I have been lurking around this site for a couple of years now. In 2020 my wife and I were seriously considering doing a STR. We picked Nashville as the market we wanted to pursue. Long story short, the market was not attractive to us. Nashville was booming. Multi-Unit STR's were going up as fast as they could build them. Sale prices were high. To this day I remain interested in real estate. I was shocked recently when I saw a post on Social Media that was mocking Airbnb. I went into the comments section and could not believe that pretty much all of the comments were negative. People did not like the fees they were being charged to rent them. Paying a cleaning fee and then having a list of cleaning responsibilities before check out. People were even dismissive about the idea of it being someone's home. They felt they were the customer but were not being treated like one. Objectively, I felt like they were making some good points. I bring this up for two reasons. I am curious as to what people think is the future for STR. More cities are restricting or limiting new STR's. Is the STR as good of an investment today as it was say 5 years ago? What about 5 years from now? I think the overall point people were making in the comments page was they prefer working with hotels. You come and go as you please. When you leave, you walk out and are not responsible for the trash, sheets, etc. Personally, I continue to be a customer for STR's. I believe it is the best option for larger groups. As my wife and I become empty nesters and travel more just the two of us, I am not sure if we will continue to use them as much.

STR'S are here to stay. A massive amount of people prefer to rent a house than a hotel room. When you travel with friends and family it is usually cheaper and you all get to hang together. I have a cabin that sleeps up to 23 people. This place stays booked and it is always a large group of people that apparently like to vacation together. Fond memories are created and many of these people come back every year. A hotel room cannot match this.

STRs are not only here to stay, I believe they are still in their infancy, relatively speaking. Boomers are just now discovering them and are realizing the benefits of staying at one. 1) You made the mistake of having anything to do with social media, and 2) You are looking at AirBnB which is kinda the poor white trash of the business.....sure they're huge, but look at the reasons why......you can rent someone a room, a tent, a cot in your backyard.......renting out substandard places to stay leads to p**sed off clients. Anyone that thinks about this with any amount of reason will understand that vacation rentals are not going anywhere. The cities that regulate against them will lose them, and their revenue, until they wake up and allow them again. The bad hosts will fade away and be replaced with people that care and are not looking to just stuff 'heads in beds'. Those hosts ruin it for everyone - "just cram heads in beds, man...!"

from my perspective a traveling business dude.. I much prefer a hotel.. I know the quality going in I can buy expensive or cheap depending what I want to do . its easy to find.. its always open the keys always work.. and for the brand I stay at the beds are nice and such. Now hotels suffered in the GFC and some still have not got back to full service just experienced that in KC last week. plus i get my points and I stay enough for business that I earn enough points for one or more very nice free stays ( usually internationally when hotels are very expensive) so that's a great perc and an important one.. If as a business traveler you use the CC and air-miles for free tickets then hotel points for free stay.. I mean I have done 2 weeks in Thailand and only paid for food :) same With Europe so you cant get that by just staying at a random airbnb. I have owned a few short term rentals and when using PM it just was not worth it.. of course this was not prime Airbnb area.. And I have another prop we have done a little short term but still not for me personally the guest are too needy for my liking. What I have liked though is the fully furnished medium term rental we have one in Vegas and it does exceedingly well. double what normal rent would be with very minimal interaction in managing it. Lastly agree though if your going with large group Airbnb is much better than hotel and better bang for the buck.. or if I go to say Montana to fish hotels are not very nice so the airbnb we use there is pretty cool and worth the money cheaper than the hotel and right above a wine bar so that's a plus.

