All Forum Posts by: Roy H.

Everyone says LTRs are passive, STRs are work.

But why? What exactly makes them more work that can't be automated?

Let's assume you self-manage. The most prominent problems that I can think of are:

• Booking/screening
• Cleaning/laundry/turnover
• Handyman on-call for repairs
• Answering questions from guests
  

You can set up autoresponders to handle booking/check-in/check-out and even requesting reviews/feedback. Cleaning/turnovers can be done with online software as well. Questions from guests during their stay can be handled from your phone in seconds or even outsourced.

You can almost automate everything down to the point where the only thing you need to deal with are major events (repairs, complaints, etc.).

So if you have systems like this in place, are STRs really more work?

You're eliminating a lot of the labor and still hauling more than an LTR (I'd imagine so) even with tools.

Or do people just say that STRs are busy from a perspective without tools and automation? Or am I missing some major hassle of owning an STR? I'm still learning as much as I can.

PS: For those have who skin in the game, how many direct interactions do you typically deal with from your guests on average? What kind of questions do you get? Are they respectful of business hours or does that not exist?

Thanks for any words of wisdom.

Some cities require you to have a local rep/agent that's within a specific distance to handle any problems arising from your STR.

e.g. "a local rep within 60 minutes of the property"

Yes, you can get a PM to handle that I guess, but that's a big price to pay for something so simple.

Since it's usually to get your guests to calm down because of noise or other problems, I'm thinking you can minimize the risk of this by:

• Adding quiet hours to your listing
• Adding a fee for disturbances
• Adding a noise/dB meter
• No parties
• No large gatherings
• Age reqreuiments
• Common sense screening

But even then, you still need to have a local contact just to get the permit.

How do y'all handle this if you're far away and not within the distance/time requirement?

I see people buying up properties from out of state, so they must have some kind of system to do this.

Any ideas? Thanks BP fam =].

Hi all-

How do you decide how many rooms is too many rooms?

For example, let's say your market has 50% 3bd, 20% 4bd, and 10% 5bd demand.

Does this merit purchasing a 4bd property over a 3bd?

1. Higher ADRs
2. Booked calendars (40% occupancy)
3. Less competition for 4bd homes, so you'll stand out

But what about a 5bd over a 4bd? Where does it stop?

1. Even LESS competition
2. Even HIGHER ADRs
3. But lower demand (30% occupancy)

Is it a matter of buying the most rooms you can afford? OR is it finding a "sweet spot" in the market? Is diminishing returns a real thing in STRs?

With more rooms, you can charge more. But you'll have fewer guests because of the higher price tag. Isn't that good (fewer headaches, less wear and tear, less cleaning, etc.)?

Anyone with experience owning both larger homes and smaller homes, what do you generally see in terms of cash flow/work required? Any insight is very much appreciated.

@Jon Crosby Thanks for your post!

Yes, I'm trying to see things from both sides of the fence before it's too late. I can find tons of info for how LTRs are the holy grail, but I just don't know if there's a reason why STRs aren't as "encouraged." Probably all the unpredictability and the need to discourage newbies from making mistakes? Or because they're *relatively* new to the general population with platforms like AirBnb/VRBO and have become convenient enough to go mainstream?

It's very easy to find info for investing in LTRs online, but hardly anything that prompts to invest in an STR as for your first investment. Perhaps it's just like you said- easier, stable, and more manageable, especially for the newbie.

One thing I read is that your numbers for the STR should be well beyond positive when compared to an LTR. So that if it satisfies an STR, it better darn well satisfy an LTR and remain positive. And then you can convert it to an LTR if needed (such as current situations pose).

I guess I'm just more interested in getting more cash flow quicker for reinvesting. I'll make a ton of (expensive) mistakes the first time around especially since it's my first home. But I'm thinking the profit from STRs can be used towards your second home much faster.

So I've been doing tons of reading on this forum, listening to podcasts, reading articles, and running sample numbers on random homes for practice to get ready for my first STR.

But the more I read into it, the more old-fashioned advice there is for going with an LTR.

Am I making a mistake for investing in an STR as my first home? Would you advise against this? Would there be issues with lenders/the bank?

Honestly the idea of LTR just doesn't appeal to me- I mean all that work for $200/door per month? I can do Uber and make that in a day.

Yeah, there's the whole equity, appreciation, etc. but I'm much more interested in getting paid today than tomorrow so I can reinvest it faster.

Yes, STRs are more work. But they're also more profitable. STRs always outperform LTRs in terms of cash flow (if you're doing it right).

So is there any reason to re-evaluate my whole plan and consider an LTR? I'm interested in sustainability right now and having a monthly cash flow that I can use to expand.

Am I doing it wrong? Or am I just having second thoughts?

I'm researching coverage and the last thing I need is someone getting an injury on an STR. So I want to be as bulletproof as possible.

If you want to protect yourself in case a renter gets hurt on your property, is a basic STR insurance policy enough (Proper, Foremost, etc.)?

Is 1M enough coverage? Or should you opt for 2M?

Do you do anything else to protect yourself? Should you form an LLC? Or is that useless?

Do you make them sign a liability waiver?

Is there anything else you can do to protect yourself and your assets?

Also, is it true that the AirBnB policy is trash?

Hi all,

Doing research for my first deal (still).

There doesn't seem to be a "method" to calculate returns on properties- at least not like traditional rentals (50% rule, 1% rule, etc.) They have the "back of the napkin" method for quick assessments.

How do you quickly "size up" to see if a property is worth a second look?

Right now, I do this:

1. Pick a location.
2. Pick a house for sale online.
3. Check comps of nearby similar homes (amenities, rooms, etc.)
4. Compare mortgage/expenses against average occupancy rate and ADR.

Is this a good start? Or am I missing a huge part of the calc?

Thanks.

Thank you both for the helpful input!

I noticed you both mentioned to "stand out" in some way to differentiate from the other listings- are these things like pools, spas, and overall a "luxury" experience?

At this point, from the advice here, it looks like larger houses with a ton of amenities so they can have a good time is the way to go for LQ.

Any other pieces of advice you wish knew when you first started?

At this point, I'm thinking of going for a larger property at this point since it seems like LQ attracts the larger crowd for the festivals and such.

I'm still early in the research, so it's still a matter of location at this point. @John D. if you'd like to send over the referral, I'll be glad to keep him in mind as I move along here =].

Thanks for helping a newbie out!

Hi all!

Looking to get into my first deal.

Never invested before in any property and STRs seem to be much more appealing than traditional rentals.

I'm looking into STRs in La Quinta/Indio area.

A couple questions for anyone who's familiar with the cities:

1. How are your occupancy rates? According to AirDNA, LQ only has a 40% occupancy rate, can anyone confirm? This seems drastically low and only a 30% rental demand.

2. How's the competition? There seems a ton of STRs in both cities since they're STR-friendly. Are you still able to compete without racing to the bottom?

3. How's the process of obtaining a license? Is there a huge waitlist or pretty easy?

4. What part of LQ do you see the best returns in? From my research, the NW or SE parts of the city appear to be the most lucrative.

5. Do 1/1 or 3/2s bring in more profit? Or something else entirely? I know this area is popular for the music festivals so I assume larger properties are in more demand (for groups)?

6. Any suggestions on LQ vs. Indio? Profitable? Demand?

7. Do you think it's possible to remotely manage as a beginner? I'm in OC and I plan to drive over there 1 or 2 times a week to restock/check the property. But if the renters need something fixed, I'll drive over WITH hesitation. I hope this isn't a common thing (once per month or less). Any experiences with how often you need to meet your renters?

Thanks for any help you can provide!