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Tony Stancato: Welcome to the Michigan. Short-term rentals podcast, My name is Tony Stancato. I’m here with my co-host. Jordan painter. What’s up Jordan?
Jordan Painter: Oh, Tony’s blind side me here. Last minute podcast trying to come up with some good chatter and yeah, intended to be more prepared, but Lord knows what’s about to hit us. So let’s go.
Tony Stancato: Just push record and make it happen, you know. Yeah, what do you got going this weekend?
Jordan Painter: Hopefully the best man. Let’s go. Oh man, I haven’t even thought that far ahead. I know I’ve got a basketball game. I’m coaching for my son and getting together with some friends Saturday night. Matter of fact, it’s funny. We’ve become a custom to have in my oldest who’s almost 17 babysitting, and she went and got a life. And so now we got to try to figure out a babysitter last minute for for Saturday. So I don’t know what we’re gonna do, but yeah, you
Tony Stancato: Nice awesome. Paint and stage and man, pain and stage, and on unit, one and a half of 11, just got back walked some cleaners through Southaven properties. Stop stopped over our southaven project. You know, progress slow and steady wins the race, I suppose there, but the grout the grout and the tiles man looking really good. So excited for that project to be wrapped up and and get that stage and…
Jordan Painter: Yeah, it’s pretty crazy.
Tony Stancato: get that listed. So,
Jordan Painter: So we do this podcast just audio There’s no there’s no video. But Tony is is zooming in from one of our properties in Stevensville right now,…
Tony Stancato: and,
Jordan Painter: looking at the background and the life of the Stancato’s right now is, is like a gypsy roaming through Southwest Michigan from property to property in the ones he’s working on right now. Don’t have Internet so he’s got a sneak into the the closest quietest place with a good solid connection for us here today. So way to go Tony.
Tony Stancato: Yelp, Yeah,…
Jordan Painter: You see his wife
Tony Stancato: absolutely, yeah, yeah. All right. What do you say? We get into it. So today we’re gonna talk about bold predictions in the short-term rental market, These are predictions that, you know, likely won’t come true but something that maybe we think could be a real possibility and we want to call our shop before before it happens, you know. And in, hopefully, we’ll remember to revisit this and you can either tell us that we were way off the mark, or boy, you guys hit the nail on the head. So,
Jordan Painter: Yeah. What months we’re going to look back and either we’re going to be absolutely brilliant or any record of this podcast ever existing is going to be deleted from existence. One of those two things is going to be true.
Tony Stancato: Yeah yeah. So my bold prediction for 2023 and I just got started thinking about it yesterday actually was having a conversation with a guy on LinkedIn and I think that the airbnb fees that are on the guest. Start to move over or…
Jordan Painter: Here.
Tony Stancato: completely transition over to the host in 2023. So the big guest fee, the fees that the guest seas, they’re no longer going to see those because the host is actually going to be the one paying for those and they’re going to be the one seeing those. So what are your thoughts on that? I think we talked a little bit in chat yesterday on that, but one of the things that I think about is
Tony Stancato: Kind of the Amazon model. You know. Some people have been selling on Amazon, a long time and they built their business on Amazon and you know when Amazon raises their fees, there’s not much you can do about it when they change the fees. When they adjust things because you built your business on the back of those platforms, they, they kind of own it and they know they can raise the fees change, the fees adjusts as they see fit because, you know, you are reliant on them.
Jordan Painter: Yeah, you know, I think that that’s, that’s some really good insight. And I think I’ve seen it just in real estate with the zillows and some of these lead platforms and the lead generation that that occurs, they really start to establish themselves as a leader in the market and…
Tony Stancato: You.
Jordan Painter: Realtors are beholden to them to pay for their leads. And they they start at, you know, I remember when I first started with Realtor.com and Zillow and some of these platforms paying $50 a month, for some pretty decent quality leads those same lead sources. Now, are 5,000, I’m sorry, you know, 500 a thousand dollars a month starting. So those fees just keep going up and and
Jordan Painter: You know, people people continue to pay them, but I think that that’s, that’s likely to happen. My bold prediction piggybacking on that. This is something else that we’ve talked about a little bit.
Tony Stancato: Here.
