Quote from @Travis Timmons:
AirDNA published their annual list, and the markets topping it are:
1. Peoria, IL
2. Fairbanks, AK
3 Akron, OH
4. Columbus, GA
You can go look up the remaining 21 markets, but you get the idea. The industry is mature and margins have properly compressed. If you want real yield or cashflow, you have to buy in a non-vacation market that is not top of mind for an STR. It's the boring places that probably won't appreciate above the rate of inflation that will provide real month to month income.
I've said this before, but I would contend that we are in a "What can you do that is really hard?" market. You have to make a deal rather than buy a deal, be more appreciation focused, and be more patient. STR feels more like a strategy to break even or eek out a meager return on a great asset than a strategy to cashflow. Or you have to take a value add approach to make it worth the hassle. It kind of feels like the rest of the market - you kind of have to pick a lane between cash flow and appreciation.
Does that make sense?
Yeah I just don't see the point of buying STR at this point, the markets are so saturated. Housing prices are high, mortgage rates are high, and competition is fierce so revenue is way down
It’s one thing if you bought a while back like many of us did, so your cost basis is much lower. But for people thinking about diving in now, what’s the point? You’ll get a better return over the long-term by putting your money in the stock market. And you’ll be much more relaxed too bc you won’t have to deal with 1 million house problems and annoying guests 😂😂😂
I think some people are diving into STR because they think it makes them look cool, or they want a cool side project. But really you're just creating a second job for yourself and one that doesn't pay very well if it even is cash flow positive at all 😆
I used to buy houses for STR but now that I've got several STRs up and running that I bought many years ago, I stopped buying STR once mortgage rates went up and housing prices went up. Over the last few years, I take all of my STR profits and dump them into the stock market and I couldn't be happier. Stock market returns have been good and I don't have the headaches of dealing with any additional houses or guests. A true win-win
I realize this is biggerpockets so we’re all supposed to act like real estate is the most amazing investment class on the planet. But it’s OK to be realistic and aware that there are plenty of other asset classes and we don’t need to all obsess over buying real estate, especially in a market where housing prices and mortgage rates are both so high. Real estate is not the end all be all panacea for building wealth, there are a lot of other options many of which will give you way fewer headaches than real estate will!
I know this is an unpopular opinion around here that you won’t see on the front page of the daily BiggerPockets newsletter, but it’s the truth
