Coronavirus and vacation town impact?
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Avery CarlBusiness Member
Real Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votesOf the 3 major types of STR markets: metro, fly-to vacation markets, and drive-to vacation markets, the drive-to regional vacation rental markets are being impacted the least. (Although all are being impacted, make no mistake about that.) I'd expect that the jersey shore would be severely impacted due to its proximity to the epicenter of the outbreak in the US.
33 Replies
- 6yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
STRs are a business. If you are running a business, you have to have “powder in the keg” for things that happen. I’m preaching to myself too.
Three years ago I had a STR burn to the ground in a natural disaster. It took me 2 years to rebuild it and of course I had 2 years of lost revenue. Yes, insurance paid for some, though not all, of the loss - it often doesn't. Insurance policies don't contemplate rebuilding costs rising 50% overnight and 2 years to rebuild.
It cost me $165-170K out of pocket for this disaster and I didn’t have enough $$ to cover it. Fortunately I was able to do some financial wrangling to come up with the money.The moral of the story is that you need cash to get you through.
As to your original question, yes, there will be great deals out there because the owner didn’t have $$ to get through. You might even see some short selling again ala the housing crash a decade ago.
- Member since 2018 · 105 posts · 34 votes6y
We were getting ready to purchase a second str in a vacation area before all this hit. We are going to see what happens over these next few months as well. Spoke with my lender last week and the guidelines for investment properties have changed dramatically by what they were telling me. Gonna be waiting cash in hand to hopefully scoop up a good opportunity
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes6y
My community services tourists headed to Yellowstone National Park. I anticipate tourism will be down, particularly from Asian countries that account for a significant portion of our tourists. I have friends that own restaurants and they're already wondering whether they will be able to recover because they lose money in the winter in summer is their opportunity to balance the books. Without a strong tourist season, it could kill them off. Our hotels and motels also require a healthy tourist season to make ends meet. We always have a shortage of employees in the summer so they typically hire JV workers from foreign countries. All the JV visas were cancelled. We are a month away from the tourist season ramping up and already the local businesses are anticipating a major shortage of employees.
I bought a short term rental in anticipate having it ready to market in the next couple of weeks. I'm prepared to shift and convert it to a long-term rental if the economy does not show signs of improvement soon. I could leave it empty the entire year and be fine but would rather have it occupied it recover some of the losses.
The DIY Landlord Book4.7247 Reviews - 6yAvery CarlBusiness MemberReal Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
Of the 3 major types of STR markets: metro, fly-to vacation markets, and drive-to vacation markets, the drive-to regional vacation rental markets are being impacted the least. (Although all are being impacted, make no mistake about that.) I'd expect that the jersey shore would be severely impacted due to its proximity to the epicenter of the outbreak in the US.
- Investor · Bethany Beach, DE · Member since 2020 · 15 posts · 4 votes6y
I built a vacation home in Bethany beach, Delaware and it’s very similar to the jersey shore. People from surrounding cities and states come visit for high priced stays in nice homes at the beach. I was on pace to gross around 50k this summer. Since the virus hit, my property has had very limited messages/inquiries and no bookings. I do think it will pick up as we come out of this, but I may be dropping my weekly price dramatically if it doesn’t pick up significantly by mid to late May.
Fortunately STR and REI aren't my main sources of income and I can more than comfortably afford the mortgage. But some people do not have that cushion. I am brand new to all of this, so take it for what it's worth, but a basic piece of advice I would tell anyone is to make sure you have enough reserves for unexpected costs and economic down turns.As far as the housing market, I do believe we’ll see a large number of houses going on the market but I do think you’ll need to act fast on them as there are other savvy investors that realize this too! Like @David VanWert said, be ready with cash on hand! Also, there are probably killer deals farther south both on price and tax incentive compared to jersey.
Good luck!
- Member since 2018 · 105 posts · 34 votes6y
@Avery Carl we are drive to and unfortunately we are dead in the water. Str outlawed until at least June 1st. Anyone renting can face fines, possible jail time and loss of tax certificate for up to one year. Heard they even have checkpoints before you get into town to prove you are a full time resident or essential business. Crazy....
- 6yAvery CarlBusiness MemberReal Estate Agent · USA · Member since 2016 · 909 posts · 1k+ votes
@David VanWert I did not mean that every single drive-to market in the country is thriving. I meant that the drive-to category as a whole is faring significantly better than STR's in major metro areas and those that generally are traveled to by plane. Watch the BP YouTube channel for some data relating to this this week!
