If you were to drive through a small mountain town on a Wednesday in the middle of February, you probably wouldn’t think that there was an investment opportunity.
You see, the main street is half empty, and the local coffee shop closes at 1 P.M.
If you look closer, though, you’ll see that the old motel got new windows, and those went in last fall. And that place down the street that rents cabins no longer offers weekly discounts because they don’t have to. People pay for 4 nights in the middle of the week, even if it’s late winter or early spring.
This is exactly how investors get a whiff of new opportunities.
Travelers don’t notice small changes, but investors sure do.
Why Buyers Start to Pay Attention
By the time the place gets crowded, you’re late to the party.
The change investors notice is when the same people come back 3 or 4 times a year, and rent the same cabin every time, in which they stay for 5 nights instead of 2. To an investor, that shows that occupancy is a lot easier to predict, so you go from having a February that’s all vacancies to what starts to become a pattern.
The thing that makes these quiet places so attractive to buyers is that prices are still relatively low because they haven’t caught up with demand yet. There are no big airports or huge chain stores, so a small town still looks like a secondary market.
This is exactly when you want to invest.
At the same time, owners start to see their properties in a different light.
So, what used to be a cabin for them to go on vacation once or twice a year is now a property that can earn them some money. They figure that, if they’re only using the place for a few weeks out of the year, why not rent it?
Everywhere you look, people start seeing rental potential. Some even take it a step further and look into the best DSCR lenders for investors to start building their portfolio.
You’ll also start seeing small local businesses pop up here and there, like a cleaning service that knows how to turn over a cabin in a normal amount of time, or a handyman who’s able to fix a smart lock or a hot tub. None of this was here 2 years ago, but then again, 2 years ago, this was only a travel destination.
Now, it’s a small, relatively reliable market.
How to Tell If a Place Is About to Take Off
The signs aren’t flashy, so it may be hard to see them if you don’t know where to look.
Here’s how to notice them.
Steady Bookings Even Though It’s Not Peak Season
Crazy busy holiday weekends bring in a nice bit of cash, but let’s forget about those for a moment because that income isn’t reliable.
What you really want is a place that can be rented out anytime, whether that’s a weekend in July or a rainy week in November. Consistency is a priority here, so if you see a town having traffic for a week or two in the summer, move along.
That’s a seasonal spot, and what you want is a growing market.
Limited Listings But Gradual Upgrades
You’d expect a ton of ‘For Sale’ signs all over town when the place starts to get some attention, but that’s usually not how it goes. There’s not a flood of new properties on the market because the people who own them aren’t desperate to leave.
So, instead of something dramatic like this, you’ll mostly see upgrades here and there.
One cabin gets a new siding, an old motel invests in better mattresses, another cabin gets a deck, the town hotel gets a spa, etc.
These are small improvements, but what’s important is that they’re happening.
Visitors Want More Than a View
A sunset on a cliff is definitely a sight to see, but visitors will start to want more than what’s naturally there. When a place starts to take off, they’ll want good internet, air conditioning and heating, a workspace, and entertainment… And mind you, these aren’t luxuries.
These are normal requests visitors expect if they’re planning on staying for longer than a weekend.
People Keep Coming Back
One thing that’s a stronger sign than anything else is when people keep coming back. Once you get repeat visitors, you no longer depend on just tourists who are curious to see what’s up; you have visitors who are attached to the place.
They know the good and the bad, and they still want to come back year after year, which clearly shows that the town is about to become a lot less quiet.
Conclusion
One thing to know about investors is that they don’t like to gamble a lot.
And, yes, every investment is a gamble to an extent, but someone with experience (and common sense) won’t go around investing their money in just anything. When it comes to properties, they’ll look to see if the place has people who come back, who stay 5 nights and not 2, who ask for Wi-Fi so they can work from the porch. That’s the stuff that gets them excited.
The boring things you don’t find on billboards.
Recent Comments