Hi,
This is my first time posting on here. For some context on where I'm at, I'm brand new to real estate investing. I've watched videos (like Robuilt), listened to podcasts (like Bigger Pockets and the Short Term Show), and read some books (like Avery Carl's), so I know a bit in the abstract, but as yet I lack first-hand knowledge in terms of doing it yet. So I'm looking to invest in my first STR. I live in Florida but I'm interested in investing in an area like the Smokies, the NC High Country, somewhere in that general area of the country. I've saved up $50-60k for this project. My plan was to purchase my own place, which is still a possibility, but now I also have this other opportunity that appears to have a lot of potential and I'd appreciate your feedback on it, whether you think it's a good idea, too risky, or what.
A couple months ago I met an Airbnb Superhost in the NC High Country (near Boone). His Airbnbs look great. He owns two, runs four (his own plus two for his parents), each with a 4.9+ star rating (each ranging from 100-300+ ratings), and he tells me their units are booked at 95% occupancy year-round. They're all auxiliary structures, mostly tiny homes/cabins, plus this shed he converted into a beautiful unit. He's done much or most of the work on these himself. So he's experienced and very capable. I liked the idea of possibly having a mentor for some on-the-ground guidance as I embarked on this journey so I was talking to him about possibilities and maybe even going in on something together. He said he'd been thinking about doing some geodesic domes. Something along those lines--glamping tents (got the idea via early Robuilt)--is what I'd had in mind early on in my education journey but then I liked the idea of getting a permanent structure since it's an appreciating asset, but I'm willing to adapt to another scenario if it's a good opportunity. Plus, I do like that domes have the potential for lower cost, higher ROI, which seems esp. attractive as the first phase of my STR journey, since then I could take that income as a big stepping stone toward purchasing permanent-structure STRs.
But he is in a unique situation. His parents own 60 acres, and his parents' children and their families (including my potential partner and his family) live in various places on that property, and they construct their Airbnb units on this property. So it's not legally his own property (or at least not solely his own), and he can't give me permanent access to a unit on the property. He talked to his parents and they're on board with the dome project. The idea would be to build three domes (nestled nearby his other tiny homes, with great panoramic views), with the cost of the whole project split three ways (his cousin is also interested in investing in the project). After he crunched all the numbers, seemingly accounting for every detail of the building project based on his experience, and talking everything over with the county--each dome would be connected to the power grid, internet, running water, etc.--the total projected cost came to $60k per investor. So if I were to invest $60k into this project, one of the domes would be "mine" for a five-year lease, and all the income for that dome, minus expenses, would be mine to keep during that five years. Given dome comparables in the area ranging from $150-450 per night, he's projecting $250 per night and 80% occupancy, which projects each dome grossing $73k per year, and after expenses me netting about $65k per year. So basically this would project me getting all my money back the first year and then multiplying it by four over the next four years, which sounds fantastic. I would also get guidance and experience for all the ins-and-outs of how to run a successful Airbnb, and build up my Airbnb profile (I don't yet have a host profile) for the future. So this would all be the potential gain.
But here are factors that cause me to hesitate. I don't yet quite have the $60k for the project, though I'm close and could probably get there soon. I'm also hesitant in that in the case of domes I initially didn't want to invest everything I had, but something more like $30k. I'm hesitant to invest everything I have into something I can't call my own, or at least half my own, in which case I know I would have access/rights to the property to do whatever I needed to do to make it successful. Obviously, in the case of the domes, we would write up a contract and I would have a lawyer look it over, but as of now I have no experience at all in this kind of thing and so I'm not sure if the law would cover me, or to what extent, if something unforeseen were to happen, like if we were to somehow have a falling out. Since it's their property, they could, for example, theoretically not allow my Airbnb guests to use their roads to make it to the dome, not allow cleaners to clean the dome, etc. And these are just a couple horror scenarios I can think of (I'm sure there are others I can't think of). Don't get me wrong, I definitely have a good impression of my would-be partner and his character, but neither do I yet know him well enough to have a high level of trust--so on that front the trust is still kind of nascent/neutral. Obviously, from that vantage point, not enough trust to risk everything I have on it. So if I were to do this, at the very least my legal rights would need to be airtight. Though I'm not sure that's possible in this kind of scenario (?).
So that's basically the situation. I'd love to hear your advice on whether you think this a good idea and worth the risk, a bad idea and not worth the risk, or what? Thanks! (And sorry this is so long. I really appreciate you taking the time to read it!)
-Justin