Jordan Painter: But, you know, I think people in our in our country are ingenuitive and they find creative solutions to things. So I think we’re going to see some other platforms, probably start to creep up. We’re gonna see people property owners, I think start to invest in other technologies, and promotion to get direct bookings. So I think that there…
00:05:00
Tony Stancato: Here.
Jordan Painter: I’m interested to see some opportunities and these are some some plans that work formulating for our business as well. What can we do to help get more direct bookings? What can we do to connect? All their property owners and do it in a more efficient cost effective way. So I think we’re gonna see over the next. I don’t know if it’ll happen in a year but certainly 18 to 24 months, we’re gonna see a lot more money being spent by property owners to find those eyeballs to get direct bookings.
Tony Stancato: You need to be.
Jordan Painter: So I Think that that’s something that’s gonna be enough fact of the, the causation of the airbnbs of the world, jacking up prices.
Tony Stancato: Alright man we’ll call your shot 2023. What it sounds like is you think there’s gonna be a emerging platform, there’s going to be a new contender, you know, gonna go from the big two to, you know, maybe a little brother in there so you got verbo and airbnb and you think another one’s gonna start to creep in. That’s going to be a little more cost-effective and do a good job at connecting guess and hosts as a shot.
Jordan Painter: Okay, I think that’s gonna happen.
Tony Stancato: I’m hearing.
Jordan Painter: I think just based on the the feedback and the comments that we see and some of the platforms that were involved with a lot of people, do complain a lot about the platforms and their lack of responsiveness in the lack of the ability to collect damages and the fees that they’re charging. All these different things that that they don’t have control over. So, people are gonna start to to seek other platforms to get eyeballs from from consumers, for sure.
Tony Stancato: Yeah. And you know, kind of going back to my bold prediction in a kind of intertwines with this but I think one of the biggest complaints you hear from guess are the fees, right? And then not only the fees but hey, I’m paying all these fees and then I also have a chores list that I have to do on checkout. So don’t think that Airbnb isn’t listening to that and…
Jordan Painter: You.
Tony Stancato: it’s the same with eBay Amazon. You know. You can think that they’re there for the sellers, but at the end of the day, they’re there primarily for the buyers, and in this instance, they’re there for the guests. So if they think they’re gonna start to lose some market share, or, you know, maybe take a little bit of a hit because the fees are just too much, they’re going to make adjustments and it might come in the form of, you know, a wolf in sheep’s clothing.
Tony Stancato: In kind of incentivizing you to incorporate those fees and then once you switch, you know, maybe they’re there’s no switch in back. So But yeah, that’s kind of my that’s my bold prediction. And I think you’re right, I think there is room for a another player in the space. I think there is some, you know, furnished Finder is in there. But it tailors more to a certain audience. And I mean, when you think of furnished Finder, you think of traveling nurses, right? I think they’ll be a platform that’ll be as cost effective. Maybe a little bit better user interface and a little bit. Yeah, just better platform in general but I do think that you can build a platform that doesn’t have to be overly You know. Over the top on the piece.
Jordan Painter: Yeah, yeah. So my my next bold prediction is I think we we’re gonna see the cream rise to the top and we’re gonna see a lot of the lower end. Let’s say, type of of owners start to fizzle out of the business. So I think we’ve seen the the increases pretty dramatically over the last year or 18 months in the market that we’re in. There’s lots more inventory.
Jordan Painter: And so what we’re gonna see is, we’re gonna see the people who are doing all of the extra things to get their property up to speed and really fix it up nicely and promote it. Well, we’re gonna see those start to get, get the bookings and maintain maintain the bookings and we’re gonna see a lot of the other ones, start to fail and…
Tony Stancato: If?
Jordan Painter: come back on the market. And so, the, the Barrett’s entry is fairly low for a lot of these smaller houses and the the smaller stays so that, that side of the market, the inventory I think is gonna increase much more dramatically. There’s a lot of people who don’t really do all the research that they should getting into it and those people are really going to struggle, I think, historically the people who Had a second home or a family cottage that put it out there just for a little bit of extra income and didn’t really put a whole lot of effort into really creating a better premium experience. Those are gonna probably also start to see less bookings. So, the level of competition is going to create, I think awesome quite frankly, awesome opportunities for consumers because the, the owners are going to have to offer that much better of experience to get you to come there. So I think we’re gonna see a lot of awesome opportunities for experiences for consumers, coming to our market in Michigan.
