All Forum Posts by: Mike Shemp

@Sarah Hylander

We have a short term rental in Kitty Hawk.  Here are my thoughts along with "What I wished I knew before I bought in the Outer Banks".

1.  The "off season" seems to be getting less "off which each year.  November to January are slower, but we still get plenty of bookings and seem to get more each year.  May through September are the high demand months.

2. It feels like a more mature STR market. Homes have been rented there for a long time, there are local county taxes that get collected on the STR revenue, etc. so hopefully that means less regulation since its well established. I did hear Nags Head wanted to have some regulations, but not sure where that went.

3.  Maintenance is much higher.  Being anywhere near salt water means things wear out faster.  

4.  The local government prevented non-resident owners from getting to their own houses when Covid first happened.  It is my understanding that some of the owners won their lawsuit against the county to prevent that from happening again, but something to note.

5.  Some areas prone to flooding during storms.  Less of a problem if the property is elevated on pilings.  You may want to drive around the area you are interested in when its raining really hard to get a sense if the property/immediate area has an issue.

6. Hurricanes area so you have higher insurance premiums, plus potential loss of income if roads are damaged.  For this reason we pay for income loss with our insuranc plan in case we are down a month due to a storm.

7.  I think smaller homes have a better chance of year round bookings.  Larger homes have a better chance of higher nightly rates and revenue during peak months.  The reason being that groups of 10-20 people usually aren't getting together as often in the shoulder/off-season to go to the beach.

Hope that helps!
Mike

@Carmella Lombardi

Congratulations on closing your first property! 

I can give some thoughts on #2 and #3 as we don't do long-term rentals....we do W2 jobs and are Airbnb Superhosts with 3 long distance rentals (7 hours away).

If you are doing long term rentals, you are in the landlord business and if you do short term rentals you are in the hospitality business....each area also has diffrent laws. Also the amount of time required of you, and cashflow are different for both. Som people say short-term rentals require more of your time, but you get better cashflow, and are a little riskier because towns can bring down STR regulations that will impact you.

The ways to help mitigate that is to use automation software which helps drastically reduce the time involved with an STR, setup a good team (cleaner, handyman, plumber, electrician, appliance, hvac person), and have an exit strategy if short-term regulation does come to that area. We don't host people in our home, and only host people in our 3 remote STR properties...while we work W2 jobs during the day. We use the W2 income to help fund purchasing the properties, and future properties.

Hope that helps.

Mike

@Chad Dembinski

We managed 3 properties that are 7 hours away from us.

The key is to have a good cleaner and good handyman.  For extra insurance, you may want to start giving 10% of your bookings to another cleaner to establish a relationship in case anything happens with the 1st cleaner.  You may want to do the same with the handyman where most of your calls go to your main handyman, but once in awhile use another one to establish a relationship.

I have also heard of people using storage units near their properties to store spare TVs, routers, fridges, AC window units, washers, dryers, etc.  We may do something like this in the future so that we don't have to deal with the chaos of getting a new one when these items wear out...usually right in the middle of a guest stay.  :-)

Hope that helps.

Mike

@Isaac Sanchez

Some questions to consider:
a.  Will the hot tub increase your bookings if you do not increase the rate, and therefore give you more revenue for the year?

b.  Will the hot tub let you increase your nightly rate, and also increase the bookings you receive per year?

c.  How will your expenses be impacted? Will your insurance go up? How much will chemicals cost? How much will it cost to pay someone to maintain it for you? Are there any local building codes that will require you to fencing or signage around it?

Once you know the answer to a, b, and c then use an Excel spreadsheet to figure when you will get your money back from the hot tub, and when does it become an asset in the sense that it is putting money in your pocket, and how long will that last factoring in the life of a hot tub?

Besides all the Excel calculations, for me if your property already has an unfair advantage or something unique to it that makes you stand out, maybe a well-planned marketing campaign could achieve similar results instead of investing in a hot tub to increase bookings?

For us our markets we are in we do have guests looking for hot tubs, but we just don't want the extra hassle of a hot tub.  If in the future our market gets more saturated and marketing campaigns don't get us the numbers we're looking for, then we might consider it.

Hope that helps a bit.

Mike

@Ryan Cummings

I think the answer will be "it depends".

For us, we have found that when we host larger groups of people there is more damage to the home and more issues to deal with.  We manage remotely, so minimizing issues and damanage is a higher priority for us than if we could get more money by allowing more people to stay.

