{"id":145740,"date":"2022-11-26T12:58:12","date_gmt":"2022-11-26T19:58:12","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=145740"},"modified":"2023-08-09T10:26:08","modified_gmt":"2023-08-09T16:26:08","slug":"short-term-rentals-are-fine","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/short-term-rentals-are-fine","title":{"rendered":"Calm Down, Short-Term Rentals Are Doing Fine"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC2734529493&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n\n<p class=\"wp-block-paragraph\"><em><span data-preserver-spaces=\"true\">\u201cFar more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.\u201d &#8211;&nbsp;<\/span><\/em><span data-preserver-spaces=\"true\">Peter Lynch&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I\u2019ll be honest. I went back and forth about writing this article because I didn\u2019t know how it may be received. But after seeing so much noise and misinformation said about the short-term rental industry, I couldn\u2019t take it anymore. Sitting on the sidelines didn\u2019t feel right without giving my perspective of what\u2019s been happening over the last few months.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">This article is about why I still think it\u2019s a phenomenal time to invest in short-term rentals.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Misinformation Problem<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">What I\u2019ve seen a lot on social media and the news is people who are in strong positions, whether it be in real estate or any industry, touting why we are in a recession and why their industry is in decline.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I urge you to be very careful about listening to anyone on social media talk about their declining industry. Why? They are in the perfect position to benefit from a decline.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Take, for example, someone who goes on a podcast and owns a large short-term rental company. It&#8217;s very easy for them to predict a sharp decline in occupancy over the next year or two because of a recession.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If I heard someone say something like that, the next question I would ask is, \u201cdoes your company still plan to acquire more properties through this recession?\u201d. I guarantee the answer would be yes, or they wouldn\u2019t be on the podcast in the first place.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If their company is still planning to acquire properties through a recession, why are they going onto a podcast and saying STRs are not a good investment anymore? The logical answer, in my opinion, is that they are scaring people into not investing in the same asset class as them.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">There is so much noise out there right now, and it may seem difficult to determine who is telling the truth or who has ulterior motives.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Four Contributing Factors To The \u201cDecline\u201d<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Lately, I\u2019ve seen countless hosts say that their properties have seen a significant decline in revenue and occupancy. That may be true, but if I had to guess, they only have their properties listed on one platform like Airbnb and are not doing anything else to promote their properties.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">From everything I have seen recently, four factors play a major role in the supposed &#8220;decline&#8221; of STRs.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The first factor is that Airbnb recently did a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/news.airbnb.com\/2022-summer-release\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">massive overhaul<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;of its website that changed how properties appear in the search results and how they are displayed. Many hosts saw a decline in their bookings because of this change. This happened around the same time interest rates started to go up, and I saw firsthand that many hosts blamed an upcoming recession on the first interest rate hike over the algorithm change. That was the first mistake.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The second part is that&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/the-fed-wants-a-housing-correction\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">interest rate hikes<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;did cause a slight drop in bookings. People are traveling less, but that\u2019s a given during a correction. It\u2019s not normal to operate in 95%+ occupancy. That\u2019s not even where hotels have historically operated, even during good market conditions! The metrics below give a good look at how much STRs have grown since 2019.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"878\" height=\"514\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.50.41-PM.png\" alt=\"airdna short-term rental performance metrics sept 2022\" class=\"wp-image-145743\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.50.41-PM.png 878w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.50.41-PM-300x176.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.50.41-PM-768x450.png 768w\" sizes=\"auto, (max-width: 878px) 100vw, 878px\" \/><figcaption class=\"wp-element-caption\"><em>Short-Term Rental Performance Metrics (Sept. 2022) &#8211; <a href=\"https:\/\/www.airdna.co\/\" target=\"_blank\" rel=\"noreferrer noopener\">AirDNA<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The third part is that many hosts overlook the fact that markets are going into their slow season. It&#8217;s easy to blame the downturn, but you may be just going into your slow season. I know that may seem too simple, but it\u2019s very possible.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Finally, many successful hosts blame the decline on the influx of short-term rentals coming into the market. Those experts fail to talk about how much&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.alltherooms.com\/analytics\/airbnb-statistics\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">demand<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;has entered the market. With higher demand, the number of listings hasn\u2019t caught up, negating the argument that more listings are harming the market.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">A combination of these four factors is convincing people that the sky is falling in the STR industry. There were points within the last few years where many hosts were operating at 90%+ occupancy. Globally, hotels operate at 65-80% occupancy.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"842\" height=\"476\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.21-PM.png\" alt=\"short-term rental occupancy 2019-2022\" class=\"wp-image-145747\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.21-PM.png 842w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.21-PM-300x170.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.21-PM-768x434.png 768w\" sizes=\"auto, (max-width: 842px) 100vw, 842px\" \/><figcaption class=\"wp-element-caption\"><em>U.S. Short-Term Rental Occupancy (2019 &#8211; 2022) &#8211; AirDNA<\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The expectation for those high rates to continue is absurd.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">My company is going into its first slow season during this correction. My current occupancy is 77%. We\u2019re still profitable.