May 21, 2025 • 27 mins
The age-old debate of short-term versus long-term rental strategies takes center stage in this thought-provoking episode of Northwest Arkansas Investing Podcast. Brian and Brandon dive deep into the nuances that could make or break your real estate investment portfolio in this rapidly growing market.
Short-term rentals promise tantalizing returns – potentially 50-100% higher income than traditional long-term leases in prime Northwest Arkansas locations. But as they unpack the reality behind those numbers, the hosts reveal the hidden complexities: the business-like operational demands, regulatory uncertainties (including Fayetteville's current Airbnb license cap), and the seasonal fluctuations that can wreak havoc on cash flow projections.
Meanwhile, long-term rentals offer the stability and predictability that have made real estate investing a cornerstone wealth-building strategy for generations. "People aren't always going to need to travel. People are always going to need a place to live," Brian notes, highlighting the recession-resistant nature of traditional rentals. The hosts explore how Northwest Arkansas's booming tourism industry (with airport traffic up 20% year-over-year) and expanding healthcare sector create unique opportunities for both investment approaches.
The conversation takes fascinating turns through mid-term rental strategies for traveling healthcare professionals, the impact of university sports schedules on rental demand, and practical tools like AirDNA for analyzing short-term rental performance in specific neighborhoods. Whether you're a seasoned investor or just starting your real estate journey in Northwest Arkansas, this episode provides the critical insights needed to align your rental strategy with both market realities and your personal risk tolerance.
Have you chosen the right rental strategy for your investment goals? Listen now to discover which approach might be leaving money on the table – or exposing you to unnecessary risk.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Welcome to Northwest Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.
Speaker 2 (00:13):
With your seasoned investor just starting out.
We bring you expert insights,market trends and practical
strategies to help you buildwealth through real estate.
Speaker 3 (00:20):
From buying and selling to property management
and long-term investmentplanning.
We cover it all so you can makesmart, informed decisions in
this fast-growing market.
Let's dive in.
All right, welcome back toNorthwest 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 afew little short episodes, just
(00:41):
kind of talking through somedeals that we've done, deal deep
dives.
We're going to talk throughpros and cons of short-term
rental versus long-term rental,and then we've got some other
really cool episodes that you'llhave to tune into, but one that
we wanted to hit on to startwould be short-term rentals
versus long-term rentals, thepros and cons, the advantages
(01:03):
and even some of the things thatwe're seeing in Northwest
Arkansas and how it pertains tothese topics right here.
And so just to kick it off,brian short term or long term.
Speaker 2 (01:14):
Man, that's way too broad.
Also, I've been listening to uson before we get into it on
Spotify versus Apple and spotifyyou can just watch its video
too.
Yeah, I didn't, really I didn't.
I didn't appreciate that untilnow because it was just so easy
you just click the purple thingon your apple iphone.
But I've been checking out someother pots too lately.
(01:36):
I love them.
Not to stall for this answer,but short-term versus long-term
I mean, I'm a long-term rentalguy.
I think less turnover, morepredictable, more sustainable,
less regulation those are kindof my level.
Speaker 3 (01:55):
Yeah, those are a lot of great points right there
that I'd love to hit on, becauseit 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 touristattraction, and for us in
Northwest Arkansas we do havetourist attraction with mountain
(02:16):
biking, we have business travelwith Walmart.
But I think there are somethings that folks should
definitely pay attention to prosand cons, I guess, if you will,
for short-term rentals, andthen we'll kind of get into a
little bit of the long-termrentals and the pros and cons of
that as well.
But I think, just things that Ithink make sense to think about
(02:37):
with short-term rentals.
Number one, obviously, theincome potential.
Income potential so, um to Imean just for an average, look
at it, if you have an apartmentthat can rent for 2000 a month
here in Northwest Arkansas, alot of times those are in areas
that are, you know, close todowntown or close to trails or
or, uh, maybe even close to theuniversity stuff like that, Um,
(03:01):
and a lot of times you have theability with a short-term rental
to to get upwards of of 3000,even 4,000 a month, um, and
obviously things to take intoconsideration would be your
expenses and what that lookslike.
You're really kind of running abusiness with a short-term
rental, but any thoughts on onthat, or or?
Speaker 2 (03:20):
Yeah, I think there is.
Yeah, so there isn't.
You know, people thinkshort-term rentals are just
automatically hopped to Airbnbs.
There is other avenues whereyou can have furnished units and
people will pay a premium forthat and maybe that's.
Maybe they're in between jobs,maybe they're in between homes,
maybe they're just on work,relocation and temporary.
(03:42):
They're not ready, maybethey're not ready to buy the
first time.
So they'll pay a premium tohave a furnished unit.
You know, I think it's.
It's a good option.
