In the short-term rental riches will discuss investing in real estate with a specific focus on short term rentals quick actionable items to wire. Scale your portfolio I’m your host Tim Hubbard.

Welcome back to the short-term rental riches podcast we are on the verge of changing times it’s been a super interesting year or 2 has an aunt 1 thing that is inevitable the rents are going up rents for residential properties and I want to break that down this week it all comes down to supply and demand but there’s a lot of factors are going to supply there’s a lot of factors they’re going to demand but I really want to clear this up for a lot of you that rents are going up they have been going up for over a decade and it’s only getting steeper and steeper but it’s not in all areas and it’s not changing in all areas at the same pace so let’s break that down this week because it can be a little complicated there’s probably some things that were not thinking about their really comes down to 2 things so on 1 end we have supply the other end we have demand this is the foundation of all economics right this is the foundation of what creates prices and our economy and this is the same for real estate this is the same for residential rental so want to break down both of those sides and also what this means potentially for your short term rentals and where we might be finding the most opportunity itself let’s jump right in first off Freddie Mac suggests and this is on the supply side that the housing shortage has increased from 2.5000000 in 2018 to 3.8000000 in 2020 at the 52 percent increase in housing shortage that means we have a lot less homes for the people that need to rent them so let’s jump into why this is well. We’re not building enough homes in the US and the types of homes we’re building are not entry level homes that renters would traditionally rant so this is one of the reasons rent is going up and now why are we not building enough homes well simply because materials aren’t available costs have skyrocketed lumber has gone up 150 percent just since the pandemic zoning can take a really long time it takes a long time to get through that process before you can even build and it’s only getting more complicated so the prices are getting more expensive to build the time it takes to build is increasing and builders that are providing all these homes have realized that. They can’t really make any money with these entry level homes which are traditionally what people are gonna be raining so what are they doing they’re building higher in home so that they can make some more profit and so that category of renters have less supply simply because we’re just not building enough so that’s the supply side on the demand side a lot of things have changed and are still changing 1 of the big ones is that the millennials which there’s over 70000000 it’s the largest demographic in the United States I am a millennial myself these are people that were born anytime between 1981 and 1994 so for all of those that are turning around 30 in the morning all demographic we are peaking in terms of home buying but a lot of millennials can’t afford to buy homes so they’re stuck with renting right that’s the other option either by or we rent and why are a lot of millennials at this peak stage while they’ve gotten a little older they have families now they want a little more space there moved out from their parents place so that is putting an increased demand on real estate on rental real estate and with lower supply because they were not building enough increased demand well that means prices are going up so that is 1 of the reasons we have this other thing in the economy that really controls. Most everything all the spending and those are interest rates and we know that we’re living in a time in history where we’ve never had lower interest rates so that means a lot of people were able to buy homes in again they’re buying homes from a supply that shrinking so there’s less available properties now on the flip side of this when interest rates go up that means people can’t afford homes because usually people are buying a home based on their payment right they don’t buy it based on you know cost $500000 to calculate the payment and say okay I can afford to purchase this property so that the payment is what’s determining how many people are buying homes and so if interest rates go up that means less people are going to be able to buy homes and then they’re going to be stuck renting as well I saw a couple big changes and 2020 year over year biggest increase in rents get this this is unbelievable Jacksonville has seen a 35 percent year over year increase in rents 35 percent can you believe that that means if you had a rental property in Jacksonville it’s likely that maybe a year ago you’re running for $1000 and now you’re running for 1350 sat crazy and that’s happening and a lot of different places but there’s also places were ran is going down and 1 of the biggest drops in rent nationwide and courses in the U. S. San Francisco I don’t think that comes as a huge surprise to a lot of you out there a lot of people laugh these densely populated areas like San Francisco during the pandemic the pandemic actually just increased that outgoing population these are trends that have kind of already been happening 18 percent drop in rent in San Francisco your rear so we’ve got 1 and we’ve got Florida which Florida’s been booming but Jack. Jacksonville specifically up 35 percent and then we have Sam’s has gone the other end 18 percent down now course every neighborhoods different we can’t you know say Sam Cisco is just one market but in general these this is what’s happening so a lot of places are seeing huge huge increases and Florida scene a really large increase because there’s more demands there so this is another one of those demand factors people are moving to Florida they’re moving to Texas they’re moving to Tennessee they’re moving to places that have no state income tax the better weather he’s our transit of been happening but if we think about it we can’t just build faster all of a sudden because we have more people moving there it still takes time to do all that zoning and with construction costs going up these places are seen a really big increase in demand and that’s why their rents are going up and up so we’re basically entering what you could call a renter nation homeownership has gone down to 65 percent from 68 percent where was in 2018 so we’ve got I think for every percentage drop in homeownership that’s millions of people that are renting this is just how it is this is the economy this is supplying demand we have a shrinking supply and we have an increase in demand and renters so it’s put in a lot of pressure on rents in in for in the right area hopefully we are from the right market well as real estate investors we are going to see the benefit of that and how does this apply to our short term rentals well as a lot of guys know these markets are seen the big rent increases these markets I recommend getting short term rentals in as well so if we buy a property in an area that’s seen increased demand and there’s less supply there well that means our rents are going to go up that would mean that our short terminal right. Ends would go up as well because the demand is gonna increased and that means that those places are probably going to appreciate faster than other markets so it’s a fantastic time to be a real estate investor and has been you know for the last 10 years and mainly because rents are going up that’s why we invest we invest for cash flow and so I don’t really think there’s been a better time and you might be saying. 10 prices are out of control they are in some places but if we’re buying for cash flow remember the prices shouldn’t really matter right as long as we can buy property using leverage and our payment is fixed for 30 years which we can do now to incredibly low interest rates that means our payments going to stay the same. And if we continue to have rents going up and up and up well then that’s going to be a sound investment no matter what the purchase prices as long as it’s cash flowing from day one and you’re in the right market well then congrats to you my friend it’s gonna be a good real estate journey so hopefully that excited you guys on one and it’s kind of sad that I mean people aren’t able to afford to buy their own homes but we’re also living in a society where where people are just valuing mobility a little more to millennials value mobility so a lot of more buying home just because they don’t want to write so it’s a fantastic time to be a real estate investor hopefully that excites you guys and until next time have a wonderful day. There’s so much money to be made the short term rentals but it all starts by having the right property if you guys haven’t yet seen my free ebook on our website rest methods.com head over there and get a copy it’s going to break down what I look for in a property and some great short cuts so that you don’t have to spend hours and hours researching at over rest methods.com and you can grab your free copy there if you want a crash course in everything I’ve really learned to short term rentals in over 5 years managing over 15000 Gasol recorded on our last live event and I’m happy to say we broke it down really nicely into a bunch of different modules that you can watch at your own pace it takes you from start to finish finding a property we talk about analyzing the property but then also some of the more important pieces how to find your team and how to set up everything so that you can run your operation is passively as possible and free up your time you can find that it rests methods.com forward slash virtual.

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