All Forum Posts by: Ryan Moyer

 What market and size home was this?

As to the original post I guess I will be the lone voice of some minor dissent here.  And you should note as I type this that the people above are much more experienced than me and you should probably trust what they say over me.

I know that checking airbnb/vrbo calendars is the method of choice around here, but I think most of the people here that do well with that are in less seasonal markets than Tahoe (which may give some indication of how the Tahoe area is as an investment) and have experience doing it in years that are not major outliers due to Covid and hence are more predictable.

I think checking calendars runs into issues when you talk about seasonal areas, and doubly so when you talk about a completely not normal, outlier year.

Seasonally, I'm sure looking through Tahoe calendars they look great right now with the holidays and ski season starting up.  That is prime time in Tahoe.  How you can use January data to predict what Tahoe occupancy will look like in May is beyond me though.  Likely most homes are pretty fully for Dec/Jan and probably pretty much completely empty calendars in May right now.  So what does that say about May?  Obviously it's seasonally less impressive than January, but those houses aren't going to stay empty for all 30 days, nor are they going to book up for 28+ days like they are in January.  So what will May numbers look like?  Somewhere between 0 and 28 days occupancy, which isn't very helpful.

This is doubly true in this year with Covid.  I believe there was some data that came out that said the average time from booking to trip date was like 3 months traditionally, but is 10 days this year.  So even what we can guess are likely somewhat high months like June-Sept are probably underbooked right now (and my own experience as a Tahoe traveler who was looking at summer dates at this time last year and am now re-planning that same canceled trip this year kind of confirms this).  So a house that has 4 nights booked in July right now will probably end up with more than that.  But as many as January?  Who knows.

Of course everywhere is seasonal to some extent, but somewhere like Tahoe is max seasonality and there's just nothing in markets like the Smokies or Destin that compares to the seasonal differences of winter vs. spring in Tahoe.

Then there is the Covid factor.  In some markets bookings are way down to a normal year.  In some markets bookings are way up to a normal year.  We know someone with a home in Southern Utah they never really come close to cash flowing on, except this year they're blowing it out of the park.  If anyone looked at their calendar this year and tried to apply those numbers to what they think they'll do in 2022 when things are back to normal they are likely going to be walking into a big mistake.

AirDNA has its issues as well.  Fundamentally ADR x nights booked is a reasonably reliable way to calculate gross, but owner usage of the property really puts a wrench in things.  They say they have an algorithm that can detect owner bookings and pull those out but I am skeptical of how well that could really work.

The advantage is that they offer data for the whole year so you can see seasonality instead of having to completely guess how things will look in summer based on winter bookings, and they have multiple years of data so you can see what things look like in a normal year.

In the end I think it's important to look at both AirDNA and calendars.  And you can even talk to local property management companies and see what they say, of course knowing that they are probably rounding up.  Sometimes realtors can pull someone's gross numbers that they know in the area too.

As to how good of a deal it is, based on the numbers you gave I would say just OK.  It's probably not the kind of numbers that are going to get most people around here excited, but if your primary goal is to get a vacation home in Tahoe for your own use ("vacation home for free", and all that) you can probably make it work.  Otherwise from an investment standpoint that same amount of money put to work in somewhere like the smokies could potentially pull in double that gross amount.

Personally I initially started looking for something like that in Southern Utah and once I really dug into the numbers I decided instead of laying out $50,000 with a $500,000 mortgage for a vacation home we used a few times a year and lose a little money or break even beyond that I'd rather just invest that same amount into a better market like the Smokies and make enough money to take several really nice vacations per year, staying at places way nicer than the place we were looking at buying, and still have money left over.  Obviously that is up to personal preference as I know for some people having their own place where they can keep stuff is more important than cash flow.

Another nice bonus to investing in areas that are popular here is you don't have to worry about any of this because people on this forum are typically happy to share numbers.

