[00:00:02] This is Short Term Rental Management, the show that is all about short term rental property management with your host, yours truly, Luke Carl.
[00:00:16] Short Term Rental Management. Thank you for being here. I love you. Happy Tuesday to you. If you're listening in real time, and I hope that you are. Man, I've been on radio for a million years and you know, it's an outdated source of content, but I still have that radio vibe and tuning in at a certain time. And that's the beauty of podcasts. You can do it whenever you want. But I like to tune in when things are new, which is Tuesday morning on Short Term Rental Management.
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[email protected] so I want to tell you a little story. I've been shopping lately. I've been shopping, shopping, shopping. And, and it's, it's brought a few things to my attention. Number one, nobody is buying real estate. So I'm sitting here like, what's going on? Do people, people haven't realized yet that nobody's buying real estate. We looked, I looked at 14 houses in the past two days, made an offer, getting ready to make a second offer.
[00:01:56] Of those 14 houses, we had 14 listing agents reach out and beg us for an offer.
[00:02:04] Every One of those 14 houses has been on the market for sale for over a year. Okay, so the thing is, is that it takes a long time for market cycles. Average human buys a house every seven years. That's an average number. Obviously, a lot of people hold them a long time. Some people move every year.
[00:02:24] So people are changing that, that average pretty quickly. But seven years is the average in which an American will own a home.
[00:02:39] Seven years is the average in which an American will buy a home.
[00:02:43] Buy, sell, hold it seven years. Again, we're talking primary homes. Primary home market moves a lot faster than second home and vacation home markets. We deal with extra houses, especially if we're working in a vacation town, which is not all of you. Some of you are doing quote unquote Airbnb overnight rental in a normal town. I always use Cleveland as an example. I don't know why I use Cleveland. What I do is I buy overnight single family homes in vacation towns. These are second homes, these are vacation homes. I just so happened to do it for a living. So yes, it started out as well. Honestly with me, it started out as a money making situation back in, in the day trying to get a couple of bucks for getting older and retirement, etc. But then over time it became, you know, as I got into long term rentals and duplexes and apartment buildings, the, the vacation homes became more of where do we want it? Buy a home to go and use it and then we'll rent it out when we're not there.
[00:03:49] So if you look at it from that regard, which is the majority of people buying in vacation towns, guys, I hate to tell you, most people doing this have a lot of money. They do. It's an extra house. So that's my point. What we're talking about in most cases is a boat alternative and a, let's, let's face it, a regular person does not need an extra house.
[00:04:15] It's usually designed for the wealthy or the folks that are trying to become wealthy.
[00:04:22] Therefore they move even slower. So what is my point? I'm speculating that primary homes are getting ready to move a little bit. Interest rates have gone down. There's indication that they will go down. More money market rates are going down because of that. Savings account rates are going down because of that. And independently of that, the stock market's not doing well.
[00:04:48] It's not doing horrible, but it's not doing well. It's going down. So when people, when people have money in a money market that's making 5%, why would I go buy a house that I got to do a bunch of work for, you know, 8 or 10% if I'm lucky.
[00:05:04] Again, just throwing random numbers out there. Don't quote me on these percentages or whatever. Why would I take money out of the stock market when it's crushing it to go buy a house? It's gonna make a 10%, 8 or 10% or whatever, 7%. Who knows when I can do absolutely nothing and crush it in the stock market? Well, the times are changing. Stock market's coming down, interest rates are coming down. Therefore people are gonna start looking for ways to take that money. The wealthy are going to look for places to take that money that makes more sense. And especially if 100% bonus depreciation comes back, which is looking like it will. So if that's the case, people are going to start buying. But right now nobody's buying, nobody is buying. Guys, the Short term shop sells vacation homes and second homes for a living. That's what we do. If you want to buy a vacation home, you call us.
[00:05:57] We want your business 100%. But right now, nobody's buying.