@Robert Willard excellent post to ruffle the feathers in the forum! Love it! Ok, to the matter at hand. STR is my bread and butter and I strongly believe it is an excellent investment and business strategy IF DONE RIGHT. Short-term-rentals/vacation rentals are a subsection of the hospitality industry. Airbnb DOES NOT equal or represent the STR industry as a whole. Airbnb is just one TOOL that travelers can utilize to find and book vacation rentals. Even if Airbnb completely went away, others will take it's place. The demand for non-hotel lodging is here and here to stay with a vengeance. I'm living it right now here on the Emerald Coast of FL. That does not mean that hotels are going to go away. Hotels are also evolving as is the STR industry. In many ways hotels are copying some of the features provided by the STR accommodations. And YES, some people prefer hotels. And yes, some people hate Airbnb and the experience of staying in an STR. Some people also hate steak. But, steak restaurants still do well :-). I do agree, however, that there was a period of exaggerated hype over STRs, which attracted people to the field who were ill-suited or ill-prepared for it. Of all real estate investment options, STR is the LEAST PASSIVE one. Especially if you self-manage, which is the best way to maximize cashflow. People who had no time or no desire to learn about the industry bought in, did it wrong, got burned and decided STR is no good as an investment option. If you're interested in STR, yes, definitely read online reviews of travelers. But be fair. Get on VRBO, or Airbnb and check out all the listing and the bazillion positive reviews. There's a passenger for every train, and the STR train has lots and lots of passengers :-).

I think as the years have gone by, STR bookings have gone up but so have customer expectations. I never felt like I was in competition with hotels until this year. Now, I'm definitely getting bookings from people who use to stay exclusively in hotels, including business travelers. In order to maintain high ratings, which in turn impacts bookings, this year I had to focus more on hospitality industry standards and less on "you are staying in my home" type standards. I dropped all my "check out" requests other than "please lock up" and I emphasized the option for a self-checkin. I also implemented other small, hospitality industry amenities. My ratings have steadily gone up since implementing these changes. But, no, I don't think STRs are going away because too many of us prefer the STR experience over the hotel experience. I do think regulations will continue to rise which will increase nightly rates by reducing competition.

Robert, Airbnb trades at Price to Earnings ratio of 66. The stock market still thinks that there is plenty of room for that business to grow. Without a doubt regulations will be introduced to better manage STRs, and in the long run that will help stabilize the business and hopefully create more certainty for all stakeholders as to what they can expect. Many others have commented that STRs that are "just a room" are going to face tough competition. There has to be some kind of appeal to put up with the costs and responsibilities of staying in a STR. As you mention, they make a lot of sense for families versus getting two rooms at a hotel. 77% of people have pets in the US. STRs can be pet friendly versus hotels. Unique stays are something that you don't find at many hotels. Plus STRs offer a wider range of price points in some markets where there is limited hotel availability. Maybe some of the "shine" has worn off, but it is like Uber. The sharing economy will continue to grow and become more mainstream.

Another funny thing is how easily people forget that STRs are nothing new. Growing up I stayed in a lot of lake cabins in the summer and ski condos/cabins in the winter. Most were not private family homes and often had identical units nearby, and in some sense they operated like a hotel with a front desk and onsite management. However they did have a lot of the same amenities as STRs that are almost unheard of in hotels such as kitchens, separate bedrooms with a shared living space, grills, private outdoor space, etc. Then you had the rental agencies that did rent out private homes and were basically a manual version of what AirBNB is today. I'd be surprised if there was a single summer or winter vacation destination in the US where some form of this was not already in place long before AirBNB. All of those places were infinitely more enjoyable than having to share 2 queen beds in a Holiday Inn next to the freeway with my Dad snoring in one bed next to my Mom and my sister and I yanking the sheets from each other all through the night. We simply didn't have the option for the above in those situations, or it wasn't convenient/practical at the time. I don't ever want to have a vacation like that ever again with my wife and kid(s), and thankfully with the current STR infrastructure I don't have to!

I was staying in short-term rentals in Europe back in the 80's and 90's. They are here to stay but I do predict a slow-down. Markets are getting saturated. Cities, counties, and states are pushing back with regulations, fees, and taxes. The hotel industry is lobbying against them (successfully in Hawaii). Vacation rentals used to be as cheap - or cheaper - than a hotel with the benefit of a kitchen, laundry, privacy, yard, spa, or other amenities, but prices are starting to creep up and make hotels feel more attractive. Go away? No. Slow and change, yes. But it may take 3-5 years to see any real impact.

