Why I like STR much more than Long-Term Renting

Mike Eichler

OP

Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

4y

I have also made a youtube video on this concept if you are interested in a more in-depth explanation

you can check it out here: STR vs Long Term Renting

3 Reply

Luke CarlPro Member

Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes

4y

1. Management is not investing.
2. long term or short term they’re both better than the stock market!

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

4y

Quote from @Luke Carl:

1. Management is not investing.
2. long term or short term they’re both better than the stock market!

Yup to me its the hospitality business apples and Oranges to buy hold long term landlords that dominate the real estate rental game.

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1 Reply

Scott E.

Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes

4y

I'd be interested to see how you felt if you put your own hard earned money into a property, rented it out as a short term rental for a few years, and reflected back on the income, expenses, and wear & tear on your home.

There is definitely money to be made with short term rentals but it's not for the faint of heart. I've never been a property manager but I have owned several STR's over the years and I imagine the perspective is very different whether your an owner vs property manager.

4 Reply

Gregory M Paielli

Property Manager · AZ NV, FL · Member since 2021 · 20 posts · 19 votes

4y

Quote from @Scott E.:

I'd be interested to see how you felt if you put your own hard earned money into a property, rented it out as a short term rental for a few years, and reflected back on the income, expenses, and wear & tear on your home.

There is definitely money to be made with short term rentals but it's not for the faint of heart. I've never been a property manager but I have owned several STR's over the years and I imagine the perspective is very different whether your an owner vs property manager.

It's like managing a hotel, but unless you have a lot houses and a staff it can be challenging. Alot of competition too on low to mid size units. Money to be made I heard in Luxury homes.

3 Reply

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

4y

You forgot the most important aspect...it's a modern, tech-enabled business that allows residents and guests to research, book, pay, check in/out, and communicate on their platform of choice right at their fingertips. The lines between STR and LTR are going to continue to blur and, importantly, those who can conduct STR legally in somewhat residential areas through commercial zoning are going to benefit as STR regulation works it's way through residential communities across the country.

2 Reply

Kyle Flynn

Property Manager · Atlanta, GA · Member since 2020 · 34 posts · 25 votes

4y

I believe that because the STR method of investing is still newish and suffers from the bandwagon effect. STR properties will have much higher operating expenses as opposed to a long term buy and hold because of the higher standard that is typically expected, as well as higher reserves that should be saved, and not to mention drastically higher taxes to be paid at the end of the year. Once all of these variables are factored in STR might not look as attractive.

But with all of that said, I love the idea of STR and am actually had a similar experience to you. I initially wanted to do long term buy and hold, but gradually my attention shifted to STR because of the potential for higher returns.

Also, your youtube video was pretty good I would just recommend either investing in a better camera or making sure that its in focus for the next one.

3 Reply

Cole Simpson

Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes

4y

Agree @Mike Eichler, I am focusing on STRs because they give the best returns. Our clients are also doing short-term rentals in Charlotte and cash flowing 12-18%.

0 Reply

Paul Camuto

Real Estate Coach · Robbinsville, NJ · Member since 2017 · 185 posts · 99 votes

4y

Quote from @Mike Eichler:

I've been involved in Real Estate for a year now. I jumped right in with a Short term rental management

company (Liberty City Living). Throughout my time it was very fun to watch the company grow from a mere

60 units in Philadelphia managed, to over 200 managed in multiple markets just a year later. Ever since I was

in high school learning about Investing and real estate and finance via Youtube, BP, books, podcasts, etc.

I knew that real estate would be my game to play. One strange thing occurred though, In my mind, Long term

renting would totally be what I got into, via Househacking a duplex or something of that nature, but when I

started to get involved with property management of Short term rentals, my perspective changed dramatically.

My entire plan of Long Term renting would go straight out the window and now I was only after STR properties.

Here are some of the major reasons why I like STR much better than Long Term Renting:

Guests PAY FIRST, before getting info about how to get to the place and how to get in they must pay first, so there

is no worry about a tenant paying on time.

Bad tenants are gone after the reservation, so it makes rowdy guest reservations quick and then they are gone

Tenants sometimes damage items whether it's long or short, but with STR, you are able to chargeback guests and

get compensation for damaged or broken items at your place, so there isn't much worry there.

The rental income is typically much more than Longer-term renting as I have seen, you can expect a 2-3x increase

in cash flow for Short term rental properties compared to Long Term

When you offload the work to a Property management company, there is nothing to worry about as an owner you

are simply able to collect a check each month and that's it.

- Mike Eichler

What are your thoughts on these, are there any I missed?

Everything has its pros and cons and really can't be generalized. STR have their headaches as well and typically can't provide the same cash flow as LTR. If you found your niche good for you. Others should keep their eyes open to opportunities that work for them.

2 Reply

Lucien Perreault

Investor · Chicago, IL · Member since 2016 · 81 posts · 81 votes

4y

@Mike Eichler

I have experienced both. I bought a 4 unit, lived in one, rented out 2 as LTR, and did the last unit as a STR. The city of Chicago frowns on STR's so there were a couple of hoops to jump through just to get approval from the city before Airbnb let us use their platform. Once we got everything up and running, it was fun for a couple months but eventually it wasn't worth the time and effort. Cleaning services were charging astronomical prices, Airbnb was not landlord friendly with some of the issues we dealt with, and quite frankly, I didn't like seeing someone trash my property which a couple tenants did.

