Welcome to short-term rental riches will discuss investing in real estate but with a specific focus on short-term rentals quick actionable items to acquire manage and scale in your portfolio I’m your host Tim Hubbard.

Welcome back to the short-term rental richest podcast so I just got back from bullies this is the 17 year that I’ve gone to this conference and I learned so much every time diverse group of investors a lot of them are super super smart when it comes to economics and especially macro economics every time I leave this conference every year I’ve got a good dose of reality and what’s really going on behind a lot of the charts in a lot of the news a lot of the things that we see in front of us all the time and I gotta say unfortunately there was a large consensus that things are not looking that good consumer credit card debt is up. All are starting to default on their auto loans consumer confidence is at a historic low interest rates are shooting up which means money cost more and that’s affecting asset prices so there’s a lot of doom and gloom but you know what our economy’s been propped up by a lot of printed money for years and years and we got the huge and surge during coated and that didn’t help us out a lot in the long run so the general consensus is we’re headed into some stormy weather. But on the other side of every storm. Skies are blue and the sun is shining so I want to give you kind of my strengths weaknesses opportunities and threats that I see with short term rentals I’m a short term rental investor of invest a lot of real estate I’m not biased just a short term rentals but they are unique class and I want to break down just on the strengths and weaknesses that I saw I was called up to talking from the group and kind of caught me off guard I wasn’t really ready and after I’d already spoke I was sitting down there in the audience and I realized I left out a lot of things so I made a little more comprehensive list and I want to share with you now soul shall we start with the risks the threats of the opportunities let’s start with the rest the threats let’s get the hard part out of the way so some of these are obvious things and some of these things you guys have heard me talk about before on this channel so regulation change this is an obvious one as recommended before it’s better to be in a place where you can secure a permit and you already know but this is a risk to short term rentals this is something that can change I’ve got a lot of bullet points I’m just gonna jump through them this can be like rapid fire Respers opportunities and there are a lot of opportunities even with the recession coming so stay tuned dalt take off quite yet so regulations can change you can have a bad neighbor moved in my brother just sold his house because they had a neighbor movin that was a riding their motorcycle up and down the the backyard day in and day out and I just don’t want to deal with that I don’t think that was the only reason they sold their property but that affected the way that they were living there and so they sold and then moved to a different spot but this can happen with short terminals to if you have a neighbor that doesn’t like you have been gas sending you don’t have a permit well then that can be a risk I talk a lot about having back up plans with my short. Terminals so as most you know if you listen to this I acquire properties that are operated as long term rentals first and then I convert them to short term rentals so that’s an excellent backup plan for me if something happens in the short term rental space I’m gonna go back and run it as a long term so if you have a property out there or you’re considering buying a short term rental doesn’t have other uses like going to a long term rental it’s not very likely they can be rented as a long term rental well then that is gonna be a little riskier along the same lines is it easy to sell your property some types of properties are easier to sell than others a entry level single family home for example the suburbs $350000 is normally going to be a lot easier to sell than a $4000000 mansion overlooking the Caesars just less people out in the world they can afford that type of property and so it’s gonna have a smaller buyer pool so if you invest in properties have smaller buyer pools and you want to get out of one for some reason then it could be a little more risky if you have less potential to sell the property a big one and maybe the biggest one that I see intimidating people from getting in the short term rental space to begin with is property damage or risk with our property so it is true people can have a party at your property they can damage things they can steal things they can accidentally set your house on fire this is true who there are lots of things are gonna happen with our properties they can slip and fall in your shower and try to see you so there’s a lot of risks in regards the properties but don’t go anywhere we’re gonna talk about the flip side of this remember there’s a flip side to every challenge there is opportunities so let’s get through a few more here oversupply. What happens if you get a short term rental and then every single person on your street and in your neighborhood also rents and their property is a short term rental well I could lower your price right assuming that the demand was not exceeding the supply so this is always a demand supply equation we want to be in a place that has more demand coming and then it has supplied that’ll ensure that we have good rates and good occupancy so I talk about a lot of this channel being in the right city to begin with being in the right place at the right neighborhood to make sure we have demanded that we need for a successful investment so that is a risk though you could have oversupply. Discretionary income disappears so this happens in recessions rain so for anyone already or worse starting down that path or will soon be in a recession people are gonna have less money to spend which means that they’re gonna go on less vacations so this is going to affect at different times of short term rentals in different ways so if you have a vacation rental your vacation rental it’s likely you could see lower occupancy now not all vacation rentals are created equally some might be rented out for years but if you’re just getting started you might have a little harder time if some this discretionary income goes away and people are traveling less travel bans what about travel bans white coated war war I can’t believe I even have to mention that now but these are realities right there are times when people just can’t travel because of government restrictions regulations whatever it is so hopefully we don’t have too many of these again in the future but that is a risk for us