Institutional Short-Term Rental Gap

Sam Parr shares insights about the short-term rental market based on his experience running a private Facebook group of property investors. He sees significant opportunities in this space, particularly due to limited institutional involvement and strong returns for individual investors.

Key Points:

• Current Market Dynamics:

  • Institutional capital hasn't significantly entered the short-term rental space yet
  • Returns were previously around 25% when people "weren't doing much math"
  • Market is more challenging now but still presents significant opportunities

• Success Stories:

  • Individual who grew from $15M net worth to owning $35M in properties
    • Makes nearly $1M monthly in profit
    • Runs operation with small full-time staff
  • Former hedge fund manager now owns $50M in short-term rentals
  • Tech entrepreneurs entering the space (like Rohan from Priceonomics)

• Creative Investment Approaches:

  • Example of "Safa Farms" in Mexico:
    • Converted coconut farm into eco-hotel
    • Built 6 cabins, 1 house, pool, and common areas
    • Minimalist but effective approach
    • Owners use property personally for few weeks annually

• Market Observations:

  • Property management software emerging to support multi-property owners
  • Growing interest from tech-savvy investors
  • Lack of traditional investment vehicles (REITs) specifically for short-term rentals
  • Opportunity for passive investment funds in this category

• Investment Requirements:

  • Typical down payment around 15% ($150K on $1M property)
  • Success possible with both large and small-scale approaches
  • Location strategy important (e.g., proximity to attractions like Disney World)