Is the STR market getting taken over by Big Capital?

7 Replies

does anyone know anything about Rented Capital?

I'm somewhat confused by their model.  

https://www.businesswire.com/news/home/20171206005...

maybe someone smarter than I can shed some light on what's going on here? Seems like they are 'bridging some kind of gap between homeowners who have a 2nd home but dont rent it because they can't agree with a PM who has different expectation'

Just seems to raise $125M is a big deal and makes me wonder if this STR market is going to start getting taken over by Big Capital.

AirBNB, short term rental, vacation rental

@Noah M. It looks like they are pairing up 2nd home owners with a PM and guaranteeing a certain income.

I was looking into them yesterday and couldn't *quite* figure out the business model, though I agree with @John Underwood that it's a way to match up homeowners and professional PMs - just a different approach to the normal homeowner/PM relationship.  They need the capital because their angle is guaranteeing the homeowner a specific payout each month.  (I'm a bit fuzzy on how exactly this works for the PM, though - presumably the PM gets whatever's left over after homeowner's cut and RC's cut)

As for whether or not Big Capital is taking over, I'd argue that overall, the involvement of major companies like AirBNB and VRBO/Homeaway is necessary to scale out a business like many of us are doing.  Having a service that acts as a centralized database and invests their own capital in advertising, etc. has taken VRs from niche to mainstream, and has basically created a whole new industry of STRs in urban areas.  Without them, we'd be left relying on our own websites jockeying for attention at the top of Google searches, or handing our properties over to pro PMs with their own websites and access to local markets.  

Can it go too far?  I'm sure it can and probably will, but for me, at least, they've made this whole venture a realistic strategy and not me just trying to offset costs from my second home.

It seems like their business model is to match or facilitate contact between the supply with the demand.  Most economic theory dictates when this occurs, prices will fall.  Either the PM will get less of a fee, the landlord gets less rent, the market rate for the rental property will go down, or any combination of the previous 3 events.

@Julie McCoy

I wasn't referring to AirBNB or VRBO, but major capital providers who can essentially create boutique hotel chains using economies of scale--- teams of PMs, purchasing power for supplies, big cash to buy up properties in up-and-coming neighborhoods and turn them quickly into airbnbs, full suite of automation tools, etc.

Do any of you see big operations flooding into the VR market and leaving scraps for the normal airbnb user?   I look at Vacasa for example... do you think there will be more of these popping up?

Originally posted by @Noah M. :

@Julie McCoy

Do any of you see big operations flooding into the VR market and leaving scraps for the normal airbnb user?   I look at Vacasa for example... do you think there will be more of these popping up?

My answers, No and No.

A big operation is not going to have the personal touch that people on here can provide.  They will also not be as quick to change or adapt when market conditions dictate.

@Noah M. @Julie McCoy I work with them currently on several properties.  I have no idea why all the press about them makes their model sound so vague and mysterious.  Most of what you said is correct but I'd be happy to share more of the details if you shoot me a PM.  

The short of it is: Rented, PM, and owner sign a 3 party lease, PM gets a percentage, Rented keeps whats leftover.  Basically a large scale rent arbitrage model.  They have in house analysts that approve rental amounts to guarantee to the homeowner.  

@Tyler Work   thanks for the clarification.  I'll PM you as I am trying to learn as much as possible. thanks!

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