Investor

Short term rentals (STRs):

STRs are transforming many of Michigan’s residential neighborhoods into Airbnb playgrounds. For those communities without adequate zoning regulations, residential real estate is fertile ground for private and investment-based entities. The motive – rental income is far more lucrative than long-term rental properties can demand.

Just as Amazon has severely impacted brick and mortar businesses, investment digital platforms (global websites) pick off homes in areas where the amenities are popular with vacation renters. Hotels and Motels that once served as the mainstay for travelers are now competing with Airbnb and VRBO digital platforms for the same clients. Accordingly, the hospitality industry is currently facing similar consequences as bookstores, taxis, and other service and retail type businesses did with the onslaught of Amazon and Uber.

So what’s different now than in the past concerning STRs? The main culprits appear to be the COVID virus aligned with the sophistication of technology. Added to this mix is the real estate lobby that quickly grasped the value of this secondary market.

The global COVID pandemic has forced Americans’ to stay within the continental U.S. when searching for vacation spots. Consequently, homes within areas that offer lake access or other popular attractions are in demand by investors.

How does this Network Function Work:

The three main actors involved with degrading residential neighborhoods are the real estate lobby, global investment websites, and Airbnb type digital platforms. In Michigan, a critical accessory to this group are a number of state legislators who are attempting to re-write current law to facilitate the growth of STRs in exchange for campaign contributions and in some cases personal interests.

Analyzing a property for its STR income potential starts when a realtor adds any given home to its Multiple Listing Service (MLS). This service, owned and operated by Realtors, is the country’s most effective real estate marketing system. It’s where all properties are recorded when a client signs a contract with a realtor to sell their property and serves as a living catalog for other agents to access.

Investment Websites:

Once listed in MLS, the managers of investment websites such as (Mashvisor.com) scrape the information from MLS and match the property to communities where there are no regulations against short-term rentals. Management then analyzes the potential for income of each property based on mathematical algorithms. Then, the properties are separated categorically by several variables of interest to investors - location to lake access, shopping, and other amenities that will draw renters.

The more amenities available, the more interest the property will draw. Since digital systems accomplish this process within a few hours, the internet allows same-day shopping for world investors. And the use of the noun “world” is not an exaggeration. Properties listed on these websites are just a click away, and investors large and small can make an offer from all areas of the globe. In some cases, instead of knowing who owns the property next to your home, a property manager will be hired to handle the day-to-day administrative tasks. Covid has changed the landscape!