Making the decision to invest in STRs is the hardest and first step to joining the club of Physician STR investors. These investors are motivated, hard working and focused on providing a service to others. As a result most Physician STR investors are successful in this real estate class. Simply put, STR investing is perfect for Physicians…
So what are the 5 most important things to consider when purchasing an STR.
1. Location, Location, Location
This is the classic real estate line for a reason. It is absolutely true but with a slight twist for STR investing.
Location is dependent on your investment style. Will you chose the location with the most cashflow? Or, are you looking for a property with less cashflow and more personal use?
There is no right answer here but take the time to evaluate your strategy before making that first purchase. (What Type of Real Estate Investor are You?)
Then be kind and don’t hindsight yourself…
For example, don’t regret a local property purchase with personal use…because there were more cashflow positive properties that you could have purchased in another State.
This also works the other way… Don’t regret “missing out” on a STR with personal use upside because you focused on cashflow.
Remember, you are still winning if you are moving the needle forward while investing using any strategy you enjoy.
After you know your style, focus in on the specifics of your STR market. Every market has specific features… Is the property near the beach, slopes, Dollywood, Hollywood, Disney World, Disneyland and so forth.
2. Would you want to stay at the property?
This is definitely different than what is taught by some of the LTR physician courses out there. In LTR investing it needs to be nice “enough” but you are reminded that you are not staying there.
In the world of STR investing it is important to put yourself in the shoes of your guests. Would you want to stay at the place you are considering owning? If the answer is NO than that is not a good property.
3. What makes your potential STR unique?
Is there something to the property that jumps out at you while flipping through Redfin, Zillow, Trulia?
Does the property have two master bedrooms? Is there a wow factor to one of the bedrooms or master rooms?
Does the property have an indoor pool, Amazing gameroom, stunning views?
These are things that the property already has that will distinguish your property from other rentals?
4. Is there room for improvement?
Now I mention this one with a little reservation. This can be a double edged sword if it involves major rehabs.
Long rehabs may result in “forced appreciation” but they also negatively impact rental income/cashflow.
If you notice some small renovation options or an easy way to add a bedroom then it might be worth it.
However, just remember any rehab takes time and money…
If you can time a purchase and rehab during the off season it might be worth it… otherwise you may be better off looking for something “ready-to-rent”.
The “ready-to-rent” properties can also have room for improvement with simple updates.
For example, replacing the outdated TVs with Large new smart TVs. Adding a Wii, arcade or pool table and updating the kitchen.
These are pretty easy upgrades and if timed right can be done the day after closing.
5. Does the location you are considering have the ability to build a team?
This seems like a straightforward statement but it is a big deal. You can have the most beautiful property in Montana, Alaska, or out along the Oregon Coast but if you can’t get it cleaned you can’t run an STR.
So when you are looking at your markets you also need to evaluate the “team” infrastructure for your market. You can do this via Google searches, word of mouth, joining Facebook groups and checking surrounding Airbnb/Vrbo listings.
Welcome to the club of Physician STR investors… Remember to consider the above five items when looking for your first or next STR and good luck out there.
Enjoy your Journey to Financial Freedom