All Forum Posts by: William Anderson

Try Spain, 1st world legal system with good values and nice rental season.  Thanks 

Michael,

35% is terrible, I acknowledge at that rate few STRs would be profitable.  What you are doing is working for you and that's good.  I see rates as high as 25% in my area and that's too high also.  

The "ideal" situation is a low rate such as I am paying and having the manager do the work.  That's ideal and of course, there are some areas where your costs will make that very difficult.  I still believe that if you want to scale up, it's best to buy in areas where PM rates are reasonable.  

If you are just playing around with STR, do it yourself, lots of fun. The guest calls at 11:00 PM and wants new batteries in the remote. The sink leaks in the kitchen and they don't call. The cleaner comes a day later and water is everywhere. Just kidding of course. This is one of your biggest investments. Treat it like a business from day one. If you can't make money having a great property manager take care of the property then perhaps owning an STR is not for you.

I am telling you from many years of experience that it's impossible to effectively manage your property remotely.  I pay 15% for the property manager and that's it.  They take care of everything including those calls when the AC goes out.  I factored in the 15% along with a maintenance budget when I bought each of my properties.

If you can't fit in 15% then buy your property for less or charge higher rents.  If that does not work, find another type of investment.  One thing it took me a while to understand was the value of my time.  I could grow my wealth by duplicating my efforts.  Yes, lower income at first but the big bucks come as a portion of a larger number of rentals, products, etc. 

For many years most of my STRs were in Spain.  I had three excellent property managers.  I never received a single call from them for issues.  If it broke, they fixed it.  Every month I looked at my deposits and reports, that was it.  This was a true passive income business.

I am closer in proximity to my current STR therefore I do stop by and meet guests from time to time just to get their reading on my property. If they pass along any issues, I notify the property manager who takes care of them. I meet with the property manager about once each month to discuss strategy for the next quarter and the next big season which I could do via phone. This is where I hear all of the horror stories that have already been solved.

Sorry for preaching for what it's worth, start out the right way.  Create a budget, create a business to own the property, buy at the lowest price, and rent at the highest end of the market.  Be sure that your property manager has the correct checking account number and routing number for your profits.

Consider signing up with Generali as an agent.  You can sell property damage insurance and travel insurance to your clients.  The property damage insurance covers up to $3,000 and payments go back to the host.  The travel insurance is great, it covers cancelation or trips cut short.  My property management company offers travel insurance to anyone reserving a property on their website at no additional charge.  They must click a box but nothing is added to the price.  Should they have to cancel, no problem?  The host keeps the funds and the insurance carrier will pay the guest.  There are rules of course but they are reasonable.  FYI, if they book on third-party sites they need to order their coverage from you within a day of booking.  

These coverages do not replace your basic landlord's policy which is what some of the others on this forum have.   Another FYI, Proper offers some great coverage for those who rent golf carts, boats, etc.  Their wind coverage is terrible, they are just brokers for that coverage

Eric, the recent economy is causing some people to sell their vacation homes.  I have seen a few on the market in my area along the Mississippi Gulf Coast.  When I see a property that meets the basic criteria e.g. location, size, price range then I look at the photos.  When I see a newer rehab with what looks to be a beach treatment inside, it's a good bet it's someone's vacation home.

I read further and see the note that furnishings can be sold.  Now that catches my eye.  I have bought several vacation homes that were fully furnished.  Every one of them was acquired by offering the asking price and telling them I want everything inside the way it is.  You are looking at about $20k in furnishings and labor.  

The first one I bought was like that, my property manager put it on the market the week it was closing.  We had a rental the day after closing and have made big bucks since.

Pick an area or areas where your analysis shows you the properties can be profitable.  Then, call an agent in the area, create a working relationship and tell that person what you want.  Let that agent work for you at no cost to you.  They know which properties are fully furnished.  Most also know if they are zoned for vacation rentals.

I found such a property last week just browsing around.  I called the agent and was told it just went under contract.  I have clients who want various properties and could have sold that one quickly.  Speaking of, I am creating a course on short-term rental properties and I was looking for a property on the market that could be used as an example.  Today I found a duplex for $189,500 that I think I can get for $175,000 plus $5k rehab and $20k in furnishings.  All in $200,000 that should gross about $45,000-$55,000 per year.  It's been on the market for 82 days.  I overlooked it before because I assumed it was in the wrong zone.  I looked again and found that it was zoned for short-term rentals.  It's not furnished but it fits all of the other criteria.

This is why you need to work with an agent who is actively looking for properties like this one for existing and future clients.

Mohammed, 

You should have six months of expenses including the mortgage in the bank when you start.  There is no such thing as "no money".  Stuff happens, vacancies, storms, accidents.  Avoid the stress, save up then make your move.  Interest rates are moderating so waiting a bit to save will probably be an advantage.

Never feel rushed to close a deal, you found that one and you will find others.  I would say it depends upon the market.  If it's a seller's market and you are pretty much rock solid on the $200k when you apply for the refi then go for it.  If the market is soft and the chance of other buyers stepping up is small, offer a lower price.  Most sellers will counter.  I can't think of a single case where the sellers did not counter when my client offered less than the selling price.  Don't be afraid to walk away if the numbers don't work.

Buy an ozone generator and run it.  I use it periodically in all of my properties, it cleans organic matter from the air.  You can buy a good one from Amazon,  Get the right size.  It takes at least 8-10 hours with everyone out of the house, all windows shut and doors locked.  Do not leave pets or any animals inside.  This will also kill insects.  The way it works is by eliminating oxygen in the air.

Vidal, 

I left CA for the same reasons, too expensive to buy.  All of my investments are now on the Mississippi Gulf Coast.  Some are long-term rentals others are STRs.  We have virtually a year-long season here so STRs have been working well.  Employment is good here with shipyards and refineries plus lots of military coming and going.  You can pick your type of investment and find a pearl.  

A client from Washington State is building a new house 100 yards from the beach for an all-in price of about $430k.  That house in Orange County or San Diego County would have a big one before the number if not two.

Sorry that your agent did not help you with some referrals.  I have recently replaced some pillars from storm damage and they were not hard to repair.  If you do not know a good contractor go to your state's contractor's license board and pick a name.  Check them out on the web, at least they will have a license.