How sustainable can STR be in crowded markets?

[Mateo Arias Gómez]

Lots of investors are looking to STR as some of the last places where we can find cash flow. However, I am thinking it might get a bit crowded in a couple of years and in some places like Orlando, there might be no secondary exit to the market in case the principal attraction loses value or there are just too many options and there is an oversupply. I know, I know, right now its not the case as there is a huge demand and lots of people are travelling and stuff, but if you are asking for a loan for 30 years you might want to think about everything that might happen.

I want to know what you guys think about STR in general? I am liking the idea but I am really concerned if something big shifts. What are some STR that are not very crowded and there is little to no supply creation? Do you think that going to some attraction areas is the best place for STR? or something like a metro area where you have lots of option? Is it really easy to just have a property manager supervising everything? what are your thoughts?

[Shawn McCormick]

@Mateo Arias Gómez, valid questions. That is why picking the right market and understanding why it exists should be a starting point. If you buy in an area that depends on skiing and they have a couple mild winters, you aren't going to last. If you buy near a beach and flooding, insurance, hurricanes, local ordinance changes or a combination of all of those, you will lose. 

I'm in Orlando and believe me, Disney, Universal, Seaworld and all the things that feed it aren't going to vanish in our lifetime, so to me, it is one of the safest bets out there long term. Orlando was built for STR and as others have mentioned, do your job, stand out and you will do great.

Good luck!