00:10:00
Tony Stancato: So what if I had to put parameters around yours and you stole mine, you son of a gun but let’s package it up so that it is very clear what shot it is. I I have one specifically, I can, I think again it aligns with your so I don’t know the numbers on it. Exactly. But my bold prediction is inventory in southwest Michigan. Goes down this year compared to last year. So we’ve seen a lot of inventory increase over the last couple years. It’s been, you know, travels been on a good run, a lot of people, I think, when we started in one area, there was 49 properties. That’s including verbo. You know, some might have been counted twice, you know, one on airbnb, one on burbo but I think the last time I checked it was somewhere around like 85 or 90, so definitely almost double right. But I
Tony Stancato: Think from where we’re at today, and I got to get those numbers,…
Jordan Painter: If?
Tony Stancato: but I think it’s going to actually go down and here’s why because when we joined and I’m gonna go back to I think we’ve already mentioned them on the podcast, but the person that was on the front porch, bending over picking something up and that was one of the photos for the listing, you know? So somebody just took random photos, probably on their iPhone, but caught, somebody bending over and they didn’t care enough to actually
Jordan Painter: If?
Tony Stancato: Remove that photo or get a better photo, you know those people are gone, right? And then the people that don’t take design and decor seriously and put their best foot forward on that. I think they’re gonna find that it’s not just somebody’s gonna run a box with something sleep on in a place to sit. Like you got to create a good experience, you got to have that design element to it. So yeah, my bold prediction and I don’t know if you want to you know it sounds like we’re kind of aligned but I’m going inventory. Decreases in Southwest Michigan and the other big factor on that is
Tony Stancato: We’re looking every day like stuff. Just does not come out on the market. So I think there’s gonna be a lot more people. There’s gonna be not enough inventory to buy to get to get new ones on. But there’s gonna be more people actually leaving because they’re just not putting in the, the right amount of effort to make their property shine.
Jordan Painter: Yes, I think we, we are in some agreement, but I think, I think where I differ is, I don’t think we’re gonna see a decrease this year. I think we’ll see that probably more in 2024. I think there’s still a lot of demand for the the asset class and there’s a lot of people still trying to get in and I don’t think that we’re really gonna see the impact of it until later this summer when people realize that their numbers are down. So, you know, I think it’ll be a lagging effect where towards the end of this year there’s gonna be a lot of people who are aren’t making the cut and we’ll see a lot of inventory. Start to decrease in 24 and that could be opportunities for people to get those properties that are already set up and maybe need some tweaks in in jump into the market, then because a lot of these properties aren’t gonna be successful.
Tony Stancato: If?
Jordan Painter: The numbers aren’t going to be good because because of the lack of professional management and set up. So there could be some opportunities in 2024 but again I don’t think we’re really gonna see that inventory decrease. At least until until you know the the next to the summer of 24 is when we’ll really start to see that fall off.
Tony Stancato: Well, I’m calling my both prediction inventory decreases in Southwest Michigan in 2023. Do you have a specific one on your end that
Jordan Painter: I think the the increase is going to be less than it was last year, but I still think we’re gonna have increase in supply over the next the next eight months from what we’ve seen in the past. So I think it’s…
Tony Stancato: Yeah.
Jordan Painter: what I think it’s gonna go up a little bit compared to what it was last year.
Tony Stancato: Yeah I think you’re probably right.
Jordan Painter: But we’re gonna go down.
Tony Stancato: That’s the easy not so bold prediction but alright.
Jordan Painter: Huh.
Tony Stancato: Alright so Will. Yeah. So I I think you’re probably right, but I’m, I’m saying, I’m going with a bold prediction of just in inventory going down in Southwest Michigan. Again, It’s just so hard to get properties over here. I mean, I can’t tell you how many people are looking and what do we see one a day? Like maybe one house a day, one house a day. In general, seems to come out on the market and how many houses do you think have to come out on the market before you actually find like a good like Vacation rental home. I mean it’s like one in 20.
00:15:00
Jordan Painter: if one 50 to 1 20,…
Tony Stancato: Yeah. Yeah.
