All Forum Posts by: Jonathan Dempsey

@Brian Cannon Autumn nailed the sentiment above.  In any market, its about the home and experience the home provides.   

Looking at a competition standpoint, I would consider places where it will be fairly difficult for others to replicate a product you're looking to share.   And also look in markets where it seems even some of the top performing listings still have ikea furnishings and iphone photos.

For example, in the Poconos market, many listings are still marketed poorly like this, and most homes are 3-4 bedrooms.  If you find a nice 5+ bedroom product or 2- bedroom product, you could be in good business.  

@Autumn Cain is a great resource if looking for more info in this market.   Best of luck.

@Angelo Proto

Some of the top vacation markets I hear about often are:

-Pocono Mountains of Pennsylvania

-Catskills and upstate NY

-Tennessee - Gatlinburg and Pigeon Forge

-Shenandoah Virginia

-Blue Mountain region of Georgia

-Many Florida markets

If proximity to home are important, the top two may be of benefit to you. I know stellar agents in Georgia and Florida who own STRs themselves. Would be happy to refer.

I could also help you in the Poconos. There are niches of the market ripe with opportunity. If you enter the market with the right approach, there is alot of money to be made. There are some imbalances of supply and demand, as well as a lower barrier to entry compared to other markets. Feel free to reach out whether for Pocono Mountains or if you’d like an intro in another market. Cheers!

Great post Mike, these fundamentals can be taken to any market.

Understanding the traveler demand and needs, seeing where the market may be lacking (and avoiding where they are saturated), then catering to that market.   Every market is a bit different, but sticking to what you would be desiring as a guest is more certain to hit than going based strictly off value.

I find it ironic how vast the differences are between STR and LTR. Upgrading on seemingly frivolous touches in LTR won't pay off in the rent increase (if you even get one). Upgrading items in an STR can lead to high ROI, because people are paying for an experience and looking to treat themselves, their friends, and family.

Keep up the good work in the Poconos Mike!

Often times I see lakeview and lakefront lots trade at much higher prices than their peers without views.  And often, the revenue multiple seems to be diluted compared to some of the peer options.

Does it make sense to pay a premium for lakefront or lakeview property? My first thought is its a short term sacrifice upfront to reap more potential appreciation and a higher ceiling as more people enter the STR game.

Introduction to the Poconos

The Pocono market has long been a popular vacation rental market due to the area's many natural attractions and the region's proximity to major metros Philadelphia and New York City. As a region, the phrase “The Poconos” is linked to a wide variety of areas that have much of the same allure in common.

Although a great area to invest, there are many caveats when searching for your next investment. Not all Pocono HOAs allow short term rentals. Of the HOAs that do allow STR, each has a unique fee structure. If you're not familiar with the area and are looking for a place to begin your search, the below hot list will help refine your search.

Today, our goal is to identify different submarkets within "the Poconos" that serve the short term rental community and its demand. We will work our way in ascending order to the number one ranked HOA, starting with an HOA that still deserves merit as an STR option. While the following rankings include a great deal of subjectivity, we use objective measures in our quest to create a hot list of where to search for your next vacation rental. Factors include: location, amenities, rental potential versus price, per stay and annual fees associated with renting in the HOA, and lastly a subjective measure of overall expected guest experience.

Disclaimer: Rankings and subjective comparisons between HOAs are not meant to discredit or heighten one HOA being better than another. Rather, help investors identify where time is best spent searching for better returns.

Honorable Mention - Pocono Farms East - Tobyhanna

Coming in with an honorable mention is Pocono Farms East (PFE). PFE benefits from being one of the few HOAs that does not charge a per stay fee to its guests. PFE also has a good proximity to some of the area's attractions. Where PFE falls short is in its amenities, proximity to the slopes, and community aesthetic. PFE has had some winners from a cash on cash projection perspective, yet I would rank the rest equal or better in likelihood of finding opportunity. If looking in PFE, be sure your property is unique. It is easy to fall victim to a tastefully renovated home that lacks standout features among its peers.

Honorable Mention - Albrightsville

Indian Mountain Lakes (IML) comes at the same tier as PFE. IML has a $50 per stay fee, implying rental rates must be higher if you are looking to cashflow. Being in Albrightsville, IML is not far from the slopes. Their amenities are standard. The guest experience falls short relative to other communities. If looking in IML, be sure you have an X-factor such as a game room, hot tub, or other differentiating factor.

