Fed holds rates but more are on the way 📈

Your daily digest of the most exciting happenings in the world of real estate and vacation rental investing. Let's dive into today's top stories:

• The Federal Reserve holds interest rates steady, signaling two more increases this year 📈

• Short-term rental investors see a surge in supply, but demand lags 🏘️

• New startup CABN unveils an off-grid, sustainable cabin 🌳

• 🔥 Deal of the Day! 🔥: 3 bd | 3 ba | Supply, NC

Fed Holds Rates Steady: What's Next? 🎢

Real estate investors, let's talk about the Federal Reserve's recent decision to hold its key rate steady. After a series of the most aggressive rate hikes we've seen in four decades, the Fed has decided to take a breather. But don't get too comfortable, as they've signaled two more increases are likely this year in their ongoing fight against high inflation.

The benchmark rate remains at a range of 5% to 5.25%, a level we haven't seen since January 2022. The Fed's projections suggest they'll push the key rate up by another half percentage point to a range of 5.5% to 5.75% in 2023. This is more than what most economists and financial markets had anticipated.

Now, why does this matter to you as a real estate investor? Well, these rate hikes directly impact the cost of borrowing. Higher rates mean higher costs for credit cards, adjustable-rate mortgages, and other loans. However, there's a silver lining. The pause in rate hikes provides a temporary reprieve for consumers, which could stimulate spending and potentially drive up demand in the housing market.

On the flip side, the rate hikes have also led to higher bank savings yields, which is a boon for savers, particularly seniors. The Fed's decision to hold rates steady for now is a balancing act, aiming to keep inflation in check without stifling economic growth.

Looking ahead, the Fed expects to cut rates to 4.6% in 2024 due to a weaker economy and lower inflation. However, they've also indicated that additional policy firming may be necessary to bring inflation down to their 2% target.

Inflation is currently running at 4.4%, according to the Fed’s preferred measure. This is a key factor to watch as it impacts the cost of living and the value of money, both of which are crucial considerations for real estate investors.

So, what's the takeaway here? As real estate investors, it's essential to keep a close eye on the Fed's actions and understand how they impact the broader economy and the real estate market. While rate hikes can increase the cost of borrowing, they can also signal a strong economy, which can be good for real estate. Conversely, rate cuts can stimulate borrowing and spending but may also indicate economic weakness.

Remember, real estate investing is a long game. Short-term rate fluctuations are less important than long-term trends and the fundamentals of your specific investment properties. Stay informed, stay flexible, and keep your eyes on the prize.

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Short-Term Rental Market: Supply Surges, Demand Lags 🏠

Attention, real estate investors! Let's delve into the dynamics of the short-term rental market. The supply of short-term rentals has been growing at a rate of about 22% per month since last August, as per a report from Evolve, a vacation rental hospitality company. However, demand has been trailing, with a growth rate of about 2% to 3% each month since January.

So, how can you, as an investor, maximize your returns in this environment? The answer lies in the amenities you offer your guests. Going beyond the basics like a fully stocked kitchen and reliable Wi-Fi, consider offering unique amenities such as a pet-friendly experience, thoughtful welcome gifts, and diverse entertainment options. These thoughtful touches can help your property stand out from the crowd and secure more bookings.

Eric Schueller, executive vice president of revenue at Evolve, emphasizes the need for fresh revenue optimization strategies. He suggests that owners who want to maximize their earnings in today's market should strategically consider the amenities they offer to win guest bookings over nearby competitors.

Another way to optimize your short-term rental investment is by setting competitive average daily rates (ADRs) and observing changes in booking behavior. This can help you determine where to set your ADRs. Other strategies include providing flexible cancellation policies, requesting guest reviews for better property listing performance, and strategically designing listing content to show up in guest searches.

Location also plays a crucial role in the success of your short-term rental investment. For instance, in the Northeast, seasonal demand is focused on water activities, resulting in lower demand during the winter and spring months compared to the summer. On the other hand, the Northwest offers year-round adventure, from skiing and ice skating in the winter to hiking and biking in the summer. Therefore, investing in amenities like a hot tub and refreshing your property’s patio and outdoor space can significantly enhance the guest experience.

In summary, to thrive in the short-term rental market, it's crucial to understand the market dynamics, offer unique amenities, set competitive rates, and consider the location-specific demands. Remember, it's the small details that can make a big difference in the guest experience and, ultimately, your returns.

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Off-Grid, Sustainable Cabins: The Future of Housing? 🌲

Nestled in the woods of Mallorytown, Ontario, stands a unique modular cabin that breaks away from the traditional gable residences in the area. This innovative dwelling is the brainchild of Jackson Wyatt, founder and CEO of the Canadian startup CABN. Wyatt's vision is to build more of these self-sustaining, off-grid homes that can thrive in remote areas.

The first built example of CABN's work is the SON.DER, a 752-square-foot one-bedroom cabin. It features a solar array that makes the cabin net-positive, and smart-home technology that monitors and reduces energy consumption. This results in lower operating costs for the owner.

Wyatt has plans to expand CABN's offerings to the U.S. market. He aims to offer a 540-square-foot model, the MOR.II, for around $219,000 USD, and larger designs like the SON.DER. His goal is to offset housing shortages by enabling people to live in less populated areas, thus reducing overpopulation in dense urban centers.

However, the interest in these off-grid homes seems to be coming from a different demographic. For instance, a couple from Cambridge, U.K., purchased a larger unit, an 1,850-square-foot, four-bed, three-bath unit called GES.TALT, for their second home in Sullivan, Maine. They were drawn to the sustainable technology that mirrored their primary home's solar panels.

Jorge Dyszel, a resort company CEO, has purchased 12 units of a 1,120-square-foot, three-bed, two-bath model called HYG.GE for a property in upstate New York. These units are slated to be used as short-term vacation rentals.

Wyatt envisions these homes for a variety of uses, from off-grid community clusters supported by government housing strategies, to sustainable long and short-term rental options, and even eco-resort style cottages for those in the hospitality industry.

In essence, CABN's modular cabins offer a sustainable, off-grid living solution that can adapt to various needs and environments. They represent a new wave of housing that combines innovative design, sustainability, and flexibility.

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🔥 Deal of the Day! 🔥

Address: 3022 Blue Drive SW, Supply, NC 28462

With its close proximity to Holden Beach Island, this classic beach house offers a unique blend of privacy and convenience, making it an ideal vacation rental. The property boasts a large inground saltwater pool, ample space for parking, and is situated on approximately 1.7 acres with no HOA. The home's coastal charm is accentuated by an open living room, kitchen, and dining area with tall ceilings and original knotty wood paneling. Each bedroom comes with its own closet, providing plenty of storage. The large back deck overlooking the pool is perfect for relaxation, and the property's location offers marsh views and plenty of coastal breezes. Additional amenities include a fire pit area, covered parking, and a large outbuilding for storage. The home's location also offers easy access to local fishing, boating, crabbing, golf, restaurants, shopping, and fresh seafood.

Airdna data:

Estimated monthly payment: $2,000/month

Estimated monthly revenue: $5,300/month

Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.

That's all for today! Stay tuned for more insights and updates from the world of real estate and vacation rental investing.

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