All Forum Posts by: Paul Wolfson

@Scott K. I’m not too familiar with your market and when I type in Poconos, PA in Zillow nothing comes up. Is there a specific city I can look at to see what you are referring to?

I'm a numbers person and want my decisions to be guided by data over anecdotes.

With that said, how do you calculate if a market is oversaturated? 

I've seen one interesting approach recently where you can use AirDNA to get the 1-year growth in STR listings and compare that to the 1-year growth in STR revenue. If the amount of listings grew by 25% and the revenue in that market also grew by 25%, then that means supply is meeting demand, which in turn means that market is not oversaturated. However, that is a snapshot of only 1 year. And, it is a "rate of change" type of metric.

I'm wondering if there are other metrics people use to determine market saturation?

@Alex F.  was Kissimmee hit hard by Hurricane Ian? Any issue with flooding in the area?

@Michael Baum thank you for sharing.

@Kevin Luttrell what purchase price is the $75 PMI based on? Does your $133 insurance include STR insurance?

Hi All. I was wondering if anyone who owns a short term rental in either Broken Bow or Smokies or any other mountain or lake market -- can share their expenses. 

I'm analyzing opportunities but am realizing that without realistic expenses, I may not be getting realistic cash flow projections.

Below are some of my variables:

Type: House

Bedrooms: 3 or 4

Location: Broken Bow, Smokies, High Country, Western North Carolina.

My assumptions:

Supplies: 150/mo

Electricity: 150/mo

Gas/Propane: 0/mo (all appliances usually run on electricity in mountain markets)

Water/Sewer: 25/mo

Internet: 125/mo

Pest Control: 50/mo

HOA: 0mp

Property Taxes: 75/mo

Insurance: 100 home owners insurance + 100 short term rental insurance = 200/mo

Cleaning: 1,300/mo

PMI (10% down): 150/mo

Thank you @Leslie Anne Morris, how would I use older rates, let’s say from 2019? Where can I find those numbers?

@Nicholas Coulter I am also interested in this so if you don’t mind sharing I would appreciate it. 

Thank you @Leslie Anne Morris. 
can you go in more detail about how you do conservative underwriting? I'm new to STR, and as such can only go off of data provided by websites like AirDNA. What can I do to make that data more conservative?

Thanks @John Carbone I had no idea that was the case with AirDNA. My analysis took the ADR * Occupancy Rate and added the cleaning fee income on top of that. 

Do you know if PriceLabs also include cleaning fees in their ADR?

Thank you.

"There are many people who bought in the last 18 months that are losing money each month currently"

@John Carbone what makes you say that I'm curious? Especially prior to March when the first interest rate hikes happened, folks were getting mortgage rates at 3%. Sure they bought likely at the top of the market, but their interest rates were still low as of 6 months ago and prior, so why would they be losing money each month especially, as you mentioned yourself, that the rental demand is still strong.

"If rates continue to stay this high, prices need to drop"

Sure, in the typical housing markets I would agree with you...but I'm not convinced that this holds true for markets that are based on revenue streams. Of course if revenues decline (for whatever reason) then yes, I completely agree here.

"a few things will cause annual revenues to drop"

Inflation erodes disposable income = lower vacation demand...totally agree with this

A recession = lower vacation demand...I don't necessarily agree with this as this isn't your typical recession. There has only once been another technical recession when unemployment rates were this low, and that was during World War 2. As you can see for yourself, this current recession is not having any impact on unemployment. Because the employment levels are historically low, consumer spending has increased in the past 2 months and continues to remain strong. Consumer spending is one of the driving factors in an economy and until this number falls, I don't see a strong recession. So I'm carefully watching unemployment rate.

extra supply of new rentals...I agree with this, but not yet sure what factor could cause this to happen. Extra supply could come as a result of panic selling due to declining revenue, but that would depend on other factors such as unemployment and continued climbing inflation.