Where are Short Term Rentals Headed?

[Kenny Smith]

Hello BP Community!

I would love to get some thoughts on where you think the STR market is headed as a whole. I have a few myself, but are considering to move some of them to MTR's to cater to the ever growing travel nursing market, and more importantly, be a little more hands off with our investments.

Do you feel the market is going to get oversaturated with STR's? Are the "golden years" for STR's behind us? OR, do you see more and more consumers catching on and the demand continues to increase? Do hotels go the way of the cabbies when Uber came into the picture?

Looking forward to your responses!

[Taylor Dasch]

I do feel like it is becoming a lot more common to have them and a lot of investors are trying it out. Either way, I would want to make sure I am better than the competition in price or in quality of property. I think they will still be a great source of revenue if you buy right and rehab correctly. 

[John Underwood]

This seems to get asked weekly.

Yes some areas are definitely oversaturated. You have to set yourself apart from the competition. 

[Andrew Steffens]

I think there is some saturation but it depends on the market.  If you offer a well priced quality product in a desirable market you will do well!

[Dave Stokley]

Yeah I think a lot of places are getting over-saturated. At BPCon in October I honestly think that every single person I met either owned one or was planning to buy one.

Curious where you are seeing evidence that the travel nurse market is "ever growing." My understanding is that that market is actually shrinking as demand abates "after COVID." It doesn't make sense to me why a hospital would pay a nurse's salary AND their cost of living if they could just hire locally, so I feel like long-term this trend will decline. If you google "travel nurse industry" you will find tons of articles about it, with varying outlooks.

[Dave Stokley]

Quote from @John Underwood:

This seems to get asked weekly.

Yes some areas are definitely oversaturated. You have to set yourself apart from the competition. 

 Some areas are over-saturated, but there are many micro-niches that people with local knowledge can exploit. The key is LOCAL KNOWLEDGE. Remotely investing in the Smokies or some other hot market that everyone knows seems pretty risky to me at this point. I'm in Cleveland, which sounds like (and generally is) a boring market, but I see lots of niches that can still be very profitable. I'm sure the same is true for just about any top-100 city if you know the market well enough.

[Brian Barch]

I think this gets asked a few times a week.

Airdna says demand is growing, but slower than supply.

Certainly the Wild West days are gone. You can’t just buy a crappy place with no design or unique features and hope it will do well. 

But that doesn’t mean there isn’t still opportunity. Also, many do this in conjunction with using the homes as their vacation places.

The real key here is regulations, which are taking hold in many places as STRs got scapegoated for the housing affordability crises. It may take a few years for that part to shake out.

[Justin Brickman]

If you do it right, it will continue to still be very profitable and rewarding 

[Kenny Smith]

Quote from @Dave Stokley:

Yeah I think a lot of places are getting over-saturated. At BPCon in October I honestly think that every single person I met either owned one or was planning to buy one.

Curious where you are seeing evidence that the travel nurse market is "ever growing." My understanding is that that market is actually shrinking as demand abates "after COVID." It doesn't make sense to me why a hospital would pay a nurse's salary AND their cost of living if they could just hire locally, so I feel like long-term this trend will decline. If you google "travel nurse industry" you will find tons of articles about it, with varying outlooks.

Sorry, should have been more specific.  So at least in our market (Denver), we are considered the #5 destination for traveling nurses according to furnish finder stats.  I guess this is more market specific, but we've done well with them over the last couple of years.

But, definitely good insight for future trends!  Thanks for sharing.

[Kenny Smith]

Quote from @Dave Stokley:

Quote from @John Underwood:

This seems to get asked weekly.

Yes some areas are definitely oversaturated. You have to set yourself apart from the competition. 

 Some areas are over-saturated, but there are many micro-niches that people with local knowledge can exploit. The key is LOCAL KNOWLEDGE. Remotely investing in the Smokies or some other hot market that everyone knows seems pretty risky to me at this point. I'm in Cleveland, which sounds like (and generally is) a boring market, but I see lots of niches that can still be very profitable. I'm sure the same is true for just about any top-100 city if you know the market well enough.

