Duncan, Oklahoma

Duncan, Oklahoma, situated in the heart of Stephens County, serves as a gateway to several attractions, including the Arbuckle Mountains and the nearby Chickasaw National Recreation Area. With a population of approximately 22,000, this city offers a small-town feel, making it a potential niche market for short-term rentals (STRs). Demand for STRs often fluctuates seasonally, influenced by local events, outdoor activities, and the general economy surrounding tourism.

This analysis aims to provide investors with data-driven insights into the current state of the short-term rental market in Duncan, taking into account vital indicators, growth prospects, and guest preferences.

Key Performance Indicators (KPIs) are essential for evaluating the potential performance of short-term rentals in any locale. In Duncan, the following KPIs are worth noting:

• Average Daily Rate (ADR): Currently set at $116.52, the ADR indicates the average price per night that a property can charge. This figure plays a critical role in understanding revenue potential.

• Occupancy Rate: Historically, the occupancy rate in Duncan has hovered around 60-70%. This reflects a reasonable level of demand and suggests that a significant portion of available rental properties are being utilized.

• Revenue Per Available Room (RevPAR): Calculated by multiplying the occupancy rate by the ADR, RevPAR in Duncan is estimated between $69.91 – $81.56, which is a critical metric for gauging overall profitability.

• Rental Growth Rate: The market has seen a rental growth rate of approximately 3-5% annually, indicating a stable investment environment.

Examining the last decade allows for a clearer perspective on long-term growth potential. Factors contributing to the fluctuations in Duncan's STR market include:

• Population Growth: Duncan has experienced modest population growth, averaging 0.5% annually. While this is lower than national averages, a steady population can create sustained demand for rentals.

• Development Projects: Investment in local infrastructure and community projects may increase the attractiveness of Duncan, potentially leading to a rise in visitor numbers.

• Tourism Initiatives: Efforts by city officials to promote tourism, including marketing campaigns and events, can create spikes in rental demand, which should positively impact STR performance.

Although Duncan may not exhibit explosive growth, its stability and gradual evolution suggest that the market can cater to dedicated investors interested in long-term gains.

The return on investment (ROI) for short-term rentals in Duncan appears to be favorable due to the combination of moderate acquisition costs and a reasonable potential for rental income. To illustrate:

• Average Property Price: The average price of residential properties in Duncan is around $150,000. For investors willing to renovate or upgrade properties, total investments typically sit in the range of $200,000 – $250,000 when accounting for furnishings and refurbishment.

• Potential Income Calculation: Assuming a property is rented at the current ADR of $116.52 and maintains an occupancy rate of 65% throughout the year, the potential gross annual income is calculated as follows:

  [
  Gross Income = ADR \times Occupancy Rate \times 365 \text{ days}
  ]

  This results in:

  [
  Gross Income = 116.52 \times 0.65 \times 365 = 27,826
  ]

• Net Operating Income (NOI): Deducting estimated operating expenses, including maintenance, property management, taxes, and utilities (approximately 30% of gross income), results in a potential NOI of around $19,479.

• ROI Calculation: Comparing the annual net operating income to the total cost of investment suggests an ROI of approximately 7.8%, which is attractive relative to the average ROI for STRs nationwide.

Duncan experiences seasonal fluctuations affected primarily by local weather, holiday events, and tourism seasons. Analysis shows:

• Peak Seasons: The spring and summer months, particularly from April to August, often witness increased travel due to favorable weather and local events. The annual Great Plains Renaissance Festival and outdoor recreational activities contribute to higher occupancy rates.

• Off-Peak Seasons: The late fall and winter months typically see a decline in rental demand. Awareness of this pattern can guide pricing strategies; lowering ADR during these months may help maintain occupancy rates.

• Special Events: Hosting local events throughout the year can significantly impact demand. Rental owners should align their pricing strategies and availability around these dates.

Duncan's short-term rental landscape includes various property types, each performing differently:

1. Single-family Homes: These tend to be the most common STR, translating into family-sized accommodations. They often attract guests looking for longer stays.

2. Condos/Apartments: Generally have a lower acquisition cost than single-family homes and can cater to different demographics, including business travelers or couples.

3. Luxury Rentals: Though less common and carrying higher upfront costs, high-end properties can command a premium price and cater to tourists seeking a unique experience.

Comparatively, single-family homes show the best performance due to larger space, catering to families, and consistent demand driven by local events.

Understanding guest preferences is vital for ensuring rental attractiveness:

• Key Amenities: Guests in Duncan often look for amenities like Wi-Fi, a fully equipped kitchen, parking, and laundry facilities. Offering these essential services can improve bookings and enhance user experience.

• Local Attractions: Proximity to parks, local attractions, and dining options significantly affects booking decisions; listings emphasizing these features tend to receive a higher rate of inquiries.

• Reviews and Ratings: Positive reviews and responsive communication can significantly enhance guest trust and booking likelihood. Properties with higher average ratings are consistently favored.

Duncan's regulatory framework surrounding short-term rentals remains relatively permissive. However, it is essential to stay updated on local regulations, which may influence operational requirements.

• Permits and Registration: Investors should check whether a local registration or permit is necessary for operating an STR, as some municipalities require this for compliance.

• Zoning Regulations: Understanding zoning laws is crucial, as they can restrict the types of properties eligible for short-term rentals, impacting investment decisions.

• Taxes: STR owners may be obligated to collect and remit local lodging taxes, which should be factored into financial projections.

Duncan features a variety of neighborhoods, each exhibiting its own character and appeal:

• Downtown: This area boasts proximity to restaurants, shops, and events, drawing tourists and business travelers alike. STRs in this location tend to generate higher occupancy rates due to accessibility and amenities.

• Suburban Areas: Typically quieter and family-friendly, these neighborhoods attract longer-term stays from traveling families or workers in the area for job assignments.

• Natural Attractions: Properties near parks and recreational areas often attract nature lovers and sporting enthusiasts, which can benefit vacation rental providers.

Understanding the nuances of each neighborhood can help strategically position a rental property to capture targeted demographics, ultimately maximizing revenue potential.

The future of the STR market in Duncan seems promising, albeit gradual. Key trends include:

• Sustainability Initiatives: Eco-friendly properties that emphasize sustainability may increasingly appeal to informed travelers. Household features such as solar panels and energy-efficient appliances are gaining traction.

• Digital Integration: Strong online visibility and digital marketing will become essential for attracting bookings and remaining competitive.

• Longer Stays: With the rise of remote work, many travelers are opting for longer stays to combine leisure and work, indicating a shift in consumer behavior that rental owners can adapt to.

• Investment Diversification: Investors may seek diverse STR property types to hedge against market fluctuations—balancing single-family homes with condos or unique accommodations like cabins can mitigate risk.

1. Is it expensive to start a short-term rental in Duncan, Oklahoma?

   • Initial investments vary but typically require around $200,000-$250,000 including property price, furnishings, and renovations.

2. What is the average occupancy rate for STRs in Duncan?

   • The average occupancy rate generally hovers around 60-70%.

3. Are there any significant regulations I should be aware of when investing in STRs?

   • Local regulations typically require registration or permits, and compliance with zoning laws and lodging tax requirements.

4. What types of properties perform best for rentals in Duncan?

   • Single-family homes often demonstrate superior performance due to larger spaces appealing mainly to families and groups.

5. How seasonal is the short-term rental market in Duncan?

   • The market sees higher demand in spring and summer months, while demand typically declines in late fall and winter.

By understanding these dynamics and preparing accordingly, investors can strategically enter the Duncan market, aligning their investments with emerging trends and guest preferences for a positive rental experience.