Is the shine wearing off on STR's?

Jon Martin

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

4y

Quote from @Michael K.:

I also think airbnb should wise up and display the cleaning and services fees upfront. I'm both a host and a user and I still find it annoying when the price doubles by the time you get to the payment page.

This is my biggest gripe as a guest as well. When you run a search they know exactly how many nights you are staying, so they could easily spit out your options with the all in price listed.

1 Reply

Heather Brown

Investor · NC · Member since 2018 · 39 posts · 8 votes

4y

Quote from @Leslie Anne Morris:

Quote from @James Carlson:

Forgive me the black-helicopter, conspiracy theory here ... I know that Bigger Pockets is about to publish a book on medium-term rentals. I'm getting pushed two different forum threads a lot lately:

-- This thread that we're on right now that's all about "the shine coming off Airbnb" and

-- This one over here which is titled "Medium-term rentals: the Next Big Thing?"

Is this some guerrilla marketing by BP to push their newest book? Or is this a real narrative out there that everyone's just talking about?

No folks are actually talking about these topics. One of the women writing the MTR book is doing a good job making the conversation relevant.

@Leslie Anne Morris

Who's writing the MTR book?

0 Reply

Leslie Anne Morris

Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes

4y

Quote from @Heather Brown:

Quote from @Leslie Anne Morris:

Quote from @James Carlson:

Forgive me the black-helicopter, conspiracy theory here ... I know that Bigger Pockets is about to publish a book on medium-term rentals. I'm getting pushed two different forum threads a lot lately:

-- This thread that we're on right now that's all about "the shine coming off Airbnb" and

-- This one over here which is titled "Medium-term rentals: the Next Big Thing?"

Is this some guerrilla marketing by BP to push their newest book? Or is this a real narrative out there that everyone's just talking about?

No folks are actually talking about these topics. One of the women writing the MTR book is doing a good job making the conversation relevant.

@Leslie Anne Morris

Who's writing the MTR book?

It’s a co-authored book. The author I know is Sarah Weaver.

1 Reply

Matt Castle

Realtor · Gatlinburg, TN · Member since 2018 · 261 posts · 155 votes

4y

Still shiny as can be in the Smokies. I'd argue even shinier now, for Buyers, b/c we actually have time to do things like due diligence, run numbers, get seller paid closing costs, concessions, etc.

Stay out of the places where one planning & zoning meeting can halve your investment with a gavel drop.

1 Reply

Jordan MoorheadBusiness Member

Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes

4y

2021 was a banner year. I'm still looking to buy an STR but looking at 2019 numbers for guidance.

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1 Reply

Myrtle Mike ThompsonBusiness Member

Realtor · Myrtle Beach, SC · Member since 2016 · 350 posts · 204 votes

4y

STR has garnered a lot of attention in recent years - thanks in large part to BiggerPockets! - but it's not a new concept and it's not going anywhere. Here in the Myrtle Beach and North Myrtle Beach markets, short-term rentals are vital to the local economy. There are way more properties listed for rent by owner than there are hotel rooms... and it's been like that for decades. I agree with some of the other comments that vacationers choose Airbnb/VRBO over hotels because they're looking for an authentic, local experience or something unique... at minimum something beyond a pedestrian hotel room with outdated coffee maker and an ironing board hanging in the closet. And yes, cleaning requirements should be minimal and delegated to the actual cleaners.

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Eric Bilderback

Real Estate Agent · Sisters, OR · Member since 2014 · 1k+ posts · 1k+ votes

4y

Buy em!

