Why I don’t invest in STR

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Why I don’t invest in STR

Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

The reason I don't invest in or use my rentals as STR anymore is that if I pay a property manager 30-35% then my return is the same as a LTR so since I won't self manage I might as well just invest in LTR.

Has anyone any experience where they can pay a manager 30-35% and still net more as an STR than as a LTR ?

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Kyle MccawBusiness Member
Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
4y

Sure no reason to go the STR route if you don't cashflow more with a short term rental.

However, I have a manager for two of my STR's in Texas and the cashflow blows away any long term rental cashflow (10x). It all comes down to the property and the location.

When I was first approached to Airbnb one of my long term rentals, I was skeptical. I agreed to it if it would revenue $3,500+/month. First month revenue was $13k. Second $9k. Traditional rental rate is $2,400.

My bread and butter is LTRs. They are less risky.

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  • Kyle MccawBusiness Member
    Property Manager · Keller, TX · Member since 2011 · 1k+ posts · 1k+ votes
    4y

    @Katrina P. Dallas Fort Worth

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  • Taylor DaschBusiness Member
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    4y

    Perfectly good reason to not do STR. I think that LTRs are the way to go if you just want passive income. However I believe that STRs can play a vital role in someones FI journey who is at the point in their journey that they are willing to put in the extra hours and reap the extra cash flow to then put it into a LTR.

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  • Alicia MarksPro Member
    Fort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
    4y

    We have someone in our REI group that manages for 25%. Always run your numbers both ways and see what works for you.

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  • Zachary Beach
    Specialist · Los Angeles, CA · Member since 2018 · 291 posts · 231 votes
    4y

    @Don Konipol my clients still make positive cashflow and great returns after management. Plus the properties stay in much better condition get cleaned multiple times a week. Have less risk particularly in STR friendly tenant friendly markets. It also allows you to keep nicer class properties in higher appreciation markets where long term rentals don't cashflow with almost any amount of leverage.

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  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    4y

    @Don Konipol

    I have a STR in Branson, MO and pay 30% for my PM. I net around $500/month. Just a base hit. But it makes more as a STR vs LTR.

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  • David DuCille
    Residential Real Estate Agent · Tampa, FL · Member since 2014 · 177 posts · 122 votes
    3y

    i self manage mine and now the market here in Tampa is getting saturated so with the exception of the one with a pool that absolutely crushes it, I'm considering going back to LTR so that i can go spend more time on my boat and less time washing sheets and towels lol. But in all seriousness, I like STR for other reasons most notably, my property stays nicer. I've got my cleaning people in there at least 1x a week often times 2x plus i'm in there. Even relatively good long term tenants do stupid **** like use lag bolts to hang a small picture frame, never deep clean house, etc. By having it as a STR I am equipped to immediately put it on the market to sell it and it's already staged which is kind of nice and I can also choose to market it as medium term rental , someone that needs to work in the area for 3 months so i get the best of both worlds. But yeah, giving up the percentage you are talking about is insane.

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