Project Summary

The Tree House in Beech Mountain, NC, marked this client’s first foray into the short-term rental (Airbnb) market. They chose this location due to its affordability and its potential as an untapped, year-round tourist destination. With skiing and snowboarding in the winter, and the Land of Oz and various outdoor activities in the summer, Beech Mountain presented a promising opportunity. Additionally, the area is known for being very Airbnb-friendly, further enhancing its appeal.

The property itself was a fully furnished, charming treehouse, requiring only minimal upfront capital to get started. Initially, the client explored working with a vacation rental management company, hoping they could fully manage the operation. However, they found that full-service companies charged steep commissions, ranging from 25% to 30%, which would barely break even after expenses.

Instead, they opted for a hybrid property management company that charged a more reasonable 10% commission, plus some processing fees. While this company handled the marketing and guest communications, the client was still responsible for managing the cleaning, maintenance, and local guest interactions. Despite their efforts, after a month, they only received one booking. After evaluating other local vacation rentals, the client realized their property was priced too high, especially for a new listing with no reviews or track record. Recognizing this, they decided to take control of the listing themselves.

Our team helped with implementing property management software, automated many aspects of the daily operations, including guest communications, cleaning coordination, and maintenance scheduling. They also installed a smart lock to simplify guest check-ins. After taking new professional photos and stocking the home with essential supplies, the client launched their short-term rental business.

Once they assumed full management, they quickly realized that the property was becoming overbooked. Occupancy rates soared to 90% and above, creating a new challenge of managing high demand. To address this, our team and the client worked together to raise the nightly rate, which not only helped balance occupancy but also increased revenue. By self-managing, they were able to provide personalized guest communication and ensure consistent cleaning and maintenance standards.

The Tree House achieved Airbnb Superhost status within the first quarter and has maintained it ever since. In 2020, the property won the Traveller Review Award from Booking.com for outstanding guest reviews.

Financial Overview

• Purchase Price: $139,900
• Cash Down + Closing Costs: $6,000
• Furniture and Decor: $800
• Startup Expenses (lock, toiletries, coffee, etc.): $2,000
• Immediate Repairs: $1,000 (new flooring in bathrooms, bear-proof trash containers)

Monthly Expenses:

• Utilities (Gas, Electricity, Water, Sewage): $300
• Cable & Internet: $100
• Property Management Software, Marketing, Website: $50
• Cleaning Fees (average per stay): $110
• Maintenance & Repairs: $75/month

First-Year Stats:

• Occupancy Rate: 70% to 90% year-round
• Average Gross Rental Income: $3,500 per month
• Total Gross Rental Income (April 2019 – December 2019): $31,382.39

Update: March 2020 (COVID-19 Impact)
As the COVID-19 pandemic began to spread across the United States, the Tree House saw a significant number of cancellations. Our team assisted the clients to adapt quickly by shifting their marketing strategies, successfully booking out the property for the upcoming months. However, in response to rising cases, Watauga County imposed a ban on short-term rentals, requiring the client to cancel stays of less than 30 days. In response, our team and the client was able to pivot to target longer-term month-to-month tenants, successfully securing a three-month lease with an option to extend.

Update: March 2021 (Post-Pandemic Decision)
The long-term tenant stayed for six months, which helped the client maintain a break-even point during the downturn when many other short-term rentals in the area were incurring losses. With the restrictions lifted and the Beech Mountain housing market thriving, the client decided to sell the Tree House. They listed the property as a turnkey Airbnb investment and sold it for $181,750, capitalizing on the high demand in the market.

This sale also met the requirements for a 1031 tax exchange, which allowed the client to roll the gains into the purchase of a new investment property, a beach house in Surfside Beach, SC, called Alohalani.

Final Numbers Summary:

• Purchase Price: $139,900
• Sale Price: $181,750
• Initial Cash Needed: $14,793
• Monthly Cash Flow: $1,471
• Cap Rate: 19.4%
• Cash-on-Cash Return (COC): 119.3%