Welcome to Northwest Arkansas Investing Podcast, your go-to source for real estate investing in Northwest Arkansas.
Speaker 2:With your seasoned investor just starting out. We bring you expert insights, market trends and practical strategies to help you build wealth through real estate.
Speaker 3:From buying and selling to property management and long-term investment planning. We cover it all so you can make smart, informed decisions in this fast-growing market. Let's dive in. All right, welcome back to Northwest Arkansas Investing Podcast. I'm here with Mr Brian Wagers, but just him and I today, and we're going to chat a little bit. What's up, man? Yes, sir, we're going to do a few little short episodes, just kind of talking through some deals that we've done, deal deep dives. We're going to talk through pros and cons of short-term rental versus long-term rental, and then we've got some other really cool episodes that you'll have to tune into, but one that we wanted to hit on to start would be short-term rentals versus long-term rentals, the pros and cons, the advantages and even some of the things that we're seeing in Northwest Arkansas and how it pertains to these topics right here. And so just to kick it off, brian short term or long term.
Speaker 2:Man, that's way too broad. Also, I've been listening to us on before we get into it on Spotify versus Apple and spotify you can just watch its video too. Yeah, I didn't, really I didn't. I didn't appreciate that until now because it was just so easy you just click the purple thing on your apple iphone. But I've been checking out some other pots too lately. I love them. Not to stall for this answer, but short-term versus long-term I mean, I'm a long-term rental guy. I think less turnover, more predictable, more sustainable, less regulation those are kind of my level.
Speaker 3:Yeah, those are a lot of great points right there that I'd love to hit on, because it seems like short-term rental is the big craze right now, especially in some of those bigger markets Austin, phoenix, a lot of those other markets that you have a lot of tourist attraction, and for us in Northwest Arkansas we do have tourist attraction with mountain biking, we have business travel with Walmart.
Speaker 3:But I think there are some things that folks should definitely pay attention to pros and cons, I guess, if you will, for short-term rentals, and then we'll kind of get into a little bit of the long-term rentals and the pros and cons of that as well. But I think, just things that I think make sense to think about with short-term rentals. Number one, obviously, the income potential. Income potential so, um to I mean just for an average, look at it, if you have an apartment that can rent for 2000 a month here in Northwest Arkansas, a lot of times those are in areas that are, you know, close to downtown or close to trails or or, uh, maybe even close to the university stuff like that, Um, and a lot of times you have the ability with a short-term rental to to get upwards of of 3000, even 4,000 a month, um, and obviously things to take into consideration would be your expenses and what that looks like. You're really kind of running a business with a short-term rental, but any thoughts on on that, or or?
Speaker 2:Yeah, I think there is. Yeah, so there isn't. You know, people think short-term rentals are just automatically hopped to Airbnbs. There is other avenues where you can have furnished units and people will pay a premium for that and maybe that's.
Speaker 2:Maybe they're in between jobs, maybe they're in between homes, maybe they're just on work, relocation and temporary. They're not ready, maybe they're not ready to buy the first time. So they'll pay a premium to have a furnished unit. You know, I think it's. It's a good option. I was a partner on the deal in uh in northwest arkansas, um large multi-family deal where we bought it and four, four of the apartments were uh, kind of furnished short, midterm, short three to six month leases and it was like for traveling nurses. Yeah, it was pretty popular for them and they would pay, you know, normal rent 1600. They're paying 2300, you know, for that premium. So, but you do, there's there's a whole different. They're staging.
Speaker 2:You know the airbnb game has been like every part of it has been been not monopolized. You know people who will buy the furniture for you and stage it, which can help. Yeah, uh, that's where the previous owner was, but we actually just paid our property managers to go buy some nice couches, nice furniture. I probably wouldn't. I have terrible design. I'm not good at interior design, but we had someone on the team do that. So I think there's like I don't know. You'd have to see what the delta is if it's worth the extra headache. If it, I guess screening tenants wear and tear, what, how that affects other residents there. But and even I don't know airbnbs I'm not even a fan of like personal like. If I'm gonna have a house in florida I don't want other people live like I don't want other people living in it.
Speaker 2:One and this I understand you're making some money back, but I would also rather just go to a different town and go to a different beach town every time I'm going somewhere, not be tied to one spot. So you know, if I can't get it behind on that connection, then yeah, um, but on the other token, there's people that are killing it and there's people that are, you know, making millions of dollars a year in airbnb locally, nationally. You know, I know you, you represent a lot of investors. That that's all they do. Yes, exactly, and that's you talked about nationally. It's big. You know, northwest arkansas it's only going to grow like beaver, like beaver lake. That that to me, makes the most sense, you know.
