All Forum Posts by: Gururaj Iyer

I know there have been many threads started on Coronavirus and it's impact on STR's over the past few days, but I wanted to share this data that Airdna published today detailing the affects of it on different types of STR markets. It appears metro markets are feeling the effects far more significantly than vacation rental markets.

The below data supports the two-fold STR investment strategy that I adhere to:

1. I only invest in STR's in TRUE vacation rental markets rather than metro markets. (I am in the Smoky Mountains in TN and the Emerald Coast in FL). The regulations in these markets are very very favorable for STR investors, since it's been the norm for tourists to rent privately owned single family homes and condos on an overnight basis for decades. (Well before the internet, much less Airbnb or VRBO). Because of this, these cities and counties figured out how to monetize STR's long ago, and the local economies depend on the income far too heavily to ever impose any truly restrictive regulations against STRs.

2. I only invest in vacation rental markets where the vast majority of the tourists are driving into, rather than flying into. The accessibility and affordability of drivable vacation rental markets is very difficult for more expensive fly-to markets to compete with in any sort of economic downturn. 

What are your experiences thus far? I have had a few clients want to pull the plug on contracts out of fear, but I have had far more reach out and tell me that they have been sitting on cash and are ready to jump into scaling into more STR properties if whatever is going on in the world results in a softening in purchase prices.

Moral of the story (and the data), keep your eyes on the numbers and your head clear of emotions when it comes to investing in any economic circumstance, whether they are favorable or slightly scary!

https://www.airdna.co/blog/coronavirus-impact-on-global-short-term-rental-markets?utm_source=drip&utm_medium=email&utm_campaign=Here%27s+how+the+Coronavirus+is+Affecting+Short-Term+Rentals+Globally&utm_content=0

 Yes of course, makes perfect sense. I think one of the huge differences is that when you’re investing down south, such as Tennessee or Florida or Arizona or the Carolinas or some other places down south, you tend to get your house rented on both weekdays and weekends, so many months will get 80 or 90% occupancy rates which is huge.
 

When you are investing in the north, if you are even able to stay rented, it is often for no longer than just the weekend  during most of the year. So you often end up with only 8 days (or so) out of 30 rented in a month,  this is less than 30% occupancy rate for much of the year.

Yet your mortgage and expenses such as property taxes and electricity and various other expenses will occur every month whether your house is rented a lot or a little. So my basic preference is since I have to pay the bills every month, I prefer to invest in places where my house will be occupied 80 or 90% of most months, rather than in the north where I would be stuck with less than 30% occupancy during many months. That is all,  I am simply a math guy (who likes to make a lot of money)

 I mean, Pocono springs might add a little bit of demand, but there’s  already a lot of attractions in the area and the area still remains really really depressed and occupancy rates remain very low because there’s such an over-supply of vacation rental houses because they overbuilt the area many years ago.

Also, Poconos springs won’t be ready until 2022 at the earliest, and everything in the Poconos takes longer than you expect plus we might have a recession coming which could slow down development. After all, it took 15 years to build that entertainment complex American Dream in the Meadowlands in New Jersey, because it was slowed down by the recession.

Also, Poconos Manor burnt down recently and that was supposed to be part of the Poconos Springs complex, so that complicates things and slows it down as well.

Personally I prefer investing in the Southern US (way higher year-round occupancy rates & way more money to be made) but if you’re really intent on buying a property in the northeast, remember that the 30 million people in the nyc area tend to vacation more in the catskills, hudson valley, berkshires, adirondacks & green mtns (vermont) more than the poconos. Those areas have far better skiing (WAY taller mtns), far better hiking (WAY taller mtns, better views) & WAY better fall foliage (a New England specialty).

Anyway, here's a great summary of the kind of numbers you can expect down south (including complete pro formas). You simply won't get annual revenue, annual occupancy rates, annual net income, & annual ROI like this in the north:

https://theshorttermshop.com/c...