in the short term rental world if we’re counting on for relying on people traveling remember that financing terms this is for those of you that have loans on your properties what if your loan is not locked in in the interest rates go up like they’re going up right now that can really affect your returns and that can be risky so it’s a nice to have a long term locked in rate you know interest rates are going up right now doesn’t mean that they’re going to go up forever we’re trying to control inflation and the only way we can do that is by raising interest rates and so hopefully we get to the point soon where inflation is a little more under control and we can lower interest rates back down but we don’t know when that will be so you don’t have fixed financing this could be a risk but this isn’t just a risk for shorts from miles this is a rest for real estate in general or businesses in general or anyone that has. As a loan and needs the lower less expensive financing terms to be successful or to have a good investment so that is another risk increased costs supply shortages increases in wages all these things can affect our bottom line can affect our return and with short term rentals we have to buy quite a few things we don’t with long term rentals so we don’t have to buy furniture for long term rentals we don’t have to pay housekeepers and all these things of these costs go up but we can’t raise our rates then that is a little riskier another risk and again there’s a lot of different wristbands on the type of property you have based on the type of short term rental you have there’s so many different types of short term rentals from the Kurds and the desert and Joshua tree to the castle in Ireland overlooking the ocean there are risk parameters based on the type of property you have a few guys unless in the show for a while you know that I like to invest in cities that have good population growth good employment diversity their landlord friendly all these things that make for a good market for long term rentals too but depending on type of property you could have much more risk than someone else especially if we are heading into a recession okay so that was quite a few risks Anna that was by no means comprehensive there’s a lot more that I’m sure I left out but just to give you an overview now for the good part Kulicke intermission I’m super excited to announce the dates for next live event live and in person in Memphis Tennessee August 19 to 20 first this is our fourth live event and they just keep getting better and better and there’s not a ton a room so I hope you can make it will go through my whole process from start to finish what I look for properties how I find them how I set them up how I manage them how I manage them remotely with my teams and how. We can scale the whole operations to retake it from start to finish perhaps one of the most exciting parts we’re gonna get on tour bus and we’re going to visit some of my actual properties in action in the operation really hope you can join us you can check out tickets at rest methods.com and again it’s gonna be a live in person I’ll be flying back from Colombia August 19 through the 20 first I hope to see you there hopefully have a Lafayette because there are a lot of opportunities and even with the recession I’m still bullish on short term rentals so number one first opportunity we can make more money with short term rentals we can I have a lot of people have but now with all short term rentals right so that all comes down to the numbers but there are lots of opportunities to make much more cash flow the short terminal then you can with a long term rental another nice thing in regards to finances our income is paid up front so we don’t have risk of someone not paying their monthly rent right if we have a really successful vacation rental I can book up years in advance so I mean you can have all your income paid really far in advance that this really happened with long term rentals so in the short term rental world we have more visibility than we’ve ever had so. Short term rentals the demand has grown exponentially and it’s still growing people are deciding to stay in short term rentals over hotels to have more visibility than we ever have well some more people working remotely than we have ever had and now there are a lot of companies requiring people to go back to the offices to work but it’s not going to go back to pre pandemic levels so we will have more people working remotely which means they can stay in our properties longer and they all are in the data shows is that so that is good news for us that our messenger to monals does a long term stays sometimes how her longer than others actually to the point now where people are living in short term rentals so there is a big merger happening between long term rentals and short term rentals there people that are staying a few months at a time here a few months at a time there and that wasn’t really a common thing. Years and years ago it’s much more common down that’s good for us in the short term rental space booster occupancies and we get higher rates than we can potentially with a long term lease so life in business and travel there all kind of merging those are great signs for short term rentals. I got homes in villages for example they are a division of Marriott and they started right before the pandemic of ThinkPad 2000 rentals. They have 60000 now that shows you one of the biggest hotel companies in the world is trying to stay ahead of this demand they’re adding a lot that’s 30 times growth 30 X. growth in just a few years so the biggest players in the world no this and that’s not going away. I am being guests have now booked over 1000000000 stays 1000000000 with a B. that is a lot and remember that’s just Airbnb there’s a lot of other common O. T. A.’s like VR BO and homeaway Expedia and booking.com and tripadvisor Google vacations there’s a lot so people are staying in a it’s great it’s great news I enjoy staying them in them myself property protection we have way better protection for properties than we’ve ever had with short term rentals not only because of the O. T. A.’s like Airbnb has their air cover if you miss that apps to go back and check it out provides way more protection for our properties directly through Airbnb but we also have insurance companies popping up to specifically insure short term rentals against our property damage and liability against our gas so we have much more coverage then of course we have all this new technology like smart cameras and smart locks and all these things that can help us protect our property a little bit better compared to long term rentals which short terminals we don’t really have that giant turnover cost I have plenty of long term rentals where