🚧 STR mashup, nationwide impact of wildfires for investors, and Waltz

Casago-Vacasa Merger Reveals Smaller Might be Better

The recent merger of Casago and Vacasa can be called a case of David helping Goliath off the mat. Casago, which has some 5,000 properties in 72 cities in its portfolio, will pay up to $126 million to take over Vacasa, which has some 41,000 homes under management in 400 locations.

Vacasa, barraged by negative reviews from both owners and vacationers, was circling the drain. The deal includes Casago taking Vacasa private at $5.02 a share, a 32% premium at announcement, but a 97.1% decline from peak valuation in the last three-and-half years. In the heady days way back in July 2021, after Vacasa announced its SPAC merger, it was valued at $4.5 billion. Despite reporting $310 million in revenue in Q2 2022, Vacasa’s losses mounted, including a $332 million loss in 2022. 

Vacasa had 7,700 employees at the start of 2023, but after a reduction in force in May of 2024, it was down to less than 5,400 employees. Casago has annual revenue of $29.2 million with a head count of only 115 employees, and is profitable. It makes money by selling local assets and earning franchise fees after sales, and also collects fees for its property management services for vacation rentals, long-term rentals, and corporate housing.

The press release announcing the sale said that Roofstock plans to invest in and provide strategic guidance to the combined company. We’re not sure what Roofstock hopes to gain, and how much it’s willing to invest, but we have our theories.  

Both companies are focused on managing vacation homes, and Casago operates in 72 cities across the US, Mexico, Costa Rica, and the Caribbean. Vacasa’s 41,000 homes are in 400 locations across the United States, Belize, Canada, Costa Rica, and Mexico

Vacasa Failed, in a Very Difficult Business

The moral of this story? Managing property is a hard business, even for long-term rentals. Managing short-term rentals is even more time consuming, and no amount of proptech is going to head off the inevitable problems in heavily used vacation homes, or pick up the phone when an owner or renter needs service.

Among the complaints about Vacasa included:

• Property condition issues: Guests reported properties were not in described condition, with discrepancies between the online listing and the property. 

• Hidden fees: Complaints about unexpected fees added to the rental price were common. 

• Poor communication: Both guests and property owners complained the Vacasa staff was unresponsive. 

• Unfair damage claims: Some owners claim Vacasa charged them for damages that were not their fault. 

• Inflexible cancellation policies: Difficulty getting refunds even in legitimate cancellation situations. 

• Neglecting property maintenance: Owners complained that Vacasa did not maintain their rental properties. 

The reviews that the Vacasa and Casago competitor Go Summer reported on its site are pretty damning, including this one posted on TrustPilot by Jesse Obbink:

“This company is a joke. They take a huge margin, drive no incremental demand, and contact you every time there’s an issue. The scope of things they actually manage is minuscule.

Essentially you’re paying 30%+ (because of all their hidden fees) for them to schedule cleaners.  Tried it for a year, I am extremely underwhelmed. Will never use them again.  If you want to see the story, just look at their revenue and profit over the last 2 years. Pretty clear they suck up too much oxygen in the ecosystem without creating value.”

Jennifer was also pretty harsh on TrustPilot.

“Vacasa is a joke. We used Vacasa to set up our AirBnB home. It was awful. They claimed we would make a certain amount of $. Didn't even make 10% of that. They said they would help with management. All they do is set the price and list on Airbnb. We had to find cleaners, yard, garbage etc. from 1000 miles away. It wasn't easy. They said they knew our market (Augusta, GA) like the back of their hand. They set the price for our 6 bdrm home during Masters for $1500 for the week. My neighbors that didn't use the "expert" Vacasa got between $18k to 22k. When we called up Vacasa to ask why they booked it so low they said "what is the Masters". Are you kidding me? They are not experts in the housing market. DO NOT trust them with your home.”

Casago, which is one of many operators in the franchise model space, has mixed reviews online, as one would expect in this industry, but has a more positive profile than Vacasa.  It provides its franchisees with tools to support owner acquisition, revenue management, and streamlining operations on a localized level.

Integrating Two Cultures Poses a Challenge

The two companies make for odd bedfellows, according to Rental Scale-Up, which wrote a lengthy post about what vacation managers can expect in 2025. Vacasa takes a tech-driven, centralized approach, while Casago’s decentralized philosophy is a franchise model that is owner-centric. It will be a challenge for the leadership team, and John Banczak, who became Casago’s COO in December 2024, has his work cut out for him. He was the co-founder of TurnKey and served as COO of Vacasa so he knows what he’s getting into.

