Short Term Rentals – State of the Market

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Top 10 Tips to SUPERCHARGE your STR

Michael Kluger from LUX STA Vacation Rentals joined our investor Zoom call last week to cover the state of the market.  Click here to watch this call.

Here are the takeaways:

  • The St. Augustine short term rental market is saturated, very competitive and occupancy rates are not where they were.  That is not to say you can’t be successful but you have to know a few key things…so keep reading!
  • Properties that were getting 80% are now getting 60% annual occupancy
  • Supply and Demand: Since Covid the number of STRs more than doubled. People got in when the interest rates were lower, visitation was higher and there was more pent up demand for travel
  • Numbers: There are approximately 850 STRs and an estimated 250 more that are without permits. Inspections have doubled annually between 2021 and 2022.
  • As people sell short term rentals, active rentals with benefit.
  • We will see lower occupancy for a period of time until people leave the market.
  • If you have a property with top amenities, such as a pool with a great location, you may not even feel the effects or be aware the market is changing.
  • This state of flux not only applies to Florida, but is happening worldwide.

SUPERCHARGE YOUR STR

How to buy and get set up for success

  1. LOCATION: Consider 32084 which includes the City of St Augustine, and also Vilano Beach. Walkability is an important factor to people, whether downtown or if you are near the beach they want to walk to the beach.
  2. AMENITIES: Properties with a heated pool or hot tub, tend to perform better.  If you have a heated pool, you’ll get bookings all year round, likely 80% occ year round. Ping pong tables, corn hole, darts, beach towels, boogie boards, ebikes are other options you could add to stay competitive.  This could also be an opportunity for incremental income.
  3. BEDS: Maximize bed count. Adding a sofa bed typically means additional income
  4. MARKETING: Photography is key. Make sure your photos are professional as people are making quick decisions based on photos. Focus on two platforms. 95% of bookings in our area are coming from Airbnb, VRBO is also popular.
  5. PMS: Find a property management system to link properties together, sync calendars between booking sites and handle guest communications. (I use Lodgify but there are many options such as Hostfully).
  6. PRICING: Do not rely on automated pricing tools. Look into pricing platforms like Dynamic Pricing, Pricelabs, Beyond Pricing. Smart Pricing from Airbnb is garbage. Be proactive with pricing adjustments to try to stay busy.
  7. OPERATING COSTS: Consideration of operating costs before you buy. In general, a 3 bd house can cost $500-$750 per month depending on electric, water, internet, cable, maintenance, lawn care, pest control.
  8. DESIGN: If you are not into design consider hiring a designer, however this can be expensive. Build out back yards with nice decking.  Add value to the property.
  9. QUALITY PRODUCTS: Avoid buying cheap products or those from Amazon. Buy quality products for less breakage over the long run.
  10. GET DIRECT BOOKINGS: Repeat bookings and referrals are the holy grail and if they can come direct that is better for you and the guest. I put a postcard in the kitchen of my rentals showing the other rentals and long stay pricing if coming direct.

How to find a good STR opportunity

  • REALTORS: Work with a good realtor that understands investment properties, ideally has or has owned them in the past.
  • GEOGRAPHY: Look at the Airbnb map to see concentration of where they are at in your town. Drive around the areas where the tourists want to go. Look for hot areas, and those in transformation. Walkability to sights.  You may see some For Sale signs and can check out those properties.
  • ASSESS INCOME: Look at Airdna to see general rental income on the Rentalizer service. Not 100% accurate
  • OTHER INVESTORS: Look at Bigger Pockets. Connect with other investors in your area and realtors on the site that work with investors.
  • DETECTIVE WORK: Already know a property you’d like to buy but is not on the market? Let your realtor know the address, or look it up on the property appraiser site to find contact info and approach the owner directly.

What do STR property managers do? 

While this can vary, Michael explained what LUX St Augustine does:

  • PERMITS: Your Property Manager will get a permit to do STR on the property. This involves working with code enforcement and the fire department once a year, adding smoke detectors, fire extinguishers and evacuation plans. They will make sure you pass inspections
  • MARKETING: Write the content for listing. Bring in a professional photographer to do photos. Set up all booking platforms. Airbnb, VRBO, own website. SEO for website
  • COMMUNICATIONS: Set up communication between guests
  • PRICING: Pricing evaluations weekly basis, rate adjustments, promotions, putting on social
  • GENERAL OPERATIONS: Manage cleaning after check out, landscaping, every aspect of the house is looked after, AC services, Maintenance inspections, pest control, internet, cable
  • BOOKKEEPING: Collect all money from bookings, pay taxes, Florida and to city and county, paid on monthly
  • EMERGENCIES: Anything that could happen from calls at midnight to inspections with the city
  • ASSESS POTENTAL INVESTMENTS: Can perform market analysis for clients on new properties on what cash flow might be

Management fee based on nightly rate, generally 20% in St Augustine.

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