What's the STR forecast for 2023?
Member since 2022 · 4 posts · 6 votes
What's the STR forecast for 2023?
Most Popular Reply
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3yOpinions are like . . . you know.
Just because someone has been killing it for the last five years doesn't mean they are experts. If you want to know what happens with short-term rentals during a recession, talk to people that have been through a recession, not people that have only invested in an ideal market. Anyone investing in the last ten years - myself included - have had it easy. Go find some investors that have been around for at least 20 years. You'll find they have a few scars and stories to share that don't match the rosy picture painted by new investors that have never experienced a down market.
I know a very respected Property Manager in Florida. She has a great business and is seen as a leader in the management community, even though she's only been in the business less than 10 years. She got hit by the hurricane and within one week she was literally begging someone to buy her business because she couldn't handle it. I saw the same thing in the military. There were young guys in peak physical condition that would melt like chocolate in Death Valley the minute bullets start to fly. It's easy to look like a pro when all the conditions are in your favor.
The DIY Landlord Book4.7248 Reviews
100 Replies
- Investor · Indianapolis, IN · Member since 2021 · 38 posts · 85 votes3y
If the numbers work, go for it. There is never a perfect time to invest. Last year, the market was on fire and it was hard to find a deal. Now, it is a fairer market but the interest rates are higher. You can always refinance. Yes, we are in a recession. People still travel during recessions; they just don't take big trips. So, if your investment is in a vacation market like the smokeys or Myrtle Beach, it will perform well assuming you're a great host.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votesHow can you tell? Aren't STRs going to be the quickest hit? Historical numbers will mean very little if in a recession and if anything will be misguided. Discretionary spending is going to be at the lows, question is how low is low?
Quote from @Brittany Stradling:
If the numbers work, go for it. There is never a perfect time to invest. Last year, the market was on fire and it was hard to find a deal. Now, it is a fairer market but the interest rates are higher. You can always refinance. Yes, we are in a recession. People still travel during recessions; they just don't take big trips. So, if your investment is in a vacation market like the smokeys or Myrtle Beach, it will perform well assuming you're a great host.
Now from an investment standpoint, I would assume when it's in the lowest demand it's the best time to buy but if this STR could be a LTR you're playing in that same market. If it's strictly a STR market, you can see how prices fair to see if the market is feeling the heat. - Investor · Indianapolis, IN · Member since 2021 · 38 posts · 85 votes3y
Quote from @V.G Jason:
How can you tell? Aren't STRs going to be the quickest hit? Historical numbers will mean very little if in a recession and if anything will be misguided. Discretionary spending is going to be at the lows, question is how low is low?Quote from @Brittany Stradling:
If the numbers work, go for it. There is never a perfect time to invest. Last year, the market was on fire and it was hard to find a deal. Now, it is a fairer market but the interest rates are higher. You can always refinance. Yes, we are in a recession. People still travel during recessions; they just don't take big trips. So, if your investment is in a vacation market like the smokeys or Myrtle Beach, it will perform well assuming you're a great host.
Now from an investment standpoint, I would assume when it's in the lowest demand it's the best time to buy but if this STR could be a LTR you're playing in that same market. If it's strictly a STR market, you can see how prices fair to see if the market is feeling the heat.This is what Avery Carl preaches and this is her strategy. She always says STRs in vacation markets are basically recession proof.
- 3yLevi BennettPro MemberReal Estate Broker · Charlotte, NC · Member since 2014 · 285 posts · 248 votes
My thoughts on this are a little contrarian, but basically I think the best time to buy is when everyone is saying to not buy. It obviously depends on where you're looking to invest, but there are tons of great tools out there to help you evaluate a market (AirDNA, Rabbu, etc..). Personally, my experience is in North Carolina and Florida and despite numerous claims of "over-saturation" my clients have performed very well. It's not a matter of getting in at the right time as much as it is positioning your asset in a way that will not go out of style, and will always be the first click for a booking in a given market.