- 6yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Nathan Gesner:
My community services tourists headed to Yellowstone National Park. I anticipate tourism will be down, particularly from Asian countries that account for a significant portion of our tourists. I have friends that own restaurants and they're already wondering whether they will be able to recover because they lose money in the winter in summer is their opportunity to balance the books. Without a strong tourist season, it could kill them off. Our hotels and motels also require a healthy tourist season to make ends meet. We always have a shortage of employees in the summer so they typically hire JV workers from foreign countries. All the JV visas were cancelled. We are a month away from the tourist season ramping up and already the local businesses are anticipating a major shortage of employees.
I bought a short term rental in anticipate having it ready to market in the next couple of weeks. I'm prepared to shift and convert it to a long-term rental if the economy does not show signs of improvement soon. I could leave it empty the entire year and be fine but would rather have it occupied it recover some of the losses.
do you also cater to fly fisherman ?? I stayed in Hamilton last year in a BB it was OK.. I would think fishermen would be good to market to
- Member since 2018 · 105 posts · 34 votes6y
@Avery Carl thanks, is what it is, thankfully have reserves to hopefully weather the storm. Going to come up and see you once this all blows over, hopefully summer time smokies are going to be location #2!
- Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes6y
Originally posted by @Eric P.:
I still think we'll see the economy bounce back sooner rather than later, and I don't think there will be too much impact on housing prices overall, but I do think vacation towns could get really hurt.
In NJ for example we have the Jersey Shore that demands high weekly rents about 3 months out of the year. Those 3 months typically more than cover expenses for the year, but I imagine a ton of non-savvy investors of those beach town houses can't afford to miss those rents.
If this does stretch into July-August I think we could see a ton of houses start hitting the market out of desperation. I saw an article that even predicted a potential 45% drop?
Curious of everyone's thoughts, we weren't planning on a vacation home for another 3-4 years but if that's the case I think we'd be crazy to wait.
It will be market specific. The market I invest and develop properties is the Outer Banks of NC. There are only 3 ways onto the island and they shut them down to anyone other than permanent residents. Even out of state property owners are banned. A lawsuit has been file by several out of state owners being denied access. I posted the article below. It will be interesting to see the results.
Traditional property management companies still handle the majority of the houses there as most owners do not want to deal with things themselves. There are a lot of VRBO and AirBnB but that represents probably only a third of the properties. The way it works there is most reservations are made a year in advance. You pay 50% in Jan and the remainder when you check in. The owners receive the deposit money minus management fee by the end of Jan and the remainder when they check out. So far is everyone who has booked for May on have not canceled yet. They are waiting to see what happens and are still planning to take their vacation if the beach opens up. Obviously everyone who booked up to this point have been given full refunds. Almost every restaurant and retail store had to shut down and many rental companies are in a difficult spot as they had to refund all the money they received from the deposits including their fees even though many of the homes had been opened up for the season. They already turned the monies over to the owners so the owners now have to send that money back to the rental companies. Hopefully this will all be over before June. If not it could be very ugly for a lot of people there including the out of state owners.
- 6yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
So far we have lost 2 bookings due to COVID19. I have a new booking coming in when they receive their refund from Norwegian Cruise Line.
Here's to hoping! - Rental Property Investor · Philadelphia, PA · Member since 2016 · 543 posts · 716 votes6y
Originally posted by @Eric P.:
I still think we'll see the economy bounce back sooner rather than later, and I don't think there will be too much impact on housing prices overall, but I do think vacation towns could get really hurt.
In NJ for example we have the Jersey Shore that demands high weekly rents about 3 months out of the year. Those 3 months typically more than cover expenses for the year, but I imagine a ton of non-savvy investors of those beach town houses can't afford to miss those rents.
If this does stretch into July-August I think we could see a ton of houses start hitting the market out of desperation. I saw an article that even predicted a potential 45% drop?
Curious of everyone's thoughts, we weren't planning on a vacation home for another 3-4 years but if that's the case I think we'd be crazy to wait.
I’ve been saying for a long time on here that, even though i live in the north, I invest in the southern half of the US because you get year-round rentals, as opposed to the north where you only get rentals for part of the year.
My main reason in saying this is that you simply get a higher ROI when you have higher year-round occupancy then when your place sits vacant for many months of the year
This brings to light a whole new advantage of investing in the southern half of the US, because you’re not dependent on one season for the bulk of your year-round revenuesLook, we know this won't last forever. But if it does last through the summer, this is going to absolutely devastate STR in the northern half of the US.
