Quote from @Bonnie Low:
We all wish we had a crystal ball to know where the economy is headed, inflation specifically, mortgage rates, home prices, vacation spending, etc. etc. Absent that, I think we have to just rely on the fundamentals as investors: is our underwriting solid? Are our margins healthy? Do we have an exit strategy or strategies? Do we have cash reserves to weather a downturn for any unforeseen reason (pandemic, anyone??) Regardless of where it's at today, history tells us the market will be somewhere else entirely 5 years from now. My guess is that there are a lot of owners in over their heads in the STR space who didn't have solid fundamentals when they underwrote their deals. This is based on the high volume of conversations I'm seeing in STR groups from people freaking out that their summer calendars aren't yet booked, dropping their nightly rates and minimum stays, lamenting property tax increases (that they didn't factor in when purchasing), increased insurance costs and wanting to nickel and dime guests on every minor infraction. This combination sure sounds like panic to me so I wouldn't be surprised to see newly acquired STRs coming up for sale in 2022 and early 2023. Beyond that, it's just too hard to guess what will happen.
I dont know what will be in 5 years from now. But I can say that I own 6 STRs in the smokies. If you're freaking out about the summer not being booked in April and lowering your rates, I dont think this game is for you. If your summer dates are booked now you are too cheap.
And if you nickel and dime your guest on every infraction you definitely wont be in this game too long. That is not the way a serious STR investor plays
