All Forum Posts by: William Beck

I used to think AirDNA was garbage, but it's better than nothing. It's good to look at a bunch of comps too that are adjacent to the subject property you do the analysis on. I feel like sometimes it will show info that's extra conservative and you'll scroll down and see a neighboring property doing 10-20k more in revenue. AND it also can pull data that's way overstated. So just always good to check but use enemy method to validate or find comps with historical financials near by. Just don't fall into the analysis paralysis trap!

I think there's still a lot yet to happen with this entire asset class. Still a ton of growth in the sector. 

I think hybrid rentals are the way to go for any sharply seasonal market. Try and get those MTR Leases for the off season so that it takes the sting out of the slow time. Even if it's lower, better to have someone paying for your place than you!

Definitely worth looking at flood insurance costs too to not get surprised by that if you're on the coast. That could be one of those expense line items that surprises you in a not-so-fun kind of way. 

I think Vacasa is going to going to file for Bankruptcy. Check out the Skift article "After Sonder, Vacasa Receives Notice of Delisting from Nasdaq"

Following that, Vacasa saw an increase of homeowner “churn,” namely properties abandoning its platform, in the fourth quarter and into 2023, and forecast that its average gross booking value per home would dip this year. Among a variety of glum forecasts the company officials made for 2023, Chief Financial Officer Jamie Cohen said Vacasa’s home count under management could decline in 2023, in part because of its sales force reductions, and shift in strategy toward signing up individual homes rather than focusing on acquiring portfolios of properties.

Simmons Bank has a 10% down product that I've had probably 1/3 of all my STR condo investors use. It's technically a 2nd home loan for a condo they should use so there are certain requirements, but ultimately you can buy a non-warrantable condo in Branson with it. They are uniquely offering this and I haven't found another bank in our area or outside of our area that offers a loan for non-warrantable condos with this amount down.

Once again, big cities are going to continue to clamp down on STR regulations. Not a big surprise here.

I think you'll always be at the somewhat mercy of the areas seasonality. Not sure how many people are heading to northern Wisconsin in mid winter. However, if you have the coolest A-frame within a few hundred miles, people will notice! Plus if your property is so different than the local comps, are those comps worth factoring with your property's revenue estimates?

Quote from @Paul Wolfson:

@William Beck thank you for your concise response, that’s great info. Do you know if there is much demand for 4-bedroom cabins there? As I see that 90% of the market is 2/2 condos. 

Hey Paul, Branson really isn't a cabin market. Taney County and Stone County have put in place performance zoning essentially creating a funnel to certain communities that allow STR's. There are 4BR cabins in Stonebridge and a few in Crowne View as was already mentioned. There are also 4BR condo properties. The interesting thing is that these are still technically "Detached Condos" because of the HOA's involvement. Without getting too much into advisory from a buyer's agency relationship I'll just say that the zoning does prevent a huge amount of STR inventory from flooding into the area. There have been some large build developments in the 6-10 bedroom range in the last few years but there was a significant lack of properties in that size to begin with. Those are the lodge properties close to the lake in the Branson Cove, Branson Canyon, Chateau Cove, Chateau Mountain and some others. There is absolutely demand for 4BR & 5BR properties. There is a new development coming up on the lake that has some 3-4 bedroom options but you should ask your agent about those.

Quote from @Nathan Gesner:

@Paul Wolfson The breakdown from William is nice, but I see some things missing.

1. Cost of furnishings. If you spend $30,000 to furnish a place, that should be broken down into an annual/monthly cost, spread over five years (or whatever you think the life-span of furnishings would be). $30,000 in five years comes to a monthly cost of $500.

2. Nothing set aside for capex? While the HOA takes care of the exterior, you still need funds to replace flooring, furnace, and other large expenses.

3. You traditionally want 10% set aside for ordinary maintenance (broken doorknob, repair the washing machine, etc.) which is closer to $200 a month but he only accounts for $125.

4. Your time is not accounted for, which is a common mistake with DIY short-term rental owners. If you spend three hours a week managing the rental and your time is worth $40 an hour, that's $160 in expenses.

It's 4:30AM and maybe I missed/misunderstood something.

The reason others may be "making it" is because many of them paid cash for their properties, many bought their properties more than four years ago when prices and mortgage rates made more sense, and many of them do not realize they are getting a 4% return when they think they are making 15%.

1. Cost of furnishings - luckily in our market the majority of properties come fully turnkey meaning, I write my contracts like so: Personal Property included with the sale, any furniture, décor, lamps, kitchen and household wares, linens, electronics, appliances, all patio and deck furniture, fire pits, hot tubs, rugs, currently located at the residence at no additional value.  Of the condo's I've personally transacted, less than 10% came without furnishings included in the acquisition price. So nobody is really spending $30,000 unless they are getting something at a steep discount that needs lots of help. Also, $30,000 for a 2BR is a pretty hefty budget and definitely overkill. 

2. Capex is totally up to the owner. How should someone quantify that in a financial model? $0 a year? $10,000 a year? 

3. A good renters insurance policy can offset a lot of the maintenance issues. I've been able to utilize an insurance policy to replace: a lamp, a king bed frame, a queen bed frame, chairs on my sun porch, a new kitchen table, and a new pull out couch with zero deductible insurance policy because guests broke those items. 

4. If we're going to quantify time as an expense on a financial model for an STR, someone owes me $500 for spending time to post this on Bigger Pockets.