Regarding the recession, and everything else we're hearing.. interest rates have stabilized somewhat, and they're not expected to keep going for more than 2 years either way. I think around the time of the next presidential election cycle, you will see a steep decline in interest rates to get back to the Fed's goal of 2% per year. Again, that's my opinion, but then layer in the fact that builders are building at a pace that is far less than necessary to keep up with new families and homes. For instance, most Millennials buy their first home at age 31, and for the next 5 years, 5 million Millennials will be turning 31. Add to this migration trends to the South from the North, and you have an interesting brew that seems pretty recession resistant. There is a lot of pent-up demand in the market right now for people who need a home. There are simply not enough homes. The problem is affordability, and that will eventually correct itself once lending becomes less stifling. I'm expecting a surge in appreciation once interest rates ease.
Regarding travel during a recession, this comment about less travel is a common misnomer in the investment community. As an example, Walt Disney World park reached record attendance and profit from 2008-2011, at the bottom of the recession. The more miserable and unemployed people are, for some reason, the more they travel to distract themselves from the economy. Add to this, despite the horrible "recession" everyone has mentioned, airbnb and VRBO continue to set monthly and quarterly records in overall growth and market cap. More people are booking STRs than ever before, and that trend doesn't seem to be slowing. Again, depends on the market, and many other factors, but it's a market large enough that, if you make the right moves and work with the right consultant, you can easily win at as long as we don't have an entire market collapse.
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
We already have 74k in gross bookings for next year. That is for about 1/3 of the year.
I'm seeing no indications of any slowdown in true vacation destination properties.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
We aren't seeing much in the way of slow down. We are booking 2023 a tad bit slower than normal, but we also have 2 bookings for 2024.
People like to get away when times are on the tough side. We don't have an inexpensive rental but it isn't super expensive either. We focus on families and that has worked really well for us.
Like @Brittany Stradling said, a good deal is a good deal. Vacation markets are solid performers if you have what it takes to provide 5 star service.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votesUntil they aren't.
Quote from @Brittany Stradling:
Quote from @V.G Jason:
How can you tell? Aren't STRs going to be the quickest hit? Historical numbers will mean very little if in a recession and if anything will be misguided. Discretionary spending is going to be at the lows, question is how low is low?Quote from @Brittany Stradling:
If the numbers work, go for it. There is never a perfect time to invest. Last year, the market was on fire and it was hard to find a deal. Now, it is a fairer market but the interest rates are higher. You can always refinance. Yes, we are in a recession. People still travel during recessions; they just don't take big trips. So, if your investment is in a vacation market like the smokeys or Myrtle Beach, it will perform well assuming you're a great host.
Now from an investment standpoint, I would assume when it's in the lowest demand it's the best time to buy but if this STR could be a LTR you're playing in that same market. If it's strictly a STR market, you can see how prices fair to see if the market is feeling the heat.This is what Avery Carl preaches and this is her strategy. She always says STRs in vacation markets are basically recession proof.
History means very little. This is like when people compare each recession to one another. They do not realize the impact of the last recession is an obstacle in the future one, but they are not parallel.
And the recession we're facing is more stagflation-esque than outright beaten, down recession. - 3yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Vacation destinations are not recession proof by any stretch of the imagination. I could write a book about Gatlinburg, the 2009-12 edition. You would swear it was fiction though.
- Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes3y
Depends on market. I think vacation markets are here to stay. Get an agent who understands underwriting and do your homework.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Turtle up! Sell it all! Hoard the cash! Buy gold! The sky is falling, the sky is falling!
Nothing is fool proof. Get all the ducks in a row and read the deal. No area provides perfect occupancy, high nightly rates etc all the time.
If you wait for the perfect time, you will never buy anything.
Best course of action - save a bunch of dough. Get a good down payment. Keep a large emergency fund for the low times. Buy it right and be an excellent host. There will be down times, there will be crazy times. Ask a ton of questions here. Be as prepared as you can be and you will succeed.
