2024 Market Predictions… where should you put your money?

so here we are 2024 oh my gosh I can't believe it so much happens in a year doesn't it I would encourage you if you're out there and you're an entrepreneur or you have your goals set just to take a look back at 2023 and write down maybe your top 20 accomplishments the top 20 things that you got done last year because a lot of times we're looking forward to the things we haven't done but we're making a lot of progress along the way I get

bogged down personally by looking into the future and so this is a good practice that I do to go back and revisit the year and see all the things that I'm grateful for and all the things that we achieved I promise you you've got a lot of things hiding in there that you achieved last year and so it's a good practice and you will enjoy it and you will just feel good afterwards so looking forward into 2024 I definitely do not have a crystal ball before

we get into that though I highly encourage you to set some goals make sure you write them down remember less than like 5% of the population actually writes down their goals uh and if it's just a thought then it's really just a dream right so if you haven't acquired your short-term rental yet well 20124 could be the year for you if you plan accordingly and you get that down in your goals I'm getting ready to head out on a cruise from California to Florida actually so

it goes all the way down Central America it goes through Panama then up the other side uh ironically it goes back to Columbia where I spend a lot of my time uh but it's going to be a good trip apparently they have good internet on the cruise I know I've been on cruises in the past have good internet now a lot of them I believe are using starlink and so this particular Cruise Line said that it's got pretty good internet cuz I do plan on working

during the cruise part of what I'm going to be doing is planning for for 2024 my goal is really revisiting everything so make sure uh that if you haven't set aside any time for that just take at least a little bit of time because again a goal without a plan is just a dream I want to do just a bit of recap on how I see the macroeconomic environment in regards to real estate before we jump into short-term rental specifics so I did talk about this

a little bit on episode 213 uh so if you missed that one go back and check that out but I'm just going to kind of recap it here real quick I like to break the real estate market into two pieces and so do most real estate professionals out there we have a commercial real estate market and we have the residential real estate market the residential real estate market does not have a lot of Supply because interest rates are high uh and people are just basically not

selling their homes because they know if they're going to buy another one that it's going to cost them more because interest rates are higher and so the other side of that people are having a hard time purchasing homes so properties are sitting on the market longer it is now a buyer Market it has been for a while and I expect that to continue into 2024 even though we're very likely going to see a few interest rate declines I'm going to get more into the actual interest

rates here in just a second but we have essentially restricted Supply in the residential real estate market which means those prices aren't changing too much although if you've honed in on a few markets that you've been looking at I guarantee those properties have been staying on the market longer you have more negotiation power and a lot of markets I've been looking at prices have been dropping so I think that will probably continue into 2024 if we look at the commercial side remember these are apartment buildings

for example that are five units or more this is office space industrial all of this they use a totally different type of loan structure typically which is shorter a lot of times it's a higher interest rate uh and because it's a shorter loan it means that they have to refinance more often and if we just look at Office Buildings for example there's a lot of outstanding debt right now you know a mli a trillion and a half excuse me of outstanding commercial debt right now that's

going to be coming up for refinances in the next two is years uh a lot of those people are going to be in trouble if their properties are not staying rented and their properties are not cash flowing and so I think there's going to be a lot more opportunity in this segment we're already it in the multif family space that's where I have my I 5unit plus apartment buildings this could also be boutique hotels things like this there's a lot of opportunity coming up in this

space so I'm excited for that uh my heart also goes out to those of you that maybe got into a deal and had expectations or maybe got a deal with someone else that put the whole thing together and maybe it's not working out that well but this is just the reality interest rates change our buying patterns uh and they're affecting the commercial Market a lot more than the residential market right now quick note on construction we're seeing that drying up less people are pulling permits to

do construction because yes for them the costs have gone up to the cost for Lending for construction loans have gone up not to mention the cost of materials mainly because of inflation so as construction dries up in the next two to three years that's going to put more Demand on rents so I do think that rents are at least going to hold steady remember there's the other side of that too though where um our renters need jobs right and they need stable incomes and if people

are losing their jobs or they're getting squeezed because of inflation maybe they're on a fixed salary then that means they're very likely going to move from more expensive properties into maybe B and cclass properties which would put even more Demand on those B and cclass type properties and this is the same for short-term rental so if we are operating in a space it's sort of like mid luxury but not Ultra luxury a lot of those people or a lot of us out there are very likely

going to be opting for a little more affordable markets a little more affordable short-term rental so I see that as a trend continuing into 2024 as inflation is still higher than what the FED wants and where people's real wages are not staying up with inflation especially over the last couple years okay and that brings us to inflation and interest rates so interest rates are how the federal government can help control inflation right if they raise the cost of money less money will get borrowed which means

