All Forum Posts by: Clint Harris

I'm still not exactly sure how to tag someone in a post, but I think it's important to point out that Jason Turgeon made some really good points here. You're exactly right Jason, the short term rental avenue is, in my mind, a result of the hotel lobby doing things the wrong way, and people on a small scale being able to be more in touch with society and what people need. I also think it's early adopters of the new technology that are able to leverage people having a smart phone and eliminate the need for STR property managers that used to scrape 20% off the top, which thereby puts owning small properties being used as short term rentals back in the profitable space again. That having been said, you are exactly right about the detriment that it can cause on towns, and especially historic districts. I think there's a time and place for this type of investment strategy, and anyone that does it, has a responsibility to their property, their neighbors, their neighborhood, and the town that they live in to do it the right way. Personally I believe that we operate our properties in a way that creates appreciation for our property itself, tremendous cash flow, which also results in tremendous taxes that are realized by our town, and I get to watch those funds go straight in to action to improve our town, streets, burying the electric lines, and creating a better experience for everyone around. In turn, our town quickly has become addicted to the tremendous amounts of revenue created by this strategy, which also ensures that our portfolio can continue to grow without threat of regulation beyond what is currently in place. I also agree with you that the strategy is probably not a great long-term solution, however, I had nine single-family properties in Columbia South Carolina, and it was really hard for me to make enough money after cap X expenses and unoccupancy to ever really get anywhere with that portfolio. With this strategy, we should be bringing in a net profit of 200K a year by Mid 2020, and at that point, our plan is to transition into apartment complexes. But in mind, of done correctly, this can be a Win for everyone, and can put tremendous velocity to anyone's portfolio, as long as they have the ability to execute on the overall principle, while still paying attention to the fine details. Great comments man, and appreciated.

It's not too saturated to enter into the STR market, I'm still actively picking up multifamily units. We are starting to see people realize the value of the STR market, so prices on great STR properties are starting to go up, and it's starting to be more competitive. The good and bad about my market is that there is a fairly high barrier to entry with prices in the 350-550k range, so it's tough to get your first one going (although arbitrage is a great strategy that worked for us when we couldn't afford to buy a second property, and we still make 80k a year off of that arbitrage deal). But the good news is that if you use the data and get into your first property correctly, you can easily net 50-80k a year, so that can quickly generate enough to keep investing even at 80% LTV. Remember, this is a feedback loop. The properties that are staged really well, clean, and managed the right way will do great. The cream rises to the top. A lot of people think they can slap a property together quickly, but without the systems in place to manage it, they quickly end up with frustrated guests, get a couple bad reviews, and if they dont quickly make corrections, that can be the beginning of the end. In terms of regulation, every market is different, but no, in most markets you don't have to live within a certain distance, that's only in a few places like Charleston, SC. All cities, and often historic districts have their own regulations, always look at local regs. Also, AirDNA.co is a great place to get an idea on regulations.

Last thing, don't be fooled into thinking STR is for beach towns or NYC, this is happening EVERYWHERE. From campers, to TeePees in the desert, mountains, ski towns, and even in Massachusetts, it's happening. It's really hard to start off long distance. If you think you want to give it a shot, pick a local spot. Use AirDNA.co to run a rentalizer analysis, and use that property to get all your systems and automation in place. Once you spend a few months getting things spinning like a top, THEN you can go rubber-stamp that in other locations. Build the machine in your backyard, and after it's built, then send it out to other markets.

I can personally testify to the accuracy of this post, this guy is tearing it up down here. I really REALLY wanted to purchase his first duplex down here at the beach, but the timeline just didn't line up. We sent it over to Joe, and he did an outstanding job. That property will do 80k in gross rents annual in the STR market. It's been fun watching Joe and Michelle just constantly continue to gain velocity in their journey. Also super excited to have them as our new neighbors!

Hope y’all can join us at Flying Machine brewery tonight at 7 pm for an informal networking and real estate discussion meet-up.  First Tuesday of every month, good beers, and good company, great turn out every time so far, come on!

We’ll be there with bells on

Absolutely agree that it’s not perfect, and I wouldn’t use it for long distance investing because you need to KNOW the market and have eyes on.  What I like is that it runs everything as median performer in that market.  Not median occupancy, but median performance.  That means it takes into account every property that has rented for at least one day a month for the previous 365 days.   That means someone has the worst rental, and someone has the best, and gives you the numbers on what falls right in between. I run an analysis on every property that we look at, our barrier to entry is that we want to cover all debt service, insurance, taxes, and still make a profit of $1000 per door per month over a yearly average. if the rentalyzer shows that metric, then we go for it, and so far have beaten that metric every time.  The rentalyzer originally showed the bottom half of our duplex as doing 43k, and we’re on track to do 57k this year. If you use the numbers and data to drive your analysis, you set yourself up for happy surprises instead of bad ones.  Again, couldn’t agree more that the rentalyzer isn’t carved in Stone accuracy, but so far we’ve been able to beat the rentalyzer metrics by at least a 20% standard deviation on all of our listings, so it’s a great benchmark for us.

