All Forum Posts by: Marcello Di Gerlando

@Robert Jordan

I would suggest taking a different tact. The assumption that more beds equals more cash in your pocket is flawed and is unlikely to turn out true. However, more folks does equal more expenses, more noise, more trash, more cleaning, more complaints etc on top of it being illegal.

If I were in your situation I would ask; How can I differentiate myself from my immediate competition to improve my guests experience?

I might consider replacing dormitory sleeping arrangements with lux king beds instead. Have you considered turning that non conforming room into a games room? How many 3 bedroom STRs have king beds and a games room within your competition? There are any number of creative ways to differentiate. Differentiation which adds to a guests experience is where you will find the additional revenue you seek, simply adding beds is not the right answer for this situation.

Hi Daniel, fellow reservist here. feel free to reach out on Global you know how to find my email. I'm the only DiGerlando.

It sounds great what you are doing for your grandparents. I'm curious what terms you are using to purchase the property with? Traditional financing through the bank?  owner financed? cash? it sounds like the house should be paid off however I hate to speculate. If you can get owner financing with your GPs holding the note you may find yourself in a sweet position.

As far as nightly rates you could try AirDNA.com. They scrub STR data and aggregate it into useful information and charts. Depending on your location the price per month to use their data varies. I think it's anywhere from $15 to $99 ( don't quote me). Some folks use it for only a month or two. I pay $15 a month and keep it live so I can track trends and changes easily in my market.

Scrubbing local calendars on VRBO and AirBnB is an option. You could reach out to STR management companies and coyly edge the data out of them without making any commitments. Evolve and Vacasa are options. Local more traditional property managers may also share the info with you. I would do all of the above until I felt comfortable.

Anymore details about the house? number of beds, baths, amenities etc? 

Good Luck

The market needs to find its equilibrium without the hand of the government. The free market approach would hurt both landlords and residents in the short term. But the tenants of economics and free market capitalism has the capacity to resolve the issue far faster and far more equitably at least in the aggregate and in the long term. When one needs to buy votes and pacification of the masses, bread and circus used to be an option,...today its free rent and a cash bonuses.

It gets easier... simply tell her you have to let her go. Don't draw things out. No need to be callus and no need to explain why. Thank her for all the work she has done and part ways. Its business.

Living in Colorado with a long term goal of possibly moving back to NH I will be following this thread. No special insight from me. listening with interest.

@Collin Hays

Neat Idea. 

I think what you have planned is more akin to the co-working / shared office space model like We-Work or Regus rather than the STR model. Both co-working and STR are ultimately real estate plays but the similarities seem to end there.

Having played in both the co-working space as a consultant and then director of operations for a $12MM project and operating my own vacation STR and other real estate assets I will share some insights.

first off, I don't want to throw cold water on your idea because it sounds very innovative, but immediately some concerns come to mind and a few ideas of my own are also sparking. 

Foremost - I would look at the co-working model not the STR model. You have a 'co-playing' model here. I doubt using STR assumptions for any of your pro forma's will be meaningful.

Competition - I don't know if anyone else is doing what you are trying to do but identifying your competition is something I assume you have already done. Some cities have tax payer supported community sports centers. What about the YMCA haven't they been doing this for years?

Software - There are several off-the-shelf software suites you can look into for co-working space's. The one I used for my co-working operation was expensive and not so great. However, for the way I envision your model progressing I would consider something like 'Fairharbor' for online scheduling of activities and 'wherewolf' for digital liability waivers. Both of these applications play in the adventure tourism space and are free-ish.

Concerns- Making a return on your investment with a new build sounds like a very tough proposition. Selling the property, if you are forced to, also sounds tough. Who is buying these types of places? 

Third party opportunities - Your idea sounds like it could open up a whole string of third party partnerships from advertising to lessons to retail and much much more. My intuition tells me the secret sauce of your model is with third party partnerships.

My comments are only meant to generate thought and not to crush dreams. The most successful folks I have known started with seemingly crazy ideas and risked it all to make them come true all the while nay sayers in bleachers were tossing flour and eggs. I wish you good luck and spectacular success. Please keep us updated.

Im with Joe on this. I get that sticking to a niche can get you to focus but Joe's rationale is wise. Not by any stroke of genius I have operated in several niches and done okay in all of them. I go where the deals are. I have done fix and flips, HML and STRs in the past 3years. We also have LTRs and commercial in our portfolio. I would not shy away from new builds, apartments, land or storage in the furure. Playing the field like this just means you need to broaden your knowledge and build relationships with experts in the field. Dont be afraid to spread out just understand your risk. GOOD LUCK.

I would not default to 50/50 without further analysis. 50/50 does not equal win-win. You need to find win-win.

If I was involved on either side of this I would structure it with exposure and risk well defined. Ask yourself how can this go south and who is likely to lose what and when? war game the worst case scenarios. Ensure you factor in time. Does it go south on day one or on year 5? If you find that one of you is more exposed than the other, that partner deserves a largre stake. Depending if your partner is on the note or not will make a huge difference. 

You need to be clear if his portion is a debt or equity position. Or maybe structure it as a portion of debt and a portion of equity. Im not making recommendations just floating ideas. 

Senario 1: If I was your partner I would probably do both equity and debt. Secure my note as a  comercial loan to you in second postion with no less than 12% interest rate. In this scenario 50/50 dosent make sense. You would need more of an equity stake. Income would be split relative to equity position. In a foreclosure situation I would have some recourse.

Senario 2: If I was fronting the 100k for a down payment without being on the note or using the property to secure my investment I would be over exposed. I would have to rely on you to execute on everything. If you couldn't mange properly or pay the mortgage I would be up the creek without a paddle in a foreclosure situation. In this case I would need more than 50/50. Income split relative to equity ( I  would never engage this senario)

As always these are just on the fly ideas. You have some analysis ahead of you. Just don't let it paralyze you

Good luck

Most of the STR folks posting on BP with true vacation rentals - beach, mountain etc are out performing previous years. I concur. However, urban STRs are not reporting the same boom. The sweet spot seems to be secluded or semi secluded vacation homes that are within a days drive from major US cities. What you describe sounds juicy and ideal for an STR. Pump the breaks, everyone is going to caution you on STR regulations for the town you select. Pay heed, do your due diligence. STR laws are a moving target and can turn you sweet deal into a dog over night.

I have lived in the Springs 10 years and have gone through this multiple times. I eventually upgraded to a DECRA stone coated steel roof 5 or 6 years ago. Remember the 100 mile an hour baseballs from hell in 2018 that killed some of the animals at the zoo? we are not far from the zoo. My roof survived, no one else in my neighborhood did. Gutters did not survive. My roof also survived the most recent storm on 5AUG. My truck did not.

Class 4 shingles are the storm resistant shingles recommended for hail...However, no class 4 shingles survived the last two storms in my neighborhood.

Keep in mind, most contractors cannot do DECRA unfortunately. They will tell you they can but be cautious. I recommend getting references before they start. Insurance will give you a discount if you have stone coated steel. However don't buy into the insurance companies additional 'cosmetic damage' discount pitch. Its not worth it; I have only heard horror stories. Expect to pay more for stone coated metal. 

Did you sign with your contractor to hand over the entire insurance check already? I hope not, it is the most used tactic for ambulance chase roofers. If so find a way to get out of it.

Reason I ask is that you will get a much better deal if you get several contractors to compete for the job and demand DECRA. These folks get very hungry when the storm damage jobs dry up. They start eating each other. I got my roof at a significant discount by forcing the competition.

If you have more specific questions reach out.