Investment firms target holiday homes

Vacation homes have seen growing demand since the start of the pandemic, and investors are taking notice of the sector, largely the domain of individual owners until now.

Investors want to capture more of the bustling short-term rental market. Saluda Grade, a New York-based investment firm, has partnered with AvantStay, a short-term rental operator, to buy around $500 million worth of homes. Saluda Grade, which targets homes within driving distance of major population centers, will buy the properties and AvantStay will manage them for a fee, The Wall Street Journal reports.

“There is a lot more yield available in the short-term market,” said Ryan Craft, managing director of Saluda Grade. The Wall Street Journal.

The startup reAlpha Tech Corp. would pool money from small investors to buy short-term rental homes as well.

But buying properties one by one can take time and make it harder for investors to invest large sums at once. The Wall Street Journal reports. Additionally, many cities place restrictions on the number of short-term rental listings.

“Regulatory risk is a huge issue,” said Sebastian Rivas, CEO of Andes STR. The newspaper.

But investors are looking to take advantage of growing interest in short-term rentals. Short-term rentals, such as those offered by Airbnb and Vrbo, are increasingly in demand as remote working has allowed more people to work from anywhere. Read more: Rise in short-term rentals among hybrid remote workers