All Forum Posts by: Jared Higginbotham

I find that most investors in this industry are used to looking at STR's with a LTR mindset. You're leaving a more passive real estate investing and you're leaping into hospitality. The hospitality industry is all showbiz. The real money is made when you find great seasoned management. You need to ask specific questions like:

-How many times will your company (not vendors) visit my property between each guest stay. Make sure they describe their process from start to finish.

-Do you perform same day turns?

-Ask to see their yield management strategy for your units.

-Ask for a seasonality report for your units.

-Ask about linen services. Do they wash linens on site? How do they handle lost or damaged linens? Who owns the linens? 

This is really only the surface. A seasoned manager should be able to quickly and easily provide answers to these questions. If they can’t answer these questions, they will cost you money. You could take two comparable properties in the exact same area and one unit’s income could be vastly different than the other. The management in place is whatwill make or break you.

Find a good management company first and then have them tell you what they are looking for. They know the guests and what they are looking for better than anyone else. Take that info and buy what they want to manage. You’ll find 2% properties a lot easier that way.

I let my housekeepers and housemen take it home with them. My hourly wage earners need that the most. I’ve heard them tell me many times how much it helps them and their families.

AirDNA shows gross, management is telling you net. Trust the pros over AirDNA always. 

The last two years have been banner years for STR's in Florida. We're seeing consumers running out of cash. They are stretched to thin with rising costs of living. We're not in a downturn. We're seeing STR operators refusing to lower their prices which is resulting in lower occupancy.

The issue I'm seeing is investors have purchased homes at insane prices and they HAVE to keep those rates high in order to pay their overhead. Now we're going back to 2019 prices and these new STR owners are going to be very sad because their malinvestments aren't paying for themselves. Over 1,000 STR's were added to the Tampa in the last 60 days. When the market gets flooded like this, ADR's fall as supply/demand equalizes. It's a race to the bottom for pricing when both supply increases and demand decreases. First ones to decrease prices will capture all the bookings while the rest of the market crosses their fingers during their holdout. This is exactly why the pros stay in business and the DIY'rs lose their hats. The extra 1,000 rentals we just added will either be converted to LTR's or sold at a loss because 2019 RevPAR numbers will not even cover their overheads.

in my market (Tampa) we’ve added over 1k new listings in the last 60 days bringing our total to right around 4,500 active listings. These are mostly new purchases that have incredibly high overhead.

RevPAR is on the decline as hosts and managers are standing firm on the higher rates. Consumers continue to eat into their savings and spend on credit cards as real wages are declining. All of these indicators show me that our guests are tapping out. Shoulder season occupancy is lower YoY. Increased inventory and a maxed out consumer will lead to nightly rate declines.

I foresee all the new additions to the STR inventory failing as they will not meet their monthly overhead requirements. The second half of this year we will see panic followed by price drops, and eventually malinvestments will either be converted to LTR's or sold. We will not see a repeat of 2021's STR boom.

Lower your prices for the second half of the year and capture as much occupancy as you can in order to save your RevPAR. Let the excess malinvestment listings drop off the market, and iron out your processes for shorter 3-4 night stays. Grit your teeth and muscle through this. I’m avoiding adding new listings at this time unless they are non-financed properties that can withstand this sudden drop in pricing power. If the consumer is suffering, we will suffer. That’s how this business works.

Feel free to reach out anytime offline.

Hi Keith,

I have a vacation rental management business here in Tampa. The average occupancy rate for Tampa as a whole is 60% but we average around 75-85% depending on the home. Feel free to reach out if you have any other questions!

Hi David,

I have detailed knowledge on this strategy in the Tampa Market. Feel free to reach out anytime!

I will keep it brief here. You will always get what you pay for. If you just want someone to do what evolve does for 13%, there are other options out there to automate and/or have a receptionist handle your bookings for 6%. This company uses automation tools as well and their listings in my market look TERRIBLE! I constantly see money left on the table with these large companies.

I will say that I manage STR's for owners in my market so I am biased of my own management strategies.

@John Underwood they are inferring to reservation leads that originated from their site. Essentially, they are hoping you are honest and do not try to take conversations off their site and book them directly in order to bypass their service fees.