All Forum Posts by: John Carbone

Quote from @John Underwood:

I can't maintain super host status as 95% of all my bookings come in from Vrbo and Airbnb just isn't getting it done for me. Many of my neighbors don't even list on Airbnb anymore due to its poor performance in my area.

More importantly I am a Premier Host on Vrbo!

90 percent of my business comes from Airbnb, and I’m able to obtain premier host on vrbo still (I think the threshold for this is very low). 

my issue with vrbo is I pay 8 percent because they won’t give me the $500 subscription. 5 percent difference over low 6 figures adds up. 

in my experience I find the vrbo guests to be more demanding and asking more questions about basic things. But they definitely tend to be cleaner. 

Quote from @Nicholas L.:

@Greg R.

just as a reminder, here's what you said in your 5th post to this thread:

"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."

i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?

 Housing historically has always just been an inflation hedge. Your home price should go up with the rate of inflation. Houses are a deteriorating asset that require maintenance and upkeep. This last 10 year boom in housing will not last.

I’m not 100 percent convinced it will “crash” but we could have a lost decade in housing where prices are stagnant and inflation just eats away at the “hedge” so 10 years from now wages will be higher and home prices in a flattish range over this time. 

Quote from @Collin Hays:

Quote from @Steven Wood:

Thank you, Collin and Lauren. Maybe we are just being too cautious about not knowing anything about who we are renting to or if they have been a good past guest. Maybe we have been spoiled by Airbnb. Just seems like VRBO would make it easy for the host to know more about who they are renting to like Airbnb does. 

Steven, not having instant booking is understandable, but there is also a cost to that in the form of lost bookings, as it is a "barrier to entry."  We have never had an issue that we feel could have been prevented with pre-reservation "screening."  Damage to your property is going to be quite rare, but when it does happen, I consider it the cost of doing business.  

I never understood why people do this. When I get an inquiry that isn’t an instant booking, my time is being spent handling this mundane repetitive task. I had 6 reservations today, and one inquiry. The one inquiry took more time to handle than the 6 instant bookings (auto welcome message sent). Ironically the one inquiry was upset I wasn’t charging a damage deposit which I manually applied. I want people booking with me to not have a barrier to entry. Hotels don’t screen guests when they are staying, so why should hosts?  My time investment in managing my properties would rise substantially and then I would have to pretend to be a detective when reading the inquiry. Automation is good in many ways, and detrimental when used exclusively. 

I have more free time with instant booking and guests don’t have a barrier to entry “waiting” to see if they are accepted. Seems like a win win situation for all 

Quote from @Olivia Grabka:

Anyone that uses correction & crash synonymously is not worth listening to.  The market corrected when interest rates shifted, there is no impending crash.  The only way you get a crash is if financing seizes up, 08 through mid 09 was a crash because financing was difficult to get.  I hope what I write here s not offensive, I do not mean to be offensive I just want to be clear. 

Home prices dropping in a single year is not a crash. The stock market was down in 2022 by 20-30 percent but it happened over the year. How many times did cnbc do a “markets in turmoil” segment and who called the stock decline a “crash”? None and nobody.  By definition this did not happen during GFC either. The stock market did crash March 2020 during Covid as it dropped in the matter of weeks, far cry from home values in 2008.

a “crash” is a sudden decline in value, even @James Hamling  agrees with this. He even said so himself at one point in this thread. 

financing is going to be difficult to obtain in 2023 with fed keeping and holding rates so high. I mean just look at mortgage transactions now, it hasn’t been this bad since the time period you are talking about. It’s 8 percent for an investment property now. 

Quote from @Olivia Grabka:

@Greg R. Which are you asserting, that the market will correct or crash? A correction is not the same as a crash. Any claim regarding a market crash, is objectively wrong there is no evidence pointing to a crash.

Based on the true definition of a “crash” this didn’t even happen in real estate in financial crisis, it was a multi year bear market. People use crash and “correction” synonymously, not saying it’s accurate to do so, but it gets the point across. The people I bought my first house from in 2012 that had to pay 50k at closing on a 160k house didn’t care about the correct definition of the housing market decline, it’s really  just semantics. 

Quote from @Michael Wooldridge:

Quote from @John Carbone:

Quote from @Michael Wooldridge:

Quote from @John Carbone:

Quote from @Carlos Ptriawan:

so update from me, there's this desktop automation software.
So here's what this software telling me.

Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.

This is market specific, but STR occupancy in Gatlinburg is way down this January, February, and March compared to the previous years. I anticipated this and had my pricing well enough to lock in these bookings back in the fall. More than half of my competitors have virtually 0 bookings for the next 3 months. Gatlinburg is the blue chip STR market. I don’t think it’s saturation either, 2022 was a phenomenal year for almost everyone. I think we have a tapped out consumer after Christmas, and people are worried about losing their jobs. This may be the canary in the coal mine moment. 

