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Wall Street investors are snapping up vacation homes

By Mike Wheatley | February 28, 2022

Demand for vacation homes has been rising ever since the COVID-19 pandemic first broke out, and investors have taken notice of a sector that was once almost exclusively the domain of individual homeowners.

Having taken note, investors want to capture a much bigger slice of the bustling market for vacation homes than they currently possess. That’s true of the New York-based investment firm Saluda Grade, which recently revealed it has teamed up with AvantStay, a short-term rental operator, to buy around $500 million worth of holiday homes. The firm is targeting homes within driving distance of major population centers and plans to buy the properties, with AvantStay managing them for a fee.

“There’s a lot of yield available in the short-term market,” said Saluda Grade Chief Executive Ryan Craft in an interview with the Wall Street Journal.

The Journal revealed there are many other investors interested in vacation homes. For instance, reAlpha Tech Corp., a crowdfunded investment firm, is said to be pooling money from small-time investors to buy short-term rental homes.

Investors face some challenges in getting into the market though. Buying up homes one at a time does take time, and it means investors struggle to invest large sums of cash in one go, as they’re used to doing. In addition, the Journal noted that many cities have restrictions on short-term rental listings.

“Regulatory risk is a huge problem,” said Sebastian Rivas, CEO of Andes STR, told the Journal.

Even so, investors are keen to take advantage of the huge demand for short-term rental homes. The popularity of such properties, including those available through sites such as Airbnb and Vrbo, has accelerated amid the rise of remote work, which allows people to work from any location.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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