SFH property to sublet STR for travel nurse etc

Member since 2020 · 69 posts · 12 votes

Hello

I just closed the 3 BED room half duplex SFH in Connecticut. I started marketing at Zillow for rent. I have received one inquiry about STR arbitrage. I was just thinking regular tenants 1 year lease BUT i haven't thought about SRT Arbitrage. This home is 2 blocks from major hospital and the home rent is more than average (very well kept, very spacious, newer home etc..) So far, a lot of Sec 8 voucher candidates ask question and i am thinking STR arbitrage can be my last option if i can't find good tenant? Anybody has any concern for STR Arbitrage?

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KC Pake
Investor · Orange Park, FL · Member since 2019 · 173 posts · 108 votes
3y
Quote from @Kevin Kim:

Hello
I just closed the 3 BED room half duplex SFH in Connecticut. I started marketing at Zillow for rent. I have received one inquiry about STR arbitrage. I was just thinking regular tenants 1 year lease BUT i haven't thought about SRT Arbitrage. This home is 2 blocks from major hospital and the home rent is more than average (very well kept, very spacious, newer home etc..) So far, a lot of Sec 8 voucher candidates ask question and i am thinking STR arbitrage can be my last option if i can't find good tenant? Anybody has any concern for STR Arbitrage?
Hi Kevin!

Congratulations on your new acquisition!

Short-Term Rental (STR) Arbitrage is an interesting concept and can be a profitable venture if done correctly. However, there are several factors you need to consider:

Location: Since your home is two blocks away from a major hospital, it might be ideal for medical professionals or families visiting patients for short periods. This could give you a consistent flow of guests.

Regulations: Make sure to check the local regulations in Connecticut and specifically in your city regarding short-term rentals. Some cities have stringent regulations, or they may require certain permits, licenses, and you might be subject to additional taxes.

Management: STR requires a different kind of management than long-term rentals. You will have to handle frequent check-ins and check-outs, provide amenities, manage cleaning services, and handle any issues that arise on a short turnaround.

Pricing: Short-term rentals generally can command a higher price per night compared to monthly rentals, but the occupancy rate can vary depending on seasonality and other factors.

Security: You'll want to consider investing in good security measures like smart locks, security cameras, and an effective vetting process for guests.

Wear and Tear: STRs can cause more wear and tear on your property because of the frequent turnover. However, with a good management process and the right guests, this can be mitigated.

Review Platforms: Sites like Airbnb and Vrbo rely heavily on guest reviews. One bad review can drastically affect your bookings. Ensure you provide the best service and amenities to garner positive reviews.

Section 8: If you're considering Section 8 tenants, keep in mind that there are specific rules and regulations you'll need to adhere to. It can be a consistent source of income, but you must ensure that your property meets all the housing quality standards.

As a backup plan, STR Arbitrage might be a good idea if you can't find a long-term tenant. However, consider the points mentioned above and see if they align with your goals and the amount of work you're willing to put into managing the property.

Good luck!
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Brian Cauldwell
Lender · Springfield, MO · Member since 2023 · 109 posts · 78 votes
3y
Hi @Kevin Kim! @KC Pake touched on most points.

There is one other thing to consider. Lending. For future refinances, depending on how the lease is worded and who the property is leased to, that may cause an issue with being able to refinance the property. At least through DSCR lenders.

If the lease is to a business/entity instead of an individual, very few lenders will be able to refinance this property. So when the time comes to refinance make sure you talk to the right person and ask the right questions to make sure they are okay with however the property is being leased.
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