In this report, I explain my, “Warning-Travel Rents May Rise Rapidly Before Stabilizing.” Then, I will propose possible solutions for you.
We have continued our world travels during the coronavirus. I decided to write this report to warn you about some troubles I see on the horizon for both domestic and international travelers.
I have traveled the world for 14 years, 65 countries, never with a return ticket, I always move forward, so I know a thing or two about trying to find nice cheap places to live as I go. But I have some bad news to share today.
Rents may begin to rise rapidly over the next few months and may remain unstable for many months before they are likely to stabilize again. There are a number of reasons why this is happening.
Decreased Rental Inventory
During the early stages of the pandemic lockdown, many vacation rentals went vacant. Landlords responded by lowering prices in some areas. Despite lower prices, many rentals around the world remained vacant. Despite the lower prices, people were not traveling.
So after a few months, in many parts of the world, landlords began to rent their vacant homes to local tenants. Since locals usually have less discretionary income, the landlords have been experiencing lower rents from the locals. Locals earn local wages and simply can not afford to pay what international tenants were paying.
That means that some significant portion of the inventory in the hot tourist spots is now in long-term leases. So, as the vaccinated world opens up for the international traveler, there are fewer properties available for arriving foreigners. So the available (tourist) inventory has shrunk and the flood gates of travel are about to open.
Thus, the very few landlords that still have vacancies will be able to raise their prices because of the sudden international demand. Landlords stuck in long-term leases with locals at local prices, will not be able to immediately increase the supply. So prices are likely to increase and remain high for months until existing leases expire and more property becomes available.
Another factor that is likely to destabilize the rental market is an increase in the number of long-term international travelers.
Increased Long Term International Travelers
Many companies around the world sent their employees home to work during the pandemic. Those employees have been working from home during most of the lockdown. During that time, many of the employers have decided to reduce the size of their offices. So, some employers are going to let their employees continue to work from home even after everyone is vaccinated.
Many of the people working from home have been watching YouTube videos. They have learned that they can work from anywhere in the world so long as there is a stable Internet connection. Some employers may try to resist letting their employees travel the world as they work from their laptops. But those employers will quickly change their mind as they watch their best employees quit their jobs to work for travel-friendly employers. There are millions of employees all over the world that are about to start traveling the world as soon as they have their vaccine.
That will create a huge demand for short-term rentals (1 month), first in well-known travel hotspots, but later to many communities around the world as more of the world is discovered, connected, and made available to international traveling workers.
This is an increased rental demand that is relatively new. There were international slow travelers before, such as retirees and digital nomads, but I am talking about a much larger pool of people. People were sitting in cubicles all over the world before the lockdown. They now know that home can be anywhere in the world now. They can work anywhere in the world with an internet connection.
This will destabilize the rental prices around the world for months and possibly years until the supply of furnished short-term rentals can be created to meet the demand. So, when will rents stabilize?
When will travel rents stabilize?
Travel rents will stabilize when the supply of furnished short-term rental properties in each location in the world meets the demand created by the four kinds of international visitors, people on holiday, short-term international remote workers, retirees traveling the world, and foreigners establishing more long-term retirement homes.
The travel demand is likely to increase for at least a few years as people learn more about the possibilities for arranging their life around living internationally. They need to learn that they can rent or sell their houses, they can home school or put their kids in international schools, or put their kids in virtual online schools they can attend from anywhere in the world.
As people learn that traveling the world is actually possible before retirement, during their working years, and their friends and family watch them do it, the fear of the unknown is likely to decrease and more people will take the plunge.
But before any market equilibrium is reached, there is likely to be a period of unpredictable rents caused by the growing demand in the face of a slower-growing supply. So, what are some of the potential solutions you can implement during the coming chaos?
So, if you are planning to jump on a jet and travel the world over the next many months, you have to be more creative than you thought. You will be competing with more and more people for the best properties in the best locations. Eventually, the inventory will stabilize, but it is difficult to know when that will be.