<\/span><\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"842\" height=\"489\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.09-PM.png\" alt=\"\" class=\"wp-image-145744\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.09-PM.png 842w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.09-PM-300x174.png 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/11\/Screen-Shot-2022-11-26-at-2.51.09-PM-768x446.png 768w\" sizes=\"auto, (max-width: 842px) 100vw, 842px\" \/><figcaption class=\"wp-element-caption\"><em>Total Short-Term Rental Revenue By City Type (2022 vs. 2019 and 2021) &#8211; AirDNA<\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Before you disregard investing in STRs, consider the reasons above and see if your market is currently going through a combination of what I mentioned.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What You Need to Understand About STRs<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Short-term rentals have been around for a long time. The only thing that\u2019s changed is how people book them.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">During the last few years, many investors jumped into the STR space to cash in on the boom. Unfortunately, many of these investors had no idea what they were doing and poorly operated their rentals.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I\u2019ve said it many times. You need to look at your STR business as a hospitality business. What does that mean? It means you\u2019re not just acquiring a property, putting it on Airbnb or VRBO, then calling it a day. You need to consider yourself a hotel and treat your properties as such.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Online travel agencies (OTAs) like Airbnb and VRBO should be viewed as a marketing tool for your business, but not where your properties should exclusively live. If your property is only on a specific OTA, then that company completely controls your property.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">If they change their search algorithm like Airbnb did or decide to ban one of your properties based on something completely out of your control, then you have no other option than to go with whatever the OTA decides for your property. I\u2019ve gone through this before.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">The hosts and property managers that are going to do well in this recession are going to be the ones that take charge of their businesses and look beyond just posting their properties on places like Airbnb and VRBO. The hosts that focus on generating their own guests and figuring out how to get them to stay again with you in the future are the hosts that are going to prosper over the next couple of years.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">It was very easy to do well in one of the best economic expansions the U.S. has ever seen. Now, we\u2019re heading into a recession, and these so-called \u201cexperts\u201d scream that the sky is falling. Don\u2019t fall for it. Treat your STRs right and figure out ways to control your guest\u2019s experience. Here are a few ways you can do this.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">The Future of STRs is Direct Bookings<\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">When I started, there was not much information available on STRs, so I relied heavily on hotel textbooks to learn how to operate my vacation rentals. The number one thing taught in those books was how to take the guests off the OTAs like Expedia or Booking.com and bring them into their ecosystem.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">During the guest\u2019s stay, they acquire their information and remarket to them via their website. We have all gone through this when staying in a hotel. You should treat your&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/stop-relying-on-airbnb-and-vrbo-and-build-a-business-you-control\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">STR business the same<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Seek STR companies that offer training in direct bookings. Direct bookings mean guests are booking directly through your website compared to having to go through Airbnb or VRBO. Outside of BiggerPockets, my favorite free resource on this topic is Mark Simpson\u2019s&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.boostly.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Boostly<\/span><\/a><span data-preserver-spaces=\"true\">.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">Learn to utilize social media marketing on Facebook and Instagram to promote your properties. I recently started doing this and have seen some amazing results. I run ads in cities that a bulk of my guests come from.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Conclusion<\/span><strong><span data-preserver-spaces=\"true\">&nbsp;<\/span><\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">I hope this helped clear up some reservations you may have about investing in this market. It is not as bad as people are making it to be. I predict that we will see a dip in bookings, but by utilizing the strategies above, I\u2019m confident your properties will do great.&nbsp;<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><span data-preserver-spaces=\"true\">People are purchasing less right now because of interest rates and being scared of the future. This is the first time in close to a decade that properties are seeing significant price declines. If you were someone complaining about prices being too high over the last three years, this is the time to buy, not sit on the sidelines.<\/span><\/p>\n\n\n\n<div class=\"wp-block-columns is-layout-flex wp-container-core-columns-is-layout-8f761849 wp-block-columns-is-layout-flex\">\n<div class=\"wp-block-column is-layout-flow wp-block-column-is-layout-flow\" style=\"flex-basis:100%\">\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block py-4    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-slate-800-color has-text-color has-large-font-size wp-block-paragraph\" style=\"font-style:normal;font-weight:800\">Master the Medium Term Rental<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color wp-block-paragraph\" style=\"font-size:16px\">The first-ever book on medium-term rentals, this guide will help you find the right markets, properties, furniture, and tenants to make you a successful medium-term rental host with maximum cash flow and minimum worries.<\/p>\n\n\n\n<div id=button-custom-event-block_64137524a9e3d class='button-custom-event'>\n      <a href=\"https:\/\/store.biggerpockets.com\/products\/30-day-stay\/utm_source=blog&#038;utm_medium=marketing_block\" x-on:click=\"window.analytics.track(&#039;Blog Block | Publishing: 30Day Stay Book&#039;, {\n      referrer: &#039;https:\/\/www.biggerpockets.com\/blog\/short-term-rentals-are-fine&#039;,\n    });\" class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Get Yours Now<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/09\/30DS_cover_mockup_01-e1663956408659.png\" alt=\"30 day stay\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>\u201cFar more money has been lost by investors trying to anticipate corrections than lost in the corrections themselves.\u201d &#8211;&nbsp;Peter Lynch&nbsp; I\u2019ll be honest. I went back and forth about writing [&hellip;]<\/p>\n","protected":false},"author":613612,"featured_media":145741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4433,7119,7271],"tags":[],"class_list":["post-145740","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion","category-biggerpockets-daily","category-short-term-rentals"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/145740","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613612"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=145740"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/145740\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/145741"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=145740"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=145740"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=145740"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}