[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.
[00:00:15] Here we are. We did it. I love you. It is short term rental management. Today we're going to talk about different markets and management differences in said markets. We're going to talk about mega markets, micro markets, emerging markets, garden variety markets, and all points in between. Oh, what did I miss? I missed metro markets. All right. Talking about different types of markets, if you're looking to get niche in the rich, rich in the niche, then you know, the market niche is maybe what we're looking to talk about. And today that is our topic on short term rental management with cash flow. Carl, do you want to get more out of your short term rental, purchase your next vacation rental using the short term shop and gain access to our free weekly mastermind the management Monday mastermind.
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[00:01:36] Welcome to short term rental management. I am Carl Cash Flow Carl. Luke, Carl, and it is a wonderful to be here with you on this glorious Tuesday morning. I want to talk about markets today, and I'm going to pull directly from Avery's book, short term rental, long term wealth. She says there are three markets. And at the time this book was written, that was true. Nobody even knew what a market was. Metro markets, national vacation markets, and regional vacation markets. And she's right about that. But recently I coined the term mega market. And quite frankly, I wanted to do this podcast just because I like saying mega market. So what is a mega market? And hold on. Also, I want to throw this at you. We could call it a mega market, but we could also, if you want to be funny and clever, you could call it a supermarket. Get it? It's a joke supermarket. It's where you buy your avocados and it's where you take your kids on vacation. Isn't it great? I love it. Mega market is definitely got more of a ring to it. So I'm going with that. And a mega market, to me, is the smokies. Smokies are the definition of a mega market.
[00:02:42] Maybe, you know, destin, I think you'll put in that, in that category as well, as a matter of fact, verboses that they have more revenue in destin than they do in the smokies. I find that hard to believe. But smoky mountains are the biggest vacation rental market, to my knowledge, in the world, not just in America. Airbnb says it's number one for them. And Airbnb started out as a room share provider, right? And there's none of that going on in the smokies. It's all cabins for rent. I actually, matter of fact, I own the house that has been on Airbnb the longest in the smoky mountains. You will not find anybody that's been on Airbnb longer with their property than me. I've been on Airbnb since 2011. Feel free to try and prove me wrong on that. It's possible there's somebody else out there. But I remember when I first started, there was very few of us, and I even got to know a few of those folks, and most of them are gone. You know, they've. They've sold and moved on. One of the guys to move to Texas and started doing it there. And so I've been around the block, and again, not nearly as long as a lot of folks. Cause you gotta remember Airbnb and a grand scheme of things, not been around for that long. VrBO has been around since the nineties and doing it by word of mouth and putting billboards up and posters up and old school property management companies. That's been around forever, you know. So now mega market is where also where you're going to hear that word saturation a lot. That oversaturated. Oh, my goodness. It's over saturated. Which, again, I do want to reiterate, I'm no. I'm no literature. I mean, I have written two books, but I'm no expert. I do not have a degree of any kind in the world of English or writing. But I'm pretty sure oversaturated is not a real word. But that is where you're going to hear this word, this term oversaturated in the mega markets. And a lot of that, to be honest, is somebody's not familiar with one of these markets like Destin. And they go on Airbnb in Destin, and then they see, oh, my goodness, every house in this neighborhood is on Airbnb. It must be saturated. Well, no, that entire neighborhood, neighborhood was designed for exactly what we're talking about. Taking your family on vacation. Renting a house, not a hotel. You might rent a hotel, but in this case, in these neighborhoods, there are no hotels where I'm talking about these mega markets. Not a lot of hotel presence in any vacation rental market. So actually, let me back up just a minute. I'm specifically talking about vacation markets right now. All right, I'll cover, um, metro markets in just a second. But when it comes to vacation markets, you know, you're talking about an area where you can drive to, in most cases, without having to get on an airplane, you know, and, um, it's within three to 4 hours of several major metro markets. That is a good old fashioned vacation rental, a good old fashioned short term rental where they've been doing this for a long time. That's where I buy my properties. I don't play around with metro markets. Now, a metro market is like Cleveland, where somebody's just decided to put their house on Airbnb. I've got an Airbnb in Cleveland. Right. And you got to be careful with these markets. I'm speaking mostly to noobs now. I just always kind of assume people know most of this