Are STR's headed for trouble?
Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votesVictor Minasce has some compelling data suggested there may be trouble ahead for Short Term Rentals.
Victor Minasce has some compelling data suggested there may be trouble ahead for Short Term Rentals.
I'm in Scottsdale. I just bought a house to make into a high end STR in Phoenix.
Think of it this way, if you sell bananas and everybody decides to sell bananas, there is still a demand for bananas even though there is more competition.
But, those selling nice bananas will always have an audience and those selling bruised, rotten, spoiled bananas will no longer have an audience.
It's called "capitalism". Those who offer the better product will do well and those who go cheap will eventually fade into the night.
Phoenix is showing 5,576 STRs
holy cow .... so it has nothing to do with the recession I guess, but it's more of a saturated market with declined visitors.
holy cow, I searched the Scottsdale super host listing, there are >500 superhost w/ $200 daily rate, the top three highest feedback hosts only have 1-week booking in January.....and all these houses are super beautiful.
how are they going to survive?
Phoenix is showing 5,576 STRs
holy cow .... so it has nothing to do with the recession I guess, but it's more of a saturated market with declined visitors.
holy cow, I searched the Scottsdale super host listing, there are >500 superhost w/ $200 daily rate, the top three highest feedback hosts only have 1-week booking in January.....and all these houses are super beautiful.
how are they going to survive?
Phoenix is showing 5,576 STRs
holy cow .... so it has nothing to do with the recession I guess, but it's more of a saturated market with declined visitors.
holy cow, I searched the Scottsdale super host listing, there are >500 superhost w/ $200 daily rate, the top three highest feedback hosts only have 1-week booking in January.....and all these houses are super beautiful.
how are they going to survive?
this is exactly the psychological investing problem of the FOMO investors following the earlier/established investors.
The same thing happened to LTR, Uber , etc... at the end it caused oversupply.
https://time.com/6223185/airbn...
Phoenix is showing 5,576 STRs
holy cow .... so it has nothing to do with the recession I guess, but it's more of a saturated market with declined visitors.
holy cow, I searched the Scottsdale super host listing, there are >500 superhost w/ $200 daily rate, the top three highest feedback hosts only have 1-week booking in January.....and all these houses are super beautiful.
how are they going to survive?
this is exactly the psychological investing problem of the FOMO investors following the earlier/established investors.
The same thing happened to LTR, Uber , etc... at the end it caused oversupply.
https://time.com/6223185/airbn...
Yes, the article says:
"But as some Airbnb hosts experience declining occupancy rates—and as the country’s economic outlook is uncertain—Airbnb is by and large having a banner year.
“Demand is still rising every month, and so are Airbnb’s bookings and revenue,” says Lane. “Although hosts in some markets are seeing a correction after a pandemic-driven boom, on the whole, demand remains very strong and we aren’t yet seeing an ‘Airbnb bust.'”
Phoenix is showing 5,576 STRs
holy cow .... so it has nothing to do with the recession I guess, but it's more of a saturated market with declined visitors.
holy cow, I searched the Scottsdale super host listing, there are >500 superhost w/ $200 daily rate, the top three highest feedback hosts only have 1-week booking in January.....and all these houses are super beautiful.
how are they going to survive?
this is exactly the psychological investing problem of the FOMO investors following the earlier/established investors.
The same thing happened to LTR, Uber , etc... at the end it caused oversupply.
https://time.com/6223185/airbn...
“Demand is still rising every month, and so are Airbnb’s bookings and revenue,” says Lane. “Although hosts in some markets are seeing a correction after a pandemic-driven boom, on the whole, demand remains very strong and we aren’t yet seeing an ‘Airbnb bust.'”
that's the trademark of the new economy.
Uber doesn't have a car
Airbnb doesn't have houses
But I guess Airbnb host is more miserable than an uber driver, at the very least, if you have a car, you can use it. I don't know what happens to the Airbnb house that are sitting idle lol, this is why my approach is contrarian to the BP advice as I analyze the demand and supply more carefully.
Crazy small town with 242K population and has 500 airbnb superhost... San Jose with 983K population only has 373 airbnb superhost (not a vacation dest)
What I want to know is when we will stop seeing these threads?
I think the people who saw str's as truly passive streams of income and are not upper end operators are the ones who will get taken out over this economic down turn. Increasing regulations from cities will also begin to wipe out un licensed operators. I very much like @Account Closed's banana sales comparison
Meh. Just one man's opinion. And indicative (maybe) of one market.