I was a partner on the deal inuh in northwest arkansas, um
large multi-family deal where webought it and four, four of the
apartments were uh, kind offurnished short, midterm, short
(04:04):
three to six month leases and itwas like for traveling nurses.
Yeah, it was pretty popular forthem 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'sa whole different.
They're staging.
You know the airbnb game hasbeen like every part of it has
(04:25):
been been not monopolized.
You know people who will buythe furniture for you and stage
it, which can help.
Yeah, uh, that's where theprevious owner was, but we
actually just paid our propertymanagers 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
(04:47):
do that.
So I think there's like I don'tknow.
You'd have to see what thedelta is if it's worth the extra
headache.
If it, I guess screeningtenants wear and tear, what, how
that affects other residentsthere.
(05:09):
But and even I don't knowairbnbs I'm not even a fan of
like personal like.
If I'm gonna have a house inflorida I don't want other
people live like I don't wantother people living in it.
One and this I understand you'remaking some money back, but I
would also rather just go to adifferent town and go to a
different beach town every timeI'm going somewhere, not be tied
(05:31):
to one spot.
So you know, if I can't get itbehind on that connection, then
yeah, um, but on the other token, there's people that are
killing it and there's peoplethat are, you know, making
millions of dollars a year inairbnb locally, nationally.
You know, I know you, yourepresent a lot of investors.
That that's all they do.
Yes, exactly, and that's youtalked about nationally.
(05:55):
It's big.
You know, northwest arkansasit's only going to grow like
beaver, like beaver lake.
That that to me, makes the mostsense, you know.
But obviously f Fayettevillekills 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 Ais not doing as good, or what
(06:18):
about during off-season, likesummers, you know, where there's
nothing going on.
So you have to fill that likeaccount for that and the
legislation.
You know in other markets morethan Northwest Arkansas where
they could say, hey, you knowyour neighbors don't like short,
they don't like the short-termrentals.
You know, they think it causesmore problems.
(06:39):
And there was actually I don'tknow if it was in, it was one of
the local municipalities Um, itwas just voted on but it did
not go.
They wanted to like limitshort-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 (06:58):
Yeah, absolutely.
Speaker 2 (06:59):
In other markets.
You've seen where-.
Speaker 3 (07:00):
Yeah, I think if you think about markets like
Northwest Arkansas, where westill have a really big housing
shortage for the most part, alot of that kind of legislation
seems like it starts to pop up.
And so Fayettevillespecifically one of the biggest
markets for the housing crisis,if you will has put in
regulations to where you aren'table to do.
(07:21):
They have a cap on how manyAirbnb licenses there are out
there at a certain time.
I don't know exactly what thatcap is.
I'd encourage listeners to lookinto that a little bit, but
they are all full and there is awaiting list, from what I
understand, and the only way toget one is if someone drops out,
which is nowadays it's kind ofbecoming a premium and it can be
(07:42):
transferred with the sale of aproperty, and so I had a client
that just, uh, just purchased aproperty and they were able to
inherit that, uh, that Airbnblicense, airbnb license and have
that value there.
And so, yeah, I think, just asyou're talking about that though
, too, you know we look at theseother cities.
I mean, you know, inBiddenville, there are hotels
(08:03):
popping up everywhere downtown,near the campus, on the campus
and in other spots like that andin other spots like that, and
the Waltons are really a part ofpressing that because we really
don't have enough housing forfolks that want to come in and
tour the area, and so they'rereally addressing those problems
.
But what if the Waltons wantedto push and say no Airbnbs in
(08:24):
Bentonville too, or we'recapping them in Bentonville?
Then we have.
If you're betting your wholeportfolio on Airbnbs in
bentonville, um, you're going torun into an issue there
potentially.
Speaker 2 (08:36):
I think that's something we haven't really
talked a lot about on thepodcast is the tourism industry
is just going to be growing sosubstantial it's already, you
know, because there is so manyother big industries here.
Um, tourism isn't as talkedabout like the hospitality
industry is going to continue togrow the more, more alice pours
into bentonville and theseoutside projects you know
(08:57):
Crystal Bridges obviously is abig one.
The mountain biking scene whenBella Vista's you know, mountain
biking course is open, that'sgoing to increase tourism.
You know University of Arkansasis a fast-growing sec school.
You know go cats.
But I still I still support asec, another school, as long as
(09:18):
we're not playing each other andwe love to see the local.
It help it.
Fayetteville's economy does alittle bit better when the hogs
are playing, exactly, exactly Ithink.
I think there's always going tobe a need for, like in
northwest arkansas, there isgoing to be a need for that
hospitality, like you said.
You see hotels coming up.
So I think legislation would bekind of careful to limit that
(09:40):
because it's a need like it'salmost a need to have that to
support tour like.