- Member since 2022 · 272 posts · 253 votes3y
I’ll echo others, there is not a best time to buy. Timing the market in real estate is no less futile than the stock market.
Sure I wish I bought in 2020, but remember one had to be pretty ballsy to buy in 2020 given the circumstances. I’m sure there were 1,000 reasons not to buy in that year at the time.
I think driveable vacation markets near large cities will continue to hold up. Find good properties with figurative moats around them (lake, Mountain View, proximity to attractions, etc.) use conservative projections and move forward - Real Estate Agent · Santa Rosa Beach, FL · Member since 2019 · 112 posts · 116 votes3y
Hi @Isan Sahoo
STR's in solid vacation markets are still a good investment. However, you can't just rent out a room and expect to make a bunch of money. The STR's that are going to do well are the ones that are run well and deliver an exceptional stay. My numbers this year were higher than last year, and last year was a record year. Alot of STR's saw lower numbers this year. It's definitely slower demand, but it is weeding out the average listings from the ones that shine. Just the nature of the beast. Make sure you are in a good market, make sure the numbers work, and have multiple exit strategies, run it like a business and you will be successful. There are deals in Myrtle Beach. I can help.
- Rental Property Investor · North Fork, NY · Member since 2016 · 1k+ posts · 631 votes3y
STR's have been around in many markets for longer than you've probably been alive, or investing in any thing. They just looked different then. Lots of good input on this thread. Do your HW, history does mean something, unlike what another person said. It's never a predictor but it's an indicator. To know where you're going you have to look at where you've been.
And run your numbers. - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Isan Sahoo:
Hello everyone,
As a prospective investor in short-term rental, I would like to get some feedback regarding the upcoming demand for short-term rental. Considering the current economic climate, where layoffs are happening every other day, and interest rates are going off the roof, is it a good time to invest in STR or wait for some time? Also, in this market, will people go on vacations and spend money on STR?
I will be extremely honest with you , IF
- you buy STR at STR market
- you buy STR in that city that's considered as resort zone
- your unit is valid for Airbnb for years
then STR is recession-proof.
But IF you expect STR performance in Toledo, Ohio or somewhere in Alabamaville somewhere to match the tourist destination, then the problem is YOU, not the market.
Your question itself is wrong, you ask the wrong question LOL - 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Brittany Stradling:
Quote from @V.G Jason:
How can you tell? Aren't STRs going to be the quickest hit? Historical numbers will mean very little if in a recession and if anything will be misguided. Discretionary spending is going to be at the lows, question is how low is low?Quote from @Brittany Stradling:
If the numbers work, go for it. There is never a perfect time to invest. Last year, the market was on fire and it was hard to find a deal. Now, it is a fairer market but the interest rates are higher. You can always refinance. Yes, we are in a recession. People still travel during recessions; they just don't take big trips. So, if your investment is in a vacation market like the smokeys or Myrtle Beach, it will perform well assuming you're a great host.
Now from an investment standpoint, I would assume when it's in the lowest demand it's the best time to buy but if this STR could be a LTR you're playing in that same market. If it's strictly a STR market, you can see how prices fair to see if the market is feeling the heat.This is what Avery Carl preaches and this is her strategy. She always says STRs in vacation markets are basically recession proof.
>Avery Carl preaches and this is her strategy. She always says STRs in vacation markets are basically recession proof.
The Avery’s had no STRs at the Great Recession (GR), so I question their basis for the comment and have heard their theory about drivable destinations.
As someone who had (still have) STRs at the GR with a current population in excess of 20 million within a 2 hour drive (not sure what population was as GR, but it was high), I can state their theory was BS for the GR. The STRs with 20m population are beach area of San Diego (Mission Beach), we also had 2 STRs at Gulf Shores Alabama (no longer own these). Our San Diego STRs were 7 years old in 2006 (started STR in 1999). Gulf Shores were maybe 4 years old. Our occupancy fell so low that we converted the San Diego STRs to LTR in the school year and STR in the summer. This is because we were not even hitting 20% occupancy in the school year months. I do recognize the GR is an extreme case and hopefully we do not experience anything similar to GR.