One challenge will be to adapt Vacasa’s standardized approach, which often alienated homeowners and fueled high rates of churn that made it difficult to turn a profit. Their acquisition costs of $6,700 per property and an average 4.6-year homeowner lifetime are numbers that put Vacasa on the ropes.  By inverting the business model from vertical integration to effectively franchising Vacasas 40k doors should in theory be a net plus for owners and investors in Vacasa.  By decentralizing day to day operations and basically referring out the low margin day to day service work, Casago can continue focusing on scaling profitability from their franchise model, while enabling local professionals that want to scale up their own short term rental management businesses.  

Stay tuned to proptext.co and we’ll have an update on where this all goes.

How the California Wildfires Will Impact Homeowners Insurance Across the Country

In short, homeowners insurance in many markets will be going up. A lot. Insurance is the business of managing asymmetrical risk: balancing the insured (person, property, or income) with the likelihood of a complete loss. It’s a game of probabilities. 

In the 2000s, insurance was one of the easiest line items in a pro forma of a real estate investment. If the property wasn’t in a flood zone, an investor could comfortably budget $1,200-$1,500 annually per single-family rental, with a 2.5% annual expense inflation and call it a day.

That’s out the window. Insurance has become one of a handful of costs today that can blow up a deal at underwriting.

Unfortunately, when systemic risk increases to the point that the odds of payout greatly rise, there’s only one direction policy costs can go to absorb potential losses: way up.

The Growing Impact of Wildfires

The recent California wildfires are a stark reminder of how extreme weather events, paired with increased population density, lead to outsized losses. According to AccuWeather, the total damage from the latest California wildfires is estimated between $250 billion and $275 billion, making it the most expensive wildfire event in US history. This figure surpasses previous disasters like the Lahaina fires in Hawaii, and recent hurricanes in Florida, which caused over $200 billion in combined damages.

Many media reports cite the increased risk for wildfires from climate change, and there is no denying the planet’s warming. But wildfires and hurricanes have been part of the landscape in California and Florida for millenia. What has changed in the last century is that thousands of buildings have been constructed in areas at risk for catastrophic events, and in the last decade or so the replacement costs for these buildings have skyrocketed.

These catastrophes in populated areas have fundamentally altered risk modeling. For example, insurers historically modeled extreme wildfires in California as once-in-200-year events, similar to how hurricanes were calculated for Florida. However, updated models now estimate one extreme wildfire every 20 years, according to a report by the Insurance Information Institute. This change increases the annual probability of such events from 0.5% to 5% – a tenfold increase.

The Catastrophic Loss Conundrum

The challenge for insurers and investors in high-risk areas lies in recalibrating for these increased risks. To illustrate:

• Palisades Home Value Average: $4,000,000

• Replacement Cost Spread Over 200 Years: $20,000 annually

• Replacement Cost Spread Over 20 Years: $200,000 annually

While premiums are calculated using more nuanced factors such as age, building materials, and proximity to fire stations, this example highlights the scale of the shift. According to Barron’s, insurance premiums in moderate-to-high-risk areas may rise to 10 times their current levels, with homeowners in California already seeing average annual premiums increase by 30% or more. Since 2019, the average homeowners insurance premium has gone up about 60% in Florida, which has the highest annual rate in the country at almost $11,000 a year.

Moderate and Higher Risk Areas Are Expanding

When discussing natural disaster risks, most think of California and Florida. However, wildfire risk spans much of the western United States. A June 2024 wildfire assessment report by CoreLogic found that the following states have the highest number of homes at moderate or greater risk of wildfire damage:

• California: 1,258,748 homes

• Colorado: 321,294 homes

• Texas: 244,617 homes

• Oregon: 129,567 homes

• Arizona: 124,603 homes

These risk levels are calculated based on the number of homes near undeveloped areas or exposed to the Wildland-Urban Interface (WUI), where homes are near flammable materials like vegetation. As more homes are built in these areas, the risk pool grows larger, driving up premiums even further.

Implications for Real Estate Investors

Insurance has shifted from being a predictable line item to a potential deal breaker for real estate investors. To prepare, investors need to:

1. Get Early Quotes: During the offer stage, pursue insurance quotes for potential deals. The difference between an $1,800 and $4,000 annual premium could erase pro forma cash flow. Insurance inflation is expected to outpace rent growth over the next 3-5 years. According to Reuters, property owners should brace for annual premium increases of up to 30% or more in high-risk areas.

2. Evaluate Structural Resilience: Assess building materials and consider improvements to future-proof investments. Companies like Faura offer home risk assessments that identify vulnerabilities. Research shows that fire-rated roofs, metal gutters, and ember-resistant vents significantly improve a home’s chances of surviving a wildfire.