If you want good tourism, you'regoing to have to have support
short-term rental.
There's people out that youknow I'm a hotel guy too.
I like the points, I like, Ilike waking up to a fresh bed
made every day and, yeah,absolutely like the room service
.
But again, you have some peopleare all airbnbs.
(10:03):
They want the whole spot tothemselves.
So I think, like we saw the onelegislation, it didn't go
through.
But I think, uh, I think nwa isin a good spot to not be, but
that's something you have to becautious about yeah, agreed you.
Speaker 3 (10:17):
You have to know the local regulations.
You have to know if you're ifan area that you're buying for
airbnb or vrba or whatever thehoa allows for it.
All these things we wouldencourage y'all to look into.
Um, but again, hitting on alittle bit of that tourism piece
, even from 2023 to 2024,airport traffic was up almost
20% in Northwest Arkansas.
We're seeing these hugeexpansions at XNA and so as we
(10:41):
continue to add flights andmaybe add airlines with
Southwest, hopefully at somepoint you're going to continue
to see tourism come in and thereis going to be there's, there
is going to be a need.
And then again, with the, withthe healthcare expansion in
Northwest Arkansas.
Travel nurses haven'thistorically been a big thing
for Northwest Arkansas, but theywill continue to be as we
(11:02):
continue to add, uh, in thehealthcare space and the things
that Alice Walden is doing.
Speaker 2 (11:07):
So yeah, I think that's pretty cool.
I like how you talk about X andX band breed breeze.
It's like blowing up notblowing up, but they just added
a direct flight to pensacola.
Speaker 3 (11:16):
Yeah so, um so, but again, you know, just finishing
off on the short-term rentalpiece, you know we, we would
encourage everyone to kind ofmake sure you know your local
regulations, make sure you knowthe best areas that that, uh,
that airbnb is doing the best in.
So there's sites called AirDNAand some other resources out
there that you can use as yourunderwriting properties in
(11:40):
Northwest Arkansas to figure outwhat does occupancy look like
for this area, what are theaverage rents look like for this
area, and start to underwriteit from there.
But I think, overall, airbnbcan really for the most part.
There's Airbnb managementcompanies out there, but that is
a business more than long-termrentals can be for the most part
(12:00):
, in my opinion, and so I justwould encourage you guys to look
a little bit further there.
Speaker 2 (12:05):
Yeah, if you're in the single family space, I think
maybe it makes sense to look atit.
You know, if you're incommercial, probably not, unless
it's for personal reasons or,um, you know it's.
Uh, we have a.
We had a previous guest, henrywashington.
He, he has some airbnbs.
Yeah, he's, he talked about acase study where not on the
podcast but uh, he had along-term rental that wasn't
(12:28):
doing that great.
But the short term term, youknow, selling it he might not
have got what he wanted it, orrefinancing it same thing, but
the short term rental market waspretty good in that area.
So he's like, ponied up someextra money to get it staged and
you know he got a pretty goodpremium.
Speaker 3 (12:46):
So yeah, yeah, exactly.
And then again, going back towhat you mentioned on on kind of
furnished rentals likefurnished finder is a is also
another website out theresimilar to Airbnb, but it fits
that midterm rental, um type ofcategory and so that's really
over 30 day rentals, so maybeit's one month or three months
(13:06):
or six months for travelingnurses or people coming in town
for this or that or they'rerelocating and need a place in
the interim.
I've got some clients thatutilize that and do really well.
And so take a look at FurnishedFinder great website that you
can kind of see how much demandis in your area and how much
supply as well and if there is abig gap there and a big need,
(13:28):
that might be an avenue that youlook at as well.
But I want to transition alittle bit to long-term rentals.
We long-term rentals is kind ofour play and what we like to do
and what we underwrite for umand and how we kind of want to
build our real estate portfolio.
But, um, for you, what do yousee as some of the biggest pros
(13:51):
of of long-term rentals?
Speaker 2 (13:53):
Yeah, I think the wear and tear is a big one.
Um, the predictability is big.
Um, not just legislative, butknowing where your income is
coming from, knowing thatthere's not huge swings, having
some level of predictabilitythere.
Um, the management side of itnot managing someone every
couple days, not paying theextra there's a lot of fees.
(14:15):
Um, there's a lot of managingthe furniture.
You know it's almost adifferent.
You know business within realestate.
I think there is the case forshort-term rentals, for, you
know, maybe you have a hundredunit apartment and 10 of those
you offer, you know, nine monthsoptions or six month options.
(14:39):
You don't even have to furnishit, but you pay a higher premium
.
Yeah, some of those midtermrents and then you could have
the option of furnishing one.
But, uh, long term, people arealways going to need a place to
live.
People aren't always going toneed to travel.
Yeah, um, it's a great point.
