#Airbnbbust: MTR surplus??

Question

Hi everyone,
Biggerpockets sent me an email about the fall of short-term rentals. I had an idea of this "#Airbnbbust", therefore I wanted to pivot to Mid term rentals. Do you feel like both str and mtr are seeing a decline or is it just strs??
For the long term, do you think Mid-term rentals will be a good pivot strategy since STRs are declining?
My sister and I currently have a sublease in Tempe

Myka Artis · Answer

Short-term rentals are not declining. Airbnb is declining with guests leaving and sophisticated hosts creating their own brands. Mid-term rentals are in the same boat. If you don't have a hospitality brand and are dependent upon the OTA's you might find yourself a part of the #airbnbust as well. Mid-term or short term you are in good hands just make sure you create a good service, and brand, and cater to your target clientele.

Damon Aniton · Answer

I am by no means an expert.  But I feel like there is a lot of taking words at their extremes going on these days.  I dont think AirBnB is "busting" as they say.  But I also dont think people will continue to make monopoly money any longer.  So long as the world does not go back into a lockdown aka covid people are still going to travel and still want places to stay.  But that does not mean you can just have a random property in a random city that does not see a lot of destination travel and make 10k a month any more.

Also as someone who clearly looks to increase their net worth by investing in real estate.  I can at least understand why cities and states are pushing back against STR rentals.  I can not in good conscience say that I dont see the effects of investors buying up properties has on local residents looking for a place to live.  Either it be for rent or to buy.

With all that said.  I also dont imagine there is a never ending market of travelers looking for monthly furnished rentals either.  And that was even before many STR properties look to transition and flooding the market.

Ben Rhodin · Answer

@Luz N Taveras, I think everyone received the same email, and personally, this is why I have never put all my stock into STRs. In the end, it's about having numerous exit strategies and contingency plans for your properties so as to not put yourself into a hole. I believe that around the BP community and investing in general there is always a "hot new investing strategy" and before STRs it was the BRRR Strategy. STRs skyrocketed in the last year or so, and now that we are seeing a bit of a dip lots of investors are jumping ship. It will begin to stabilize and lots of investors and nonprofessional owners will probably exit the space. It is simply the way investing goes, and it follows the "get rich quick" mentality. The ones that succeed in either space are the ones that run these properties like a business and provide a product above the rest.

I have numerous clients here in the Denver metro with numerous MTRs that didn't have a single vacancy all of 2022. And I have numerous clients with STRs that are still going strong. Yes, the ones that have bad furniture, bad pictures, and don't communicate will sit vacant, because they aren't putting in the effort, and also they may not be in a solid location for the MTR space.

As for your questions, we are currently in a weird time, between being the dead of winter, right around the holidays, and in a recession (or at least in the loom of a recession) it is too early to tell what will happen to these spaces. Typically MTR is a better space during nontourist seasons. The same thing happened in the Real Estate market when rates started ticking up, it's simply consumer fear.

Luz N Taveras · Answer

I will add these to my to-do list. Thank you so much :)

Luz N Taveras · Answer

Love this!! As a new business owner, this is great information to know from the beginning. Learning how to pivot, having multiple strategies, and being continuously active is extremely important. Thank you for sharing!!

Jason Livdahl · Answer

This is another example of “the sky is falling” that isn’t taking all of the information into account. Maybe that is the point of the post, create dialogue. Love it! When I read the article I didn’t read it as STRs are dead. It highlighted the need to evaluate and pivot if needed. This is a business and everyone needs to have a plan, backup plan, and a backup plan to the backup plan. Every market isn’t created equal and it is critical as a business owner to know the market and change business strategies WHEN needed. Having multiple strategies is key. We can’t set it and forget it. Manage our business and be an active owner/investor.

Myka Artis · Answer

@Luz N Taveras yes a direct site, guest data collection, strong social media page, and a google my business page are a must. Yes if you can utilize your current site with your hospitality brand that would be a great idea.

Luz N Taveras · Answer

To prevent that dependence on OTA's, do you feel like it's a good idea to start advertising and have clients book on your own personal site?? I have a website for my business and had thought about placing a tab where you would find a list of all the properties we co-host and or sublease. From there, people can book their stay. Others have probably been doing this, but I haven't seen much action on that idea.

Luz N Taveras · Answer

Wow! This gave me a sense of relief xD My sister and I have only been in the str niche for a year and we feared that we "joined the party" too late. We do intend to stay in the niche, nourish our business, and grow over time. Besides mid-term rentals, what are (in your personal opinion), other great exit strategies and contingency plans that have worked for you in the past with your properties?? I've heard Brrr is still a great strategy as well

#Airbnbbust: MTR surplus??

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