Rental expectations for a beach house split into a tri-plex?
Member since 2015 · 53 posts · 88 votes
Rental expectations for a beach house split into a tri-plex?
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Dwayne GhantPro Member
Investor · Member since 2022 · 53 posts · 23 votesHello Palmer,
Because the STR is subjected to the spring/summer season (April to September) of the rental year, and varies according to traffic during that season, I would be more inclined to trust the property management companies like (Elliott, Thomas, Dunes or Palmetto).
28 Replies
- 3yDwayne GhantPro MemberInvestor · Member since 2022 · 53 posts · 23 votes
Hello Palmer,
Because the STR is subjected to the spring/summer season (April to September) of the rental year, and varies according to traffic during that season, I would be more inclined to trust the property management companies like (Elliott, Thomas, Dunes or Palmetto).
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Palmer Thomas, have you taken the time to check your local listings on AirBNB and VRBO? See what they are going for with similar amenities and size. What is their occupancy rate?
What does a big 7/4 do in the area? Run all the numbers to get a better picture.
Personally I am not a big fan of a multiplex as a STR. Less privacy than a SFH, but maybe the beach front will offset that. Think about it, if you have a triplex with 75ft of beachfront, spreading out will be a necessity. Could cause some negative guest interactions. I am not really sure but that is the first thing that comes to mind.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Palmer Thomas:
Why do you think your numbers are more accurate than the property manager that has experience in the market?
The DIY Landlord Book4.7248 Reviews - Member since 2015 · 53 posts · 88 votes3yI was questioning the accuracy of the property manager because the typical house they manage is anywhere from 5-8 bedrooms and does 90% of its business during the summer. Most don't have much experience renting out 2 and 3 bed units. I was thinking that the smaller units might pull in more occupancy during the off season.
Quote from @Nathan Gesner:
Quote from @Palmer Thomas:
Why do you think your numbers are more accurate than the property manager that has experience in the market?
- Investor · Member since 2022 · 1k+ posts · 754 votes3y
We have a duplex in Fort Morgan, AL. Each side is a 2/1 that we STR. Idk if I would buy it again to be honest. I think instead I would just buy a SFH.
The smaller beach units will likely house snow birds and those who can work remote in the off season, but that bigger property is going to do better gross.
As for the property management quote, I wouldn't put a lot of weight in that unless you are going to use property management. If you're going to self manage use Airdna, STR insights, Rabbu, look at neighbors and see what they are getting. This will give you a better idea of what you can gross.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Palmer Thomas:
Or it could perform worse. The larger houses may fill better because people vacation in larger groups.The DIY Landlord Book4.7248 Reviews - 3yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Palmer Thomas:
I'm trying to run the numbers for a beach house in South Carolina and am having trouble figuring out the expected income. The house is 7 bed 4 bath in the Myrtle Beach area, but the house has been split up into a triplex consisting of a 3/2 top floor and two 2/1s beneath that. When I use the STR estimate tool here on BP I get the units bringing in somewhere around $45k each per year. I've also discussed the house with a property manager in the area and they estimate that the entire house would bring in around $75k a year once it acquired an established rental clientele. The two numbers ($135K from str tool and $75 from prop mgmt) are really far off.
Does anyone have any experience with a house like this? I was thinking that the units would be full in the summer and that they would also do much better in the off season than a regular 7 bed house because in the off season there are many more people looking for smaller units and not entire families coming for vacation.
I would check with another tool like AirDNA. In my experience with beach houses in FL that larger units command more per night (i.e. a 7/4 can get $800 a night ADR versus $150 per night x3). It is also more work/cost to operate 3 separate units. I think you will have to dig a little deeper, maybe speak to more PM's and source more data
Vacation Rentals of Florida53 Reviews - Member since 2015 · 53 posts · 88 votes3y
Quote from @Michael Baum:
Hey @Palmer Thomas, have you taken the time to check your local listings on AirBNB and VRBO? See what they are going for with similar amenities and size. What is their occupancy rate?
What does a big 7/4 do in the area? Run all the numbers to get a better picture.
