Is NOW the Right Time To Buy An Airbnb?

Hey, what’s up guys? In this video, we’re gonna be talking about whether or not right now is the best time to be buying a short term rental property or Airbnb. I’ve talked to a few people recently that are just concerned about, you know, should I really buying Now should I wait Is 2024 going to be a better year for investing in short term rental properties? You know, maybe I should just hold out. And so I want to address that head on and want to talk about my thoughts on generally when is a good or bad time to invest? And right now, specifically, is it a good or bad time to invest in short term rental properties.

So let’s start out by looking at what would make a time good or bad to invest in short term rental properties overall, so that we can figure out whether or not right now is a good or bad time. So in theory, most people that look at this go, Okay, I want to invest in a property when property values are really low as investors, if that make sense, you want to buy low and you want to sell high, that’s how you make your money. And so naturally, we want to try to figure out when the market is going to be at a low so that we could buy then, and then sell once the market is out of high. Let’s try to do that right, think back and try to figure out right now, if we’re at a low point or high point in the market, this is going to depend on the area you’re in. And I guess it’s always going to depend on what happens in the future, which we don’t necessarily know. And then it’s also going to depend on what happens with like interest rates. And there’s actually a whole bunch of different factors, right. And so ultimately, anyone that’s trying to buy low and sell high, I think he’s actually coming at it the wrong way. Because ultimately, there’s really no way for us as investors to know what’s going to happen in the future, we don’t know if the Fed is going to keep on raising interest rates. And when interest rates go up, that’s going to drive property values down, we don’t know when or if they’re going to start dropping interest rates, which would send our property values higher, we also don’t know what’s going to happen in the economy overall, we don’t know what’s going to happen next year, the year after that, let alone five or 10 years after that. And the reality is some of the best investors in the entire world who do this full time who you know, they make a living off of trying to predict what’s going to happen in the market, most of them get it wrong most of the time. So the reality is we just can’t really predict what’s going to happen with property value. So we can’t use that as a measure to determine whether or not we should buy a property now or in the future. Because realistically, we can take our best guess at, hey, I think that property values are going to drop in 1218 months from now. And here’s why I think that we may or may not be wrong. And if we’re right about it, then great we can buy then. But we will have also missed out on a whole bunch of potential cash flow that we could have been earning. While we were just waiting and sitting on our cash, the other thing is going to happen is that the money we have saved up is going to start withering away to inflation over that time. So rather than having our money working for us over the next 12 to 18 months are going to have it working against us, which isn’t really great. And so ultimately, if we try to gain the market, even if we succeed in predicting what’s going to happen, and we make a guess, and it ends up being accurate, we’re still probably going to be in a worse opposition. But then if we don’t predict properly and property values go up and up and up, then what’s going to happen, either you will have waited and then actually ended up paying more for the property or you’re going to keep sitting on the sidelines. And this is what I see a lot of people doing is that they end up just sitting on the sidelines forever as property values continue to go up waiting for them to come down, which they just don’t, or at least not to the extent that that person wants them to in order for them to feel like wow, we’re at the bottom of the market. So if we can’t look at what’s going to happen with property values to determine whether it’s a good or bad time to buy a property, what can we look at? Well, we could try to hypothesise about what’s gonna happen with short term rentals, we could say, well, you know, I think it’s gonna boom here, or I think it’s gonna bust and then try to figure that out. But again, we’re going to be in this same position of not being able to predict what’s going to happen. So ultimately, what can you do? What can you do to figure out whether or not now is a good time to buy a property? Well, ultimately, what it comes down to is that it depends, it depends on the property, it depends more than anything on the property and the deal that you’re buying whether or not you should buy it. Now there’s tonnes of people that sold properties in 2008. And it was a really bad idea to do so. And there’s tonnes of property that people that bought properties in 2008. And it was a really terrible idea to do. So it really depends on the specific property. So what we really need to focus on as investors is not trying to predict the market and time in the market. But we really want to focus on time in the market, we want to be in the market as much as possible, not have our money sitting in the sidelines. But we also want to balance that with not being in such a rush that we make bad financial decisions and invest in the wrong property. Because even if we’re at the low point in the market, there’s still going to be really bad properties to invest