Hi all, I am a little curious what veteran STR people think about the current market- specifically, VACATION ONLY MARKETS. By vacation only markets, I mean places where basically nobody is moving for a primary residence, and prices are totally driven by vacation rentals. My actual example: I am looking to buy a place near yosemite National Park, offer is about to be accepted. The facts are these: ----I am being quoted over 6% for 2nd home/10% down loans, which I have used in the past to buy STR Properties; ---Rates for 20% down loans aren't tons better; ----House Prices are through the roof, all time highs ----Every house in this market is being bought as an STR (meaning this market is not a primary home buyer market/people are not moving there to live, prices are driven solely by STR buyers) I am just wondering if the veteran STR investors are shying away from these types of vacation only markets, due to the rise in rates and prices, waiting for those markets to cool off (since it seems like they should, since STRs will be making less and houses and loans are harder to get- or if people are still just going on with business as usual buying STR's in places like gatlinburg, port st joe, etc. (e.g. places whose prices are driven solely by STR sales) with prices and rates as high as they are, and assuming it'll work itself out. I am balking a little at my decreased ROI I guess, and wondering if its smarter to hedge ones bets in a market with a better exit strategy - maybe a market that isn't quite as lucrative on the STR side, but is a real housing market where people actually want to live also. (like Orlando, maybe joshua tree) This way if STR buyers dry up, the market will still hold its value. Just curious what the bigger STR people are thinking on these sorts of "vacation only" STR markets, as I find myself doubting them a little. Mainly because, if I am doubting them for myself, then I figure so might other STR investors be, and therefore, since these markets are dependent upon STR investors to continue to drive prices, then demand is going to dry up and prices will come down. hope i made sense. its kind of late for me- any thoughts/opinions appreciated.

Nationwide. Occupancy rate dip was very minor, and still up from 2019. Though it was the most pronounced in destination/resort areas (-5.5% in mountain/lake areas) which I think is why we're seeing so many people in investor groups note lower than usual occupancy while ABNB reported great earnings. Most of the boom last year was in vacation markets at the expense of metro listings. This year the boom is more in the metro areas while vacation markets are pulling back some (still not badly) and most of us here (and the FB STR groups) are primarily in vacation markets. Below is from the aritcle (https://www.airdna.co/blog/air...) The recent occupancy decrease is actually due to an increase in available listing nights, of which there were 25.1% more than this time last year and 11.9% more than in 2019. As supply increases, demand must catch up, meaning occupancy will sometimes decrease as a result. But this -0.3% change should cause little concern for the industry as a whole. Average occupancy rates fell most in small city/rural areas and in destination/resort areas. Overall, year-over-year demand was up 22% in small city/rural areas and up 15% in mountain/lake destinations but ultimately could not match supply growth. This caused occupancy to drop -6.3% in small city/rural areas and -5.5% in mountain/lake destinations. STR demand has failed to keep pace in some markets that recorded substantial increases in 2021. The following mountain destinations all saw significant year-over-year demand declines in March: • Big Bear, California (-23.8%) • Lake Tahoe, California (-13.3%) • Pocono Mountains, Pennsylvania (-10%) • Lower Hudson Valley, New York (-9.1%) • Adirondack Mountains, New York (-7.8%) However, when compared to 2019, each of these markets except Lake Tahoe is still exceeding 2019’s demand levels, especially the Pocono Mountains which is up 120%. Occupancy rates have grown more than 8% year-over-year in the 50-largest U.S. cities in both suburban (+8.1%) and urban (+9.5%) neighborhoods. The cities with the strongest occupancy growth include New York (+24.1%), Boston (+30.6%), and Washington, D.C. (+39.3%). These cities have seen enormous increases in demand over the past year but have yet to see much, if any, increase in available listings—given that they are still more than 30% below 2019 demand levels.

