All Forum Posts by: Timothy Church

Leigh Ann Smith The cost of insurance eventually just becomes another number you have to work with. It is required on any financed property and the rates are set by the government. It's as guaranteed as death and taxes. You just have to make sure that any deal you analyze take it into account with a conservative estimate. Margins can still be great with it!

@Thomas S. Besides the hotel industry, I don't see which businesses they are hurting. 

One of the things I love about Galveston is that a lot of the restaurants are small hole in the wall type places. They aren't giant chains which the same food across the nation. The downside to this is that they can be difficult to find. Even with apps like Yelp, most of these aren't promoted enough to gain wide recognition. 

When a guest stays at one of my vacation rentals, they get a digital guest book with information not only about the house but about the cool places to go. I can promote these small businesses that I didn't even find until living on the island a few years. I can tell them which pho place is my favorite or what places are kid friendly. There is a place here called Board Game Island. The ratings aren't the best but they have decent food and any board game you can think of. When someone sorts an app by the ratings they will miss it.

All vacation rentals are doing is moving money away from corporate hotels and putting them into local economies. That to me is a win!

@Joe Davis I think one of the key variables is the fact that 79% of all active hosts only have 1 listing. This is about 500 of the hosts. That shows that between a third to a half of all the listings are simple mom & pop type hosts. They bought a second house down here that they choose to rent out when they aren't here.

The difference between those hosts and the majority of people on this site, is they tend to treat it like a hobby while we look at it like a business. Prices will begin to drop in the next year or two but that provides a unique situation for us as investors. What we are left with are homes that are fully equipped and turn key to be purchased. I have a few under contract right now for other investors. This lowers the initial investment substantially for us. 

The key in this market is how you manage your rentals. There are far too many people who set it at $150/night every day of every month! They get low occupancy rates, get discouraged, and sell us their houses. On the flip side there are those who rent too cheap and stay fully booked. While that is great for them, without proper systems in place it is exhausting.

Personally I use a dynamic pricing system (used wheelhouse and beyondpricing and love them both) and I adjust my prices on a weekly basis. I maintain a minimum 50% occupancy and have last minute price drops to fill the gaps. The majority of bookings happen with a 30-day window so being booked for 3 months means you're far too cheap!

The difficult part with individual property hosts is they offer a level of service that is amazing. Their places not only have the usual addition amenities but little things that go above and beyond. I know certain hosts who always have a bottle of wine or a 6-pack of the guests favorite beer waiting. 

I think the market will slowly saturate over the next two years and peak out. At that point, the hobbyist will slowly die off and the business minded investor will pick up their scrapes and build a beautiful portfolio. Yes ROI has gone down but in my personal case it has gone down from 30% to 25%. That still beats my 15% LTR any day!

On a whole, AirBnB is on the rise. Just 2 years ago in Galveston, (according to AirDna data) there were only 154 active listings on the island. Last year it was 552 and now it is at 1273!! Anything with that type of exponential growth is going to be difficult to stop. 

Last year several cities throughout Texas banned Uber (Galveston included). With the support of its user base, Uber was able to push through legislation to lift all the bans and only restrict them in places such as airports. Since coming back it has taken off!

I see the same thing with AirBnB and similar sites. They have build up a strong fan base that will support them with votes to push through legislation. I think the legislation around AirBnB comes down to a simple battle of capital vs votes. The money from the hotels versus the votes of the people. 

As a STR owner and manager here, I stay tuned with what is happening on the local level. They have put rules in place to enforce our 15% HOT tax, require registration, and also require a local property manager. The city is happy, the vacationers are happy, and the homeowners are happy.

Honestly it will teach hotels the same thing Uber taught taxi drivers, "If someone offers a better service, don't fight it. Step up your game!" 

@Douglas Krofcheck now that I manage more properties and manage for other people, I have a software which takes care of this. Initially it was just a week of building the website. Thankfully I enjoy HTML/CSS writing so it wasn't bad. It could be something you could hire out to a web designer fairly easily. Then just set up a secure portal to your server to transfer documents and a way of taking online payments. 

@Tori Prophet That sounds great! I'll send you a PM with all of my contact information and we can set up a time to talk soon!

@Tori Prophet I think another thing to consider is how long it will take to do repairs and what the average days on market is for comp properties. The cash our refi is going to cost more in points charged and origination fees than the HELOC. If you are going to be able to do all necessary repairs and sell quickly the HELOC would be a good choice. However if the market is slow and your stuck paying your mortgage plus the HELOC with it's high interest rate you might want to consider the refi.

The other thing to look into is how much equity you will be freeing up through the sale of your home. One thing I did after selling a personal residence was to put 20% down on an investment property while putting 5% down on a new primary residence. This was able to get one of my first vacation rentals down here on the island while also giving me a place to live. The cashflow from the investment easily covered the difference in my personal mortgage (PMI plus increase in loan amount). It does leverage you a bit more but if you are in a position that you are comfortable with that it can me a big jump!

Personally what I like to do is have all communication come through a personalized website. I have my property management email that I use generally but for each property I have a dedicated page. 

My tenants are able to log in from my general page to access information. They are able to pull up a copy of the lease and other documents, pay their rent, and request repairs/general inquiries. All of these get forwarded to me through the system along with any additional information such as address and tenants name.

This way the tenant feels that they have a personal way to contact me and I am able to keep everything neat and organized. I'm thinking of adding check boxes for repairs, general inquiries, and other things so the email gets cc'ed to the repair man or other relevant parties.

Good morning,

I am realtor/investor/property manager here in Galveston. I've worked on the other side of a few transactions with managerenthouses.com. They've always seem to do a good job. They kept everything digital which I liked and quickly sent a courier for any physical papers. I don't know how they perform as of ongoing management but they were smooth for the transaction and on boarding of new tenants.

I'm always looking to connect with local investors. If you'd like to grab a coffee some time and discuss your plans/view of the market, just let me know. All my contact info is in my signature.

@David Tardy Oh that makes sense! I'd be happy to meet with y'all when you are in town. I do send out regular mailings of potential STR to investors as they come to market. I'd be happy to schedule a time this week to talk on the phone just to get an idea of what you're looking for.

We can discuss management as well if you'd like. I personally run the property management side of my brokerage and know most of the property managers on the island if you'd like recommendations.

Plus I'd love to get your insights on what you like and don't like with AirBnBs!! You will have the unique understanding seeing as you constantly travel and stay in them. Let me know what time would work for you!