Outlook For Short Term Rentals, Nov 2020
Due to COVID-19, there is an estimated 3.4-4 million homes currently in forbearance. In January 2021, lenders will end the forbearance so what does that mean for the vacation rental industry? Leaders in the finance industry are predicting they will make one of two decisions. They are predicting that there will be a foreclosure boom or they will allow loan modifications.
Homeowners often don’t know what a loan modification is. Lenders would rather help borrowers with a short-term solution instead of incurring the expenses of foreclosure. Banks want to avoid this at all costs which is why they came up with loan modifications. Banks will sit down with borrowers and lower their payments either for six months to a year or two years. Now borrowers of the mortgage still have to pay this back, but they tack it on the end of their mortgage.
Unfortunately, some smaller banks may not be able to negotiate lower terms as they need the funds to keep their doors open. This is why they are predicting there might be a foreclosure boom. This will open up inventory in the housing market which has been so hard to find when the federal government lowered the interest rate. Purchase prices will start to normalize then as supply increases. The feds have made a statement that they will not increase interest rates until the end of 2023!
If you are looking to start investing in a vacation rental, this is the most affordable they have ever been in our history. You will probably never see interest rates this low ever again. Lower interest rates are a tactic the government uses to encourage lower mortgage payments so that borrowers will use those savings to put back into the economy. Purchasing and selling homes also create about 50 jobs per transaction which also helps the economies. There are mortgage officers, realtors, escrow officers, loan officers, lenders, appraisers, and so many more involved when you purchase a home. You are providing them work and helping the economy.
Taking The Plunge
Uncertain times like a pandemic can be scary to take the plunge to purchase a vacation home, but if you have a great property management company in place that will make sure to get you the most income for your investment property then there is less risk involved. The low interest rates allow you to purchase more homes since your mortgage payments will be lower. Do your research and ask property managers how they would market your property. Do they have procedures in place for something like this? If not, they may not be the best fit. Our homes are still producing income and getting renters. If you would like to know more about how much income you could be producing in a vacation home, we’d love to speak with you about how this is the best time to get into the vacation rental industry today!
As you can see, we are extremely active with our marketing efforts. We would love to have the opportunity to manage and market your vacation home. Last year, we did not have one vacation home occupied less than 220 nights and our average vacation home was occupied 248 nights annually…that is over 20 nights a month! Check out more of our Orlando Vacation Property Management Tips.