The 3 Golden Rules
Your guiding investment principles for 2025
Welcome to this week’s issue The Un-Normal Investor. Each week, I publish one 5-minute read that’s written to make you a smarter real estate investor.
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Last month I was contacted by three different investors.
One of them exclusively operated short-term rentals. Another one focused on the mid-term space. The third was a long-term operator.
Albeit each of them were executing different strategies, they were all experiencing similar issues - shirking rent rates, increased vacancy, and a rise in tenant turn-over.
Within the first 10 minutes of our 30 minute call I was able to identify the ‘big-picture-problem’ that was plaguing their portfolios.
They were trying to implement old tactics, in an entirely new market.
They hadn’t evolved their approach to marketing, positioning, or tenant retention. And as a result, they were taking a hit to their bottom line.
We spent the next 20 minutes discussing how they can turn things around.
Rather than boring you with every little detail, I’ll distill it down these 3 core investment principles that I implore you to follow if you want to make 2025 a profitable year.
Investment Principle #1 is for the Short-Term Rental Investors
‘Unique’ Isn’t Enough Anymore. You Have to Create An ‘Experience’.
Ten years ago you could list a shack on AirBNB or VRBO and secure a booking. Now a days that won’t cut it. The short-term rental space has grown increasingly competitive and has hasn’t shown signs of slowing down any time soon.
If you want to make your rental stand out amongst the crowd, you have to do more than create a ‘unique’ stay, you have to curate an ‘experience’.
Investment Principle #2 is for the Mid-Term Rental Operators
Ditch the Flashy Finishes. Execute the Basics Exceptionally Well.
Most mid-term rental investors are still taking pages out of the STR (short-term rental) playbook.
Rather than designing and furnishing the home for a traveling professional or family that will be spending the next 2 - 3 months at the property, the home is stocked and marketed like a weekend getaway.
This is a huge mistake.
The key is to make your guest feel at home, not like they’re on vacation.
You can skip the moss wall, photo booth, and neon signs. Saving them a trip to Target and sending over the cleaners will go ten times farther.
Investment Principle #3 is for the Long-Term Buy-and-Hold Investors
Grow Your Rent Roll Without Tenant Turnover.
The common approach that most use to grow their top line is to wait for a tenant to vacate and re-fill the unit at a higher rate.
But they’re forgetting that the #1 killer of cashflow is vacancy.
The best way to increase your rental revenue is to stabilize rents without ever letting the unit go empty.
It’s far easier said than done, but if you strategically re-invest in your real estate, and take a measured approach to raising rents, you can add to your top line while protecting your bottom line from vacancy risk.
As fertile markets continue to mature and lesser-known investment strategies become popularized, more competition will pile into the real estate space.
Regardless of whether you focus on short-term, mid-term, or long-term buy and hold opportunities, follow these core principles to make your portfolio more defensible (+ profitable).
What’s your take on today’s topic? Do you agree, disagree, or is there something I missed?
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