One issue with larger STRs is you may have more difficulty renting them in the off-season or shoulder-seasons.

One issue with smaller STRs is you may not get the same amount of revenue as a larger STR during peak.

I think my point is that if money is the only driver, than a larger STR may make sense. In our experience the smaller groups have been easier to manage (knock on wood).

Hope that helps.

Mike

@Joe S.

If you are looking for someone to purchase furniture, supplies, keyless lock, and set that up for you...then you might be able to ask your cleaner, handyman, or combination of both.

If you are looking to determine if a home in a given market will make a good STR....I like to do that research myself. This usually involves driving around the area I am interested in, at different times of the year and times of day, to get a sense of what kind of neighborhoods they are, flooding, seasonal access/closings, etc. and then researching Facebook groups for that market where guests are looking for homes to see what they want (ocean view? hot tub? pool? privacy? access to a specific attraction?).

When I'm looking for a STR, I'm looking for a home with an "unfair advantage". Maybe it is something that makes the home "Instagram-able". I want something I can market that will give me an edge, especially in a saturated market.

Hope that helps.

Mike

@Ben Scarborough

I guess one way to compete against an all cash offer would be to add more risk into your offer.  This could be done by having no contingencies at all (financing, inspections, etc).  

Again, this is risky for the buyer, but may give your offer an advantage to the seller over an all cash offer if that all cash offer has contingencies on inspections and things like that since it gives the buyer a way to back out.

For me I would not do this unless I was certain I wanted the property, and certain I would get financing because if for some reason that falls through then the seller would be able to keep your earnest money....not sure if that varies by state so you would need to speak to your local realtor about the risks of making a no contigency offer.

Hope that helps.

Mike

@Lucas Bubb

Try to find any Facebook groups for owners of short term rentals in the Poconos area.  Join the group and see who people recommend for your cleaner and handyman.  While you are there, try and also get contacts for an appliance person, electrician, plumber, and HVAC person. 

One thing to consider with the cleaning person is to utilize 2 cleaning people.  For example maybe give 90% of your bookings to one cleaner, and 10% of your bookings to another so that you establish a relationship with a 2nd cleaner in case there are any unforseen issues with your main cleaner.  You can also do this with your handman as well.

Being remote you'll want to establish those relationships so that when you contact someone, they don't get back to you 3 days later.

Hope that helps.

Mike

@Chris Ivy

I don't have any STRs that fit this description, but here are some ideas I would do if I were thinking about doing a remote setup:

1.  I would make sure my rental agreement mentioned there were no communication methods.  Also include hold harmless language in it.  You should talk to an attorney about what would need to go into it.

2.  You could look into getting communication to the location via satellite phone if you want to have some means of your guests reaching you and you reaching them for emergencies.  There are also satellite texting options too.

3. If you have a property manager that is local or close to the area, you could establish CB or other radios at the location and at your property managers so there was a means of communication.  You would have to do some testing on this, and also have backup plans for when the PM was not monitoring the radio.

You should also talk to an attorney and your insurance company about what kind of language you need in your rental agreement related to having no/limited emergency communications as well as any other things they want you to do for this kind of situation.

Hope that helps.

Mike

@Kyle Staal

We are very familiar with the area. My wife and I have been going to the White Mountains for over 20 years, and have 2 STRs in Bartlett....and we ski at Bretton Woods all the time!

So my take on it is "it depends". I think the answer depends on the guest profile you thin will stay at your properties. For example are you looking to compete with the Mt. Washington Hotel (think they have a new name now)?  Then you'll definitely need to do a remodel.

That area is also close to Crawford Notch and Franconia which are major hiking destinations, so it may be worth it to look at it from the skiing and hiking angle too, and not just sking.  If you are specifically targetting people who ski at Bretton Woods, I think you would make sense to remodel. If you are targetting hikers mostly, and anyone who wants to stay at an affordable ski chalet, then you may not need to do a major remodeling. Luxury vinyl plank flooring and change of decor can help. If you want to go a little more, but not a total remodel then maybe put cedar shakes or the curvy barnwood planking on the outside to make them look more like cabins than old ski chalets, or do log siding. Both options would be more affordable than complete remodel but as you probably know you probably won't get the rate-per-night you would with a total remodel.

Overall I do like that area from an investment perspective because you have Cannon Mountain and Bretton Woods for sking, and plenty of hiking trails all around.

Hope that helps.

Mike