Private REIT

Read on for a deep dive with Wander REIT's finance team, covering the emerging asset class.

Jake Kelley
JakeHead of Capital Markets
Private REIT

Wander REIT is a private non-traded REIT, which we created to give investors the opportunity to invest in a brand new asset class: the short-term vacation rental. The return profile can be very very attractive in these short-term rental assets and what we are doing here at Wander REIT is we’re compiling a diversified portfolio of very high-end luxury short-term rentals across the United States so that investors get access to not just a single property but a portfolio of properties across the country.

A Conversation with the Wander REIT Finance Team:

Jake: “It certainly is an emerging asset class, there really aren't any institutional short-term investment managers. That's what Wander REIT sets out to do: become the first and largest institutional short-term rental investment manager.”

David: “As the asset class becomes institutionalized and we build a portfolio of cash-flowing assets, the market will start to value those assets based on the cash flow that they generate, as an institutional investor would, and we expect to see meaningful upside to the returns for Wander REIT.”

Jake: “We’re effectively taking these homes out of the residential real estate market where they trade on a per-square-foot basis, and we’re moving them into a brand new category of a hospitality asset that produces cash flow and is valued based on the yield delivered by those investments.”

David: “I think that where the opportunity gets really attractive from the real estate investment perspective, is being able to take a single-family home that is worth XYZ based on square footage to building a portfolio of single-family homes that are worth XYZ plus, based on the cash flow that it's actually able to derive.”

Jake: “I think you made a good point in terms of the liquidity. We operate these homes as short-term rentals, naturally, they’re valued as such based on a multiple of their cash flow, but in a downturn situation they could also be liquidated back to their original use as a residential home, so we have some additional liquidity and downside and protection.”

David: “I want to be in markets that have limited supply, but high demand, and I want to be in markets where my product can be super-differentiated versus the rest of the marketplace. So, I don't want my house to be able to be compared to five other houses that look the same; I want to own the best real estate.  I want to own the nicest houses with the most thoughtful selection of amenities. Those are all things that are going to drive higher ADR and also higher customer satisfaction.”

Jake: “Some  of those differentiators might be terrific views, extremely well-appointed houses, and we also do some special things inside the house to make them Smart Home-enabled such as the ability to control the air conditioner, the fireplace, and lock to the door all through an app, so it's really a seamless experience.”

David: “ Using Smart Home Technology will deliver an optimal guest experience for all the reasons you mentioned. We want it to be easy for someone to stay in our house. When you combine the amenity set that we offer, whether it's the Smart Home Technology, or access to 24/7 tax concierge, with the marketing machine behind Wander that is able to push out content to market these homes on a real-time basis, more so than any other short-term vacation rental operator, that's how you drive higher occupancy and higher ADR, which results in a higher return for our investors.”

Jake: “This really is different than all the other players in the short-term rental space because, as you said earlier, it's a fragmented space, and therein lies the opportunity for Wander to operate the entire value chain. It really is Wander, the corporate operator, that's taking the riskiest piece of this investment - Wander is doing the conversion into an STR,  putting it onto the booking marketplace, getting it ready for prime time so of speak, seasoning it as a short-term rental and getting some operating history behind it.  Then once it’s ready to go, it’s stabilized, and that's when we transfer to the REIT.   And we're not even doing that at a premium, we are doing it at the original cost basis, so in fact, the investors are getting a post-converted asset at the cost of a pre-converted asset. Generally, in the institutionalization of this brand new asset class, we’re applying traditional large-scale commercial real estate underwriting principles to a relatively small and new asset class, but it still has to be underwritten with the same sort of discipline.  , When you combine that sort of institutionalization of the underwriting process with a sea change in the mentality of travelers wanting better experiences and more spacious accommodations and so on, it's a pretty good combination.  A great time to be getting into this business.” 

David: “Consumers find a lot of value in what we’re offering relative to traditional hospitality; you get more amenities, you get more space, you get access to new experiences that you don't necessarily get in a hotel, and I think that's one of the reasons you've seen such a surge in vacation rentals.” 

Jake: “Because it's not a commodity product. What we’re offering is truly unique and special. It’s very different from your traditional, even a very high-end hotel. It’s a completely different experience and our operating history is proving that there is a lot of demand for it.”

David: “We’re at the very beginning of transforming the short-term vacation rental market from a fragmented industry with an inconsistent guest experience, to an institutionalized, brand-focused hospitality sector that is going to deliver consistent cash flows and consistent guest experience. Wander is at the forefront of delivering that. There are billions of dollars spent on travel today, but Wander has the opportunity to deliver the highest-end customer experience at the highest-end homes. The opportunities for growth are almost limitless when you look at short-term rentals across the country.”

Jake: “One of the cool things about Wander REIT is that it’s a tech-driven platform, so we've created a really smooth onboarding process to be able to invest in Wander REIT. We have a terrific investor dashboard on which you can view the status of your investments, you can download documents and can access anything you want to know about your investment.. The technology that's supporting the investment management business of Wander REIT is really first-class. and the place you would go if you're interested in investing is to start at our website wander.com/reit and everything will be right there at your fingertips.”

Learn More About Wander’s Private Vacation Rental REIT

Interested in the benefits of vacation rental investing without all the extra work? You can invest in Wander REIT, to enjoy the return of a diversified real estate portfolio with the peace of mind it is being professionally managed. Learn more here

Share article

You may also like


Find your happy place™

© 2024 Wander.com, Inc.