YoC STR
@YieldOnCostSTR
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Short-term rentals (previously VC-backed, now just me). Reformed finance guy. Golf dork.
Joined October 2022
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Last Seen Profiles
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As promised, here's the link to the full STR Kitchen shopping list:
87 items your kitchen needs for <$3,500. Including Amazon links, as well as Costco products and links when I think they offer a superior product.
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Spent my Tuesday evening with the
@Airbnb
earnings call and a glass of wine.
9 takeaways for Hosts & Property Managers
$ABNB
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Airbnb reported their Q3 2023 earnings this afternoon after the close.
I just spent a couple hours with the shareholder letter and the earnings call - 7 key notes and takeaways for fellow hosts/property managers!
$ABNB
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If this gets 25 likes I'll do a full underwriting of this property (financial model, qualitative analysis, build costs, speak with listing agent, speak with county, speak with insurance, etc) for the next Short-Term Thinking newsletter
(shorttermthinking dot 🐝hiiv dot com)
Anyone want to go in on 80 acres in Sonoma County with me?
40 trellised acres planted, 100 olive trees along the driveway, septic already in the ground, zoning allows for vacation rental, and a nice little pond.
3cap just from selling the grapes, before any rental income.
🤔🤔
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Why is Vacasa struggling? To put it bluntly, their operations suck. Pull up any market they operate in and their review scores will be lower than average for that geography.
Why do their operations suck? Well, they manage 40,000+ properties nationwide. That's 40,000 unique homes
Vacasa's Q4 results are about as bleak as it gets. Stock should be down more.
Read the shareholder letter and the call transcript and there's nothing to hang your hat on if you are a bull.
Revenue down. Churn up. Guidance pulled. COO out.
Best news was a 5% layoff 😬
$VCSA
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I'm working on a larger project, but this was too wild not to share:
We've all know Joshua Tree is a challenging STR market right now, but I didn't know it was this bad...
Here(.co) purchased this property in Joshua Tree in June 2022 for $816k.
Not one single booking
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@Thefrugalgay11
Potential hosts - if this picture causes your blood pressure to spike please find another asset class.
This is absolutely nothing.
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Certainly the most unique deal that has come across my desk recently (and it's *allegedly* a 10-cap):
- 43 acres near Mt. Shasta, CA
- 22 rentable cabooses(!), 1 boxcar, 4 cabins, 44 RV/campground spots
- Steam train, full bar/restaurant (w/liquor license), pool
- Asking price:
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People blame Airbnb for destroying the "character" of towns. In many cases, I think this is completely backwards.
Which is better for promoting a vibrant base of thriving local businesses?
1) A property that is occupied 9 months a year by families visiting year-round
2) A
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"Airbnb is so much more expensive now - it used to be a good deal but not anymore."
Have we considered that they might have been underpriced before and are now (more) properly priced?
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I just spent 49mins on the phone with Comcast and managed to save $5.57/mo on the internet packages at our STRs.
Slap a 9% cap rate on that, boom, I created $756 in equity value. Now I can refi and take out $529 tax free.
The is the power of leverage that W2s don't understand.
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Nobody should own one STR. Either scale or sell.
The business takes up too much mindshare to make it worthwhile to own only one, regardless of how good the returns on that individual property are.
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Streak comes to an end at 4 years 6 months and 337 reviews
300 consecutive 5-star reviews. Wow.
A moment of reflection this morning - four years ago last week I hosted my first guests at my first STR. Eight months after that I closed on my second property (March 6th, 2020 🫠).
The success of these first two properties gave me the push
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Two reasons I prefer VRBO bookings over Airbnb:
1) Cash is collected when the booking is made on VRBO, not upon check-in like Airbnb. I collect cash ~100 days earlier through VRBO.
2) Overall, VRBO guests are higher quality. Generally older and quieter. 121/121 5-star reviews.
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300 consecutive 5-star reviews. Wow.
A moment of reflection this morning - four years ago last week I hosted my first guests at my first STR. Eight months after that I closed on my second property (March 6th, 2020 🫠).