Speaking specifically about the Joshua Tree market: First, when referring to "Joshua Tree", you have to consider the ENTIRE high desert and not just Joshua Tree proper. This means Morongo Valley, Yucca Valley, Pioneertown, Landers, Johnson Valley, Twentynine Palms, and Joshua Tree. Each of these towns have their own attractions and when combined together, it will take multiple visits to experience the entirety of what the Southern California High Desert has to offer and these neighboring towns are literally 5-10 minute drives from each other so to only talk about Joshua Tree with 5 restaurants is an inaccurate portrayal. The best restaurant (arguably) in the entire high desert, La Copine, isn't even in Joshua Tree. Second, ~80% of the people visiting Joshua Tree are local to Southern California. During the pandemic, when international travel got the kibosh, occupancy rates went up, significantly. Even in periods of economic slowdowns, people need to take time off and vacation so if a lengthy road trip or flight are off the table, then a staycation is the only option and Joshua Tree is the perfect staycation destination for SoCal locals to experience the feeling of getting away without going far. I was showing houses today and the high desert was PACKED from Yucca Valley all the way to Twentynine Palms and it was over 90 degrees in the hi dez today. The high desert is now the land of hipsters and hipsters and disposable income go hand in hand. Are home prices high in STR markets? Yes. A big reason for that is that in these markets, literally every SFR is potentially an income generating property and this income generating potential is getting priced into the home values. In summation, if you're looking for an STR market that will weather the storm, look for one that has a MAJOR city within a couple hours drive and look to acquire properties that will attract guests that are willing to spend more for nicer things which means the higher end properties. Even at $1000/night, split between 4 friends is $250 each which isn't bad considering how nice $1k/night properties are and these properties in general, do consistently better than your mediocre properties where the competition is the most dense.

@Richard E. @Michael Hyun Kitchen in the Desert has small portions and is overpriced. My group of four paid $150 for one entree each and 4 drinks and we all left hungry and unimpressed. The ambiance is nice though. If you haven’t been to La Copine, it tells me that you’re new to the desert because La Copine has been THE restaurant FOR YEARS and continues to be so. Grnd Sqrl is a new addition. Campbell Hill Bakery is hands down the best bakery in the high desert but Luna Bakery in Yucca Valley is giving it a run for it’s money. If you like overpriced good food, I’d check out Tiny Pony. Awe Bar just opened up and is worth a visit too. An often overlooked sushi spot is Aki Sushi. Definitely check it out. Be on the lookout for The Copper Room which is coming soon. Same owner as Giant Rock Meeting Room. 29 Palms is coming up for sure. Project Phoenix is complete and it was packed yesterday. 29 Palms tends to draw more of a party crowd and has a lot less desert plants. You have to be careful with where you buy in 29P because there is a HUGE wash there that becomes a dust bowl on windy days. Morongo Valley does not suck and is not as windy as claimed in this thread. The entire high desert has windy and non-windy days. Once Willie Boys Saloon is back up and running under proper ownership, you’ll see this town’s activity change and there are already several local business owners setting up shop in preparation for this; Black Luck and Central Station are examples. In fact, Live Nation was in negotiation to buy Willie Boys but the owner backed out once he realized what he had on his hands. There are several high end STRs in Mo Valley killing it. My STR is in Mo Valley and we’re going to kill it too. The cool thing about Mo Valley is that like Joshua Tree, the locals are fiercely protective of it’s rural, small town vibe. Aside from Dollar General and Chevron, you won’t see corporations setting up shop like they do in Yucca Valley and 29 Palms. No Wal-mart, no Starbucks. Only local businesses. Joshua Tree is the name brand but there are plenty of high priced neighborhoods in Yucca Valley; Covington Flats, Sky Harbor, Western Hills, Rancho Estates, The Country Club, etc and there also shit neighborhoods in JT with prices still in the 3s and 4s. When comparing like for like, JT and YV are comparable. Home prices have been taking off since before the pandemic. This is not a recent phenomenon. Most of the national parks in the US are forests in the mountains. When you’ve seen one forest, you’ve seen them all. Sequoia may be the exception due to it’s types of trees. What sets Joshua Tree National Park apart is it’s desert ecosystem. The national park is not the only draw to the SoCal high desert. There are many reasons to go to the high desert and the Coachella Valley and low desert are just “down the hill”.

Thoughts on Vacation Markets w/ rising rates/economic slowdown?

Ken Boone

Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes

4y

It all comes down to the numbers and what your goals are. I have seen absolute crazy people buying in my market (Pigeon Forge) at all time high prices and totally being taken. I just talked to a realtor last week, who just sold a lot, that my builder said was almost unbuildable and he didn't think they would even be able to get a septic permit - but the buying frenzy is still going on. Uninformed people are throwing money. People are buying things still right now that "might" cash flow but if we take a slight dip in rental demand - i.e. small price drop, they are hosed.

