When the Numbers Stop Working: Why One Investor Pulled the Plug on Airbnb
Member since 2025 · 49 posts · 28 votes
When the Numbers Stop Working: Why One Investor Pulled the Plug on Airbnb
Most Popular Reply
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
1yI was talking to a client the other day who made a funny but true comment that got me thinking: they have done extremely well with their property but would have done almost equally as well if it had been vacant the whole time they’ve owned it. The rental income is small potatoes for them compared to the real bread and butter which is the appreciation that they have had over time. They were joking about just skipping the tenant headaches and keeping their properties vacant from now on.
Of course it's better to have someone living there to keep the property up and for that extra income, but my point is that in a really good location, the rental income is secondary to appreciation. With an STR, it's more of a business than a traditional real estate investment, and location is even more important. In the best locations, a property will do well regardless of the vacancy rate/ operational side of things simply because the land and location are going to increase in value by enough to offset any operational hiccups. Not so much in bad locations that are boom/bust or for properties where the underwriting depends entirely on low vacancy rate and smooth operating, which doesn't always happen. Location, location, location with strong fundamentals that isn't reliant on one single factor which ebbs and flows.
29 Replies
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes1y
@Pedro Andrade you make an excellent point. Everything in life changes and I'd expand your sentiment to "nothing stays good forever". It is important particularly in business to continue to assess the current situation and remain limber. The good news is there are always other opportunities.
- 1yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
8 years in and things are still good. No reason for us to move to another type of investment.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Michael Baum:
8 years in and things are still good. No reason for us to move to another type of investment.
location location location your in an area that is super unique. One of the world premier mountain lakes .. to me that makes a huge difference and I suspect not a ton of competition I think those out in the TN hills have LOTS of competition and FLA and other areas.
I bought a house on the Columbia river I have no doubt it could have worked but after two stays I figured out I did not like it at all.. Just personal .. that area there is no management so getting calls and such was not for us so we sold it 1 month later.. did well on it since it was a fixer and we did value add.. But we had way to much $ in it to just use it ourselves a couple times a eyar. - Member since 2022 · 1k+ posts · 1k+ votes1y
While I don’t doubt the validity of this story, I do question the level of effort by the owner that was put into furnishings/decor, management, site selection etc. Once past the early upswing of a new market, average efforts yield average results.
That said, the true cost of ownership is often humbling once you the trailing 12 months of expenses. Nothing wrong with unloading and moving on, better to voluntarily stop the bleeding than having that decision made for you.
- 1yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
I focus on LTR'S so I can weather any STR downturns. That said our lake house has many reasons for people to come stay there and it is still doing really well.
Our cabin in Pigeon Forge seems to be doing better than many others in the area. It also has a lot to offer and we have many people come back here year after year.
- Lender · Elk Grove, CA · Member since 2016 · 190 posts · 94 votes1y
I am happy to have gotten in and out before things peaked. To me the business model always seemed risky due to the low barrier of entry. I don't want to see anyone fail and know many are doing well, but I'd rather make less on a LTR any day.
- 1yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
I’ve been in this investment class for 20 years, so I’ve lived through a few of these cycles.
It’s fascinating just how far these inflated values can crash.
Consider this one…asking 1.2 million 3 years ago, asking $749K today, and it’s still sitting. Going to be some really good deals in a few more months when panic sets in.
https://www.zillow.com/homedetails/436-Lucerne-Way-Gatlinbur...- Rental Property Investor · New Braunfels, TX · Member since 2022 · 408 posts · 408 votes1yOuch!
Quote from @Collin Hays:
I’ve been in this investment class for 20 years, so I’ve lived through a few of these cycles.
It’s fascinating just how far these inflated values can crash.
Consider this one…asking 1.2 million 3 years ago, asking $749K today, and it’s still sitting. Going to be some really good deals in a few more months when panic sets in.
https://www.zillow.com/homedetails/436-Lucerne-Way-Gatlinbur... - Rental Property Investor · Member since 2019 · 276 posts · 235 votes1y
Quote from @Collin Hays:
I’ve been in this investment class for 20 years, so I’ve lived through a few of these cycles.
It’s fascinating just how far these inflated values can crash.
Consider this one…asking 1.2 million 3 years ago, asking $749K today, and it’s still sitting. Going to be some really good deals in a few more months when panic sets in.
https://www.zillow.com/homedetails/436-Lucerne-Way-Gatlinbur...Still needs to drop in price significantly to make it worth it. A lot of work needs to be done on that cabin to update to make it competitive with all the rest in the area.
- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
Quote from @Collin Hays:
I’ve been in this investment class for 20 years, so I’ve lived through a few of these cycles.
It’s fascinating just how far these inflated values can crash.
