Short-term 2 small houses or 1 larger home

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Short-term 2 small houses or 1 larger home

Luis Guerra
Member since 2024 · 7 posts · 12 votes

I already have a home in the Disney area that I purchased pre Covid and it’s making me about 3k in profits per month on airbnb. I have an opportunity to purchase 2 homes for about 300k each that make me about 1.5k per month each in profit. I’m also looking at a larger property in south Florida listed for 750k and can possibly profit 4K per month on airbnb based on my comparisons in the area. Would you go for 2 smaller properties or the bigger property? Take in consideration that the bigger property will appreciate more in the long run because of the area.

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Trent Reeve
Atlanta · Member since 2022 · 708 posts · 638 votes
2y

less work only dealing with 1 property and then more appreciation? sounds like a no brainer

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  • Trent Reeve
    Atlanta · Member since 2022 · 708 posts · 638 votes
    2y

    less work only dealing with 1 property and then more appreciation? sounds like a no brainer

    3Reply
  • Ko KashiwagiPro Member
    Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
    2y

    Hi Luis,

    It sounds like the larger property would cash flow around the same percentage range but the appreciation potential likely higher for the 750k property. Since you already have experience with airbnb, it would make sense to take this bigger bet over diversifying across 2 properties. It's less stress and more potential.

    310-848-9776
    1Reply
  • Luis Guerra
    OP
    Member since 2024 · 7 posts · 12 votes
    2y
    Quote from @Ko Kashiwagi:

    Hi Luis,

    It sounds like the larger property would cash flow around the same percentage range but the appreciation potential likely higher for the 750k property. Since you already have experience with airbnb, it would make sense to take this bigger bet over diversifying across 2 properties. It's less stress and more potential.


    0Reply
  • Jon Martin
    Member since 2022 · 1k+ posts · 1k+ votes
    2y

    Agreed with all of the above. Assuming equal profit and appreciation, the only situation where I would consider 2 properties is if they had opposite peak seasons for more steady year round revenue. 

    In general the revenue slope starts to hockeystick around the 4-5 bedroom range. 

    0Reply
  • Luis Guerra
    OP
    Member since 2024 · 7 posts · 12 votes
    2y
    Quote from @Jon Martin:

    Agreed with all of the above. Assuming equal profit and appreciation, the only situation where I would consider 2 properties is if they had opposite peak seasons for more steady year round revenue. 

    In general the revenue slope starts to hockeystick around the 4-5 bedroom range.

     Both homes are in the Orlando area. The only concern that I had is that the mortgage on the larger home is about 5k per month and the rent would be around 4.2k(without mayor updates). The mortgage in the Orlando homes are about 2k per month and the rent it’s about 2k. In the scenario that airbnb dries a little I can simply do long term rental and not have to come out of pocket on the Orlando properties. 

    1Reply
  • Jacob Sherman
    12 Penns Trail Suite 138 Newtown, PA 18940 · Member since 2023 · 1k+ posts · 319 votes
    2y
    Quote from @Luis Guerra:

    I already have a home in the Disney area that I purchased pre Covid and it’s making me about 3k in profits per month on airbnb. I have an opportunity to purchase 2 homes for about 300k each that make me about 1.5k per month each in profit. I’m also looking at a larger property in south Florida listed for 750k and can possibly profit 4K per month on airbnb based on my comparisons in the area. Would you go for 2 smaller properties or the bigger property? Take in consideration that the bigger property will appreciate more in the long run because of the area.


     I would go 2 small to split the risk . even if you want to get out of one you always can and still hold one . more flexible strategy . but more management 

    2Reply
  • Jeremy Jareckyj
    Real Estate Agent · Salt Lake City, UT · Member since 2020 · 490 posts · 205 votes
    2y
    Quote from @Luis Guerra:

    I already have a home in the Disney area that I purchased pre Covid and it’s making me about 3k in profits per month on airbnb. I have an opportunity to purchase 2 homes for about 300k each that make me about 1.5k per month each in profit. I’m also looking at a larger property in south Florida listed for 750k and can possibly profit 4K per month on airbnb based on my comparisons in the area. Would you go for 2 smaller properties or the bigger property? Take in consideration that the bigger property will appreciate more in the long run because of the area.