The success of these first two properties gave me the push
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When you’re anon but not important enough to be accused of being fake:
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@rohindhar
While we’re at it, can we talk about Airbnb’s decision to add a check-in reminder push notification for guests and hosts 8(!?!) days before arrival??
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If you are a real estate agent or property manager in Seattle, SF Bay Area, LA, Boston, Washington DC, Portland or San Diego this is what you should be doing today:
Zeus Living is going out of business. They manage furnished mid-term rentals in these markets. Many of them are
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Lifecycle of raising outside capital for an STR OpCo:
1) Open first handful of listings. Put heart and soul into day-to-day management. The returns for the first cohort are off the charts.
2) "I am crushing it with this small number of listings, we need to raise VC/PE capital
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@JoeCassandra
If I posted what we pay for daycare for 2 toddlers (soon to be 3) I think it would start a culture war on this app.
It's completely obscene
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Me lowering prices for Jan/Feb again but I have to pretend like everything is okay or the housing doomer accounts will RT me:
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The power of language in managing STRs:
We changed "Pet Fee" to "Pet Rate" in our listing and all of our messaging and guest pushback has dropped at least 50%.
(sleeping puppy for algo)
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Favorite booking of the year came in last night.
Up 8% over last year.
3.25 months of mortgage covered by four nights.
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@moseskagan
Another reason why the co-living business models (especially ones targeting young professionals) scare me
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The two types of STRs that I am interested in buying/building at this point in my "career":
1) The location is so good that a guest has no choice but to book the property
2) Regardless of location, the property is so stunning that a guest has no choice but to book the property
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Notes from
@Airbnb
's Q4 2022 earnings:
Summary: Bet against Airbnb at your own risk - this thing is a MFing juggernaut that is only getting stronger. Really impressive stuff. Lots to dig into for hosts here, and not all of it is positive!
Details below! $ABNB
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Anyone want to go in on 80 acres in Sonoma County with me?
40 trellised acres planted, 100 olive trees along the driveway, septic already in the ground, zoning allows for vacation rental, and a nice little pond.
3cap just from selling the grapes, before any rental income.
🤔🤔
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I try to tweet about what’s going on in my own STR business as much as I can, but “chugging along down 5% y/y with a string of great guests and no issues” really isn’t compelling content.
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Vacasa reported their Q3 '23 earnings yesterday after the close - I just got done going through their shareholder letter and earnings call.
5 key notes and takeaways for fellow hosts/property managers below!
$VCSA
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Guests: "This $300 cleaning fee is outrageous!"
What I want to say: "Well I actually pay my housekeeper $400 per clean, so you're welcome. Why do you think we haven't had a single cleanliness score below 5* since 2022?"
What I actually say: 😶
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Airbnb reported their Q4 and FY 2023 earnings yesterday afternoon after the close.
I just went through the shareholder letter and the earnings call - 5 key notes and takeaways for fellow hosts/property managers!
$ABNB
@Airbnb
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It might be counterintuitive, but the wear-and-tear on the physical structure of a property is lower with a short-term rental compared to a long-term rental.
- A housekeeper is cleaning the property 75x per year. As part of this, they are ideally catching issues early and not
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As a Airbnb host, there are only two rational options for reviewing guests:
1) Leave a glowing review
2) Don't leave a review
There is only downside for posting a <5* review
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This slide is from Sonder's Series D pitchdeck (2019). It's a fascinating moment in time for the STR industry - optimism still abounded, but we all know what was about to happen in March '20.
Combined these 9 companies raised more than $1.5B!
A "where are they now" thread:
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As an STR host, when you see this you know you are about to lose thousands of dollars.
IYKYK
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Best feelings as an STR host:
4) Alteration request from a guest adding an extra night to their stay
3) Guest who just arrived texting “everything is perfect, thank you so much!”
2) Past guest emailing about visiting again/introduction to a friend
1) Sun-Wed booking
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Nine reasons to densify your short-term rental business in one market:
- Better Data: You have real-time data on both revenue and expenses that other potential acquirers might not have.