100%! I think you are spot on. Here in my market of Denver, the STR laws have become very strict in certain municipalities. You need to know what pockets you can exploit and take advantage. Local knowledge is critical right now.

[Ryan Moyer]

Like others have said this gets asked all the time.  Actually just 2 posts down from this one is almost this same thread.  And then 3 posts down the same thread again!  So lots of good thoughts on this subject out there already.

https://www.biggerpockets.com/...

https://www.biggerpockets.com/...

I'm not into the monthly rentals thing (MTR or whatever) but from what I've heard of people in that market the "traveling nurse" thing is even more oversaturated than STR, as tons of people bought monthly rental places just throwing around the term "traveling nurse" without really looking into that closely, and even as traveling nurses become less common. That's just hearsay on my part though.

[Leslie Anne Morris]

I always say that in my market we do not compete with hotels.  I think the demand will continue to grow as more folks move away from hotels for that whole house vibe.  I definitely do not think demand is slowing down as it relates to vacation markets.

[Brian Barch]

Quote from @Leslie Anne Morris:

I always say that in my market we do not compete with hotels.  I think the demand will continue to grow as more folks move away from hotels for that whole house vibe.  I definitely do not think demand is slowing down as it relates to vacation markets.

 Agreed. I’ll stay in a hotel for business travel, but with 3 kids, I will forever be on the lookout for whole spaces where we can spread out. 5 people in 2 queen beds and a floor sleeper in a hotel room almost sounds like torture now…

[Desta Sillerud]

Quote from @Dave Stokley:

Yeah I think a lot of places are getting over-saturated. At BPCon in October I honestly think that every single person I met either owned one or was planning to buy one.

Curious where you are seeing evidence that the travel nurse market is "ever growing." My understanding is that that market is actually shrinking as demand abates "after COVID." It doesn't make sense to me why a hospital would pay a nurse's salary AND their cost of living if they could just hire locally, so I feel like long-term this trend will decline. If you google "travel nurse industry" you will find tons of articles about it, with varying outlooks.

I am a nurse myself, and recently picked up a travel contract. I can tell you working in management/ administration for the past 7 years, and now as a travel nurse, I don't see it slowing down. There are not enough local nurses to staff the hospitals, so they are relying on (and budgeting) for travel nurses to fill these holes long term. In talking with administration, their needs have only increased. The needs from even a year ago have gone up over 30% at my facility. Nurses are burnt out and leaving, causing a bigger problem than pre-pandemic. It could very well be area dependent, but it sounds like this is an issue nation wide. 

[Michael Baum]

I have to assume the search function is broken. With the future of STRs dying and arbitrage questions, there has to be some kind of issue.

:)

[JD Martin]

Quote from @Michael Baum:

I have to assume the search function is broken. With the future of STRs dying and arbitrage questions, there has to be some kind of issue.

:)

 I've been here forever, as a lurker before a member and a member before a mod, and it's never worked very well :)

[Michael Baum]

Touche' @JD Martin. I have used it and it mostly works. Sorta...

[Jacob Krafka]

Saw you were out of Denver,

I am also... What I am seeing with my investors is diversity. Not putting all your eggs in one basket. I think that is important to a well balanced portfolio which leads to success. I think STR's are great but out in the popular mountain towns they can be a pain in the you know what. I find it interesting you mentioned the travel nurses, I have a ton of people investing in the Springs for that and the Airforce base. Look forward to hearing back from you and connecting.

[Michael Porche]

I see this a lot. Being this industry has on wide scale been around for 10 year, the golden years are just beginning. I think that overall STR's aren't going away, however the ability to make money on them differ from location to location. It used to be that you can buy them almost anywhere and do very well. Now that airbnb is mainstream, you can't just buy anywhere. You have to be very strategic with where you buy. The number 1 driver of revenue from short term rentals is location. The 2nd driver of revenue in STR's is amenities. These are both huge drivers. So if you know how to invest in the right amenities in the right locations that can significantly boost your revenue in addition to the location. ..I personally wouldn't switch to MTRs. The reason being is because now I am focused on 1 or 2 job vocations. However that is heavily dependent on your location and where you invest. What are the demand factors for travel and the supply count for places to stay. What are the demand drivers for MTRs. Either way MTR's are becoming just as saturated in areas due to people just buying property and hoping a strategy works

[Kenny Smith]

Quote from @Desta Sillerud:

Quote from @Dave Stokley:

Yeah I think a lot of places are getting over-saturated. At BPCon in October I honestly think that every single person I met either owned one or was planning to buy one.

