From Midterm Rentals to Ground-Up Development
In 2020, David Rosenbeck embarked on my real estate investment journey, focusing initially on midterm rentals tailored for travel nurses. My first acquisition was a $150,000 property in Fort Wayne, IN, which I house-hacked to generate significant cash flow. Over the next two years, I expanded my portfolio to eight doors through house hacks, live-in flips, and co-hosting arrangements, culminating in over $100,000 in revenue by 2023.
Transitioning to Development in Sedona
Seeking to optimize my time and returns, I shifted towards development projects. Sedona, AZ, with its annual influx of over 3 million tourists, emerged as an ideal location. I identified a market gap for large, short-term rental properties and initiated a project to construct a 6-bedroom, 7-bathroom home designed specifically for this purpose.
Capital Raising and Project Financing
To fund this venture, I raised $330,000 within 45 days from my network, utilizing self-directed IRAs. Investors were offered options of a 12% interest rate with a lump-sum payment after 24 months or a 10% rate with monthly payments. The project’s total cost is projected at approximately $1.1 million, with an anticipated valuation between $2 to $2.5 million upon completion.
Navigating Sedona’s Short-Term Rental Landscape
Sedona’s short-term rental market is thriving, with average occupancy rates around 59% and daily rates averaging $347, leading to an annual revenue of approximately $49,000 per property.
airdna.co However, the proliferation of vacation rentals has contributed to a housing shortage, with short-term rentals comprising 18% of Sedona’s housing stock as of 2024.
abc15.com This dynamic underscores the importance of responsible investment and community engagement.
Future Plans
The development is slated for completion by late summer or early fall. Post-completion, I plan to either retain the property for an estimated monthly cash flow of $6,000 to $7,000 or sell it for a substantial profit. A cash-out refinance is also under consideration to repay investors and finance future projects, leveraging the equity of the completed property.
This journey from midterm rentals to ground-up development highlights the potential of strategic investment and adaptability in the ever-evolving real estate market.
