BiggerPockets Real Estate Podcast: "Is NOW the Time to Get Back Into Airbnb?"

Release Date: February 12, 2025

Introduction

In this episode of the BiggerPockets Real Estate Podcast, host Dave Meyer engages in an enlightening conversation with Avery Carl, CEO of The Short Term Shop and author of Smarter Short Term Rentals. With an impressive portfolio of over 250 properties and extensive experience in over 5,000 short-term rental deals, Avery imparts valuable insights into navigating the competitive landscape of short-term rentals, particularly through platforms like Airbnb.

Current State of the Short Term Rental Market

Avery Carl kicks off the discussion by assessing the stability of the short-term rental market:

Avery Carl [01:58]: "I would venture to say the short term rental market is now stabilized."

She elaborates that post-COVID-19, the market has undergone significant fluctuations, but signs of equilibrium are emerging. The influx of investors during the pandemic, driven by low-interest rates and unprecedented travel demand, led to an oversupply in certain markets. However, Avery notes that this saturation is beginning to ease, allowing for more predictable income streams and property valuations.

Avery Carl [02:36]: "Once Airbnb came along, it democratized vacation rentals, making it possible for more investors to participate without relying on property management companies that charge high fees."

A prime example Avery cites is Joshua Tree, where a significant increase in supply last year led to market saturation. Fortunately, as supply growth has slowed, the strong, unchanging demand rooted in tourism is restoring balance, reaffirming the viability of key vacation markets.

New Investors vs. Experienced Investors

Dave Meyer probes into the dynamics between new entrants and seasoned investors in the short-term rental market. Avery provides a nuanced perspective:

Avery Carl [05:22]: "There are a lot of new investors who have been waiting to see how rates evolve, but in the last quarters, more new investors are starting to jump in despite interest rates remaining high."

However, she emphasizes that a significant portion of recent buyers are returning clients with prior experience:

Avery Carl [05:22]: "80% of the buyers who closed last year were past clients who'd already bought with us."

This indicates a robust presence of seasoned investors who are capitalizing on favorable deals, while still welcoming newcomers who are now more confident to enter the market.

Advice on Finding Good Deals

When asked about strategies for securing profitable deals in the current market, Avery underscores the importance of timely action and seller motivation:

Avery Carl [07:01]: "If you can find deals that work today, then buy those deals today."

She advises targeting properties that have lingered on the market for extended periods—typically six to eight months—as these sellers are more likely to negotiate favorable terms due to their urgency to sell.

Avery Carl [07:01]: "Properties that are sitting on the market for six, eight months are usually being listed by sellers who need to make a deal rather than just want to."

This contrasts with overheated markets where rapid competition often leads to bidding wars and inflated prices.

Optimizing Existing Short Term Rentals

Transitioning to optimizing current portfolios, Dave and Avery discuss effective strategies for enhancing property performance without overextending financially.

Avery introduces the "enemy method," a competitor analysis technique:

Avery Carl [15:39]: "Use the enemy method, which is a competitor analysis. Look at your competitors in your market of the same size property and see what they offer."

She cautions against excessive investment in amenities, which can erode property value and complicate future sales:

Avery Carl [17:09]: "People are going way too crazy with this. You want a clean, comfortable, updated place with good light and bright photos that make someone want to click it."

Avery shares a cautionary tale of a property that, despite high income generated from extravagant amenities like murals and human-sized bowling pins, struggled to sell because potential buyers sought more refined, luxury-focused features.

Avery Carl [17:49]: "What happened was every single showing we got, the buyer said at this price point we're really looking for something that feels a little more luxury and not murals on the walls and like all childish stuff."

Her advice emphasizes maintaining a balance—investing in key amenities that enhance guest experience without compromising the property's overall value.

Personalized Listener Questions

In a segment addressing listener concerns, Dave presents his own challenges with a ski town rental experiencing declining revenue despite efforts to enhance its appeal. Avery provides actionable recommendations:

1. Optimize Listing Descriptions:

   Avery Carl [25:35]: "You want bullet points, you want white space. Otherwise you know, people aren't going to read it."

   She advises making listings concise and feature-focused to immediately capture potential guests' interest.

2. Manage Dynamic Pricing Effectively:

   Avery Carl [26:48]: "The algorithm's got it, but you do have to get in there and kind of tweak it."

   Avery highlights the necessity of actively monitoring and adjusting pricing strategies based on lead times and market demand, rather than relying solely on automated tools.

3. Enhance Visual Appeal:

   Avery Carl [29:17]: "The headline is the most important piece of real estate in your entire listing."

   She stresses the importance of strong, descriptive headlines that quickly convey key property features to attract bookings.

The Future of the Short Term Rental Market

Looking ahead, Avery anticipates continued professionalization and regulatory shifts within the short-term rental sector:

Avery Carl [30:58]: "The industry has become very professionalized, so travelers can expect more standardized, hotel-like experiences on platforms like Airbnb and VRBO."

She predicts that increasing regulations in metropolitan and suburban areas will further concentrate short-term rental opportunities in established vacation markets, reinforcing their status as lucrative investment avenues.

Avery Carl [32:37]: "Vacation rentals are the gold standard. They consistently offer reliable demand, especially in locations with robust tourism and minimal hotel competition."

Avery also advocates for innovative strategies like leveraging Accessory Dwelling Units (ADUs) to maximize rental income without over-relying on property amenities, especially for new investors seeking manageable entry points.

Conclusion and Further Resources

As the episode concludes, Dave expresses gratitude for Avery's expert insights and encourages listeners to deepen their understanding by reading her book, Smarter Short Term Rentals.

Dave Meyer [34:38]: "If you want to learn more about how to be a successful short term rental investor, don't forget to check out her brand new book, Smarter Short Term Rentals."

Notable Quotes

• Avery Carl [01:58]: "The short-term rental market is now stabilized."
• Avery Carl [07:01]: "If you can find deals that work today, then buy those deals today."
• Avery Carl [15:39]: "Use the enemy method, which is a competitor analysis."
• Avery Carl [28:27]: "It's almost always a pricing problem because price tools are great, but you still have to manage them."
• Avery Carl [32:37]: "Vacation rentals are the gold standard."

Summary

This episode of the BiggerPockets Real Estate Podcast offers a comprehensive exploration of the short-term rental market's current landscape and future trajectory. Avery Carl's expertise provides listeners with practical strategies for both entering and optimizing within this space. Key takeaways include the importance of timely investment decisions, strategic property enhancements without overcapitalizing on amenities, and the necessity of proactive management of pricing tools to maintain competitive edge. As the market continues to stabilize and professionalize, established vacation markets emerge as the most promising arenas for sustained profitability. For investors seeking to navigate this evolving terrain, Avery's insights and her book, Smarter Short Term Rentals, serve as invaluable resources.

For more detailed strategies and expert advice, don't forget to check out Avery Carl's book Smarter Short Term Rentals available at biggerpockets.com/smarterstrain.