We at bnbguy love to buy properties and make them successful short term rentals, and are looking to do so every day. In several markets across the country we have determined that we might be at the “top” of the cycle, yet people are still buying overpriced properties with the hopes that short term rental income will help cover the loss that may happen. This is an absolutely terrible strategy and how do we know? Because we have done it and it doesn’t ever work long term.
Recently, I came across a property that was GROSSING $3700 a month in an excellent neighborhood with some excellent hosts. I thought this may be an opportunity to look into and see what they might sell the property for at this point. Mind you, these were fellow investors and they had rehabbed the property, and had a steady flow of guests in a legal part of town. Check, check, check, looking great so far! Well, they told me they would want $490,000 for the property! I literally laughed when they quoted the price and they got upset. Granted, they are a younger couple who never went through downturns in the market, but I explained to them politely, that those numbers would never work in my business, and anybody who bought at that price as an investment would lose money every month. How do I know! Because I’ve been there and done that!
If you are looking to buy an investment property for short term rentals always analyze the numbers, and make sure they are the true numbers. Investors are always the eternal optomists and they believe they can solve issues that will lead to more revenue. Maybe you can, but you make your money when you buy not when you sell. Buying properties is an analysis based decision not emotion based. If you allow your emotions to get the best of you you will end up stressed out and pleading with someone to buy this mess for a huge discount. Now, that’s the perfect time to buy not sell! Good luck in your search and please feel free to contact us with any questions!