[00:06:02] Nobody's buying. A lot of people are selling. People are getting out from 2021.
[00:06:08] It's a lot of 2021 folks that are just over it, which means a lot for management.
[00:06:16] Okay, so let's segue into that. Your management life is getting easier. People are dropping like flies.
[00:06:24] I actually looked it up. East Tennessee, Sevierville, Smoky Mountains of East Tennessee. The number one Airbnb market in America. Love it or hate it, it's a big deal. Some people crap on it. I've noticed that. Everybody that craps on it doesn't happen to own anything there.
[00:06:43] Haters gonna hate. Potatoes gonna potate.
[00:06:48] Are you with me? Well, I own stuff there and I love it there. I do. I really do see myself, and I used to live in Tennessee, but I do see myself spending quite a bit of time there in my elder years, which may be right now with all these gray hairs. But my point is, I did some research. Right now on market at the time of the recording of this podcast, which is spring 2025, 1700 homes are on the market in Sevierville, Tennessee.
[00:07:21] Quick Google search tells me that there are somewhere around. There's somewhere around 58,000 homes in Sevierville, Tennessee total, which means that about 3% of the entire area, the entire town, which is really basically a county, is for sale.
[00:07:40] 3% of the entire county is for sale. And it's because the market cycle has shifted.
[00:07:48] Regular people are starting to realize that nobody's buying houses. I'm gonna tell you another story. I was out on a run with an old buddy of mine the other day.
[00:07:55] He's just a regular dude, you know, has a great job, great daughter. He's a great runner. He's 55 years old, doesn't matter, but, you know, he's a regular dude.
[00:08:06] Fantastic runner. Smokes me. Although, yeah, I've been keeping up a little bit these days. You know what I mean?
[00:08:14] So I was. We were out of water stop. We were at a water stop. We lived in Florida. So there's water stops on the beach everywhere. And he was down here visiting from Tennessee. I know he's a buddy of mine from my Tennessee days. And I'm drinking the water out of the water. We're at the beach, can see the water in the ocean, the Gulf and Gulf of Mexico, Gulf of America. And that was not a political statement, by the way. No politics here. He starts talking about his townhouse. He's like, you know, I bought my two. We saw about real estate in general. You know, I bought my townhouse and I'm worried if I were to sell it today, I don't think I could. I think I'd lose money. And it boom, clicked in my brain.
[00:08:57] There it is.
[00:08:59] There's a regular dude. This is one of those seven every seven year kind of dudes.
[00:09:07] And at this water stop at 5:30 in the morning at mile must have been close to mile seven on a 13 mile run.
[00:09:18] This dude is telling me that he realizes that his 2021 purchase is probably worth slightly less than what he paid for it. It's coming around. It's coming around. People are starting to realize it. Okay? So this means wonderful things for operators that are focused and paying attention and want to crush it or they want to buy a beach house for their family or mountain house, vacation house. Because I'm here to tell you, if you're thinking about buying a vacation house, go for it. It's awesome.
[00:09:47] Says the guy that sells vacation houses, which I do not, but my company does. Right? So this means two things. Means number one, this 2021 Covid. Covid hosts. These are Covid hosts. 2020, late 20, all of 21, early 22 Covid hosts that jumped in because at the time, everybody was buying motorhomes, second homes, vacation homes and firearms and Rolexes. That's what everybody was doing with all that money that rained out of this guy. Because you guys, guess what? You give a bunch of people free money, they're gonna spend it all right away and then it's gonna go to the wealthy. And that's exactly what happened. And the wealthy went and bought houses with it from the hardest working gal in real estate, Avery Carle. We now have a new book, Smarter short term rentals, available wherever books are sold.
[00:10:39] Build a dynamic real estate business and out host the competition that smarter short term rentals. The book.
[00:10:49] And now they're sick of the boat and they're selling it. They're sick of the motorhome and it's gone. They've taken a loss now, luckily, real estate not taking nearly as big of a loss as motorhomes, Rolexes and yes, the world famous boat. The boat. The boat's always going to take a hit. Don't buy the boat. Please don't buy the boat.