As for the LTR side, my tenants are great and the system is more of a set it and forget it. As long as the prospective tenants have been screened thoroughly, I'm ok with them being there for a long period of time. The STR looks great on paper but from my experience, it was not worth the extra $500-$1000 a month. Good systems have to be in place before running an STR and even then, it's still an active job.

STR can definitely make you extra cash flow but it all depends on how involved you want to be. And as an investor, I'd rather have one steady tenant over a year than 100 tenants. Sure the 100 tenants will increase my revenue but, how much did they add to my bottom line?

2 Reply

Ryan Johnston

Lender · Charlotte, NC · Member since 2019 · 67 posts · 72 votes

4y

All boils down to the individual investors goals. I myself am a STR investor, and love it. There are certainly more moving parts when it comes to STRs, but if you have the right systems in place, you can self-manage and have it run somewhat on auto-pilot. Automatic Messaging, Dynamic Pricing, and Cleaning management enable us to be hands on, but removed in a sense. Don't get me wrong, nothing out there to automate a bad guest, but we are very diligent about screening upfront, and limiting that possibility. With any investment strategy, there is no "one-size fits all". At the end of the day keep it simple and ask the question "Will this make me money and help improve my net worth?".

2 Reply

Mike Eichler

OP

Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

4y

Quote from @Luke Carl:

1. Management is not investing.
2. long term or short term they’re both better than the stock market!

Personally I have seen much greater returns on properties that are professionally managed because they have the tools and the ability to rent it out much faster and easier. It also frees up time for the Investor to invest their time into other businesses, other than being stuck managing their own place. Many of our owners have multiple houses and would not be able to manage them themselves anyway, and have seen way better returns with our professional management on their rental, even after they pay us the management fee.

3 Reply

Mike Eichler

OP

Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

4y

Quote from @Scott E.:

I'd be interested to see how you felt if you put your own hard earned money into a property, rented it out as a short term rental for a few years, and reflected back on the income, expenses, and wear & tear on your home.

There is definitely money to be made with short term rentals but it's not for the faint of heart. I've never been a property manager but I have owned several STR's over the years and I imagine the perspective is very different whether your an owner vs property manager.

I have been in the space for a year now, and actually have just purchased my first rental a few weeks ago, so I will see how it goes. I have had the opportunity to see well over 100+ rentals as I work in management, and they are going great!

1 Reply

Mike Eichler

OP

Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

4y

Quote from @Mike Dymski:

You forgot the most important aspect...it's a modern, tech-enabled business that allows residents and guests to research, book, pay, check in/out, and communicate on their platform of choice right at their fingertips. The lines between STR and LTR are going to continue to blur and, importantly, those who can conduct STR legally in somewhat residential areas through commercial zoning are going to benefit as STR regulation works it's way through residential communities across the country.

Totally agree with this!

0 Reply

Mike Eichler

OP

Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

4y

Quote from @Kyle Flynn:

I believe that because the STR method of investing is still newish and suffers from the bandwagon effect. STR properties will have much higher operating expenses as opposed to a long term buy and hold because of the higher standard that is typically expected, as well as higher reserves that should be saved, and not to mention drastically higher taxes to be paid at the end of the year. Once all of these variables are factored in STR might not look as attractive.

But with all of that said, I love the idea of STR and am actually had a similar experience to you. I initially wanted to do long term buy and hold, but gradually my attention shifted to STR because of the potential for higher returns.

Also, your youtube video was pretty good I would just recommend either investing in a better camera or making sure that its in focus for the next one.

I agree totally, and thank you for the tips :)

0 Reply

Mike Eichler

OP

Realtor · Pocono Pines, PA · Member since 2019 · 183 posts · 108 votes

4y

Quote from @Cole Simpson:

Agree @Mike Eichler, I am focusing on STRs because they give the best returns. Our clients are also doing short-term rentals in Charlotte and cash flowing 12-18%.

Love to hear it. Best of luck for the future :)

0 Reply

Nancy P.

Naperville, IL · Member since 2018 · 330 posts · 357 votes

4y

My city has banned STR, but I don't know that I could ever do it again. Did it years ago in Park City, Utah, a ski resort, Internet was so new you used a management company that advertised in magazines. (30 years ago). Maybe it was just the ski/vacation mentality but guests destroyed EVERYTHING and it wasn't as easy to chargeback as you seem to say it is now. This has an open stairwell/courtyard concept. Twice had guests puke over the railing down the stairwell--$500 fine both times, as somebody had to get on a ladder ON STAIRS to reach some of it. TV stolen. Chair thrown to the ground from the 4th floor. Dishes broken clearly just for fun. Sheets set on fire leading to building evacuation. The last straw--we put in new carpet and the VERY NEXT GUEST took the fireplace poker, heated it up, and branded his name into the carpet. $1000 in carpet (only 600 s.f., again, 30 years ago) and we had to take him to court. Judge sided with him that he only destroyed a small bit of carpet, he had to pay our court fees plus $100. It took a year to go to court and we were told not to replace the carpet, we needed to be able to show it. Carpet was no longer available. (That was on us, we should have at least gone and got some more matching carpet.) The day after the judgement we moved to LTR and then sold it because the condo board president was insane.

2 Reply

JD MartinBusiness Member

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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes