All Forum Posts by: Ryan Anders

Hey Ryan! I am a short term rental investor and agent in the Houston, Texas area for over 5 years now. I think the people that have soured on STR's did not expect it to be as much as it requires. With that being said, you can build a successful STR if you win on two fronts (to simplify it)

The real estate side and the hospitality side (operations).

The real estate side is buying a very good deal in a market that has a history of vacation rentals in my opinion. 

There is alot of chatter in Houston about them shutting down STR's but I believe it will go into a paying for a permit phase more realistically. There are a few areas that have long been unrestricted in spots (Heights, Montrose, EADO, etc) that may work. These numbers have risen tremendously though and with interest rates it is harder.

I like your Galveston idea because of the area and the amount of people that will probably be selling as they see it takes way more work than they expected. My concern with Galveston is definitely insurance costs though for you. I would 100% price that out before making a move anywhere there.

I think Lake Conroe and Lake Livingston are two places to check out as things progress in the area. That is where most of my investments are and my smaller experience based cabins crush it compared to my regular SFH that I rent. I think STR is an experience based travel and with the right marketing /design, it can 100% be a viable investment. Be prepared to learn the systems you need and deal with some headaches though compared to other forms of renting. One of my glamping sites brings in around $25,000 a month but we also spend around $15,000-20,000 per month. Insurance, weather related events, and labor costs for cleaning have been a big cost this year for us. We have supplemented our income with plenty of add on packages, local partnerships (jet ski/boat rentals, breweries, restaurants, etc)

I just moved out of Houston (Sugar Land) after living there for the last 12 years. I went down this road a few years ago and ultimately landed on an out of state market for STRs (Maine). As much as I wanted to make something in Texas work, there was just too much demand from 2nd home buyers that drove up prices to a point where investment returns, even in 2021-2022, were tight (vacation home buyers that didn't care about the investment return and just wanted a beach/lake/hill country home for personal use). 

Out of state is hard. It's not as simple as many make it seem. It is not for everyone - you need to spend a lot of time at the property getting it to market. We purchased in a different market a few years ago as well. We bought a fixer in Dec 2021 to get to market in the summer of 2022. 

It's sucks and is really expensive to start. You're going to bleed cash before you make a dime in booking revenue. You'll have that, "Holy crap, this is expensive; this better freaking work" feeling for a while. 

I have nothing to sell and would be happy to help if you think I can be a resource. We've since added a mid term and long term property along with a fixer STR that turned into a bit of a live in flip that we just moved to in Maine. I'm no expert, but have learned a few things, had some success, and live in reality. Send me a direct message if you want to chat further.

If I weren't married I'd continue to buy 3-4 bedroom LTRs in my area in the 200-300K range. I'd ensure I got them at a price and pay down the interest rate to allow me to net at least $200 a month after PITI and other expenses like repairs and vacancy. I'm in it for the long haul, so if the numbers work today the future doesn't concern me as much, but I would hope home prices and rent continually and gradually increased and hopefully within the next 5-10 years interest rates came down to allow me to either refinance and pull a lot of cash out, or greatly reduce my mortgage.

But in an effort to get my wife involved and excited about real estate we've switch gears and are currently looking for an STR along the NC coast. In the areas we're looking we're seeing homes sit 100, 200, and even up to 300+ days. We want to get one at a price that would allow the numbers to make sense, and since I follow people like Rob Built and Avery Carl I feel confident we can manage it, and even do a better job than most because I know not everyone is as plugged into BP as I am. It's also important to note it took us 10+ years of hard work in our career fields for our salary to get to a point where we have no consumer debt and can save enough for a few LTRs or a beach STR every year.

I'm sure plenty of flippers are having success today, but I imagine the ones who are having the most are the ones with close connections to many contractors. Guys like you and me without reliable contractors would have to get multiple bids and hope we select a contractor who doesn't try to screw us. It can be done, but the odds aren't in our favor with interest rates still going up and prices potentially coming down.

If you're set on needing lots of cash ASAP you're going to have to put in a ton of effort. Outside of flipping you could become a RE agent, try wholesaling, or rental arbitrage.

Full disclosure, I'm not a flipper.

My initial advice would be to try and and exercise more patience. We all want large sums of cash ASAP, but we have to implement the best strategies in the given economy. Yes, a lot of deals today are only going to cash flow in the 3-6% range with today's interest rates, but you also have all the other benefits like tax deductions, appreciation, & loan pay down. If this isn't attractive to you there are CDs with 5% interest rates today, and there's always the stock market.

Several years ago when interest rates were around 3-4% and home prices were soaring flipping was very forgiving because even if you made mistakes there was a lot of margin for error. Now with interest rates potentially continuing to climb and prices potentially coming down you run into the opposite issue where even if you do everything perfect you may loose money because of factors outside of your control.