What you need to know about short-term rentals

Plus, how to spot a bad brokerage

Grace Townsley
January 28, 2022

Happy Friday (finally)! 

This business can be tough sometimes. Wait, what are we saying? It’s tough ALL THE TIME! But that’s why we’re here to give you some much-needed inspiration, because even we could always use some of that.

Here’s a story about one of our recent sales: the sellers were having a rough time offloading their house. They’d gone through two listing agents before coming back to us. But they didn’t want to lower the price… they wanted to RAISE IT! Well, we were up for the task. We changed the marketing, cut down all the trees to open up the view, and… yada yada yada… we sold the house for even more than they had previously listed it for.

That goes to show that anything is possible when you have persistence, determination, and also good landscapers.

- David 

Today's Blueprint:

  • The Top 10 short-term rental markets in the U.S.
  • When are all those new homes getting here?!
  • Our simple guide to the bond market
  • Which brokerage is best for you?

Short-term rental, long-term gain

In today’s work-from-anywhere environment, investors with an extra property or two available for short-term renting are cleaning up. In Q3, nearly 50% of nights booked through Airbnb were for stays of at least a week. A whopping 100,000 guests booked a stay for three months or more. And longer rentals mean greater profit. The average new host in 2021 received their first booking within four days and raked in $9,600 last year. 

According to Airbnb, these are the most profitable areas where to list a stay:

  1. Atlanta
  2. South Florida Gulf Coast
  3. Phoenix
  4. Los Angeles 
  5. North Carolina Coast
  6. Smoky Mountains 
  7. Poconos
  8. Houston 
  9. Catskills and Hudson Valley
  10. Denver

Our take

There’s obviously a lot of money to be made in the short-term rental market. If your buyer wants to get into this space, we have three strong recommendations: 

  1. Hire a reliable management company to handle cleaning and flipping the stay. 5-star reviews are critical, so don’t cheap out here!
  2. Look for properties that are super walkable. Nobody wants to be stranded in the      middle of nowhere… well, unless, that’s the point of the vacation.
  3. Great pictures SELL. Make the property look like somewhere that you’d want to stay.

Don’t expect the housing market to change anytime soon

In typical years, the housing market follows a predictable cycle: interest rates rise and home sales level off. But the 2020s have been far from normal. We’re currently facing a shortage of 5.2M homes. And while builders are doing their best to catch up, home prices keep climbing, climbing, climbing. 

What’s the cause of all this chaos? The short answer is… well, a lot of factors. Builders are still struggling to complete their projects, sellers don’t want to become buyers, and inventory has never been so low. Inman expects many of this year’s would-be buyers to get priced out of the market before rising interest rates start slowing price growth.

Our take

Right now, sales are happening faster than ever. Do everything you can to land as many listings as possible while homes are flying off the MLS. Grab a buddy and go door-knocking. Send your mailers. Check public records to see who bought low and stands to earn a major profit by selling now. Then go talk to them! We don’t know exactly how long this market will last. Make the most of every day!

Who runs the world? Bonds…

On Wednesday, in a not-so-surprising turn of events, the Federal Reserve again suggested it could raise interest rates as soon as March. What does that mean for the real estate market? Well, it all has to do with bonds. To put it simply: when bond prices go up, mortgage interest rates go down, and vice versa. This is because mortgage lenders peg fixed interest rates to Treasury bond rates.

Right now, it looks like the Fed is going to raise rates, meaning bond values will go down and mortgage rates will go up.

Our take

As we predicted earlier this year, mortgage rates are going to rise because the Fed is going to increase interest rates throughout 2022 . As bond yields rise, expect mortgage rates to rise soon too. It’s not exactly science, but that's a good indicator of what’s to come.

Schematics

The news that just missed the cut

Foundation Plans

Advice from James and David to win the day

Here are five factors to consider when picking a brokerage:

  • The payout: One of the first things you need to know is how the brokerage handles commissions, listing charges, and fee negotiations.
  • Reputation: The better the brokerage’s reputation, the easier it will be to build your leads list. Positive name recognition is a huge asset to your personal business.
  • Tech tools: Find a place that embraces developing tech. It improves your team’s efficiency and, these days, your clients are going to expect it.
  • Learning and development: Find a brokerage that prioritizes your professional growth. In this business, mentors are incredibly valuable.
  • The culture fit: Some agents thrive in a high-performance environment, while others prefer a laid-back office. Find a brokerage where you can stay true to your working style.

Q&A

You asked, we answered! 

Q: How do you get sellers to be more realistic with their asking price when they’re asking way over market value, have expired twice, and are now listed as for sale by owner?

  • Mason from California

A: Do several showings. Provide the seller with real, unfiltered buyer feedback. It’s hard to explain to an emotionally invested seller that they’re just priced too high. But if they hear unfiltered feedback they are more than likely to get the message. 

What’s on your mind? Drop your own question here. We answer them every Friday.

Just in Case

Keep the latest industry data in your back pocket with today’s mortgage rates:

Source: Rocket Mortgage

We can't believe the first month of 2022 is almost over. Where did the time go? Let's not talk about it, haha! Have a great weekend everybody and we will see you on Tuesday! 

- James and David

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