My wife and I bought a Catskills log home 3 years ago as our first investment, before we even bought our primary residence/house-hack in Northern NJ. And boy did we learn a lot the first year on multiple fronts!
Lesson #1: We quickly learned if you underprice your STR listing and allow for 1 or 2 night stays, you'll end up with occasionally really bad renters, who will do damage to your property (we had one group that broke a glass coffee table and left their large dog locked in our bathroom all day while they went skiing). The dog scratched up our door and trim pretty badly.
We now have a 1-week minimum, charge higher prices, and have not had any problems with any of our guests.
Lesson #2: Hire a cleaning person(s) that can handle your rental volume and turnover requirements. The initial cleaning person we used was not well-suited for our needs. Pre-COVID, we often had same day turnovers, and she was always stressed out and calling or texting us about every little thing the previous guests did "wrong". We switched to another cleaning provider, who has a small crew, and that's been relatively seamless for 2 years now. That's what she does every day, so her team get in and get out quickly, and we only hear from them if there is a real problem (which is very rare).
Lesson #3: Make sure you do thorough inspections BEFORE purchasing your STR investment property. We didn't know any better at the time and did NOT check the septic (and the main waste line going on to the septic field), nor did we check the depth of the well. Both mistakes ended up costing us a lot of money and a ton of stress within the first year of ownership. The well turned out to be a 48 ft gravel well that ran completely dry, while we had guests at the house. And the waste pipe under the driveway leading to the septic field turned out to be made of paper and tar and was partially crushed. We only found out AFTER our basement got flooded with waste back-up when that partly crushed pipe got clogged up. Digging a new well cost us $9500, while the emergency plumbing, hazmat cleanup, and repairs for the septic pipe and basement cost us another $5000.
Lesson #4: Don't panic and don't act based on emotion. We were so stressed out after that experience, that we seriously considered selling this property and taking a loss, but thankfully, we put emotions aside and made a list of pros and cons, where the pros clearly outweighed the cons. We changed our mentality from "woe is us" to "how do we improve this property and reduce our stress level? First thing we did was get rid of the dated hot tub that was a big source of headaches for us -- cleaning, maintenance, guest complaints. That alone reduced our stress level big time!
Lesson #5: Make sure you have reserves for emergency cap ex. Luckily, we had some cash saved up when we had to dig a new well or do the emergency plumbing repairs and basement cleanup. The central air furnace went bust around that same time, during a summer heat wave, which cost us another $7500. So all in, we had over 20k in unplanned cap ex within 2 months! If we didn't have the cash, I don't know what we would have done!
We are extremely happy with our decision to keep the property and improve it. We have made a lot of improvements to it as well, which has allowed us to increase our rental income and enjoyment when we stay there. COVID has driven prices up in the area significantly, as folks looked to escape NYC or buy second homes, so we are very glad we held onto it instead of selling at a loss. And the way my wife and I look at it is that the unforeseen expenses and stress was part of our "real estate education", which has made us better, smarter, and more resilient property owners and real estate investors.