Having said all that, now more than ever you have to buy right and for at least myself that is getting very hard to do. In my market and I suspect others it is a lot cheaper to build - however there are tons of caveats with that. My current build which started in Dec 2020 is still not finished. Close but not ready to rent yet. I have had to babysit this thing through all the way. I have had to make more trips to PF then I could have imagined due to all the screw ups in the build and the labor supply is just not good there. Had a forced builder switch in Dec 2021. What I am saying is that, even though it's a lot cheaper, the two years to get it built, means 2 years of lost revenue on an active rental and it has been one of the biggest headaches in my life.

The prior build wasn't near as bad although it had its headaches too. As best I can tell, every builder is over extended in what they are capable of and everybody suffers through the build process.

The thing about these vacation markets is that they are always going to be vacation markets. Look at past history in these markets. Will they dip from time to time - yes. Overall do they trend upward - yes.

It's just tough right now and it comes back to your goals. So for me personally, I will buy if the deal is right. For me that means I am going to put a lot more money down to which I am not worried about my cash on cash numbers, I am concerned with cash flow because that is what I invest for. My thinking is that it will be very difficult to find my next deal and I may wait till things settle down a bit. Everyone is different though. The numbers still have to be right.

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Sean Bramble

Investor · United States · Member since 2020 · 202 posts · 284 votes

4y

A lot of us focus on the market cycle in the housing market … but you make a great point that the vacation rental market is different and can be in a totally different phase of things… and of course it depends on which particular market you’re talking about

one of the tricky things about STRs is that construction isn’t the only way to increase supply … existing homes can simply be converted. So the market cycle can in theory change rapidly with new entrants

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Richard EvannsBusiness Member

OP

Real Estate Agent · Los Angeles · Member since 2018 · 35 posts · 23 votes

4y

Thanks for the responses. I am looking at the STR as basically the same as any rental at this point. It is not generating the typical "hand over fist" STR income (or this one wont). It will generate what a very good long term rental will generate (but i will have it managed so it hopefully won't be a headache, then if i self manage i can increase the income alot, which i may do once its established)

So because I am looking at STRs at this moment as more long term investments, I am alot more concerned with how the values of the markets are going to hold up from an appreciation standpoint.

When I first started doing STRs i was paying $200k for a place that would net 2k a month maybe. In that scenario, i truly don't care what happens to the property value (within reason) so i never even asked the question of "whats the market going to do".

Now im paying 500k for a place that squeaks out $1200 if its lucky, which is fine by non-str investment standards, I feel the STRs kind of need to meet the same standards and more long term stuff, e.g. they have good long term appreciation/growth potential.

Just not sure if vacation-only markets are the places to go for stuff like that.

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John D.

Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes

4y

@Richard Evanns It's extremely difficult to guess how "vacation first" markets will fare as we get used to the new reality of the living-with-COVID world. It's this new reality that caused a flight to these markets, with many people living full-time in what used to be vacation-only markets given remote work being embraced, and the flight from cities due to a desire to escape the conditions where COVID spreads more easily, as well as escape cities that were decidedly less fun not only due to entertainment etc. being shut down but due to increases in homelessness and general blight.

If COVID disappeared tomorrow, everyone had to go back to the office, and international travel picked back up to normal, it's hard to see how these markets wouldn't get hit pretty hard. While that all seems unlikely, a muted version of this seems possible over the next few years.

I used to have a target list of 15 or 20 large pool homes in remote areas, on my possible to-buy list. With so many people looking for more space, and interested in more remote locations, it's rare I have 1 or 2 on the list. Most of those are not being bought for vacation rentals, but for people that are living in them, having gone to remote work and moved out of the City.

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Michael Hyun

Investor · San Jose CA · Member since 2018 · 114 posts · 73 votes

4y

I think if you buy right, and you have a 90% percentile listing, you can survive in any market. Any vacation rental market always has demand despite recessions - the trick, in my opinion, is to be one of the top listings so that you will always get booked even during slow times.

To do this requires more work. I'm noticing a lot more novice investors getting into STR because they see a tik tok about how lucrative it is - but being someone who invested in Joshua Tree in 2020 - I can tell you that the numbers don't work out so well these days.

