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Investors Look to Build Airbnb Portfolios

June 28, 2021

Investors see huge potential in the growth of short-term rentals and are rapidly collecting homes to rent out to vacationers.

For example, ReAlpha, a Dublin, Ohio–based firm, is reportedly looking to spend up to $1.5 billion to buy short-term rentals. The company’s CEO said that’s enough to buy about 5,000 homes. ReAlpha plans to target markets like Dallas, Austin, Texas, and Miami, where it then intends to acquire 100 to 500 homes quickly and nearly at the same time.

ReAlpha’s CEO Giri Devanur also said he wants to let other people purchase fractional ownership of short-term rentals on his company’s app.

Short-term rentals have seen a surge in demand as vacationers during the pandemic looked to homes over hotels to stay. Read more: Short-Term Rentals Target ‘Digital Nomads’ and Short-Term Rental Operators Offer Longer Leases

Other investors are also looking to buy up groups of Airbnb units and other short-term rentals to take advantage of returns from a post-pandemic travel boom.

“The business model has been proven, and now the opportunity is to do this at scale,” Scott Shatford, CEO of industry analyst AirDNA, told Bloomberg. “People can’t figure out how to deploy capital quickly enough.”

Owning short-term rentals can pose challenges, however. It requires regular house cleaners and maintenance and fast turnover times due to shorter stays than apartments that have longer leases.

Investors are facing higher home prices due to the highly active market, and adding portfolios of short-term properties could prove a challenge with competition. Some municipalities are also cracking down on which properties can be offered on a short-term basis in neighborhoods and condo buildings.

Sean Breuner with AvantStay, which manages branded properties that offer concierge services, told Bloomberg that he believes the demand for short-term rentals will draw tens of billions of dollars in future years. “It is the last remaining asset class with any yield remaining,” says Breuner, whose company also operates a brokerage to help investors find such real estate. “We believe there is a huge opportunity to institutionalize.”