Latest / Short Term Rental Problems and Solutions / How Smart STR Investors Minimize Risk
Transcript
- Jeremiah: It's not all sunshine and five-star reviews. If you've realized being a short-term rental investor isn't glamorous, then you're and the right place. Guys, I made a mistake. and today I own up to that. I've invited a Titan in the Poconos STR world to join me so that we can correct the record, but also because she brings an incredible perspective to help answer a couple questions about HOAs and their overreach, as well as some long range views of the STR industry in the region. We get into it because this is the community where we talk about the gross, the awkward, and the operational messes, as well as the real strategies that help you keep going instead of quitting. anybody can win big in this industry, but you can also ignore education and you can quit. My name is Jeremiah, and I'm an investor with over a decade of experience. and I'm also a property manager with over 140 units under management. I talk about what rental investing looks like from the inside. Let me start by introducing you all to Kara and McKenzie. Kara Sincavage and McKenzie Seitz are gonna help us answer today's emails. Kara Sincavage has been involved in the Poconos on so many levels for decades. She's an entrepreneur and a realtor and builder and fourth generation in Blakeslee, and her 26-year-old daughter is fifth generation, continuing the legacy, and is her broker. She recently retired from STR management, but is still very active in her construction business, building some of the top performers in this region. Kara, what would you like to add? Kara Sincavage/Mackenzie Seitz: Well, Jeremiah, as being a realtor is a lot of work. Being a broker is more work. Being a property manager is the most work because you're on call 24-7. So, Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: yes, we did used to manage 165 short-term rentals in Lake Harmony, Blakeslee, Pocono Lake, Pocono Pines, and Long Pond area. and it's exhausting. We did it for years. We decided that we wanted to get back into building and construction like my father. and grandfather and generations before us did, so we decided we were going to stop managing short-term rentals, and we were gonna hand it off to a company, which we did, and we were gonna get back into building construction and short-term rental investment homes for investors that were looking to invest in the Poconos. So we started that a couple years ago, and we absolutely love the construction and We love the real estate end but we can't do the property management. and we like companies like you that are doing the maintenance and the management. Jeremiah: Awesome, thank you. so to my listeners, on episode 36, where I talked about where to buy a short-term rental in the Poconos, we talked about all these different HOAs and some of the dynamics and temperatures of each one. Something that I got wrong was about Greenwood Acres, which is actually a community that was settled and created by the Sincavage family. but what I was thinking was that the builders would actually have some sort of a vote. and it turns out they don't. They don't have any actual votes in the HOA level. So she's been like pouring her life into this community and I can totally understand how that would come across as wrong for me to imply that she's actually still in control of the community. So Kara, do you have anything to add on that correction? Kara Sincavage/Mackenzie Seitz: I sure do. my family has had zero control of Greenwood Acres since 1996 We lost a lawsuit against our cousins that built the house the way they shouldn't have. It cost my family $30,000 in attorney fees for the judge to tell us we need to form an HOA and protect every homeowner in here. So 1996, we turned everything over to a board of homeowners. That took over the roads, the lake. and we from 1996 to 2026, current today, have not had one vote as the developer or owner at all ever in the community. Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: The only people that get to vote here are the homeowners or landowners that pay dues. So what happened was a couple years ago, the builder Matzel was building and ended up going under unfortunately in 2010 because of DEP coming with the common plan of development. Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: and in 2010, they took it from 10 acres down to five acres. and it ended up unfortunately shutting down Matzel. The bank took the properties back in New Jersey, and the bank contacted us to list the properties, which maybe three or four years ago we relisted 21 properties for the bank. So people might have Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: thought that was us as a developer, but that was sold in the 90s to a builder. Jeremiah: Yeah, that's what gave me the wrong idea and I'm not sure if anybody else had that idea, but I saw all these listings go up for sale at the same time and I thought, Kara's liquidating her holdings in Greenwood Acres. But that was obviously wrong. Kara Sincavage/Mackenzie Seitz: Yeah, no, and and everybody else could have thought that too, because they see some Sincavage Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: listing twenty-one properties. But no, unfortunately not. So yes, we get absolutely no votes in here. The only people that vote in here are the full time homeowners and landowners. Jeremiah: Mm-hmm. Yeah. and actually that's the topic of today's episode. You know, like so we're gonna be answering a couple of emails and the first one here is about HOAs. So let's get into that email. Kara Sincavage/Mackenzie Seitz: Great. Let's do it Jeremiah: Awesome. So it says, Hi Jeremiah. About six months ago I purchased a property for STR in Lake Harmony, and I've been making $10,000 per month, which is awesome. But it looks like I'm going to lose everything because the HOA just voted 75 to 3 to ban short-term rentals as an allowed use for the whole HOA. The community is Pocono Mountain Lakes in Carbon County, and I paid a high price for it because of its rental history and its rental potential. I actually paid over appraisal value because it's more of a business than a home. Can you recommend an attorney? and have other HOAs had fights like this that you know of could help me and other STR owners towards the right solution? Regards Jack. So Kara, I'm not sure how familiar you are with this one. It's pretty close to you know Greenwood Acres, But this is a tiny little