Digital Social Hour - Episode #1176: Why Vacation Rentals Beat Traditional Real Estate

Host: Sean Kelly
Guest: Avery Carl
Release Date: February 12, 2025

Introduction to Avery Carl

In this episode of Digital Social Hour, host Sean Kelly sits down with Avery Carl, a seasoned real estate investor and top-producing agent at EXP. Avery shares her remarkable journey from bartending to building a robust real estate portfolio, emphasizing why vacation rentals outperform traditional real estate investments.

From Bartending to Real Estate Investing

Avery begins by recounting her initial foray into the workforce post-graduation. After earning her degree in communications, she found limited opportunities and resorted to bartending and playing in bands to make ends meet.

[05:13] Avery: “Running the hospitality business of having short term rentals and we've got a lot of long term rentals too. We've got 250 doors across the country.”

As the job market improved, Avery pursued her master's in marketing, landing what she believed was her dream job in Nashville. However, dissatisfaction led her to explore real estate investing for greater flexibility and financial rewards.

Vacation Rentals vs. Traditional Real Estate

A key focus of the discussion is the distinction between vacation rentals and traditional real estate investments.

[01:02] Avery: “Vacation rentals in true mature vacation markets. So beach markets, mountain markets, lake markets, things like that. Not going into, you know, your grandmother's residential neighborhood and turning everything into party houses.”

Avery differentiates vacation rentals from standard Airbnb listings by targeting mature vacation markets with consistent tourism, such as the Smoky Mountains in Tennessee and Destin, Florida. This strategic choice ensures a steady stream of guests and minimizes regulatory risks.

Challenges in Vacation Rentals

Avery discusses the complexities of managing vacation rentals, highlighting the need for treating them as true businesses. Unlike traditional rentals, vacation rentals demand active management and hospitality skills.

[02:14] Avery: “I like to call vacation rentals kind of a gateway drug to both owning a business like being an entrepreneur, and also, you know, getting into investing in real estate.”

She warns against the pitfalls of the COVID-19 boom, where many inexperienced investors entered the market without proper planning, leading to oversaturation and financial strain.

Scaling the Vacation Rental Business

Avery shares her impressive journey of scaling from a single property to managing 250 doors across various asset classes. This growth was entirely self-funded, relying on reinvested profits rather than external capital.

[16:38] Avery: “All self funded. So back to active income.”

Her approach emphasizes systematized management, utilizing local teams for cleaning and maintenance to efficiently oversee multiple properties with minimal weekly time investment.

[10:08] Avery: “It's like an hour a week for one property. It's... Yeah, that's not bad at all.”

Financing and Tax Strategies

Avery delves into financing options unique to vacation rentals, such as vacation home loans and DSCR (Debt Service Coverage Ratio) loans, which allow for lower down payments and leverage based on property income rather than personal income.

[25:29] Avery: “There's something called a vacation home loan or a second home loan where you only have to put down 10%.”

She also explains the short term rental loophole, enabling high-income earners to benefit from cost segregation analyses without needing to qualify as a real estate professional. This strategy allows for accelerated depreciation, significantly reducing tax liabilities.

[28:03] Avery: “The cool thing about a cost segregation analysis is it allows you to take accelerated depreciation on the property, which basically means that instead of extending that out to taking it annually for 39 and a half years or something, you can scoot all that depreciation to the front.”

Real Estate Market Insights

Comparing the current real estate climate to the 2008 financial crisis, Avery asserts that while the market faces challenges, it hasn't experienced a price crash. Instead, reduced inventory and cautious buying have created opportunities for savvy investors.

[29:38] Avery: “But the difference is everybody expected a price crash, but that just didn't happen.”

She advises that now is an optimal time to buy, especially in markets with limited competition and motivated sellers, allowing investors to secure properties at significant discounts.

Advice for Aspiring Investors

Avery emphasizes the importance of market selection, patient investment, and maintaining strict operational standards to ensure success in vacation rentals. She discourages the pursuit of rapid expansion across multiple cities without established systems.

[10:21] Avery: “You got to be careful trying to go too fast.”

Additionally, she highlights the value of soft skills acquired from her bartending experience, such as managing diverse personalities and handling high-pressure situations, which are crucial in the hospitality-driven vacation rental business.

Avery’s Achievements and Offerings

Avery is not only a top-producing agent at EXP but also an accomplished author. Her first book, "Short Term Rental Long Term Wealth", serves as a primer for aspiring investors, while her upcoming book, "Smarter Short Term Rentals", delves deeper into systems and processes for outhosting the competition.

[25:08] Avery: “It's called STS Plus, like short term shop plus. And you find it stsplus.com.”

She offers mentorship programs through STS Plus, providing extensive guidance and support for those looking to enter the vacation rental market.

Conclusion

Avery Carl’s journey underscores the advantages of vacation rentals over traditional real estate investments, particularly in mature vacation markets. Her strategic approach, leveraging unique financing and tax strategies, coupled with disciplined management, has enabled her to build a thriving, scalable business. For listeners interested in real estate investment, Avery's insights offer a roadmap to achieving long-term wealth through vacation rentals.

Notable Quotes

• [05:13] Avery: “Running the hospitality business of having short term rentals and we've got a lot of long term rentals too. We've got 250 doors across the country.”
• [01:02] Avery: “Vacation rentals in true mature vacation markets... Not turning everything into party houses.”
• [02:14] Avery: “I like to call vacation rentals kind of a gateway drug to both owning a business... and investing in real estate.”
• [16:38] Avery: “All self funded. So back to active income.”
• [25:29] Avery: “There's something called a vacation home loan or a second home loan where you only have to put down 10%.”
• [28:03] Avery: “The cool thing about a cost segregation analysis is it allows you to take accelerated depreciation...”
• [29:38] Avery: “But the difference is everybody expected a price crash, but that just didn't happen.”
• [10:21] Avery: “You got to be careful trying to go too fast.”

Resources Mentioned

• Books by Avery Carl:

  • Short Term Rental Long Term Wealth (2021)
  • Smarter Short Term Rentals (Upcoming)

• Mentorship Program:

  • STS Plus: stsplus.com

• Real Estate Team:

  • The Short Term Shop: Operating in 20 mature vacation markets nationwide.

Final Thoughts

Avery Carl's expertise and success in the vacation rental market present a compelling case for investors seeking consistent income and scalable growth. Her pragmatic approach, grounded in self-funding and strategic market selection, offers valuable lessons for both novice and experienced real estate investors.

Tune in to Digital Social Hour for more unfiltered conversations with industry leaders and trailblazers.