Personally I am not a big fan of a multiplex as a STR. Less privacy than a SFH, but maybe the beach front will offset that. Think about it, if you have a triplex with 75ft of beachfront, spreading out will be a necessity. Could cause some negative guest interactions. I am not really sure but that is the first thing that comes to mind.
It's a tough time of year to check comps in our area right now. The rental season here, at least for big beach houses, is very seasonal. All the big houses are basically vacant until late spring. I just didn't know if the smaller units might rent better in the offseason compared to the big houses. The property manager I spoke to did say that smaller units in the area do much better in the off season since we do get snow birds, golfers, etc, coming down in the winter. They come down in smaller groups instead of a big summer vacation group.
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Brooklyn McCarty:
We have a duplex in Fort Morgan, AL. Each side is a 2/1 that we STR. Idk if I would buy it again to be honest. I think instead I would just buy a SFH.
The smaller beach units will likely house snow birds and those who can work remote in the off season, but that bigger property is going to do better gross.
As for the property management quote, I wouldn't put a lot of weight in that unless you are going to use property management. If you're going to self manage use Airdna, STR insights, Rabbu, look at neighbors and see what they are getting. This will give you a better idea of what you can gross.
The problem is that none of the neighbors have the kind of house that this one is. It's an area where all the nearby houses are single unit big houses and I'm not sure how accurate they would be as comps. This one is the odd man out in the area.
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Nathan Gesner:
Quote from @Palmer Thomas:
Or it could perform worse. The larger houses may fill better because people vacation in larger groups.Exactly. It could do better or it could do worse. That's why I was asking if anyone had experience with this situation.
- 3yMyrtle Mike ThompsonBusiness MemberRealtor · Myrtle Beach, SC · Member since 2016 · 350 posts · 204 votes
@Palmer Thomas I don't believe $135k is realistic. If it were, I feel that more people would be doing this. Instead I see several duplexes and triplexes being converted into larger single units. There's just way more demand for those here in the Myrtle Beach area. Yes, your occupancy rate might be better in the offseason with 2 and 3-bedroom units, but your nightly rates would be paltry. You'd be competing with more private accommodations and resorts with indoor water parks. I've found the STR tool and AirDNA to be pretty hit or miss in this market and prefer, as others have suggested, to lean on my own research and the experience of local property managers.
Myrtle Mike Real Estate580 Reviews - Member since 2015 · 53 posts · 88 votes3y
Quote from @Myrtle Mike Thompson:
@Palmer Thomas I don't believe $135k is realistic. If it were, I feel that more people would be doing this. Instead I see several duplexes and triplexes being converted into larger single units. There's just way more demand for those here in the Myrtle Beach area. Yes, your occupancy rate might be better in the offseason with 2 and 3-bedroom units, but your nightly rates would be paltry. You'd be competing with more private accommodations and resorts with indoor water parks. I've found the STR tool and AirDNA to be pretty hit or miss in this market and prefer, as others have suggested, to lean on my own research and the experience of local property managers.
Thanks, Mike. That's exactly what I was looking for.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Hey @Palmer Thomas, so look at historic numbers from 2022. Not what they are doing right now in the down season.
I rarely say check out an algorithm, but I have been using Awing.com's Estimator tool. It will give you a rough idea of occupancy and nightly rates.
Seeing as I don't have the exact address I just put in N Kings Hwy in Myrtle Beach and numbers are all over the place. So plug in the actual address and see what it says.
It just pull historical data from the area, but you can put in different numbers like bedrooms etc to get a rough idea of what to expect.
https://awning.com/airbnb-esti...
EDIT - See link above. Also they call it the AirBNB estimator so it might just pull data from AirBNB and not VRBO which is a HUGE hole IMHO if that is true. You find more mature guest groups (not old, but seeing as VRBO has been around for so much longer they have been using that tool longer) which usually means extended families visiting. The triplex could be a bonus as you could separate extended families and multi family up a bit for more privacy.
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Michael Baum:
Hey @Palmer Thomas, so look at historic numbers from 2022. Not what they are doing right now in the down season.
I rarely say check out an algorithm, but I have been using Awing.com's Estimator tool. It will give you a rough idea of occupancy and nightly rates.