 I have a subscription that focuses entirely on my local market which is the island of Carolina beach in North Carolina. I think the important thing to note is that with any subscription, no matter the size, it gives you access to the  Rentalyzer.  The Rentalyzer  allows you to plug-in any address of any property in the world, and it will show you what the gross rents for that property should be over a year, and includes the occupancy, seasonality, average daily rate, etc. I use the rentalyzer more than anything.   My recommendation is not to use AirDNA to search nationwide to identify what market you want to be in. You should always start in a market thats close by so you have the chance to get your systems in place, and then you can consider expanding from there. My recommendation is that once you have chosen the market you’re going to be investing in, then use the air DNA data to do a deep dive 

I've posted fairly regularly about the success that my wife and I are having in STR at the beach in Carolina Beach, NC, and its generated some questions, but one that keeps repeating. I thought I would take a minute to give my opinion on the best way to get started with a short term rental property, whether it be AirBNB, VRBO, Booking, Travelocity, Expedia, Etc. (We use all platforms to maximize bandwidth)

So first of all, it’s really important to reverse engineer what you want your end result to be. Of course everyone wants to make a bunch of money from a business you run from your phone (and it actually is possible, and it’s awesome, just takes a TON of work up front) but I would recommend breaking down your goals into bite-sized chunks. Let’s say you want to have a duplex or triplex operating in a good short term rental market within a year. In our market, a duplex like the first one my wife and I bought that’s a couple blocks to the beach, staged really well, great pictures, good marketing, pays all of the debt service, taxes, insurance, and our net on the property is 50-55k a year. But lets just say that as a median performer, you want a duplex/triplex operating, and you need it to pay for itself, and make you a couple thousand dollars a month over a yearly average. Here’s how I would go about mentally organizing that journey, I’ll keep it as brief as I can while still trying to communicate the value.

Take a self inventory of what you have.

1) Do you have money to spend? Obviously for most new investors, the answer is No. Ok, that’s fine, we didn’t either on our last deal.

2) Do you have family or a retirement account that you might be able to partner with or convert to self-directed IRA? Again, for most of us the answer will be no. Ok, that's fine. The point is, don't stop.

3) Do you have the experience of running a successful rental or a well performing property, or are you able to show a track record of a small flip or renovation that increase the value of a property? For many, that answer is still no. That’s fine, it’s your reality, embrace it, and adjust course. Starting to see a pattern here? Perseverance and being honest with yourself are crucial.

4) This question is probably where a lot of people land. Do you have the knowledge of what makes a STR rental successful and how it operates? Have you educated yourself on the process, on what it takes to choose a market, to stage, to set up the profiles, to manage the calendars, to automate the guest messaging? Maybe the answer is "yes", but if you're not currently operating, then it's probably "No" or even "I don't know". And you know what? That's great, because "I don't know" is still an answer. "I don't know" or "I'm not sure", or even "Well, I think so" are answers that imply a certain level of ignorance. That's not a bad thing, ignorance is just the lack of education on a subject, and boy do I have some good news for you. Education is free. The resources are endless on educating yourself and digesting data on what makes a certain market at A or an A+ in the STR market. AirDNA.co (I know I keep yammering on about this, but the data is extremely helpful) is a great place to start. Dig in to the data, look at the occupancy, average daily rate, seasonality, regulations, etc. The data is there, it's your responsibility to metabolize it. After that, look at operations. There are countless articles, some of which I've written and posted, that are all about staging, marketing, streamlining, automating, etc.

If you don't have money, or access to money, or experience, then the one thing that you can get for free is education. Once you can talk the talk, and actually analyze a property, or help someone with an underperforming property, you have created real and true value for yourself. At that point in time, you have something that makes you a commodity. You've spent 6 months building your knowledge base, and you know more than most of the people around you in your market. So you still can't afford to buy a place, but with your knowledge, what about renting a long term unit, and then operating STR out of it? This is called Arbitrage, it's legal, and it can generate tremendous cashflow. My wife and I have an arbitraged triplex, we pay 36k a year to lease the entire triplex, and our gross rents are 125k over a yearly average. Not only that, once we were able to clearly and articulately explain our plan and educate the property owner on how we were going to execute, he was willing to defer rent for the first 2 months while we got up and running. We used an interest free credit card to stage, and were caught up on rents by the end of the second month, had the furniture paid off by month 4, and kept rolling. For us, this was a no money down deal that was solely based upon our education, and ability to communicate our ability to execute.

Think that’s a stretch? It worked for us. You might have to make 20-30 or 50 phone calls to properties up for rent, or expired listings before you find someone willing to partner with you, but again, that part is free, what do you have to lose? If you aren’t able to communicate that the owner still gets paid, the property is cared for and cleaned really well constantly, and you’re actually adding a lot of value to the property because of the new rental history, then you probably need to keep educating yourself until you that message becomes clear.

Even if that avenue isn't for you, with your new-found education, I see people every day on the FB AirBNB Superhost group that are looking for co-hosts that know how to operate. Even as a 10% or 15% cohost, you're now getting paid to operate a STR, and you just went from education to EXPERIENCE.

In summary, if you think you have nothing to offer, and no way to get started, then take it upon yourself. Educate yourself. Education can be leveraged into experience. Experience can be leveraged into cashflow, and cashflow can be turned into ownership/partnership. We went from zero experience with STR to 8 units in 9 months. Educate yourself!