Short Term Rentals - Mail Box Money & Property Barons

[GlenFromTheMailRoom 1618]

My wife and I (no pics) decided to take the plunge and invest in a short rental in Pagosa Springs, CO for passive income/part-time usage (1-2 months a year).  According to AirDNA, Rabbu, and Mashvisor it should be a pretty healthy investment if we play things right and evolve's 10% management fee has made the deal a little sweeter.  If the cards fall correctly and we pump all the income back into the loan we should have the home paid off pretty quick and are planning to run the story back again if it all works out.  Anyone else deployed a similar strategy?  Are there any pitfalls or "gotchas" to the thought process?

For those that have done something similar are there any tips you could share or thoughts on ways to maximize the top line revenue generation from the property?

[fattyflattie 4639]

37 minutes ago, GlenFromTheMailRoom said:

Are there any pitfalls or "gotchas" to the thought process?

The only pitfalls I can think of are the communities that are trying to get eliminate STRs.   Don’t know how long it’ll take for that to catch on in the legal sense (if ever) but if it ever does, that might be a concern.  Wife and I looked doing the same on a couple places in Durango, but cooled on it a bit. 

[Spaulding Smails 1568]

Subscribed.  We're going to look for something along the coast some time in the next five years.  Similar strategy, @GlenFromTheMailRoom.  Hoping to use it a dozen times a year, have it break even, be able to let friends / family use it, and build some equity.

We also have a strategy in place at our primary residence.  We purchased seven acres, built a 1900 SF / 4-BR / 3.5 BA lodge at the front of the property, moved into it in early June, and will move into the main house at the back of the property early next year.  Once we're settled, we'll start renting the lodge.  We're right across from a big wedding venue with limited lodging available in the area, so I'm optimistic it'll generate some nice income.  

For those of you with STR on the same property as your homestead, how are you handling property taxes, etc?  I think I have a pretty good grasp on the management side, but I'm struggling with the financial / tax and risk side.  I'd love some high level input from someone with experience to help figure out:

-Setting up a separate entity to "own" the property

-How to minimize tax implications, leverage homestead, etc

-How to reduce risk through the proper insurance policies

[GlenFromTheMailRoom 1618]

21 minutes ago, fattyflattie said:

The only pitfalls I can think of are the communities that are trying to get eliminate STRs.   Don’t know how long it’ll take for that to catch on in the legal sense (if ever) but if it ever does, that might be a concern.  Wife and I looked doing the same on a couple places in Durango, but cooled on it a bit. 

Pagosa was a weird one.  Lots of HOAs have specific restrictions adopted and most of the town north of HWY 160 won't allow STRs.  If you stay south of 160 you have to go through the county to get a license which seems much more straightforward.  The real pain the ass so far has been finding contractors to make small changes and updates to the house.

[zman13 180]

Check out this thread also:

 

[NYTransplant 148]

6 hours ago, GlenFromTheMailRoom said:

Are there any pitfalls or "gotchas" to the thought process?

For those that have done something similar are there any tips you could share or thoughts on ways to maximize the top line revenue generation from the property?

Wife and I used Evolve for our place in Lago Vista, and our biggest issue was with their suggested rates. We moved to AirBnB and doubled our nightly rate. We aren't 100% occupied and have no desire to be. Wear and tear on an STR is no joke, and I'd rather it go empty than rent it for less than I think it's worth. My personal opinion, but if you do plan to use it for your own use, it's better to reduce wear.

Somewhat related note, but we lived in our place for a couple months before starting to rent it. I feel like this helps avoid the stupid mistakes/complaints from your first renters, and getting a 5 star rating on your platform of choice is key to consistent rentals.

[Gladeite 375]

Picking Pagosa Springs as a STR location could prove to be challenging.  There is a concentrated effort to eliminate/restrict STRs.  One large, popular neighborhood south of 160 just adopted a no STR policy.  This was a HOA vote and it passed by a large margin.  A large neighborhood north of 160 has an amendment out for vote right now.  It is expected to pass and will eliminate STR.  If you are in the town limits, voters approved $150/month per bedroom tax for all STR, regardless of occupancy.  There is a lawsuit to stop this fee, but you get the idea.

[Chewbacca 7807]

On 7/12/2022 at 7:10 AM, GlenFromTheMailRoom said:

My wife and I (no pics) decided to take the plunge and invest in a short rental in Pagosa Springs, CO for passive income/part-time usage (1-2 months a year).  According to AirDNA, Rabbu, and Mashvisor it should be a pretty healthy investment if we play things right and evolve's 10% management fee has made the deal a little sweeter.  If the cards fall correctly and we pump all the income back into the loan we should have the home paid off pretty quick and are planning to run the story back again if it all works out.  Anyone else deployed a similar strategy?  Are there any pitfalls or "gotchas" to the thought process?

For those that have done something similar are there any tips you could share or thoughts on ways to maximize the top line revenue generation from the property?

Thanks for contributing to the fucked up housing market in the CO mountains.  Ugh.

[GlenFromTheMailRoom 1618]

11 hours ago, Gladeite said:

Picking Pagosa Springs as a STR location could prove to be challenging.  There is a concentrated effort to eliminate/restrict STRs.  One large, popular neighborhood south of 160 just adopted a no STR policy.  This was a HOA vote and it passed by a large margin.  A large neighborhood north of 160 has an amendment out for vote right now.  It is expected to pass and will eliminate STR.  If you are in the town limits, voters approved $150/month per bedroom tax for all STR, regardless of occupancy.  There is a lawsuit to stop this fee, but you get the idea.

Our realtor is the one who's challenging the tax changes.  The house we bought isn't in the city jurisdiction.  Our permitting will go through archuleta county.

We close in 7 days so it shouldn't be too big of an issue.

 

Edited July 14, 2022 by GlenFromTheMailRoom