All Forum Posts by: Timothy Church

 You forgot the 6% HOT to the state of Texas! Another fun hit to your return.

@Derrick Cameron Jenkins 
Everything is always connected and there will be an effect but that is what you plan for. One of the reasons I own properties down here in Galveston is that we are such close proximity to Houston. When the economy is doing great, people who normally wouldn't be able to go on a vacation can come here. When things begin to drop, those typically fly out of Houston for the Keys or somewhere nicer, will settle for Galveston. Overall it is finding a market that has a draw to those who can still afford to travel in a depression of the market. 

Overall I'll say that returns have definitely leveled off and in some areas dropped compared to the previous years. While even I expected COVID to create a huge drop when it happened, the rentals I manage turned around and beat previous years even with a 45-day ban here on the island. Last year the travel bug from COVID was still going strong and it was a great year. With the economy changing, income has changed but as long as you've planned for that STRs can still be a great investment! 

I'm actually looking to get my real estate social meetups started back up! It would be down here on Galveston Island. Just opened up a forum to start discussing things.

https://www.biggerpockets.com/...

Hope to start meeting with people again!

A while back I was doing regular low-key social meetups to discuss real estate here on the island. They were going well but life got busy!

I was wanting to see about starting them back up and wanted to see if there is interest in a Galveston Island meetup. Figured I'd get a feel of when works best for people and get things rolling again.

Look forward to sitting down with people again to discuss real estate!

Great to see you got one! Hope it is the first of many!

Hey Brendan!

Glad to see your portfolio is still growing! Are you looking for management for your long term properties or have you converted them all over to STRs now?

I know you where just dipping your toes into STR last time we talked.

Case study:
1 of my personal downtown units is booked 60% (18 days) while the market is 29% (8.7 days)
This unit is 3 floor walk-up with no parking so I keep it at the lower range price-wise.

Property ADR - $121
Market 25th percentile - $139
Market 50th percentile - $162
Market 75th percentile -  $191

Assuming they are all getting 29% occupancy vs my 60%, revenue is as follows

Property Revenue - $2,178
Market 25th - $1,209
Market 50th - $1,409
Market 75th - $1,661

In fact, to hit my number at their rates, I'd need the following occupancies.

Market 25th - 52%
Market 50th - 45%
Market 75th - 38%

I'm just trying to find that balance. I'm ready to finish out my programming so that I can have better ways to analyze things.

One of the fun parts about managing Airbnbs has been finding ways to optimize things and increase profits. I've always used a dynamic pricing tool in order to control how the property is priced on a given day. Normally I'd go in once or twice a week and adjust my prices with a target range of 40-60% occupied over the next 30 days. With the average lead time for bookings fluctuating between 30-60 days, keeping in this range kept everything about 75-85% booked. 

While the properties have performed great, I'm now training an employee and am finally having to answer the questions of why I adjust some and not others and how much to adjust. I know there are a tremendous number of factors such as seasonality, pickup, quality of the listing, etc. but I'm currently working on going through things to put pen to paper to write out why.

All that said, Pricelabs (the tool I currently use) has recently added a feature to their dashboard. While they always display your occupancy percentage for the next 10, 30, & 60 days, it now shows the market occupancy rate when you hover over it and colors the number based on your relationship to it. RED < 80% Market, Yellow >80% & <Market, Green > Market & < 120% Market, and Dark Green > 120% of market.

This new edition has got me thinking a lot about my target occupancy. On properties that are newer to market or have lower occupancy, it is great to see this correlation but for properties where they are currently 60% booked and the market is at 29% I don't know if I'm missing out on income. Depending on if weekends are booked for 2 or 3 night stays, they account for 26-40% of the monthly occupancy.

Do you think keeping the 40% as my lower threshold is a good strategy or should I change it to something that correlates closer to the market?

Should 60% still be that upper threshold or should it be say related to the market average as well?

Thanks in advance for your thoughts!

Overall it can be a great return for that price point. The main thing to consider when you are purchasing a vacation rental at this price is that even a great return isn't a large amount every month. Making sure that the larger expenses (appliances, HVAC, etc) are in a good state becomes even more important.

One definite pro is with only 450ish sq ft, you can easily do upgrades at a lower cost. It is easy to go with that slightly more expensive flooring when you only have that much to do. The same goes for counters and cabinetry.

The main con is that you have a small range for resale and daily rate. Since there are so many other units doing the exact same thing, even if yours stands out above the others it is hard to get the price a large amount higher.

Overall it can be a great investment especially for trying out vacation rentals for the first time!

@Drew Sygit

That was the way I was leaning. It is one of my favorite parts of being a realtor. If you out in more work you can make more. A direct correlation that helps you to want to work harder!

The only issue I'm running into with 1099 is the setting hours and a few things that are borderline crossing into W2 territory.

Awesome!! See you then!