Paragon’s STR Growth Fund is raising up to $10 million to fund the acquisition, renovation, and operation of a portfolio of approximately 40 short term rental (STRs) properties. The fund will build upon Paragon’s experience as a STR owner/operator, having brought over 15 STR properties online in recent years. Our experience with our existing STR portfolio has taught us that this particular asset class offers value creation, asset preservation, and rental yields that are significantly greater than what long term rentals can offer. The fund is currently open to accredited investors only with a minimum unit purchase price of $200,000. 

More detail on the the fund strategy, terms, and expected returns can be found here. Accredited investors that are interested in learning more about this investment opportunity are encouraged to contact us to verify their accredited investors status and receive the full set of offering documents. 

With STRs, one can ensure the property remains in pristine condition with weekly cleaning and maintenance. Through various marketing platforms and strategies, it is possible to greatly increase the rental yields far beyond what would be achievable with a long term rental, where rents are largely fixed for periods of 1-2 years. When contemplating a sale of the asset, STRs are attractive to multiple buyer types, including retail home buyers looking for a home, institutional investors seeking higher cap rates, or corporate buyers seeking furnished accommodations for their executives.

With remote work becoming the norm, more and more people are seeking short term rentals not only for vacation, but also as a way to experience living in a new city without the hassle of buying, renting, or furnishing a new home.

Paragon sets itself apart from other fund operators in that we manage all aspects of the fund operations in-house without the need to rely on any third party operators. All construction is handled in-house by our construction company Paragon Construction, and the design, furnishing, operating, and marketing of the short term rentals is managed by our in-house team at Paragon Short Stay. 

There are also a number of key risk mitigation factors that set the Paragon STR Growth Fund apart:

1. Immediate Cash Flow – The STRs will begin generating cash within months of the property acquisition with no need to wait for a long multi-year development cycle.
2. Minimal Permitting – The fund will not require any major permitting or zoning approvals from local government, as the use of the existing asset will not change, and minimal construction will take place
3. No Outside Financing – The fund will not rely on any additional outside financing aside from Class A accredited investor capital and can proceed with any amount of Class A capital.
4. Location Diversification – The fund will own approximately 40 properties across multiple locations, protecting against a downturn in any one submarket.

Cleveland and the Greater Northeast Ohio area are great places to invest in real estate in general. Historically speaking, the region has fared far better in times of economic uncertainty when compared to other markets. For example, during the 2007-2009 financial crisis, property values in markets like Miami and San Francisco lost 40-50% of their value, whereas in Cleveland, property values only decreased by 19% on average (Source: JLL). 

As a market for short term rentals, there is less competition and less local restrictions in place in Northeast Ohio, while at the same the region offers excellent attractions and amenities that draw visitors, vacationer, students, and remote workers for short term stays. Read more about why Northeast Ohio is a great market for short term rental investment here.