community. it's got like seventy-eight houses, seventy-eight lots, I think. It's in Carbon County. It's over there by where the Turnpike and 940 intersect. it's actually right next to the Francis E. Walter Dam this dynamic where they just take away somebody's rights is also something that a lot of investors are worried about. I think a lot of people who are looking to purchase in the Poconos are very concerned that, they're paying for something because of its intended use. It has zero value to them as a vacation home that they can't rent, or as a primary home that they have to live in or a long-term rent. So this is a big concern for them. and I'd love for you to share some of your perspective on HOAs and these dynamics as you've seen more of them switch over from allowing this to not allowing this. and I've seen a couple things behind the scenes as well, but probably not nearly as much as you. Kara Sincavage/Mackenzie Seitz: it's very hard. investors have to understand that when they're buying a home, they need to understand what they're buying and where they're buying it. and you and I discussed how important it is to work with a local realtor in the area that knows the HOAs, that knows the township rules. they also need to know what's going on in the communities that they're selling in They need to know if they're going to have an upcoming vote to shut down STRs. and that did happen in Greenwood Acres a few years ago. About Three years ago, a group did file a petition, have a special meeting. They did come and present that they wanted to do a cap of 50 homes in Greenwood Acres. They wanted to, after that, make it full-time residence only, no more short-term rentals in here. and wanted to put a complete moratorium. On the people's properties in the community. So because of my parents and family being original developers, people trust us. We live here. We're here every day. We're not Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: asking them to sign a petition without them knowing what they're signing for. We're telling them we're here, we'll protect your property values, we'll protect your rights, we'll protect your values. So at that time with Greenwood Acres, we knew that they were trying to form a special meeting. Everybody gave me 97 proxies. So I sat in the audience with 97 proxies of homeowners that cared about their property values and rights, and asked me to vote for them and to stop anything that they were trying to do to shut down short-term rentals, take away their property rights or their values for the future, or even if they did put the cap. We have 86 homeowners right now that are still waiting to build in our community. That that's not fair for people that have owned the land for forty years that might want to build a house here, use it part-time, rent it part-time, and for a few residents to try to take that right away from them. So yes, we we live it every day here with these people. I think it's super important to understand the dynamic of the community when you're coming into it, whether it's like one person that doesn't like it, find out how many short-term rentals are in it, and get a get to know the neighbors in the communities too. I think that's a really big part of it. Jeremiah: Mm-hmm. I associate the risk of an HOA banning vacation rentals with the number of primary homeowners. When you've got like a lot of people living there, this is their, you know, where they commute from, this is where they work from, they have their home offices. When there's a lot of that in an HOA, I see that as a high risk, and a lot of people like Penn Estates as an HOA for vacation rentals. I think it's high risk. There's a lot of primary homeownership there compared to other communities where short-term rentals are common. and I think it's high risk. they have the gate, it exercises a lot of authority about who they let in and who they don't. But that's Penn Estates. You know, when it comes to like Pocono Country Place, you don't have a lot of people who are primary homeowners living there. So I don't really think that it's a high risk, you know, comparatively. When you talk about like Lake Harmony Estates, there's almost no primary homeownership. Almost every property in there is Is just a vacation home or it's somebody's STR. so there I see like the lowest possible risk. and in the 2000 timeline, like 2001 to 2008, you saw a lot of development up here. and a lot of that I think was people who want to live here. They want to commute. and they'll cut down all the trees, put in a nice grassy yard, and they've got their two car garage and their 1.5 kids, and they live in these four bedroom houses close to the interstate and I saw a lot of that in Emerald Lakes. I saw a bunch of that in Greenwood Acres. I saw a lot of that there. very limited degree in Brier Crest, which by the way, Brier Crest also had a meeting where they were talking about potentially putting a cap of ten percent on STRs. and it was Kara Sincavage/Mackenzie Seitz: That's not good. Jeremiah: their most visited meeting. Like I was there, seventy five other people were there, there was standing room only. and Kara Sincavage/Mackenzie Seitz: Yep. How'd that go over? Jeremiah: The guy who suggested it on the board was like, guys, I can tell nobody wants this. I just suggested it because of this. and I think he was just trying to justify why this was even on, like why it Kara Sincavage/Mackenzie Seitz: Yeah. Jeremiah: was up for discussion. He said that there was a developer who bought five lots next to each other and told the office these are all going to be short-term rentals. and it got them concerned because most of what their security does in Brier Crest Woods, most of their reports for security are from vacation renters. It's people who are at the lake, they're fighting with each other. sometimes it's shooting off fireworks Kara Sincavage/Mackenzie Seitz: Music. Jeremiah: or playing music at the beach, you know, and people complaining about stuff that. and so they're like, well, if we become this haven for short-term rentals, then you know we're gonna have more of that. and I'm like, yeah, but it's like 60 bucks per reservation. to the community, I think you can deal with it. if we did become a haven for short-term rentals, your budget would go through the roof and you'd be able to hire that much more security. So let's think of the good and the bad, But nevertheless, nobody wanted their rights taken away. Except for a couple of people who did stand up and say, this