Although like with any business, if you are not prepared, and don't run it like a business.....you will pay the price. I think STRs are here to stay and will grow in popularity as the years go by. As I've mentioned before, a majority of the people we are getting at our STRs are first timers, and older folks too. They are just discovering the beauty of STRs and say they will start using them every time they travel now that they know about them.
Of course, due to the economy, there may be a dip in numbers for those that are not well run/managed.
Would you be open to an audit of a STR I'm in the process of acquiring? Looking to do everything I can to boost occupancy and get set up for the busy season during these next slow months (Jan-May).
What I want to know is when we will stop seeing these threads?
I think the people who saw str's as truly passive streams of income and are not upper end operators are the ones who will get taken out over this economic down turn. Increasing regulations from cities will also begin to wipe out un licensed operators. I very much like @Account Closed's banana sales comparison
Hi Tyler, I checked your company's recent funding related to STR. That's awesome. Some of the investors are really smart. I also like lender
that could underwrite appropriately and not just too aggresively.
Imagine if you're a tourist from MN, why in the world do you want to stay for $200/day in Phoenix rather than just staying in Sedona for the same price?
Actually, I've been confused about this Airbnb business for a long time. I've checked the booking between these two cities has a different booking pattern.
Staying in cities does absolutely nothing for me. I honestly hate it. Put me in a quiet cabins in the woods or in a quiet beach house and I'm in heaven. BUT- many people DO enjoy the city resources. Also, some people stay for a few days or a week in Scottsdale and then pop out to my area for 1-3 weeks. It takes most people 2-2.5 hours to get to Sedona from Phx, so not too long of a drive for the masses.
No lol
Imagine if you're a tourist from MN, why in the world do you want to stay for $200/day in Phoenix rather than just staying in Sedona for the same price?
Actually, I've been confused about this Airbnb business for a long time. I've checked the booking between these two cities has a different booking pattern.
Staying in cities does absolutely nothing for me. I honestly hate it. Put me in a quiet cabins in the woods or in a quiet beach house and I'm in heaven. BUT- many people DO enjoy the city resources. Also, some people stay for a few days or a week in Scottsdale and then pop out to my area for 1-3 weeks. It takes most people 2-2.5 hours to get to Sedona from Phx, so not too long of a drive for the masses.
What's very interesting about the Sedona housing market, is that the Sedona market is now almost like different market than Phoenix/Scottsdale market altogether. Sedona, especially the condo, keeps appreciating. While Phoenix, etc is slowing down after June 2022.
I have been monitoring what's the best market post covid and I've seen a very unique market transition, all STR destination seems doesn't experience a downturn, while "city destination" is experiencing a downturn. This happened in Hawaii as well. Sedona's price action is similar to Kauai/Maui , while Phoenix is acting like Honolulu where the price is dropping.
It gives a lot of insight into where to invest. It seems a lot of investors that are able to cash out in 2021-2022 era, are moving their money to STR-vacation place (well including me).
Yes, it seems that 'Americans are bracing for a recession' and are being a bit more cautious with their spending.
I have many friends/clients who own STRs in Sedona; the feedback I'm getting is that booking requests don't come in 1-2 months in advance as they used to, more-so a couple weeks in advance with a lot more last-minute requests too. But in the end, they still experience 80-90% occupancy rates!
I see small niche markets like Sedona doing really well through tough times. People are always looking to get out of the cities and breathe some fresh air and what better place to do that then in the beautiful Red Rocks! :)
how are they going to survive?
There will be trouble in the waters for STR's in the near future. However, I think it can be mitigated if people become more involved in their communites.
Go to you city council meetings, town council, what ever - and speak your mind on these issues. Come correct to these with data. Get the numbers as to how many STR's are in your area. Find out the majority of the demographic using them. Generally these properties service people who are visiting family for major life milestones, they are coming back to a place they used to live in and enjoy it again, or they are there for play and are contributing to the local economy.
Bringing these points up can really help you with swaying the decision makers\
@Martin D., hey man! Glad to see you posting!
@Greg Scott- The Emerald Coast is still packed. Panama City Beach has dumped a LOT of money into becoming a year-round tourist destination. I have clients here who mentioned they could not believe how busy it is. I would absolutely look into the Emerald Coast Market, if you're open to it and looking to invest. For PCB, you'll get the best bang for your buck under $800k.
I'm starting to see more listings put up, so people moving on from this strategy. Just like many strategies some work some don't, some work for some people others don't work for other people.
One thing I've seen lately is some pretty low rates for STR properties. At some of the rates I see, they would make more sense as LTR.
STRs will always work in the right area. Always. The only glitch will be government over-regulation. So just choose your AO properly with a lot of research.....