Quote from @Ryan Ridge:
I might be biased, but as close to a year-round attraction as possible. Try to avoid markets with off-seasons or at least ones with shorter seasons. There's some seasonality here in Orlando with back-to-school, but it quickly picks up again near the holidays.
I totally get the logic Ryan, from my side if you're getting a similar return w/ a market that is slow for part of the year then you have less moving parts and less work. However, any natural problem that can disrupt that can turn a winner in to a loser quickly. Whereas, your Orlando will just come out ahead and be steady. Currently we own 3 STR in the Fort Lauderdale area ourselves.
When this becomes the case, we want to build out Risk Models with our growth rates (i.e. you'll see someone who is only putting down 10% of their net worth with a 20% ROI wanting to actually head to the less saturated markets. The inverse becomes true as someone's net worth drops as your Risk of Ruin (RoR) flies up exponentially when you're dropping a lot of your bankroll on one wager). Your RoR is your chance at bankruptcy or any figure you want to put at the bottom (You can put in a 0% chance of going below $100k Net Worth etc).
When I played high stakes poker, there was a well known story of Poker "Bob", aka Haralabos Voulgaris who was finally hired to the be the analytics director for the Dallas Mavericks. He ended up as one of the best sports bettors of all time, his return on each game bet was >10% for a solid few year window. Nowadays almost zero people can gain a significant advantage at sports betting (his edge went to under 1% after building out a computer for >$3MM), and he was also unable to place his own bets due to his reputation as a crusher. Anyhow, when he had around $400,000 to his name he bet almost his entire net worth on the Los Angeles Lakers to win the World Championship. They were trailing big in game 7 to the Trail Blazers and ended up coming back to win. He didn't bet that large portion of his bankroll because of Risk of Ruin criteria, but because of Kelly Criterion. He knew that the edges on sports betting would go off a cliff shortly and that he could make $5MM+ a year if he doubled his bankroll in that very moment. If he didn't, his growth would be extremely capped during those years. After Mark Cuban hired him finally, Luka Doncic hated him, so now he is out and owns part of a European soccer team where he does the analytics.
TLDR: Your gambles should go along with the math of your life and your family. Someone single and young with a job cushion should be gambling much more than most do in the real estate market and taking chances at up and coming markets. This is because their upside of growing now can really alleviate later life stress and they can recover easier from losses. While the person with 3 kids and a small skill set work wise to be able to be promoted or start a new company should be making a lot more passive bets.
Fwiw, currently I have not taken enough gambles in real estate myself, and plan to scale up that level shortly! GL all!
