RASM NEWS YOU CAN USECOUNCIL PROPERTY MANAGEMENT
Vacation Rentals as an Asset Class By: Liz Berry, Associate Advisor, SVN | Commercial Advisory Group
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ourism is one of the most important industries in Florida bringing in billions of dollars a year to the state of Florida. One of the largest divisions of the travel industry in our state is accommodations with short-term/vacation rentals alone, making a $27 billion-dollar impact. This impact has to lead to these rentals becoming a rapidly growing separate investment asset class for both private and commercial investors.
RENTAL MARKET AND OTAS This rapid expansion of short-term rentals as an asset class is the result of a technological disruption brought on by the digital world that merged hospitality and real estate through the creation of online travel agencies (OTAs) in the early 2000s. Vacation rentals have gone from mom and pop to a worldwide corporate-dominated field based on their opportunity for growth with key players including well-known brands such as Marriott and Wyndham purchasing properties.
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These OTAs such as Airbnb cleared the way starting with individual owners and leading to large scale real estate investment trusts and other capital institutions to seek them for an investment opportunity. These opportunities range from basic ownership to large-scale property management. The field of property management is of great importance to short-term/vacation rentals. As the market continues to grow, so will the need for the oversight of their daily operations including reservations, maintenance, and guest service. Many of the early mom and pop owners expanded to owning multiple properties and became managers of other properties which led to them being bought out by larger companies which led to large corporations getting involved. Airbnb itself has become a property manager through its construction of short-term rental units they host and oversee the day-to-day running of in many of their large tourist markets.
SHORT-TERM RENTALS Short-term rentals provide a stable real estate investment with a consistent healthy return through multiple facets providing revenue. Their growth is going to continue as the multi-family market stabilizes and investors seek a dependable profit on their investments. During economic downturns and recessions, the rental market is poised for positive expansion leading to a profitable bottom line when other investment products struggle to maintain even close to a steady grasp on their earnings. The greatest challenge to the expansion of the vacation rental market is legislation actively being created to control and limit their growth, push back to ensure that appropriate collection of taxes is taking place, and the impact on communities losing longterm residents. Overall, vacation rentals are a win for clients as an asset or investment class as they offer many reasons for satisfaction from the accumulation of funds. •