[00:11:13] Oh, it's not even the money you're losing on the boat. And Again, I'm. I should be careful because next thing you know, I'm buying a boat someday, but I have no intentions of that. But you do need to be. I mean, the boat, it's not even the money that you're losing by buying the boat and it costing you money and where to park it and where to fill the gas. And this broke. And this broke. And that broke. And that broke. And the value to sell it tomorrow is going down every day. It's not even that that bothers me. It's not that that bothers me with the boat. What bothers me with the boat is the amount of freaking time you're wasting on that thing when you could be crushing it.
[00:11:52] If you're under 55, you need to be crushing it. From 40 to 50 is the. Is when average human makes the majority of their wealth. 40 to 50. I'm smacking in the middle of that. I ain't got time for no damn boat, baby. I'm waking up early and I'm crushing it. Let's go, let's go. I'm making offers and I'm feeling good about it. All right, so I got two points today, which are somewhat related.
[00:12:19] Number one, a lot of the competition, all the saturation you're talking about, which by the way, saturation is no, nothing more than competition. It's competition. And if you're afraid of competition, I've said it 2,000 times, get out. If you can't compete, you should not be here.
[00:12:38] But believe me, you can't compete because I've seen the competition and they stink. You know, almost every single house, especially in the million dollar plus range, is using a property management company. Because let me tell you something, there's not a lot of crazy people out there that have the kind of money to buy a million dollar vacation home that want to manage it themselves. There's just not. There's not a lot of people out there. I'm preaching to a pretty small choir.
[00:13:01] Most people that can afford a $2 million extra house, they want to put it with a property manager. And there's nothing wrong with that. There is nothing wrong with that. And you can do well. You know, in some cases, if you find a good manager, you're probably going to end up changing managers a few times. That's a whole conversation for another day. But my point is, your competition is dwindling. They're disappearing. By the, by the 1700s, you got 1700 houses for sale in East Tennessee right now. And those are all Covid hosts and they're getting out and pretty good chance that whoever buys those is going to end up putting it with a property manager.
[00:13:38] And 1700 of however many rental properties is probably more like 10%. It's probably like 10% of the rental properties, the cabins, if you will, in Sevierville are for sale right now. I completely made that number up and I dare you to prove me wrong. I think I'm pretty close based on the, you know, 1700 versus 58,000 at 3%. Well, how many rental cabins are there? Who knows, 20, 25,000, something like that. So 10, 15, 20% are on market, who knows? So the vacation, the, the, the competition is going down.
[00:14:17] They're getting out, they're over it. These Rolex folks that we're not taking it seriously. From the get go, they're getting out.
[00:14:26] And coincidentally because of that and many, many, many other reasons, the market is dead. And listing agents are begging for offers. You want to know why they're begging for offers?
[00:14:36] They're begging for offers because they want to take whatever offer you're willing to give and they can show it to their seller and be like, look, this is literally the only offer you're getting on this thing. There's just no other offers coming in. So they want like the worst lowball offer you've ever had so they can show it to their seller and make their seller more real.
[00:14:53] And I'll be honest, I'm making offers right now. The sellers that are the worst are the ones that have owned it for 15 years. I thought for sure I'd be better off finding somebody that's owned it for 15 years, paid, you know, a half or a third of what they're asking for it, and they got a ton of wiggle room. They're being the worst.
[00:15:10] My house is, they're, they're so proud. Oh, my house is worth this much. My house is. My neighbor got this much three years ago. Well, guess what? This ain't three years ago.
[00:15:19] I'm actually finding, and again, don't quote me on this, but I am finding more wheel and dealing power from the folks that have only owned them since 2020 or 2021. And, and they're taking losses.
[00:15:32] And we don't wish that on anybody. But the market is what it is. We cannot control the market.