And for the record - I don't think Joshua Tree is a very "liveable" market. JT is a TINY town - I would barely call it a city. It has a total of like 5 restaurants within the whole area. The reason I sold my JT home in 2021 was because homes inflated by double - and I couldn't see how a JT home could be almost the same price as a entry level home in some other parts of California. This is historically a market where home prices have been <100k since 1950's. All of a sudden in one year the home prices shoot from 200k to 400/500k? Seems like a bubble to me. I transferred my money to the Bay Area SFR via 1031.

SInce Oct 2021, I've seen the JT market start to stagnate - the home prices are the same in Oct 2021 as today. There are more price drops than before - but probably because of greedy people listing their homes for way too much because they heard they could get away with it. With rising interest rates, I can't run the numbers in JT and be positive enough to risk buying in that bubble.

Just my opinion. I still plan to do more STR in the future, and I was actually eyeing Yosemite area as well.

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Richard EvannsBusiness Member

OP

Real Estate Agent · Los Angeles · Member since 2018 · 35 posts · 23 votes

4y

@Michael Hyun

FYI the thing about yosemite, is, per local property managers, well over 1/2 of the people are foreigners who come there, so that market is strong to the point of international renown (as opposed to just a local spot). So that is a positive. Problem there though is that, every agent ive spoken to tells me they havent sold a house to a primary homebuyer in like over a year- all are STR investors. So that saturates the market, and drives up prices due to everyone on the bandwagon. But now that rates on 2nd home loans particularly are through the roof, these things are tougher. Its hard to see how values arent going to take a hit. (And im in escrow of course, before i thought of all this - lol) sigh.

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

4y

The vacation rental market is being dominated by FOMO investors. "Fear of missing out." I also call them "panic buyers." "Just get me into a property, any property, so that I don't miss out".

I am not buying because I can't hang with these guys. I am unwilling to buy a property just to say I bought a property.

The time to buy is when panic selling hits. Like in 2009, 10, and 11, when sellers were just fishing for someone to offer them something. Not enough of an offer to pay off the loan? Time to short sell it. THAT is the time to buy. There were hundreds of short sale properties in the Smokies. I recall very large cabins with indoor pools that were selling from $250-300K. Let that sink in. $200K would buy you about anything you wanted.

I happened to save some screen shots of those days. Here is one for you to enjoy:

You don't make money in STRs when you sell; you make money when you buy. Now is not the time to buy. But another time to buy will be coming soon to a town near you.

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Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

4y

I would look at legacy vacation rental markets that predate the recent airbnb and post-covid travel craze. Think of the beaches or mountains you went to as a kid every summer/winter break where it was pretty much a tradition. Such as Lake Michigan for people from Chicago, or the NC coast for DC/Baltimore/VA etc. Those are the places to be where FOMO sets in if you don't go, and at the end of the day they don't cost an arm and a leg to visit for a few weeks per year and aren't dependent on foreign visitors. Places like that could do better in a downturn because people travel domestically instead of international during tough times.

That said, I ended up passing on that type of location for my first STR and instead bought in Greenville SC where there is a good mix of appreciation and STR cashflow that is not wholly dependent on tourism. I figured that having my first STR in a stable college town with a diversified economy would make for a good foundation for future investments, those of which will be more cash flow and vacation destination focused. Will see how it turns out . ..

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

4y

Want to see some pain? I have intimate knowledge of this particular cabin, as a client of ours bought it during the panic selling crisis of 2010. The original owner paid $485,000. The recession then hit, and all it brought was $205,000. Owner number 1 took a 58% haircut, AFTER JUST NINE MONTHS OF OWNERSHIP! This is for a 4110 square foot log cabin with an indoor pool. THIS shows how fast things turn, and turn badly.

It just sold for $1 million, BUT...that is down for its peak sale of $1,150,000 just 6 months prior. So another someone took a $150,000 loss on this, just recently.

You never know who's got their swim trunks on 'till the tide goes out.

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

4y

Quote from @Jon Martin:

I would look at legacy vacation rental markets that predate the recent airbnb and post-covid travel craze. Think of the beaches or mountains you went to as a kid every summer/winter break where it was pretty much a tradition. Such as Lake Michigan for people from Chicago, or the NC coast for DC/Baltimore/VA etc. Those are the places to be where FOMO sets in if you don't go, and at the end of the day they don't cost an arm and a leg to visit for a few weeks per year and aren't dependent on foreign visitors. Places like that could do better in a downturn because people travel domestically instead of international during tough times.