stuff, and I shouldn't do that. But in a metro market, you've got neighbors and they can call the police and they live there and they're raising their family there, and they might be annoyed if your guests are coming in and raising hell. So you got to be a good manager to make sure that doesn't happen, number one. And number two, you're going to need to be pretty damn friendly with your neighbors to make sure that they're cool with what you're doing. And also, you got to understand that the city might not be cool with what you're doing. Most metro markets are not cool with overnight rentals. And I can understand why people moving in and out all the time, they're bringing extra cars. They're lying to you about this, that and the other. And, and if you're not a really good manager that's keeping up on all that stuff and making sure things are going smooth, then you, you know, the police are probably going to be at your house occasionally because they're breaking up a kegger or whatever. That's a metro market. A metro market vacation home. A metro market overnight rental is a hotel alternative. It's an area where there are a lot of hotels. But I'm looking for a little more breathing room. I want a washer and dryer in a kitchen, and I'll pay a couple extra bucks if I have to. Sometimes you can get one of these houses in a metro market for less than a hotel. So they do have their place, and there's a lot of people out there doing it and having great success with it. It's not what I do. I stick to the vacation markets. So when I say mega market and the metro mega markets, do those even exist? Because New York City doesn't want you doing it there. Chicago doesn't want you doing it. San Diego doesn't want you doing it. All these major, big giant cities are fairly anti and very regulated. Yes, you can do overnight rental in San Diego. You can. I was just there not that long ago, plenty of overnight rentals. I rented one, but they're very regulated. You can't just go buy one and put a sign up and be done with it. You have to get licenses and permits, and there's only a certain number of them that are allowed. Okay. Now, in these vacation markets, everything in the market is an overnight rental. Big difference. And so that's where the saturation comes from. People say, oh, it's oversaturated. There's so many vacation rentals. There's so many short term rentals in that market. Well, it's always been like that. You know, you come in, if you go look into smokies, and you don't, let's say you've never heard of the smokey of East Tennessee. I'm talking about, you know, Gatlinburg, pigeon forge. Let's say you've never even heard of that, and you go look at it on verbo.com. Well, all of a sudden you're going to be sitting there saying, man, this place is saturated. Every one of these houses is on verbo. It's just the way it's been since, since the beginning of time. Destin, Florida, same thing. Maybe Gulf shores, Alabama. Maybe we put that in there. The Poconos, Myrtle beach, you know, so smokies, I would say, are kind of the, the pinnacle of a mega market. That is a mega market. If you are going into the smokies, you are going to do overnight rental. And I'm talking about East Tennessee, Gatlinburg, Pigeon Forge, Sevierville. And you are going to have a lot of competition.
[00:08:46] But as in anything in life, competition is a good thing. And you need to understand that there's going to be a lot of competition, and you need to be confident that you can do better than they can. And I'll be honest with you, it ain't that hard. It is. Not that I'm not supposed to say ain't, but it's not that hard. Just got to pay attention, do your job. Even somebody that's been doing it for a long time, that's, that was good at it. They're not as excited about it as they used to be. Your competition is falling off all the time. So there's always room for improvement in a mega market. Now let's talk about mega markets. Nuances of a mega, of a mega market. Now, the biggest nuance is that the vendor, the vendors, the vendors, they know you don't live there because nobody lives there. I live in one of these towns that nobody lives in. I'm in Destin and they see an out of state phone number and they just assume that you're not going to check up on him. And you also have to understand, when it comes to vendors, these are the type of people that probably just could not or definitely did not want to hold down a day job. You know, I was actually trying to hire a new lawn guy recently. I could not find anybody that had a bank account. I've called four or five guys and they were like, a check. What do you mean? Because I wanted to put them on direct deposit, so I needed a voided check. And they were like, I don't have a checkbook. And I'm like, so, you know, these, these people are. It's a different, different breed. It's a different. I can't. My family's like that. My family's a bunch of contractors and, you know, hammer swingers. I've never had a day job in my life. I own my own business at the age of 25. So I relate to these folks in New York City, by the way, which is a mega market, not a vacation mega market. It is a vacation mega market, but not an overnight rental. It's a hotel mega market. So anyway, if you'll allow me a second here. There you go. I need a little cold one on a Tuesday morning. Can't drink all day unless you start in the morning, right? It's water. I'm kidding.