the tenant moved out and I had to paint the whole unit or have the whole unit painted maybe had to change the flooring do all these things and so it’s like one big costs and I still have long terminal so this still happens occasionally unfortunately but that doesn’t really happen short terminals right if we’re in there we’re checking them out more more often housekeepers are in there we don’t have like one giant turn over expense like we might have with a long term rental lending options now I know this might not be the best time to talk about Linda because interest rates are going up but the reality is there are more and more lenders lending specifically for short term rentals than there have ever been and they will base it off of your. Short term rental income so not all lenders are created equally some of much better terms than others but just know that we have way more options now than we ever had before speaking of options we have tons of management options now so we don’t have to manage our short terminals ourselves and they’re way more options than there have ever been there’s lots of tools management platforms I talk a lot about on the show I really like using software we have more time for tools and ever now we have the ability to manage a lot of our short terminals virtually which is super scalable right that’s what I do so my whole team is in the Philippines and they’re excellent they’re amazing and I know that I can add properties essentially anywhere in the world we can plug it into my system and they can help manage them so you can have a virtual management team to really really scale but on the ground we also have more options to write we have more management companies popping up for short term rentals we have more people supporting the industry so management has gotten much much easier as well another benefit to short term rentals is for a lot of people they have a property that can already work as a short term rental and might be a guest house in the back of their primary residence might be a granny suite above the house a lot of people have a property that might work it might be a traditional rental that has good at short terminal qualities so if we have assets that are being used to most efficiently like a guest house that could be a short term rental by adding that that really helps boost the income especially for the middle class it’s kind of getting squeezed right now that helps boost their income and use an asset that they already have so I think that’s another good one as well another note on scaling there are lots of ways to scale with short term rentals now you guys know that I managed over 2. Many 0 gas with my team and my properties but you can do it much much bigger than that you can do large developments designed for short term rentals knowing that people are not not just visiting George miles but they’re living in them so hotels are doing this now they’re building their properties differently some of them are having co working spaces in there they’re being built as short term rentals so we got to take these cues from some of these hotel companies in the hotel industry that’s been around for a really long time they know that a lot of people are preferring short term rentals another benefit to short term rentals we have the option to do them anywhere in the world right of course we can’t invest easily anywhere in the world depends on a residency in our citizenship but I have properties in 2 other countries outside of my home country and they operate very well short term rentals and that’s kind of cool right it’s more fun I guess that’s what I’m getting at long term rentals don’t get me wrong they are a sure path to wealth if we do it right and I still like long terminals but the end of the day a lot of times are more basic tenet goes in there for a year we don’t have the design element we don’t get to be as involved on the creative side is maybe we would want to before I start with short term rentals I didn’t realize that I actually really like interior design so there are a whole bunch of benefits and leave you with one more I know the steps so it’s been a little bit longer but this is a super duper important one and its tax benefits so there are a lot of tax benefits available to you potentially if you’re operating a short term rental tax benefits that are not available operating traditional long term rentals so it’s call materially participating versus being a real estate professional which is what the long term rental world would potentially designate someone. As so both of these designations allow you to use your real estate losses to offset other income but it’s much harder to qualify as a real estate professional because that’s your primary job versus operating short term rental so there’s some huge tax benefits there and if you enjoyed traveling like I do and you are a professional investor in short term rentals check with your CPA but very likely you can travel around the world and you can write off your expense stain and a lot of these accommodations because it is legitimately research if you have it structured that way and if you are in fact research and sell tons and tons of opportunities I know there’s a lot of craziness going on the economy right now but there’s always 2 sides to everything right there are some scary sets of data out there and depending on the type of short term rental you have that might be riskier than others but on the other side there’s a ton of opportunity with short term rentals I’m still excited about them I’m still adding them although I am being careful and I would tell you that I’m not rushing into anything at the moment I’m not a huge rush to acquire properties right now but if the right one comes along I’m still going to acquire it and if things continue as are going I do think there’s gonna be some really good opportunities to pick up a lot of properties maybe a good discount so hopefully that didn’t freak yeah hopefully it excited you a little bit with all the opportunities and again this wasn’t a comprehensive list so I know I probably left out a lot of things but I just want to give you a quick update for me jotting my notes down at this recent conference I was out I hope you guys are doing really well out there and I hope you found value in this episode until next time I hope you have a wonderful day shares. I want to get on the fast track to financial freedom for short term rentals what all searching the properties you acquire you want to make sure that you acquired the right properties I want to give you my E. book that will show you how to do just that there is no charge to my gift to you for being one of our subscribers just go to restmethods.com that’s R E S T methods.com.

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