- Dedicated Housekeeping: You can provide enough volume to a fantastic housekeeping team
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The ironclad rule of furnishing STRs:
Do not have anything in your property that will make you upset when it is (inevitably) ruined/broken.
Use the nicest & highest-quality products/furniture/decor that don't violate this rule.
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Thankful for our landlord extending our lease another year at $4,995/mo when our PITI buying a similar house in the neighborhood would be $11,050/mo
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@rohindhar
And what’s better for all the small businesses in the area - a property that is 75% occupied by families visiting year-round or the property that is vacant 10.5 months a year because the wealthy retired couple is only there in January and February?
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My family and I just spent the week at an STR that had a "What'd You Forget??" basket.
Travel sized toothpaste, deodorant, individually wrapped toothbrush, razors, etc.
Loved the idea.
What else should I include in ours?
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It has sunk in recently that there is a very good chance that if I stick to my current markets I am not acquiring another property for the next 12-24 months. The last property I bought was Mar '21. Four years of only managing our current portfolio doesn't feel right.
Therefore,
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Sonder reported their Q3 '23 earnings yesterday after the close - I just got done going through their shareholder letter and earnings call.
5 key notes and takeaways for fellow hosts/property managers below!
$SOND
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This account has been pretty negative recently, but this weekend was a nice reminder of how great the STR business can be:
- 5/5 properties fully booked
- Not a single message from a guest after check-in
- $42k in revenue
- Unanimously glowing reviews
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YoC's Law Of Engagement
If you use the noun "STR" you will get 1.0x engagement.
If you use the noun "Airbnb" you will get 7.5x engagement, 98% of it from accounts that don't follow you with 37 followers and banal takes.
If you use the noun "VRBO" you will get 0.5x engagement.
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My least favorite part of the STR business model? Buying furniture/decor.
If you think the depreciation when you drive a new car off the lot is bad just wait until you furnish an STR.
Found a great 5bd vacation rental? Cool, take $100k cash and incinerate $70k immediately.
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The bane of an STR host's existence: the pull-out couch.
- Easily broken and impossible/not worth it to repair
- Gets filthy, quickly
- You will attract a worse quality guest
If your underwriting only works with the pull-out sofa, pass on the deal.
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The initial total was 83(!) separate items added to the cart and a (pre-tax) total cost of $3,449.76.
Next question: How much do you think you save if you can also order from Costco??
(And what items do you think I forgot here??)
I'm helping a friend who is about to open her first STR - yesterday I spent 6 hours creating a spreadsheet of everything you need to purchase to fully equip and supply the kitchen.
Guess how many items she needs to purchase & how much it will cost (if only using Amazon)
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I added a new tab to my shopping spreadsheet which has every supply item that I purchase at Costco for my STRs.
40 items, with links and pricing, and notes on how often they go on sale.
Link to the spreadsheet is in bio or in the QT'd post below!
As promised, here's the link to the full STR Kitchen shopping list:
87 items your kitchen needs for <$3,500. Including Amazon links, as well as Costco products and links when I think they offer a superior product.
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@mwmoedinger
I’m convinced there would be an explosion of economic activity if/when this happens
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The Venn diagram of “people who ask for discounts” and “bad guests”
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If you see one of these in a house there is a 110% chance it is a vacation rental.
The hairy coo - the universal symbol of a vacation rental owner who knows nothing about interior design and is too cheap to pay a professional to do it for them.
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An under-discussed benefit of short-term rentals: the ability to invest additional capital into a property and achieve an immediate, above-market return.
An example: you buy a property that has a 10% yield on cost (1). Over time you add a hot tub (2), add a pool (3) and then
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This passage from the most recent
@InvestLikeBest
summed up my thinking on the current state of housing more succinctly than I would be able to.
18-24 months of a (very) slow slog down to levels 15-20% below current list prices.
Today’s podcast conversation is with
@BobEUnlimited
on all things macro
We cover rates, inflation, all the major asset classes, and the major lessons from history
This excerpt summarizes what we discuss: what if this time it’s very slow and boring?
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The vast majority of teeth-gnashing and whining about Airbnb can be attributed to unrealistic guest expectations:
When a guest spends $600/night on a 5BD house they are anchored to the total price they paid (left), but on a per-bedroom basis they really booked the right.
