All Forum Posts by: Ruben Kanya

You'll definitely want to do it the right way and be clear with the owner on your intentions, if it's not through your personal name, corporate lease will do the trick along with rental insurance...you're now in commercial territory you'll want the right protection. Have you thought of co-hosting instead? Less risk same concept, great way to learn how to work wit an investor.

Your answer depends on how seasonal your area is. My STRs are located in metro Atlanta which are STRs and not vacation rentals but even then always run my numbers in 3 different scenarios worst case, ok case, best case. My worst case should be bottom of the barrel bookings which honestly we would almost have to try to NOT get bookings and the reason i say that is the work is done before our listing is even purchased and even launches, the budget, investment made in the home to ASSURE it can provide an experience that only homes in the top % have...because at the end of the day we're running this like a business and we're not in it to be average but with that said we do factor in a buffer for a rainy day, I.e. unforeseen renovations and usage...but for that did you know that there's STR insurance companies like proper.insure will cover a portion of lost rent for those kind of events? Yes they do, look into it.

Not sure what your unit mix is but Panama CIty appears to have some respectable numbers via aidrna, look at the numbers from 25th% to 90th% to see your best and worst case scenarios...

Additionally you also have super high occupancy rate so for the interest of being ultra conservative, run your occupancy at 50-60% and see where that puts you with respect to the average daily rate...again factor in low and high seasons 

and then do the research upfront (before you buy) to be the best by studying the best a.k.a (top properties) and see where the opportunities are to not only hang with them but surpass them...at the end it's business not personal ;) 

Brian,

You're most certainly going to want all of the below and/or atleast one. Short term rentals are case by case and one luxury property can sit empty while the exact same property down the street can be constantly booked based on 4 key pillars

Technology | Furnishing & Design | Analysis (before buying) | Management

I would start working with a realtor who specializes in short term rentals, the more information you have the better, then when you set your eyes on making an offer based on an area that allows for STRs, run the numbers. You mentioned not using airdna.co but I would definitely keep tools like airdna.co, STR insights, rankbreeze, give you some insights on occupancy and average daily rate.

I personally like to be in market that supports the demand then I know what I need to do to stand apart. So to recap:

1. Identify your goal in wanting an STRs (numbers wise)

2. Get a realtor who can understand those goals and point you towards the most desirable zip codes

3. Understand who you're serving in that marketplace (i.e. families, business travel, ..)

4. Use as many data points as possible to verify (airdna.co, rankbreeeze, str insights, look up airbnbs in your area) the reason I like the tools mentioned in brackets is some people have cool listings that are priced high but have zero occupancy because they don't cater a true avatar and/or aren't priced correctly.

I find you're either option #1 paying your dues upfront (build a team and implement systems to self manage) or option #2 pay a pm company 25% of revenue which can be the amount used to fund another deal, especially depending on how long you have an STR, it can compound a lot overtime.

OPTION #1 - SELF MANAGING consists of taking the time to build a lean team, which isn't that challenging to do but requires you to put the right people together, again doesn't have to take long, you can assemble these pieces in less than a month. We did it because we had to. We are in New York and self manage 4 STRs in Georgia.

Setup:

-Cleaning Team: ask your local realtor for recommendation; ask them to post in their private realtor groups and they will get tons of recommendations they can share with you. (i speak from experience I'm a licensed realtor and that's we built our team). You will 1/3 times find a cleaner who has experience running airbnbs....there's saying that goes you hire people to tell you what to do ...not the other way around...they'll cover the details around what you need to help them help you become successful. Just like anything else, not all cleaners are created equal

- Technology: Ring Doorbells (ring), Smartlocks (august), security (ADT), Smart home technology, control heat/ac remotely (ADT and or nest), Dynamic Pricing Tools (pricelabs), PMS - property management software (Guesty) to automate guest messes, share dynamic cleaning calendar with cleaners, sends reminder notifications etc.

