What is your Plan B?

Short-Term & Vacation Rental Discussions
6yFollow

What is your Plan B?

Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

The short-term rental industry is taking a hit, especially those AirBnB arbitrage folks. Even if the market recovers, this summer may still see large losses as people focus on getting back to work and paying bills. I personally live in an area that relies on tourists (many Chinese) traveling to Yellowstone National Park and I'm expecting tourism to be down as much as 40 - 50%.

If you have a short-term rental, how will you survive if the market fails to recover? Will you convert to a long-term? Shut the property down and wait out the storm? Start running an illegal brothel? Sell the property and switch to something else?

The DIY Landlord Book4.7248 Reviews
WebsiteView Page
3Reply
70 views

Most Popular Reply

Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
6y

I plan to remain positive and not let the sky fall on me when we have no idea what’s going to happen 

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
9Reply
See this reply in the discussion

38 Replies

Jump to latestLatest
  • Marcello Di Gerlando
    Investor · Colorado Springs, CO · Member since 2011 · 322 posts · 238 votes
    6y

    If things get really bad I will make a claim on my commercial STR insurance under 'loss of business income due to civil authority'. It will cover me for 90 days of business income and extended business income losses.

    My understanding is that most insurance policies don't cover pandemics. My policy was written in way that if a condition was not specified it would in fact be covered. Pandemic does not appear in my policy and I have a call into my broker to verify, fingers crossed.

    So far so good no major concerns at this time. Not being over leveraged is plus. Lots of folks in this game tend to have mortgages up to their eyeballs which can really put the squeeze on.

    2Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    6y

    I plan to remain positive and not let the sky fall on me when we have no idea what’s going to happen 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    9Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y

    I'll probably discontinue trash, cable and internet at some of my bigger properties.  Electric, gas and water will be on.  So a group of people can move in on the weekend, and on Monday those other utilities will be resumed.

    2Reply
  • Paul CoxPro Member
    Rental Property Investor · Manassas, VA · Member since 2013 · 193 posts · 156 votes
    6y

    Agree with @Luke Carl...We will remain positive and take this time to do some little improvements to our place. We are not over leveraged as well and so we should be able to ride this out with our 1 property. For those with multiple properties, you may have other choices to make and or issues to face if this goes for an extended time, however, I really believe that once we get through this, the Vacation destinations are going to explode with business. Best wishes to all of you as we get through this together.

    Paul

    5Reply
  • Nathan GesnerBusiness Member
    Moderator
    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y

    I recently purchased a home to use as a vacation rental. We've been renovating it for far too long but it was just about ready to market. Now I've decided to hold off and see if I want to convert it to a long-term rental for the next year.

    When I purchase a property, I try to think about the different ways I can use it. If the vacation marketing is hot, I can rent it and maximize my return. If it cools, I can convert it to a long-term rental and still easily cover my costs and make a profit.

    I would not purchase something without a backup plan in place.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    4Reply
  • Leora Merrell
    Rental Property Investor · Member since 2019 · 276 posts · 235 votes
    6y

    We only have one and are not over leveraged. We plan on 1031ing into at least one more within 2 months. All will be well at some point and prices are falling where we are buying. We sold at top dollar and will not be buying at top dollar which is great.

    Anyone who thinks this will suddenly kill any sort of vacationing by Americans is crazy.

    4Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    6y

    Well said @Leora Merrell! We bought our place for us mainly. We can afford to keep it if no one comes. So far we have 2 cancellations. Hopefully it will stay that way.

    I think things will eventually get back to normal. Sooner rather than later I hope. Then people will want to get away and we will be here!

    1Reply
  • Michael Greenberg
    Investor · Denver, CO · Member since 2016 · 533 posts · 433 votes
    6y

    SELLING IT ALL!  Was planning to anyway and starting fresh in new area.  

    3Reply
  • Jim Hudelson
    Member since 2020 · 34 posts · 19 votes
    6y

    Wait this out.  My thinking is that 2 months (June 1) is when a clearer view should be unfolding. Possibly convert to long term but probably not.  At some point the vacation rental market will return.  We can wait it out.  Surprisingly, our rental has been okay.  We received a last minute booking in early March and they are there for 3 weeks.  4 days after they depart we have a couple checking in for 6 weeks.  They are building a house in the area and need a place while awaiting completion.  We are counting our blessings.  Fortunately our location hasn't yet banned ST rentals so we aren't breaking any rules.

    The current guests were in place before the virus picked up any real steam.  We are in regular contact with them and they seem to be following all of the Covid rules.  I'm probably most concerned about the housekeeper bringing something into the house when she cleans but she too is very aware of the problems.  Fingers crossed.

    1Reply
  • Jonathan Balos
    Member since 2019 · 13 posts · 3 votes
    6y

    Planning on converting my STR's into MTR's as the cash flow is much nicer than LTR. I have both occupied for until end of April and hope to renew or get new tenants for another month or two in hopes this summer we will all be back in business hosting traveler's in Music City!

    1Reply
  • Ken Latchers
    Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
    6y

    I had started to convert to long term rental most of my units last Autumn and I'm glad I did. There are no midterm rentals 2 speak of in this area.

    but most of my tenants and furnished rentals turn out to be midterm, I cycled through about 70% of them since last autumn. Several of them were lemons

    1Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y

    I like the brothel idea. That will be plan C.

