All Forum Posts by: Ryan Moyer

The problem there is once you add a mortgage at 75% LTV with a 6%+ interest rate to the equation, the cash flow disappears entirely if you're only doing $50k gross on a $500k purchase. In fact, you're most likely paying out of pocket each month and not even covering your costs.

Of course the answer there is to buy in a market where you're not paying 10x gross revenue, or do a value-add where you're not paying 10x gross revenue.

But yes, I agree with Colin's premise that buying STR at 10x gross revenue is a terrible deal. Thankfully there are better deals available.

I would add Destin to the list as well.  That's another market like the Smokies where people have just kind of accepted that a property is going to be listed for 10x gross revenue.  Lifestyle asset, future appreciation, maybe.  But the numbers are really bad on 10x properties at current interest rates.

Though for what it's worth, I wouldn't necessarily just look at the list price and assume you can get it for that in your underwriting.  The Byars house ended up selling for about double the list price when it went on the market.

I assume this is about the Wheeler house from Stranger Things that went on the market a few weeks ago.

If you want a comp, somone already STR-ified the Byars house from Stranger Things.

It's booked out solid at really high rates from Nov - Jan with the final season of Stranger Things airing.  If you can close on the Wheeler one and get it all themed out in the next month or so (a tall task) you can probably do ~$90k revenue in 3 months.

Byars house rates are pretty low after that so if you miss out on that, probably not worth it.

VRBO is no better, and will almost certainly copy this in the coming months.

VRBO and Airbnb take turns coming up with jerk the host around policies, and then the other one copies it.

Remember, VRBO are the ones that invented charging fines to hosts beyond even the max refund amount, which is pretty much the most brutality punitive policy in all of business and something no other business would accept.

Imagine if waiters had to pay a $2000 fine for spilling a drink on a diner.  That's VRBO if they were in the restaurant biz.

Don't forget to apply the mark up to your fees as well.

If you were charging $250 for cleaning before, Airbnb would charge the guest their 14% on top of that and still pay you roughly $250 (minus 3%).

Now they will charge the guest $250 and only pay out $211 to you.  So you need to mark up the cleaning fee as well.  Along with pet fee, damage insurance, etc.

Rents are down in the area and so far have just continued in that direction.  At some point hopefully we will bottom out and start climbing back up again, but the reality is we've been hit with the double whammy of both quantity saturation and quality saturation.

That is to say we've gotten both a lot MORE listings in the area (new homes built by the thousands) and a lot BETTER listings (so many more people doing the high level theming now).

I've heard from a local realtor that they're running thin on tourist zoned land to build more of these resort neighborhoods in so maybe over the next few years supply will stay steadier as demand continues in the same steady direction as always.

It's all supply driven right now.  Demand is fine.  We just got hit with the shock of so many new awesome homes added so fast when the market took off.  Champions Gate doubled in size.  Windsor Island, WIndsor at Westside, Windsor Cay, etc.  If they truly are out of tourist zoned land to keep adding those neighborhoods that should help settle things over the next few years, but I'm not really seeing anything in the near-term now that Epic Universe launched without much effect.

Easiest way is just to have the cleaners or handyman do it.  The registration is like 20 bucks.

Just make sure there is language built into the regulations that protects you against future regulation.

I strongly believe that 50 years from now STRs in residential zoned neighborhoods won't exist.  The reality is we're operating commercial businesses in residentially zoned areas that objectively don't make any more sense there than a Hilton or a steel mill, neither of which would be permitted to operate there.  It's a loophole, currently, and one that will continue to be closed more and more.  These cookie cutter suburban neighborhoods lined with houses 15 feet away from each other will be some of the first to go.

You can still type them into the search bar but yes, most guests won't know that and with the actual tabs gone basically no one uses them anymore.  And there's no longer any way that I'm aware of to search for a category in a specific market (IE "omg" in Las Vegas, you can only search "omg" nationwide now).

It sucks because like many hosts, we designed some of our listings to target some of the categories, down the drain.

Even moreso it sucks because, when I travel as a guest myself, I actually quite liked using the categories. We have kids and rarely want regular houses. We want the STR-ified ones like the ones we create. I liked using the "play" category in whatever market we were traveling to.

Sadly, this is just life with Airbnb now.  Every couple of quarters they have to come up with some new big thing to get investors excited about how they're going to change the industry and should continue to be valued as a mega growth company even as their numbers level out.  A year from now the services and experiences tab will be gone from the homepage too, replace by something else, we can almost guarantee it.

