Another one bites the dust

[John Underwood]

I am  leaving a Master Mind group meeting in Puerto Rico. This has 12 different RE associations from across the Eastern U.S.

So one of the guys who is apparently not as experienced as I thought as this was his first STR house apparently had to dump his really nice Lake House in TN. It was a very nice house, but I thought it was too rural when he bought it.

He did not properly vet the property. He likely paid too much and I'm sure he didn't properly check the occupancy and nightly rates. He might have depended too much on Airdna but not sure on that.

I think we will be hearing more and more of these type scenarios on improperly vetted STRs.

[Nathan Gesner]

Quote from @John Underwood:

Agreed. A lot of new investors were using equity gained by market appreciation. In other words, it's easy money they didn't have to work for. Easy come, easy go. They watch a few videos about cashing out equity and investing in real estate without knowing what a good investment looks like. They don't investigate the market or analyze the deal, and they get caught up in a feeding frenzy and pay more than what the property is worth. When things get tough and the investment performs below expectations, they'll sell for a loss and walk away.

[Brooklyn McCarty]

I think we will see this happen to a lot of people who bought during the STR gold rush and are not cut out for the business side of it.

[Andrew Freed]

Personally, I wouldn't touch STR's with a 10 foot pole right now. In an upcoming recession, people travel less so the demand will be lower. Combined with a ridiculous influx of supply due to everyone and their mamas wanting to get into STR. Sounds like a recipe for a majority of negative cash flowing assets. That is why it is imperative to underwrite a STR to still work as a LTR. You could always fall back to just throwing in a tenant if the demand isn't there.

[Michael Baum]

That is a bummer @John Underwood. I hate to see people fail when there are a ton of resources to help plan correctly.

[Ryan Moyer]

The worst part of it is all the "experts" and influencers and realtors and lenders and established personas that were screaming "buy buy buy" 8 months ago when things were starting to look sour that are now saying "boy I hope people didn't buy at the top, that was stupid!".

[Leslie Anne Morris]

Ouch that stinks! I’m seeing this quite a bit right now with folks wanting to list their cabins. 

[Jay Hinrichs]

John we bought a river house 60 minutes out of Portland on the Columbia river at the time there was maybe 3 air bnb listed in the whole county. now there is something like 20 basically with most of last summers purchases going airbnb.. We tried it not our cup of tea LOL.. I sold it for and the person who bought it has it on airbnb and when i look at their calendar I can only see 4 days it was used since they closed in August and that was Thanksgiving.. will see what this summer brings it is one of the nicest units available with deep river doc etc. my Daughter bought a floating home on the Slough behind us has it well priced and its got very high occupancy but she is of the same mind one year wore her out.. Now granted floating homes have a lot of moving pieces and folks can bugger things up pretty easily.. Its on the market and in contract I believe for someone who wants to continue with STR.

I think If I was going to go that route again it would be a ski condo or a Condo on Maui something that we did not have to maintain like a SFR structure.

[January Johnson]

Quote from @Andrew Freed:

Personally, I wouldn't touch STR's with a 10 foot pole right now. In an upcoming recession, people travel less so the demand will be lower. Combined with a ridiculous influx of supply due to everyone and their mamas wanting to get into STR. Sounds like a recipe for a majority of negative cash flowing assets. That is why it is imperative to underwrite a STR to still work as a LTR. You could always fall back to just throwing in a tenant if the demand isn't there.

This all depends on your market.  In my regional, drive-to market, even if people have to spend LESS on vacation, they can still rent smaller places.  We are not feeling any kind of recession here, and I doubt we will.  We are all about STRs.

Also, "the housing market" ≠ "the STR market". You didn't say it did, but I'm saying it. : )

[Andrew Freed]

@January Johnson - I don't disagree with any of your points, I'm not a STR specialist so I defer to your expertise. There is definitely money to be made in the model, even in recessions. But I would advise newbie STR hosts to pick up properties that still make sense as a LTR so they have multiple exit strategies.

[Jarrod Askin]

Quote from @John Underwood:

I am  leaving a Master Mind group meeting in Puerto Rico. This has 12 different RE associations from across the Eastern U.S.