Jordan Painter: 25 to 50 to 1 probably, you know, the other the other interesting thing is, you know, we’ve been working with some people Tony particularly They there’s a lot of people out there with a lot of money and they just want to buy. And I can’t tell you how many, how much time we spend talking to people telling them, not to buy properties in for, you know, I kind of it just makes me wonder how many other people are out there that are making bad buying choices and not being picky enough. They’re there has to be a lot of that going on, just based on the microcosm of the experience that we’re having. So again, I think that that’s gonna, that’s gonna lead to a an increase this year, but they’re not going to be. They’re not gonna be happy with the numbers, they get, you know, in 24. So,
Tony Stancato: Yeah, I I do when it comes to Southwest Michigan, I still feel really good about the Southwest Michigan market. You know, when you go look at some of the places that are oversaturated, I mean, they’re just super cheap but I feel like again because it’s so hard to find a place here, even though there is quite a few short-term rentals.
Jordan Painter: It.
Tony Stancato: I mean, I always go back to the question of how many Vacation, rentals have to be available.
Tony Stancato: To, you know, provide for, you know, call it Chicago, Traveler’s the third biggest city in the United States and I mean, we always say 80% of our guests are from Chicago.
Jordan Painter: but,
Tony Stancato: So, I mean, I don’t know, I just don’t know that the Southwest Michigan area can actually provide enough inventory to service that market. So I think, you know, ones that don’t put their best foot forward. Can still probably the price still. Make a little money over the season, but it’s gonna be a rough road.
Jordan Painter: Yeah, I could definitely see that.
Tony Stancato: Well, it got any other bold predictions or
Jordan Painter: Yeah. You know, I would say that the other the other asset class I think in it, it’s somewhat to do with short-term rentals but I I think we’re gonna see it’s an explosion with midterms. I think we’re gonna see a lot of people that are already doing. Long-term Rentals on Properties. You know, they may not want the hassle of the the vacation rentals because of the amount of turnovers, but there’s gonna be a lot more people doing furnished, fully furnished days. So I’m gonna say just pulling a number out. I’m gonna say We’re gonna see that go up by at least 25% this year, in regards to the inventory, and I think the demand is following that. I know a lot of a lot more people that are relocating in a different places and not really wanting to commit and get tied down to the market. Not to mention how hard it is to. Even even find a place. I think we’re gonna see a lot more a larger increase in the midterm options than we are the actual vacation rentals.
Tony Stancato: Dude, I love that because I tell you, if I was a renter, I think I would love nothing more than to rent a place that’s completely furnished.
Jordan Painter: Here.
Tony Stancato: All in costs have my, my TV, my lawn care, all that provided for just one flat fee and oh, I get to see that it’s, it looks amazing in. The pictures has great reviews. It’s like, why would I want to wear down my own stuff? When I can just, you know, go in there for three to six months and if I like it, I could probably extend the least a little bit longer if not, you know, on to the next one. It’s probably a lot harder with kids, but you know, definitely, I think my 25 year old self, dude, I’d be living out of airbnbs all day, man. All day.
Jordan Painter: Yeah. Yeah. I think I think it there’s, there’s some good opportunities there, and I do think that the profits are gonna be better for investors, especially that are buying in today’s market with today’s interest rates. At today’s prices, it’s really hard to make sense of any type of a longer term rental right now for people. So, you know, in order to, to have asset class to invest in and…
Tony Stancato: You are.
Jordan Painter: make sure they’re not losing money on inflation, I think we’re gonna see a lot more a lot more of that happening. So pretty, pretty exciting to see where that, that leads, and these different markets. Um, so yeah, I think that’s another one. I think the last one I’m gonna go out on a limb. I’m not gonna say 2023 but 2024 by 2024, I think we are going to see some legislation pass in Michigan. That has been kind of outstanding for several years. It’s been, it’s been ongoing I I hate to even predict what’s gonna happen with that whether it’s gonna pass or not, but I think we are gonna see a resolution. I know there’s a lot of pressure being put on the politicians to come up with a resolution National Association or realtors in Michigan Association or Realtors and you know some of the our pack is is putting a lot of dollars towards promoting individual property rights.
