, not one giant cliff like the news would have you believe.

If history is anything, people will continue to vacation well into the future. I’m not worried. Perhaps I’m optimistic even, that the shiny new object crowd is phasing out