So I think that's why I gotinto real estate in the first
(15:01):
place.
You know, because of itsresilience.
Speaker 3 (15:04):
You know, not only the profitability but protecting
your downside Right, that's agreat point, yeah, when you
think about trying to protectyour investment and make good,
strong investments long-term,it's hard to beat what long-term
rentals can do for you and thestability that it can provide
Recession-proof, really.
(15:29):
I mean, when you look at it,the only areas where I see that
would not be recession resistantwould be in these more luxury
apartments that are well abovethe average rent in your area.
And so I think, as you look atlong-term rentals and and kind
of what you want to underwritefor as long as you have, um, if
you have, you know, a deal thatis around or under the the
average rent in your area, a lotof times you're going to be,
(15:51):
for the most part, recession,recession resistant, um, in my
opinion, yeah, nothing'srecession.
Speaker 2 (15:56):
You know you got to be careful, not for such a proof
.
Recession is it recession?
Uh, resilient, even you knowthat can take it.
Uh, I think, just looking backin case, that you know there
wasn't really short-term rentalsum, and past recessions you
could, maybe you could track,like hospitality, how it does.
(16:16):
You know there's I'd say that'smore correlated.
Short-term rentals is then, youknow, to hotels than it is to
long-term rentals, you know, Ithink.
I heard someone talking aboutboutique hotels being a strategy
.
Now too, like because of theshort-term rental disruption in
some of these markets, thatboutique buying a boutique hotel
is an option.
Yeah, but yeah, it's for melong-term rental.
(16:41):
You me long-term is 12 months.
That's not maybe you do.
And on the other token, somepeople offer a discount sign a
13-month lease and we'll giveyou your first month free when
you're in for 13 months.
So you have that 12 months onthe other side.
Speaker 3 (16:58):
Absolutely yeah, and I think those are some great
points.
I think, looking at some of thecons of long-term rentals versus
short-term rentals, a lot oftimes I mean you don't obviously
have that upside with therental potential and the income
potential, Some other things Ithink that are interesting to
think about.
(17:20):
Know, as as delinquencies happenand rents get behind in some
areas, um, it's kind ofinevitable as you start to grow
your portfolio, you will havepeople that inevitably maybe
won't pay, Um, if you're in thegame long enough, I think that's
that's fair to say.
And so non-payments, damages ofthe property, eviction issues
that you could be having likeyou don't have to worry about
(17:47):
evictions with a short-termrental and kind of the
complexities that come with thatand the attorney's fees that
get involved, things like that.
More, things like lessflexibility, so you're locked in
kind of on rents and whereyou're going to be for at least
a year typically.
And I would even say, goingback to kind of the wear and
tear of a short-term rental, alot of people probably would
argue that short-term rentalsare able to be kept in better
(18:10):
shape because they're beingcleaned, you know, either
nightly or multiple times a weekor whatever, Whereas you know,
a typical long-term rentalsomeone's likely not getting a
cleaner each week, um, so Ithink those are some things
there.
I think the other thing, theother con of it would be and
this would be really a con forfor both sides of it but market
(18:30):
competition.
So, um, you really have to payattention to that either way,
whether there's hotels poppingup more, airbnbs popping up on
the short-term side, or ifyou're in a market where you've
got multiple apartment complexesbeing built around you and
you're kind of sandwiched in anarea that maybe it's not getting
absorbed as quickly, and so notnecessarily a con only for
(18:51):
long-term rentals, butdefinitely something to think
about on both sides For me inmultifamily.
Speaker 2 (18:55):
I think I can underwrite and I can account for
what happens if we have a dipin vacant.
What happens if it goes from100 occupied to 80 occupied or
90 for for airbnb?
I can't underwrite what happensif they change the law where
they don't do airbnb.
How do you write that?
If they shut the shut the welloff yes, that's One thought
(19:19):
there.
Yeah, absolutely.
Speaker 3 (19:21):
But yeah, I think, just as we wrap up, I think it's
important just to understand alot of the legality in the
legislation that is coming aboutin Northwest Arkansas when it
comes to short-term rentals,what hotels are popping up and
who's kind of leading the chargethere.
But even on the other side ofthat kind of the advantages of
short-term rentals and the needthat we have for it right now in
(19:44):
Northwest Arkansas, andespecially in those areas like
Bentonville or close to Trailsor in Fayetteville, close to the
university, and then on theother side of that, you know the
advantages of long-term rentalsand the stability that comes
with that, the recessionresistance of it and then really
just being able to kind ofmodel what that looks like
(20:05):
long-term.
I think there's a lot ofadvantages on both sides and
those are things that there's alot of need for in Northwest
Arkansas on both sides, and forus to figure out kind of what
makes sense for a long-termgrowth strategy.
It's kind of up to eachinvestor.
