STR Now for Future Home?

Question

My wife and I currently live and rent in NYC but anticipate moving to western Connecticut on a 5-year time horizon. We're wondering if there is any sense in purchasing a property now and renting it out (likely short- or mid-term rentals) for the next few years prior to moving into it. We don't know much about the AirBnB or mid-term rental market in Fairfield County--just know it's a likely home contender in the next few years.

Any advice would be greatly appreciated as we'd be new to REI and to the Fairfield market!

Bonnie Low · Answer

Hi, Jared. What are your needs as far as covering your costs? Are you willing to come out of the property now if you need to in order to get the property you eventually want to live in or do you need it to pay for itself? Typically you'll make the most doing short term rentals, then midterm, and the least doing long term rentals. There can be some exceptions to this. For example, some people are very successful renting out larger homes for insurance placements and the income equals or surpasses short term rental income, but you have to have the right property in the right location and really work that vein. To do some market research, I'd start by researching STR regulations in the area you want to buy first and foremost. If STRs are a no-go, you know that's not a viable option for you. Since you're on a 5-year time horizon I would also make a call to the local planning agency to see if there are any discussions at council meetings about introducing vacation rental restrictions. Although it could be an open market now, that doesn't mean they aren't hearing from locals about regulating it so be sure you take the pulse of the local jurisdiction. AirDNA is a pretty good source for evaluating STR opportunity and revenue projections. So is STR Insights. To research the midterm options, I'd start by checking Furnished Finder in your locale to see what the demand is and the number of listings. You can go into a lot more research on either of these, but that's a good starting point. Good luck in your search!

Ryan Kundrat · Answer

Hey @Jared Robbins, so the benefits of course would be to lock in a house at a 2023 price, begin building equity on the property today, tax write offs, and knowing you have an easy place to move into. I might steer clear of STR as it really is a job in and of itself. MTR and LTR would be great options, MTR being most flexible in terms of being able to move in on your schedule. One of the upsides to interest rates being higher right now is that it is keeping some buyers away which with so few houses available next buying process a bit more manageable. If interest rates were to drop, a whole wave of buyers would enter the market, and with no increase in the number of homes available, you can imagine what will happen to prices.

Different parts of Fairfield County are going to be better for MTR versus LTR, and then of course you also have to consider what town and neighborhood you'd personally like to be in in 5 years. I'm a lifelong resident, so happy to share any insights I can on the different areas and potential for renting prior to moving in, give me a shout anytime!

Ryan (203.539.1139)

Carlos Ptriawan · Answer

yes buy it now and just do LTR.