Moving out of primary and keep it as STR vs MTR
Hello all,
I'm in Denver market and will be moving out of my primary residence, a SFH I've been living upstairs and AirBnB the basement doing my own cleaning. When I move out I will be renting out my upstairs as LTR. For basement, I have three options:
1. Keep operating STR and hire a cleaner, and give incentive to the LTR tenant as I'll need them to set up STR license for Denver (Denver does not allow STR if not primary residence)
2. Switch to MTR (I can do my own cleaning)
3. Hybrid of STR during high months (April - October), MTR during low months
Based on 14 months of historical earnings, I've conservatively estimated below with monthly $500 cleaning fee and $100 incentive to LTR tenant when applicable:
1. STR monthly earnings: $2000 (2600 - 500 - 100 incentive to LTR tenant)
2. MTR monthly earnings: $1700 (no cleaning fee to extract)
3. April - October earning is $2500 (3100 - 500 - 100), rest $1700 (MTR is higher during low months than STR - is this accurate? STR during low months is $1500 (2100 - 500 - 100))
TLDR;
1. STR: $2000
2. MTR: $1700
3. Hybrid: $2150
To me, there is no clear winner here since more cash flow means more work and planning. I want to see if I left out anything and if my assumptions are solid. And if there is anyone who went through this, I'd love to hear!
I do MTR's in Denver and I love them. Not a ton of work for a good reward. That being said STR is almost always more money, but as you noted STR is not allowed right now in Denver. My logic would be the path of least resistance and not fight the city and just MTR the place.
MTR would be the best option in my opinion to not have to work around the city and having the LTR tenant get the STR permit could cause problems in the future.
Hey, @Christine Cho! Hopping on the MTR band wagon here as I personally would go that route - maybe less cash flow but less work and less headaches if you run into any issues with an LTR tenant and the STR.
@Christine Cho Another vote for MTR. Denver is getting SERIOUS with their STR enforcement as of late and really drilling down on license holders to ensure they're meeting all criteria (which is sounds like you would make every effort to do that), but if you get any bad reviews/complaints because your LTR tenants aren't putting in as much care/love as you did, that impacts you. It may be more headache than it's worth to STR, so I'd go MTR if I were you.
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#2 Short-Term & Vacation Rental Discussions Contributor
- Olympia, WA
Yeah @Christine Cho, what everyone else said. Don't break the law which is what you would be doing.
Either do a LTR or MTR. What would it bring in as a LTR? I would have to guess it would be close to the MTR. The average rental rate in Denver is $2028.
#1 what's the STR regulation there? Is it even doable?
#2 I’d go more cash flow.
@Brett Deas @Tanner Pile @Kayla Givens @Brittany Guimond @Michael Baum
Thank you all for comments! I agree with what is said. @Brittany Guimond you have really good points there, I'd like to keep up my hard earned reviews.
I don't mind your idea of going STR in strong summer months (or whatever your best season tends to be) and then MTR other months. That is what I am transitioning my furnished rentals to in Des Moines, IA as we speak. HOWEVER Denver sounds like much of a headache to do STRs nowadays especially since you're moving so for efficiency I'm also jumping on MTR bandwagon for your scenario. That's what I would do!
Path of least resistance seems to be MTR here with the lack of regulations hurdle that it has as compared to STR.
Hey @Christine Cho! Yeah it seems at odds... I would likely go for the one that requires less work. Ultimately, I imagine you are investing this way and on here to build wealth and financial independence. Well, normally we do that for time freedom. So I'd vote for the least headache and less management so you can focus on investments or other focuses to either build your wealth or enjoy your time with what you love most.
