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Real Estate Investment Strategy

Short Term Rentals represent an incredibly compelling investment opportunity

Our focus is on luxury stand-alone villas in high demand destinations.  Larger properties specifically in beach and mountain destinations tend to perform better, hold their value, and offer the highest profit margins.  Our data-driven approach uncovers the best opportunities to achieve outsized returns.

Value-Add Property Acquisition Illustration

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  • Profit potential of hospitality:  Offers high income potential and strong profit margins usually reserved for hospitality real estate, but without the many risks of hospitality.

  • Value stability of residential:  Offers wealth protection, stability, and attractive financing of residential real estate but with high profit potential.

  • Avoids pitfalls of both hospitality and residential:  unbelievably, STRs sit in a perfect sweet spot of the two that allows for unique risk mitigation and positive investment dynamics.

  • All the benefits of real estate ownership:  including depreciation tax benefits, asset appreciation.

  • Provides a direct use value that no other real estate can through vacation rentals for our investors.

Return Based Investors

How Are Short-Term Rentals Superior

The real estate is the exact same, but STRs often cash flow 2-3x what an annual residential lease would produce.  In the right locations, which are often the most desirable with international demand and strong downside protection, owners who are not renting short term are simply not maximizing their asset performance.  There are no significant modifications to a property to rent short term and the downside is essentially nonexistent – it’s a competency differentiator

Institutions are primed to enter the space -

we’re ahead of the game at the exactly right time.

Institutions need a good owner/operator partner:  This is also true in hospitality and to date there are extremely few institutional quality operators.  Even amongst institutional hospitality property managers, we’ve averaged almost a 20% premium to our competitive set over dozens of hospitality deals.

Data availability is finally above a minimum threshold level:  Industry level data required to properly assess investment opportunities is only accessible since roughly 2018, and even still more granular metrics have even less available historical data.  With COVID muddying the waters, good baseline data with enough history is only now at an acceptable place.  

Fintech has flourished in recent years:  Between 2015 and 2020, tools to centrally monitor and manage assets have made operation possible.  Management systems that rival hotel sophistication, smart locks, noise sensors, automated analysis tools, etc make everything primed for institutional adoption.

Property service providers have matured:  Similarly, with the strong growth of STRs around the world, established destinations have seen a rise in service providers including maintenance and cleaning are reasonably procured at competitive prices.  This reduces the risk and complexity associated with traditional employment and allows for efficient operation without the need for clustering.

Legalities have been largely established:  For many years the legality of operating short term rentals in residential communities was murky at best, but today most municipalities around the world have well defined STR regulations and laws with explicit guidance on operating legally.  This has been critical to STRs becoming an investable asset class.

Return Based Investors

Full Cycle Investment Strategy

Our institutionally structured fund is primed to outperform in good times through easily executable and apparent value add opportunities as well as in downtimes through dollar cost averaging our acquisition basis with distressed asset purchases while others are forced to sell.  This is why an open ended structure is so valuable and why diversification of time is a critical ingredient to vintage year risk mitigation that naturally leads to outperformance over time.

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Return Based Investors

Unsportsmanlike Structural Advantage

  • Asset:  the granular nature of STRs allows the fund to feel limited impact from any individual asset issue that may arise

  • Geography:  diversified geographies mitigate not only location risks, but also grants diversified currency exposure with a lower correlation play to many other real estate investments

  • Time:  the benefits of dollar cost averaging through the economic cycle goes a long way to ensure an attractive average investment basis while smoothing out economic spikes and affords us the ability to patiently grow, leading to stronger negotiating leverage and better deal terms.

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