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Economic Moats in the Short-Term Rental Industry (Ranked)
A thread:
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7:45am: Guest texts that the toilet and shower in the downstairs bathroom are starting to back up with water (likely flushed something that shouldn't have been flushed)
7:47am: I respond and apologize for the inconvenience
8:15am: Guests go out for breakfast
8:50am: Plumber
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This is the primary flaw in the STR business model (besides, you know, having to host guests) - each additional property you add is another 10+ systems that could break down at any time.
Let's do some math together, and I'll explain how this has informed my investment strategy:
Operating an Airbnb is NOT “passive income”
Example from this weekend:
Cabin in the mtns had septic tank clog up. Now there’s literally shit in the woods.
Beach cottage has sewer line back up. $2k later, it’s back to working.
Don’t be fooled to thinking this stuff is easy.
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My favorite question to receive from a guest: “Is there a pack-n-play we can use?”
- Will be quiet after 7pm (won’t disturb neighbors)
- Won’t get too drunk (know how painful the next morning is with an infant/toddler)
- Child is too young to really destroy the house/furniture
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Finally got around to going through
@airbnb
's Q2 2024 earnings report from last week.
I'm not doing a full breakdown but here's 5 interesting nuggets for hosts that I would call out:
$ABNB
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A underutilized benefit of running a STR business?
Trade accounts with many national retailers.
- 20% off Williams Sonoma, Pottery Barn, Crate & Barrel, etc.
- 75% off Riedel (!)
If you are going to buy something home-related, always Google "{retailer} trade program" first!
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Can you predict a bad short-term rental guest?
A few years back I ran a regression analysis on a database of ~5000 stays to see what variables correlated with bad guests (parties, noise disturbances, smoking, vandalism, etc).
Can you guess the 3 strongest correlations?
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Until your STR business is doing >$1m in revenue you should not spend any time building a presence on social media.
Spend that time acquiring more properties and then optimize your business later.
Your Instagram account with 483 followers isn't moving the needle one iota.
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Five reasons why it doesn't bother me to pay $400 per clean in my short-term rental business:
- Housekeeping is only 7.6% of total revenue. If I managed to reduce housekeeping costs by 20%, then it would be 6.1% of revenue. Even a huge improvement like that doesn't meaningfully
Guests: "This $300 cleaning fee is outrageous!"
What I want to say: "Well I actually pay my housekeeper $400 per clean, so you're welcome. Why do you think we haven't had a single cleanliness score below 5* since 2022?"
What I actually say: 😶
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Your regular reminder that if you have a short-term rental, you NEED to have mattress protectors on every bed. Don't think twice, just buy them now.
As hosts, we do not F with neighbors, guests who ask for discounts, and bedbugs.
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Seven attributes of a potential STR investment that make it an immediate “No” for me:
1) Shares a wall with another property (apartment, condo, townhome)
2) Year-1 yield on cost <10%
3) Is located in Florida or Houston
4) STR supply growth >15% in the last year
5) Absolute
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“No, we didn’t hire an interior designer for our new short-term rental - actually my wife/best friend/sibling is really passionate about interior design and they are super talented”
The result, every time:
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The Five Economic Moats in the Short-Term Rental Industry
Economic Moat - A durable competitive advantage possessed by a business that protects it from existing competitors and potential new entrants.
A quick note to begin: a short-term rental doesn't have to possess any of
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Number of stays from repeat guests by year:
2019: 0
2020: 0
2021: 4
2022: 13
2023 (YTD): 29
If you're not doing it already, start collecting emails from all your guests. Your 2026 self will thank you.
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Alright here we go - a full recap of
@Airbnb
's Q1 '23 earnings report! Takeaways for hosts and PMs below:
Summary: Regardless of the stock reaction, this was another solid report from Airbnb.
$ABNB
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Something that used to annoy me that I've flipped my thinking on: guests leaving items behind.