Consider this one…asking 1.2 million 3 years ago, asking $749K today, and it’s still sitting. Going to be some really good deals in a few more months when panic sets in.
https://www.zillow.com/homedetails/436-Lucerne-Way-Gatlinbur...It's down to $725k!
- 1yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Quote from @Mike Grudzien:
Quote from @Collin Hays:
I’ve been in this investment class for 20 years, so I’ve lived through a few of these cycles.
It’s fascinating just how far these inflated values can crash.
Consider this one…asking 1.2 million 3 years ago, asking $749K today, and it’s still sitting. Going to be some really good deals in a few more months when panic sets in.
https://www.zillow.com/homedetails/436-Lucerne-Way-Gatlinbur...It's down to $725k!
😂
- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
It really depends on the market. High-draw, resort, tourist markets do well consistently
We're in a college town (University of Oregon, Go Ducks!), so that is a draw.
Also Eugene, OR is situated such that either the Pacific coast or the Cascade mountains are each only an hour away in opposite directions.
STRs strategically located in large metro markets also do well.- Cambridge, MA · Member since 2015 · 650 posts · 735 votes1y
Quote from @Mike Grudzien:
It really depends on the market. High-draw, resort, tourist markets do well consistently
We're in a college town (University of Oregon, Go Ducks!), so that is a draw.
Also Eugene, OR is situated such that either the Pacific coast or the Cascade mountains are each only an hour away in opposite directions.
STRs strategically located in large metro markets also do well.Not necessarily. My units are in a college town between Harvard and MIT but we relied heavily on international visitors. Among many other issues, international tourism has taken a big hit under this administration.
- 1yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Exactly, but I think having something on a lake, the ocean etc will always bring in guests.
- Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
I was talking to a client the other day who made a funny but true comment that got me thinking: they have done extremely well with their property but would have done almost equally as well if it had been vacant the whole time they’ve owned it. The rental income is small potatoes for them compared to the real bread and butter which is the appreciation that they have had over time. They were joking about just skipping the tenant headaches and keeping their properties vacant from now on.
Of course it's better to have someone living there to keep the property up and for that extra income, but my point is that in a really good location, the rental income is secondary to appreciation. With an STR, it's more of a business than a traditional real estate investment, and location is even more important. In the best locations, a property will do well regardless of the vacancy rate/ operational side of things simply because the land and location are going to increase in value by enough to offset any operational hiccups. Not so much in bad locations that are boom/bust or for properties where the underwriting depends entirely on low vacancy rate and smooth operating, which doesn't always happen. Location, location, location with strong fundamentals that isn't reliant on one single factor which ebbs and flows.
- 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Steve K.:
I was talking to a client the other day who made a funny but true comment that got me thinking: they have done extremely well with their property but would have done almost equally as well if it had been vacant the whole time they’ve owned it. The rental income is small potatoes for them compared to the real bread and butter which is the appreciation that have had over time. They were joking about just skipping the tenant headaches and keeping their properties vacant from now on.
Of course it's better to have someone living there to keep the property up and for that extra income, but my point is that in a really good location, the rental income is secondary to appreciation. With an STR, it's more of a business than a traditional real estate investment, and location is even more important. In the best locations, a property will do well regardless of the vacancy rate/ operational side of things simply because the land and location are going to increase in value by enough to offset any operational hiccups. Not so much in bad locations that are boom/bust or for properties where the underwriting depends entirely on low vacancy rate and smooth operating, which doesn't always happen.
I think ski areas like where you live are very resilient as well.. I have not gone skiing in a few years my last trip was to take my tribe to Copper and for fun I check lift tickets at Vail 300 a day per.. now that is becoming an elitist activity Holly cow. family of 4 1200 just for lift tickets. NOw I am dating myself but I got a mid week pass to Copper for 75.00 total back in the day when I was living in leadville. - Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes1y
Quote from @Jay Hinrichs:
Quote from @Steve K.:
I was talking to a client the other day who made a funny but true comment that got me thinking: they have done extremely well with their property but would have done almost equally as well if it had been vacant the whole time they’ve owned it. The rental income is small potatoes for them compared to the real bread and butter which is the appreciation that have had over time. They were joking about just skipping the tenant headaches and keeping their properties vacant from now on.
Of course it's better to have someone living there to keep the property up and for that extra income, but my point is that in a really good location, the rental income is secondary to appreciation. With an STR, it's more of a business than a traditional real estate investment, and location is even more important. In the best locations, a property will do well regardless of the vacancy rate/ operational side of things simply because the land and location are going to increase in value by enough to offset any operational hiccups. Not so much in bad locations that are boom/bust or for properties where the underwriting depends entirely on low vacancy rate and smooth operating, which doesn't always happen.
