Best markets for STR properties Abroad?

Question

I see the best plays right now in countries with currency plays (Brazil) and/or heavily dependent on tourism which has been crushed  by Covid (Italy).  Curious what others consider the best markets for STR properties in other countries and why?

Mike Lambert · Answer

I imagine that most people use short-term rentals as a cash flow strategy, although the right properties in the right markets will give you capital appreciation as well. And, of course, a high income will support the value of a property. So you'd be looking at high potential rental income, cheap properties or, even better a combination of the two.

That prime candidates would be:

Mexico and the Dominican Republic: cheap properties, mass tourism, occupancy all year long, closeness to North America, direct flights from North America, the US and increasingly Asia, strong international and domestic tourism and tourists coming from diverse locations.

Southern Europe (Portugal, Spain, Italy, Greece): properties aren't necessarily that cheap (some are) but you have mass tourism there as well.

Then you have secondary markets like Colombia or Brazil. They don't have mass tourism but they are emerging touristic spots (Brazil has an established domestic tourism market).

There is another element that makes short-term rentals very attractive in Latin America in general. Unlike North America and Europe where short-term rentals are increasingly regulated and downright banned in the most attractive locations, there are hardly any regulations in Latin America and it's unlikely that'll change anytime soon. Indeed, these countries need and want the tourists and the real estate investments that go along with the development of tourism. Also, aside of noise issues, the main reason for the regulations is to prevent landlords to raise rental rates and subtract properties from the long term rental pool. There's no such reason in Latin America as renters (the lower middle class and the poor) could never afford to rent the type of Western standard properties that are put on the short-term rental market.

Like in any market, it works only in the right areas of the counties (and with the right properties).

As to the BVI, refinery or not, it doesn't have any of the characteristics I'm looking for in a great short-term rental market.

Paul Sandhu · Answer

@Randy Dubiskas  That refinery did shut down about 8 years ago.  If someone is spending 4 billion to restart it, they probably plan on running it for a long time.  There is a refinery in my town, and the only interruption I've had in 8 years is the normal Thanksgiving to New Years lack of people that want to do work.  But that fits in good with my duck season, give me more time to hunt.

Randy Dubiskas · Answer

@Paul Sandhu makes a good point about diversification away from tourism.  However, in a captured market serving a refinery, you have to be aware of the risk if the plant shuts down for an extended time or permanently like some have done recently.  Under a plant closure scenario, your investment may take a major hit.

Paul Sandhu · Answer

USVI.  There is 4 billion being spent on the startup of the largest refinery in this hemisphere.  It's a hell hole though.  I've met some people that worked there.  They have to stay in a Man Camp.  It's the equivalent of a Federal Prison.  The first night one guy was there, he heard gun shots way off in the distance.  Then he heard bullets flying overhead.  Another was at a bar, and his drink got spiked with narcotics.  One morning there was a dead worker lying outside the gate of the camp.  Where there is chaos, there is cash.

Best markets for STR properties Abroad?

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