All Forum Posts by: Ryan Moyer

As a fellow avid skier/boarder, I've sadly come to accept that there are very few, if any attractive STR markets that are good for skiers. Especially out west.

There are just too many people willing to buy homes in those markets primarily to use for themselves, for way more money than make sense as a pure investment. So I've settled on buying STRs in better STR markets and using some of the profits to pay for baller ski vacations in houses that cost 5x as much as my STR but barely generate even half the revenue.

 Is there such a thing as cash flowing properties in the Eden area at current rates?  I've got some great properties down in Southern Utah but I live in Ogden and would love something over on the Ogden Valley side, but seems like inflated prices and meh rental revenue there would make it pretty impossible to cash flow.

It does not replace your current router.  It works along with it and creates a SEPARATE network.  That means all of you devices like your rokus, video game consoles, video doorbell, can stay connected to your current network that you have now.  Then StayFi creates an ADDITIONAL network, and you just make sure you give the guests the login info for that network.

So it doesn't interrupt your ability to use your rokus, etc at all.  They can remain on your old network.

HOWEVER, one thing that it can interrupt is the guest experience.  I have had pretty mixed results so far.  I've gotten a good handful of emails but I've also had several guests complain.

By default StayFi doesn't even put an opt-in checkbox on the splash page they create.  So most StayFi users are probably violating some laws, collecting emails for marketing purposes without actually giving the guest the ability to opt out of it.

I used the option to include a checkbox, but the software very stupidly still requires the guest to enter all of their info even if they've opted out of marketing.  This creates a lot of distrust as the guest becomes suspicious as to why you're still collecting their info even when they've unchecked the box allowing you to store their info.  I've received this feedback from multiple guests.  One even refused to connect to the wifi because of it and left a bad review.

When I brought this up to StayFi they were pretty dismissive of the issue.

Do a search on Vacasa on this forum.  Rent shifting, neglecting your property, using their extra fees to market their own company (rather than your home), etc.  Very poor reputation.

Regarding the payout/host structure, it is true that the most common way is that they host it and collect the money and then pay you out.  But there's a reason for that.  It's because it is great for THEM.  Terrible for you.

They own the listing.  They own the photos.  They own the reviews.  They own the bookings.  They own the guests.  That means if you ever want to move on from them, you lose everything and have to start all over.  They like this because if they're doing a mediocre job, it's usually easier for the owner to just let them keep plugging along than give up all future bookings, all past reviews, etc and start over from scratch.

Seriously, read through their contract before you sign on.  Forget the percentage.  Look at how easy or hard it is to actually move on if you're not happy.  And as Colin said, watch out for rent shifting.  When they control the listing much of what they're charging is obfuscated to you, so they can use that to shift the cost of your place out of the nightly rate and into fees (booking fee, heating fee, etc) that they take 100% of rather than the 15% or whatever they are claiming they take from your "revenue".

But ultimately, the one thing most people overlook is how hard it is to move on.  There are still hosts that operate under your account so you own everything if you decide to move on.  Just think about it, would you rather their strategy to keep you onboard be that they have to keep you happy and keep doing a good job, or would you rather it be to make it as difficult and costly as possible for you to leave them?

There are a ton of bank accounts that have either no minimums, or low minimums.

A lot of online banks (some real estate specific) like Stessa, Baselane, SoFi, Relay are set up to handle this with virtual accounts.  You can create unlimited virtual accounts, with separate accounting and account numbers, separate debit cards, etc all with no set-up fees or minimum balances.  And you can create/delete them in about 5 seconds with the click of a button.

I can't comment on Stripe, but Airbnb/VRBO will let you assign a separate bank account to each property so deposits from that property will go into that separate account.  The only annoying thing with Airbnb is any money collected after the booking (payment requests for upgrades, pass-through taxes, etc) are deposited into the master account, which is very annoying.

Most people here self manage, so we're definitely going to tell you that you can do it.  I'm not a particularly bright gut but I manage it just fine.

Evolve only does the front end stuff anyway, so you were already scheduling cleaners, scheduling maintenance, etc?  All of that stuff is the hard part.  Managing the listing and pre-check-in messages is the easy part.  So if you've already been handling the other stuff, this last little bit of it will be cake.

I think this is probably happening everywhere.  Here in Salt Lake City STRs are essentially illegal, but tons of people operate them anyway because the city doesn't really enforce it.

I imagine one day the city will decide to start enforcing it, and then everyone will act shocked and caught off guard that they can no longer operate their illegal STRs.

Go Gators :P

I think it sounds like he probably understands that each deal will have to be analyzed on its own merits, but was just wondering about broader more high level things people follow (like the 1% rule in LTR) that can tell you right off the bat if a deal is even worth running the numbers on before you spend a bunch of time on it.

The answer I think is it depends on who you ask, buyers or sellers.

Sellers - The 10% Rule

In a vacation rental market where a high percentage of homes are STRs and home values are essentially based on STR revenue (they still appraise as residential homes but the market sets their values based on what works for investors), a home is typically listed for 10x its gross annual revenue.

If you go look in the Smokies or in Destin or markets like that, if a home does $120k gross annual revenue then it will be listed somewhere around $1.2M.  Obviously this varies somewhat property to property and yada yada yada, but that's kind of the starting point.

Buyers - The 15% Rule

On the flipside, especially now, most savvy investors look for something a bit better than that.  At current interest rates, even with self management it can be hard to cash flow with the 10% rule.  And the margins are tight which leaves a ton of risk as travel spending is still at record highs and there are no guarantees that will continue in a straight line upwards.  

It still works for large companies that are buying these properties as a long term inflation hedge and for appreciation, but for your typical cash flow STR investor the 10% rule doesn't really get the job done, especially at current interest rates.

So a lot of smaller, savvy investors look at 15% as a good starting point.  That is, if the purchase price divided by the gross annual revenue is less than 15%, it's probably not a deal worth looking into.  These can be hard to find in established vacation markets, where you might have to accept smaller margins.

Again, these things vary from market to market depending on property taxes, etc.  But like the 1% rule in LTR it's kind of a starting point some people use to thin out the list before diving deeper into properties and figuring out the specifics of all of the expenses unique to that property.

The thing 99% of owners miss is this.

The first thing you should look at in their contract is how hard it is for you to get out of the arrangement.

Most PM's are set up so they own everything.  The listing, the photos, the reviews, the guests.  And moving elsewhere requires starting over (which discourages unhappy owners from doing so) as well as paying some kind of penalty on future bookings, etc.

It's a great gig.  Get the owner so stuck in with you that it becomes too difficult for them to move on.  So then you end up with a bunch of PMs doing mediocre or below average work, but it's not worth it to the owners to go through the extreme hassle of getting out of the arrangment.

Just think about it from your end.  Would you rather be working with a manager/co-host who's best way to retain you is by doing a great job and keeping you happy, or a manager/co-host who's best way to retain you is by making it so difficult to leave that you decide to just stick it out?