All Forum Posts by: Michael Porche

Quote from @Kevin Reinhardt:

Hey everyone.

Looking for advice on how to evaluate some potential str properties. I have some long term rentals and want to diversify.

I'm looking in a popular beach area in manitoba. There are a lot of air bnb properties already there so I can look at those to try and figure out a nightly/weekly rate. Sites like airdna don't have data on this area yet.

I'm wondering what everyone is doing to estimate or figure out their projected Occupancy rate? This way I can take that and my projected nightly rate to do a cost analysis on the property. Also if anyone has come across random or unique cabin expenses that one wouldn't usually think of feel free to drop a note in here too.

Any and all insight would be welcomed.

Thanks in advance.

Kevin

Hey Kevin! I am curious on the fact that you mentioned there is a lot of airbnb properties but airdna is not there yet? Well I would look at each one that share similar amenities to yours and see how often they are booked out in their calendar and then look at some nightly rates. If they are on airbnb at all I'm sure airdna has some data on some individual ones. I'm assuming this is in Canada?

@Britney Allan 

Great question, Britney. I feel it depends on the area where you invest and what your overall goals are. STR can be more lucrative in certain areas, but also comes with a lot more of a need for knowledge and business savy techniques to be very successful. However, in some markets, you can get lucky and just throw one up and do very well! LTR is a lot more passive and less constant touching with your property and with your manager if you choose to have one.In regards to the condo and/or house... Well, that completely depends on who is traveling to the area to stay at those locations and why are they staying. the HOA's are usually more strict when it comes to condos of course. That is something to consider.

@Mike DowneyHmmm this is a hard one to judge based on the information you are working with. To be honest, depending on your goals, if it's to generate strong cash flow I wouldn't personally invest in Panama City Beach. Unless you are buying a very unique product to where there will be more demand in comparison to supply. Currently the products (SFH & Condo) you are referring to are very saturated in Panama City Beach, and your cash flow numbers will not be as strong. Now if you are looking to invest there to also vacation there and looking to break even, that is a different story. However, there is really good data you can use, like the key data dashboard down there. They have REAL numbers they source through property managers to get real time data. Way outperforms airdna

Hey @Murray Reginald, I actually just answered a similar question like this earlier. so I'll repost what I wrote and told him. Hope this helps:

1. You need to check the comparables AirDNA decides to use and pull from to make sure they are 1) similar location in proximity. 2) like the property in terms of natural amenities (views, waterfront) and amenities you can put in yourself (hot tub, pool etc).
2. Next you need to make sure you the data/comparables airdna is 1) pulling is good data. Meaning you want to make sure the data has reviews that is aligned with the amount of revenue it is making. Meaning if there is only 5 reviews but it says the comp made 200k.. well that might be telling airdna pulled bad data and you cant use that comp. 
3. 2) Next is you can check the calendar of the comps it pulls and see if its random blocked days or if there is any uniformity. This also may mean airdna is reading the blocked days that someone blocked as reservations.

Hope this helps!

John! Great question! So there are a few things you want to check here.

1. You need to check the comparables that AirDNA decides to use and pull from to make sure they are: 1) similar locations in proximity. 2) like the property in terms of natural amenities (views, waterfront) and amenities you can put in yourself (hot tub, pool, etc).
2. 2.) Next, you need to make sure the data/comparables are: 1) pulling is good data. Meaning you want to make sure the data has reviews that are aligned with the amount of revenue it is making. Meaning if there is only 5 reviews but it says the comp made 200k.. Well, that might be telling you that AirDNA pulled bad data and you can't use that comp. 2) Next, you can check the calendar of the comps it pulls and see if there are any random blocked days or if there is any uniformity. This may also mean AirDNA is reading the blocked days that someone blocked as reservations.
3. 3.) I would use your own analyzer instead of airdna. To make sure you have everything accounted for in terms of expenses. Let me know if that helps

If you need an analyzer I can send one your way!

Quote from @Steve Uekert:

Happy Wednesday everyone,

I have a question that I've been pondering. After sitting on the sidelines for a long time, my wife and I are finally moving from interested, to serious in our pursuit of a STR. We're likely going to be staying in our backyard (so to speak) of Orlando for our first since we can learn and be close to it before we start out of state investing.

Anyway, my question revolves around the size of home, but it's not from a typical angle I think.

In this market, it seems like the larger the property you can afford, the more you can expect from cash flow. This of course assuming you have the right theming, manage it great, etc.