Make no qualms about it, it will be absolutely devastating to the Jersey shore, Cape Cod, the Maryland and Delaware beaches, Woodstock, everywhere, northern Michigan, the great lakes, this will absolutely devastate STR in the northern half of the US as they pretty much only take in revenue during the summer
That said, it will also be tough on vacation rentals in the southern US, but they should be much better positioned to weather this as they tend to get business during my most months of the year and aren’t so dependent on summer revenue like the northern half of the US isI’ve always really liked the year-round revenue thing not just because it lines my pockets year-round but also because I know that if something goes wrong at my house and I have to take my house out of commission for one or two months to fix it, I know that I have a steady stream of year-round revenue having houses in the south so it doesn’t really matter if I miss one or two months any time of the year.
I know many people who own vacation rentals here in the north and I’ve seen what happens if something breaks in their house or their house floods and they miss July and August seasons, it kills them for the year. I’ve never really thought about some external event causing them to miss July and August, perhaps a hurricane or something, but this just further illustrate how nice it is to have revenue spread out across all 12 months like we fortunate folks with vacation rentals in the southern US have
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes6y
Originally posted by @Avery Carl:
Of the 3 major types of STR markets: metro, fly-to vacation markets, and drive-to vacation markets, the drive-to regional vacation rental markets are being impacted the least. (Although all are being impacted, make no mistake about that.) I'd expect that the jersey shore would be severely impacted due to its proximity to the epicenter of the outbreak in the US.
I agree, but we're a remote drive. I could see people staying closer to home this year.
The DIY Landlord Book4.7247 Reviews - Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes6y
Don't need reserves of cash. Flipped to long-term furnished rental and I am mostly full.
while I agree that a place like the Smokies might do okay, I do not agree you should be totally helpless if something like this happens.
what if it was a year? Will your cash reserves last for that? The Arbitrage aficionados have gone quiet. In other places, I see them trying to offload their portfolio onto others to get out of their obligations.
everyone seems to think this will blow over in a month or two. It is wiping out State budgets. It is indebting the federal government.
many businesses may not come back from this. Many jobs may not come back from this.
you need a back-up plan beyond cash. I have a good paying IT job and the company has not been impacted so far. I had some long-term rentals besides short-term rentals. I'm working on a tour company.
- Rental Property Investor · Ormond Beach, FL · Member since 2020 · 15 posts · 4 votes6y
My wife and I were shopping for our first STR when the virus hit. We are waiting until the economy opens back up. I feel it will bounce back and people will be looking to get away from their homes. I'm curious what the impact will be on property prices. Deals could be available if owners did not plan appropriately. Looking forward to normalcy and to begin our RE investment journey in FL. Stay safe!
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes6y
Originally posted by @Eric P.:
I still think we'll see the economy bounce back sooner rather than later, and I don't think there will be too much impact on housing prices overall, but I do think vacation towns could get really hurt.
In NJ for example we have the Jersey Shore that demands high weekly rents about 3 months out of the year. Those 3 months typically more than cover expenses for the year, but I imagine a ton of non-savvy investors of those beach town houses can't afford to miss those rents.
If this does stretch into July-August I think we could see a ton of houses start hitting the market out of desperation. I saw an article that even predicted a potential 45% drop?
Curious of everyone's thoughts, we weren't planning on a vacation home for another 3-4 years but if that's the case I think we'd be crazy to wait.
Makes sense. The short term rental model exploded and then the gurus started swarming, pitching short term rental arbitrage to any schmo looking to make some money in the business. It's become the new wholesaling...........KABOOM! I bet a lot of folks are getting wiped out right now.
- 6yTracey WittkePro MemberTraverse City, MI · Member since 2018 · 37 posts · 16 votes
@Mark Miles I appreciate your post and find it very interesting and inadequate in regards to investing in areas of Northern MI. Vs Southern MI. I grew up in a suburb of Detroit and sold real estate there prior to moving to Traverse City 17 years ago. The last 7 years we have started investing in N. Michigan real estate. I have found areas here that will NEVER compete with ROI of downstate properties, as in mine would Be better then yours.
As far as year round rentals, I run 2 Airbnb’s that I still rent out as 6 month rentals in their off months. The other LTR’s pay for my two lakefront’s and themselves.