So any other thoughts there.
Speaker 2 (20:21):
Yeah, I mean, that sums it up pretty well.
There's a lot of ways to makemoney in real estate investing
Part of the reason why we havethis podcast to talk to.
People are doing it in a bunchof different ways.
We're doing it in differentways, so there's not one right
or wrong way, absolutely.
Speaker 3 (20:38):
Love it.
Well, thanks for listening andlooking forward to our next
episode.
We're going to dive into a fewdeals and we'll see you guys
soon.
Speaker 2 (20:47):
See you guys.
Speaker 1 (20:48):
Again, thank you guys for tuning in.
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Welcome to Northwest Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.
Speaker 2 (00:13):
With your seasoned investor just starting out.
We bring you expert insights,market trends and practical
strategies to help you buildwealth through real estate.
Speaker 3 (00:20):
From buying and selling to property management
and long-term investmentplanning.
We cover it all so you can makesmart, informed decisions in
this fast-growing market.
Let's dive in.
All right, welcome back toNorthwest 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 afew little short episodes, just
(00:41):
kind of talking through somedeals that we've done, deal deep
dives.
We're going to talk throughpros and cons of short-term
rental versus long-term rental,and then we've got some other
really cool episodes that you'llhave to tune into, but one that
we wanted to hit on to startwould be short-term rentals
versus long-term rentals, thepros and cons, the advantages
(01:03):
and even some of the things thatwe're seeing in Northwest
Arkansas and how it pertains tothese topics right here.
And so just to kick it off,brian short term or long term.
Speaker 2 (01:14):
Man, that's way too broad.
Also, I've been listening to uson before we get into it on
Spotify versus Apple and spotifyyou can just watch its video
too.
Yeah, I didn't, really I didn't.
I didn't appreciate that untilnow because it was just so easy
you just click the purple thingon your apple iphone.
But I've been checking out someother pots too lately.
(01:36):
I love them.
Not to stall for this answer,but short-term versus long-term
I mean, I'm a long-term rentalguy.
I think less turnover, morepredictable, more sustainable,
less regulation those are kindof my level.
Speaker 3 (01:55):
Yeah, those are a lot of great points right there
that I'd love to hit on, becauseit 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 touristattraction, and for us in
Northwest Arkansas we do havetourist attraction with mountain
(02:16):
biking, we have business travelwith Walmart.
But I think there are somethings that folks should
definitely pay attention to prosand cons, I guess, if you will,
for short-term rentals, andthen we'll kind of get into a
little bit of the long-termrentals and the pros and cons of
that as well.
But I think, just things that Ithink make sense to think about
(02:37):
with short-term rentals.
Number one, obviously, theincome potential.
Income potential so, um to Imean just for an average, look
at it, if you have an apartmentthat can rent for 2000 a month
here in Northwest Arkansas, alot of times those are in areas
that are, you know, close todowntown or close to trails or
or, uh, maybe even close to theuniversity stuff like that, Um,
(03:01):
and a lot of times you have theability with a short-term rental
to to get upwards of of 3000,even 4,000 a month, um, and
obviously things to take intoconsideration would be your
expenses and what that lookslike.
You're really kind of running abusiness with a short-term
rental, but any thoughts on onthat, or or?
Speaker 2 (03:20):
Yeah, I think there is.
Yeah, so there isn't.
You know, people thinkshort-term rentals are just
automatically hopped to Airbnbs.
There is other avenues whereyou can have furnished units and
people will pay a premium forthat and maybe that's.
Maybe they're in between jobs,maybe they're in between homes,
maybe they're just on work,relocation and temporary.
(03:42):
They're not ready, maybethey're not ready to buy the
first time.
So they'll pay a premium tohave a furnished unit.
You know, I think it's.
It's a good option.
I was a partner on the deal inuh in northwest arkansas, um
large multi-family deal where webought it and four, four of the
apartments were uh, kind offurnished short, midterm, short
(04:04):
three to six month leases and itwas like for traveling nurses.
Yeah, it was pretty popular forthem 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'sa whole different.
They're staging.
You know the airbnb game hasbeen like every part of it has
(04:25):
been been not monopolized.
You know people who will buythe furniture for you and stage
it, which can help.
Yeah, uh, that's where theprevious owner was, but we
actually just paid our propertymanagers 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
(04:47):
do that.
So I think there's like I don'tknow.
You'd have to see what thedelta is if it's worth the extra
headache.
If it, I guess screeningtenants wear and tear, what, how
that affects other residentsthere.
(05:09):
But and even I don't knowairbnbs I'm not even a fan of
like personal like.
If I'm gonna have a house inflorida I don't want other
people live like I don't wantother people living in it.