 If you call them they can offer you pricing on statewide or even nationwide plans, but they aren't cheap.  I believe the nation wide is $1000/month and statewide is $199 and up depending on the state.

I can only speak as a traveler with a pet here, but in almost every market we've traveled to with our dog the number of properties available and not already booked that allow pets are extremely limited, which would lead me to believe there is extreme demand for them.  Just anecdotal, of course.

Well if you buy it, at least you're not buying Robinhood's IPO.

What about putting it on a no interest for 12 months credit card and paying it off over a year with a portion of the profits you have coming in?

I would wager that 99% of AirBNB hosts don't have the capital or pull to buy a mega major IPO like this at IPO price so in that sense IPO price is already a discount.  Several of the last few IPOs this big opened to the general public at almost 100% premium to the IPO price and I would imagine this one will be the same.

Hotels and airlines are down because they were negatively impacted by the pandemic.  AirBnB delayed their IPO because they thought they were going to be impacted negatively by the pandemic, and in the short term (when the shut down first started) they were.

But now, unlike hotels and airlines, AirBNB has come roaring back and may be operating at even higher revenues now than they were when the pandemic started.

Covid has changed the way a lot of people travel...in AirBNB's favor.  Stay with only your family (not in the same building as 500 strangers), cook in your rental instead of eating in a restaurant with 100 strangers, etc.

Interesting.  I never knew that they even tried to parse out owner stays.  I always figured it was part of the expected margin of error.

Most of the markets I am subscribed in when you look at the top properties there are usually one or two that have just insane total revenue despite looking like nothing special as properties.  Like I'm talking 10x average revenue and 5x the revenue of the next closest property.  I always figured those were just properties that the owners used a lot.

I think it has less to do with traffic and more to do with whether people's travel habits have permanently changed or if they will revert back to normal once it is safe to.

Right now hotels are getting killed.  No one wants to go stay somewhere in the same building as 500 other people, in a room that's too small to hang out in, and have to go out for every meal.  Vacation rentals are the perfect way to travel in COVID times.

Obviously East Tenn was already doing gangbusters pre-Covid but the worrisome thing to me is that places that were pretty "meh" before are doing beyond gangbusters right now.  We know people in Southern Utah that typically do 40-50% occupancy in summer than did 98%ish this year (just a day open here and there between guests).  We regularly travel down to St George and have always booked last minute with plenty of inventory and this year if we try and do that we get "there are no properties available for your timeframe" messages from VRBO/AirBnB.  In particular we like renting homes with a private pool so we can have days where we can just stay in with the kids and swim and I think all of those have been booked up for the whole summer FOR THE ENTIRETY OF THE STATE OF UTAH for months now.  Like in June I could search for any house with a pool anywhere in the entire state for any weekend from June-October and there were 0 available in the whole state.

Granted I don't think anyone is going to lose their shirt buying a home in East Tenn expecting 95% occupancy and getting "only" 85% occupancy next year or the following.  That's a much bigger issue for people buying in markets that aren't traditionally great and expecting 95% occupancy and getting 45% next year.  East Tenn does gangbusters during the worst of times.  But I do wonder if prices will adjust some if things return to normal and the numbers change some for current owners.  Especially those giving a 30% cut to property managers who I think previously made up the bulk of the selling inventory since they probably were losing money on their place, but even they are probably sitting back and watching profit roll in right now (with no work on their end) during the Covid boom.

For a bigger pockets investor buying a place to run themselves I bet they'd still cash flow nicely at current prices even if things revert back to pre-Covid levels of booking.  It's the folks paying 30% off the top that might create new inventory in that case.

Then again I say all of this as the shmuck who convinced my wife that we should put a pause on our Smoky Mountain cabin search for a month or two when everything was shutting down in March as I thought the shutdown might end up creating a nice discount on places.  And as I told her at the time, "worst case scenario is prices hold where they are, it's not like the prices are going to go UP with a global pandemic".  Lol, whoops.