there's less money in the conomy uh and that helps control inflation so they've been raising in fact they've raised 11 times since March of 22 the fastest raise ever in history and they're still not quite at their target of 2% so they've definitely gotten a lot closer but because they still have not reached their target I don't believe in 2024 we're going to see a ton of rate decreases we might they can certainly ease off but until they actually reach their inflation Target uh I don't

see us going back to lower interest rates uh like like we had for several years there in fact I don't really see us going back to those 2 3% interest rates that were available to the market for purchasing properties maybe in my lifetime I think we really want it out there and again these aren't just my own thoughts these aren't like my own predictions uh I am not an economist but I certainly follow quite a few especially in the macroeconomics space as it is in regards

to real estate okay so even if rates go down a little bit in 2024 which I think they might um it doesn't mean that it's going to be easy for us to get loans right A lot of these banks are in a tough spot because they have all these commercial loans coming into the picture that are going to be really hard on their balance sheet if the owners of those properties can't pay for the properties anymore right we don't want a scenario like we had in

2008 2009 but the reality is that might start happening and so banks have to tighten up across the board a lot of banks lend on Commercial properties and residentials so remember even if rates come down doesn't mean it's going to be really easy for us to actually get loans and if it's not easy for us to get loans then less people will continue to buy right so I think properties will continue to stay on the market for a longer period of time even if the rates

come down in the next year quite a bit so remember as Real Estate Investors we also get the benefit of inflation and everything that's been happening over the last few years at crazy inflation levels if we own assets right so if you don't own a property yet I really encourage you to get in there start doing some research select a few markets that you are interested in and do some research ideally three zip codes where you might want to find your property and you can start

benefiting from inflation as well remember if we're borrowing for a fixed period of time and inflation is raising the price on everything but our mortgage payments staying the same then we're benefiting from that so inflation helps us as Real Estate Investors but then the other side of inflation it's bad for the majority of people uh is the sad truth everyone on a fixed income gets squeezed with inflation so if inflation went up 7% one year and your salary or someone's salary on a fixed income only

went up 5% then in real terms they're actually making 2% less that following year or in other words they have 2% less purchasing power so that is the sad Truth for a lot of the US really for a lot of the world a lot of people on fixed incomes including Baby Boomers are those uh of you out there that are on retirement that is difficult because your retirement payments stay the same but inflations taking away that purchasing power so ultimately this means that affordable places are

going to become more attractive to the majority of people it also means that less people are going to be able to afford to buy properties so I think we'll continue to see uh increases in rental demand doesn't necessarily mean that the rent prices are going to go much much higher uh it depends on the category of um rent that we're looking for so again like those B and C type class properties that aren't Ultra Luxury they're probably going to see more demand as people are looking

for affordability whereas the Ultra Luxury and the more expensive rents are probably going to come down a little bit more every Market is of course different and this always depends on supply and demand if there's a whole bunch of new construction being finished going into a certain city that could drastically affect rent prices as well but in general people are going to be seeking affordability uh and they're going to be seeking more affordable rents and and so my prediction for 2024 is to continue investing in

affordable markets remember if we can find a market that's great for short-term runnels meaning it has a lot of reasons for people to visit that market could be vacation work uh universities hospitals whatever it happens to be if it has that component but it's also affordable Market that means your property is going to be usually less expensive relative to the less rest of the US but it's also going to rece re the benefit of more demand coming into that market that is a good scenario for

any real estate investment so let's talk a little more specifically about short-term rentals and where you might be in what you might call a safe haven so uh as the economy changes each and every year each and every month some parts of the economy don't really get affected as much and one of those segments you could say is the Ultra Luxury right uh the people that have a lot of money they're going to continue staying and really nice accommodations so if you happen to have a

super luxurious short-term rental it's very likely that you can continue to do very well even if a lot of the market is seeking more affordable places remember two shortterm rentals can operate completely uh differently one can way outperform the other even if all the amenities are pretty much the same we have the hospitality component right we have to make sure our communication is really good and everything in between having a good property and good communication that goes into our management and that can really boost your

returns another Safe Haven might be if your short terminal has a permit in a place that has significantly increased regulations or created a limited supply of permits so congrats to you if you're in one of those situations I think demand for short terminals is going to continue to increase as people still Discover It Believe It or Not there's a lot of people out there that still stay in traditional hotels that haven't quite discovered short-term rentals so if you're in a market and you have a permit

in an area where they're no longer issuing permits that could be a jackpot if people continue to seek more affordable places and and they have less and less spending power then you could still do really well if you're in one of those markets even with a lot of Supply if you have a long history of reviews and you have a lot of reviews so we know that the online travel agencies like air MB and vbo they prioritize these listings right you get the benefit of being

