Turning Hotel into long term rentals

[Mark Hadnett]

Hi All BP fam,

I’m wondering if anyone out there has experience with renting out hotel rooms as long term rentals I.e rents over a month. I understand you cannot have leases with tenants but would it be treated just as a long term hotel stay? What would pros or cons be to doing it this way? The reason I ask is I am under contract on a hotel property in NJ and we were going to turn into long term rentals but there are a lot of costs involved with switching it over vs we operate as a extended stay hotel unfurnished/furnished where we would essentially just be long term rentals. Thanks in advance 

[Nathan Gesner]

You have to have the market for it. Is there enough demand for small rooms with no kitchen? If you're in a market that has the demand, I recommend finding a way to create common area where renters can take a break from their small space. This could be a room with a pool table, some couches and chairs, a big-screen TV for watching movies or sporting events, etc.

Another (better) option is to combine two rooms and create one small apartment. I have a converted motel where one room was turned into the kitchen/dining and the second room is the living/bedroom. There's a full bath and walk-in closet between the two rooms. It works great and is easy to keep them rented long-term. I include utilities and rent them to single people. If they want a second occupant, they pay an additional $75 a month to cover the extra utility use and a little more profit.