So one of the guys who is apparently not as experienced as I thought as this was his first STR house apparently had to dump his really nice Lake House in TN. It was a very nice house, but I thought it was too rural when he bought it.

He did not properly vet the property. He likely paid too much and I'm sure he didn't properly check the occupancy and nightly rates. He might have depended too much on Airdna but not sure on that.

I think we will be hearing more and more of these type scenarios on improperly vetted STRs.

@John Underwood

What other tools do you use to analyze an STR other than airdna?

[John Underwood]

Quote from @Jarrod Askin:

Quote from @John Underwood:

I am  leaving a Master Mind group meeting in Puerto Rico. This has 12 different RE associations from across the Eastern U.S.

So one of the guys who is apparently not as experienced as I thought as this was his first STR house apparently had to dump his really nice Lake House in TN. It was a very nice house, but I thought it was too rural when he bought it.

He did not properly vet the property. He likely paid too much and I'm sure he didn't properly check the occupancy and nightly rates. He might have depended too much on Airdna but not sure on that.

I think we will be hearing more and more of these type scenarios on improperly vetted STRs.

@John Underwood

What other tools do you use to analyze an STR other than airdna?

 I don't trust Airdna data.

I get real numbers from similar properties on Vrbo and Airbnb, then check them a couple times per year to set my pricing. It's easy, free and doesn’t take much time.

[Jarrod Askin]

I paid for a year of airdna and was super disappointed with the product in general. I don't own any STR but the numbers seemed extremely high. That's dangerous!
Thanks for your feedback. 

[Henry Lazerow]

At least where I live many properties sell for low cap rates that would not cashflow at 25 down but these are cash buyers or live in owners so not seeing any inventory get dumped back at all. I think a lot of the time people see sales prices and think it was a bad buy but do not know the buyers goals or downpayment ammount if even financed at all. 

[Brian Kragerud]

I compare airdna data to price labs and have found airdna includes cleaning fee making it higher and price labs does not.

[January Johnson]

Quote from @John Underwood:

Quote from @Jarrod Askin:

Quote from @John Underwood:

I am  leaving a Master Mind group meeting in Puerto Rico. This has 12 different RE associations from across the Eastern U.S.

So one of the guys who is apparently not as experienced as I thought as this was his first STR house apparently had to dump his really nice Lake House in TN. It was a very nice house, but I thought it was too rural when he bought it.

He did not properly vet the property. He likely paid too much and I'm sure he didn't properly check the occupancy and nightly rates. He might have depended too much on Airdna but not sure on that.

I think we will be hearing more and more of these type scenarios on improperly vetted STRs.

@John Underwood

What other tools do you use to analyze an STR other than airdna?

 I don't trust Airdna data.

I get real numbers from similar properties on Vrbo and Airbnb, then check them a couple times per year to set my pricing. It's easy, free and doesn’t take much time.

But AirDNA says it gets its data from Airbnb (plus lots of other sources), so if you don't trust Airbnb....

https://www.airdna.co/airdna-d... 

Do you use Mashvisor or Key Data or STR Insights?

[January Johnson]

Quote from @Brian Kragerud:

I compare airdna data to price labs and have found airdna includes cleaning fee making it higher and price labs does not.

Gross income is gross income.  Of course you would count cleaning fees, then just account for it in your expenses, no?

[John Underwood]

Quote from @January Johnson:

Quote from @John Underwood:

Quote from @Jarrod Askin:

Quote from @John Underwood:

I am  leaving a Master Mind group meeting in Puerto Rico. This has 12 different RE associations from across the Eastern U.S.

So one of the guys who is apparently not as experienced as I thought as this was his first STR house apparently had to dump his really nice Lake House in TN. It was a very nice house, but I thought it was too rural when he bought it.

He did not properly vet the property. He likely paid too much and I'm sure he didn't properly check the occupancy and nightly rates. He might have depended too much on Airdna but not sure on that.

I think we will be hearing more and more of these type scenarios on improperly vetted STRs.

@John Underwood

What other tools do you use to analyze an STR other than airdna?

 I don't trust Airdna data.