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[00:11:07] So the vendors are the biggest nuance of all markets. Mega market vendors are going to be a little bit different than micro market vendors and meat and potato market vendors. Mega market vendors. They just assume they're never going to see you. And they are used to their boss. They feel that they are their boss. They're probably right in a lot of ways. Is never going to check up on their work. And it's just kind of a weird vibe where, you know, 95 plus percent of the owners of these properties live in other states. That's a mega market, also known as a supermarket. Okay, so now a micro market again in the vacation rental world. By the way, I googled best places to buy vacation rentals or best vacation towns and it was, I did not agree with any of the, of the data. To me it was just a bunch of data places trying to sell data. So they're naming all these towns nobody's ever heard of or oh, I never really thought of that town that you could do such a thing in that town. Let me buy the data. You know, it's just, I don't get it. But um, like the Wisconsin dells might be a micro market or a hocking hills, Ohio could be a micro market up. Cape San blast, Florida micro market. That's definitely a micro market. I'm in that market now. That's, the whole area is called the forgotten coast and it has been forgotten. Man, it is empty other than a beautiful beach and a bunch of beautiful beach houses. Not a bunch, but you know, some, I have a house there. So I've got a mega market vacation rentals and I've got micro market vacation rentals. And the biggest difference again is the vendors. There's definitely more of a kind of a camaraderie in the micro markets. There's less people doing what's going on there. You know, it's not like in the smokies where, you know, you go to the gas station and literally everybody at that gas station is working for somebody that lives out of town doing whatever. In a micro market they probably, there's a better chance. They grew up there, not a much better chance. But there is a better chance because most of the vendors in the, in the mega markets also did not grow up there. They just went there because there's work, there's work in these towns. If you move to one of these towns and answer your phone, you will get business. It's hard to find good work, man. It is in any, in any business, I'm in the business of fixing houses up, right? There's always something that needs, that's broken and needs fixed and I need people to help me with that. And it's hard, it's a hard deal. But micro markets, better chance. They grew up there, at least they're probably been there for a while or maybe retired there and they're taking on some extra work and you know, at a later age. And, um, they tend to be maybe a little bit more friendly, but at the same time, they are definitely more sticking to the pack. Like, if they don't know you in a micro market, if they don't know you, they might not answer the phone. In a mega market, they're used to not knowing you. You know, you call somebody in the smokies, and they're like, I don't know you. And that's just the way it is. Every time I answer my phone, micro market, it's almost like you got to drop a name. You almost have to drop a name. Like, oh, hey, you know, I got your phone number from Sally Smith. She said you were a fantastic landscaper. All right. I've got some business if you're interested. Oh, yeah, I love Sally. Been working for her for six years. You know, not that that doesn't happen in the smokies, but it definitely happens more often in a micro market. Micro market might tend to be a little more seasonal. There's less action going on. There's less people coming year round and less people. That's less jobs. You know, the micro market that I'm in, way more seasonal. I would say for four months, a year, maybe four and a half. There's nobody there. It's empty. Had a girl on my podcast recently with a place in.