one lady I'll never forget. She's like, my blood pressure goes down as the elevation goes up. when I'm coming to the Poconos, my vacation home, it's my peace. I don't really want A whole bunch of vacation rentals playing music around me, rising my blood pressure. and I get it, you buy in an HOA, it's nice and it's quiet at that time, but things change. But things change whether it's an STR or an LTR or another primary homeowner, like everything is gonna change. Things are constantly changing, Kara Sincavage/Mackenzie Seitz: Mm-hmm. Things are constantly changing. Yes. Jeremiah: exactly. So, People are just trying to stop things from changing, I think, in HOAs. and I think it's noteworthy to say in an HOA, every property owner gets a vote. In a township, every resident gets a vote. Kara Sincavage/Mackenzie Seitz: every full-time resident. Only full-time Jeremiah: Yes, every full-time resident. Kara Sincavage/Mackenzie Seitz: residents get the vote. Jeremiah: Because as an STR investor, which is what most of our audience is, as an STR investor, you only get to vote in local elections where you live full-time. You don't get to vote in Tobyhanna Township. You don't get to vote in Tunkhannock Township. So wherever you happen to be, that's where you get to influence your local elections, which means the township is the bigger wild card. STR investors band together and they sue, but at the same time, they can't vote and they can't run for the board of supervisors. why don't you help us like compare and contrast the HOA, where every property owner gets a vote? and like you said, you had 96 proxy votes when they were talking about banning vacation rentals in Greenwood Acres. what can STR owners do at the local level when a township decides that they're gonna put a cap? Kara Sincavage/Mackenzie Seitz: The STR owners need to find somebody like us that they can trust and count on and have us to protect them. So not just sit there and buy a property and think they give it to a property manager and that's all they have to do with it. They need to know what's going on in the HOA. They need to have a 24-7 contact person in the community where they live that they can count on. That they can call that knows what's going on. that goes to the board meetings. They they need to be active. a lot of people, some of the homes we're building for these homeowners. Are million-dollar houses. These aren't $200,000, you know, temporary investment vacation homes. These are investment homes that are sometimes double the value of their home, primary home that they live in. So they need to take it serious and not think I'm just gonna buy it and that's it. They need to be active in the community, Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: in the township, and with somebody that they can trust. Jeremiah: Yeah. that dynamic, it almost feels like the Poconos is a minefield. You really do need to follow somebody through a minefield. You know, you need to know like which way you can go. one of my most interesting sales, which I'll share with you, it was a 125 Hillside. and this is in Locus Lake Village. So this house was performing really well. It's a five-bedroom chalet. It's like a Liberty Chalet, you know, the big windows up front. We sold it to somebody who used their mom from Montgomery County down near Philly. They used their mom as their agent and they bought this property and then two days after closing on it, it was up on VRBO. She was advertising it on Facebook, on all like the Facebook groups, like, hey, come on over to the whatever chalet, the sunrise chalet. and I was like, no, she doesn't have a permit yet. This lady's gonna get caught. She doesn't know what she's doing. and Kara Sincavage/Mackenzie Seitz: someone didn't read the resale. Jeremiah: I don't think she paid attention to anything, honestly. I actually friended her on Facebook when I saw that because I was like, I need to follow this. I Kara Sincavage/Mackenzie Seitz: Yeah. Jeremiah: I need to know what's going on. But like Kara Sincavage/Mackenzie Seitz: How'd she do that? Jeremiah: my client who is also a property manager by the way, very good one, so she purchased this property to make her own vacation rental, and then she ended up selling it like 13 months later. In the meantime, we redecorated, we repainted, we did a bunch of things, and then we put it up and we sold it. She bought it for $505 it was a foresale by owner essentially. It was entry-only. $505 We sold it around $565 Don't quote me on the numbers, but we were under contract twice. Anyway, this lady bought it with her buyer's agent was just from the Philly area. They barely negotiated on inspections. They didn't really seem to know what to do there. So on our side, it was a win. It was a big win for us because we just got the value up sixty thousand dollars. and the limitation on this was really just the appraisal value. Anyway, I'm getting too into the weeds. I'm talking to real estate agents and we care about these details, you know. Kara Sincavage/Mackenzie Seitz: Yep. Yes. Jeremiah: but not everybody does. So, she had it listed as a five-bedroom house. She changed it to a four-bedroom house a little while later. and then she put it up for sale about 12 months later. So she put it up for sale with a local agent who was from the same office that I was with back when I sold it. So I Have a feeling that she didn't remember my name. She just remembered what the brokerage was, and she contacted them, and the one that you know listed it did. Well, that guy listed it as a four-bedroom house, even though it has five bedrooms. Because you know, some agents are like, if it only has a septic system for four bedrooms, I'm gonna list it as a four-bedroom. I I think that we need to disclose this as a broker. right, McKenzie, broker to broker. Disclose, disclose, disclose. But Kara Sincavage/Mackenzie Seitz: Definitely. Definitely. Jeremiah: Pocono MLS rules say if it has five bedrooms, list it as five bedrooms. So that's what I do. and that's how we sold it the way we did. Well, he lists it as a four bedroom, which I think is a disservice to his client, but his client doesn't really seem to know right from left, right? So she ends up selling it, I think, for $565, which we both know she lost on commissions on both sides. She lost on closing costs. and she probably saw a couple of fines from Tobyhanna Township for operating her house without a short-term rental permit. Applied for her short-term rental permit. That was why she changed