So what are some of the potential solutions you may be able to implement in the meantime?
Expect to Pay More: Landlords that know how to market over the internet will be getting top dollar. Yet, you may still need to rent a place over the Internet for your first few nights before you arrive in a new place. Once you are on the ground, you may be able to get better rates by talking to local landlords that are not so well connected and advertising over the Internet. So you may need to just pay more until you can negotiate a better price with local landlords with your feet on the ground. So make sure your budget allows for high unexpected rental prices until you can find a better solution with your feet on the ground.
Feet on the Ground: In an earlier video, I shared with you how online rents have been rising rapidly over the last few years and how you may need to put feet on the ground in order to get the best prices. Make sure to watch that video and read the steps in that report (How I find Perfect Apartments Around the World) for more tips on how to avoid some of the fees associated with booking online.
Get Off the Beaten Path: Some of the hot locations that people have been promoting online for a few years will have the most extreme pressure on rental prices. Those same areas often have the same high prices for other living expenses as well, such as restaurants, food, tours, etc. So during the coming time of too many travelers for so few apartments, think about getting off the beaten backpacker and tourist path. Visit smaller towns in more remote places. Visit places of natural beauty and less populated areas that have flown under the radar of the most popular YouTubers and travel bloggers. How would you do this? Just change your search strings a little to find travel articles written by people that get off the beaten path. (i.e., hidden towns of, where are the tourists, towns nobody talks about, etc.) Then double-check the places people recommend in these articles to make sure they are not on everyone’s “best places to see list.” Make sure to watch at least some videos and pictures of those places to make sure they appeal to you. You can even use Google Earth to see what many of these places look like. Another source is travel bloggers that are driving through a country (i.e, Driving through central America, etc.) They may show you quaint little unknown towns between popular places as they drive around. Then verify what rents are online in these hidden gems. In the end, you are still going to have to put your feet on the ground to get the best prices.
Do More Research: Join the Expat Facebook pages in the countries and cities you are interested in. Expats often take day trips and weekend trips to smaller towns, remote areas, and beautiful nature around the popular areas. Often these day trips are to beautiful places that may not be as well known and thus might be nice places to spend a few weeks or months that won’t break your budget. Check Google Map and make a list of the small towns just a few hours away from the hot travel spots. Then use the Facebook search tool (explained in this video link provided). Search on the small town names in the Facebook ex-pat group to see if anyone has talked about each such town before. You can also search on Google for Things to Do in ‘Townname’ or on YouTube for videos of the town. Some of you may remember my friend Calvin in the Philippines (Sunshine Shoulders YouTube Channel) that found a small town in the Philippines he loves called San Carlos, where his rent was less than half of my rent in Dumaguete. He found that town when he was riding a bus through that part of the Philippines and decided to stay.
Be Willing to Share: Early on in our travels, we used to rent just a room in people’s home as we traveled the world. But now that we have a little more money we like to get our own apartment whenever possible. Then you just share the kitchen and wifi with someone that already lives there. We have had some of our best experiences living in a local’s home with them. They will often tell you all the great things to do in that town and help you solve problems in a much cheaper way. We have made some lifelong friends that way. You can find a room in someone’s home for rent on Airbnb.com and sometimes on Facebook ex-pat pages. You may not need to do this for every city you visit but there may be places that you desperately want to visit that are just too expensive to get your own apartment. But don’t be surprised if you end up enjoying it as we did. Back when we weren’t making money with our travel hobby, it was a way we could stay within budget in cities with apartments that were over budget. It was also a way we could stay in a much nicer home with more amenities and get to know other travelers. Our stays in Queretaro, Guadalajara, Mexico City, and San Cristobal, were all greatly enhanced by the people we met by sharing living space. We always get our own bathroom and bedroom, but we share the living room and kitchen, sometimes with locals, other times with other ex-pats. We have never had a bad experience sharing living space for short terms like a month or less.