All Forum Posts by: Luke G.

My guests this weekend were not great either, but you win...However I may win on the stupidity level.

@Paul Sandhu this one's for you.  My cabin is on Lake Superior; very isolated and really in nature, I have a couple neighbors that are somewhat nearby but it's very private.  Group of people from Minneapolis were there for the entire week.  I get a text, "There's a big dog outside scaring us and we can't leave the house."  Expecting the worst, I tell them to send me a pic so I can ask the neighbors, thinking who's Rottweiler is running around?  He sends me a video...of a 9 month old golden retriever puppy wagging its tail at the door while two people in his group are sitting in their vehicles too scared to get out.  I try and explain that they're known for their friendly personality and willingness to please humans, but I will find the owner.  Owner comes and picks her up and all is right in the world, until the next morning he said they have bed bugs...

Fearing the worst I let my cleaner know and the plan is to get everything sprayed and I'm almost to the point of cancelling my next guests.  I tell him to send me a picture, he responds with a picture of a tick.  I explain that is a tick, not a bed bug.  You picked it up from outside likely, that it is remote Wisconsin and ticks are part of the deal when spending any time outside.  I'm hoping they don't bother with a review...I can just see it now "bed bug infestation and rabid wild vicious dogs running all over the place."  

In my STR on Lake Superior I have a separate room for fish cleaning and a cutting board to do it outside in the summer. I even have a Traegar up there so they can immediately smoke lake trout and salmon if they so choose.

Generally it does require beer to clean them as well when we're there.

Not a STR rental story, but I was elbow deep cleaning a wild turkey I had shot one morning in high school. A Jehovah's Witness stopped at my house and he just couldn't resist himself with his question. "Did you get a turkey". I just smiled back and I think the magnitude of the stupidity clicked and his face showed it.

I'm guessing that didn't go how you thought it was going to go...

Hey @Michael Baum great minds think alike.  I'm bringing up a custom made 12' long dining room table with bench seating and tossing the one that's currently up there :)  

I finally was able to get a professional photographer into the cabin, he will come back again once it greens up but I think it looks a lot better since he was there.  Let me know anything else you'd change on my listing.

Lake Superior Lakefront Perfect for Large Groups! - Houses for Rent in Herbster, Wisconsin, United States (airbnb.com)

I ended up taking @Marcello Di Gerlando advice and leaving it as one large unit.  I pretty much went bullet point for bullet point on his list earlier in this thread and now I have a cash cow.

Nobody has balked at the large cleaning fee, I have dropped it when they're only using one side of the house, but only offer it if they request it for smaller groups.  I don't really think I've missed out on any bookings as I have been booked every weekend since I went live in December and don't anticipate any weekends that won't fill up.  I've had several guests stay 7+ days during the winter which was likely a covid bump, but I've had a couple groups of ice fisherman too.  I may have left some money on the table for peak season in the summer, but most weeks are booked at 500+ night and I'm ok with that.  

Thanks everyone for chiming in on this, it's turned into a home run deal.  I paid 325k, put about 35k into new flooring and furnishings and was re-appraised at 495k, leaving me with a new line of credit for 155k to buy my next deal.

I have ROKUtv's throughout my lake cabin.  I do not have any subscriptions or even local channels, I have excellent high speed internet and they can login to whatever service they prefer.  I've only been rolling for 4 months, but I've yet to have anyone say they weren't happy with the set-up.  

@Jillian Peterson

The city of Duluth significantly restricts the number of STR applications, it's tough if you're not grandfathered in. Another area you should consider looking is on the Wisconsin side. I have a large Lake Superior cabin about an hour from Duluth on the south shore in WI and do very well, Bayfield county in general is a lot more accommodating of short term rental applications and they welcome the business to the area.

1.) I just opened up a HELOC on a 2nd home that I do STR; LTV is at 90%. Shop around with local banks and portfolio lenders, big national stuff will not look at you.

2.)  If he "gifts" it to you, make sure it's in there for at least 2 months, bank's don't allow gifting down payments.  But they generally only go back 2 bank statements so as long as they don't see the transaction you'll likely be ok.  An easier way would just be to let your father have an equity stake in the deal and then underwriting will get infinitely easier for you.  The bank will likely not allow him to hold a note as the down payment when you purchase something, they will want a little skin in the game from you.

@Philip Cook- it isn't been a money issue, it's a time and weather one.  

Dates for the particular one I've hired just haven't worked out; he lives up there so trading a few free nights would have little interest to him.  Even if I let him stay there for free for a 3 nights stay that would end up costing me 850$'s, 3 nights @200 and a 250$ cleaning fee even if it was during the week.  It makes it more complicated as my cabin is east facing so we need a sunny morning when the cabin is clean.

I have no open nights in February, but several promising weekday dates in March so I'm confident they will get taken within the next 6 weeks.  It hasn't appeared to matter much yet as interest has been insane, but I know long term it will.

Investment Info:

4400 square foot cabin on Lake Superior overlooking the western Apostle Islands 

Purchase price: $325,000
Cash invested: $60,000

Post-Renovation Appraisal: $495,000
Post-Renovation LOC: $154,500

My wife and I had frequented this area since we were kids. We wanted to begin adding a few STR's to our LTR portfolio. This oversized cabin was exactly what we were looking for. There were no large cabins in the area and the rental demand for the area was excellent in this remote part of WI.

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

We had been frequenting the area and thought it was a niche market to have a house that could sleep 18 people comfortably.

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

It was listed on the MLS, but had started out way too high and had been listed on and off for the previous 10 years. It was originally listed for 500k and eventually was at 340k; we settled at 325k.

How did you finance this deal?

10% down 2nd home program, with the intention of renovating it immediately and be rid of PMI.

How did you add value to the deal?

It was not a complete gut, but I had about 30k worth of renovations into it which I did mostly myself and some help from friends/family. There was a rough-in for an additional tub and it was incorrectly listed as only a 3 bedroom, when it was really a 4. I framed in an additional shower, replaced 4000 square feet of flooring with LVP to hold up to rigors of STR, removed 50 gallon electric water heater and replaced with a 75 gallon LP unit, completely renovated both sets of stairs, added additional railings to bring up to code, new trim throughout the house, added automation with thermostats and locks, and also furnished it via secondhand stores with some new items.

What was the outcome?

The original broker's opinion to drop PMI came in at 458k, I decided to order a full appraisal for a LOC. The full appraisal came in at 495k, which allowed me to open up a 154k LOC against the property. I currently have the next 6 weeks booked up for an average of 220$/night; and have about 1/2 of my peak season booked up averaging 500$/night. It should conservatively cash flow 1500$/month. I've had 6 guests stay so far and have given 5* reviews, I'm still working on automation with cleaners and schedule's, but it's getting there.

I decided to not completely refinance as I would rather have access to the LOC and didn't want to go through the nightmare of underwriting again as it is a pain for conventional financing with my long term rental portfolio and I have cheap (3%; 30 year locked) debt on this property already.

Lessons learned? Challenges?

Logistics can be a nightmare when you are in a rural area.  I pay more than most for handymen, cleaners, electricity etc... but the payoff can be massive.  

I still need to get a professional photographer in the building as my AirBnB and VRBO pictures are less than ideal, but schedule's haven't worked well with adequate sun and not having people in the cabin.  I included a link to the completed project.  

Lake Superior Lakefront and Large Group Getaway (dog-friendly) - Herbster (vrbo.com)