It seems like their next big push that they'll probably release a few quarters from now is becoming an "all in one" travel platform that includes hotels too.  They've already been moving more in this direction with requiring more flexible cancelation policies, eliminating the split fee structure later this year, etc.  But hotels will surely balk at getting themselves involved in Airbnb's insane refund policies.

When they release that they'll probably talk a big game about how eventually it will include flights and car rentals as well so people can book their entire trip on Airbnb.  But then they'll abandon it long before they get to that point.

Meh.

Quote from @Laura Winters:

Quote from @Ryan Moyer:

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Quote from @Patricia Andriolo-Bull:

There is no end in site for these platforms to play games. They just don’t want guests to see how much they charge. I’m on the higher end and guests end up paying Airbnb $2-3k which is outrageous. Now they want to disguise that fee and make it look like I over price. Hopefully more will come to my direct booking site now. 

 From the view of the consumer WHO CARES?   The customer is just concerned with their total cost, not how the pie is divided.  It’s not like the customer is going to say, well, since the host is only getting $200 of the $275 then I’ll go $75 over budget because it’s not their fault.  The point (from the users point of view) isn’t that the Airbnb fees aren’t disclosed separately; it’s that those fees increase the cost to a certain amount.   Since Airbnb fees increase the total charge, either of the following result - (1) host lowers amount charged so TOTAL amount still attracts customers (2) total amount is enough to decrease demand and hence increase vacancy time while consumers find cheaper alternatives either through less expensive platforms, direct with host, or at hotel, or (3) consumer stays home or goes somewhere else. 

Here's what I don't understand. How can someone be in the STR business for the long haul and NOT do everything possible to establish a business model where they're almost exclusively direct to customer of through low fee platforms? I understand that 10 years ago (when I owned some STRs) competition was less, Airbnb fees were lower, and Airbnb was all you needed to have an outsized profit - if you were in the right location. But now? It will only get worse as Airbnb growth slows down - they will look to "make it up" by "squeezing" hosts even if it's detrimental to themselves long term.

 Very well said. 

Just like we don't disclose that we pay 1k for insurance, 3k for utilities, and 3k for cleaners, Airbnb doesn't need to tell the guest how much they are charging. It is the business owner who makes the decision in the end.

The only thing I want to add is that Airbnb doesn't just provide a platform. They provide great customer service, multi-billion dollar-sized marketing, and incredible insurance on top of letting us chip in on their reputation. (Airbnb became a pronoun for traveling stays) From my experience, 15% is a very reasonable price for the insurance and background check alone. 

 do they provide great customer service? not to hosts, at least not in my experience and many that i have talked and listened to. And their insurance isnt really insurance and many have their claims denied. so to me, they provide a platform and market share of being known, but thats about it

In my opinion, Airbnb actually provides a really great service for both hosts and guests. A lot of the frustration comes from hosts not fully understanding how the insurance process works, which is why some claims get denied. But honestly, they’d face the same challenges with any other insurance company. It’s just that big claims like crime, floods, or fires don’t happen very often, so fewer people talk about them.

Most of the time, Airbnb doesn’t even send an adjuster to your home. Instead, they look at the photos and information provided by the host and usually resolve things within about two weeks. That’s pretty impressive, and to me, that’s the definition of good service.

On the guest side, Airbnb often gives out coupons for future bookings, even if the guest wasn’t completely right in their claim. What’s nice is that Airbnb absorbs the cost of those coupons themselves—they don’t pass it on to hosts. That’s rare in this kind of business. (For example, DoorDash usually makes restaurants cover the cost of their promotions.)

I think a lot of the bad reputation comes from people not really understanding how these kinds of businesses operate. Many hosts want the simplicity of a retail shopping experience, but also expect to make a big company money. If you want to make a big money, hosts need to act like a real business owner. 

 Calling it "insurance" is generous, given that they attempt to recoup the money from the guests at the expense of the host's reputation and future revenue.

 I am not sure what kind of experience you had but sorry to hear that. That is why you need to hire a professional property manager who understand the Airbnb policies and have a system to meet their requirement. I have 99% success rate with Airbnb resolution. (I self manage all my listings) I got 14k+ on resolution this year. Hopefully you changed your system after they denied your claim.

 What are you talking about?  I didn't say denied the claim, I said it's not really insurance, more like arbitration, because they are primarily trying to facilitate a repayment by the guest, at the expense of the host's reputation (retaliatory reviews). They didn't pay you $14k out of their own pockets like insurance would.