LTR or STR/MTR
Hi Everyone,
Wife and I will be purchasing another investment home here in the Phoenix area. Id like some feedback on personal experience dealing with STR or MTRs in this market.
We have another investment home in the area that is a LTR and so far been superb. So were a bit nervous switching the game plan. We hear that a lot of investors in the area make a killing in that segment but were just not confident pulling the trigger and going that route.
How has dealing with Airbnb or furnished finders been?
Any advice would be appreciated.
Thanks for your time!
It really depends on where the property is. Phoenix metro is a pretty seasonal STR area to me. The LTR's have picked up after a long dry spell. Location, location, location (and a good quality home) is what it is about, IMHO.
Of course, check the rules from the HOA and the municipality, if any. I had a client who bought a home with the intention of STR but did not read the CC&R's that stated no rentals shorter than 6 months. Other cities in the area have, or will be implementing more rules about STR's.
With the increase in home prices in Phoenix over the past couple years it is harder to cash flow in any segment. Make sure you do your research and run the numbers. We have a lot of businesses coming to the area, like TSMC, Lucid, Ecobat and several others. Those workers are going to need long term housing. Some of the expansion is on the fringes of the metro, like Casa Grande, but the demand will be there.
Good luck!
Quote from @Walter Moneypenny:
It really depends on where the property is. Phoenix metro is a pretty seasonal STR area to me. The LTR's have picked up after a long dry spell. Location, location, location (and a good quality home) is what it is about, IMHO.
Of course, check the rules from the HOA and the municipality, if any. I had a client who bought a home with the intention of STR but did not read the CC&R's that stated no rentals shorter than 6 months. Other cities in the area have, or will be implementing more rules about STR's.
With the increase in home prices in Phoenix over the past couple years it is harder to cash flow in any segment. Make sure you do your research and run the numbers. We have a lot of businesses coming to the area, like TSMC, Lucid, Ecobat and several others. Those workers are going to need long term housing. Some of the expansion is on the fringes of the metro, like Casa Grande, but the demand will be there.
Good luck!
Hi Walter,
Thanks for your response. I agree, with high prices and interest rates, it does make it tougher to cash flow. I have found a few homes where the numbers work and were in the positive (barely). My gut is telling to stick with LTR because here in the West Valley, rents are still high (surprisingly). For my wife and I, its about the long game. Were thinking in the next 5 years our other rental is paid off with some extra effort on our end, then that money helps us pay the next purchase much quicker etc.
Regarding home quality, we would only purchase a home that we could live in if necessary. If its ok for us it would definitely be great for renters since were so demanding.
Thanks again!
Hi Armando! It really depends on what market segment you are getting into. Short term rental and mid term rental are each their own animal, they do have advantages but come with their own drawbacks as well. Also Short term rentals have seen a significant dip in the last 18 months.
Quote from @Bretton F Trapnell:
Hi Armando! It really depends on what market segment you are getting into. Short term rental and mid term rental are each their own animal, they do have advantages but come with their own drawbacks as well. Also Short term rentals have seen a significant dip in the last 18 months.
HI Bretton!
Thanks for your feedback. We're still undecided as to which direction to go, but leaning towards LTR as we are thinking about this as a long term investment. Quite frankly, doing a STR or MTR does come with more hands on from us.
Like you mentioned, Ive also heard that STRs have taken a dip as well.
Thanks again!
I've been deliberating over the same issue (long-term rentals vs. medium-term rentals) and am inclined to invest the extra effort to manage a medium-term rental, given the appealing additional cash flow it promises. However, I'm somewhat concerned about managing numerous tenants, especially since I plan to rent by the room, which inevitably might lead to encountering a few challenging tenants. I'm hopeful that Phoenix's reputation for being landlord-friendly, particularly regarding evictions, is as reliable as I've heard from others.