The future of STRs in your local market?

104 Replies

@Andre Gueziec I remember them cracking down on vacation rentals in Hawaii a few years back, and all of a sudden I saw a huge influx of “apartments/homes for rent” on the board posts. Good to see you’re still doing well despite that. Hawaii has a knack for making it hard for businesses to thrive. 🤷🏽‍♂️

I'm very bullish on STR's. I feel we are at a unique point in history with the pandemic in our rearview mirror, workers being distributed, and much less tied to physical offices, coupled with technologies that enable them, means we are likely at a new level of demand for STR's that is only going to increase.

As a business traveler, my preference for STR's is all about the time i spend in a city. If it is a short stay < 1 week, it is a hotel and post pandemic hotels have been cheaper and on most days offer good service, security, room service, housekeeping, functional appliances and above all rewards. If my stay is > 1 week, then an STR makes sense absolutely or even an aparthotel. To me the latter category is where hospitality companies need to focus on like yesterday. If that thing starts to ramp, it will be a fierce competitor to private STR's. Frankly private STR's come with a lot of dingy stuff. I have seen nice pictures and lived in a very nice STR but then it was suboptimal from a cleanliness standpoint. One had broken and cracked tiles in the bathroom. It is all cool if you are traveling alone but if you have family along this starts to get thorny. My view is also that Airbnb and other sites have started to mess big time with pricing and fees. So while STR's have seen a lot of growth, I see a bit of a lull in coming years.

@Kaylee Walterbach The city of Los Angeles has done all they can to kill Air BnB for property owners. They have limited home owners who use the Air BnB platform to a min of 30 days per guest UNLESS your guest is staying in your primary residence. They make you register and pay fees outside of the normal fees that the platform takes. This is only within the city limits.

You would have to have a screw lose to head into REI now. Regulation big ones is coming to this sector, rent control and eviction regulations. Landlord will no longer be in charge. Selling all properties at record highs and placing them in dividend paying stocks. Tax free distributions that can be passed to my kids and pay them as well. Oh and every renter I had paid thru CoV.

I am biased against STR. I personally do not like the idea. Too many potential issues. Might be acceptable in some picturesque rural area for a getaway vacation. Overall can be used as a supplement but not as the only option. High risk/high profit/high loss...too many ifs...great while it works but lots of buts...

Originally posted by @Jay C. :

You would have to have a screw lose to head into REI now. Regulation big ones is coming to this sector, rent control and eviction regulations. Landlord will no longer be in charge. Selling all properties at record highs and placing them in dividend paying stocks. Tax free distributions that can be passed to my kids and pay them as well. Oh and every renter I had paid thru CoV.

 stocks????....hahahah...thanks but no thanks...it will require a bunch of screws lose to head into a stock market.

@Kar Sun

End of the day you should stick with what you know best. The real estate game takes way less skill and a whole lot of folks eager to lend to anyone with zero skill.  

My above posts reflect my skill set and they certainly may not be the returns of many. It took many years to gain experience(decades).

Good luck in whatever you do. You cannot put a price on what lets your comfortably sleep each night.

Originally posted by @Jay C. :

@Kar Sun

End of the day you should stick with what you know best. The real estate game takes way less skill and a whole lot of folks eager to lend to anyone with zero skill.  

My above posts reflect my skill set and they certainly may not be the returns of many. It took many years to gain experience(decades).

Good luck in whatever you do. You cannot put a price on what lets your comfortably sleep each night.

you are right...it takes less skills to be a slumlord...there are way too many of those. But landlord done right requires good financial, communication, marketing, interpersonal, technical, repair skills. And also a good hunch.

Originally posted by @Anna A. :

Our first investment is an STR in Big Bear Lake CA, the closest four season mountain resort in Southern CA. We got a great deal, bought the cabin last December 2020. Rehabbed for a few months. Next, great cash flow by Renting. As for now, appreciation is phenomenal. With equity in our side, Refinancing and Repeating the process is next. Thank you Biggerpockets for all the tools and education. We still have a long and fun journey ahead. We are super excited.

