If you’re interested in purchasing a short-term rental (STR) home, no doubt you’ve seen the ‘Top 10 Best Places to Buy’-type articles from companies like Vacasa, Airbnb, and AirDNA. Whether it’s a list of beach homes, mountain homes, or places to buy this fall, these lists are always fun and attention-grabbing. Unfortunately, there’s one big problem: they are all incredibly misleading. Furthermore, these lists can quickly push people into buying a home before looking at some of the most important details.
Now that we rocked that boat, what better way to explain the flaws of these articles than with our own top 10 list. Without further ado, here are the…
Top 10 Reasons Why Those ‘Top 10 Best Markets to Buy in’ Articles Mislead Short-Term Rental Home Buyers
1. Unintentional (or intentional) bias – property management and marketing companies use their own data to generate top 10 market lists. These lists generally tell us where their services do well, but not necessarily the best market to buy in at a given time. Also, most companies don’t operate in all markets; therefore, they cannot show you data from some markets. Whether unintentional or intentional, we’re only seeing the part of the picture they want us to see and can share.
2. Averages – the typical Top 10 markets featured in these articles represent averages compared to other markets. Only people who own a thousand homes can effectively play the averages. Seriously! Most STR home buyers buy one or two houses. Because markets change based on the economic conditions of an area, STR owners with a few homes don’t have the luxury of playing the averages, and therefore, the lists don’t offer much good.
3. Home Pricing – the lists don’t consider home price whatsoever, and you know what, price matters for nearly all STR owners. Many buyers come to us with a price point or budget that must meet a specific cash flow from rentals. While the lists might be thought-provoking, if you don’t know the price or consider your unique situation, they don’t offer the critical insight you need to make a purchase.
4. Risk Tolerance – each of us has a different risk profile based on income, wealth, and experience. For instance, a few years ago, people bought homes in Galveston, Texas and prices surged given its proximity to the Gulf of Mexico. Unfortunately, frequent hurricanes in the region damaged homes, which ultimately forced homeowners to sell or invest large amounts of money into repairs. The area might match your price range, but are you capable of replacing a home if there’s a hurricane? Only you know that answer.
5. Timing – markets change over time and may fluctuate. They might be more expensive during the summer than the winter, depending on the location. The lists make no mention of these fluctuations and the right time to buy. These lists often reflect where a given company’s best-performing rental properties currently are. Sadly, for the buyer, however, this rarely includes information about when to buy a home in the given region to get the best deal.
6. Availability – home inventory fluctuates daily. Depending on the timing, these top 10 lists might be poorly timed with availability, and the best home (the ones we identify for you and recommend) won’t be there to buy.
7. Local STR Regulations – some cities and areas are more friendly to STR owners than others. Also, some are becoming more STR friendly, while others are not. This must be accounted for as you’d hate to buy a home in a market that may be too difficult to rent in based on the local city regulations.
8. Emotion – There’s an emotional aspect to buying homes for most of us.
Some people like the ocean more than the mountains. Or log homes over cottages. These lists don’t factor in the types and styles of homes in an area. In a market like Phoenix, homes have a similar look and feel. Investor-first buyers focus less on emotion, but if you want to stay in a house at certain times of the year, you may care a great deal about the style. Again, this speaks to the specific desires of a buyer, something that these lists don’t consider.
9. Local STR Management – once you purchase a home, you will use a local property manager in most cases. From our experience, not all local managers of STRs are created equal. Homes in rural mountain regions will have fewer vacation management options. In a busy summer ocean resort town, you will have more options. The mountain town may be more challenging to rent simply because of local management.
10. Home Age and Upkeep – although potentially cheaper, buying an older home could reduce your rental income if you are unaware of the risks involved. First, be conscious of the potential for high maintenance costs. Old homes, along with homes located in areas with unpredictable weather, generally need the homeowner to spend more on upkeep as key pieces are likely to wear down quickly and need repair. Also, old homes frequently have out-of-date appliances and old-fashioned designs that reduce the price of rent. Luckily, to make up for lower rents, old homes tend to have high occupancy rates because of the high demand for budget rentals.
Real estate purchases are personal decisions, and only you know what you want and need. An average-based top 10 list is not taking your situation into account. The next time you receive one, enjoy them, but now you know they represent markets where those companies have rental success more than anything else. That’s not a bad thing, but it does not tell the full story as we’ve shown.
If you are interested in buying a home with a more complete picture, sign up today to find the best vacation rental homes on the market at revedy.com
Revedy makes your dream a smart decision. Our team of vacation rental experts and real estate consultants help buyers and sellers navigate the sales process in vacation rental markets nationwide. We leverage our proprietary tools to analyze market data and support our investors in making informed decisions. If you are considering investing in a vacation home or have any questions, please call us at (503) 908-5225 or email inquiry@revedyhome.com