That said, I ended up passing on that type of location for my first STR and instead bought in Greenville SC where there is a good mix of appreciation and STR cashflow that is not wholly dependent on tourism. I figured that having my first STR in a stable college town with a diversified economy would make for a good foundation for future investments, those of which will be more cash flow and vacation destination focused. Will see how it turns out . ..

Hope you didn't buy the Greenville city limits. I'm sure you know STR'S are illegal there and they are starting to crackdown.

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Luoyi Wu

Member since 2022 · 3 posts · 1 vote

4y

I was looking at yosemite area as well. I own rentals in Blue ridge, Tahoe, Florida and the views in Yosemite areas are un-matched. And with decent facilities, the towns around yosemite are totally livable as LTRs in future. Apart from the fire danger, the $/view is unmatched in yosemite.

The traditional hotel industry is getting disrupted by airbnb massively especially in vacation areas. Business travel in cities / cities with STR restriction will probably be the safe zones for traditional hotels. Given this, STRs in vacation areas still have upsides I think as I predict more hotels going out of business in these areas.

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Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

4y

Quote from @John Underwood:

Quote from @Jon Martin:

I would look at legacy vacation rental markets that predate the recent airbnb and post-covid travel craze. Think of the beaches or mountains you went to as a kid every summer/winter break where it was pretty much a tradition. Such as Lake Michigan for people from Chicago, or the NC coast for DC/Baltimore/VA etc. Those are the places to be where FOMO sets in if you don't go, and at the end of the day they don't cost an arm and a leg to visit for a few weeks per year and aren't dependent on foreign visitors. Places like that could do better in a downturn because people travel domestically instead of international during tough times.

That said, I ended up passing on that type of location for my first STR and instead bought in Greenville SC where there is a good mix of appreciation and STR cashflow that is not wholly dependent on tourism. I figured that having my first STR in a stable college town with a diversified economy would make for a good foundation for future investments, those of which will be more cash flow and vacation destination focused. Will see how it turns out . ..

Hope you didn't buy the Greenville city limits. I'm sure you know STR'S are illegal there and they are starting to crackdown.

You are correct sir- I'm just outside the city limits! 5 minute walk to west village.

I also have a county zoning code that is one of the few allowed for STRs in the city limits should I end up being annexed.

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Sean Bramble

Investor · United States · Member since 2020 · 202 posts · 284 votes

4y

@Collin Hays absolutely fascinating - thanks for the history lesson on the Gatlinburg area. Question: what drove home values down so much? Did revenues take a big hit during 08/09/10? I know home values in the US generally declined during that time, but if Gatlinburg homes are more hospitality assets than housing I would imagine it was due to a decline in earnings? Would be interesting to learn if that area is as “recession proof” as some claim ..

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

4y

Quote from @Jon Martin:

Quote from @John Underwood:

Quote from @Jon Martin:

I would look at legacy vacation rental markets that predate the recent airbnb and post-covid travel craze. Think of the beaches or mountains you went to as a kid every summer/winter break where it was pretty much a tradition. Such as Lake Michigan for people from Chicago, or the NC coast for DC/Baltimore/VA etc. Those are the places to be where FOMO sets in if you don't go, and at the end of the day they don't cost an arm and a leg to visit for a few weeks per year and aren't dependent on foreign visitors. Places like that could do better in a downturn because people travel domestically instead of international during tough times.

That said, I ended up passing on that type of location for my first STR and instead bought in Greenville SC where there is a good mix of appreciation and STR cashflow that is not wholly dependent on tourism. I figured that having my first STR in a stable college town with a diversified economy would make for a good foundation for future investments, those of which will be more cash flow and vacation destination focused. Will see how it turns out . ..

Hope you didn't buy the Greenville city limits. I'm sure you know STR'S are illegal there and they are starting to crackdown.

You are correct sir- I'm just outside the city limits! 5 minute walk to west village.

I also have a county zoning code that is one of the few allowed for STRs in the city limits should I end up being annexed.

That is great. You should do well in this location.

