All Forum Posts by: Carson McGee

Hi,

I am not too active in Kauai but I have multiple short-term rentals on Maui. I think in general the islands of Hawaii are experiencing a lot of price appreciation due to the scarcity of land and inventory. You should do your due diligence with zoning but if you find a sweet spot as we did you can have a very profitable short-term rental. If you are interested in any revenue projections, zoning restrictions, or STR property management in Hawaii feel free to reach out!

Hello! 

Welcome to Bigger Pockets! I own Vacation Rentals in Panama City Beach, Orlando, & Maui. Of those, it sounds like Panama City Beach may be the most feasible market. It is a great beach town, with a better purchase price than some other high-end markets. If you are interested in revenue projections or property management feel free to reach out!

Hi David!

My team has bought seven large STR's in the Kissimmee area over the past year. It is possible to come across certain deals that don't make sense in the area. With all of the competition you truly have to figure out ways to be unique and drive up your ADR. I am able to do this by creating a company that builds out garages into movie theatres, custom murals, high-end design etc. You can definitely see great returns, you just have to invest some capex to get the property performing top 10%. If you have any questions about themeing/design or just general information about investments & management feel free to reach out. I also have created an extensive comp set if you want to see some tangible revenue numbers firsthand.

My personal opinion is that the market is naturally correcting itself, although we may see a slow down of price appreciation with interest rates increasing. The previous appreciation of vacation rental markets is due to many factors. You have the buyers who have been couped up due to covid and are looking to buy a second home as a lifestyle asset. You also have a nationwide appreciation, which has been concentrated in places that have a location advantage.

I believe the biggest factor in short-term rental market appreciation has been a natural correction of returns. Just last year, my team was investing in STRs that generated a 20%+ gross yield (annual gross revenue/purchase price). These levels of returns are extremely abnormal and now very difficult to find. STRs are just now beginning to be seen as an emerging asset class. There is no reason short-term rentals won't trade on cap rate in the coming years just as other long-term real estate assets.

The primary driver for increased prices is that people are recognizing the value of an income-producing asset in vacation markets. The low inventory and ideal locations also play a huge factor. I think zoning & compliance is going to be a huge appreciation factor down the road. There is inherently more risk and work associated with short-term rentals when compared to long-term rentals. You run the risk of regulations changing or occupancy/ADR shifting. I am able to invest with more certainty due to markets with strong rental history or value add properties. Ultimately the STR/LTR decision all depends on if you are purely return-driven and how passive you want to be.

Hi Christina,

I have bought seven STR's in this Kissimmee/Davenport area over the past six months. It is a very competitive market but if you are able to make yourself stand out it can be extremely profitable. We have built out an in-house team to theme and renovate our homes to help us achieve this. If you are interested in learning about our success or want any general insight into the market, feel free to reach out!

Hey Sean!

This is all based on your comfort level, I personally do not physically see a property until an offer is accepted. You typically have some leeway if needed in the first few days of the due diligence process. It would be ideal to partner with a local agent, friend, or even vendors like handymen and have them do a video walkthrough of the property prior to finalizing anything.

All of that being said, my company has only seen a handful of our STRs in person prior to getting the offer accepted. In a market where buyers do not have the advantage, I believe it can be a waste of time to physically see every single property yourself. This also gives you a time advantage, we have submitted offers within the hour they have gone live on the MLS, which helps blow the seller away. You should still have a trusted individual help you scout out properties prior to the offer writing process.

I would definitely recommend visiting the actual market in general prior to writing offers. There is a lot of market-dependent research to do for STRs such as zoning, prime locations, specific amenities, general vendor availability etc. Make sure you have your criteria down for a certain area, property type, overall style, etc., and that gives you more confidence to write site unseen offers.

 Thanks for the recommendation, Andrew. 

Amitesh, my company has bought and renovated seven homes in the Kissimmee area. We have put together an in-house team of professional muralists, designers, etc to elaborately theme homes. They are incredibly talented and have come straight from Universal Studios and similar backgrounds. I would love to set up a call with you and show you the work we do and see if we can help. 

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $875,000
Cash invested: $225,000

This is a short-term rental investment in Kihei, Maui.

What made you interested in investing in this type of deal?

The main interest was a high gross yield and little upkeep for a smaller condo.

How did you find this deal and how did you negotiate it?

We found this deal on the MLS, negotiated it with cash, and waived contingencies.

How did you finance this deal?

We bought the property cash and set up delayed financing at 75% LTV.

What was the outcome?

The outcome was a successful short term rental added to the portfolio.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, reach out for recommendations.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $675,000
Cash invested: $120,000

This is a short-term rental purchased south of Disney. We built out a team of professional designers, muralists, and laborers to completely transform the property. This home is projected to make annual gross revenue of $165,000 - $180,000. Check out the full property pictures at Elevated-Stays.co

What made you interested in investing in this type of deal?

The cap rate was over double previous long-term rental investments.

How did you find this deal and how did you negotiate it?

We found this deal on the MLS and offered cash with no inspection right as it was listed.

How did you finance this deal?

We bought it with cash and refinanced it with delayed financing for STRs using DSCR and income projections.

How did you add value to the deal?

We added value to the income potential of the deal through elaborate design and furniture. This increased the average nightly rates by 40%+

What was the outcome?

The outcome was a successful short-term rental that provides a fully immersive guest experience.

Lessons learned? Challenges?

A lesson learned is that onboarding and theming an STR takes time, set aside a few months for this process.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes, feel free to reach out for contacts.

Hi Eddy,

That's awesome that you are interested in joining the short-term rental space in Orlando. I would recommend going south to Kissimmee/Davenport and exploring the resort-built communities that specialize in short-term rentals. The best ones I have found so far that warrant a look into further are; Champions Gate, Windsor at Westside, Reunion Resort, Solterra Resort, Solara Resort, Windsor Island, Storey Lake, Providence Resort, Sonoma Resort, Windsor Hills, and Formosa Gardens. All of these allow short-term rentals, and many don't even allow long-term stays over six months. They have extravagant amenities that you can provide your guests such as huge clubhouses, pools, waterparks, lazy rivers, gyms, etc.