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Our team at Nectar had the opportunity to attend the second annual IMN Short Term Rental Forum in Miami, and we’re still processing everything we learned and all the new connections we made.
This is a critical time for the STR industry, which is poised to evolve and innovate more than ever before in the coming years. For that to happen, it’s important for lenders, investors, realtors, brokers, vendors, and operators to get on the same page about where we’re headed, and this conference was an excellent step in the right direction.
Here are some of our team’s top takeaways from the conversations we had and the sessions we attended.
Emerging Strategies for Growth and Acquisition
A large portion of the forum centered around portfolio growth, mergers and acquisitions. It was fascinating to hear a wide variety of perspectives about different strategies for funding the growing capital needs of not only investors, but of short term vacation rental operators, arbitrageurs and owners.
This also led to some great conversations about data and valuation, including discussions about single homes vs. apartments, and comparing different secondary market types like national parks and college towns. It feels relevant to us here at Nectar because these are all areas we have a focus on, and we are seeing an uptick in the need for capital coming through our doors.
STR Financing in a High-Interest Environment
Amidst high interest rates and an uncertain future for the real estate market, many conversations at the conference centered around STR financing and the best ways to continue growing a portfolio in the coming months.
Our CEO and Co-Founder Derrick Barker hosted a standing-room-only panel on “Financing the Short Term Rental Market in a Climate of Volatile Interest Rates.”
During the panel, we heard from a variety of lenders, each with their own ideas about ways to finance STRs in our current economy.
They also discussed recent changes to underwriting, breaking down topics like interest rates, repayment periods, fees, and what to include in your file.
It was exciting to hear how alternative funding sources are stacking up against traditional banking right now, and to learn about regional trends in lending across the U.S.. While not everyone agreed on the method of gathering data to make effective decisions in lending, everyone did agree that quality data is a critical component of the industry’s healthy growth trajectory.
Underwriting Income-Generating STRs
In our conversations with even the most experienced STR operators, we often find that the underwriting process is a source of confusion and reservation for many investors. One of the classes at STR Forum tackled this head-on, talking about underwriting for income-generating STRs.
The panelists — including one of our past webinar guests: Colin Carvey from Revedy — broke down some of the different methodologies and tools used to underwrite rental arbitrage.
They also talked about valuation in markets that don’t have comps to guide you, and they addressed some of the ways they’re maintaining forward-looking projections even in a volatile market.
Building Your Capital Stack
Derrick also hosted a panel on “Equity, Private Equity, Debt, and Your Capital Stack as Money Becomes More Expensive.” This conversation dug into some of tactical things STR investors should know as they’re setting up their capital stack, including:
- Finding the optimal capital structure
- Bridge to perm vs. sell decisions
- Today’s ARM structures
- Leverage
Derrick and the panelists also explained why local brokers and community and local bank options are sometimes superior to large national banks, and they discussed the question of “How many lenders do you need?”
Strengthening Relationships and Fostering Innovation
Our team left the STR Forum with a renewed excitement about all the innovation and growth that is happening in the STR industry. It was so refreshing to connect with and learn from other innovators and leaders in the space, and we’re excited to see how people take the lessons they learned at this conference and run with them. We enjoyed meeting so many of our existing clients, as well as future potential clients, affiliates and distribution partners.
Thank you to everyone who attended one of Derrick’s panels, stopped by our booth, or had a conversation with our team. It is abundantly clear, our fintech product is well-positioned to positively contribute to the investment space.
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