I think ski areas like where you live are very resilient as well.. I have not gone skiing in a few years my last trip was to take my tribe to Copper and for fun I check lift tickets at Vail 300 a day per.. now that is becoming an elitist activity Holly cow. family of 4 1200 just for lift tickets. NOw I am dating myself but I got a mid week pass to Copper for 75.00 total back in the day when I was living in leadville.Yeah the only way to do it semi-affordably is to get a season pass at an early discount and go as many times as possible. If you get a family pass and go 100 times, it breaks down to just a few bucks each day. Buying day passes is crazy expensive these days.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesI take a more nuanced approach to my real estate portfolio.
Quote from @Pedro Andrade:
Last week, I spoke with a client who bought his first investment property back in 2020 with plans to run it as an Airbnb. At the time, everything looked great on paper — low interest rate, hot short-term rental market, and strong demand.
Fast forward to 2024:
-
Insurance premiums more than doubled
-
Property taxes went up
-
Bookings dropped significantly
-
And the cleaning & turnover costs started to erode the already-tight margins
After running the updated numbers, he realized what many are starting to face — the short-term rental model wasn’t giving him the freedom or returns he hoped for. It was barely breaking even — and more importantly, he felt stuck.
So, he made the hard decision: Sell the property and re-deploy the equity into a more passive and predictable strategy.
Here’s the lesson: Even good investments don’t stay good forever. Markets shift, expenses rise, and if you’re not running your numbers regularly, you might be holding onto something for emotional reasons — not financial ones.
Curious to hear from others:
Have any of you pivoted from short-term rentals back to long-term holds or sold off a property because the math stopped working?
What was the trigger point for your decision?
Each investment I make has a particular purpose, target return and anticipated time frame. Of course market events can change all this and often will. But, if I purchase a property to provide long term inflation (purchasing power ) protection, the property would either have to no longer satisfactory provide the results I want or a different opportunity more attractive would have to present itself.
I’ve probably held property too long that has been satisfactory but mediocre performer. If an event occurs which values property I own higher than I believe I can replace it for than I’m likely to take advantage of the temporary price/value discrepancy and sell. I’ve performed a rather “loose” statistical analysis to see where I built wealth in my 45 years investing in real estate, notes, etc. and I believe I earned 40% of my net worth resulting from plain old investing and 60% by opportunistic investing. So that means I’d be at 40% of my net worth had I just bought property and held on, the other 60% is a result of the many aspects of ACTIVE investing sometimes called being creative. To provide one example: I negotiated the purchase of a 1st lien note with a principal balance of $210,000 paying interest at 11% for $180,000. Instead of just collecting my interest I instead sold a 1/2 interest in the note for $105,000. So on a $75,000 investment I owned a 50% interest in the note worth $105,000. The note paid off after 3 years. I had collected $34,650 in interest and $105,000 principal payoff, or $139,650 on a $75,000 investment over three years. By selling the 1/2 interest a created a situation in which I more than doubled my ROI, freeing up $105,000 to reinvest immediately.
I believe that most investors look at each investment as an independent stand alone opportunity; while that can be profitable it would be more profitable to exam each investment as it relates to the investors total portfolio and as it provides opportunities to increase ROI without increasing and possibly decreasing risk. -
- 1yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
Depends on the market. I had a few units that were not in the greatest area for STR make a killing during COVID fizzle out in 2023. Still some cashflow but the return on equity was not great. So I sold and put into other investments. I do not look at investing as binary or rigid, it always depends on your personal preferences in addition to market conditions and the property itself.
Vacation Rentals of Florida53 Reviews - 1yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Sell in the rally, buy when folks are searching for a bid.
They were in that former phase in 2020, and we are in that latter phase and continuing it.
I want to see how this is all going to play out the next 2-18 months. Seasonality will play a role.
- 1yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Quote from @V.G Jason:
Sell in the rally, buy when folks are searching for a bid.
They were in that former phase in 2020, and we are in that latter phase and continuing it.
I want to see how this is all going to play out the next 2-18 months. Seasonality will play a role.
We haven’t reached capitulation yet. Long ways to go.
- 1yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Collin Hays:
Quote from @V.G Jason:
Sell in the rally, buy when folks are searching for a bid.
They were in that former phase in 2020, and we are in that latter phase and continuing it.
I want to see how this is all going to play out the next 2-18 months. Seasonality will play a role.
We haven’t reached capitulation yet. Long ways to go.
Don't think we get there. Just lots of undue stress and complications for folks still thinking housing is booming.
- Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes1y
The numbers stopped working some time ago for most. It was the latest fad that everyone flocked to. So many just woke up and declared themselves a STR operators because it was sexy, cool and felt like get rich quick. Like everything else, everyone rushes in and over inflates the market. Everything increases in price and there ya have it. Same thing happened with wholesaling a few years back. Everyone rushed into that, many being unskilled and uncappable. Many people botched it, and the market got saturated until those numbers didn't make much sense. Before that it was flipping. Who knows what's next.