0 Reply

Antoinette Munroe

Rental Property Investor · Orlando, FL · Member since 2016 · 17 posts · 7 votes

4y

Quote from @Luke Carl:

Looking in Nashville was your first mistake. That's one of the worst places in the nation to try to short term. It's no surprise it left you disinterested. Short term belongs in vacation towns with very few hotels. Not big cities.

Yes there is an over saturation in Vacation rental markets, but with the right amenities, stylings and hospitality experience a differentiation can be established resulting in consistent ROI. AirBnb has 50% turnover with hosts, changes in regulations play a part, but a majority of the attrition is due to the fact that people think its a "get rich quick" platform and don't do the work of learning the market, learning the business, and learning the resources available to supercharge their service... so they get frustrated and quit. We operate in Orlando, FL an MSA larger than that of Nashville and have had sustained success for the last 6 years. Success can be had in any market, be it flyover country, beach front or fifth avenue Manhattan... you just have to work for it.

As far as the "shine" wearing off of STR's... is a quarter still worth .25 cents if the varnish is stripped and stained a little? Value is what matters most not appearance. It's frankly a good thing that there is a cooling off in the eyes of the average bear on the viability of STR's as a solid investment vehicle to deliver them a better tomorrow. The frenzy moving from the forefront to an afterthought in the public consciousness takes a lot of air out of the bubble and pressure off of everyone involved--pressure off aspiring operators because they are onto the next thing, pressure off existing operators because the inflation/oversaturation abates, pressure off "evil investors" because people that don't know what they are doing aren't overbidding for properties and contributing to the abysmally low long term housing supply step back, pressure off local governments to fight "investors" from taking over their communities... The same way a recession is a moment of opportunity in the stock market, this is no different. The shine wearing off is a GOOD thing long term.

STR's aren't going anywhere for many of the astutely aforementioned reasons noted by others. Make an informed decision and pull the trigger Robert, there is tremendous value to be had!

3 Reply

Collin HaysBusiness Member

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

4y

A good investment is never out of style.

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Cliff H.Pro Member

Rental Property Investor · Nashua, NH · Member since 2014 · 587 posts · 477 votes

4y

Here in the northeast (NH/VT), the answer is quantitatively, yes.

Total revenue is down 20-30% year over year, total occupancy down 12-29% year over year, including both peak winter and summer seasons. These are on existing, well-managed/reviewed listings so there’s little new listing bias in the data. Others I know in the areas have reported similar experiences: demand/bookings in rural New England have dropped substantially year over year, likely due to pent up demand for the primary Boston or NYC traveler audience for air travel / international travel after 3 years of COVID restrictions.

Additionally, there’s the elephant in the room few want to talk about: over-saturation of key tourist markets. Anecdotally I’d say the number of listings in VT has at least tripled to quintupled over the past 3 years, with NH not far behind. ME’s seacoast sold out nearly a decade ago so that ship’s long sailed, but we now have the parallel challenge of investor capital driving up home purchases and/or cash buys from deep-pocketed investors with no need for covering typical mortgage overhead and trying to squeeze out competitors by renting out at loss-leading ADRs (news flash: that didn’t work so well for ride-sharing and won’t with STRs either). As far as I can tell these are often folks with nothing better to do with their time than pick up properties they call a good deal by avoiding mortgage payments and calling it a win in a game they can’t lose. Silly .0001%rs.

Either way, the markets have shifted and, as wisely called out by David in others in recent podcasts, STRs are no longer some insider secret that anyone can throw money at and expect 10x returns. We'll have to work for that more going forward. Municipalities are catching up, licensing new technologies that scrape AirBnB/VRBO for listings in parallel to new or pending STR legislation/taxes. Regulation/taxes here in the northeast I fully expect will reduce revenue by 15-20% over the next 5 years.

None of that to say STR is all doom and gloom, just that this market will continue to evolve and look very different 2-3 years from now, just as it does today versus 2019. And looking 5 years out I fully question whether STRs will continue to show greater returns that MTR/LTR rentals, particularly those rentals already focused on niche markets for better returns.