[00:14:32] Where was she? In Maine or somewhere. And she said that her market was once a, what, like six weeks? Six weeks. And the rest of the year, it's completely empty. She was lovely, by the way. I don't remember her name. What was her name? Allison. That's it. Allison Bailey. She was great.
[00:14:48] Scarboro, Maine. Six. Six to eight weeks. That's it. That's a micro market. That's like a microscopic market, man. That's. That's. That's a. That's a whole nother. Another conversation. But, yeah, micro market. If you want to check out that podcast that came out April 23, 2024, 80 units in a seasonal beach, in a small seasonal beach town. Micro market.
[00:15:13] I just like saying it. Is that. Is that a problem? I like saying mega market. It's a supermarket you can get. Yeah. Let's go squeeze some tomatoes. So then we also have emerging markets, which I believe that term may have come from Bill Faith. I heard. Somebody told me that. I don't Bill. I know Bill. He's been on my show.
[00:15:33] He's great. But I don't have it all memorized. Right. So. But somebody told me that was a bill faith thing was emerging market. And I like that term. That's a great term. And that, that is like, I think what he was going for there was, like, gulf shores, where it was kind of like, you know, down the road a little bit from Destiny. Destin's already, obviously, a mega market, a supermarket, and Gulf shores is down the way a little bit. I've actually heard him speak about that. I think I heard him talk about that on, on Mike Sjogren's program with, with my boy Emanuel. I like that dude. E. E. I like that dude. Shout out to e man. E pony from Sjogren's show over there, short term rental secrets. Well, for me, from Emanuels show, I like that. But I heard, I heard years ago, I heard Bill Faith on there, and I think that was his deal. Like, he was talking about, he went and bought in Gulf Shores because it was less expensive, and it wasn't like, you know, it was like a huge, giant thing, like Destin was yet emerging. He called that, I like that term, and I agree. I think that's pretty much what you're going to call the Gulf shores. It's, you know, not a micro market, and it's just right down the road from a mega market and kind of just, you know, garden variety market, much like Branson, Missouri, although it's not really down the road from anything. But it's, it's. I'd say Branson is getting closer to being a mega market. I'm from the midwest. My parents go to Branson all the time. I'd say that one definitely leans a little bit more towards mega market. But maybe something like Myrtle beach maybe is emerging. But I don't know if you're from the east coast or from New York, that New Jersey area, everybody knows what Myrtle beach is. So I think that's probably closer to a mega market. So emerging means, you know, that it's, it would imply that it's somewhat undiscovered and kind of building its way up exactly like a gulf shores. So I do like that term as well. Now, do I even care what type of market it is to me? I only care if it's a vacation market. And then from there, it's most important to me. Where does my family have any interest in going on vacation?
[00:17:33] When we first started buying in the smokies, we lived right down the road, and we were going there all the time. We had no idea that it was the biggest thing or it was going to be. It was such a thing, you know, and also, I'd never heard of it I had never heard of the smokies, the biggest mega market on the planet, the supermarket, until I went there with, with my lovely wife to be at the time, Miss Avery and I, and we rolled into pigeon forge, and I said, what the hell is this? Had no idea. It is a really weird place if you've never been there. It is weird, and I love it, man. I. Someday when I'm older and more gray, because I'm sure it's hell gray, but I am going to spend quite a bit of time in east Tennessee. I love it there. My. My daughter was born in Tennessee. I just think it's just an amazing place. It's gorgeous. The weather is pretty ideal in most months, most seasons, and I just love it. I do. My son's name is Nash. Shout out to him. He's cool. He's awesome.