[00:15:39] And I'm seeing folks, you know, obviously folks that buy with the short term shop. This is not as big of a deal. They're fairly sophisticated, operators are doing their homework, paying attention. But I'm seeing, I got, I'll Give you a perfect example. I saw a house the other day. It was listed by a buddy of mine. The seller bought it for 1.5. They're selling it for 1, even 1,050,000. They're taking almost $500,000 loss in two or three years. I hate to hear these stories, but to me, that sounds like it's time to go damn shopping. And again, that was not related to. I didn't know anything about that deal. I just happened to be on that street. I saw the sign in the yard. I knew the dude because I'm in real estate, and I know everybody in real estate around here. And I called him up and I was like, give me the door code. I'm going in. I have a licensed real estate agent with me, you know, which happens to be my wife.
[00:16:31] He said, well, actually, it's. It's sold. It's under contract. And so he told me the numbers, and I was blown away. I was blown away. But a lot of these Covid buyers are looking to sell. They're looking to get out. And I'm actually, again, I'm finding that the COVID buyers are being a little more forgiving on the purchase price than the people that have had it for fifth, I've made an offer on one that the guy's owned it since, like 2015. It was brand new. When he bought it, he paid like four. I don't know. I think he paid 580. Somewhere in the upper fives.
[00:17:02] He wants eight. Something, which is really kind of not that bad in this. In this. In the area that I'm talking about as it sits, he wants 8:30 on a three, two and a half. And it's a little dated. It's got carpet on the beach, which is weird, but it's cute, you know, it's little. Probably be pretty easy to manage. He was completely unrealistic. Wouldn't counter my offer at all. Yes, I did throw him a very low offer.
[00:17:28] I did, but wouldn't even counter. I said, hey, we got room to come up. Why don't you have just get him to counter? Nope, he's not going to do it. So I moved on because guess what? There's 27 other houses for sale that fit my buy box. Not 27, but there's a lot, you know. So number one, we're getting some competition is going away.
[00:17:49] And number two, I'm finding this is a pretty good time to start shopping for deals.
[00:17:56] Says the guy whose company sells houses. You know what I mean? But I'm doing It. I'm making, I'm making another offer today. We'll see how that goes.
[00:18:04] Because I've got old Luke in mind. I've got old Luke.
[00:18:08] That's always, first and foremost. You need to say that to yourself. I need to be looking out for old John, old Jason, old, Old Jimmy, whatever your name is.
[00:18:18] You need to be looking out for the old version of you. And the old version of you is going to say, man, I wish I would have bought that damn house.
[00:18:23] Of course, the 21 guy's not so super psyched right now, but again, I got plenty of buddies that bought in 21 and they're just fine with it. You know, it's chugging along, they got their tax benefits, breaking even, making a few bucks.
[00:18:40] What more could you ask for?
[00:18:43] What more could you ask for on a million dollar house? 2 million dollar house.
[00:18:47] To break even on 2 million dollar purchase. I mean, that's not the goal, but if it, if that's. It can be the goal. If it's a second home for you and your family wants to go there.
[00:18:57] Anyway, I think you're picking up what I'm putting down.
[00:19:02] Some folks are getting out and it's a good time to get in. I really do believe that I'm making offers.
[00:19:08] Spring has sprung.
[00:19:12] I realize this whole entire podcast sounds a bit like a sales pitch and I did not mean for that to happen. I didn't. But I'm just telling you, I'm out there shopping. I shopped all day the last two days and this is what I went through, this is what I observed. And I have already made one written offer, two verbal offers, and I'm getting ready to make another written offer today. So we'll see how that goes. And maybe if I get it, I'll keep you abreast of the purchase and listing of the property. I love you,
[email protected] got a quote for you from Dan Martell.
[00:19:50] If your business depends on you, you don't own a business. You have a job.
[00:19:57] And it's the worst job in the world because you're working for a lunatic.
[00:20:03] Don't overthink it.