3. Plan for Increased Operating Costs: Factor higher premiums into the pro forma with a more conservative estimate of 10% annual insurance inflation. And plan for longer construction timelines and higher rebuild costs in the event of a disaster.

The Path Forward for the Insurance Industry

Insurers face a delicate balancing act. They must price policies to account for increased risks while remaining solvent and competitive. Reinsurers, the companies that provide insurance for insurers, are also feeling the strain. According to Swiss Re’s latest report, global reinsurance costs are up 15% year-over-year because of the rising frequency of catastrophic events. This has raised costs for primary insurers and policyholders.

Some insurers have chosen to stop writing policies in high-risk areas altogether. According to the Los Angeles Times, major insurers like Allstate and State Farm have paused new homeowner policies in California, citing unsustainable losses. As a result, many homeowners are forced into state-backed insurance pools with higher premiums and limited coverage.

How Natural Disaster Risk Shapes Market Values

The rising cost of insurance is also reshaping real estate market values. In high-risk areas, properties may sell at a discount because of higher carrying costs. According to a Redfin analysis, properties in wildfire-prone areas have appreciated at a slower rate compared to the broader market. This creates opportunities for investors with higher risk tolerance but also underscores the importance of thorough due diligence.

Conclusion: Navigating the New Normal

California will rebuild. People will continue to move to Florida. Investors will find ways to thrive in high-risk areas. However, the dynamics of risk and cost have fundamentally changed. Insurance is no longer a trivial line item; it’s a critical component of deal analysis that can make or break an investment.

The intelligent investor must adjust their approach, incorporating detailed risk assessments and realistic cost projections into their strategies. Whether through structural improvements, early insurance quotes, or more conservative underwriting, those who adapt to the new realities of natural disaster risk will be best positioned for long-term success.

As we enter this new era, one thing is clear: understanding and mitigating insurance risks is not optional — it’s essential.

Final Note

The fires in California have wreaked havoc on countless families, yet the national dialogue often shifts to political debates, diverting attention from the immediate need for support. 

Altadena, a community with rich historical roots, exemplifies the human impact of this devastation. Established 140 years ago as an affluent retreat, Altadena has since grown into a diverse neighborhood, blending pockets of affluence with working-class, multigenerational households. Many of these families, whose ties to the area date back to the era of racially segregated housing in the 1950s and 60s, now face unimaginable loss. Entire homes have been destroyed, leaving these resilient yet resource-limited families without shelter or the means to rebuild.

If you’re able, please consider supporting organizations like the American Red Cross. Your contribution can provide vital resources to those affected as they embark on the long and arduous road to recovery that will take years.

Valdosta, Georgia

Opportunities for real estate investors abound in Valdosta, Georgia, where valuations are low, the economic base is diverse, there are multiple employment drivers, and the housing market is affordable. With its strategic location in the southern part of the state, Valdosta, known as the "Azalea City," boasts a thriving economy anchored by education, manufacturing, retail, and military sectors. The upshot is a thriving and resilient housing market.

Valdosta’s current value-to-income ratio is only modestly overvalued based on local fundamentals, presenting an opportunity for investors to capture value in a competitive market. (Value-to-income ratio is calculated by dividing the area’s median income of $56,000 into average home value of $199,000.) The current value-to-income ratio for Valdosta is at 3.56, or 6.5% higher than the long run average. A hot Airbnb market like Sevierville, Tenn., in the Great Smoky Mountains, has a current income-to-value ratio of 6.6, or 42% higher than the long-run average.

Valdosta’s location on I-75 connects it to Atlanta, Macon, and Orlando, and it is only 15 miles north of the Florida border. As the insurance market for homeowners in Florida further deteriorates, with higher premiums and fewer options, Valdosta should benefit from outflow from Florida. Nearby cities like Valdosta stand to benefit.

Moody Air Force Base:

• A cornerstone of Valdosta's economy, this base employs approximately 4,500 active-duty personnel and civilians and injects an estimated $450 million annually into the local economy.

• These soldiers and support staff drive consistent demand for workforce housing and short-term rentals for military families and contractors. 

Valdosta State University (VSU):

• With over 12,000 students and 1,500 faculty and staff, VSU is a significant driver of housing demand.

• Regular influxes of students, faculty, and visiting professionals create opportunities for multi-family rentals and short-term housing.

South Georgia Medical Center (SGMC):

• The region's largest healthcare provider, employing over 3,000 healthcare professionals.

• A key driver of workforce housing demand, particularly for healthcare professionals and traveling nurses.

