Short-Term Rentals have been a top topic of conversation in the real estate investment world for quite some time. Are they a good investment? Is the market becoming too saturated? How to you handle increasing regulations? In a recent REL Freedom episode, Tyler Coon got to share his insights into the world of short-term rentals. As an agent in North Carolina running Savvy STR Agents, this is his niche. He offers valuable advice on how to succeed in this thriving market. If you're considering investing in short-term rentals or simply interested in learning more about this lucrative real estate niche, here are some key takeaways and things to consider:
1. Expertise is Key: Tyler emphasizes the importance of working with a market expert to help you identify deals that will give you the best chance for success. Each market is different, and each opportunity within a given market is different. Specializing in short-term rentals, like any other real estate niche, requires in-depth knowledge and a keen understanding of market dynamics, to help you make a solid investment choice. Instead of seeking to cut agents out of deals, investors are recognizing the value that experienced agents can bring to the table.
2. Higher Cashflow Opportunities Over Long Term Rentals: With a market of higher interest rates and higher prices, investors should look to adapt with it. Long-term rentals are tougher and tougher to cashflow because of this. Short-term rentals, on the other hand, offer higher cash flow opportunities when you pick the right property, position it well to attract guests and provide great service to them.
3. The Importance of Amenities: To stand out in the short-term rental market, investors should focus on providing unique and attractive amenities. Providing creative amenities like a movie theater and fire pit can draw people into your property when it stands out from other properties. Other ideas for attractive amenities can include game rooms, pickle ball courts, hot tubs, pools, and a great patio and other outdoor spaces.
4. Property Management: Contrary to common belief, short-term rental properties can be effectively self-managed. Tyler emphasizes the availability of automation software and messaging tools that make self-management easier, reducing the need for costly property management companies. It's important to do a self-assessment if you have the time and expertise to attempt to manage these properties yourself. If not, find a great property manager to help you!
5. Competitive Markets: Understanding the competition in a specific market is crucial. Investors should analyze comparable properties and identify opportunities to stand out, whether it's through exclusive amenities or unique property features. Look for pockets of opportunity if you feel you can stand out from the other properties in the area, or if you should look to other markets that provide less competition.
6. Understanding Regulations: Before purchasing, make sure you understand the short-term rental regulations in your market. Some markets may require a special short-term rental license to operate your property. Others may have guidelines on the number of nights guests can stay there, having the property owner nearby, or other unique requirements. Other communities may ban them all together. It's up to you to find out the regulations to stay in compliance. Keep in mind, just because the regulations may work today doesn't guarantee it will still work in the future, so think through possible exit strategies and alternatives should regulations change.
7. Leveraging Data and Technology: Data is a powerful tool in the short-term rental space. With access to market insights and performance data, investors can make informed decisions and ensure the success of their investments, and continue to use data to help them make great pricing decisions and helping them to maximize their revenue down the line.
8. Be Flexible And Adapt: Understanding the direction of the market and recognizing opportunities for innovation are essential for long-term success in short-term rentals. Adapting to market shifts, adding value through unique amenities, and building trust with investors are key elements of your future strategy.
The world of short-term rentals presents exciting opportunities for real estate investors. By specializing, staying informed, and focusing on value, investors can thrive in this dynamic and ever-evolving market.