Multi-Family or Mid-term Rental?

Question

Hey BP Family, I'd love your insight on this.

I'm currently weighing two intriguing options: house-hacking a 4-plex or venturing into the realm of a mid-term rental with a single-family home or duplex, particularly for renting to travel nurses. While the former presents a classic investment opportunity, the latter has caught my eye for its unique and potentially lucrative approach.

As someone relatively new to this field, I'm aware that there might be aspects I haven't considered or opportunities I'm overlooking. Your insights, advice, and recommendations would be invaluable to me in this decision-making process.

Thanks!

Max McQueen · Answer

Some sheer wisdom was shed here, thank you Dominik!

Joshua Christensen · Answer

LOL.  Thanks Max. I do actually provide some coaching.  I haven't done it consistently and have had several clients over the years.  Not as a primary coaching business, just one offs.  lol.

I'm glad to hear that you were encouraged and hope it helps with your decision.

Max McQueen · Answer

Have you considered being a coach? haha This was very pointed and encouraging. Thanks Joshua!

Max McQueen · Answer

The data is definitely important, I'll do some more digging. Thank you Adam!

Joshua Christensen · Answer

Ultimately the question I can add to these stellar options is this...

You seem to like both options.  You have comfort in both options.  Which one itches your investment desires most?  You probably have something leaning towards one or the other, so lean in and enjoy.  Once you make your choice, push forward and don't look back wishing you had done the other.

Give which ever choice you make your full attention as both will have different demands on your time and resources over time.

A second question is, how much experience do you have in either space?  Do you know anyone who has experience in each space that you can pick their brains and run things by after you're in.

Maybe join a local REI meetup and find people already doing what you want to do.  Have some local allies that know your market and have experience there.  They will see things that any of us outside your market won't see.

Evan Polaski · Answer

@Max McQueen, from a technical standpoint, if you buy a midterm rental, you will not be an owner-occupant and your financing could be considerably more expensive.  And of course, I would be certain you are in a market that is in demand for mid-term rentals, i.e. you need to be in or around a fairly major city, or have a big hospital nearby that utilizes travel nurses (does every hospital use travel nurses?).

The house hacking a 4 family is something I wish I had done earlier in life.  The nice thing about this is: owner occupied financing, typically going to cash flow better than SFRs, 3-4 tenants, so it is less likely to be all or nothing when one tenant moves out, and you have a place to live, so you are not only collecting rental income, but also saving having to pay rent yourself.

I listed the upsides, but there are downsides to both too.  4 family - 3-4 tenants to manage (could be nothing or could be a lot), more wear and tear on units.  If you tenants know you own the building, and they are already needy tenants, it can be burdensome for you being that close for them to knock on your door, and presumably you are going to want to live in a specific neighborhood(s) so you are a little more limited in your options.

If you, personally, are comfortable with either, then it comes down to actual opportunities available.

Dominik Porobic · Answer

When weighing the options of house-hacking a 4-plex versus mid-term rentals for travel nurses, consider a few key factors. House-hacking offers a classic investment opportunity with less furnishing and management intensity. On the other hand, targeting travel nurses for mid-term rentals is unique and potentially lucrative but involves more hands-on management and furnishing efforts. Location is crucial, so research areas with high demand for travel nurses. Assess your capacity for involvement and consider potential vacancies. Additionally, be open to Airbnb as a solution for filling gaps in occupancy. Ultimately, your decision should align with your risk tolerance, involvement capacity, and long-term goals. You could also just get a 4-plex and use a smaller unit to "test the waters". Good luck!

Adam Connolly · Answer

Just some hopefully thought-provoking questions on option #2. Have you considered proximity to a hospital, or better, multiple hospitals and long-term care or retirement facilities? Secondly, do you have any data on the lengths of time over which a traveling nurse is in one location vs another? Days, weeks, months, etc? If shorter lengths of time, it could make more sense to STR/Airbnb a property like that; if longer, maybe mid-term is a better approach. Just some thoughts! Good luck!