Speaker 2:But obviously f Fayetteville kills it during school, like if you have a short-term rental, you have alumni coming back in Fayetteville and visiting those, and I know some of those kill it. But the devil advocate on that. You know what about when U of A is not doing as good, or what about during off-season, like summers, you know, where there's nothing going on. So you have to fill that like account for that and the legislation. You know in other markets more than Northwest Arkansas where they could say, hey, you know your neighbors don't like short, they don't like the short-term rentals. You know, they think it causes more problems. And there was actually I don't know if it was in, it was one of the local municipalities Um, it was just voted on but it did not go. They wanted to like limit short-term rentals or something like that, or not completely, but they said no, there was no limits or anything like that. But it got brought up.
Speaker 3:Yeah, absolutely.
Speaker 2:In other markets. You've seen where-.
Speaker 3:Yeah, I think if you think about markets like Northwest Arkansas, where we still have a really big housing shortage for the most part, a lot of that kind of legislation seems like it starts to pop up. And so Fayetteville specifically one of the biggest markets for the housing crisis, if you will has put in regulations to where you aren't able to do. They have a cap on how many Airbnb licenses there are out there at a certain time. I don't know exactly what that cap is. I'd encourage listeners to look into that a little bit, but they are all full and there is a waiting list, from what I understand, and the only way to get one is if someone drops out, which is nowadays it's kind of becoming a premium and it can be transferred with the sale of a property, and so I had a client that just, uh, just purchased a property and they were able to inherit that, uh, that Airbnb license, airbnb license and have that value there.
Speaker 3:And so, yeah, I think, just as you're talking about that though, too, you know we look at these other cities. I mean, you know, in Biddenville, there are hotels popping up everywhere downtown, near the campus, on the campus and in other spots like that and in other spots like that, and the Waltons are really a part of pressing that because we really don't have enough housing for folks that want to come in and tour the area, and so they're really addressing those problems. But what if the Waltons wanted to push and say no Airbnbs in Bentonville too, or we're capping them in Bentonville? Then we have. If you're betting your whole portfolio on Airbnbs in bentonville, um, you're going to run into an issue there potentially.
Speaker 2:I think that's something we haven't really talked a lot about on the podcast is the tourism industry is just going to be growing so substantial it's already, you know, because there is so many other big industries here. Um, tourism isn't as talked about like the hospitality industry is going to continue to grow the more, more alice pours into bentonville and these outside projects you know Crystal Bridges obviously is a big one. The mountain biking scene when Bella Vista's you know, mountain biking course is open, that's going to increase tourism. You know University of Arkansas is a fast-growing sec school. You know go cats.
Speaker 2:But I still I still support a sec, another school, as long as we're not playing each other and we love to see the local. It help it. Fayetteville's economy does a little bit better when the hogs are playing, exactly, exactly I think. I think there's always going to be a need for, like in northwest arkansas, there is going to be a need for that hospitality, like you said. You see hotels coming up. So I think legislation would be kind of careful to limit that because it's a need like it's almost a need to have that to support tour like.
Speaker 2:If you want good tourism, you're going to have to have support short-term rental. There's people out that you know I'm a hotel guy too. I like the points, I like, I like waking up to a fresh bed made every day and, yeah, absolutely like the room service. But again, you have some people are all airbnbs. They want the whole spot to themselves. So I think, like we saw the one legislation, it didn't go through. But I think, uh, I think nwa is in a good spot to not be, but that's something you have to be cautious about yeah, agreed you.
Speaker 3:You have to know the local regulations. You have to know if you're if an area that you're buying for airbnb or vrba or whatever the hoa allows for it. All these things we would encourage y'all to look into. Um, but again, hitting on a little bit of that tourism piece, even from 2023 to 2024, airport traffic was up almost 20% in Northwest Arkansas. We're seeing these huge expansions at XNA and so as we continue to add flights and maybe add airlines with Southwest, hopefully at some point you're going to continue to see tourism come in and there is going to be there's, there is going to be a need. And then again, with the, with the healthcare expansion in Northwest Arkansas. Travel nurses haven't historically been a big thing for Northwest Arkansas, but they will continue to be as we continue to add, uh, in the healthcare space and the things that Alice Walden is doing.
Speaker 2:So yeah, I think that's pretty cool. I like how you talk about X and X band breed breeze. It's like blowing up not blowing up, but they just added a direct flight to pensacola.
Speaker 3:Yeah so, um so, but again, you know, just finishing off on the short-term rental piece, you know we, we would encourage everyone to kind of make sure you know your local regulations, make sure you know the best areas that that, uh, that airbnb is doing the best in. So there's sites called AirDNA and some other resources out there that you can use as your underwriting properties in Northwest Arkansas to figure out what does occupancy look like for this area, what are the average rents look like for this area, and start to underwrite it from there. But I think, overall, airbnb can really for the most part. There's Airbnb management companies out there, but that is a business more than long-term rentals can be for the most part, in my opinion, and so I just would encourage you guys to look a little bit further there.