it to four bedrooms, ran into a brick wall, got kicked in the teeth, whatever, decided to put it up for sale instead of holding on to it and fixing it. Well, the guy who bought it, Has me managing the property now. long story short, so it came full circle, it's important to have somebody lives here, knows this area, knows the temperature of each community. and, you know, before you buy into an HOA, you need to know the HOA, right? Like that's that's why it's hard line written into the agreement of sale that you have up to five days to look at the resale certificate, the rules for the community before you are locked in They can back out for the resale certificate if they're under contract on something. Because they might find some rules or regulations in that HOA that they're not comfortable with. and the HOA, you could avoid a lot of problems just by finding an agent who knows these different areas and these different HOAs. Kara Sincavage/Mackenzie Seitz: Yeah, that's especially important someone that's involved in the community, someone that does it every day. You might get a realtor up here, but they might sell one house a year. So they might not be actively involved in all the communities, everything that's going on and know at what point that each community's at what's short term right now. Jeremiah: Yeah, and actually that was part of episode thirty six. The listener that was writing in for that question, they had found a realtor just through Realtor.com. It was the first person who called them back and they were seeing houses in Beltzville., Lake Ariel, East Stroudsburg and Bushkill, and Blakeslee. they were all over the map. Kara Sincavage/Mackenzie Seitz: All over. Jeremiah: and their agent, when asked, how do you think this house will do for vacation rentals, was talking about, well, this one is two hours from Philly, but it's only an hour and a half from the George Washington Bridge. Well, you're not adding a lot of value, Miss Realtor Like you might be good at negotiating Kara Sincavage/Mackenzie Seitz: Yeah, no, no. Jeremiah: an agreement of sale, but like you don't seem to know anything about underwriting a short-term rental. A lot of people do find that. and I practice what I preach. my sister is looking to buy a house and she's only an hour and a half from here, but I'm not her agent. I'm providing free consultation. I'm not even taking a referral fee. I want her working with one of the top agents in her marketplace because that's gonna get her the best deal at the end of the day. So I don't know. I think I've said it before, I'll say it again. If one of my listeners is thinking about using their cousin from Philadelphia as their real estate agent to buy a property in the Poconos, just get your cousin to fill out a referral and get you an agent from the Poconos that knows what they're doing. They'll agree to split the commission and your cousin will get something and they won't even have to come here. If you're just looking to do them a favor, let's not use them as your agent to where you will eventually sue them for for what is this? Kara Sincavage/Mackenzie Seitz: Agreed. 'Cause they don't know the area, they don't know the HOA rules, they don't know what's going on in the township, they don't know if full time residents want to shut a community down. They Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: know nothing because they're not local like us. Agreed. Take a referral. Jeremiah: Yeah. Yeah. and even like Kara Sincavage/Mackenzie Seitz: We're happy to work with anyone with referrals. I'm sure you are too. Jeremiah: oh yeah. oh yeah. So years ago I sold a house in the community that this listener is asking about, Pocono Mountain Lakes in Carbon County. It was 98 Black Bear Pass. I was the buyer's agent. The listing agent actually lives in the community and is the treasurer of that community. and for various reasons, I don't think I want to name names on this, but they When asked about short-term rentals, they're like, oh yeah, there's a handful of short-term rentals. They mind their own business. Nobody seems to care about them at all. I don't see it as a risk. Well, she sold the house, and then like one year later, we get this. This guy bought his house as a vacation rental. He overpaid for a vacation property because of its rental history, because of its rental potential and it looks like it's doing really well. But the HOA, including that treasurer, if the treasurer gets a vote, I'm assuming they do. They voted 75 to 3 to ban vacation rentals for existing homeowners. So, like all future reservations are now not allowed. and this is an HOA. I manage three properties in this community. I've sold I think just one. But so Kara Sincavage/Mackenzie Seitz: Would that have been the three votes that voted? Jeremiah: there were like six or seven short term rentals before they did this vote. Kara Sincavage/Mackenzie Seitz: Yeah. Jeremiah: so that just means not everybody voted. I actually did a listing appointment with one of these, which was an A-frame. and by the way, I absolutely love A-frames. That's why it's on my shirt. it's the icon and the symbol Kara Sincavage/Mackenzie Seitz: in one Yes, PoconoAframe.com. Thank you. Trademark Pocono A-Frame. Jeremiah: Yeah, I was just I was just pointing that out. Is you guys have been putting up more A frames than anybody I know of. and it's it they're Kara Sincavage/Mackenzie Seitz: We love what we do and they're so comfortable. Jeremiah: they're beautiful. But the style is timeless. So the episode that came out last it's picking apart a vacation rental. Somebody asked me to critique their house. But it's a bi-level. and nobody's building new construction bi-levels today. Nobody's building new construction split levels. It's because they were in style for a little while and they're no longer in style. and as a vacation rental, I've never seen one outperform like square foot by square foot, number of bedrooms, whatever. Location, all things being equal, the bi level will do 50% of what an A-frame will do. It's maybe not even 50%. If you had a four-bedroom A-frame, just in the middle of, you know, Pocono Farms, and it's a grassy yard, you'd still probably do double what this guy was doing, which he was doing $36,000 for the last year. That A-frame would probably do $75. Easy. Kara Sincavage/Mackenzie Seitz: People wanna when they come to the Poconos, they want to feel like they're and the Poconos. So as an A-frame, you feel like you're in the mountains. It's all wood