4 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Cliff H.:

And looking 5 years out I fully question whether STRs will continue to show greater returns that MTR/LTR rentals, particularly those rentals already focused on niche markets for better returns.

That will depend entirely upon the area you choose to invest in. Blue States will definitely regulate more, so choose carefully....

0 Reply

Cliff H.Pro Member

Rental Property Investor · Nashua, NH · Member since 2014 · 587 posts · 477 votes

4y

Yea but again that’s 15% versus the 30% I’m tracking right now pre-regulation due to changes in the market and oversaturation of key sectors. That’s not red, blue, or purple, just the reality of more investors/listings in the mix than we had 3-4 years ago.

Quote from @Bruce Woodruff:

Quote from @Cliff H.:

And looking 5 years out I fully question whether STRs will continue to show greater returns that MTR/LTR rentals, particularly those rentals already focused on niche markets for better returns.

That will depend entirely upon the area you choose to invest in. Blue States will definitely regulate more, so choose carefully....

0 Reply

Robin SimonBusiness Member

Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes

4y

Quote from @Jon Martin:

You're not wrong about Social Media. Still, I was surprised by people's comments. I keep seeing that Cleveland is a good market for STR. My own backyard. Who would have thought?

There is a false consensus bias effect with social media. All it takes is 1-2 dozen debbie downers getting nasty in the comments to all of a sudden make it feel like everyone feels a certain way. Twitter is a perfect example of this. Where in reality, it was confirmation bias and insidious algorithms that led those people to that post and motivated them to leave a comment, while those who don't feel that way would've never known about it.

I also wouldn't put it past the hotel industry and their associated PR and trade associations to hire some paid trolls, whether with their existing PR people or farming it out.

This is a key point - social media is not really reflective of reality and people are going to be much more likely to post if they had a negative experience, so 98% of people that are happy with their STS experiences probably aren't posting about it on FB. Theres also going to be a higher percentage of "horror stories" for Airbnbs since really anyone can be a host, so some bad ones will create some bad experiences (versus hotels with much larger barriers to entry, will be less likely to have true disasters, even if a worse overall experience)

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Robert Willard

OP

Member since 2020 · 29 posts · 18 votes

4y

Quote from @Jon Martin:

You're not wrong about Social Media. Still, I was surprised by people's comments. I keep seeing that Cleveland is a good market for STR. My own backyard. Who would have thought?

There is a false consensus bias effect with social media. All it takes is 1-2 dozen debbie downers getting nasty in the comments to all of a sudden make it feel like everyone feels a certain way. Twitter is a perfect example of this. Where in reality, it was confirmation bias and insidious algorithms that led those people to that post and motivated them to leave a comment, while those who don't feel that way would've never known about it.

I also wouldn't put it past the hotel industry and their associated PR and trade associations to hire some paid trolls, whether with their existing PR people or farming it out.

It really is not that deep. As I said in OP, I was surprised to see the comments. I thought by and large people were positive about staying in STR's. For the record, I have considered owning one and would still consider it if the situation is right. I have used STR's and will continue to do so. That said, their complaints are valid. The fees are high. You feel like a guest in someone's home vs. a customer. You pay a cleaning fee and then get a list on tasks to do before you checkout. These are facts. Personally, I think it is good feedback. If I end up buying one, I certainly will take some of these things into consideration.

0 Reply

Jon Martin

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

4y

Quote from @Robert Willard:

No, they aren’t all facts because those complaints are only valid for a subset of STRs. The only only thing listed above that is universal for most are the fees, which I agree tend to be high and substantially add to the per/night cost of the unit you decide on. Otherwise I’ve never been asked to do clean up tasks. Most I’ve stayed in are decorated in a way that don’t make it feel like someone’s home (such as with family photos).

Someone complaining on social media is not a representation of how the public feels by any means. STRs wouldn’t have risen to their current level of success if that was the case.