4939 Sandy Hill Dr

New construction in south Valdosta, GA, for only $256k with an estimated rent of $1,725 per month. This affordable market and affordable home is close to the FL border. With migration out of FL becoming a topic, this market could see boomers leave FL for cheaper home insurance markets like Valdosta, GA.

The Investment Thesis

→ New construction for only $256k
→ $1,725 / month estimated rent
→ Market of Valdosta is only 6.5% overvalued based on local fundamentals (HHI and Home values)

 Property Details

 Financial Projections

Interested in Learning More?

*Appreciation based on 4% growth rate. 

Tech Entrepreneur Knows the Value of ‘Investing in Bricks’

Growing up in Argentina, a country long plagued by out-of-control inflation, Ale Ayestarán learned early on the value of “investing in bricks.” His family had various properties they rented, both short and long term, and discussions around the dinner table invariably included some talk about managing its real estate portfolio.

Still, he did not personally start investing until later in life, after working for Boston Consulting Group and then Shift Technologies, an online marketplace for buying and selling used cars. He took a break from Shift in the summer of 2020, focused on being a dad to his 2-year-old and helping out with a newborn.

Around that time, he got a call from Mynd, a property management and real estate startup, and received an offer to serve as chief business officer.

“I was looking to really get into real estate,” Ayestarán said. “I really liked that Mynd was in real estate, a massive market with a ton of opportunity where I think it’s possible to change things with technology.”

At the time, both he and his wife, a Mexican woman he met while they were studying at Stanford’s MBA program, were both working at startups and living in San Francisco. (He has a degree in industrial engineering from Instituto Tecnológico de Buenos Aires.)

“We were tripled down in tech,” he said. “We worked in tech, lived in an area that relies on tech, and much of our savings was in indexes that are tech-heavy.”

They bought two single-family rentals, one in Texas and one in North Carolina, through Mynd’s investment platform and was thinking of buying a third but decided to hold off after interest rates rose and his wife became pregnant with their third child.

Mynd merged with Roofstock back in May, which was covered in issue #4 of proptext.co, and Ayestarán is now looking for his next role. But the experience at Mynd was invaluable.

“I wanted to learn about real estate investing for my own practical experience. It is a way to protect your savings,” he said. “I wanted to get more sophisticated. I definitely learned a lot.”

Ayestarán said people need to realize that real estate is a fact of life.

“People have to appreciate that you don’t have to get into real estate, you are in real estate,” he said. “The fact that you exist means you live somewhere. You have to decide if you want to rent or buy. You have to decide how much time to spend on it. Just know that there are ways to do it and be more hands-off.”

This interview has been edited and condensed for clarity.

What is your special real estate superpower?

I grew up in Argentina in a high inflation environment. You really need to understand what investments protect you from inflation. These are things you generally don’t have to worry about if you live in a stable country. I’ve been through so many crises that I know what to do to protect my money. 

What was the hardest lesson you learned early on in your real estate journey, and how did you overcome that and persevere?

Doug (Brien, president of Roofstock, co-founder and CEO of Mynd) wrote a book called “The Big Long,” which explains it. It is the long game I kinda knew when I got into it would be a journey I would be in for life. To understand the game and see your thesis play out you have to stay patient. It’s like the stock market but it’s an even longer term. That has been a challenge for me because sometimes there’s not much you can do, which is not my nature. Be super patient and do nothing. 

What advice would you offer to somebody looking to get into real estate or grow a portfolio?

Just do it. Save enough to be able to do something — you need to set aside 20 percent of your net worth for real estate investment [He said that’s his personal preference]. Whatever your choice, it’s a number that’s more than zero, and that is aside from your primary residence. Save that money as fast as possible — be more frugal. Once you are there don’t hesitate. Think of it as a portfolio and thinking long-term is the key. The learnings at the beginning are more valuable so just get going. Go ahead and read about it and learn what you can, but at some point you just go do it.

Among the strategies a property owner could pursue — long-term rental, mid-term rental or short term, (Airbnb), co-living — what works best for you, and why?

For me long-term rental of a traditional unfurnished property is the best. I don’t want to be actively managing a portfolio. With short-term rentals it’s more involved when you factor in how much of your actual time is spent and I don’t want to do too much. These days, we’re doing it only in the US but in the future maybe it’s not short-term rentals in the US, but long-term rentals internationally. 

What do you think is the biggest issue investors face in 2025 and beyond?

Today, it’s obvious that the math does not work on many deals. This is something you should only do if you are committed to the long haul. If you get freaked out over a longer vacancy, that’s a problem. With real estate, try doing a mental check and assume the asset is worth nothing, don't count on cash flow. There might be a check [monthly cash flow] but in your mind you don’t need that check.

