All Forum Posts by: Ryan Moyer

Buying cash instead of taking on a mortgage makes CoC lower, not higher. Because it's more cash out of pocket.

20% CoC is still possible. It's not as easy as just closing your eyes and buying a house anymore, but they're still out there with self management.

Sedona is an awesome place but not a cash flow market.  I actually still look there regularly as I'd love to own one there for myself even if it doesn't cash flow well, which is exactly why it's a poor cash flow market.  Because there are too many people that want homes there for themselves that are willing to buy above numbers that make sense as an investor, as they put more value into their own usage.

I was speaking to CoC, not cap rate. Cap rate is really more of a LTR figure. Most STR investors focus on CoC over cap rate.

What am I missing here? If he's buying outright for $1M cash, that's $1M cash out of pocket / $43,860 NOI = 4.3% CoC. Once you add in closing costs and setup to the $1M purchase that's probably down to around 4%, if not lower.

I own a 9 BR home in this market (you can view it in my profile) and manage a few others.

I think it's a dangerous market to spend that kind of money in right now.  The area used to be simple.  Buy, theme, profit.  But lots of people have followed that mold and even the themed homes are getting a bit saturated at this point.  It used to be you themed to avoid having to compete on price.  But now there's enough of the themed homes that even the themed homes are competing on price.

Which resort neighborhood is this in?  At $925k I would hope it's already themed.  How well themed is it?  That matters now.  It used to be just high level theming was enough.  Now your high level theming has to really resonate with people.  

Which one sold for $1M?  Most themed ones I've seen have been in the low 900's.

Feel free to PM me if you don't want to share publicly.  I can give you my honest opinion of the place.  My place in Champions Gate heavily exceeded those revenue numbers last year but we really got lucky with nailing the theming and it turning out not just great, but REALLY great.  I've seen plenty of other highly themed places that will struggle to even meet those projections you posted this year. 

Expenses are high in the area so be careful. People are hard on these homes. Also Florida taxes and of course the HOA fees in these neighborhoods are high.

If you're not willing to self manage, there are a zillion PM's in the area.  I bet you can haggle on the commission.  Just be aware of rent shifting and the like (PMs shifting fees out of the nightly rate and into made-up fees that they keep 100% of), as well as PM contracts that make it difficult for you to leave them.  Both things the area is rife with.

ETA: Just saw your projected management fee is 25%.  That is way high for the area unless you're in Encore where only the contracted neighborhood PM can give the guest access to the resort amenities.

 You can buy a property there for $1M that does $260k gross, still?  Those are amazing numbers for the current market.  Is there high regulation risk or something?

 So this is with buying the property outright, no mortgage?

$43,860 net seems REALLY low for $1M cash spend in the STR game. That's 4% CoC. Most STR folks shoot for 20% as a minimum.

 It may even be more than that.

I can't remember if it was on this forum or a local STR owners FB group, but the rail company here in my hometown was giving away old train cars. There was much talk in our local STR group about turning one into an STR but with some quick due diligence we found the costs to move it to be astronomical. Granted we didn't have any insider connections on that front but it was a huge barrier, and we quickly concluded that's the reason the rail company was giving them away.

If they were drivable that would remove a massive expense.

Prices, for starters.

I haven't heard of AirReview so can't comment on that.

I'm not sure if you're looking in Ogden or through the canyon in Ogden Valley but the story is similar in both. Home prices have exploded over the last decade as people have moved into the area in droves, well above what would typically make sense for an STR investor. Occupancy rates are low, nightly rates aren't great, and the market is insanely seasonal.

Granted I don't own any here, so I could be totally wrong.  I've talked to probably half a dozen realtors and almost as many PMs trying to make the numbers work because I'd love to own one here locally for a change.  They've all made it very clear upfront that subsidizing the mortgage for part of the year was the goal here.  Would love to hear differently from someone that's made it work.

I'm not sure how AirReview calculates its numbers.  I think there are a lot of properties here that open their places seasonally and block it off the rest of the time, and that confuses the automated revenue projectors into thinking they have a lot more bookings than they do.

I live in Ogden. It's awesome. But it is not a good STR market if you're looking to make money or even break even.