All Forum Posts by: Bryan Harvey

Thanks @John D. This is exactly the type of feedback I was looking for - analysis of the deal, (rather than all the critique about how I did my spreadsheet). 

But...Are you sure you are not living in a super-unique market to expect the returns you mention above? In most vacation rental markets I know of (including where I live), a $250k investment in a turnkey property will not even cashflow. Also, many buy and hold bigger pockets investors are just looking to profit a couple dollars a door per month. I'd be doing 10x that. I realize this is not an apples to apples kind of investment comparison, but even figuring in additional management fees for short term rental - its just a vastly higher return than a few hundred bucks per door. 

For sure there is added risk and work building from scratch, and it will take a year of my time more or less...But at the end I expect to be netting way over $1000/month for the rest of my life on just a single 1BR property. The IRR is over 26%. Is that sub-standard for what I'm doing here?

My strategy is buy and hold for maximum income. 

Anybody else want to chime in on what type of return I should be looking for in this endeavor -  building a vacation rental from scratch? 

Noah, the thread above kind of covers that discrepancy - but to repeat...My spreadsheet gross income number ($38k) is just a shortcut - it has a proven vacancy rate already built into it based on my other comparable STR's in the area.

I don't have a ton of experience with it but I think it depends on how you use it. It can definitely be a useful tool for certain scenarios, and then sometimes it can miss areas and trends that seem obvious to me. 

Good point Dan. I wish I could just buy existing to be honest. But the reason I'd build instead of buy existing is that there's a lack of properties in the area that fit my strategy. I've looked at everything, and I continue to keep my eyes open for the few properties that I think would work. I've driven every street and know every house and have a list of less than 15 or so that I'd make an offer on IF they were for sale. And I've cold called the owners of a few with no luck so far. Where I live, mostly there's a whole lot of the same kind of cookie cutter vacation rental homes. I think my strategy has been successful with my two current STR's by providing something different and unique. One of them I built specifically for STR, the other one I bought off the MLS, but it is very unique for our area. The main advantage we see with this strategy is our occupancy is way above the competition. The property IS the destination. We do really well even in the dead of winter when most other vacation rentals doors can be shut for months at a time.

Thanks for your take on this Michael. 

Yes I agree guessing on the economy is a crapshoot. When I think about waiting 18-24 months for a dip - well that's over $80k in potential gross income I'd be missing out on in the meantime. And good point about recession vacations.  Coastal NC is always a popular destination because it's centrally located on the eastern seaboard, so anyone east of the Mississippi can pretty much drive here in a day. 

Hi Michael,

You write : "If you changed your occupancy to 70%, your cash coming in is $26,600. That change makes it a completely different scenario." 

NO, that's not correct. I guess I'm not being clear. My two other similar properties CURRENTLY gross over $40K+/year each,  WHILE BEING LESS THAN 70% OCCUPIED. The $38k gross income estimate on the spreadsheet for the new property already has the vacancy rate built into that number. The way I look at it is this: all I can assume is that occupancy on this property would be about the same as it is on the two that I already have.   It's really just a shortcut on the spreadsheet (and probably where I lost you) because it would be pointless and impossible to state a POTENTIAL INCOME at 100% occupancy, since -  1. this is a seasonal vacation market so 100% occupancy is never gonna happen,  2. our daily rates are adjusted all over the place, so trying to pinpoint what income could be at 100% occupancy would be an exercise in futility. 

Hi John and Julie, thanks for the reply! Not sure if you read my complete post, but at the bottom I stated where my numbers come from which are actual properties I already own in my market. Stating a vacancy rate is not really relevant to STR. The $40K+ each I am getting on my current airbnb rentals is actually less than 70% annual occupancy, so you can see how it doesnt really make sense to think about vacancy in the same way as a normal rental. Additionally I should add my cost to build number ($130K) includes my holding cost for 9 months and a healthy overage for any cost overruns.

Hey folks, I'm interested in opinions - pros/cons on this strategy of new construction for STR income. I am in my DD period with a contract on the lot for $89k.

Here's my projected numbers on the deal: 

My income/expenses numbers are based on two other properties I own in my market. Both of my current 1BR properties are paid for and gross over $40k each annually. 

I am trying to be smart about my next move and have considered a smaller 6 unit apt building also. Or wait until things are cheaper with an expected recession/downturn? I see that most more seasoned investors don't really like single family homes, but when I compare the income on the 6 unit vs what I'm getting in my market on a single family, it does not seem worth it to own the multi-unit. 

Thanks in advance! 

It never occurred to me that owning properties free and clear would be a negative to my application. Plus, I get a large part of my income from these properties, so I told them about the properties during the application process.

Regarding the PENFED limit of owning no more than 3 properties - has anyone considered placing one or more of your properties in an LLC to reduce the number of properties that show up under your name in a credit check?

I'm asking because I just got tripped up for a HELOC application with them for owning 4 properties. I'm considering this idea as a way to solve that issue.

Any lending pros have thoughts about whether this would work?