     Totally agree with the others on this thread.. better cash flow and higher appreciation, sounds like a  better deal. RE isn't about the quantity of properties always, quality is king

    1Reply
  • Sarah KensingerPro Member
    Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
    2y

    I would be hesitant to have 3 properties in the Orlando area. Especially if two of them were smaller and could be harder to rent, since guests seem to want the large out of this world themed STR. Diversity is usually the best in the STR industry so if one area is lacking you can always tap into the stronger property.

    [email protected]330-557-3021
    0Reply
  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    I tend to agree with most on here in general that one higher quality property is the better route BUT

    - Are you sure they are profiting now? What you bought Pre-covid with a low interest rate and much lower value at the time.  Supply is up and demand is down in Orlando and values and interest are up which has been a recipe for disaster for most people entering recently.

    - Diversifying risk is a thing.  Orlando is not immune to storms, or Disney downturns etc.  I am primarily invested in Tampa but I have properties inland near other attractions, some right on the beach, etc.  Try to diversify some risk

    Truly it is a personal decision, follow your gut!

    [email protected]813-563-0877
    Vacation Rentals of Florida53 Reviews
    WebsiteView Page
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  • Shawn McCormickPro Member
    Realtor · Central Florida-Orlando · Member since 2014 · 1k+ posts · 892 votes
    2y

    @Luis Guerra Some good recommendations here. Something else to consider would be that you already likely have cleaners, handyman services and the like in Orlando area. That seems like it should carry some weight, along with knowing the the traffic patterns of the booking cycle etc.  Depending on where is S. Florida, you could have more expensive insurance (the whole state is a mess, but near the oceans would be worse. 

    Have you run comps on the $750 house, is that a fair price. Does it come fully furnished and ready to go? For all of them... what are the age of the systems (roof, a/c, pool equipment, water heater etc. Probably more to consider, but be thorough.

    Best of luck!

    1Reply
  • Mark Dennis
    Investor · Marco Island, FL · Member since 2016 · 12 posts · 6 votes
    2y

    Are the two smaller properties right next to each other by chance?   If so you can actually have three listings... One for each house and one for both houses for larger groups...

    0Reply
  • Alice Horn
    Property Manager · Kissimmee, FL · Member since 2019 · 445 posts · 266 votes
    2y

    One advantage of having the smaller properties and diversifying your inventory is that you will even out your cash flow over the months. larger properties tend to do very well over a more limited time period, while the smaller ones are more spread out. Don't neglect theming, even for a smaller property. Yes, there is more inventory but many of the smaller homes are more "generic". We have seen highly decorated smaller homes book well. Feel free to reach out if you would like some income comparisons.

    1Reply
  • John K.
    Lender · West Palm Beach, FL · Member since 2017 · 306 posts · 122 votes
    2y

    Hi Luis, 

    I would agree with most saying that what matters is revenue/profit over number of properties, so one property can indeed be better than two. There are loans that allow you to use projected short term rental income to qualify as well. Feel free to reach out with any questions!

    John

    0Reply
  • Merritt Harris
    Rental Property Investor · Syracuse New York · Member since 2024 · 31 posts · 17 votes
    2y
    Quote from @Luis Guerra:

    I already have a home in the Disney area that I purchased pre Covid and it’s making me about 3k in profits per month on airbnb. I have an opportunity to purchase 2 homes for about 300k each that make me about 1.5k per month each in profit. I’m also looking at a larger property in south Florida listed for 750k and can possibly profit 4K per month on airbnb based on my comparisons in the area. Would you go for 2 smaller properties or the bigger property? Take in consideration that the bigger property will appreciate more in the long run because of the area.


     According the the founder of TechVestor, they find that larger 4-7 bedrooms perform better when it comes to a standard single family. 

    https://www.linkedin.com/posts/taylor-jones-38997154_average...
    0Reply
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