One and this I understand you'remaking some money back, but I
would also rather just go to adifferent town and go to a
different beach town every timeI'm going somewhere, not be tied
(05:31):
to one spot.
So you know, if I can't get itbehind on that connection, then
yeah, um, but on the other token, there's people that are
killing it and there's peoplethat are, you know, making
millions of dollars a year inairbnb locally, nationally.
You know, I know you, yourepresent a lot of investors.
That that's all they do.
Yes, exactly, and that's youtalked about nationally.
(05:55):
It's big.
You know, northwest arkansasit's only going to grow like
beaver, like beaver lake.
That that to me, makes the mostsense, you know.
But obviously f Fayettevillekills 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 Ais not doing as good, or what
(06:18):
about during off-season, likesummers, you know, where there's
nothing going on.
So you have to fill that likeaccount for that and the
legislation.
You know in other markets morethan Northwest Arkansas where
they could say, hey, you knowyour neighbors don't like short,
they don't like the short-termrentals.
You know, they think it causesmore problems.
(06:39):
And there was actually I don'tknow if it was in, it was one of
the local municipalities Um, itwas just voted on but it did
not go.
They wanted to like limitshort-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 (06:58):
Yeah, absolutely.
Speaker 2 (06:59):
In other markets.
You've seen where-.
Speaker 3 (07:00):
Yeah, I think if you think about markets like
Northwest Arkansas, where westill have a really big housing
shortage for the most part, alot of that kind of legislation
seems like it starts to pop up.
And so Fayettevillespecifically one of the biggest
markets for the housing crisis,if you will has put in
regulations to where you aren'table to do.
(07:21):
They have a cap on how manyAirbnb licenses there are out
there at a certain time.
I don't know exactly what thatcap is.
I'd encourage listeners to lookinto that a little bit, but
they are all full and there is awaiting list, from what I
understand, and the only way toget one is if someone drops out,
which is nowadays it's kind ofbecoming a premium and it can be
(07:42):
transferred with the sale of aproperty, and so I had a client
that just, uh, just purchased aproperty and they were able to
inherit that, uh, that Airbnblicense, airbnb license and have
that value there.
And so, yeah, I think, just asyou're talking about that though
, too, you know we look at theseother cities.
I mean, you know, inBiddenville, there are hotels
(08:03):
popping up everywhere downtown,near the campus, on the campus
and in other spots like that andin other spots like that, and
the Waltons are really a part ofpressing that because we really
don't have enough housing forfolks that want to come in and
tour the area, and so they'rereally addressing those problems
.
But what if the Waltons wantedto push and say no Airbnbs in
(08:24):
Bentonville too, or we'recapping them in Bentonville?
Then we have.
If you're betting your wholeportfolio on Airbnbs in
bentonville, um, you're going torun into an issue there
potentially.
Speaker 2 (08:36):
I think that's something we haven't really
talked a lot about on thepodcast is the tourism industry
is just going to be growing sosubstantial it's already, you
know, because there is so manyother big industries here.
Um, tourism isn't as talkedabout like the hospitality
industry is going to continue togrow the more, more alice pours
into bentonville and theseoutside projects you know
(08:57):
Crystal Bridges obviously is abig one.
The mountain biking scene whenBella Vista's you know, mountain
biking course is open, that'sgoing to increase tourism.
You know University of Arkansasis a fast-growing sec school.
You know go cats.
But I still I still support asec, another school, as long as
(09:18):
we're not playing each other andwe love to see the local.
It help it.
Fayetteville's economy does alittle bit better when the hogs
are playing, exactly, exactly Ithink.
I think there's always going tobe a need for, like in
northwest arkansas, there isgoing to be a need for that
hospitality, like you said.
You see hotels coming up.
So I think legislation would bekind of careful to limit that
(09:40):
because it's a need like it'salmost a need to have that to
support tour like.
If you want good tourism, you'regoing to have to have support
short-term rental.
There's people out that youknow I'm a hotel guy too.
I like the points, I like, Ilike waking up to a fresh bed
made every day and, yeah,absolutely like the room service
.
But again, you have some peopleare all airbnbs.
(10:03):
They want the whole spot tothemselves.
So I think, like we saw the onelegislation, it didn't go
through.
But I think, uh, I think nwa isin a good spot to not be, but
that's something you have to becautious about yeah, agreed you.
Speaker 3 (10:17):
You have to know the local regulations.
You have to know if you're ifan area that you're buying for
airbnb or vrba or whatever thehoa allows for it.
All these things we wouldencourage y'all to look into.
Um, but again, hitting on alittle bit of that tourism piece
, even from 2023 to 2024,airport traffic was up almost
20% in Northwest Arkansas.
We're seeing these hugeexpansions at XNA and so as we
(10:41):
continue to add flights andmaybe add airlines with
Southwest, hopefully at somepoint you're going to continue
to see tourism come in and thereis going to be there's, there
is going to be a need.