So as a loose example, a 5 bed home might get revenue around 50 to 60k a year, a 10 bed home has the potential to earn a couple of hundred thousand a year. I know these figures depend on a lot of things, but I've seen research from quite a few properties and they all seem to point to the same thing.

All of that might point to "get the bigger house" but my concern as a newbie is, what about a recession?

If we assume we're looking at recession over the next year or two, the first thing to typically dry up is peoples discretionary budget so trips to Disney get postponed or cancelled altogether.

Therefore, from a planning perspective, if the STR market dries up or slows WAY down like it is in other markets, it would seem to be to be an easier thing to potentially shift to long term rental for a year or two if you were renting out a 4 or 5 bed home, versus trying to LTR in a 10+ bed home.

I'm just looking at this from a strategic perspective and trying to play this as smart as I can. I know there will be risks regardless, but I'd like to try and mitigate as many as I can as smartly as possible.

Or maybe I'm just over thinking this too much.

I would appreciate any thoughts or feedback on this.

Thank you everyone!

Steve

Yo Steve! First of all, great questioning and line of reasoning. Now, I'd say there is a lot to unpack, but I'll try my best to help clear up a little.First: Size of home is not the greatest factor in determining cash flow.

Yes it can be a factor due to how many people it can sleep at times. Meaning larger groups of people need more accomadation so there for willing to pay more.

However the 2 largest items that corelate with increasing revenue is 1) LOCATION. 2) EXPERIENCE/AMENITIES. I have studios that out perform 5 bedroom houses in the same market because of how strong 1 & 2 factors are.2nd: Timing recession. If you look up on google the average time a recession will last is 10 months.

That means, if you are atleast cash flowing. I wouldn't worry as much about is today the right time, but rather just find a strong deal! If you do, then the recession will be over before you know it.3rd: I would consider going out of Orlando... it comes back to what your goals are. If you are getting in this game for financial freedom, time freedom, then investing in your backyard may not be the best fit if you are aiming for cashflow. Now that doesn't mean you can't find a good deal in your backyard... but I'll tell you my first deals were out of state and they have caused me financial freedom in the long run!

Hope this Helps!!!

Hey @Paige Harrison, Now I'm not a CPA or attorney so take this with a grain of salt. My recommendation would be going into an LLC. LLC fillings for taxes vary from CPA to CPA. However it gives you a layer of protection where insurances don't cover. That, and if you form it correctly you can save more on taxes year after year. That and I don't think you would be restricted to commercial insurance coverages. or at least its doesn't have to be more expensive.

I have varied insurance products on my properties and they are relatively the same depending on what type of coverage I am getting. Also getting a 5million dollar umbrella is EXCESSIVE. Most insurance agencies to my knowledge wont do this for a residential property for STR and it will be very difficult to find because it appears too risky for them. I tried finding a 3 million dollar umbrella and that was almost impossible and had to structure things a different way.

I hope this helps!

Hey @Christine Cho! Yeah it seems at odds... I would likely go for the one that requires less work. Ultimately, I imagine you are investing this way and on here to build wealth and financial independence. Well, normally we do that for time freedom. So I'd vote for the least headache and less management so you can focus on investments or other focuses to either build your wealth or enjoy your time with what you love most.

It is understandable that you would want to explore other options to make sure your guest can continue their stay with a lease agreement and save on the Airbnb platform fees. 

However, I agree with the other commentators. It is definitely important to vet potential tenants in addition to what Airbnb does for its guests. This could include conducting a background check, financial history, reviewing credit reports, and ensuring references are valid.

Creating a month-to-month lease with a security deposit is a great option as it allows flexibility for both parties. Depending on the state you live in and the specific terms of the lease agreement, you may need to give 30 days notice before ending or terminating the lease agreement.

I see this a lot. Being this industry has on wide scale been around for 10 year, the golden years are just beginning. I think that overall STR's aren't going away, however the ability to make money on them differ from location to location. It used to be that you can buy them almost anywhere and do very well. Now that airbnb is mainstream, you can't just buy anywhere. You have to be very strategic with where you buy. The number 1 driver of revenue from short term rentals is location. The 2nd driver of revenue in STR's is amenities. These are both huge drivers. So if you know how to invest in the right amenities in the right locations that can significantly boost your revenue in addition to the location. ..I personally wouldn't switch to MTRs. The reason being is because now I am focused on 1 or 2 job vocations. However that is heavily dependent on your location and where you invest. What are the demand factors for travel and the supply count for places to stay. What are the demand drivers for MTRs. Either way MTR's are becoming just as saturated in areas due to people just buying property and hoping a strategy works