in, there’s properties that are going to be overvalued, there’s properties that you just flat out, shouldn’t buy. Same thing is at the top of the market, there’s going to be lots of properties that are still a really really great buy even at the top of the market. And especially this is true if you’re going to be holding the properties long term thing 510 1520 yours, the longer you hold the property, the more it’s going to have time to not really matter what happens in the micro fluctuation in the market, we know that over the long term, the market is going to rise. And so what we really want to focus on is making sure that we get a property that does two things. One is cash flows really well. And this means that you want to find a property that’s going to cash flow 15% year over year or greater on your initial purchase price. So whatever you’re buying the property for, no matter what type of market we’re in, if you’re able to buy the property, get a 15% or greater cash on cash return, that in my experience is a great a great number for a short term rental property that’s going to help you win. But you also want to make sure that you’re protecting your downside. So not only that’s the first thing is making sure the property can cashflow really well. But number two, we want to make sure that in a worst case scenario, that property is still going to break even at the very least, this is how you eliminate that fear that so many investors have the buying at the wrong time and the property value dropping, oh, when you have cash flow, it just doesn’t matter. So give me an example. Let’s say you buy a property for $600,000. And you buy it right before the market drops out. Well, if the market drops out, and now that property is only worth $500,000, then you’ve lost $100,000, where have you right? If you don’t actually sell that property, then you haven’t lost that money, you’re still just holding on the investment and writing out the ways. But the question is, can you actually afford to do that? Can you afford to hold that property and wait for property values to come back up. And that ultimately comes down to whether or not you can afford the monthly payments, the mortgage payments, taxes, insurance, etc. And so if that is that time period where the property drops in value happens to coincide with a drop in bookings of drop in demand, what’s your plan, you have to make sure when you run your numbers before buying the property that even if that happens, and you do experience a drop in bookings that either you’re going to still be able to cash flow because there’s such a great margin that even if you do perform really poorly, you still have enough cash coming in every month to pay for all the expenses or that you have a backup plan such as long term rentals that you can just flip the property over to a long term rental if you absolutely need to, and still have a cash flow neutral at the very worst. Ideally, you want cash flowing a little bit positive, even in a worst case scenario where people get into trouble is when that property value drops. And suddenly they have less bookings that they didn’t account for when they were running their numbers, all they looked at was the best case scenario, they didn’t think about what would happen in a downtime. And so in that downtime, now they have less bookings. And they actually aren’t making enough to cover all the expense of carrying the property every month, because that’s happening now they have to either pay out of pocket to carry that property or be forced to sell it. And so for a lot of people, they just can’t afford to keep paying for the property a pocket, they’re forced to sell it. Now, they really do lose that $100,000 Because the property dropped in value, and they had to sell it. So they’re not able to hold it and ride out that storm. So ultimately, as investors, it’s our job to make sure that we buy good properties that we’ve done proper due diligence on so that in a good scenario, we can make cash, and it’s great, and it’s going to appreciate over the long term, but in a bad scenario, we could still make cash still gonna be okay. And we’re still going to appreciate over the long term. So to me, it’s much less a question of Is now the right time to invest. The reality is, it’s always a great time to invest, there’s never a good or a bad time to invest, you should always just be investing right now. Because ultimately, that’s the only way to get your money working for you. And not withering away working against you wither away to inflation. So if you want to have your money working for you, then yes, now is a good time to invest. But it depends on what you’re investing in any bad asset is not going to have a good time or a bad time to invest. It’s just always going to be a bad time to invest in a bad asset. But it’s on the flip side, if it’s a great asset. If it’s a really solid investment, then doesn’t matter what time it is, it’s always gonna be the right time to invest in that great asset. So let me know your thoughts. I want to know if you agree, if you disagree, if you have any thoughts that you’d share any questions, comments, just leave them for me in the comment section down below. If you liked this video, and you thought it was helpful, if that was valuable, and please hit that like button, it really does help me tremendously with growing this channel and getting these videos in front of more people. So be sure just hit the like button there. And then of course, if you’re new to the channel and you haven’t yet subscribed, or you watch his videos all the time and you are not yet subscribed, please do me a favour and hit that subscribe button. 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