Honorable Mention - A Pocono Country Place - Tobyhanna

A Pocono Country Place (PCP) is well known in the Poconos region, love it or hate it. PCP has nearly 6,000 homes, boasting a massive community of both residents and STRs. The average home price in PCP is on the lower end. With a $40 per stay fee in tandem with cheaper home prices, PCP is a value play. There are successful rentals in PCP, and to be one you have to differentiate yourself. A common trap to fall into is seeing a nicely renovated house at a reasonable price tag. Unfortunately, many of these homes are fairly cookie cutter and face extreme competition. The silver lining here is with low barrier to entry and a community filled with amenities, offering guests a listing that can differentiate itself will put you in a position for success.

#10 Stillwater Lake Civic Association - Pocono Summit

Stillwater Lake Civic & Stillwater Estates both benefit from having a central location in the Pocono region. Shopping and area attractions are close by. The homes are affordable. In Stillwater Lake Civic Association, the per stay fee is $75, so be sure to have the WOW factor. Stillwater Estates has its lakefront gems, and has no per stay fee.

#9 Emerald Lakes - Long Pond

Emerald Lakes falls in the middle of the pack. With a central location to area attractions, shopping, the slopes, and the Pocono Raceway, Emerald Lakes has its benefits. With no per stay fee, and a $2500 annual STR fee for full time hosts, you'll want to be sure you plan on committing in this community. I find larger/more expensive houses in Emerald Lakes to fare better as investments. Emerald Lakes is in Tobyhanna Township which limits to 2 per bedroom and 10 guests max. There are talks of restricting the amount of STRs in the community, so stay diligent. Although repetitive, I need to reiterate its the X-factor in your listing that will put you ahead of the competition.

#8 Pocono Farms - Tobyhanna

Pocono Farms earns the number 8 ranking position due to the quality and feel of the HOA and community amenities. As a country club, the expectations are set for the experience. Unfortunately, there is a $100/stay fee. You'll want to be sure to cater to high dollar or lengthy reservations to offset this cost.

#7 Towamensing Trails - Albrightsville

Towamensing Trails is a highly coveted HOA and for good reason. The community has amenities, is STR friendly, and excellent proximity to Jack Frost Big Boulder. With so many positive facets, the key here is being proprietary. There is a $30/stay fee and $5/vehicle registration fee, so you'll want to either search for value to keep the mortgage low, or better yet, aim for a unique home that you can further spice with interior design.

#6 Locust Lake Village - Pocono Lake

Locust Lake Village quickly became one of our team’s favorite locations in the Poconos. Why? The homes are reasonably priced for the size and bones, allowing investors to customize homes with renovation or interior design prior to being able to attract guests at the right price. The community has its amenities, the location is great, and the per stay fee is a modest $30. LLV is in Tobyhanna Township which limits to 2 per bedroom and 10 guests max.

#5 Arrowhead Lake - Pocono Lake

Arrowhead Lake is a long time vacation favorite in the Pocono region. The superb amenity offerings and number of charming listings in the community have led to an established brand vacationers and guests trust. With close proximity to Jack Frost/Big Boulder ski resorts, Arrowhead serves as a premier vacation destination. Each reservation comes with a $35 per stay fee, and guest fees to use the amenities. Arrowhead is in Tobyhanna Township which limits to 2 per bedroom and 10 guests max. Otherwise Arrowhead could find itself even higher in the rankings.

#4 Big Bass Lake - Gouldsboro

With lesser known popularity, Big Bass Lake may come as a surprise at number 4 on our list. There are a variety of reasons Big Bass Lake should have your attention. Foremost, Big Bass Lake has larger lots, creating an increasingly rare serene getaway. Further, the homes come with some of the most reasonable price tags, seriously, you will not believe how far the dollar goes in Big Bass relative to its peers. There is a $50/stay fee, but with the size of the homes and the beauty of the community, Big Bass warrants the cost. Tour Big Bass with us and compare elsewhere, you will not be disappointed.