on their listing sites for longer period of time and having more history you get more visibility so let's talk Tech and a few predictions just around that in terms of the shortal industry so remember we're still in the beginning stages of this industry hotels accommodations have been around for centuries Millennia but short-term rentals are still sort of in their infancy at least in my eyes and so the technology is changing super super quickly a really big thing that's happening now is AI so we've talked about

that before and my team and I use a lot of AI we actually have a whole prompt sheet the actual prompts that we use for chat GPT to help us with things like discovering what our guests are looking for and how to write our listing descriptions they will write listing descriptions for you photo captions all that fun stuff you can get a copy of that for free uh it's a living breathing document just go to rest methods.com slai uh and we'll send you a copy for

free so AI is making its way into the short-term rental industry in a really big way uh Airbnb in 2024 is going to be implementing a lot of AI I don't know the actual specifics but I know that they're going to implement it a lot on their support end uh because they have tons and tons of different policies and the reality is is that a bot can read through those policies a lot faster than a human can so AI is coming whether we like it or

not it's entering the industry I think personally that it's going to be really really helpful for us it is again a tool so it's something we need to learn how to use I think Google vacation rentals is going to continue to get more and more market share keep in mind we're talking about Google this is the largest search engine in the world and they've entered the short-term rental industry space right right now they allow for us to to list our properties on Google vacation so someone

can actually booked directly uh which means we don't have to pay any commission fees like we do on Airbnb or booking.com so I do think that they'll probably charge a commission fee at some point in the future but in the meantime I think that they're going to make a lot more Headway in the short-term metal industry in terms of market share that's a easy segue into my next point and that is just that there's going to continue to be more and more visibility I touched on

that just a second ago but don't let all the Doom zoom and Gloom out there let you think that there is really an Airbnb bust cuz there isn't people enjoy staying in short terminals they have much more use cases than a traditional hotel and so visibility will continue to increase in regards to hotels though they obviously see this right and so in 2024 I think that we're going to continue to have more hotels building their hotel rooms more like short-term rentals more uh set up for

long longer term stays for example maybe they'll have more kitchen Nets in there we're also going to see more properties using policies a little more similar to short-term rentals for example self checkin this is available in a lot of hotels so the two industries are sort of merging um but don't let that scare you they're changing because they see the potential with short-term rentals and I hope that you do as well along with more visibility and more hotels is more money more money will continue to

enter the industry in 2024 especially in the tech Bas so a lot of venture capital coming in we know that there's basically a new tool for a short-term rental every single day from smoke monitors to property management software to pricing tools to digital guide books all of these things there's so much technology out there I love technology uh but we're still sort of in the infancy phase I think what'll happen is that some of these larger players are going to start acquiring more of the smaller

tech companies so property management software companies like streamline or guesty or hostway for example they're very likely going to be acquiring some of their competition maybe incorporating some of the features and things that they don't already have all these software programs across the board are going to continue to get better and better that's the good news for us it's going to make it easier and easier for us to operate our short-term rentals and along those lines my last idea or thought for 2024 is that more

and more people are going to be using virtual management as a management approach instead of traditional Property Management if the average person out there has a little less money because inflation's been eroding a lot of their savings and their salaries or their purchasing power then we might need to look for ways to save on our expenses right remember if we're saving on our expenses that's the same thing as making more money it goes right back into our pocket and traditionally in the short-term rental industry companies

charge between 20 to 40% for vacation rental property management you see this a lot more in markets like dtin or the Smoky Mountains where vacation rentals have been a thing for a long time there's some really high Property Management rates there but as you know if you've been following the podcast for a while we have so many tools available and you can 100% operate your property virtually like a professional as a professional remotely just like I do with all of my portfolio and like our team

does with all of our partners portfolios now too so I think as some people are getting squeezed maybe seeing a little bit more demand as people are chasing more affordability a lot of people out there are going to look to Virtual management as an approach to help save a little more on their expenses but still maintain the same quality Professional Management so I'm really excited for 2024 I've been studying it on markets I'm planning on acquiring in 2024 I actually have not acquired anything in over

a year and a half so I took a little break there uh although I have been working on building uh development in Colombia it's going slowly but it's still moving along so I'm looking forward to acquiring more properties and I think there's a ton of opportunity this is a really awesome space I actually left out one thing there and those are medium term stay so I think there's a ton of opportunity in that space as well for a lot of you out there I hope this

gave you a little bit Insight hopefully excites you make sure to get your goals down on paper I'm really excited for 2024 I think there's a ton of opportunity I hope that you'll stay in tune with me and catch the podcast please let me know if you have any feedback you can catch all of our prior episodes at strr riches.com and until next time I hope you have a fabulous week want to get on the fast track to Financial Freedom through short rentals well it all

starts with the properties you acquire but you want to make sure that you acquire the right properties I want to give you my ebook that will show you how to do just that there is no charge it's my gift to you for being one of our subscribers just go to rest methods.com that's reest methods.com