Seeing as I don't have the exact address I just put in N Kings Hwy in Myrtle Beach and numbers are all over the place. So plug in the actual address and see what it says.
It just pull historical data from the area, but you can put in different numbers like bedrooms etc to get a rough idea of what to expect.
https://awning.com/airbnb-esti...
EDIT - See link above. Also they call it the AirBNB estimator so it might just pull data from AirBNB and not VRBO which is a HUGE hole IMHO if that is true. You find more mature guest groups (not old, but seeing as VRBO has been around for so much longer they have been using that tool longer) which usually means extended families visiting. The triplex could be a bonus as you could separate extended families and multi family up a bit for more privacy.
I appreciate that, Michael.
When I put in the address as a 2/1 it gave me an estimate of $50k annual income. If that were the case then I should be able to triple that since there are three units, but that seems WAYYYY too high. That was the problem I was having with the estimator tool here on BP. It was giving me numbers much higher than a local property manager.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Ok @Palmer Thomas, what do the comps say? Those are currently running STRs as far as I know. Do the units in service provide similar numbers? Are the 1/2 what your estimate is?
Don't just trust the estimate, look at the comps in the area for historic data.
Also, a new STR will have a lean first year as you are new. It will take some time to build up the 5 star reviews.
A really nice place on the beach, setup well and run well will do well. A mediocre place 2 doors down will do mediocre numbers.
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Michael Baum:
Ok @Palmer Thomas, what do the comps say? Those are currently running STRs as far as I know. Do the units in service provide similar numbers? Are the 1/2 what your estimate is?
Don't just trust the estimate, look at the comps in the area for historic data.
Also, a new STR will have a lean first year as you are new. It will take some time to build up the 5 star reviews.
A really nice place on the beach, setup well and run well will do well. A mediocre place 2 doors down will do mediocre numbers.
That was the problem I was having with the comps. The smaller units in the area, mostly condos, seem to do well in the off season. I just don't know how well that translates over to a large house split into smaller units. I do know that the large houses in the area that aren't split up do pretty bad. My parents own a 7/7 in the area and it gets almost no action in the winter.
- 3yMichael BaumPro MemberOlympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
Well, I would think that if a condo is doing OK then the triplex should as well. Do the condos you see have a ton of amenities? Pools, hot tubs etc?
- 3yJake CohenPro MemberRental Property Investor · Denver, CO · Member since 2017 · 200 posts · 126 votes
@Palmer Thomas I own a 7/4 triplex in Steamboat springs, CO that has the same breakdown of rooms. I have 4 listings, 7/4 whole property, 3/2 alone, and 2- 2/1s separately. It has been a great investment for us. We do approx. $100,000 on the 3/2. $55,000 on 1 2/1 and $65,000 on the other 2/1. The whole property doesn’t rent that much as the units don’t have connected inside access. We run about 78% occupancy even in a seasonal area. I hate the up down setup but it is a solid performer for us.
We bought a side by side duplex in Fort Morgan, Al last year that is 5/3.5 per side and also rent the whole property or the units separately. It is also a great earner for us but we see the whole property rent more for holidays and during the summer high season. The smaller units rent more during the off season and shoulder months. Happy to answer any questions you have.
- Member since 2022 · 1 post · 0 votes3y
Hey Thomas! A lot of variables go into trying to figure out potential revenue. I would love to help you look into this a b Which area of Myrtle Beach is the property in (North Myrtle, Cherry Grove, Surfside)? Does it have any amenities? How far from the beach is it?
- Rental Property Investor · Member since 2019 · 411 posts · 148 votes3y
@Palmer Thomas local boots on the ground will usually be much more accurate than any tool you can find online.
- USA · Member since 2022 · 879 posts · 109 votes3y
- I'm excited about the potential of this beach house as an Airbnb investment. The triplex setup is a smart way to maximize income and appeal to different types of guests. Plus, the location in Myrtle Beach is a big draw for tourists.
- I'm a little concerned about the discrepancy in the income estimates. It's important to do thorough research and get a good understanding of the potential income before making a decision on this investment. Like others have mentioned, some free tools exist, try googling awning airbnb estimator.
- I agree that the units may be more in demand during the off-season. By offering smaller, more affordable options for solo travelers or couples, you could potentially attract more bookings year-round.
