Any Short Term Rental Advice?
Not positive this belongs here or /r/RealEstate my apologies in advance.

My business partner and I have maintained an LLC for the purpose of purchasing commercial properties for the past 5 years.    We haven't bought a thing.... Yet.     We are aggressive in our search terms and have concluded that if it has a MLS# already there is no equity in it or the ROI takes a generation to recoup.

We are shifting gears a bit and are exploring the option of purchasing single family homes for Short Term Rental.   Looking in beach(y) towns right now in Texas and Florida.  

Have any of you pursued this previously, where should I turn for advice?

Thanks!
[{"id": "fszt7rf", "text": "I'm the happy owner of a few STRs. The easy advice is to buy something that cashflows just fine as a long term rental, then turn it into a STR and increase your returns. Don't buy something that only works as a STR. \n\nFort Myers Beach, FL has some nice properties with good returns for sale, at least as of February. Many sellers pulled off the market to wait out Covid. Covid has had a very big impact on STRs, leaving you in a good time to buy over the next year.\n\nAlso, what you shared about MLS listings being absent of profitability? While I'm sure that varies by area, in my area, I can certainly find profitable properties on the MLS. You just have to keep looking outside the box you don't even know you are in. For example, look at huge homes, and convert them into multi families. Look at mixed use commercial buildings. Look at rural property. Look at listings that have been there 200+ days, figure out what is wrong with the property and fix it. \n\nBack to STRs for a moment there. Don't spend much on furnishings - guests destroy things quickly. I usually come in around 4-6k in interior decoration and furniture for a 5 bedroom home. DO spend money on professional photography. And use last year's numbers for comps, instead of this year, as far as rental rates go, because of covid discounting.", "replies": [{"id": "ft0bou8", "text": "Thanks for the reply I truly appreciate it.\n\nI am feel you on the MLS listing comment and completely agree with you.    We have tried but one of the rules that I am sticking to in our business plan is the building be able to pay its own mortgage/burden costs.   We are using a 20% vacancy rate in our models and the lion share, while cash flow positive, are break even or have a long long long payback.  \n\nI hope that \"getting outside the box we're in\" is the pursing STRs.  At least this is what we are telling ourselves.\n\nI am pleasantly surprised that many listings are selling furnished, some even come with golf carts and beach toys.    For your interior decorations prices you mentioned is that annually?    100% agreed on professional photos.   \n\nDo you have a preference for Condo vs. Single Family property types?", "replies": [{"id": "ft7q1cv", "text": "Hi again - sorry for the delay.\n\nFirst, why 20% vacancy? Is that on commercial (which I don't know what rate is appropriate), on long term rentals (7% or area standard should be used vs 20% - 20% is huge!), or short-term rentals? Short term rentals goes the opposite - how many days of occupancy are you expecting? That depends wildly on your area and season. My Midwest properties see 110 days occupied on a normal year, and I budget for only 90 when forecasting cashflow.\n\nFor my interior decorations, that's one time. My annual followup budget is about $1,000 in NON-reimbursed replacements/upgrades/damages. I tend to have another $1,000k-$2,000k in reimbursement income and replacements. This is all in addition to CapEx and Maintenance savings, which I treat otherwise identical to a Long-Term Rental. \n\nI am adamantly opposed to condos and HOAs, especially for short term rentals. That takes a big element of control out of your hands if the HOA or board changes the rules about rentals, vacation rentals, or owner occupancy requirements. They can and do also change the HOA fees, leaving you with an unpredictable and unforecastable future expense, which is no fun at all, and usually doesn't correspond with rental increases for an area. You need the control - don't give it up to an HOA. You have enough to learn and grapple with in local or state short-term rental regulations, taxes, and Covid-19 compliance concerns, without adding an HOA on top of it. \n\nDo you want to run your other base assumptions by me, in terms of CapEx, Maintenance and any management fees you are accounting for in your evaluation? While it's going to be regionally specific in some ways, in other ways, it's fairly straightforward to apply CapEx numbers to a given property considering its condition.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ft03h43", "text": "My suggestion is seeking for a broker or agent that is local and familiar with the locations you want to purchase single family homes. They have the right tools to search in the areas and be able to give you advice.", "replies": [{"id": "ft0bx3r", "text": "Thanks for the reply.   I have a couple of listing agents that have called me back and have offered to work with me.   I've also have an agent referral from a friends network that has reached out.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ft067j9", "text": "Short term rental, like VRBO/Air BnB? How are you calculating ROI?", "replies": [{"id": "ft0u38g", "text": "That is a very good question.   How should it be I wonder....?\n\nVery simply currently I am calculating it by capturing my costs vs. revenue.    I haven't really figured out a good model to capture appreciation other than a gut check against market comps.   \n\nQuick simple example say a property is $600k purchased price and the rental projections $70k/annually, Operating expense and debt maintenance estimated $35k~$40k annually.   On paper they are cash flow positive in the first year.   More so year 2.  \n\nDo you have a recommended way for forecasting prospects?", "replies": [{"id": "ft1490y", "text": "We use discounted cash flow models to evaluate commercial real estate investments. Typical model, unless we know otherwise, projects ten years of cash flow and a reversion value in year ten based on cap rate. Then we discount it back to current dollars. The difference between the acquisition cost and discounted cash flow value will tell you whether it\u2019s a profitable investment (positive) or not (negative)", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ft0u5sk", "text": "Can't comment on STRs specifically, but we own hotels, which are fairly similar. The biggest takeaways on individual houses especially on the beach towns is achieving a reasonable return. Since the airbnb trend took off, many made the conversions over to permanent rentals. I have seen well located beach houses get bought by investors whose plan was to rent. However, once you see the cap rate, its like a 4% cap, barely enough to service the debt. They're great investments at the right price. In addition, you'll have to account for higher insurance premiums. Unless you can find a really good deal, a lot of the beach houses I have seen are heavily marked up. Message me if you need more help, but thats my two cents. Good luck.", "replies": [], "depth": 1}]