So their theory does not match my reality as someone who actually had well established STRs at the GR.
I suggest you be leery of people who present theories without any experience related to their theory.
Also people who make money by having people purchase STRs have vested interest in under representing the associated risks. Not stating the Averys are intentionally doing this, they may simply be stating an opinion without the associated experience
Good luck
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Opinions are like . . . you know.
Just because someone has been killing it for the last five years doesn't mean they are experts. If you want to know what happens with short-term rentals during a recession, talk to people that have been through a recession, not people that have only invested in an ideal market. Anyone investing in the last ten years - myself included - have had it easy. Go find some investors that have been around for at least 20 years. You'll find they have a few scars and stories to share that don't match the rosy picture painted by new investors that have never experienced a down market.
I know a very respected Property Manager in Florida. She has a great business and is seen as a leader in the management community, even though she's only been in the business less than 10 years. She got hit by the hurricane and within one week she was literally begging someone to buy her business because she couldn't handle it. I saw the same thing in the military. There were young guys in peak physical condition that would melt like chocolate in Death Valley the minute bullets start to fly. It's easy to look like a pro when all the conditions are in your favor.
The DIY Landlord Book4.7248 Reviews - 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Nancy Bachety:
STR's have been around in many markets for longer than you've probably been alive, or investing in any thing. They just looked different then. Lots of good input on this thread. Do your HW, history does mean something, unlike what another person said. It's never a predictor but it's an indicator. To know where you're going you have to look at where you've been.
And run your numbers.That's assuming things are linear-- they are not. History is almost and completely irrelevant. Real estate can't be evaluated off normal risk measures or backward dated information, it's a highly different asset class. I haven't seen a single consistent thing in the longest of time, if I just step aside casually. If someone told me 15 years ago Nashville would be the hottest place in 12 years time you'd roll your eyes, if someone said the Smoky Mountains is a hot spot just 4 years ago you'd be like what Mountains? If you made $100k in 2020, $150k in 2021, and $200k in 2022 can you go ahead and pencil in you'll on average make $150 k in 2023, and your target is $250k?
No, you cannot. Risk measures don't reflect well on real estate, it's hard to evaluate. The best course of risk aversion is to take a more proper approach to your well being. That's a leverage to personal lifestyle debate. That way you manage the ups & downs with no issues.
History will not tell you your 2023-2028 projections. If you feel so, go calculate them and let's run them year by year. You'll be off. I hope you're off the wrong way(underestimated). Quit with the history crap and comparisons to previous downturns in economy, no new set of variables in the future are going to be 100% correlated from previous times. There'll definitely be some causation(this 2020-2021 housing run is definitely attributed to 2008 issues). Much like it's more probable the next real downturn we get(after this one, if there is one), housing may be a normality or it might be a run on rent issues in America. That's a wide spread of outcome.Stick to what you can manage at the individual level. This goes with any form of investing.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Nathan Gesner:
perty Manager in Florida. She has a great business and is seen as a leader in the management community, even though she's only been in the business less than 10 years. She got hit by the hurricane and within one week she was literally begging someone to buy her business because she couldn't handle it. I saw the same thing in the military. There were young guys in peak physical condition that would melt like chocolate in Death Valley the minute bullets start to fly. It's easy to look like a pro when all the conditions are in your favor.
What happened after Florida hurricane? bankruptcy ?
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @V.G Jason:
Quote from @Nancy Bachety:
STR's have been around in many markets for longer than you've probably been alive, or investing in any thing. They just looked different then. Lots of good input on this thread. Do your HW, history does mean something, unlike what another person said. It's never a predictor but it's an indicator. To know where you're going you have to look at where you've been.
