All Forum Posts by: Mike Shemp

@Paul S.

We have found smaller groups of guests cause less damage than larger groups of guests.  Maybe it's coincidence, but anytime we have a larger group there was always something broken when they left.

Mike

@Casey Lodes

We have a cottage that is oceanside in the Outer Banks. We have unobstructed ocean views because all the homes in front of us were taken by prior storms. This cottage was our 1st STR, so I was totally afraid to take the plunge. Here is what helped me, and what I have learned about beach properties:

1.  We went into the deal with an extra large operating expense budget.  Even though I know I wasn't putting that excess cash to work in other investments, sometimes there is no better investment than being able to sleep well at night.  So we went into the closing with still extra cash in our bank account.  I'm very glad we did as there were some things the home inspector missed that needed to be addressed, so this strategy worked for us.

2. Maintenance is much higher at the beach.  Being anywhere near salt water makes everything wear out quicker (anything not stainless steel or brass), HVAC systems, etc.  In your spreadsheets make sure you have accounted for extra maintenance depending on how close you are to the ocean.

3.  If you are in an island setting, check how the local government handled Covid and if they were or were not allowing non-resident owners on to the island.  Something important to know should this ever come up again.

4. We have lost revenue several times due to storms/hurricanes coming to the Outer Banks where there was either a state of emergency called, or our guests were not comfortable staying.  In either case we give refunds for any nights that couldn't be used.  But you could also have a situation where a storm PREVENTS access by guests to your area, so you need to factor in that potential lost income as well.  We mitigated this by paying extra on our insurance policy for income loss.

5. As for flooding, our home is elevated so it's less of an issue.  If the area floods and can't be used, we would rely on the insurance policy / income loss we are paying for.

6. If you area is seasonal, you may find that smaller homes rent year round, and the larger homes are more seasonal.  This is because huge groups of people aren't getting together in the winter to go to the beach and stuff like that.

Hope that helps!

Mike

@Nicolas Mayta Canlle

I could be wrong, but many of the traditional lenders I have worked with require 25% down for a short term rental.  Also I believe traditional lenders are going to want to see that you have additional money set aside for operating expenses.  

Also, if this is your first short term rental you may want to budget extra money for your operating expenses to help sleep better at night to handle any unforseen issues that may come up your first year.

Hope that helps.

Mike

@Julio Chacon Jr

We choose vacation markets, and then pick the areas that we like to personally vacation at ourselves to take advantage of function stacking.  Function stacking is a term I'm borrowing from the permaculture world where it means one thing can serve multiple purposes.

This way while we are visiting the area, learning which neighborhoods we like, don't like, doing research, etc. we are also spending time in a place we genuinely want to spend time in anyway.   Then if we do end up buying in this market, when we visit these homes to do maintenace in the future, we are again spending time in a place we genuinely like to visit.   And for the worst case if we decide not to buy in that market, we also spent time in a place we enjoyed anyway PLUS you would have gained some experience when interacting with locals, realtors, and other folks which will set you up for your next market you are interested in.

Hope that helps.

Mike

@Kiran Dhaliwal

I agree with @Rick Reeder.  If you are going to do it, make sure you have had all the difficult conversations up front.  One way to do it would be to list out every question you can think of, and then setup a series of calls/meetings with your partner to align on them all.  Once done, have an attorney help you with an operating agreement, identify any other issues/questions that need to be discussed, and make it all legal, signed, etc.

Going through the above process is a win-win no matter what.  If the partnership falls through because of the difficult conversations you are having, you just dodged a bullet.  If it goes through, you have a good operating agreement in place should issues come up.

Hope that helps.

Mike

@Steve Puglisi

My thoughts are that running vacation rentals remotely is not that hard, and you may want to give it a try.  \

If for no other reason that if you do delegate these tasks to a PM you'll have a really good idea if they are doing a good job or bad job, and know what questions to ask, things like that.  

You may find it harder to have those kinds of conversations with your PM if you are not intimately familiar with all aspects of running a STR. Plus there are several automation services that make the work easier than ever.

Hope that helps.

Mike

@Gary Christensen

We're in a similar situation.  We're working our W2 jobs, but building up our short-term rental portfolio to hopefully escape the rat race.  We started 5 years ago and we have 3 properties that are short term rentals that we manage remotely 7 hours away.

We decided we wanted to do short term rentals instead of long term because they seem to have higher cash flow, and we were willing to accept the additional work and risk involved with them.

Some advice to consider:
- To help sleep better at night, go into your first deal with some additional emergency savings for anything unexpected that you didn't consider.

- Purchase unique, vintage, higher quality furniture on Facebook Marketplace, estate sales, and garage sales instead of buying cheap stuff from the big box stores.

- The automation services such as Hospitable, Pricelabs, etc. are worth it in my opinion.  

- Build a good team consisting of your cleaner and handyman.  After that look for a good electrician, hvac, plumber, and appliance person.  Pay them as soon as you get their invoice and treat them like gold.  

- When you find yourself not sure what to do with a guest situation, just ask yourself "What would I want the host to do for me if I were the guest?"

Hope that helps get you started!

Mike

@Kelly Leithner

I also agree with @Billy-Dee Greenwood.  We use the Schlage Encode locks and really like them.  

We used to have physical keys and the lockbox would get frozen in winter, or people couldnt open it, etc.  We have been very impressed with how easy they are to install and setup.

Mike

@Cody Brookes

You might want to spend some time on Airbnb looking for a home with similar bedrooms, bathrooms, and amenities that your home has....and then literally going week by week, month by month, looking at how many bookings they have, what rates they are charging, etc.  Do that for a few homes to try and get an idea of what the yearly estimate will be.   As their entire calendar is not likely to be totally booked, you might have to come back over the next few months to check how the occupancy is going and the rates to help get a more detailed picture.

Hope that helps.

Mike

@James Colgan

We have a SFH on the beach road in Kitty Hawk. We have unobstructed views of the ocean because all the homes that used to be in front of us are gone now...due to storms. We generally shy away from condos because of the reasons that Rich Dad Poor Dad outline with limited ability to increase their value.

Mike