    I normally get most of my business from VRBO at top dollar.

    I have lowered the price some due to the situation and I have been tearing it up from the bargain shoppers and non planner's on Airbnb.

    So I am happy for the moment but want to get back to the higher paying VRBO customers.

    1Reply
  • Vincent Chen
    Real Estate Investor · Philadephia, PA · Member since 2016 · 214 posts · 36 votes
    6y

    @John Underwood @Luke Carl I have no Vacation rental, but just wonder when the virus is over, how should vacation market behave? Up from downside or just back to normal?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    I use protection so that I dont need to use Plan B. 

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    8Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    6y
    Originally posted by @Vincent Chen:

    @John Underwood @Luke Carl I have no Vacation rental, but just wonder when the virus is over, how should vacation market behave? Up from downside or just back to normal?

    I think the demand will be there from people who are tired of staying home. I think people may ease back into it to make sure things are safe.

    Just my opinion.

    2Reply
  • Avery CarlBusiness Member
    Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
    6y

    @Russell Brazil @Luke Carl laughed so hard at that he came across the house to show it to me. I, too, am cracking up now.

    Podcast Guest on Show How to Get More Airbnb Bookings This Spring and Summer Break
    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    6y
    Originally posted by @Russell Brazil:

    I use protection so that I dont need to use Plan B. 

     🤣Touche, Russell!

    Podcast Guest on Show #243
    Skyline Properties
    View Page
    2Reply
  • Michael S.
    Huntsville, AL · Member since 2018 · 577 posts · 864 votes
    6y

    There is no "plan B". The plan remains the same now as it did years ago - generate revenue from the W-2 job, use the capital to support our LLC properties should we see the need for repairs or defaults occur on rental payments, use the capital to find deals as they occur, and avoid becoming over leveraged.

    5Reply
  • Jeffery Wilen
    Rental Property Investor · Vancouver, WA · Member since 2017 · 181 posts · 115 votes
    6y

    Glad I didn’t read Russel’s post while I had coffee, may have come out my nose...

    On a serious note, our location is somewhat unique as we’re not a pure vacation nor a big city.  We’ve had cancellations for weddings, baseball games, conferences etc. most of those were 2-3 day bookings. They’ve been replaced by some 2-3 week bookings at a lower daily rate. They’ve been for “essential” workers needing to travel, but wanting to avoid a hotel. Or for those that want to stay in but not at home.  Overall, revenue is unchanged but income will be up with less turnover. So we’re staying with plan A. If needed, we’ll do LTR. There’s big demand for that in the area. Have a 1BR/1BA nearby coming vacant at the end of the month and have had over 100 inquiries for it. 

    1Reply
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    6y

    @Russell Brazil I am re-listening to podcast 192 on my run this morning

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    1Reply
  • Nick Rutkowski
    Rental Property Investor · Ithaca, NY · Member since 2015 · 1k+ posts · 1k+ votes
    6y

    @Nathan G.

    Competitive eating will be my Plan B. I got a lot of vacant real estate in my stomach and a mouth that can chomp through food like the corona virus chomped through our economy. Yes, I am kidding.

    I might have my stories mixed up but I heard the CEO of AirBNB or some new company saved his tanking business by gambling their last couple thousand and winning big. The things people do to stay in business.

    1Reply
  • Matt Millard
    Lewisville, TX · Member since 2015 · 341 posts · 264 votes
    6y

    I feel like no one would post on here if they were highly or even just somewhat over leveraged & in process of losing everything.

    Just an echo chamber.

    1Reply
  • Kanita Jefferson
    Real Estate Broker · Kansas City, MO · Member since 2015 · 33 posts · 13 votes
    6y

    @Nathan G.

    IMO, AIRBNB -is a voided area right now which is a GOOD thing. Because when ur an investor, u should KNOW...."When everyone exits, you stay in place or come come in "

    That way, when it rebounds (and it will) you will be ahead of the curve before all the other homes come back and saturate the marketplace. Remember AIRBNB is about the star rantings. So if u have a high star rating - stay there. If you don't have a high star rating - be ahead of everyone, especially those that try and come back. They will come back building up their rating again :)

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    OP
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    6y
    Originally posted by @Matt Millard:

    I feel like no one would post on here if they were highly or even just somewhat over leveraged & in process of losing everything.

    Justan echo chamber.

    ...and yet you posted. ;)

     I'm not over-leveraged, but I still have a backup plan in case the vacation rental markets stagnates or dies. Isn't that a wise thing to do?

    Even with long-term rentals, I try to purchase properties that can convert to short-term or commercial, depending on the market. 

    Don't put all your eggs in one basket.

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    2Reply
  • Matt Millard
    Lewisville, TX · Member since 2015 · 341 posts · 264 votes
    6y

    @Nathan G.

    That’s true. We are in different areas though as I do syndication full time now & am no longer a landlord or host. I also am pretty focused on the crypto & silver markets for last couple years at the moment.

    My mining bet now a render farm in Oklahoma with asics mining & cheap natural gas mixed in is now tied to Disney. If their stock goes to zero I’m in for a 15% hit to my net worth & will be left to other crypto’s & silver to bail me out or cut expenses again by moving.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free