And then again, with the, withthe healthcare expansion in
Northwest Arkansas.
Travel nurses haven'thistorically been a big thing
for Northwest Arkansas, but theywill continue to be as we
(11:02):
continue to add, uh, in thehealthcare space and the things
that Alice Walden is doing.
Speaker 2 (11:07):
So yeah, I think that's pretty cool.
I like how you talk about X andX band breed breeze.
It's like blowing up notblowing up, but they just added
a direct flight to pensacola.
Speaker 3 (11:16):
Yeah so, um so, but again, you know, just finishing
off on the short-term rentalpiece, you know we, we would
encourage everyone to kind ofmake sure you know your local
regulations, make sure you knowthe best areas that that, uh,
that airbnb is doing the best in.
So there's sites called AirDNAand some other resources out
there that you can use as yourunderwriting properties in
(11:40):
Northwest Arkansas to figure outwhat does occupancy look like
for this area, what are theaverage rents look like for this
area, and start to underwriteit from there.
But I think, overall, airbnbcan really for the most part.
There's Airbnb managementcompanies out there, but that is
a business more than long-termrentals can be for the most part
(12:00):
, in my opinion, and so I justwould encourage you guys to look
a little bit further there.
Speaker 2 (12:05):
Yeah, if you're in the single family space, I think
maybe it makes sense to look atit.
You know, if you're incommercial, probably not, unless
it's for personal reasons or,um, you know it's.
Uh, we have a.
We had a previous guest, henrywashington.
He, he has some airbnbs.
Yeah, he's, he talked about acase study where not on the
podcast but uh, he had along-term rental that wasn't
(12:28):
doing that great.
But the short term term, youknow, selling it he might not
have got what he wanted it, orrefinancing it same thing, but
the short term rental market waspretty good in that area.
So he's like, ponied up someextra money to get it staged and
you know he got a pretty goodpremium.
Speaker 3 (12:46):
So yeah, yeah, exactly.
And then again, going back towhat you mentioned on on kind of
furnished rentals likefurnished finder is a is also
another website out theresimilar to Airbnb, but it fits
that midterm rental, um type ofcategory and so that's really
over 30 day rentals, so maybeit's one month or three months
(13:06):
or six months for travelingnurses or people coming in town
for this or that or they'rerelocating and need a place in
the interim.
I've got some clients thatutilize that and do really well.
And so take a look at FurnishedFinder great website that you
can kind of see how much demandis in your area and how much
supply as well and if there is abig gap there and a big need,
(13:28):
that might be an avenue that youlook at as well.
But I want to transition alittle bit to long-term rentals.
We long-term rentals is kind ofour play and what we like to do
and what we underwrite for umand and how we kind of want to
build our real estate portfolio.
But, um, for you, what do yousee as some of the biggest pros
(13:51):
of of long-term rentals?
Speaker 2 (13:53):
Yeah, I think the wear and tear is a big one.
Um, the predictability is big.
Um, not just legislative, butknowing where your income is
coming from, knowing thatthere's not huge swings, having
some level of predictabilitythere.
Um, the management side of itnot managing someone every
couple days, not paying theextra there's a lot of fees.
(14:15):
Um, there's a lot of managingthe furniture.
You know it's almost adifferent.
You know business within realestate.
I think there is the case forshort-term rentals, for, you
know, maybe you have a hundredunit apartment and 10 of those
you offer, you know, nine monthsoptions or six month options.
(14:39):
You don't even have to furnishit, but you pay a higher premium
.
Yeah, some of those midtermrents and then you could have
the option of furnishing one.
But, uh, long term, people arealways going to need a place to
live.
People aren't always going toneed to travel.
Yeah, um, it's a great point.
So I think that's why I gotinto real estate in the first
(15:01):
place.
You know, because of itsresilience.
Speaker 3 (15:04):
You know, not only the profitability but protecting
your downside Right, that's agreat point, yeah, when you
think about trying to protectyour investment and make good,
strong investments long-term,it's hard to beat what long-term
rentals can do for you and thestability that it can provide
Recession-proof, really.
(15:29):
I mean, when you look at it,the only areas where I see that
would not be recession resistantwould be in these more luxury
apartments that are well abovethe average rent in your area.
And so I think, as you look atlong-term rentals and and kind
of what you want to underwritefor as long as you have, um, if
you have, you know, a deal thatis around or under the the
average rent in your area, a lotof times you're going to be,
(15:51):
for the most part, recession,recession resistant, um, in my
opinion, yeah, nothing'srecession.
Speaker 2 (15:56):
You know you got to be careful, not for such a proof
.
Recession is it recession?
Uh, resilient, even you knowthat can take it.
