Best places for Short Term Rental Purchases and High ROI?

Question

I am seeing a larger number of people get into the Short Term Rental Space as they can cash flow their properties better than a LTR. For people who are looking into STRs, currently have them, or brokers whom have clients that are taking the step into looking into them more:

Where are you seeing the largest influx of STR purchases? Does a buyer need to shell out a large amount of funds in these areas and have to recoup it through Airbnb/VRBO listings? How have your STR experiences been overall?

I am curious as I will be starting my own real estate journey soon, and Airbnbs seem like the most profitable avenue at this moment! Would love to hear everyone's opinions.

John Underwood · Answer

Many retirement accounts will let you take out a loan against your IRA money. This isn't a taxable event and prevents you from robbing your IRA money.

Many times it makes more sense to use your IRA money to make way better returns with RE

I personally have 2 self directed ROTH IRA'S that own Real Estate. I paid the tax hit when I converted to a ROTH, but they now growing tax free for forever! As they keep making more money the IRA is able to keep buying more properties.

Kristina Kuba · Answer

@Dominic Pizzi

Demand is weening but we are still seeing solid ADR and occupancy in the Tampa urban core. My colleagues and I are seeing a lot of people who were doing Airbnb arbitrage are not renewing leases with the landlords, so demand is shrinking slightly.

If you are using the AirBNB platform, which is going through an algorithm change, the general consensus is that you should have instant book on, professional photos, dynamic pricing and competitive cleaning fees because now users can toggle and see the ‘total all in’ price for stays.

Michael Baum · Answer

Hey @Dominic Pizzi, I know ALLL the good places! Where I get bazillions of dollars in nightly rate! I ain't gonna tell you and cut into my bazillions! :)

Seriously though, just about any area can do well if the house is purchased right, setup right, has lots of amenities, near cool stuff, run properly etc.

Like others have said, vacation areas with solid STR friendly regs are the way to go for us.

And it isn't running an AirBNB, it is running a Short Term Rental. AirBNB is a platform.

Leslie Anne Morris · Answer

Mostly in vacation markets. You’ll need cash to get in the game but originally I used retirement funds - basically robbed them. Overtime you could pay these funds back but it’s more fun to use the cash flow to scale.

John Underwood · Answer

Best place for a vacation rental with a high ROI is going to be the same type place where you would want to spend your vacation dollars.

Where do you go?

What about Disney World, ocean front house, house on the lake or river, house in the mountains?

Trent Reeve · Answer

maybe far travel, but you should get more local travel or people within driving distance.

Ben Scott · Answer

This is anecdotal, of course, but I operate two Air BNBs in the Oklahoma City area. I recently got my special exemption permit from the city (I'd run afoul of the law for too long) and there were at least 20 other home owners seeking a special exemption to operate a short term rental. I do wonder at one point does the market become saturated. Of course, those providing the best experience will rise to the top.

Drew Sygit · Answer

You may have missed the timing for STR gold. Recession will dampen travel spending.

Chad McMahan · Answer

Best advice I can give you is get a great deal on a property that checks enough STR boxes to yield a high income.

Best places for Short Term Rental Purchases and High ROI?

Best places for Short Term Rental Purchases and High ROI?

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