Should I Get Into the Short Term Kosher Vacation Rental Market?

It’s a question we get asked so often. People love what we’re doing. They watched the Latest Talks interview with our CEO, Shaya Weinberger.

Or they stayed with us for a Shabbos, over Pesach, or a Florida kosher getaway with their spouse. Or held an amazing Shabbos family reunion in one of our kosher rental mansions or unique kosher retreat properties (that can accommodate up to 114 guests!).

And people want to know if this is a business they should get into.

We’ll try to answer that question by asking you a few simple questions. The way you answer them, will help you make an informed decision.

Firstly, do you have a second property already that you are considering putting out to the short term vacation market?

If you answered yes, how much money are you carrying each month, including mortgage, insurance, utilities, landscaping, property maintenance?

If you answered no, can you afford to go for 6 months to a year without rental income, should you choose to now purchase a property?

Having a vacation rental, does not automatically equal profit. Often, owning a second home is a long-term proposition, only offering returns down the road when property values rise and you can sell, charge more for rent etc. Until that point, you may not even cover your monthly costs.

Market demand is also a factor. If you are in an area with high demand for vacation rentals, then the short term rental market can theoretically be a great investment. But if that demand is great now, what will it be in 6 months or a year from now?

Diversification also plays a major role in demand. Consider:

Our Florida kosher rental listings on the one hand, have very high occupancy rates and little gap time in the Winter season. Everyone wants to get out of the cold with their family or their spouse and enjoy sunny weather and a pool, while its snowing back home. But in the summertime, demand lessens.

On the other hand, our New York kosher rental listings, primarily in the upstate region, have a different demand cycle. In the summertime, many people are looking for a getaway from the city and its heat. But in the wintertime, demand is much lower.

LakewoodHosts.com runs on an entirely different plane, which isn’t necessarily seasonal. Being the fastest growing city in the US, Lakewood is a burgeoning construction boom town, with communities sprouting almost as fast they can. With marriage rates among frum Jews way up and above the secular world by miles, each new marriage needs somewhere frum to live, and more often than not, Lakewood and its surrounding environs is that place of choice in setting up a frum home.

That sets up the short term market in the Lakewood, NJ regions to be more a “need-to-be-near-my: son/daughter/grandchildren”, kind of demand, where the location is key to the success of the occupancy percentage and ultimate profitability.

But even in boom town, the model is only profitable up to a point, as saturating the market in a particular area, will only dilute the demand among the available short term rentals. And while that’s good for prospective guests as it drives pricing down and competition up, it isn’t good for any short term rental property owners, new, prospective, or existing.

There’s always a bit of calculated guessing, in deciding where that perfect location to set up an STR (short term rental) for the greatest ROI (return on investment) is.

And it isn’t all about revenues.

No matter where you own or buy a property, you will still have these regular costs to consider. Mortgage, property management, insurance, utilities, landscaping, property maintenance, regular pool and/or hot tub servicing are constants that must be paid, regardless of occupancy rates.

So, is it the right time for you to invest in the short term rental real estate market?

That depends on your individual situation:

• Do you have a second property already that you can rent out?

• Can you afford to go without rental income for 6 months to a year, should you choose to purchase a property now and need to do work to get the property to a rent-able state?

• Can you afford to upgrade/rehabilitate the home (if needed) to bring it up to a modern state?

• What is the demand like in your area?

• Are there other STR’s operating successfully in the neighborhood? (That could be either a good or bad indicator)

• Are there enough rentals right now to meet the demand?

• Are there too many STR’s for the demand?

• Is demand in the area trending upward? Downward?

• Would it be better to offer the property to the general marketplace, such as AirBnB or VRBO, where there is a broader audience?

• A property can cost tens of thousands to furnish and outfit. Do you have that money to put in?

• You will need approximately $2,000 for initial marketing materials (professional photography, descriptive writing, layouts etc) to bring your STR to the marketplace.

• Even when your rentals is ready and operational, can you afford this if a quiet spell leaves you with a no rental income for 6 months, if market conditions change?

• And finally, does it make more sense financially to rent out the property to a long term tenant, which typically is more stable income, but lower risk and less reward.

Unless you can adequately answer the above questions in a sure and confident way, we don’t suggest you purchase property anywhere as an investment for the short term rental market.

It is important to remember that the short term rental market is a highly competitive one. You need to be sure that you are making an informed decision and doing your due diligence before investing in this type of real estate. It’s also always good to have a ‘Plan B’ up your sleeve.

You should research the local market, understand the demand for short term rentals in your area, and determine if there is enough competition to make it worthwhile. You should also consider the costs associated with owning and operating a short term rental property, such as mortgage payments, insurance, utilities, and maintenance.

Finally, you should consider whether it makes more sense to rent out the property to a long-term tenant or to pursue the short term rental market.

Most of our owners are seasoned investors, have other diversified businesses so they’re not relying on the income from this investment as source of regular income, or those who can afford their second home even with all of the above considerations, and are it in for the long run.

If that sounds like you, feel free to complete a List-with-us request form, and we’ll review it to see if you and your property are a good fit for our company.

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floridakoshervillas.com has been at the forefront of the kosher vacation rental industry since 2009. Serving tens of owners, hundreds of vacation properties and tens of thousands of customers over 14+ years, there is no more experienced company in the industry.

The article above is intended as food for thought for those considering getting involved in this type of industry. It is NOT intended to serve as nor should it be considered investment advice, and you should always consult with a qualified financial advisor before making any investment decisions.