It’s not always where you buy, it’s what you buy, what you paid and the hustle you put into it to have it occupied and cared for! - Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes6yI have a couple STrs in a drive to market to Yellowstone, and we get some here as a destination town. My bookings like many went to zero. I have had one hardy fisherman, and someone moving here who needs 2 nights to to wait for their home to be unloaded by the moving company. I had a regular repeat customer set for tomorrow for a 2 week stay. He was going to self quarantine per our states rules for the 2 weeks and only go out and fish by himself for 2 weeks. My state game and fish department got smart and cut off sales of fishing licenses to out of state fishermen. This guy even had ups sending in frozen meals so he did not have to go to the grocery store. It probably helps that my town has not had a reported case of COVID 19 yet. Still every one of my bookings has canceled until late May, even some of my summer ones are cancelling now.
- Real Estate Broker · Park City, UT · Member since 2020 · 1 post · 0 votes6y
I sell property in Park City, UT (a resort town). Business has definitely slowed here. Summit County is on "Stay at home" orders.
Will be interested to see how quickly (or not) things bounce back once the quarantine is lifted. Park City / Deer Valley are typically VERY busy during the summers in addition to being a ski resort town. Hope this ends soon!
- 6yShawn McDonnellBusiness MemberReal Estate Broker · Rehoboth Beach, DE · Member since 2020 · 14 posts · 11 votes
My wife and I own a STR in Rehoboth Beach, Delaware and have many friends/clients who do as well. So far, we haven't seen many cancellations between Memorial Day and Labor Day. As long as they loosen the travel restrictions prior to the Memorial Day I don't expect much to change. That said, our rental is a single family home which I think is better protected since renter's can stay at the home and not have to be around anyone unless they want to. I could see there being more of an affect on hotels and condos where there is a larger concentration of people.
- Real Estate Agent · Fort Walton Beach, FL · Member since 2018 · 219 posts · 275 votes6y
Here is what I'm seeing down here on the Panhandle of FL:
1) The impact of COVID-19 restrictions was significant, especially after the Governor of FL suspended vacation rentals in the state and the beaches were closed.
2) As soon as rumors of the beaches re-opening started floating around, people started sending inquiries of making reservation. I am weirded out by this, as I had to turn people down in April, telling them that vacation rentals are not allowed and we have no toilet paper, lol.
3) Now that the beaches are starting to re-open, I'm seeing bookings for May re-fill all those that canceled. I am still turning people down for early May because the Governor has not been clear on STRs yet and I don't want to lose my license, lol.
4) I am not offering any special discounts for vacation/STR renters. I offered monthly pricing during the COVID-19 closings for monthly rentals to medical personnel.
So... in summary, I'm a bit surprised to see this, but the STR/vacation rental demand is rebounding as soon as the beaches are re-opening. I know a lot of people are complaining about that on the internet, but it seems that those same people, or their neighbors, are up and ready to pack their bags to the beach if they can. I'm guessing that might also be happening with other type of resorts (Smokey Mountains, etc) where a level of social distancing is possible while vacationing. That is probably not the case with amusement parks or densely populated city destinations. The Panhandle of Florida is not Miami.
I am very interested to know what STR owners from other areas are observing.
- Lender · Tampa, FL · Member since 2018 · 149 posts · 102 votes6y
@Villy Ellinger
I have a condo in pcb and I thought the same thing it was crickets for the past month and last week when the started talking about opening the beach back up my calendar for May and going into the summer have blown up. I think people want to go to the beach so bad after being stuck in their homes for so long.
- 6yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Originally posted by @Joey Morea:
@Villy Ellinger
I have a condo in pcb and I thought the same thing it was crickets for the past month and last week when the started talking about opening the beach back up my calendar for May and going into the summer have blown up. I think people want to go to the beach so bad after being stuck in their homes for so long.
We had a woman call this weekend and asked "do you have any condoms this weekend for rent?" Umm, we might consider a lease purchase, but otherwise, no. ;)
- Investor · Vacaville, CA · Member since 2016 · 433 posts · 249 votes6y
Article in Wall Street Journal today seems to suggest there are fire sales going on with AirBnB houses but I have not seen that anywhere that I pay attention to including Scottsdale and Tucson. I don't see why there would be fire sales as prices haven't fallen yet so most people should be able to sell pretty quickly with at least slim equity I would think!?
- 6yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Originally posted by @John P.:
Article in Wall Street Journal today seems to suggest there are fire sales going on with AirBnB houses but I have not seen that anywhere that I pay attention to including Scottsdale and Tucson. I don't see why there would be fire sales as prices haven't fallen yet so most people should be able to sell pretty quickly with at least slim equity I would think!?
Me thinks WSJ is trying to sell newspapers.
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