Short-Term on Long-Term in Economic Downturn?

Question

I’m curious to hear people’s take? I’m looking to convert a yearly lease rental property in Salt Lake City to an AirBnb by the end of 2021. But I’m pondering the following:

During housing/economic downturns, what do you all think will perform better? Short-term or long-term?

I’m appreciate the input as I consider my options venturing into a new type of rental.

Account Closed · Answer

I think that no matter what the economy looks like people will still want to get away and vacation. As long as the numbers check out as a long term rental, which it seems like it does since that is what you are doing now, I would try out the Airbnb game. We were pleasantly surprised with the returns we got. Worst case scenario, you convert back to a long term rental! High upside, low downside

John Underwood · Answer

A true vacation rental in a vacation location/destination will do better. Now more than ever.

My LTR are doing great as I do extensive background checks and get the best tenants I can to start with.

Michael Metzger · Answer

@Sean McDonnell Appreciate the response. That was my thought too- I can always convert it back to a rental

Luke Carl · Answer

@Michael Metzger

If you’re calculating “risk” or “downturns” or “bad luck” you’ll never buy anything. Just jump in brother

Dan DiFilippo · Answer

@Michael Metzger long term should perform better as people crash down through housing tiers.  Essentially, new people show up to rent the same housing stock.

Zachary Beach · Answer

@Michael Metzger my theory with my market was that if there was a recession people would go to big bear rather than flying to Hawaii. Not the way I expected to be correct but that’s exactly what has happened with People not wanting to fly are prices are up 63% on the property I manage and we already had top properties with great cashflow before that.

Patricia Taveras · Answer

@Michael Metzger

Hi Michael. My three airbnb homes are doing better than ever right now. I'm at 90% occupancy rates in New Bern NC. People stay for many different reasons- vacation, visit family, work, etc. I have two LTR doing great too - I owe that to good screening. Look at properties on Airbnb right now in your area and look at their calendars. That will give you an idea of demand in your area.

Paul Sandhu · Answer

During an economic downturn, you want to rent to people with money.  For me, it's traveling workers with a per diem.  I charge the same as motels, but people get a lot more than just a room with 2 beds and a bathroom.  Look at the White House administration.  They are for wind farms, fiber optic networks and renewable fuels.

Short-Term on Long-Term in Economic Downturn?

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