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Augustine Cherukunnel

Investor · Houston, TX · Member since 2016 · 18 posts · 6 votes

4y

@Collin H.

Considering Airbnb & VRBO didn’t exist during the last downturn, do you still the value of a property in that region would fall so dramatically?

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Brandon Mojarro

Member since 2020 · 4 posts · 2 votes

4y

@Luoyi Wu How are your Blue Ridge rentals doing? Have you seen a slowdown recently?

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

4y

Quote from @Sean Bramble:

@Collin Hays absolutely fascinating - thanks for the history lesson on the Gatlinburg area. Question: what drove home values down so much? Did revenues take a big hit during 08/09/10? I know home values in the US generally declined during that time, but if Gatlinburg homes are more hospitality assets than housing I would imagine it was due to a decline in earnings? Would be interesting to learn if that area is as “recession proof” as some claim ..

There is no such thing as recession proof, and vacation destinations are often the first, and most impacted, by a recession.

To answer your question, let's look first at why things are so hot right now in places like Gatlinburg, for vacationers and investors:

1.  Low unemployment.  Everyone has a job and can afford some sort of vacation.
2.   Cheap gas (until the last year). Fill up and drive a day, not a big deal. Low airfares.
3.  Lots of extra money floating around to spend on things.  Vacations, furniture, cars, maybe even buy your own vacation home, even if it doesn't make good financial sense, "just because you can."
3b Big stock market gains - 401Ks have ballooned (until the last year), folks are feeling really good about their finances, and are stepping out on a limb with their spending.
3c. PPP and stimulus money. $ Trillions of printed money, much of it financial windfalls, that recipients put somewhere. Big screen TVs, back yard pergolas, a BMW, maybe even a vacation rental.
4. Ability to borrow money for next to free. Historically low loan rates, including mortgage rates.

The result of all of this is an economy that is like a small camp fire that you just dumped a bunch of newspapers on. It's been burning hot and bright, and everyone is stepping closer to roast a marshmallow. The prices of virtually everything has skyrocketed. Gone parabolic. And when things go parabolic, it's time to take cover.

So what happens that makes a $500,000 cabin worth $200,000 in a year? A recession. A recession is everything that the expansion was, except in reverse:

1.  Rising unemployment. As company earnings disappoint (and they are currently), companies start laying off to shore up their balance sheets. Layoffs beget layoffs. Unemployed people quit spending money, and start liquidating things at steep discounts to shore up their own balance sheets.
2. Expensive gas. A tax on everything we buy. And now you have a bunch of unemployed people trying to fill the tanks of their $70,000 Tahoe with the $1300 a month payment for the next 6 years.
3. As things get tight, there is less disposable money floating around. Folks start thinking twice about spending $5 a day on a double scoop from Baskin Robbins. That's real money.
3b. As it turns out, the stock market doesn't have a conscience.  It's just a number. And as earnings decline, so does the stock market. And it won't go back up until earnings recover. How long will that be? Could be months, could be years.
3c. Stimulus money is gone. And not only is it gone, it went on to jack up the prices in virtually everything we buy. That's not good going forward, as fewer dollars will be chasing those goods.
4. The cost of borrowing is quickly rising. The Fed is going to be forced to shut down the economy to keep inflation in check. So that property that sold for $500,000 last month, might only be worth $400,000 now, because the borrow can't qualify for it otherwise.

As all of these phenomena snowball, you can see valuations cut by 50 to 75 percent pretty quickly. Panic selling is part of the cycle of the vacation rental world. Folks jumping in during the last few years are getting ready to find out about the ugly underbelly of a fire that goes from roasting marshmallows to small flicker that all of the campers are now desperately looking for fuel for to keep alive.

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Karen ChenaillePro Member

Real Estate Agent · Sevierville, TN · Member since 2017 · 165 posts · 137 votes

4y

@Augustine Cherukunnel

The smokies have been a hot rental market since the 1960's...long before Air BnB and VRBO. Before the internet, folks would call cabin rental companies and book a cabin over the phone...my how things have changed!

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

4y

Quote from @Karen Chenaille:

@Augustine Cherukunnel

The smokies have been a hot rental market since the 1960's...long before Air BnB and VRBO. Before the internet, folks would call cabin rental companies and book a cabin over the phone...my how things have changed!