Hi Anna 

I am also exploring STR in Big Bear. I am curious to learn more about your experience and how you are managing it. I have sent you a connection request, perhaps we can chat over PM and I will appreciate your help.

-Neeraj

There are 2 STR markets: vacation hot spots & every city in America with a chain hotel. Most STRs are focused in big cities and vacation hot spots (often saturated markets), but the growth zone is in small to medium sized cities all over the country.

I have a triplex in the Old Colorado City section of Colorado Springs. We are one of the hottest destinations in the US right now and my STR's are performing beyond my greatest expectations. Provided the city doesn't change the rules on us, I believe the future of short term rentals in the Springs is excellent. Great hiking, a vibrant downtown which is getting better constantly, Garden of the God's, Red Rocks Open Space, Cheyenne Canyon, Broadmoor, and just up the road is Pikes Peak, Mueller State Park and Pike National Forest. What's not to love?

The short term future in my market-continued lawsuits and fighting city commissions.  Long term once we get younger people in government should be outstanding as it's the way of future travel.

While I personally only own a long-term rental, I believe the future of short-term rentals to be very bright. With travel opening back up and the continuance of remote working, there will be an increased demand for STR's in many cities. I think that the biggest challenge is local governments making it difficult for non-occupying investors to get licenses (this is the case in Nashville, New Orleans, and probably a number of other popular travel destinations). Investors need to be cognizant of these restrictions at the early stages of the process.

I think STR's will be with us for the forseeable future. Government will try to regulate and tax but the nimble STR owners will work around the obstacles. I envision thousands of unarmed fishing boats and rowboats swarming around a Navy destroyer. Of course big business and government can crush any individual STR owner (no matter how creative or motivated), but millions of others will find a way. Maybe army ants mowing a swath through the jungle would be a better analogy. Even lions and bears who can crush thousands of ants without effort will run away from an army ant migration. Army ants will reduce a healthy predator to a skeleton in minutes. We lived in HI for 6 months and the STR market was thriving in spite of 30 day minimums and 30% taxes, retroactive taxes, and a $2000 bounty to rat on a neighbor. (I never owned an STR in HI). I have owned 2 STR's in Wasilla, AK and both are booming. People travel for sports events, leisure, work...(It seems that many American's would rather travel to Alaska than Asia or Europe recently) Where I now live in Northern Alabama, STR's seem popular to house contract workers, sports events, and newcomers who are waiting for a house to close or new construction to be finished. Personally, I much prefer to stay in an STR over a hotel. Usually more private, homey, more rooms. And I know that my reviews about an STR get read and make a difference. The owners of (almost) every STR I have rented were the kind of people that made our lives better by meeting. Most of our guests have been similar.

on the contrary takes much far less skill to manage stocks , look at the amount of wealth managers out there  ,  not saying that stocks are bad but it cant be compared to STRs , an STR doesn't lose value when mr musk decides to smoke pot :) .  Again quite frankly Real estate vs Stocks is probably the oldest debate ever however the beauty of STRs lie in the fact that it becomes extremely diverse with every location ! 

Originally posted by @Kar Sun :
Originally posted by @Jay C.:

@Kar Sun

End of the day you should stick with what you know best. The real estate game takes way less skill and a whole lot of folks eager to lend to anyone with zero skill.  

My above posts reflect my skill set and they certainly may not be the returns of many. It took many years to gain experience(decades).

Good luck in whatever you do. You cannot put a price on what lets your comfortably sleep each night.

you are right...it takes less skills to be a slumlord...there are way too many of those. But landlord done right requires good financial, communication, marketing, interpersonal, technical, repair skills. And also a good hunch.

I believe the short-term rental market is entering a growth stage. The pandemic certainly accelerated this growth, but, for many reasons, the Airbnb and vrbo trend has been up and coming for a while. 

I have rented long term for years with 20+ doors. Switched all vacant units to STR in 4/20 and have been consistently converting all of my LTR to STR. I am a "BORN AGAIN" Real Estate investor and it is great! STR is here to stay.