Looking to Purchase Short Term Rentals? Read this!
Exciting news! I'm not coming home!! Well, at least not for a while! If you have been following my journey for a while now, you know that my goal is to be Fully Location Independent. I have been living in the Dominican Republic since December--and the good news is that we extended our stay until Spring! 🎉🎉🎉
I'm one more step closer to never seeing snow again!! WOOHOO!
I share this not to show off, but inspire you to go after the life you want!
Now, maybe living abroad or traveling is not your goal. Maybe you are just looking to bring a little extra cash in to help your family be more secure. That's okay too! The great thing about Real Estate Investing is that there is room for absolutely everybody!
So how do we keep growing to solidify these goals?
Well, we need to be sure to build our individual portfolios in the best way that suits our needs. Fo me, that is based on cash flow and that is how I have largely built mine. But, with an ultimate goal to live on the beach, evaluating short terms rentals just makes sense for me, and might for you too!
We already own in the Dominican Republic, but that is a long term rental....and not on a beach. So I promised many of you in the group that I would share what I learned about the Short Term Rental Market along the way!
So here is what I have learned so far:
1. AirBNB does NOT equal instant Success.
Yes, there are some people that have had amazing success with STR (Short Term Rentals) but it requires the same hard work that any other REI strategy requires. There is no get rich quick scheme here. My husband and I have looked at quite a few properties here and have yet to come across a deal, let alone a STEAL! And a lot of that comes from the added costs that you would have for a STR versus a long term rental, especially when purchasing one long distance. (More on numbers below) The deals are out there, but don't get lured into thinking that an AirBNB will make you an overnight millionaire.
2. COVID is here to stay (for now)
One of the most interesting things I learned while looking for our STR here in the Dominican Republic is that home prices are still rather high. I would've thought prices would drop as people would need to sell due to the decrease in the tourist industry and, well, the economy as a whole. But I was wrong. Seems the rich really are recession proof. 🤷🏼♀️ If you are looking to purchase in a popular destination, remember, not everybody is buying to use the place as an AirBNB. Some people truly are looking for a second/vacation home and are perfectly happy to have it sit empty for half the year, rather than have different strangers in there every weekend. If you are looking in an area like this, don't expect the housing prices to drop even though the demand for rentals has.
Also, this place is a ghost town! Vacancies everywhere and some resorts, just didn't even open back up for the season! The place we are staying at had to drop their prices by 50% just to entice people to book it! And its GORGEOUS here! I heard some people are taking advantage of free cancellations and are hedging their bets on a vacation in 2022, especially with travel restrictions tightening for Americans and Canadians this past week. Local STRs are probably fairing much better right now.
3. Deal Analysis is CRITICAL
This is true of any ANY deal, but it gets a little more tricky for STRs if you aren't familiar with analyzing them. For example, if you have someone managing the AirBNB for you, you need to calculate that in. And that number is probably going to be much higher than the average 10% that you always hear for the long term property managers. You also have cleaning fees between clients, unpredictable vacancies, and varying nightly rates, especially if you are buying somewhere that has a high and low season.
Need help analyzing deals? Check out the Lady Landlords Course that walks you through the EXACT steps you need to get your numbers right so you can be confident you found a Deal and not a Dud! Here's the link!