Were you around in 2010 when rental owners were giving their properties back to the bank? There were hundreds of these properties. It hasn't been that long ago.

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Brady Richard

Brusly, LA · Member since 2017 · 44 posts · 36 votes

4y

Quote from @Collin Hays:

The vacation rental market is being dominated by FOMO investors. "Fear of missing out." I also call them "panic buyers." "Just get me into a property, any property, so that I don't miss out".

I am not buying because I can't hang with these guys. I am unwilling to buy a property just to say I bought a property.

The time to buy is when panic selling hits. Like in 2009, 10, and 11, when sellers were just fishing for someone to offer them something. Not enough of an offer to pay off the loan? Time to short sell it. THAT is the time to buy. There were hundreds of short sale properties in the Smokies. I recall very large cabins with indoor pools that were selling from $250-300K. Let that sink in. $200K would buy you about anything you wanted.

I happened to save some screen shots of those days. Here is one for you to enjoy:

You don't make money in STRs when you sell; you make money when you buy. Now is not the time to buy. But another time to buy will be coming soon to a town near you.

Collin, thanks for the screen shots. I compiled those same cabins now. This really puts things into perspective

7 Reply

Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

4y

Quote from @Brady Richard:

Quote from @Collin Hays:

The vacation rental market is being dominated by FOMO investors. "Fear of missing out." I also call them "panic buyers." "Just get me into a property, any property, so that I don't miss out".

I am not buying because I can't hang with these guys. I am unwilling to buy a property just to say I bought a property.

The time to buy is when panic selling hits. Like in 2009, 10, and 11, when sellers were just fishing for someone to offer them something. Not enough of an offer to pay off the loan? Time to short sell it. THAT is the time to buy. There were hundreds of short sale properties in the Smokies. I recall very large cabins with indoor pools that were selling from $250-300K. Let that sink in. $200K would buy you about anything you wanted.

I happened to save some screen shots of those days. Here is one for you to enjoy:

You don't make money in STRs when you sell; you make money when you buy. Now is not the time to buy. But another time to buy will be coming soon to a town near you.

Collin, thanks for the screen shots. I compiled those same cabins now. This really puts things into perspective

winner winner, chicken dinner!

[email protected]806-672-7102

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Collin HaysBusiness Member

Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

4y

Quote from @Augustine Cherukunnel:

@Collin H.

Considering Airbnb & VRBO didn’t exist during the last downturn, do you still the value of a property in that region would fall so dramatically?

VRBO certainly did exist in the last downturn. I've had properties on VRBO since 2005.

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Gene Livingston

Investor · Kyle, TX · Member since 2015 · 113 posts · 102 votes

4y

Quote from @Collin Hays:

Quote from @Karen Chenaille:

@Augustine Cherukunnel

The smokies have been a hot rental market since the 1960's...long before Air BnB and VRBO. Before the internet, folks would call cabin rental companies and book a cabin over the phone...my how things have changed!

Were you around in 2010 when rental owners were giving their properties back to the bank? There were hundreds of these properties. It hasn't been that long ago.

Preach it brother. People LOVE to buy at the top...thankfully, because that's when I'm selling.

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Jon Martin

Member since 2022 · 1k+ posts · 1k+ votes

4y

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Christina Johnson

Real Estate Agent · Galveston, TX · Member since 2019 · 100 posts · 16 votes

4y

Not in our area. I work in Galveston, Texas. We are just seeing the rise in home values this past year. I am seeing lots of equity being pulled from homes which scares me bc most don't realize that makes their mortgage increase. I keep seeing posts about how its "Free Money". 20 to 25% has been the down payment for investment property for the last year or longer.

If you know what kind of STR to buy and have a true plan you will do well but I am seeing many people buy just about anything and MOST of those properties will not do well. They were never meant to be a short term rental and some of these large management companies will just take them on as a client, set rates and never adjust them as the market demands. I evaluate my clients rates weekly versus performance. I also know what will do well since you need amenities in some markets during the offseason that most single family homes do not have so those people have to give the rental away, if they can even compete with the properties that do have a heated pool and amenities year around. Galveston is a beach town. I have 18 years experience here.

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Thoughts on Vacation Markets w/ rising rates/economic slowdown?

Thoughts on Vacation Markets w/ rising rates/economic slowdown?

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