#3 Camelot Forest/Greenwood Acres - Blakeslee

Another sleeper pick soaring up the rankings is Blakeslee, particular two distinct HOAs Camelot Forest and Greenwood Acres. Being as close as you can get to the ski slopes without touching your face to the snow, the 7 minute distance is among the best. Camelot Forest has a distinct class of homes that will make you drool over the idea of owning one. Greenwood Acres is seeing development by one of the areas premier builders, as is Camelot Forest. Each HOA is small but mighty. Another plus here is the central sewer system versus septic. Septics can lead to high hidden costs, which you will not have to worry about here.

#2 Lake Naomi/Timber Trails - Pocono Pines

No other community on the list yet can compete with the ambiance and feel of a drive in Lake Naomi. The aesthetic of homes, rigid yet warranted community standards, and pure beauty of the area will sweep you off your feet time and time again. Home prices in Lake Naomi come with a heftier price tag compared to their peers. It’s the price you pay, and the price guests will be willing to pay, to experience the Lake Naomi community. There is no per stay fee. You must pay a hefty $4800 in annual membership dues for your guests to use the community amenities. Lake Naomi is in Tobyhanna Township which limits to 2 per bedroom and 10 guests max.

#1 Lake Harmony/Split Rock - Lake Harmony

Lake Harmony and Split Rock share many of the same praise as Lake Naomi. Where Lake Harmony pushes ahead for the top spot is its location. Being only a few minutes from Vail owned Jack Frost/Big Boulder secures the top spot. There is not much more you could ask for from an experience standpoint. The second you arrive at the community, you'll feel not only welcome, but welcomed into vacation mode. Lake Harmony Estates has low HOA dues, but Split Rock has a whopping $4800 per year, so keep these fees in mind.

About the Author

Jonathan Dempsey (JD) is a top performing agent in the Poconos region primarily serving investors to find premier short term rental offerings. JD manages a team of investor agents who source & underwrite STR deals. JD also manages a co-hosting company that handles all STR operations for owners. The co-hosting company grew from JD and his team's love of the short term rental industry, with a focus on being the solution to passive STR investing. JD actively invests in the Poconos region, most recently acquiring a $5M BRRR project. If you're looking for help from a team that lives and breathes STR, treats your real estate journey like your own, and wants to build success together, do not hesitate to reach out.

Web: www.LFListings.com

IG: @LiveFreewithJD

@Andrew Steffens

Guesty has been my favorite among Track, Hostaway, and iGMS. Track was probably the worst experience you could imagine as a platform. Guesty and Hostaway are very similar, but Guesty has better user interface for property owners and more detailed analytics. However iGMS is great for smaller portfolios.

Best of luck!

@Stacey H.

It will be a bit easier if you dial down your criteria first to whether or not the investment aspect or vacation aspect for yourself is more important. The two will likely have overlap in what you’re looking for as guests will want the same.

For the investment side are you looking for appreciation or cashflow? Is there a cap rate you have in mind?

Are there specific must haves such as the beach or lake? Anything more than that? Bedroom count or pricepoint maybe?

These should help you dial in down from an endless amount of options to at least a few markets to choose from. Happy hunting!

@Tyler Solomon

I just had 2 houses over appraise for a client (I'm an STR focused agent), only to find out the DSCR lender they were using is having trouble 1 week before closing because they are using market LTR rents vs. an Airdna projection (which I poor assumed the DSCR lender would use from past experience with these loans).

Nightmare! Hoping we can salvage these deals because they are 13 cap rates

@Tyler Solomon

I 100% agree. Lenders that aim to do loans using market rent as an LTR in the STR market are behind the 8 ball.

Hi Amber, 

You're in good hands with the Short Term Shop.  These guys have been studying the market for awhile.  The conversation definitely boils down to how willing you are to stretch financially with market uncertainty.  A great question to ask yourself before making any purchase.  

If you go with a higher priced higher grossing asset, you're definitely a bit more exposed to both the upside or downside of the market.

Example Using Simple Numbers:

$1M purchase with $10K net revenue and $7K PITI. A 35% decrease leaves you at $6500 net, or a $500 loss.

$100K purchase with $1K net revenue, and $700 PITI. A 35% decrease leaves you at $650 net, or a $50 loss to carry.

The upside of a 10% increase in projected revenues is $1000/mo extra cashflow versus $100/mo.  If you are in a good financial scenario going into the deal and can weather the 35% reduced doomsday scenario, I don't see a reason not to leverage a bit and make the bigger play.  Your risk appetite is totally up to you and your confidence in your asset!