00:20:00
Jordan Painter: And trying to get some legislation through. So, you know, if I’m gonna say a not, so, bold prediction, I’m gonna say, Well, it will be resolved by the end of next year. If I’m gonna go bold, I’m gonna go out in, in hope that they actually pass it in favor of allowing the uses of property for short-term rentals with reasonable reasonable restrictions. You know, I think communities do have to be protected and, you know, homeowners have to be protected but I also love the idea of being able to do what the heck I want with a property that I own so,…
Tony Stancato: Yeah, and…
Jordan Painter: bold predict,…
Tony Stancato: I think that that’s Boom,…
Jordan Painter: awesome 23.
Tony Stancato: let’s go. And that’s something. I think we talk about quite a bit. I mean a lot of people want that pass and yeah, that could be a good thing. But on the other end of it, if you own a place that’s grandfathered in that no longer allows new short-term rentals into the area,…
Jordan Painter: If?
Tony Stancato: you got a lot of protection, you got a lot, you know, the demand could surge and the inventory will. Have to stay the same, right? So, there are definitely pros and cons with, you know, having some restrictions. And again, I think we’re in an area where
Tony Stancato: It’s not allowed in a town that a lot of people want to stay and because of that I think people start buying up short-term rentals on the outside of the area so that they can do it by the books. And if you want to stay in that town and if you want to stay with larger groups, you have to stay just outside of town. So causes demand in those other areas to go up. but,
Jordan Painter: Yeah sure. Yeah. There’s definitely some some risk there for some of the outlying areas right now. However I do I do still very strongly believe that if you create a great guest experience, people are gonna book it. So it just goes back to making sure you’re making the right buying choices. Make sure you have a very clear plan in a very stable, exit policy and, you know, I think, you know, something that we’ve been talking about a lot as well. Recently is just not being over leveraged, make sure that you’re making good investments and make sure that you’re bringing enough, you know, capital into that investments that you’re not gonna end up putting yourself in a bad spot measuring expectations for costs and, you know, monthly ongoing maintenance and those types of things. It’s very important. So you just got to be wise in the the purchases you make and a thing shift, you know that that creates opportunity, right? So, so then you know somebody’s markets opened up open up and all the sudden it opens up opportunities for everybody to
Jordan Painter: To reevaluate where they’re where they’re focusing and in turning those directions. But again, I think when, if and when this bill passes, there are some some regulations that have been proposed on the number of units. Any one entity is, is able to purchase. So, they’re trying to make sure that these corporate interests don’t, you know, buy up city blocks and they’re gonna have a limit on the number of permits they issues. So they’re still even what? Even if it passes, there’s gonna be some pretty good leslation to ensure that these communities aren’t turned into,…
Tony Stancato: If?
Jordan Painter: you know, 100% vacation type of of communities and in the homeowners are all forced out. So, you know, I’m optimistic that that’s gonna pass and I think it is going to be a good thing for those communities in the property values and those communities are going to be, you know, lifted up as well. So I think it’s a It’s a win-win for everybody with reasonable regulation. So
Tony Stancato: Absolutely, well, I think that’s it for today. If you get a chance, go over to Facebook, join the Michigan, Vacation, rentals, Facebook group, that is a kind of a new group that we just got our hands on. And I think we’re at 6400 members strong right now, a great place to connect with other homeowners travelers. If you want to try to find a property, I always say the best way if I’m a traveler to leverage that group is to go in there and say, Hey, I’m looking for, you know, five nights stay between the state and that day and here’s my budget, what do you got? And then vacation rental owners, just kind of come out and comment on your post and share their listing? And Yeah,…
Jordan Painter: If?
Tony Stancato: I think for me that’s seems like a great way to get a deal. You know, you always got to be cautious. Make sure you do your due diligence. Make sure that, you know, the homeowner is who they say they are and that the property does exist and you’re not
00:25:00
Tony Stancato: Iron money over, you know, across the pond or anything. So yeah, go ahead. Go over there and enjoying that. And until next time,
Jordan Painter: Real quick, I love to get some feedback if you think we’re idiots and we’re wrong in our predictions. Hit us up love to get some some alternative viewpoints on this If there are other predictions that we missed out on, I’m sure there’s there’s a bunch of them love to get some feedback. So, reach out to Tony or I and yeah, we’d love to maybe bring those up in a future episode and give you a shout out.
Tony Stancato: Good point. Take care.
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