Uh, I think, just looking backin case, that you know there
wasn't really short-term rentalsum, and past recessions you
could, maybe you could track,like hospitality, how it does.
(16:16):
You know there's I'd say that'smore correlated.
Short-term rentals is then, youknow, to hotels than it is to
long-term rentals, you know, Ithink.
I heard someone talking aboutboutique hotels being a strategy
.
Now too, like because of theshort-term rental disruption in
some of these markets, thatboutique buying a boutique hotel
is an option.
Yeah, but yeah, it's for melong-term rental.
(16:41):
You me long-term is 12 months.
That's not maybe you do.
And on the other token, somepeople offer a discount sign a
13-month lease and we'll giveyou your first month free when
you're in for 13 months.
So you have that 12 months onthe other side.
Speaker 3 (16:58):
Absolutely yeah, and I think those are some great
points.
I think, looking at some of thecons of long-term rentals versus
short-term rentals, a lot oftimes I mean you don't obviously
have that upside with therental potential and the income
potential, Some other things Ithink that are interesting to
think about.
(17:20):
Know, as as delinquencies happenand rents get behind in some
areas, um, it's kind ofinevitable as you start to grow
your portfolio, you will havepeople that inevitably maybe
won't pay, Um, if you're in thegame long enough, I think that's
that's fair to say.
And so non-payments, damages ofthe property, eviction issues
that you could be having likeyou don't have to worry about
(17:47):
evictions with a short-termrental and kind of the
complexities that come with thatand the attorney's fees that
get involved, things like that.
More, things like lessflexibility, so you're locked in
kind of on rents and whereyou're going to be for at least
a year typically.
And I would even say, goingback to kind of the wear and
tear of a short-term rental, alot of people probably would
argue that short-term rentalsare able to be kept in better
(18:10):
shape because they're beingcleaned, you know, either
nightly or multiple times a weekor whatever, Whereas you know,
a typical long-term rentalsomeone's likely not getting a
cleaner each week, um, so Ithink those are some things
there.
I think the other thing, theother con of it would be and
this would be really a con forfor both sides of it but market
(18:30):
competition.
So, um, you really have to payattention to that either way,
whether there's hotels poppingup more, airbnbs popping up on
the short-term side, or ifyou're in a market where you've
got multiple apartment complexesbeing built around you and
you're kind of sandwiched in anarea that maybe it's not getting
absorbed as quickly, and so notnecessarily a con only for
(18:51):
long-term rentals, butdefinitely something to think
about on both sides For me inmultifamily.
Speaker 2 (18:55):
I think I can underwrite and I can account for
what happens if we have a dipin vacant.
What happens if it goes from100 occupied to 80 occupied or
90 for for airbnb?
I can't underwrite what happensif they change the law where
they don't do airbnb.
How do you write that?
If they shut the shut the welloff yes, that's One thought
(19:19):
there.
Yeah, absolutely.
Speaker 3 (19:21):
But yeah, I think, just as we wrap up, I think it's
important just to understand alot of the legality in the
legislation that is coming aboutin Northwest Arkansas when it
comes to short-term rentals,what hotels are popping up and
who's kind of leading the chargethere.
But even on the other side ofthat kind of the advantages of
short-term rentals and the needthat we have for it right now in
(19:44):
Northwest Arkansas, andespecially in those areas like
Bentonville or close to Trailsor in Fayetteville, close to the
university, and then on theother side of that, you know the
advantages of long-term rentalsand the stability that comes
with that, the recessionresistance of it and then really
just being able to kind ofmodel what that looks like
(20:05):
long-term.
I think there's a lot ofadvantages on both sides and
those are things that there's alot of need for in Northwest
Arkansas on both sides, and forus to figure out kind of what
makes sense for a long-termgrowth strategy.
It's kind of up to eachinvestor.
So any other thoughts there.
Speaker 2 (20:21):
Yeah, I mean, that sums it up pretty well.
There's a lot of ways to makemoney in real estate investing
Part of the reason why we havethis podcast to talk to.
People are doing it in a bunchof different ways.
We're doing it in differentways, so there's not one right
or wrong way, absolutely.
Speaker 3 (20:38):
Love it.
Well, thanks for listening andlooking forward to our next
episode.
We're going to dive into a fewdeals and we'll see you guys
soon.
Speaker 2 (20:47):
See you guys.
Speaker 1 (20:48):
Again, thank you guys for tuning in.
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Speaker 2 (26:20):
Special thanks to one of our sponsors, who I've
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by brick.
They don't just see numbers ona spreadsheet, they see your
passion and vision.
People's Bank, it's wherepeople come first.
Member FDIC.
If you're needing loanassistance, reach out to Dakota
at 870-883-1706 or dhedden atpeoplesbankarcom.
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