Speaker 2:Yeah, if you're in the single family space, I think maybe it makes sense to look at it. You know, if you're in commercial, probably not, unless it's for personal reasons or, um, you know it's. Uh, we have a. We had a previous guest, henry washington. He, he has some airbnbs. Yeah, he's, he talked about a case study where not on the podcast but uh, he had a long-term rental that wasn't doing that great. But the short term term, you know, selling it he might not have got what he wanted it, or refinancing it same thing, but the short term rental market was pretty good in that area. So he's like, ponied up some extra money to get it staged and you know he got a pretty good premium.
Speaker 3:So yeah, yeah, exactly.
Speaker 3:And then again, going back to what you mentioned on on kind of furnished rentals like furnished finder is a is also another website out there similar to Airbnb, but it fits that midterm rental, um type of category and so that's really over 30 day rentals, so maybe it's one month or three months or six months for traveling nurses or people coming in town for this or that or they're relocating and need a place in the interim.
Speaker 3:I've got some clients that utilize that and do really well. And so take a look at Furnished Finder great website that you can kind of see how much demand is in your area and how much supply as well and if there is a big gap there and a big need, that might be an avenue that you look at as well. But I want to transition a little bit to long-term rentals. We long-term rentals is kind of our play and what we like to do and what we underwrite for um and and how we kind of want to build our real estate portfolio. But, um, for you, what do you see as some of the biggest pros of of long-term rentals?
Speaker 2:Yeah, I think the wear and tear is a big one. Um, the predictability is big. Um, not just legislative, but knowing where your income is coming from, knowing that there's not huge swings, having some level of predictability there. Um, the management side of it not managing someone every couple days, not paying the extra there's a lot of fees. Um, there's a lot of managing the furniture. You know it's almost a different. You know business within real estate. I think there is the case for short-term rentals, for, you know, maybe you have a hundred unit apartment and 10 of those you offer, you know, nine months options or six month options. You don't even have to furnish it, but you pay a higher premium. Yeah, some of those midterm rents and then you could have the option of furnishing one. But, uh, long term, people are always going to need a place to live. People aren't always going to need to travel. Yeah, um, it's a great point. So I think that's why I got into real estate in the first place. You know, because of its resilience.
Speaker 3:You know, not only the profitability but protecting your downside Right, that's a great point, yeah, when you think about trying to protect your investment and make good, strong investments long-term, it's hard to beat what long-term rentals can do for you and the stability that it can provide Recession-proof, really. I mean, when you look at it, the only areas where I see that would not be recession resistant would be in these more luxury apartments that are well above the average rent in your area. And so I think, as you look at long-term rentals and and kind of what you want to underwrite for as long as you have, um, if you have, you know, a deal that is around or under the the average rent in your area, a lot of times you're going to be, for the most part, recession, recession resistant, um, in my opinion, yeah, nothing's recession.
Speaker 2:You know you got to be careful, not for such a proof. Recession is it recession? Uh, resilient, even you know that can take it. Uh, I think, just looking back in case, that you know there wasn't really short-term rentals um, and past recessions you could, maybe you could track, like hospitality, how it does. You know there's I'd say that's more correlated. Short-term rentals is then, you know, to hotels than it is to long-term rentals, you know, I think.
Speaker 2:I heard someone talking about boutique hotels being a strategy. Now too, like because of the short-term rental disruption in some of these markets, that boutique buying a boutique hotel is an option. Yeah, but yeah, it's for me long-term rental. You me long-term is 12 months. That's not maybe you do. And on the other token, some people offer a discount sign a 13-month lease and we'll give you your first month free when you're in for 13 months. So you have that 12 months on the other side.
Speaker 3:Absolutely yeah, and I think those are some great points.
Speaker 3:I think, looking at some of the cons of long-term rentals versus short-term rentals, a lot of times I mean you don't obviously have that upside with the rental potential and the income potential, Some other things I think that are interesting to think about.
Speaker 3:Know, as as delinquencies happen and rents get behind in some areas, um, it's kind of inevitable as you start to grow your portfolio, you will have people that inevitably maybe won't pay, Um, if you're in the game long enough, I think that's that's fair to say. And so non-payments, damages of the property, eviction issues that you could be having like you don't have to worry about evictions with a short-term rental and kind of the complexities that come with that and the attorney's fees that get involved, things like that. More, things like less flexibility, so you're locked in kind of on rents and where you're going to be for at least a year typically. And I would even say, going back to kind of the wear and tear of a short-term rental, a lot of people probably would argue that short-term rentals are able to be kept in better shape because they're being cleaned, you know, either nightly or multiple times a week or whatever, Whereas you know, a typical long-term rental someone's likely not getting a cleaner each week, um, so I think those are some things there.