And run your numbers.That's assuming things are linear-- they are not. History is almost and completely irrelevant. Real estate can't be evaluated off normal risk measures or backward dated information, it's a highly different asset class. I haven't seen a single consistent thing in the longest of time, if I just step aside casually. If someone told me 15 years ago Nashville would be the hottest place in 12 years time you'd roll your eyes, if someone said the Smoky Mountains is a hot spot just 4 years ago you'd be like what Mountains? If you made $100k in 2020, $150k in 2021, and $200k in 2022 can you go ahead and pencil in you'll on average make $150 k in 2023, and your target is $250k?
No, you cannot. Risk measures don't reflect well on real estate, it's hard to evaluate. The best course of risk aversion is to take a more proper approach to your well being. That's a leverage to personal lifestyle debate. That way you manage the ups & downs with no issues.
History will not tell you your 2023-2028 projections. If you feel so, go calculate them and let's run them year by year. You'll be off. I hope you're off the wrong way(underestimated). Quit with the history crap and comparisons to previous downturns in economy, no new set of variables in the future are going to be 100% correlated from previous times. There'll definitely be some causation(this 2020-2021 housing run is definitely attributed to 2008 issues). Much like it's more probable the next real downturn we get(after this one, if there is one), housing may be a normality or it might be a run on rent issues in America. That's a wide spread of outcome.Stick to what you can manage at the individual level. This goes with any form of investing.
problem with bigger pockets folks is they think STR is the housing market while STR is the hospitality market, as James Hamling ever said, very accurate.
The Airbnb guy who invented Airbnb never think their model would replace a hotel. - Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Carlos Ptriawan:
Quote from @Nathan Gesner:
perty Manager in Florida. She has a great business and is seen as a leader in the management community, even though she's only been in the business less than 10 years. She got hit by the hurricane and within one week she was literally begging someone to buy her business because she couldn't handle it. I saw the same thing in the military. There were young guys in peak physical condition that would melt like chocolate in Death Valley the minute bullets start to fly. It's easy to look like a pro when all the conditions are in your favor.
What happened after Florida hurricane? bankruptcy ?
No. The hurricane damaged a lot of homes, so her workload increased. She had to coordinate with a lot of Landlords, Tenants, insurance companies, and contractors. She seemed professional when everything was rosy. Once it got tough, she fell apart.
The DIY Landlord Book4.7248 Reviews - 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Nathan Gesner:
Opinions are like . . . you know.
Just because someone has been killing it for the last five years doesn't mean they are experts. If you want to know what happens with short-term rentals during a recession, talk to people that have been through a recession, not people that have only invested in an ideal market. Anyone investing in the last ten years - myself included - have had it easy. Go find some investors that have been around for at least 20 years. You'll find they have a few scars and stories to share that don't match the rosy picture painted by new investors that have never experienced a down market.
I know a very respected Property Manager in Florida. She has a great business and is seen as a leader in the management community, even though she's only been in the business less than 10 years. She got hit by the hurricane and within one week she was literally begging someone to buy her business because she couldn't handle it. I saw the same thing in the military. There were young guys in peak physical condition that would melt like chocolate in Death Valley the minute bullets start to fly. It's easy to look like a pro when all the conditions are in your favor.
Long ago, we had an OOS duplex in Gulf Shores right on the beach, Alabama that were used as STRs. They were doing OK, but not as good as our local RE. The issue is the taxes and insurance was going up faster than the STR income. Then it got hit by hurricane 1. Hurricane 1. This hurricane red tagged many of the properties on the beach near our duplex. The red tagged units needed to be moved off the beach. Our duplex was not red tagged but had significant damage. We were made various promises of our property being worked, but there was no progress. We had to go there to finally get significant work completed. Insurance rose significantly. A year later, another hurricane hit our duplex. Exact same story, red tags, our unit not red tagged but had significant damage, promises of progress, had to take a trip there to get the desired progress, insurance cost roase more. We ended up selling not too long after completing the repairs from the 2nd hurricane.
