What's the STR forecast for 2023?
Member since 2022 · 4 posts · 6 votes
What's the STR forecast for 2023?
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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.
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100 Replies
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Doug Coup:
@Carlos Ptriawan
I would agree with this. The platforms have issues. New people expecting great thing from avg places or effort will not preform.
Make sure there is a city ordiance in place. Otherwise there is big changes coming
Biggerpocket investment advice is bad man .... telling you.
When everyone is purchasing STVR in toledoville for 50% markup to follow the early guy that has invested there in long term, it's time to get out, basically, they increase the supply side; while demand remains the same.
There's no way the city/gov would not catch you guys that convert the regular homes to permanent Airbnb. That action destroyed the local economy. - Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Chad McMahan:
For my clients and myself, this is the best time to invest since 2009. Amazing deals on properties. If you buy a property that checks the STR boxes and markets incredibly well, and you hire top notch STR management or self manage at a high level, you will out perform 80%-90% of the STR's on the market and have huge cash flow.
100.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Brian Barch:
I agree that at this point you want a find an area that has reasonable regulations already in place. Otherwise you always have the unknown of big changesQuote from @Doug Coup:
@Carlos Ptriawan
I would agree with this. The platforms have issues. New people expecting great thing from avg places or effort will not preform.
Make sure there is a city ordiance in place. Otherwise there is big changes coming
My purchasing criteria is to buy in the area with the strictest housing and STR regulation and a few miles from the Hilton resort.
I guess 50% of my Airbnb book is from US traveller, the rest are European and Japanese travelers. - Lender · Austin, TX · Member since 2018 · 241 posts · 136 votes3yQuote 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?
@Isan Sahoo - good evening! The success of an STR will depend on how it is managed, designed, and marketed. I've seen a difference of 20% in gross revenue for houses on the same street.
The economic climate does also matter, which is why I buy and advise to buy near the city business district. Here in Austin that does require a permit, but those can be obtained with the right planning.
I've been able to make well over my debt service & floating costs every month since starting to operate Oct 2020.
Every weekend bookings are continuing to happen even with the massive layoffs in tech and overall gloomy economic picture.
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
So, if you can find an investment property in an area that caters to vacationers and it meets your financial criteria, don't be afraid to take the plunge. Chances are you'll make a great return on your investment even during tough economic times! And with interest rates being relatively high at the moment, it's definitely worth considering refinancing if it allows you to make your money work harder for you. Don't be afraid to seize the opportunity when it arises! You just might be surprised at the results.
Good luck with your investment journey – may it lead to a prosperous future!
- 3yJoe S.Pro MemberInvestor · San Antonio · Member since 2020 · 3k+ posts · 3k+ 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 has a book as well as other interest at stake. Do you think her views are unbiased??
- 3yJoe S.Pro MemberInvestor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
Quote from @Jarrod Covey:
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?
@Isan Sahoo - good evening! The success of an STR will depend on how it is managed, designed, and marketed. I've seen a difference of 20% in gross revenue for houses on the same street.
The economic climate does also matter, which is why I buy and advise to buy near the city business district. Here in Austin that does require a permit, but those can be obtained with the right planning.
I've been able to make well over my debt service & floating costs every month since starting to operate Oct 2020.
Every weekend bookings are continuing to happen even with the massive layoffs in tech and overall gloomy economic picture.
Do you know anyone that manages over in San Antonio area?
- Lender · Austin, TX · Member since 2018 · 241 posts · 136 votes3y
@Joe S. - yes, I do! I'll send you a dm now
- 3yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Joe S. I do, a good buddy owns and manages a few @Lucas Piper
The Moorhead Team5140 Reviews - Real Estate Broker · Atlanta, GA · Member since 2019 · 34 posts · 23 votes3y
We run 4 STR in Atlanta area. We are at 70% occupancy on all. What I can tell you is that our Cabin and Lake House properties are booked solid and nearly 9 months in advance. As people's income drops, they still vacation, but opt for cabins and lake houses, in State or in Country lower budget options. I see people doing less big trips and more small get aways. If you are buying destination STR, you may find better ROI then lower end units more designed for the business traveler.
- Member since 2019 · 4 posts · 5 votes3y
@Carlos Ptriawan
Respectfully disagree with you here. As a Superhost with 5 rentals across different markets and states, this is not the case. This is what one would assume, but this just isn't so. My small town Oklahoma, and my larger city Wisconsin Airbnb's get a similar cash on cash return as my Smokies Tennessee, and Grand Canyon Arizona rentals do.