 @Carlos Ptriawan what you are seeing is mostly what I’m seeing. The deals are slight adjustments but for the most part prices are flat or a few % points down locally for me (nationally is closer to 8% or so). Volume is way down as expected but inventory is flat.

@John Carbone it's funny but my STR are doing very well even brand new ones in FL. I would have been happy with less than what I'm achieving (expected a downturn) but just not seeing it yet. Which is a pleasant surprise. That said I wouldn't call it a blue chips market but more like upper middle class markets. Which has been fairly stable and still a lot of cash on hand.

That said the next 6 months will be telling. So many variables with Covid in china (ukraine/russia is silent in news these days funny enough) and other global levers that could hurt us. I’m expecting inflation to slow about March/April as housing will be at their peaks. I’m curious what happens when the markets see that in the inflation numbers. 

I’m personally not seeing it yet either, but I’m seeing it in the competition by looking at calendars.  

real competition though? Or people who "heard" you could jump in and make easy money on STR? It's amazing how many times people cut corners like not having beach chairs when near a beach, not having a high chair / pack in-play for family oriented homes or even just adding snacks. Not saying it's as simple as that but to your point around you managing ahead of time, strategy does matter.

 Yeah, the listings with no bookings are not operated or set up properly. However, last year at this time those places were renting out at a good clip going into 2022. So there is clearly a strong shift in demand going into 2023 relative to 2022. This could be a short blip though, and I hope it is as I don’t have bookings beyond Memorial Day. 

Quote from @Michael Wooldridge:

Quote from @John Carbone:

Quote from @Carlos Ptriawan:

so update from me, there's this desktop automation software.
So here's what this software telling me.

Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.

This is market specific, but STR occupancy in Gatlinburg is way down this January, February, and March compared to the previous years. I anticipated this and had my pricing well enough to lock in these bookings back in the fall. More than half of my competitors have virtually 0 bookings for the next 3 months. Gatlinburg is the blue chip STR market. I don’t think it’s saturation either, 2022 was a phenomenal year for almost everyone. I think we have a tapped out consumer after Christmas, and people are worried about losing their jobs. This may be the canary in the coal mine moment. 

 @Carlos Ptriawan what you are seeing is mostly what I’m seeing. The deals are slight adjustments but for the most part prices are flat or a few % points down locally for me (nationally is closer to 8% or so). Volume is way down as expected but inventory is flat.

@John Carbone it's funny but my STR are doing very well even brand new ones in FL. I would have been happy with less than what I'm achieving (expected a downturn) but just not seeing it yet. Which is a pleasant surprise. That said I wouldn't call it a blue chips market but more like upper middle class markets. Which has been fairly stable and still a lot of cash on hand.

That said the next 6 months will be telling. So many variables with Covid in china (ukraine/russia is silent in news these days funny enough) and other global levers that could hurt us. I’m expecting inflation to slow about March/April as housing will be at their peaks. I’m curious what happens when the markets see that in the inflation numbers. 

I’m personally not seeing it yet either, but I’m seeing it in the competition by looking at calendars.  

Quote from @Carlos Ptriawan:

Quote from @John Carbone:

Quote from @Carlos Ptriawan:

so update from me, there's this desktop automation software.
So here's what this software telling me.

Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.

This is market specific, but STR occupancy in Gatlinburg is way down this January, February, and March compared to the previous years. I anticipated this and had my pricing well enough to lock in these bookings back in the fall. More than half of my competitors have virtually 0 bookings for the next 3 months. Gatlinburg is the blue chip STR market. I don’t think it’s saturation either, 2022 was a phenomenal year for almost everyone. I think we have a tapped out consumer after Christmas, and people are worried about losing their jobs. This may be the canary in the coal mine moment. 

 Maui and BI are fully booked til May-June. I hate it when it's fully booked like this lol

 Those places are smaller sample size of units and they appeal to only primarily affluent market. A place like Gatlinburg appeals to everyone and has been most visited park for decades. 

The only time Gatlinburg ever slowed down was GFC. This is something to keep an eye on. 

Quote from @Carlos Ptriawan:

so update from me, there's this desktop automation software.
So here's what this software telling me.

Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.

This is market specific, but STR occupancy in Gatlinburg is way down this January, February, and March compared to the previous years. I anticipated this and had my pricing well enough to lock in these bookings back in the fall. More than half of my competitors have virtually 0 bookings for the next 3 months. Gatlinburg is the blue chip STR market. I don’t think it’s saturation either, 2022 was a phenomenal year for almost everyone. I think we have a tapped out consumer after Christmas, and people are worried about losing their jobs. This may be the canary in the coal mine moment. 

I’m currently in aggressive expansion mode, so currently no actual reserves. I have several years of operating expenses in investment reserves I can sell if needed to cover though. Also, both myself and my wife work, and individually we can each cover expenses on all properties in a month if needed assuming 0 revenue comes in on the rental income. I’m at about a collective 65 percent ltv on my mortgages at 3-4 percent. So current reserves I’m month to month but several backup plans if things go south.