interior. It's it just has a mountain feel. Yes. Jeremiah: It feels rustic. It looks alpine. It looks like a place you would go, after skiing. Getting a little off topic. So about Pocono Mountain Lakes, I was saying, like, I had a listing appointment with a lady who had an old A-frame, stained glass on the front wall. It was really eclectic, really cool. she was doing like $120,000 a year in that community. So she was one of those homeowners who was told. You can't vacation rent your house out anymore. It's got to be 30 days or more. and by the way, the registration fee for long-term rentals over there is $1,000 a year. That's exorbitant. So there was actually one homeowner in the community sued, and the district court determined that that was an undue burden. That you can't have a registration fee. Because a registration fee is a fee for a service, right? It's got to be equivalent or somehow matched up with the service. So for them to you know, make it $1,000 for long-term rentals once a year is just exorbitant. Other places are $500 max. The $300, $200, whatever. Arrowhead, I think it's $275. Brier Crest Woods is $200. I think it's $600 or $500 for Towamensing Trails, but a $1000 over there and for no reason. Kara Sincavage/Mackenzie Seitz: Greenwood Acres was a $1000 and they just dropped it to $500 which is fair. Yeah. Jeremiah: That seems high. Yeah, five hundred seems fair. But the HOA lost. in that case. The district court said it's not gonna happen. So then the HOA actually appealed it and it got lost in appeal. Like at that level, there's no action, there's no judgment, there's nothing. It's just in appeal and nobody's doing anything with it. So like it's not really enforceable. So I was managing a long-term rental in there. The homeowner was not paying that thousand dollar registration fee and the HOA can't do anything about it. It's like they don't have any teeth. They don't have a judge saying this is legal for them to charge. So I don't know. I really don't like when some people know the rules and some people don't. Or some people know that they can break the rules or which rules they can break and other people don't, 'Cause the rules seem to apply to everybody but in reality they don't. Kara Sincavage/Mackenzie Seitz: Full-time residents have their own set of rules, didn't you know that? They don't Jeremiah: Ha ha. Kara Sincavage/Mackenzie Seitz: have to follow anything. Jeremiah: Yeah, that sounds like Mount Pocahontas. I talked about that HOA a couple of times because there they have rules and they're like telling people that you can't do any more short-term rentals here. But the residents there don't seem to follow any of their HOA rules. I was talking to one of them who's like, if I want to cut down a tree, I cut down a tree. I'm not going to the HOA first. They can't tell me that I can't cut down my trees on my property. and I thought it was hilarious, but I still see the community as a high risk if somebody's looking for an STR because there is this unresolved conflict, Anyhow. That HOA dynamic is tricky sometimes. But the comforting thing, I think, for short-term rental investors is that you actually do have a vote and you can run for the board and you can actually make a difference at the HOA level. The more difficult thing is gauging the township and what you can and cannot do in a township because you don't really get to vote there. and I tell people you limit your risk because there's strength in numbers. So townships like Tobyhanna Coolbaugh, Penn Forest, or Kidder, there's a ton of other STR owners that if the township decides to like, you know, overstep their authority or start taking some of your rights away as an STR investor, like you've got other people who can ban with you and you're able to hire a much better attorney. not that we want it to come to that. But have you got anything else to add on that HOA dynamic before we move on to the next email? Kara Sincavage/Mackenzie Seitz: Just anybody that's looking to invest by here, work with somebody that knows the HOA, what's going on, or can attend meetings because it's an investment and it's a very big investment for some people and they need to know, not just buy and not listen to the realtor that they're speaking to because not every realtor knows everything. Jeremiah: Yeah, yeah. in fact a lot of them don't. know anything. Alright, Kara Sincavage/Mackenzie Seitz: Yeah. Jeremiah: so hey Jeremiah, my fifty-nine-year-old mother came into some money from my dad passing away a few months ago. and me and my brother feel like she should invest it. what I have been researching is STRs, and specifically in the Poconos, because it's near all three of us, and my brother is a great contractor. But when I brought it up to her, she immediately said no. She doesn't think the moldy, humid paneling of the Poconos is good for Airbnb. She remembers visiting. A few times in the 90s and the early 2000s, but I've been there in the last few months and the house was pretty nice. Has the region changed that much? Or are we just seeing one or two properties that are actually nice? What's your take on the market compared to some of the other ones that are driving distance to us in New Jersey? Best wishes, Tommy. so Kara, when I started selling homes here, I was told for management, investors had two options. and yours was one, and like Evolve was the other. So, like I was selling homes, telling people, yeah, if you want management, just contact Kara Sincavage She'll hook you up. If you want to do it all yourself, Kara Sincavage/Mackenzie Seitz: Thank you. Thank you very much. Jeremiah: you need to talk to Evolve. and Kara Sincavage/Mackenzie Seitz: Yeah. Jeremiah: and those were like the only two options back then. So why don't you add context to help Tommy understand how the area is really changed Kara Sincavage/Mackenzie Seitz: Okay, Tommy, since 2009, so prior to 2009, we built for Thomas P. Carney over in Lake Harmony 28 townhouses, which we were doing phenomenal. building, building, building, and then 2008 into 2009, the market crashed hard. when the market crashed. We had to come up with a plan because we were sitting on six houses at that time not sold, six four hundred thousand dollar houses for sale. and I said to my boss, Kimmy Carney, I said, Why don't we furnish them and rent out? and she said, Do you really think that we would be able to rent them? and Make money off of it because we can't sell them right now. I said absolutely, I will property manage with you, I will do the rentals with you, I'll do everything and we'll go design them. So we did all six houses. and 2009, 2010, we made probably $600,000 in rentals on six houses total. There was no home away, there was no VRBO, there was no Airbnb, and Evolve just came online then and they were doing it for 10%. Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: we weren't charging anybody, we were just managing the six the first year. Then eventually, I mean we made so much money up here. Back in 2009, 2010, and then Airbnb then everybody came on. Then as soon as the market hit, everybody decided to sign up. Our thirty five hundred dollars that we were getting for a weekend then came down to a thousand because Jeremiah: Hm. Kara Sincavage/Mackenzie Seitz: of the corporations coming in and taking over our market and money out of our pocket. Homeowners' pockets, local pockets. So It it changed drastically to everybody then wanted to buy a house here and now the competition and when we were getting thirty five hundred now your number's a thousand because there's so many houses here. Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: So it changed a lot. But if you have Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: a good home and you manage it right and you work with a great property manager, you will be successful. Jeremiah: Awesome. That's that's incredible. those homes that you're talking about, were they like three bedroom homes, five bedrooms? Kara Sincavage/Mackenzie Seitz: They were all we built a few three bedroom houses, so three bedroom duplexes on Summit Road, and then everything else was basically a four, five, or six bedroom house. We were always into big construction and investments and short-term rentals with large houses. Jeremiah: Fantastic. So one of the things that Tommy's asking about is the moldy paneling you know humid Poconos vibe. and I think when I started selling real estate in the Poconos 2016, I did see a lot of houses with a lot of paneling. and it wasn't like what's behind you. It wasn't like the solid wood, knotty pine, tongue. It was it was like the cheap, Kara Sincavage/Mackenzie Seitz: Yeah, not tongue and groove. Yeah. Not new construction. Jeremiah: thin little paneling. Sometimes you can still get it Lowe's and Kara Sincavage/Mackenzie Seitz: Yes? Jeremiah: like it's a composite. I mean it's real wood, but it's like fiber. It's really cheap. Kara Sincavage/Mackenzie Seitz: It's cheap. It's cheap looking. Jeremiah: So like that's what a lot of the houses up here had. Almost everything on the market was a contemporary or a salt box and it all had the paneling inside and it was dark because paneling's not bright it doesn't reflect a lot of light and besides everything was being built with lamps so there's no overhead lighting there's very few chandeliers there's like not much surface mount it was just kind of like stereotypical Pocono to have these paneling palaces in these like Kara Sincavage/Mackenzie Seitz: Mm. Jeremiah: you know decent locations with nothing but woods around and so no yard no landscape Boulders everywhere, gravel driveway. Like when you think of the stereotypical investment property, the stereotypical vacation home from 2010, like does that kind of sum it up? Kara Sincavage/Mackenzie Seitz: Yeah. Mm-hmm. Jeremiah: But today, everything that's on the market's renovated. Like I almost never see Kara Sincavage/Mackenzie Seitz: So different. Jeremiah: paneling unless it's an accent wall. Kara Sincavage/Mackenzie Seitz: I would say some of the older homes definitely in Under two hundred thousand. In that price range, they're they're priced where they should be. But there's so much new construction, so many new buyers have come in and done renovations to the house, like you said, though Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: it doesn't even look like how it would have ten years ago. Jeremiah: I think STR drove that. the short-term rentals, the competition Kara Sincavage/Mackenzie Seitz: Yes. Jeremiah: in the short-term rental market, I think it drove that improvement that we've seen in our marketplace. Kara Sincavage/Mackenzie Seitz: Absolutely did. Jeremiah: the average house in 2019 was selling for I think $116,000. Today the average listing is $305,000, I think. So the number is almost tripled in the value. and that part of that's deflation of the dollar. But a part of it too is like the homes up here are better than they used to be. There's more high end homes. There's more new construction high end homes. A lot of them you're putting together. I really like Kara Sincavage/Mackenzie Seitz: I I think a lot of the full time residents get jealous of that because they don't get to live this. I do. Jeremiah: Yeah, I think so. I remember speaking with one full-time resident who said these STR investors are raising the prices and now locals can't afford to buy them. and I was like, but locals own real estate here. I know, like, like locals own the real estate too. Like Kara Sincavage/Mackenzie Seitz: Your property value going up is a bad thing? Your taxes aren't going up, only your property values are going up. The equity Jeremiah: Yeah, like Kara Sincavage/Mackenzie Seitz: in your house is going up. Jeremiah: Well, he was lamenting as a first-time home buyer, you know, Kara Sincavage/Mackenzie Seitz: Yeah. Jeremiah: and that's kind of the perspective he's coming from. But at the same time, like it's not a bad thing for values to go up. Like, I'm invested in this marketplace, you guys are invested in this marketplace, we're all benefiting from the values going up. But at the same time, like, so is he. he's got family in this area, they own real estate, the values go up there. it seems like a weird dynamic, I know, but like there are some locals that are so I guess the word is myopic, like they're only looking at one perspective and only seeing their side of it and how it affects them to see the values going up. But again, like I started this by saying the houses are better, right? If you took that house from 2009 with all the paneling and it's moldy inside and it's dark and dingy, and there's like all the switches just turn on lamps and Outlets, right? If you take that stereotypical house from 2009 and you put it for sale today, it's not selling for $306,000. It's selling for $200. and so it is still affordable. It's just that houses are now much bigger, much nicer. Kara Sincavage/Mackenzie Seitz: Right. It's gonna sell where it should. Jeremiah: it's not STR's fault. it's an effect