Insane growth in revenue during Covid with Vacation rentals

[Justin Leithem]

We have been operating a few vacation rentals in the Oregon area for the last few years and have been blown away by the impact of the Pandemic. At first it was soul crushing, we had just converted a small 8 unit motel into a hip Airbnb and the entire world seemed to shut down over here. We were forced to cancel all bookings and we lost $50k in revenue over the two months! Not good. Luckily they opened up after those two months and we saw some very unique things begin to happen...Ill explain three different houses. The first one to discuss is directly on the beach and as soon as things opened up we saw a flood of business happen and we ended up finishing out that year with over $108k of gross rent (that includes missing 2 entire months of bookings) which was $8k more than the previous full year, and we already have $92k on the books for 2022 and we aren't even through January. That blows my mind...

The second house is in the same town as the first, much larger (sleeps 23) has epic views of a bay, a few minutes from the beach, and had a totally different story. We did about $85k in 2018, and during last year it ended up just passing $70k. The pandemic seemed to crush this house where as the first house rebounded PLUS some. A matter of house size and not being direct ocean front maybe? 

The third house is on the outskirts of Portland, towards Mount Hood and is more of a mountain view retreat. When we bought it in January 2019 it had done about $65k the previous year with the previous owner, and we managed to squeeze almost $100k out of in 2020. It took a slight dip when covid first hit but seems like every single day has been booked since May last year. Never thought this house would do that much. 

Prices in both the coastal and mountain markets here have gone up like 20% in the last 6 months, making it very difficult to buy right. I know interest rates and super low inventory have a huge role to play in price increases at large, but these typically less active/appreciating markets are exploding at a much faster rate then everything else it seems.

I know with people more wary to fly, it makes sense for people staying home to vacation, and people in dense cities are probably seeing the value to have a place to escape to which is driving up prices...

It appears to be a phenomenal time to own a VR, but more difficult to jump into the game if you are wanting to start now...

I am very curious if other STR investors are noticing similar bump in demand for both purchasing and renting VR homes in their areas, and what they think the trend will continue to be.

Looking forward to hearing from you guys! Cheers!