Speaker 3:I think the other thing, the other con of it would be and this would be really a con for for both sides of it but market competition. So, um, you really have to pay attention to that either way, whether there's hotels popping up more, airbnbs popping up on the short-term side, or if you're in a market where you've got multiple apartment complexes being built around you and you're kind of sandwiched in an area that maybe it's not getting absorbed as quickly, and so not necessarily a con only for long-term rentals, but definitely something to think about on both sides For me in multifamily.
Speaker 2:I think I can underwrite and I can account for what happens if we have a dip in vacant. What happens if it goes from 100 occupied to 80 occupied or 90 for for airbnb? I can't underwrite what happens if they change the law where they don't do airbnb. How do you write that? If they shut the shut the well off yes, that's One thought there. Yeah, absolutely.
Speaker 3:But yeah, I think, just as we wrap up, I think it's important just to understand a lot of the legality in the legislation that is coming about in Northwest Arkansas when it comes to short-term rentals, what hotels are popping up and who's kind of leading the charge there. But even on the other side of that kind of the advantages of short-term rentals and the need that we have for it right now in Northwest Arkansas, and especially in those areas like Bentonville or close to Trails or in Fayetteville, close to the university, and then on the other side of that, you know the advantages of long-term rentals and the stability that comes with that, the recession resistance of it and then really just being able to kind of model what that looks like long-term. I think there's a lot of advantages on both sides and those are things that there's a lot of need for in Northwest Arkansas on both sides, and for us to figure out kind of what makes sense for a long-term growth strategy. It's kind of up to each investor. So any other thoughts there.
Speaker 2:Yeah, I mean, that sums it up pretty well. There's a lot of ways to make money in real estate investing Part of the reason why we have this podcast to talk to. People are doing it in a bunch of different ways. We're doing it in different ways, so there's not one right or wrong way, absolutely.
Speaker 3:Love it. Well, thanks for listening and looking forward to our next episode. We're going to dive into a few deals and we'll see you guys soon.
Speaker 2:See you guys.
Speaker 1:Again, thank you guys for tuning in. I'm going to go ahead and list some sponsors off here. We're going to start with Flat Branch Mortgage, specifically Colton Kennedy. Colton and I personally do business together and he's a wonderful lender here in the Northwest Arkansas corridor. Want to invest in real estate or purchase a home but feel like you need a secret decoder ring to understand the process? You're not alone. First-time investors, house hackers and future homeowners, colton Kennedy has you covered. Colton Kennedy with Flat Branch Home Loans helps people like you break into the real estate market without the guesswork. Think of him as your mortgage strategist, helping you turn I wish I could into. I just did. You bring the vision he'll bring the lending game plan. Let's make your first investment a smart one. Colton Kennedy with Flat Branch Home Loans. Contact him today by calling 417-437-0086. Or emailing ckenedy at fbhlcom. Thank you so much, colton.
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Speaker 1:Our next sponsor is TDSIT. That's T as in Tim, d as in document, s as in solution, I as in information, t as in technology. This one hits personal. It's close to home. My dad, tim Stanley, runs TDSIT and he decided to sponsor our podcast podcast. So I can speak from personal experience. I've been able to work for my dad in the past as well and they're a great, great uh solution for business technology. Uh, if you're a local business owner, or even out of state, if you're running a business, need printers, printers, need information IT services. If you need phones, scanners, printers all the way up to your printing books to hey, we just need something in the office, tds IT is that spot. They provide the best in-brand business technology with proven best in local service, and they can prove it.
Speaker 1:Our next sponsor is from Winstone Private Lending. This episode is brought to you by Winstone Private Lending, one of the top private and hard money lenders now serving Northwest Arkansas. Whether you need short-term capital for a flip a bridge loan or creative financing, they've got you covered with very flexible products to fit nearly any deal, including 100% financing. What sets them apart is their deep expertise, fast response times and ability to think outside of the box to help investors like us close quickly and efficiently. If you're looking for a real lending partner, check out Winstone Private Lending. Link is in the show notes.
Speaker 2:Special thanks to one of our sponsors, who I've worked with personally on multifamily commercial loans as well as business acquisitions. People's Bank works with entrepreneurs, investors, dealmakers and risk takers. They're the ones who see opportunities where others see obstacles, whether it's a vacant lot with a plan for a thriving business or making an old space new. They work with creators who think big and are not satisfied with the status quo. People's Bank helps you build Arkansas, deal by deal and brick by brick. They don't just see numbers on a spreadsheet, they see your passion and vision. People's Bank, it's where people come first. Member FDIC. If you're needing loan assistance, reach out to Dakota at 870-883-1706 or dhedden at peoplesbankarcom.
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