Curious where you are seeing evidence that the travel nurse market is "ever growing." My understanding is that that market is actually shrinking as demand abates "after COVID." It doesn't make sense to me why a hospital would pay a nurse's salary AND their cost of living if they could just hire locally, so I feel like long-term this trend will decline. If you google "travel nurse industry" you will find tons of articles about it, with varying outlooks.

I am a nurse myself, and recently picked up a travel contract. I can tell you working in management/ administration for the past 7 years, and now as a travel nurse, I don't see it slowing down. There are not enough local nurses to staff the hospitals, so they are relying on (and budgeting) for travel nurses to fill these holes long term. In talking with administration, their needs have only increased. The needs from even a year ago have gone up over 30% at my facility. Nurses are burnt out and leaving, causing a bigger problem than pre-pandemic. It could very well be area dependent, but it sounds like this is an issue nation wide. 

 @Desta Sillerud 

This is great insight!  My fiancé is a nurse and she was saying the same thing.  I also think with baby boomers getting older, the healthcare field will be in high demand for years to come.

[Felicia Lucco]

@Dave Stokley, I agree with both of your statements. I bought in Davenport last year. I learned a lot, followed the teachings of a few experts here, and as far as I can tell, I'm doing everything right. But the demand in my area has dried up. It may be the economy and uncertainty, or that there are so many places to choose from. I can't even make my bills each month and have to seriously consider unloading this. 

I have heard the hype about traveling nurses, and also that the demand is declining. Nonetheless, I did post my place on Furnished Finder in hopes of getting longer stays. So far, nada. I'm not giving up my dream of owning one or more STRs but definitely need a less saturated market.  

[Felicia Lucco]

Desta Sillerud, you give me hope. lol  I recently spoke to my niece, also a traveling nurse. She has mgmt experience as well and can afford to travel with her family; however, she did mention that 'staff nurses' are on the lower end of the pay scale. With my 4/3 townhouse in a resort community, I'm hoping to attract colleagues willing to share. This saves them money while allowing me to get my asking price. It's also perfect for those traveling with their families, but... so far, not one inquiry. 

[Desta Sillerud]

Quote from @Kenny Smith:

Quote from @Desta Sillerud:

Quote from @Dave Stokley:

Yeah I think a lot of places are getting over-saturated. At BPCon in October I honestly think that every single person I met either owned one or was planning to buy one.

Curious where you are seeing evidence that the travel nurse market is "ever growing." My understanding is that that market is actually shrinking as demand abates "after COVID." It doesn't make sense to me why a hospital would pay a nurse's salary AND their cost of living if they could just hire locally, so I feel like long-term this trend will decline. If you google "travel nurse industry" you will find tons of articles about it, with varying outlooks.

I am a nurse myself, and recently picked up a travel contract. I can tell you working in management/ administration for the past 7 years, and now as a travel nurse, I don't see it slowing down. There are not enough local nurses to staff the hospitals, so they are relying on (and budgeting) for travel nurses to fill these holes long term. In talking with administration, their needs have only increased. The needs from even a year ago have gone up over 30% at my facility. Nurses are burnt out and leaving, causing a bigger problem than pre-pandemic. It could very well be area dependent, but it sounds like this is an issue nation wide. 

 @Desta Sillerud 

This is great insight!  My fiancé is a nurse and she was saying the same thing.  I also think with baby boomers getting older, the healthcare field will be in high demand for years to come.

 Yep, I think you are correct. Interesting to see where healthcare goes in the years ahead.

[Myka Artis]

Short-term rentals aren't really saturated from the perspective that people are traveling and looking for places to stay outside of hotels. The OTA's are saturated with short-term rentals. As long as you continue to build a strong brand around hospitality where guests are wanting to repeatedly book with you then you have nothing to worry about. If you're depending upon the OTA's for reservations then you might be in for a long gloomy ride.