What's a right house for STR

[Alice Smith]

Hi everyone, 

Newbie to STR here. So I narrowed down my market already and am starting to go to open houses. When you go to open houses, how do you decide if it's the right house for STR (after the numbers make sense)? For example, if I were choosing a house I'd live in, usually one house just clicks with me vs the others, aka, there is certain styles of kitchen I like etc and certain location in a neighborhood( not facing the main road and not at the entrance of the community bc I don't like noise etc). How important are these things for STR? I'd imagine with a renovated kitchen the nightly rate can probably be higher than a basic old kitchen. But what about noise level? Would people mind that much? And is there a kind of style of house that would work better than others(not planning to renovate myself)? Market is a suburb.

Thanks!

Alice

[Sergey A. Petrov]

Instead of having a house click with you for living purposes, look at it from a vacation perspective. Would you take your family to that house for a week or a weekend getaway? Better yet, go to Airbnb, VRBO, etc, look at listings in that area, then check the nightly rates and the calendar. If the property is mostly booked and the rate makes you money on the purchase, that's the kind you want to buy for a STR.

[Lauren Kormylo]

Noise will be an issue if your guests can’t sleep or enjoy outdoor space. 

Also think about outdoor upkeep. You’re not living there, so you won’t be able to pull weeds and fuss with plants daily. You’ll be hiring a landscaper to cut grass and take care of plants. 

In a multistory house, having a bedroom on the bottom floor is desirable for attracting family groups with older guests with mobility issues. 

[John Underwood]

I have seen some houses that have a weird layout that are killing it as a STR.

It is more about location, views, amenities, what there is to do close by. 

People will overlook a smaller kitchen if you are on a lake or have mountain views for example.

Can you create an atmosphere where people can have fun and make memories in a given property?

[Nathan Gesner]

Quote from @Alice Smith:

Hi everyone, 

Newbie to STR here. So I narrowed down my market already and am starting to go to open houses. When you go to open houses, how do you decide if it's the right house for STR (after the numbers make sense)? For example, if I were choosing a house I'd live in, usually one house just clicks with me vs the others, aka, there is certain styles of kitchen I like etc and certain location in a neighborhood( not facing the main road and not at the entrance of the community bc I don't like noise etc). How important are these things for STR? I'd imagine with a renovated kitchen the nightly rate can probably be higher than a basic old kitchen. But what about noise level? Would people mind that much? And is there a kind of style of house that would work better than others(not planning to renovate myself)? Market is a suburb.

What do renters want? Privacy, room to spread out, the comforts of home? Is your market catering to singles on a quick get-away or families on longer vacation trips? You need to know who you're marketing to, then find the property that suits their needs.

[Travis Timmons]

@Nathan Gesner is absolutely correct - who is your customer? Answer that question first and then make decisions. Beyond that, find a way to stick out. If you're property is an ADU in a suburb of Portland, it's tough to make a lot of cash given the abundance of those in Oregon's ADU friendly zoning environment. Whether it is design, number of bedrooms, location, etc., find something that is in short supply relative to demand.

One of my favorite general business concepts is how one of my favorite writers defines business strategy - "What can we do that is really freaking hard?" I like that concept in short term rentals. If you can pull off a renovation on a large property, get STR zoning approved in an area that does not typically approve it, build out a super unique space, etc. What can you do that is not easily replicated by your competition?

As for what people like and don't like, I'd recommend that you pull up listings of successful and unsuccessful airbnb/vrbo properties and read the comments. You may be able to pull some wisdom and practical tips from those.

Hope that helps...we own a furnished rental in Portland and a short term rental in Maine that we just got up and listed last month. We (my wife and I) are familiar with the Portland market and have some fresh wounds and sweat from getting a full renovation to go live as a STR if you have any questions. I'd love to help if I can.

[Don Konipol]

Quote from @Travis Timmons:

@Nathan Gesner is absolutely correct - who is your customer? Answer that question first and then make decisions. Beyond that, find a way to stick out. If you're property is an ADU in a suburb of Portland, it's tough to make a lot of cash given the abundance of those in Oregon's ADU friendly zoning environment. Whether it is design, number of bedrooms, location, etc., find something that is in short supply relative to demand.

One of my favorite general business concepts is how one of my favorite writers defines business strategy - "What can we do that is really freaking hard?" I like that concept in short term rentals. If you can pull off a renovation on a large property, get STR zoning approved in an area that does not typically approve it, build out a super unique space, etc. What can you do that is not easily replicated by your competition?

As for what people like and don't like, I'd recommend that you pull up listings of successful and unsuccessful airbnb/vrbo properties and read the comments. You may be able to pull some wisdom and practical tips from those.

Hope that helps...we own a furnished rental in Portland and a short term rental in Maine that we just got up and listed last month. We (my wife and I) are familiar with the Portland market and have some fresh wounds and sweat from getting a full renovation to go live as a STR if you have any questions. I'd love to help if I can.