People need lodging EVERYWHERE. And the Airbnb gurus out there - Avery Carl, Kai Andrew, Robbuilt, are they preaching to buy in Toledo, Ohio? No. They are preaching to buy in the Smokies and Myrtle Beach.
So what is going to happen to the Smokies and Myrtle Beach? Over-saturation.
While I am thoroughly enjoying being one of only 6 Airbnbs in the entire town of Podunck Oklahoma and where I am in Wisconsin, is not over-saturated yet.....not a single guest is coming to these places for a "vacation."
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Jenni Vega:
@Carlos Ptriawan
Respectfully disagree with you here. As a Superhost with 5 rentals across different markets and states, this is not the case. This is what one would assume, but this just isn't so. My small town Oklahoma, and my larger city Wisconsin Airbnb's get a similar cash on cash return as my Smokies Tennessee, and Grand Canyon Arizona rentals do.
People need lodging EVERYWHERE. And the Airbnb gurus out there - Avery Carl, Kai Andrew, Robbuilt, are they preaching to buy in Toledo, Ohio? No. They are preaching to buy in the Smokies and Myrtle Beach.
So what is going to happen to the Smokies and Myrtle Beach? Over-saturation.
While I am thoroughly enjoying being one of only 6 Airbnbs in the entire town of Podunck Oklahoma and where I am in Wisconsin, is not over-saturated yet.....not a single guest is coming to these places for a "vacation."
it's because you're already super host so all these traveller are attracted to stay in your place, since you are a reliable good host.
but if you ask the newbie in your area that may not having the same feedback like yours, their booking most likely wouldn't be similar to yours.
to answer this question we really need to use comparative data. - 3yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Myrtle Mike Thompson:
@Isan Sahoo I can really only speak to my local market here in Myrtle Beach, but my clients are reporting that their bookings are up for next year. I had a condo unit listed for one of them and they just decided last week not to sell after seeing a flurry of bookings on their AirBNB site.
As others have mentioned, the middle class might spend less on restaurants and pricey gym memberships during a recession, but they still need to recharge and still want to make family memories with their kids. Look for beach or mountain/lake destinations within driving distance of major population centers.
Did you have STRs at the Great Recession (GR)? Did you have any ro,e with STRs at the GR? I have seen similar comments many times, but I have yet to see such a comment from someone that had STRs at the Great Recession. Those who had STRs at the GR recognize that a recession can greatly impact STRs.
We had 4 well established STRs at the GR, 2 beach units in San Diego (STRs for 7 years) and 2 beach units in Gulf Shores Alabama (STRs for 4 years). Our vacancy rate shot upwards. Our off season income fell far below the LTR income. We converted the 2 San Diego units to student housing in off season/school year and STRs in the summer. We took a beating on the Gulf Shore units.
I recognize the GR is an extreme example, but people did cut back or not take vacations. Many people were more worried about keeping their house than going on vacation. Even those that were not concerned about losing their homes were concerned about how bad it would get and being very cautious in their spending.
- 3yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
If people have less money they'll travel less. This doesn't mean you can't crush it with STR but you need to have an amazing, unique property that's priced right with everything people would ever want
The Moorhead Team5140 Reviews - Rental Property Investor · Castle Rock, CO · Member since 2022 · 9 posts · 12 votes3y
This is a really interesting discussion. Seems to me like we're at a breaking point in the US where everyone is split on which way the economy is heading. Some people think the sky is falling and others are throwing all their chips in to ride the bull forward.
My wife and I just bought a property in Castle Rock, CO. The city itself isn't a huge vacation market but it's about a half an hour South from Denver which gets a ton of traffic. I like the purchase we made because the numbers work well for LTR as well as STR, so regardless of how things end up going with the STR business - we're in a pretty good spot.
I'd advise others to do something similar, hedging bets just seems to put ourselves in the best spot possible when the economy is on the fence like it is now
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Asare Nkansah:
This is a really interesting discussion. Seems to me like we're at a breaking point in the US where everyone is split on which way the economy is heading. Some people think the sky is falling and others are throwing all their chips in to ride the bull forward.
when the sentiment is split, it's a good time to buy.
when the sentiment is everyone would like to buy, is time to get out.
please note that our psychology is impacted so much by that bombardment of news that we're going to the recession,layoff,ww 3, russia invasion,etc,etc.....
if we stop reading the news, social media, do not have cable/tv, drink milk tea, watch fifa world cup, the world is just okay - Member since 2022 · 272 posts · 253 votes3y
Ultimately anyone getting into an STR needs to:
1) be able to weather the short term (ramp up period, slow months, etc)
2) buy for the long term
Asking about 2023 is great for discussion sake, so I enjoy the question. But ultimately real estate has high transaction costs. So one should really ask, what’s the outlook from now until 2030?
