If you're at all in tune with what's happening in today's real estate economy, then you're probably aware that interest rates are rising daily. What does this mean as an #airbnb investor? Is the gig up? Are the golden years of Airbnb over? As much as I'd like to say, "No, of course not!" the answer isn't quite so simple.
When investing in short-term rentals, there are many things you need to consider such as your cash-on-cash return and overall ROI. And of course, the higher your interest rate, the lower your return. So I'm not going to sit here and say that mortgage rates and premiums don't matter. They do.
But here's what I do have to say about the rise of interest rates: they shouldn't matter. Let me explain. So long as you're investing wisely and the properties you're choosing hit all the marks and overall criteria that you've set for yourself...then it shouldn't really matter what the interest rate is. Meaning if you're target for any deal is a 20% cash-on-cash return, then it doesn't matter if you're interest rate is 2% or 4% or 7%βso long, as it still pencils out as a 20% CoC. Make sense?
Timestamps: 0:00- Changing interest rates in the last 5 years 3:00- Is it still possible to get a high CoC return on a short-term rental? 5:45- Submitting offers on multiple promising properties 7:10- here vacation rentals 8:11- How a value-add can help you get higher returns 9:46- What is a good return in todayβs economy? 13:17- Interest rates in the 70s, 80s and 90s 15:30- Cash flow vs appreciation 17:00- How a return changes based on the interest rate (spreadsheet examples) 23:07- Final thoughts on short term rentals and interest rates
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*All content on the Robuilt YouTube channel reflects my own opinions and should NOT be taken as legal advice, financial advice or investment advice. Please seek out guidance of professionally trained and licensed individuals before making any decisions. Some links in the description may be affiliate links.