As we now know Gulf Shores went many years without getting hit again. I occasionally have seller's remorse. The duplex was awesome with an incredible location. Such a property in Souther CA does not exist but if it did it would be an easy 8 digits. The Gulf Shore market has appreciated significantly (many markets have including my primary market). On the sell side, my local properties have performed great with no hurricane risk.
Mother Nature can be unpredictable and impact RE performance, time required, etc. Our limit apparently was 2 hurricanes in consecutive years.
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Michael Baum:
Turtle up! Sell it all! Hoard the cash! Buy gold! The sky is falling, the sky is falling!
Nothing is fool proof. Get all the ducks in a row and read the deal. No area provides perfect occupancy, high nightly rates etc all the time.
If you wait for the perfect time, you will never buy anything.
Best course of action - save a bunch of dough. Get a good down payment. Keep a large emergency fund for the low times. Buy it right and be an excellent host. There will be down times, there will be crazy times. Ask a ton of questions here. Be as prepared as you can be and you will succeed.
Well said!
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
So I am not sure I agree with everything @V.G Jason has said. It's true you can never really know but some things are pretty standard.
An oceanfront, lake front or mountain cabin with a great view will always be valuable.
Nashville has always been a popular destination. The Smokies are the same.
I am not saying that it is incorrect, it's just certain places will always do better with the right management.
Our place is lakefront in North Idaho. I am not worried about occupancy this upcoming year. A nice drive to location on the lake is just what families and friends are looking for.
When times are tougher, people still find a way to get out and have fun. The need to get away from the daily drudge is even more important when things are tougher. I am not talking about folks that don't have 2 nickels to rub together but middle class working families.
My 2 cents.
- 3yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Michael Baum:
So I am not sure I agree with everything @V.G Jason has said. It's true you can never really know but some things are pretty standard.
An oceanfront, lake front or mountain cabin with a great view will always be valuable.
Nashville has always been a popular destination. The Smokies are the same.
I am not saying that it is incorrect, it's just certain places will always do better with the right management.
Our place is lakefront in North Idaho. I am not worried about occupancy this upcoming year. A nice drive to location on the lake is just what families and friends are looking for.
When times are tougher, people still find a way to get out and have fun. The need to get away from the daily drudge is even more important when things are tougher. I am not talking about folks that don't have 2 nickels to rub together but middle class working families.
My 2 cents.
Nashville has not always been a popular destination. It's been rising probably since 2017-18. Head full of steam since the pandemic, but to say "always" is a complete lie. Again, if you're going to use history you'll notice so many trends are different then how they appear. Smokies have not always been in demand either lol. You're using the last 3-5 years. When you stretch things out, like 20-25 years, you'll notice how off things are. I got offered a gig in Nashville in 2017, almost took it, it was nowhere near as popular back then as it has been the last three years. Asheville is another example. I use to live in NC back in 2012-2013, nobody cared about Asheville. It got some tracks in 2015-2016, but it jumped during the pandemic. Durham was crap back then too.
The next 7-10 years will show new trends and even the next 15-20 years. That's my point. History isn't going to predict it. There's too many examples to show otherwise. Go check out San Francisco projects back in 2005 now, go check Austin projections in 2014 versus now. Go check Boise, Idaho, as recently as 2018. Check the Savannah, Georgia 4 years ago versus now. History as an indicator is the biggest pump fake. If you want the leads, follow where the whales are going not where we've been. The "market" that gravitated to these hot spots; Austin, Nashville, Savannah, Asheville Miami are primarily corporate and institution leads(New York and California based mainly). The Idaho and Montana leads are people jumping California policy. Go look at Tulsa, OK, right now versus the history. Dallas & Tulsa are probably some of the most underrated lead spots, as well as San Antonio. Let's see where those go the next 7-10 versus the last 10 years. If you're going tell me the last 10 years are going to be similar for the next 7-10, I'm willing to make a larger wager against you.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.