That takes the pressure off this idea that you need to buy a property that puts $2k in your pocket your first month. Bill market/bear market, that’s a bad strategy for either one
- Real Estate Agent · Pasadena, CA · Member since 2017 · 274 posts · 255 votes3y
This might be an unpopular opinion but if you're thinking about getting into a business and the uncertainty of the future is preventing you, then you're probably not ready to get into the business.
Of course we have to factor in data and analysis and plan for the future forecast but as a business owner, you have to know that there are no guarantees and you have to have the grit to get through slow times in order to enjoy the fast times and most importantly expect that there are going to be slow times that need to be weathered.
- 3yTyler MunroePro MemberBoston, MA · Member since 2017 · 84 posts · 42 votes
Popular destinations are pretty easy to identify and well-run STRs will always thrive there. What I don't see mentioned on this thread (and also pertaining to a "recession-proof" STR), is how does your property compare to those around you? Do you have a jacuzzi when 65% of other listings have one? What about a game room? Baths per bedroom? Waterfront? The list goes on. Point is that you can minimize effects of a downturn and/or over saturation by having a property even marginally better than those around you. These differentiators will be the difference between success and failure if/when occupancy slides.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Brian Barch:
Ultimately anyone getting into an STR needs to:
1) be able to weather the short term (ramp up period, slow months, etc)
2) buy for the long term
Asking about 2023 is great for discussion sake, so I enjoy the question. But ultimately real estate has high transaction costs. So one should really ask, what’s the outlook from now until 2030?
For regular housing, I think housing til 2030 is equivalent to a single-digit IRR. There's not much appreciation.
However STR that's standing next to Hilton only or Superhost or full of positive reviews that would survive.
Some folks here have wet dream that their STR in Toledoville or Phoenixcity would perform like the best Airbnb in town, while in 2014 the number of Airbnb supply is 300; and 2022 number of Airbnb supply is 1500, and demand is flat. Just think about it.
If one really wants the actual statistic you should consult the data provided by Airbnb itself.
For example, even in one local geographic area, between Hilton, Motel 6 and RedRoof Inn, they have various occupancy rate. - 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Joe S.:
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 has a book as well as other interest at stake. Do you think her views are unbiased??
I know Avery. Her book is based on her actual experience with her STR properties.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @John Underwood:
Quote from @Joe S.:
Quote from @Brittany Stradling:
Quote from @V.G Jason:
This is what Avery Carl preaches and this is her strategy. She always says STRs in vacation markets are basically recession proof.
Avery has a book as well as other interest at stake. Do you think her views are unbiased??
I know Avery. Her book is based on her actual experience with her STR properties.
The problem with someone's experience (and this is not just for STR) is the experience is hard to duplicate. His approach could be working when supply and demand is having 1:4 ratio and they're super host with good reputations for example; but if supply and demand are becoming 5:4 in the future as a new player come in with zero feedback, the experience for the new player could be different.
- 3yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
Quote from @Carlos Ptriawan:
Quote from @John Underwood:
Quote from @Joe S.:
Quote from @Brittany Stradling:
Quote from @V.G Jason:
This is what Avery Carl preaches and this is her strategy. She always says STRs in vacation markets are basically recession proof.
Avery has a book as well as other interest at stake. Do you think her views are unbiased??
I know Avery. Her book is based on her actual experience with her STR properties.
The problem with someone's experience (and this is not just for STR) is the experience is hard to duplicate. His approach could be working when supply and demand is having 1:4 ratio and they're super host with good reputations for example; but if supply and demand are becoming 5:4 in the future as a new player come in with zero feedback, the experience for the new player could be different.
Yes a new person's experience could absolutely be different.
However in the areas where she is invested its not that hard to duplicate either because she has stayed in tried and true vacation destinations.
Over 14 Million tourist visited the Smokey Mountain National Park in 2021.
- Member since 2019 · 7k+ posts · 4k+ votes3y
mostly in summer months only for that chunks of 12 mil tourists.
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