-Handyman:  we have electricians/handyman. Ask your realtors and or post in bigger pockets locally for recommendations. Including landscapers

That's the dream team. We've been able to build a lean dream team and all of our properties cashflow significantly from a distance. Rest assured it's not a matter of IF things go wrong it's a matter of WHEN they do. And when they do...never ask HOW this problem can be fixed but always ask WHO can fix this before you pick up the phone...that question will force you to be resourceful and to build systems and that is what will seem like a passive business when truly you've taken the time to invest in systems upfront. Feel free to reach out if I can be of anymore help.

@Lewis Vine I would definitely compare the zip codes via airdna.co as a start. I had a quick glance and while you can be an outlier there's usually some data you can pickup in the masses. 31901 seems to have way more STRs than 31906 (2nd) compared to 31903 closest to fort benning. I would look at the top Properties in the area and make sure you're comparing room and guest count by filtering down and also looking at the STR comps in the Rentalizer Section. attaching a screenshot of 31903 and 31906 for reference. It would be interesting to see if you can out-finish with design / furniture to beat out the very little competition that exists there.

@Kevan Baum check out Superhost Labs I recently connected with Sarah and Emily from there, wonderful souls, see if it's a good fit for you.

I agree with getting close to the data. I would:

STEP 1: See what my average daily rate would be as a short term rental buy going to airdna.co and checking your zip codes, top properties, similar properties go to the rates tab to see your average daily rate and multiply it by 30 and or go to the revenue tab and be sure to adjust your amount of rooms and how many you can accomodate. I would also go to the top properties & rentalizer tab and cross reference the amount you can make there.

STEP 2: I would also consider getting rankbreeze chrome extension, so you can see how much a property is generating a month as you look around on airbnb and/or when you click comparable/top properties via airdna

STEP 3: As a rule a thumb, when I analyze properties, I make a general assumption that someone will be willing to pay 20% more to have a furnished apartment. Remember typically there are less furnished apartments on the market which means if someone truly needs it, they 're most likely going to be willing to pay more for it because there aren't simply as many options as there are unfurnished property (law of supply & demand). Ask a realtor to do a quick search for you of how many furnished properties are in your areas you may be surprised for better or worst but nonetheless you'll have the data :)

Agree with @Bill Crawford you should map out all of your exit strategies based on data. 

STEP 1: Speak to a realtor or look online for history of property value growth in your area for buy and hold history you may be surprised on growth or the other way around. 

STEP 2: Put in your address at the Bigger Pockets Airbnb Calculator to get an idea on how much you could gross as a STR. For a more granular neighborhood data, on average daily rate on airbnb, occupancy rate overtime, top properties and similar properties like yours in your neighborhood buy a zip code on airdna.co for the month to get the data and cancel it after.

STEP 3: I would consider tapping into multiple options. Cash out refies are not the most desirable due to higher interest rates now, (probably why you didn't mention it) but it is a non-taxable event, all depends on your numbers, HELOC could be leveraged and you can tap into more equity than a refi, some lenders do 90% LTV. And selling well there's going to be capital gains taxes on that so factor that in unless you're doing a 1031 exchange but it's all depending on opportunity cost and what you would buy instead.

I personally would lean towards a heloc on a next project (use it as a down payment and furnish another STR) and either airbnb your current property or leverage LTR with students if you just want to maintain this as an asset in your portfolio that possibly could cashflow very well with renting by the room model, you could crush it that way too but you gotta know your numbers, see how close to the school you are and what students are willing to pay in that market. If i wanted to use it as cash-flowing machine then I would Airbnb it considering I've done all my research on the numbers above and any anticipated STR regulations etc. Typically that's the cash-flowing model i love the most but it all DEPENDS on your goals, not mine ;)

I am no CPA, but you should work with one that understands your goal..."can't" usually means there's something they don't know or is not being creative enough, I'll plant a seed that I received from my CPA that I won't butcher because I'm not a CPA. But get an LLC and rent from it personally...any cleaning expenses, paying your mortgage etc. come from the LLC's bank account, any outside money that you need to fund the account will be a capital contribution and then you will be able to do cost seg on that property. If you speak to a CPA who understands remotely what I mentioned then you're in good hands.

@Justin Osborne congratulations and thanks for sharing. What are you projecting to make annually on this property. I'm assuming 72K is right around 25% percent of what you're grossing? What made you go with them over the others?