of everybody just investing into this region. They're investing into the region because we have people coming to the region. We have Kara Sincavage/Mackenzie Seitz: Mm-hmm. Jeremiah: visitors, travelers, tourism, poconotourism.com. this whole region has changed, right? So there's almost nothing left for the better. There's almost nothing Kara Sincavage/Mackenzie Seitz: Yes. For the better. Yes. Jeremiah: left in that condition, 1980 when it was built. Now it's like they've covered the paneling, they've painted the paneling sometimes, they've put up accent walls, they've done all this cool stuff, and that's why people are coming to the Poconos. It used to be in 2016, 17, 18, 19. I remember every Road being pretty much empty in the springtime. Weekends in the spring were not occupied. There was not a lot of people up here. But last spring was very busy, all spring long. I think personally, people are coming to the Poconos because of the houses. It's because there's some awesome properties up here. there's no good hiking when you're hiking in the mud. There's no leaves on the trees yet in the spring. Like that's the season I'm talking about. and usually it's pretty slow. But with people's dynamic pricing bringing the pricing down for these amazing properties, people are coming. Here because of the properties. The properties themselves are driving the tourism industry here. they're not coming here just for the race because that's only one weekend per year. They're not coming here just for skiing because that's only one season per year. They're coming here because of the investment that people have made into these properties. and I think that's a good thing. That's using local labor for the most part, that's buying materials locally for the most part, and it's employing locals to clean the properties and to maintain them. So this is all the local. Kara Sincavage/Mackenzie Seitz: and it's supporting all the local businesses as they're here spending the money locally. Jeremiah: Yes, exactly. A lot of that tourism dollars go right back into the community to maintain it, clean it, and everything else. the property values going up, I think, is a side effect. I personally think it's a good side effect, and I'm still buying in this region. I'm under contract to purchase something right now, actually. should be closing in the next couple of weeks. But I'm buying at those higher values compared to, five years ago. But I'm not complaining about that because I'm hoping in the next five years my value will go up. Everybody benefits. So basically, Tommy, what we're saying is this whole area has changed. Like there's been so much investment in the Poconos marketplace and these old dingy like contemporary houses that just have this wood paneling all over the place. that's changed. So my recommendation would actually be to bring your mother to the Poconos and take a tour. use a local agent like we were just discussing. take a tour, see some of these properties are available to give her a better idea of what the Poconos is like today. Because if that is really her only objection to getting involved and investing into short term rentals, or at least short term rentals in this marketplace, then you know, I think she's just allowing her perspective from two decades ago to cloud her judgment today. So before we go, I want to make sure that you guys have the opportunity to plug what you have going on. So there's Sinc construction, which is building some amazing properties, one of which you're sitting in right now. Mackenzie, Kara Sincavage/Mackenzie Seitz: Mm. Jeremiah: do you want to show turn the camera around and show us what we're talking about? Kara Sincavage/Mackenzie Seitz: Sure. Sure. So this is one of our A-frames. So beautiful. A gorgeous custom kitchen over here. I'm not gonna walk through the whole house, but I'll give you a tour. I'll give you a tour Jeremiah: Yeah. But this is the big Kara Sincavage/Mackenzie Seitz: of one of the bedrooms because it's so beautiful. So we have all tongue and groove throughout the house. This is Amy Mink Design. She is the owner of the house and she also did all the designing in it. So beautiful. So through all of the rooms upstairs they're all tongue and groove. and downstairs we have the sheetrock or you can do tongue-and-groove ceilings. Sorry, it's lagging Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: a little when I walk. Jeremiah: Very nice. Yeah, I love A frames. I think they're classic, timeless, and A good investment for anybody who's looking to purchase. we recently I've had a lot of communications with investors who are trying to take advantage of the short term rental loophole. and I'm gonna have to do like an episode on that soon. But for an investor to actually rent out their property this year and write off a bunch of that depreciation, they're gonna have to go under contract like today. Like they're running out of time because there's like township permits, which can take up to six weeks, and then you still have to have it rented in this calendar year and get your hundred hours for material participation. So if those investors, a lot of them that are looking in this region, they're thinking about next year at this point. So a good option for them, and a lot of them are like, high-earning professionals, they don't have time to manage a property. they don't want another task on their plate. So they're looking for a good property manager and they're looking for something that's turnkey, that's in good condition. and so that value proposition of new construction that's purpose-built to be successful in vacation rentals, like the one that you're sitting in I think it is really valuable to them. What would you say to those folks who are thinking now about building something to have it completed by the end of the year next year? Kara Sincavage/Mackenzie Seitz: Definitely for next year, if they're looking, contact us immediately. If if they want to talk about new construction, go to Poconoaframe.com. We are trademarked of the Pocono A-frames. and we can see if we could fit them on the schedule next year. we might be able to dig a foundation and get them in We are backlogged all the way up into probably September, so we might be able to squeeze six more homes in If they're interested, then definitely get in touch with us and we also do have a few other options. We don't just have the A-frame, we also do a chalet. Jeremiah: Mm-hmm. Fantastic. and if somebody wants to follow you on social Kara Sincavage/Mackenzie Seitz: If they want to follow us on social media, probably the best is Instagram, Facebook, my Kara Sincavage because everything goes there. Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: first. and then sometimes it gets missed going to all the other social media. So just follow Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: me on Kara Sincavage on social media. Jeremiah: Awesome. So what about Pocono Tourism So I've seen a couple billboards now. I know you guys are promoting this heavily. and so tell us a little bit more about what Pocono Tourism does. Kara Sincavage/Mackenzie Seitz: Okay, Pocono Tourism came about because we had a house in Florida that we rented and we were going through our payments and we realized that the VRBO shorted us $2,500. When we called them to find out where our money was, they gave it back to the guests for no reason and told us they weren't paying us for it. I was livid. Instead of me getting mad, I decided in the Poconos where we live, we are going to create a website where people are going to be able to work with owners and property managers and book direct. Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: They will not pay an extra 15 to 30 percent. The corporations, Airbnb, VRBO, Home Away, Guestie, all of them are taking money but not putting it back into the homeowner's pocket. So Pocono Tourism, we charge three options. One, fifty dollars a month to be on our platform, which is $600 a year. Two, a $500 flat fee a year or three two percent of every booking rental and you pay nothing. If we book it, you pay us two percent and you get ninety-eight percent of the rental rental Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: income only. Everything else, cleaning taxes, all that goes direct to them. So we made this website that we then go all over the Poconos and everything that is free to do in the Poconos, we promote on there. Free hiking, free biking, free fishing spots. and of course it's only free fishing if you're 15 and younger. I need to say that. Jeremiah: Hmm. Kara Sincavage/Mackenzie Seitz: must have a license in Pennsylvania to fish over 16. But Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: we so we want to promote the Poconos. We want people coming to the Poconos to live it and love it the way we do. I've been here 56 Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: years and I'm not leaving. and I hike it, I bike it, I fish it, I ski it, I golf it, and so does Mackenzie. We do it together. and we Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: want everybody coming to enjoy it like we do. So, Pocono Tourism is to bring everybody together, save money. Managers, Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: you're getting the money direct. You're making more money in your pocket because you're making the homeowners another 20 to 30% that they wouldn't have made from the corporations. We don't want Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: you to cancel VRBO home away. We don't want you to cancel those. Ours works with those. So you keep everything working, but any direct bookings, you're putting more money in your pocket when you're with us. Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: From there, We went to Poconostr.com. Because we build the houses for some of the most successful investors with the short-term rentals, with how they make out. We wanted to help other investors coming to the Poconos because we're here, we're local. Jeremiah: Mm-hmm. Kara Sincavage/Mackenzie Seitz: It's $99 a year to be a member of Pocono STR. We are going to have two online conventions. You'll be wherever you're at hosting your management Jeremiah: Right. Kara Sincavage/Mackenzie Seitz: as a vendor on the convention. So everybody's gonna be able to sit in the comforts of their home. They don't have to pay to travel. They don't have to walk around. They don't have to eat. They Jeremiah: Mm. Kara Sincavage/Mackenzie Seitz: could be comfortable for five hours. February Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: 28th is our first convention from 11 a.m. till four p.m. We will have all speakers on the floor from eleven to four. We will have all vendor booths that if they don't want to listen to a speaker, they can go on their computer into each. Each vendor booth, talk to them. Everyone will have special pricing. Is it's gonna we're just trying to help people make more money, make their houses better. We're charging $99 for any homeowner that wants us to come out, look at their house, and tell them what they can do to make it better and give them the contacts who to talk to up here that can Jeremiah: Yeah. Kara Sincavage/Mackenzie Seitz: help them make it better. We're not asking for a lot. We're basically working for free to make them more money and make Poconos better. We really are. Jeremiah: You're really making a difference. You're really making a difference in this STR industry. Kara Sincavage/Mackenzie Seitz: We love what we do. Jeremiah: it's a rising tide and you guys are one of those things that's pushing it up. you're elevating the housing conditions of the Poconos. that's been our motto at Galvanized Management is to elevate the housing conditions of the Poconos. and we're working along that same mission. So I'm proud to be Kara Sincavage/Mackenzie Seitz: Yeah. and together we could do it. Yeah. Jeremiah: Proud to be colleagues. I'm really glad that you guys came on today. to all my listeners, I genuinely enjoy sharing messages like this. and it's why this is the show where we discuss the challenges as well as the stuff that no one talks about when they sell the dream of easy passive income. If you're a property manager, an owner operator, a co-host, or just an investor, then email me info@galvanizedmanagement.com.. I'd love to connect and learn more about your approach. and if you have a question, ask it. Your question might be the next one that we break down, and chances are you'll help a lot of other hosts in the process too. We win or we lose together. If this episode helped you, great. I'd appreciate a good rating and a share too, so we can keep growing organically. Together is how I believe we make this industry better. Until next time, stay steady and keep learning and keep building something real. This is Short-Term Rental Problems and Solutions. Thanks for coming on, Kara and Mackenzie. Kara Sincavage/Mackenzie Seitz: Thanks for having us, Jeremiah. See you on the streets. Bye. Jeremiah: See you then.