International STR Investing

[Matt Raleigh]

Hi all,

We are considering shifting our focus more toward STR, like everybody else :) There are a couple of Caribbean islands that are close to our heart, and that we feel reasonably safe starting out in. Questions as a first-timer trying international STR: Anybody have experience internationally that they can share regarding safety, security, property management in Latin American Caribbean or similar locations? Also, do we generally post on both AirBnB and VRBO? If so, how does one balance those bookings, especially with instant bookings?

Thanks for any pearls of wisdom,

- Matt

[Mike Lambert]

@Matt Raleigh

I invest internationally and am at times getting so discouraged by the reaction to posts about that topic, especially those from people who don't invest internationally because of their own fears and are discouraging those who want to tempt the adventure (which might or might not be the case for those who have replied on this specific posts). That's when I some days lose faith in the BiggerPockets community. Are we really here to discourage the people who are taking bold action and/or going after their dreams because we project our own fears on them or because we don't want to see them succeed because deep inside of ourselves, we want to invest internationally but don't dare doing and so the last thing we want is to see other people successfully doing it.

I see repeated negative posts from the same people (not those who replied here thus far) from people in the international forum and I'm left wondering why they're hanging in the international forum if they're negative about international investing.

By the way, even though I totally disagree with him on this matter, I have to command @John Carbone for writing in all honesty "I haven't researched ... I think...". But then, does it make sense to give a negative advice and discourage  somebody from doing something without doing any research? I invest in the Caribbean and totally disagree. Usually, I would explain in detail why but I'm short on time so I'm going to stick to the general but important topics here. Matt, please feel free to reach out by DM if you want.

@John Underwood, I love your many contributions to the forum but, as an international investor, like a large and increasing number of American and Canadians, I find myself constantly at odds with your opinions on international investing. I guess that's what makes a great forum! :)

In this case, I guess you make clear that part of your advice reflects your own personal preferences so I'm not going to argue against that. Otherwise, your advice looks nice on paper and might be the right advice for some people, but, in my opinion, not for most. International investing can be very easy or very complicated, depending on what you do and where, what you know and who you know but it can be way easier than most people think. Also, the idea of making money in the US to rent in the Caribbean sounds again nice on paper but only make senses for so-called lifestyle buyers and Matt talks about investing there, not merely visiting as far as I understand it.

Moreover, you'd need to make money in the US first and it's no secret that, in many places (including many of the most visited places by STR renters), real estate prices have been propped up to unsustainable by artificially low interest rates. The FED almost lost its credibility by keeping interest too low for too long and is probably not gonna make that mistake ever again. The 15-year period of cheap money on which every US real estate investor has surfed is over. The current 6% mortgage interest rate is actually normal in a historical perspective and a lot of US real estate isn't profitable with such a rate and it might not go back down to a real-estate friendly level anytime soon. The FED made a huge mistake by bringing interest rates too low for too long and have us risk some sort of hyperinflation and their credibility has been badly if not irreparably damaged so I don't think we'll see super low interest rates again anytime soon in the US.

As long-term rentals becomes less profitable, short-term rentals are going to be more and more popular. There is already a huge amount of them and the law of economics tell us that, eventually, there's going to be a huge oversupply which is going to result in a drastic fall in profitability and occupancy rates.

I have often wondered here why people who don't invest internationally give advice about the topic of international investing. I don't invest in US short-term rentals so I won't allow myself to give any advice about that subject. What I just wrote is just plain economics and I'm an economist and I think so many people are going to be surprised and see how I was right with this in a few years.

Whether you agree on what I just wrote or not, we know, by hanging on BiggerPockets, that investing in the US has become more challenging to many as a result of many headwinds faced by investors like very high prices and high interest rates. Contrast that with international investing, which has huge tailwinds like the resumption of explosion in international travel, which actually was already going on pre-Covid and, the emergence of the local middle classes and, most importantly the life-changing explosion of remote working is a huge.

The latter tailwind is particularly powerful and can't be overestimated. I live in beautiful Montreal which is a great place to live but the winters are very long. You'd think that the locals are used to it but they hate it and more and more so as age passes. When I talk to my friends who invest locally, I sometimes jokingly say "Do you realize that, with the normalization of remote working, there's no reason for people to stay in Montreal and live a life of stress and bad weather and have a high cost of living when you can move to Mexico, buy properties for much cheaper, have beautiful weather pretty much all year round, less stress, no traffic jam.... For them, I might be joking but I'm not. You already see the migration within the US from the North to the Sun Belt. As Florida becomes unaffordable, the next step is Mexico (where, unlike in Florida, you're guaranteed nice weather in winter). It's already happening, as shown by statistics and anecdotally the sharp increase in the number of BiggerPockets member asking for my help investing there. Once short-term rental only markets are becoming huge long-term rental markets too.

You just have to open your eyes and your world and see further than your own country and all of a sudden you see all these opportunities you had no idea about.

While I'm on BiggerPockets to contribute, I sometimes wonder why I'm not shooting myself in the foot why praising international investing. I might as well leave everyone fight and overbid for the same piece of overpriced US or Canadian property while I have no competition in scooping international bargains.

So Matt, finally, to the essence of your questions:

1. What do you mean exactly by safety and security? Is it safe for people to travel there? Can something happen to your property? What do you mean exactly?

2. Regarding Airbnb and VRBO, I don't invest in the US so I can't compare but I imagine it should be the same. And others have already replied to that anyway.

Hope this helps!