Really good analysis!

[Joshua Messinger]

Hey @Alice Smith! 

Every area is different and every area is filled with different consumers needing different demands to be met. I would narrow down on a list the current STR's in your area and why have they been so successful. Is it because of certain amenities they offer? Do they offer a unique aesthetic compared to their counterparts which allows them to compete against other properties? What really sets them apart?

There are a lot more questions than this but it isn't just about having the most improved property with the best furnishings, amenities, looks, etc. You really need to dial down what the people coming to your area want. Once you can do that then you can figure out what type of supply you need to provide to meet this demand. 

I hope this helps and if you have any questions please don't hesitate to reach out! 

All the best,

Josh 

[Alice Smith]

Thanks for everyone's help so far!

But then that brings up another question. How do I even know what kind of people my airbnb neighborhood caters to? I tried to look up some reviews on nearby airbnb and everyone was just like... oh great host etc etc but never mention why they were there.

[Jon Martin]

Quote from @John Underwood:

I have seen some houses that have a weird layout that are killing it as a STR.

It is more about location, views, amenities, what there is to do close by. 

People will overlook a smaller kitchen if you are on a lake or have mountain views for example.

Can you create an atmosphere where people can have fun and make memories in a given property?

Agreed, there are some key differences between buying for myself/family or booking a vacation rental. A family of four won't have an issue with not having a garage or sharing a single bathroom for 3-7 days if the place checks all the other big boxes. It may be an annoyance but overall is low on the priority scale and will be forgotten if they otherwise have a great experience. I would choose the place with an epic view and walking distance to amenities any day over the place that is too far to walk but has an extra bathroom. 

While on vacation I'm also willing to sacrifice some space on a temporary basis if I get walkability, views and a great recreational and cultural experience in return. This is in sharp contrast to normal daily life, where not having a garage for the toys and having 4 people share a single bathroom would be a PITA, and where I don't want to live in a shoebox condo just because it has killer ocean or mountain views and a fun bar across the street. 

You want to be able to optimize for the recreational and cultural experience, not what's convenient for family life. Get the best location you can afford, for starters, then work on maximizing the amenities that will be shared by the guests (deck, BBQ, fire pits, views, games, pool or hot tub if possible etc). That's often where the memories are made on vacation. 

[Ed Emmons]

There is another market you could tap into and be successful. I just got back from a vacation to CO tourist areas. I stayed at Airbnb the whole time in 2 different areas. One was what I would call low on the standard scale. It was basically staying in someone’s bedroom. It certainly wouldn’t work for families or for most couples. In this case it was just my son and I and we were just there to sleep, so it worked. For both places that we stayed I had to book several months in advance because everything was taken. So the market is near National Parks, beaches, snow sledding areas, four wheeling, Disney. Essentially anywhere people want to go where there aren’t many accommodations. People will book out of necessity. Obviously if it is clean, has wi-fi, small frig, microwave, ac and little amenities, you will get good reviews and stay full. Some markets are only for the summer too so that also is a consideration.

[William Anderson]

One key factor is the size of the parties who stay in the area where you are considering your vacation rental.  I have many on the Mississippi Gulf Coast.  This is what I learned during my research before I bought the first one:

1. People come to the beach and they like to walk there -  So, close to the beach check.

2. Families like to travel, not just three or four but extended.  They like to meet at the vacation rental from all over the country.

3. Groups for events e.g weddings, bachelor parties, birthdays etc. require larger accommodations

4.  Bigger is better, more income allowing more people to stay.

5.  Three bedrooms and two bathroom is a minimum.  Four bedrooms are better.  Accommodations for up to 10

6.  They love yards with fire pits, bbq's and fences for kids and dogs

All of my properties meet the above requirements and they stay booked most of the time.  My property management company works with owners who have 2 bedroom condos and they work as well but the income is lower because they can only accommodate four-six people. 

Your market may be one of those set up for couples to get away for the weekend.  Your property should be large enough to accommodate the customer base you are looking for.  Also and very importantly, check zoning rules and parking restrictions.  Lots of people want to start a vacation rental in places where they are not permitted.  I do two more things.  First, I evaluate what if I have to rent it on an annual basis (back up plan) and I go to City Hall and meet planning and zoning people asking lots of questions about plans.

[Michael Baum]

I always look at places that I would like to stay. When outfitting the house, I build out a great kitchen with tons of options.

Generally more heads in beds is better for profit, but can compromise the comfort of the guests. The only room in our lakehouse that has multiple beds is the kids bunkhouse with 2 bunkbeds.

[Bruce Woodruff]

Don't look so much at what you like in a kitchen, bath, etc......look at what will attract and be suitable for the highest percentage of guests. Go on VRBO and see which properties are the most popular, then figure out why. It should be obvious....