I get real numbers from similar properties on Vrbo and Airbnb, then check them a couple times per year to set my pricing. It's easy, free and doesn’t take much time.

But AirDNA says it gets its data from Airbnb (plus lots of other sources), so if you don't trust Airbnb....

https://www.airdna.co/airdna-d... 

Do you use Mashvisor or Key Data or STR Insights?

 I use Avery's & Luc's "The enemy method"

[Sara Levy-Lambert]

Google the awning airbnb estimator, the estimator numbers are just that... estimates. The real value comes from seeing all the nearby active listings and diving into their amenities, daily rates, seasonality and other data to get a really good understanding.

[Brian Kragerud]

@January Johnson you got it right, I just remove the Cleaning Fees on the revenue side when using Airdna data or I would get inflated revenue by doubling of Cleaning Fees, makes all the diff in calculating CoC. Then I use PriceLabs to breakdown the data even more, probably can do this with Airdna paid version too but PL is way cheaper by location. Now when someone provides me with actual s (revenue) then like you said, I would add in the Cleaning Fees or take out of the expense side as a wash. I like adding it in to get an accounting affect as it is revenue that has to be claimed. Thank you for the question.

[Michael Baum]

I have been playing with the Awning estimator and it is pretty fun to see things.

@Sara Levy-Lambert, if you can recommend a feature, I would add the ability to see things in an area vs just basing it off an address. Like Sheboygan and it pulls up the data in that town. Maybe add a line feature to get info on a defined area once you narrow things down.

[Brooklyn McCarty]

Quote from @John Underwood:

Quote from @January Johnson:

Quote from @John Underwood:

Quote from @Jarrod Askin:

Quote from @John Underwood:

I am  leaving a Master Mind group meeting in Puerto Rico. This has 12 different RE associations from across the Eastern U.S.

So one of the guys who is apparently not as experienced as I thought as this was his first STR house apparently had to dump his really nice Lake House in TN. It was a very nice house, but I thought it was too rural when he bought it.

He did not properly vet the property. He likely paid too much and I'm sure he didn't properly check the occupancy and nightly rates. He might have depended too much on Airdna but not sure on that.

I think we will be hearing more and more of these type scenarios on improperly vetted STRs.

@John Underwood

What other tools do you use to analyze an STR other than airdna?

 I don't trust Airdna data.

I get real numbers from similar properties on Vrbo and Airbnb, then check them a couple times per year to set my pricing. It's easy, free and doesn’t take much time.

But AirDNA says it gets its data from Airbnb (plus lots of other sources), so if you don't trust Airbnb....

https://www.airdna.co/airdna-d... 

Do you use Mashvisor or Key Data or STR Insights?

 I use Avery's & Luc's "The enemy method"

This is what I do John!

[Sara Levy-Lambert]

Quote from @Michael Baum:

I have been playing with the Awning estimator and it is pretty fun to see things.

@Sara Levy-Lambert, if you can recommend a feature, I would add the ability to see things in an area vs just basing it off an address. Like Sheboygan and it pulls up the data in that town. Maybe add a line feature to get info on a defined area once you narrow things down.

 That's a great recommendation Michael, we announce new features and tools in our newsletter, sign up for a free Awning account to receive it and be the first to know!

[William Beck]

I do have concern about a bubble of STR property value relative to income potential. Some markets are in better or worse shape than others. Opportunities still exist for sure, it's just the values are totally wrecked and all over the board. I think lower performance properties that bought at the peak last year might be in for some hurt in the next 12-18 months.

[Michael Baum]

How are things in Branson @William Beck? We went there about 10 years ago. Pretty fun place.

[William Beck]

STR Business is.. well, business as usual! It's our slow season right now which is a nice relief from the madness that tourists bring the rest of the year. There are some cool new commercial developments coming up like a new indoor water park and some more stuff that Johnny Morris is building down in the Hollister/Ridgedale area. Luckily our real estate prices haven't gotten completely out of hand like some of the other spots in the country, they are still a bit elevated but still good buys all around. I'm building a container home STR just down past the border in Arkansas near Table Rock Lake. When are you coming back to visit? @Michael Baum