0 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

4y

So right now we are booking out for 2023 and I have one booking for 2024. We have all 5 star reviews and I feel we do a great job with amenities in a great location. That never goes out of style or gets old. If you want a lake front home, fully stocked with everything you could possible need in a small rural town with lots to do, our place is your place. Those things never go by the wayside.

Also, we do ask a bit of our guests. I ask them to load and run the dishwasher, place all used towels in the nearest tub, and take all their trash out to the cans. If they need to leave food behind I tell them that we will deal with it. That is it. We don't have them strip the beds or do laundry. Frankly most of them would ruin the sheets and towel if they washed them.

I don't think that is egregious at all. It takes just a few minutes and easy to do. We have never had a guest balk at doing any of those things. Actually most want to do more.

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Michael Baum:

Also, we do ask a bit of our guests. I ask them to load and run the dishwasher, place all used towels in the nearest tub, and take all their trash out to the cans.

That's exactly what we do and what virtually every STR I've styed in does. Hardly doing chores, just common courtesy. I think most guests understand that a lot of STRs are self cleaned and even if not, there is not going to be a cleaning crew coming in the same day like in hotels.

1 Reply

Leslie Anne Morris

Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes

4y

Quote from @Michael Baum:

So right now we are booking out for 2023 and I have one booking for 2024. We have all 5 star reviews and I feel we do a great job with amenities in a great location. That never goes out of style or gets old. If you want a lake front home, fully stocked with everything you could possible need in a small rural town with lots to do, our place is your place. Those things never go by the wayside.

Also, we do ask a bit of our guests. I ask them to load and run the dishwasher, place all used towels in the nearest tub, and take all their trash out to the cans. If they need to leave food behind I tell them that we will deal with it. That is it. We don't have them strip the beds or do laundry. Frankly most of them would ruin the sheets and towel if they washed them.

I don't think that is egregious at all. It takes just a few minutes and easy to do. We have never had a guest balk at doing any of those things. Actually most want to do more.

Wow! 2024?!

0 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

4y

Hey @Leslie Anne Morris, yup! We had one booking for 2022 made in 2020. It is pretty rare and a lot can happen between then and now, but some folks like to plan ahead and get all their ducks in a row so they don't have to worry.

2023 is shaping up real fast. I am already booked for 35 days for prime summer. We are getting one booking a week right now. Usually from 5 to 7 days. Then later, the 3 day stays start filtering in until we are full for May - Sept. Nothing in Oct 2022 yet. We should see some come rolling in. Then Thanksgiving and Christmas/New Years.

1 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Michael Baum:

Hey @Leslie Anne Morris, yup! We had one booking for 2022 made in 2020.

Good job Michael! We have about 10 weeks booked in 2023, at least at one of our places. People that stay there go to a local attraction that gets booked way in advance....

1 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

4y

Thanks man! I don't do much special except make the house as cool as I can. :)

0 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

4y

Quote from @Michael Baum:

Thanks man! I don't do much special except make the house as cool as I can. :)

Yep....cool and clean gets the great reviews!

0 Reply

Leslie Anne Morris

Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes

4y

Quote from @Michael Baum:

Thanks man! I don't do much special except make the house as cool as I can. :)

That makes all the difference!

0 Reply

William Arrington

Gainesville, VA · Member since 2021 · 82 posts · 72 votes

4y

All my STRs are in places with 4 season rentals and laws on the books regulating them. Do not buy one in the wild west. Sure it's great to not have any rules but one county meeting and they are all banned from that area and you're done. I also have security so if you are loud and security comes and says your done.. I am not even the bad guy. Your leaving with them driving you out

2 Reply

Michael BaumPro Member

Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes

4y

Yeah @William Arrington, that is not how it works. Ours in the "wild west" and we have no problems. There aren't arbitrary decisions with no reviews.

Yes there are restrictions here and there, but it is much worse in the larger cities on the east coast from what I have read here and elsewhere.

1 Reply

Is the shine wearing off on STR's?

Is the shine wearing off on STR's?

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