I haven’t seen a deal that pencils using traditional financing and MLS-listed properties since rates went up and asset prices peaked. I’ve underwritten hundreds over the past couple years, and the only real opportunities I’m seeing are in creative finance.
Last year, some partners and I bought a home subject-to the existing mortgage—it has a 2.7% interest rate—and it cash flows without any issue. Deals like this are the backbone of my investment strategy right now, and likely will be until something shifts in the traditional lending world. That shift may never come. Who knows.
The good news? This environment creates a real barrier to entry. Over the last several years, the STR market has been flooded with first-timers and mom-and-pop owners who heard “Airbnb” was a good idea. Most of them are losing money. Even more of them are giving this industry a bad reputation.
- Trevor
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