[00:18:32] Different city, obviously, in that great state of Tennessee. You know, all my exes live in Texas. That's why I hang my hat in Tennessee. They wrote a song about it. There's a lot of classic country songs, obviously, about Tennessee. I just love it there. And so anyway, when I first went there, I said, what in the hell is this? You know? But my point was, if I even had a point, is it, you know, to me, it does need to be a place where you want to go. I love going to Smokey's. I wish I could go more often. I'm drivable. I can get there from where I'm at without getting on an airplane, but, man, I'm busy with these kids and I get there as much as I can, and I'd love to go more often. So if you have some sort of vibe like that, that's how you know you're on to a good market now. You're not going to end up. Is another thing. You're not going to end up with 15 vacation rentals. You're not. You know, it's usually that sweet spot is like seven to eight, maybe, maybe nine, maybe ten vacation rentals. And most folks don't go beyond that either. If you go beyond that, you're either super mega wealthy and don't even know where they are, or you're maybe managing for other people because it's a lot of money to buy these vacation houses. These are not $150,000 long term rentals. These, you know, in a vacation town, you're talking a lot. It's another thing you got to keep in mind. Vacation towns are expensive. These are where wealthy people tend to kind of bring their money, you know, it's where they go spend their time when they're away from work. And there's not a lot of industry in these towns, so the wealth is coming in from other areas in a lot of cases, with the property tax and the purchases, et cetera. But it does need to be an area where you, you know, care, care to care to hang out. That's. That's my thing when it comes to picking a market. I think that's number one. And then you just have kind of. That's the vibe I'm going for here. Oh, I want to buy a vacation rental. I love that idea. I want to rent it on my own. I want to put it on Airbnb. I love Airbnb. I use it all the time, and I want to get my own. And my family just loves going to Branson, so we picked Branson. It's a bit of a mega market, and we're okay with that. There's a lot of competition, but, you know, nobody's as good at it as I am. I think that's the vibe you're kind of going for there. And I'm not trying to teach you right now this, you know, Avery's much better at that stuff than I am. Her show, by the way, is called short, the short term show, which is a fantastic name, but Avery is great at, you know, you know, kind of how to. Which house should I buy, man? You know, and a lot of times you just got to go with your gut, which one is speaking to you? And it doesn't have to be, you know, I actually heard Barbara Corcoran talking about this yesterday. You don't have to buy. You don't need to wait around for the one that's absolutely perfect. You buy a house when you get the. When you have a loan ready to go and a down payment ready to go, buy a house. That's the way I've always done it. You know, to me, the heart, I've said this a thousand times. The hard part is the down payment 1000%. So if you're going to sit around and make sure that the floor plan is perfect in the neighborhood is exactly what you're looking for. You might be looking forever. You just buy something, and then here's the. I'll tell you what they do. The years do. What do the years do? They tend to roll on down the line. They do. They roll. My phone teaches me that every day. About last summer with the kids, two summers ago with the kids, and they were so tiny, and I'm just like, man, it's going too fast. We need to go to Disney right now. There's a mega market for you. Disney is a mega market. Or you might even call it a what?
[00:21:46] Supermarket. Anyway, I'll be honest with you. I just wanted to do these podcasts today because I like saying mega market. I love it. I think it's a wonderful term, and I'm taking credit for it right here. I tried to give Avery credit for it, but she was too busy. So I cut this podcast for you, and I hope you enjoyed it. You got mega markets, micro markets, emerging markets. I'll give that one to bill faith. What else did I say? Meat and potato markets and garden variety markets. And then, of course, you got your metro markets, which are a whole different thing. Right? You know? So, anyway, I hope you enjoyed my little hang today as I'm preaching the great gospel of vacation rental real estate, because it has created a lot of freedom in my life, and I am greatly. I greatly appreciate the opportunities that it has given me and all the changes that it has made in my life. And I'm very, very grateful. I'm equally as grateful for you coming to hear all this craziness today on short term rental management. And I would really appreciate it if you could leave me a review. You wherever you are listening to this, I'm an apple guy. I like that Apple podcast. So please hit me with a quick five star. We are in the review business after all. Mega markets, supermarkets, micro markets, wherever you choose to buy your house, I wish you happy renting and fantastic, successful vacations for your guests. And I love you, as always.
[00:23:15] Please don't overthink it.