- Allows me to have a another touch point with a guest where I am being hospitable
- Only costs $1-$15 (never let the guest pay)
- Leaves a good taste in their mouth - guaranteed 5*
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A question for STR hosts operating at 85-100% occupancy:
Why do you think the most sophisticated hotel brands in the world, with decades of operating history and teams of data scientists optimizing rates and performance, choose not to run occupancy above 75-80%?
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A few expert-level tips to save $$$ when booking an STR:
- Select a few dates in the same month (i.e. 3 different Mon-Wed dates). If they are all the same price the host is setting prices manually, if they seem random then they are likely using a pricing tool. These usually have
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One thing I was not totally prepared for was how to deal with friends and family staying at our properties.
After trial and error I've determined there are only 2 good options:
1) They stay for free
2) They don't stay with us
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Furnishing a new short-term rental on a budget? Mattresses can really add up quickly, especially for a larger house.
A quick tip to save hundreds (potentially thousands) of dollars.
1) Locate your nearest retail liquidation center. For me in California that is BidRL(.com).
2)
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When your next Airbnb inquiry asks for a discount just send them a link to Raise(.com)
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It's hard to explain how powerful the dopamine hit of the "new reservation" push notification is to someone who doesn't own their own short-term rental(s)
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In STRs, as in life, game selection is of paramount importance. The two games I have chosen to play in the STR industry thus far:
1) Work 80+ hours per week and own <1% of a VC-backed STR operator managing 1,000+ apartments nationwide that is unprofitable.
2) Work 25 hours per
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To add on to my favorite post in a long time - 9 more STR hard truths:
1) If someone asks you what you do for a living and you say “I’m in real estate” and not “I’m in hospitality” you should find a different asset class.
2) If you purchased both NFTs and an STR in 2022 you
24 hard truths about investing in Airbnb short term rentals:
3 bedroom homes are the worst short term rental investment.
All cities eventually ban Airbnb. Probably suburbs will too.
Any STR strategy in the United States predicated on digital nomads and “work from home” is Dead
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Basically Neo in The Matrix at this point
I'm predicting that the guest checking in today for two nights will be our first <5* review.
- Younger (~20s) guest with only 1 review
- Booked on Sep 2nd
- Relatively cheap ADR
- On Sep 5th messaged asking to cancel due to "family emergency". I offered to refund if the nights
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This is the type of property that gets my juices flowing.
8 guest rooms, a restaurant and a wine shop in Jacksonville, OR (just outside of Medford).
Property dates from the 1860s. Guest rooms all recently remodeled.
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A month late, but let's dig into Vacasa's trainwreck Q1 '24 earnings report.
The basics, before we dig in to a specific passage from their call that stuck in my craw:
- GBV down 18% (-7% ADR, -12% nights sold)
- Homes down -5% (churn up)
- Laying off 13% of workforce
-
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The beauty of STRs: you can find great deals because everybody else is valuing the property based on comps and you are valuing it based on the income it can generate.
The curse of STRs: an appraiser is going to value it the same way everyone else does.
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Negativity bias among STR hosts is so real.
Every good guest is forgotten 24 hours later, but bad guests are remembered (and posted about) for years.
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If the kitchen utensils at your STR need a refresh, this is the cheapest the OXO set has been in the last 13 years:
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A key attribute of a great vacation rental market: there is (at least) one true compression weekend annually (think Coachella for Palm Springs)
We just received our final booking for our compression weekend - five properties will generate $88,650 in revenue over four nights
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A metric I keep watching every month: STR supply growth has now outpaced demand growth for 16 consecutive months. It's hard to imagine that we're going to see meaningful RevPAR growth until this dynamic flips.
(A huge shoutout to
@Jamie_Lane
for humoring my random data requests
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Prompted by a Q from
@rohindhar
, I took a stab at estimating the economic impact of one of my vacation rentals. I came up with a single 4bd vacation rental contributing an incremental:
- $350k in revenue for local businesses
- $60k in additional tax revenue for the city/county
An aspect of the STR regulation debate that I think is under-discussed - the effect of bans on the ability of families to visit your city.
The largest bolus of Millennials are entering their early 30s and we will see the number of families with young children increase over the
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