All Forum Posts by: Ian Dunross

4. I'm not going to manage it myself. I have two other business that take precedence and I live in Mexico, so that's not on the table. I allocated a couple of hours per week to manage this RE business. 

 How would you go if you were 19 with no money and trying to get into real estate ?  What path would you take

The days of buying a random average property in a vacation destination and throwing it on Airbnb when you actually aren't any good at underwriting or hosting and stumbling blindly into 50% CoC returns are dead. That was never going to last. But Airbnb isn't dead. You just have to actually know what you're doing now.

If anything Airbnb is as alive as ever, because it's basically accepted as a investment asset class now.  It used to be if you had money to invest you thought about stocks or bonds or long-term single family rentals or multi-family rentals.  Now short-term rentals are an accepted part of that list.

As with any asset, the more accepted it becomes as an investment asset and the more people get into it, the lessor the returns are.  Just look at how long-term single family rentals have evolved.  It used to be that when you were looking for these deals you used the 2% rule.  That is to say you wanted the monthly rent to be 2% of the purchase price.  That is long gone as more and more people started buying LTR's as assets, and it shifted to the 1% rule.  People at the time freaked out.  1% rule, that is stupid, I used to get 2% I'll wait for that to come back.  Then over time 1% became the new 2%, and everyone accepted it.  Now, you can't even find 1% unless you have connections or value add, and people are happy with even less.

Short term rentals are headed down the same path. My first 2 I bought I had 80% CoC return. That is dead. But that doesn't mean it's still not a viable investment at 20% CoC. 20% is still pretty great even with the extra work involved.

Of course the big elephant still lingering out there is that short term rental revenue isn't as reliably predictable moving forward as long term rental revenue, so when you're putting in that revenue number to get 20% CoC you need to be sure it is a number that you can hit moving forward, and not something that was just a result of a large outlier travel year like we're looking back at now. I'm not confident that's the case, which is why I've put my purchasing on pause for a bit to see how things shake out. But once everything settles back down to reliable levels I'm happy "settling" for the now lower norm of 20%ish CoC. I bet 10 years from now we'll all be pining for the days where you could get 20% like we're pining about the days of 50-80% now.

@Ian Dunross

Yes that is correct but note local architects will not stamp others plans. You can have an offshore architect come up with schematics / floor plans but from there have the local architect do all the elevations, sections and details along with code analysis as they will have to do it anyways.

What areas do you recommend for purchasing a STR/Vacation home under $400k in Florida? We like the Tampa area but are open to wherever the numbers look good...we looked into Clearwater/St. Pete but am seeing they do not allow less than 30 day rentals.