Crystal Coast Vacation Rental Show

“Be fearful when others are greedy and greedy when others are fearful.”– Warren Buffett

“If life gives you limes, make margaritas.”– Jimmy Buffett

I like to think that the two men that I don’t personally know who have had the largest impact on my life are the Buffetts. We are going to set aside Jimmy (RIP) for today. While there’s probably quite a few lessons we could take from the Poet from Pascagoula, today we’ll concentrate on the Oracle of Omaha.

Warren Buffett, as one of the world’s most successful investors, has many things to say about investing and money. Largely, his success has come from starting early, having a long term view, and investing in things he understands. Berkshire Hathaway was a textile manufacturer when Buffett took control. Something he understood. And while he slowly turned into the holding company that it is today, he famously invests heavily in things like See’s Candy, Dairy Queen, and a variety of other things we all know and understand.

I think it’s fair to say that we’re getting mixed signals in the financial world. At the very least. I also think that “Be fearful when others are greedy and greedy when others are fearful,” is starting to come into play. When we started investing in foreclosure properties at the end of the 2008 real estate bust, we knew people who thought we were crazy. But if we hadn’t, we wouldn’t be where we are today. Our only regret is not being more greedy while everyone was still afraid of values continuing to drop. But what was not apparent to the fearful was the fact that a loss of 10 or even 50 percent in the value was not important. Rents were still high and the pool of renters was unfortunately growing. We knew that we could very quickly recover our investment. And of course values rebounded like they always do. And, in the only way I could ever compare us to Warren Buffett, we bought something we understood. We bought small houses in the town we lived in.

If you have a deal that makes sense, using conservative underwriting, this is still a good time to pursue it. We believe there will be some people, in an effort to batten down the hatches, who will be eager to sell. However, buy what you understand. Also take a peek at my post from last month, Positioning Your Short Term Rental for Success in an Uncertain Economy. Set yourself up the best you can for whatever the future may hold. And if inflation comes back, there’s nothing like paying off debt with devalued currency.

Of course, it is fair to wonder why I believe in the beach vacation home even as things may be shaky. My view is this- if you have positioned yourself properly, you are not just someone’s aspirational vacation, you’re someone else’s “safe” vacation. Rather than going overseas or across the country, many will see an in-state vacation at the beach as a simpler, safer choice. People will continue to vacation. As times change, your guests may change. As long as they keep coming and you make them happy, you have done your part. You have provided a valuable service. And hopefully made a little money. This being said, a larger home not directly on the ocean may be in for a rougher ride. A moderately priced property directly on the beach will rarely have an open week in the busy season. And will continue to do well in the shoulder seasons.

Probably the second scariest time* we had as STR owners was the start of the pandemic. When you are used to a deposit from the management company on the first of the month, and instead you pay them, you get a little queasy. That quickly turned into a banner year. Stand alone houses became the perfect place for a family to vacation while staying away from others. As things have a tendency to do, everything worked out just a little differently than we expected.

Of course as a back-up plan, I highly recommend the other Buffett.

We will be at the Carteret Chamber of Commerce Business After Hours Expo April 29 at the Crystal Coast Civic Center. We will be promoting our exhibition spaces and are planning some great giveaways and promotions. See you there!

As always, if you are interested in the Vacation Rental industry or are already involved, we encourage you to join us at the Crystal Coast Vacation Rental Show October 18 and 19 at the Crystal Coast Civic Center. Subscribe and follow our social media links above and below to stay on top of what’s coming next.

*The scariest was Hurricane Florence camping out over the home we had just closed on three months prior and very quickly rehabbed to get on the rental market.