- I think it's worth considering the property management route. A reputable company with local expertise could help us optimize the house's income and handle the day-to-day responsibilities of managing an Airbnb property. Vacasa, Awning, and some others are big in the area.
- I think it's important to keep an open mind and consider all options. It may be that the STR estimate tool is more accurate in this case, or it could be that the property manager's estimate is closer to the mark. It's important to do our due diligence and make an informed decision. I'm happy to connect you with a property manager to get a full income estimate
- I'm excited about the potential of this beach house as an Airbnb investment. The triplex setup is a smart way to maximize income and appeal to different types of guests. Plus, the location in Myrtle Beach is a big draw for tourists.
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Jake Cohen:
@Palmer Thomas I own a 7/4 triplex in Steamboat springs, CO that has the same breakdown of rooms. I have 4 listings, 7/4 whole property, 3/2 alone, and 2- 2/1s separately. It has been a great investment for us. We do approx. $100,000 on the 3/2. $55,000 on 1 2/1 and $65,000 on the other 2/1. The whole property doesn’t rent that much as the units don’t have connected inside access. We run about 78% occupancy even in a seasonal area. I hate the up down setup but it is a solid performer for us.
We bought a side by side duplex in Fort Morgan, Al last year that is 5/3.5 per side and also rent the whole property or the units separately. It is also a great earner for us but we see the whole property rent more for holidays and during the summer high season. The smaller units rent more during the off season and shoulder months. Happy to answer any questions you have.
Thanks.
Do you have any idea how your house's income compares to a whole house 7/4 in the area? Also, how seasonal is Steamboat Springs? I'm guessing it's largely ski driven guests? If you had to guess at a split between on and off season occupancy what would you guess for regular houses compared to your?
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Samantha McGriff:
Hey Thomas! A lot of variables go into trying to figure out potential revenue. I would love to help you look into this a b Which area of Myrtle Beach is the property in (North Myrtle, Cherry Grove, Surfside)? Does it have any amenities? How far from the beach is it?
Pawleys
No major amenities
100 yards from the beach
- 3yJake CohenPro MemberRental Property Investor · Denver, CO · Member since 2017 · 200 posts · 126 votes
@Palmer Thomas Steamboat is very seasonal. Most properties operate under 50% occupancy for the year. I find I run about 50% occupancy in low season (April, May, October, November) And we run about 90% the rest of the year. Our occupancy numbers are much higher than larger properties. I do not have a direct contact for a comparable property in the area but have done research through airdna, rankbreeze, etc and feel my revenue would be similar if I owned a single family of the same size. The difference was the purchase price. I was able to buy this multi family property that needed work for $645,000 in 2018. I put about $300,000 in repairs and upgrades into the property. A 7 bed/ 4 bath home would have been about $1.5 million to purchase at that time. Would a 7/4 single family cost the same? If so I would buy the single family. If not, the multi family may be a better deal and offer more cash flow for your purchase price.
- Member since 2015 · 53 posts · 88 votes3y
Quote from @Jake Cohen:
@Palmer Thomas Steamboat is very seasonal. Most properties operate under 50% occupancy for the year. I find I run about 50% occupancy in low season (April, May, October, November) And we run about 90% the rest of the year. Our occupancy numbers are much higher than larger properties. I do not have a direct contact for a comparable property in the area but have done research through airdna, rankbreeze, etc and feel my revenue would be similar if I owned a single family of the same size. The difference was the purchase price. I was able to buy this multi family property that needed work for $645,000 in 2018. I put about $300,000 in repairs and upgrades into the property. A 7 bed/ 4 bath home would have been about $1.5 million to purchase at that time. Would a 7/4 single family cost the same? If so I would buy the single family. If not, the multi family may be a better deal and offer more cash flow for your purchase price.
I think a good purchase price is going to be my only hope for this one. The family is planning on listing for a little over $1.5 million. If it was a single family house I don't think they'd have any trouble getting that. Since it's already split up, I think it's only going to get interest from investors like myself and I don't think it makes investment sense at that price. I need to go ahead and talk with the sellers to be first in line if they get crickets at their asking price.
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