This evening, I read “BiggerPockets” — a publication that caters to investors in STR — and I find concerns regarding an era of #Airbnbust…
From an article by freelance writer Lindsay Frankel, titled ‘#Airbnbust: The Fall Of Short-Term Rentals…’
It’s a story that’s echoed across social media platforms from rental property owners across the nation: Vacation rentals are no longer generating the steady revenue investors grew to expect during the pandemic. The era of #Airbnbust has taken hold…
Why is #Airbnbust approaching?
STR inventory continues to increase …
STR occupancy rates continue to fall (closer to 2019 levels)…
STR is losing its appeal (especially for entry point beginner STR investors)…
The number of first-time landlords is growing significantly, buying second-homes and attempting to earn money…
AirDNA is reporting on a slowing growth in Average Daily Rates (ADR). Revenue per available room is declining; higher rates do not offset decreasing occupancy.
First-time landlords snatched up STRs during the pandemic, based on forecasted ADR. Widespread selling of STRs could increase the supply and create a downturn in home prices.
Debt Service Coverage Ratio (DSCR) loans have become increasingly common. DSCR allow STR investors to qualify for larger loan amounts based on possible future ADR.
After reading about the decline of STRs, my conclusion is the Airbnb boom may be coming to an end. But what really caught my attention were the 19 comments to Ms. Frankel’s article:
“Inexperienced, unprofessional operators will be wash out”
“I expect we will see many of them sell for a loss”
“Those who jumped in … may run into issues if their market has softened”
“It will take 2 – 3 years before the people who are in STR to figure out the party is over”
“Coming banking crisis will catch these investors in a liquidity crunch (they will sell at fire-sale prices)”
“STR must cash flow $250-$500 a month from day one (or you should not be buying the property)”
“An ‘industry’ that is finally starting to get regulated (a quick ‘n dirty way to skirt local hotel-motel taxes)”
“The wild STR party is over (I own half a dozen STRs)”
“Some will survive, some will not (a LOT harder than it was for the last two years)”
If you are interested in freelance writer Lindsay Frankel, you can learn more here.
Hank Lydick
Austin, TX (now)
Pagosa Springs, CO (soon)