- 1yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Quote from @Mark Cruse:
The numbers stopped working some time ago for most. It was the latest fad that everyone flocked to. So many just woke up and declared themselves a STR operators because it was sexy, cool and felt like get rich quick. Like everything else, everyone rushes in and over inflates the market. Everything increases in price and there ya have it. Same thing happened with wholesaling a few years back. Everyone rushed into that, many being unskilled and uncappable. Many people botched it, and the market got saturated until those numbers didn't make much sense. Before that it was flipping. Who knows what's next.
Tulips ?
- Real Estate Agent · Tampa Florida · Member since 2013 · 630 posts · 303 votes1y
@Mark Cruse the next best investment is to start renovating BRRRR and turn them into Sober living or Group homes. The state and Feds will pay you to open and run per occupancy. Buy in areas that have City or State funded grants to revitalize/ gentrify and low interest rate loans. I researched it in length here in the Tampa, Clearwater and surrounding areas of Florida. It's a business plan that you can never have enough of and always keep the beds full. I would be proud to run a reputable and healthy home for all. You hear such horrible stories. We need to be the change. There's no end to the opportunities with this plan.
- 1yJohn LitzPro MemberReno NV · Member since 2022 · 74 posts · 56 votes
I keep hearing of all the huge reductions in bookings. However I am doing better than I did last year. With economic uncertainty people are still traveling. They are just doing lower cost vacations they can drive to. There is a lot to be said for having something different, an experience. I don't see any crappy STR's in my area. Everyone has a nice property like a hotel. However so many also like a hotel are rather boring. Nothing to write home about. My property could be just like that as it is just a 3 bed 2 bath. Instead I came up with a theme that flow throughout the house. I have added every single amenity I could possibly add. Any profits I put right back into the property to improve it. Always looking for ideas that will make people want to book. This weekend I am painting my retaining wall. Boring manual hard work, but with a plan. On the retaining wall I will add my logo for the property that will be an excellent spot for taking pics for social media. Free marketing at its best for an investment of maybe $1k and a couple days of my time. Work harder than others and the bottom doesn't really matter because your a top performer getting booked solid.
- Investor · Atlanta · Member since 2022 · 146 posts · 72 votes1y
Spot on, Pedro. This is such a necessary reminder that real estate—especially STRs—isn't a set-it-and-forget-it game. Market conditions change, expenses creep up, and what once looked like a solid deal can turn into a cashflow drain. I've seen investors hold on too long out of fear or pride, when pivoting could've freed up capital for a better opportunity. Regularly reassessing your numbers and being willing to adapt is key to long-term success in this space. We are an STR operator in an urban market (Metro ATL) and our numbers are still solid, but for many others that's not the case anymore. Thanks for sharing this perspective—more people need to hear it.
- Investor · Indianapolis, IN · Member since 2014 · 208 posts · 137 votes1y
What I'm curious about is what their more passive and predictable strategy is. An STR is at least a reliable way to cashflow in current tough conditions. They don't seem to cashflow a lot better than LTRs though--it's a thin enough margin that I've wondered if the real nature of the business is selling the depreciation on your furnishings.
- 1yMelissa JusticeBusiness MemberRental Property Investor · Phoenix, AZ · Member since 2024 · 518 posts · 1k+ votes
Hey Pedro -- from personal experience, I agree with a lot of what you're saying.
STRs absolutely can be lucrative, especially in strong vacation markets like the Poconos where one of ours is. We've seen revenue jump significantly year-over-year as well, and once you're through that first 12–24 months of trial/error, things do begin to stabilize.
You're spot on that cleaning and operational costs go up with more bookings. We've also hit that $600–$1,000/month cleaning expense range, especially during peak season. It's one of the biggest "hidden" costs that eats into STR cash flow if you're not watching it.
STRs are 100% a long game. It takes time to dial in pricing, operations, and seasonality. I’ve found years 2 and 3 are where consistency really starts to show.
And absolutely--depreciation, appreciation, and tax advantages (like bonus depreciation and cost segregation) are major reasons we stay in the game beyond just monthly cash flow.
I wouldn’t recommend STRs as a first investment either. Like you said, long-term rentals (LTRs) are simpler, less volatile, and better for building a base portfolio, especially for newer investors with full-time jobs or limited systems in place.
STRs demand way more active involvement, even with a property manager. It’s still a business, and I’ve seen beginners get overwhelmed when they start with STRs expecting them to be “passive.”
Overall: You nailed it. STRs are a great tool after you’ve built a strong foundation with LTRs or other lower-maintenance assets. They can really boost income and tax strategy, but they come with operational headaches that aren’t for everyone.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.