Should I rent or AirBnB my Newly Renovated Rowhome?

Question

It's better sweet, but after just two years in Philadelphia, I'm moving back to New York to another fully reno'd house in 6-8 months.

The sweet part: I'm moving to a town I love, and into a house, we'll renovate in the way we want to live for the next 20 years.

The bitter part: We took a fixer-upper in one of the most desirable areas of Philadelphia (East Passyunk) and renovated it into an absolute gem. My wife is a high-end residential interior designer, and our house looks as beautiful as the multi-million dollar homes she designs for her clients. Everyone whose seen our place (including appraisers and agents) said it's unlikely that there's another home like it in South Philly. Could we sell it? Of course, but I don't want to.

So, my question is - given the current housing market, interest rates, and the opening of the city (bye-bye covid) - should I rent or do short/mid-term stays?

Tom Dempsey · Answer

I also tell others that they should try renting on Airbnb and other OTA's and see how they like it. Worst case you can pull the listing and switch it back to longer term stays. During my time working with a short term property management company - I have never seen a client upset or disappointed with the way their property has done when being rented out on Airbnb.

It is definitely a lot more maintenance and upkeep doing Airbnb. If you don't personally have the time and energy to do it I recommend getting a management company to make it completely hands off.

Joshua Messinger · Answer

Hey @Franky Aikens!

Expertise in Interior design paired with a renovation in Passyunk? Would love to see pics! Bittersweet moving a home with so much sentiment. It's unique, and design is such an integral piece of the Airbnb experience. I'd rent it out short or moreso medium term.

My team and I have hosted over 10,000 reservations in Philly with a lot of our portfolio being high end with high end design.

Here are some of our listings:

- https://www.airbnb.com/rooms/2...

- https://www.airbnb.com/rooms/4...

Can't wait to see how your place is finished, and congrats on your guys move to the forever home!

Live Free,

Josh

Caleb Brown · Answer

Short term/mid term stays. I'd check on regulation and see what's allowed there

Conner Olsen · Answer

Monthly stays have been pretty passive for me after I got it all setup. It takes awhile to get all the furniture, put it together, stage the property, order all the linens and dishware. After that it's been about the same work as a normal LTR for me.

Michael Porche · Answer

Franky! Way to go! that's awesome man. I would definitely keep it. overall real estate has show to do best when you hold on. I think STR would be a great option if its aloud. I can send you a quick one if interested. Let me know if I can help.

Mike Smith · Answer

@Franky Aikens I agree with others about verifying it's allowed.  Also, some due diligence is required to be able to compare the net cash flow and also time invested in long term rentals vs STR or mid term.

I'm writing to caution you about taking any one property managers financial projections as fact, be it short term or long term.  Some property managers realize that landlords will interview multiple property managers and simply chose the manager that projects the largest net income.  Unscrupulous property managers will over forecast revenue and under estimate expenses to present a over rosy projections.

So you should spend some time manually figuring your net income.  You can do it through manual research or use a site like AirDNA or MashVisor.

As a builder, I run into the same scenario with some agents presenting inflated home values, hoping to get a listing.  It took me several years to realize I had to do some of my own research...

Steven Pulla · Answer

Hey Franky!

My name is Steven Pulla , a New York Realtor, congratulations on your potential move and embarking on a new journey. What you've done in taking a fixer-upper and renovating it into an absolutely gem is very admirable and an amazing investment. I've had the amazing opportunity to partner up with some very well known Airbnb Superhost, and have been fortunate enough for them to share some of their airbnb knowledge and numbers there airbnbs generate. Personally, if I were in your situation, I wouldn't sell or have a longer term tenant. The numbers airbnb's can generate in terms of profit are absolutely ridiculous and way more profitable from what I have seen!

So as mentioned, with the current housing market, interest rates, and the openings of each city, if it we're me... I would do short term rentals!

Jacob H. · Answer

Can't speak for that location in particular but I can say that our Airbnb has performed quite well compared to the long-term rentals. It seems to be rather consistent across the nation that STR returns beat LTR returns. STRs are more active but you can expect that with a higher generated ROI. As others have mentioned, if you don't like the guests, they will be leaving before too long.

Only real issue with doing STR is local regulations and permits. Some areas are more strict than others so you just have to be familiar with that; I'm sure that will help drive your decision as well. If it's not going to be more stress and headache than it's worth to get and maintain a permit, STR is the way to go if the highest ROI is your goal, as you mentioned.

I will say that our Airbnb hasn't been as popular this year compared to last year. I think bookings are slowing down in a lot of areas because everything is so expensive that people are just trying to survive these days and aren't worried about taking vacation; could just be here though (Colorado Springs).

Alicia Delaney · Answer

Steven: Where does one find AirBNB managers outside of Facebook? Or does has anyone else found AirBNB managers in unique places?

Ryan D. · Answer

Can only do midterm (30+ day rentals) for non-primary residences in Philly. Unless you're CMX3.5 or obtain a limited lodging license via zoning if its your primary. They're going to start cracking down sometime this summer on unregistered STRs as this is a recently implemented bill.

Should I rent or AirBnB my Newly Renovated Rowhome?

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