Waltz

Waltz is a digital platform transforming the way foreign nationals invest in US real estate. However, the solutions it offers are not exclusive to international investors — they also resonate with US-based investors, many of whom are self-employed, high-net-worth individuals, or others seeking to move large sums efficiently.

With its stable growth, favorable regulations, and reputation as one of the safest assets in the world, US real estate attracts investors of all types. Unfortunately, these same qualities make it a target for illicit money, causing regulators to impose stringent compliance measures. Waltz bridges the gap by streamlining regulatory transparency while reducing the time and effort it takes for investors to navigate this complex system.

The Origin Story

Founder and CEO Yuval Golan’s personal frustration with investing in US real estate as a foreign national during the pandemic led to the formation of Waltz. A self-described digital nomad, Golan had experienced inefficiencies in real estate markets across multiple countries, but found the process in America particularly grueling.

Faced with lengthy closing timelines (up to eight months), anti-money laundering (AML) verifications, and limited guidance from brokers and lenders, Golan saw firsthand how the system seemed to discourage foreign investors. Yet, the real issue wasn’t a lack of liquidity or demand—it was the labyrinth of regulatory compliance spanning the financial and real estate sectors.

Golan created the platform to eliminate the pain points he endured, aiming for a seamless experience for other investors.

How Waltz Works

Waltz streamlines each stage of the US investment process. While it’s not entirely vertically integrated (a strength, in our view), it brings together trusted professionals and digital tools for an end-to-end solution.

Why It Makes Sense for Short-Term Rental Investors

1. Property Selection: Waltz collaborates with vetted agents, mortgage professionals, and turnkey providers to match investors with properties aligned to their goals.

2. Identity Verification: A seemingly minor, but critical step. Waltz integrates document verification (e.g., passports, driver’s licenses), biometric authentication, and global compliance checks to ensure investors meet all legal requirements and are not on any watch lists internationally.

3. Legal Setup: One of the biggest hurdles for foreign investors is creating a proper LLC and obtaining Employer Identification Numbers (EINs) for tax purposes. No loan starts without the government's ability to collect its share. Waltz enables legal and tax setups in minutes — a game-changer for all parties involved.

4. Banking, Financing, and Closing: Waltz simplifies setting up US FDIC-insured accounts, managing currency exchanges, sourcing loans (non-trivial for non-recourse loans), and facilitating remote closings. We cannot overemphasize how much time is saved here.

5. Post-Purchase Support: From property management recommendations to tax advisory services and performance tracking, Waltz ensures investors are equipped for success beyond the purchase.

Where Waltz Operates

Waltz currently operates in key single-family rental markets, including Alabama, Florida, Georgia, Maryland, Mississippi, North and South Carolina, Ohio, and Texas. With its focus on process optimization rather than full vertical integration, Waltz is well-positioned to expand its footprint in 2025, navigating state regulations and balancing market-specific price and return ratios.

Our Thoughts

Investing in US real estate is notoriously cumbersome for foreign nationals, and Waltz addresses these challenges head-on. But domestic investors can also benefit.

Many US-based entrepreneurs, doctors, and lawyers with high incomes but lower reported net income struggle to qualify for conventional loans. Even those who do qualify face mountains of paperwork and invasive financial scrutiny, making repeat investments unappealing. High-net-worth individuals often find themselves bogged down with trivial requirements, like justifying every $10,000 transaction.

Waltz provides fast and efficient solutions. While the platform may involve slightly higher interest rates and insurance premiums, these costs are offset by reduced personal liability and substantial time savings.

From a business strategy perspective, what stands out about Waltz is its focus on tackling the toughest challenges first: regulations, banking, and securitization. Many proptech and fintech companies falter early on by underestimating the complexity and power of regulatory hurdles. In contrast, Golan and his team have taken the opposite approach, addressing these barriers head-on. This strategic prioritization positions Waltz for long-term success, and suggests they’ll eventually serve a broader range of investors seeking a better investment process.

We at prop.text saw the strong demand from US citizens for a service like this while working at HomeUnion, a venture-backed startup that focused on remote investing back in 2015. Nearly a decade later, the market is still searching for a definitive leader in this space, and Waltz could be the one to eventually seize the opportunity.

Head over to Waltz to learn more about their platform and start investing today.

Refer and Earn

You can earn free prop.text merch for referring investors to the newsletter

25 referrals - hat 🧢
 50 referrals - tee shirt 👕
100 referrals - weekender bag 🎒

Copy & paste this link: https://www.proptext.co/subscribe?ref=PLACEHOLDER