COVID CONCERNS FOR STRs?

Question

Hey BP team,

As a newer STR investor in the Smokies, I wanted to reach out to some veterans in this space. I own 2 Smoky Mountain cabins and potentially looking to do a 1031 exchange to buy a third. Currently we have 4 duplexes as well. We like the stability LTRs offer to offset some of the STR risk.

We enjoy the increased cash flow from the short term rentals but there inherently more risk. Especially with the risk of another “shut down”.

I was hoping to hear your opinions on this topic to see what you think? Will travel be slowed down? Will domestic travel boom even more? Will rural destinations take a hit or continue to surge in demand?

Thanks,

LN

John Underwood · Answer

So during Covid last year we shut down for April and still had our best year ever.

I remember some people who have properties in the smokies that said the same thing.

I beleive this was the same nationwide for people that have true vacation rentals. The only exceptions might be places around theme parks like Disney that were shut down.

Chai Xiong · Answer

I have 5 rentals over by Disney World Florida, yes we where shut down for a few months.  But our governor said he won't be doing that again so its a go for me to buy more.

Bruce Woodruff · Answer

I opened up the STR business a year ago, August '20, so my experience is limited compared to others.....I can say however that even with the Covid hysteria still rampant at that time, we had no issues. Booked right up and have remained so ever since. We had a couple guests show up at the properties with masks on (I think because AIR told them to) but they ripped them right off when they saw we were ok with it.

I have two impressions - 1) a paralyzing shutdown just makes people want to get away from the big cities and their lives in general. 2) The camp that is wary of the Govt mis-info and mandates et all is even more anxious to get out and get away.

This is just based on my experience and my opinions only......

Bruce Woodruff · Answer

Governments are more of a worry, particularly where you live. But you can sort of work around AIR by using other sites and/or promoting yourself through your own website, FB, Etc....

Kyle Smith · Answer

Shoot, C19 stimulated the Gat/PF STR market.  What better place to go than the smoky mountains during a pandemic?

Lee Davis · Answer

Seems like super high demand for "staycationers" still and appears to be the trend. No international guests, which I miss, personally.  We got shut down for a couple of months too, and short of physically getting shut down by airbnb and/or local governments(likely?), we should be ok.

Ken Boone · Answer

@Luke J Nelsen So the country is really divided on this just like many things right now.  What they think they know or at least what they tell us they know seems to change every other week.  Part of the country is however fed up with lockdowns and mandates and that part of the country is still going to travel to destination locations like the Smoky Mtns.  I don't think we will see a lockdown like we saw before.  However, when it happened last march/april - in the span of about 3 weeks I lost over 37k worth of bookings most of them for april/may.  Lowered prices immediately - pretty much re-filled through the end of april, the demand was so great come May brought prices back to normal and since then I have had to constantly raise prices due to the high demand.  Ended up with a record year across all my cabins.  Even that part of the country that is nervous about being around others still wants to get away.   They would rather stay at an STR with a bunch of amenities locked up with their families than a lot of other vacations they could take.  So I am not concerned but I could be dead wrong too!  ;)

Luke J Nelsen · Answer

@Kyle Smith I agree which is why we are scaling our business there. Our one little 3BR is knocking it our of the park so far. I am just weighing our options if it's wise to sell a steady asset for one that's a bit more of a risk but the reward is MUCH greater.

COVID CONCERNS FOR STRs?

Most Popular Reply