What event would trigger a STR - LTR situation?

Question

Reading the old posts on this STR subreddit for a bit, I see it's not uncommon for people to want this parameter for their STR property.

This is a difficult thing to do in today's market.

What would trigger this though? New airbnb regulations obviously, but anything else?

Nathan Gesner · Answer

There are two reasons to convert. First, the home may produce equivalent income as a long-term rental since there is less vacancy and fewer expenses. Second, it could free up a lot of time.

I recently converted my STR to LTR. It's earning slightly less, but I don't have to worry about checking on it during vacancies, it takes less effort, etc.

Collin Hays · Answer

Agree with JD.  A Short Term Rental is a Part Time Job.

A lot of investors who bought in 20-22, who got bad advice that they could manage a place with their iPhone, are dumping their properties as a result.

To be sure, ANY rental is somewhat of a part time job.  But a vacation rental, you'd better be ready to take calls and handle things at the most inopportune times.  Christmas Eve, your birthday, your anniversary, etc.

Henry T. · Answer

#4.   anti-landlord legislation. (for those who are in Seattle or the west coast)

Gregory Schwartz · Answer

The moment my partner and I feel the cash flow from short-term rentals (STRs) isn't worth the effort, we'll pivot.

STRs were a means to an end, helping us expand our portfolio when cash flow was hard to find. But our ultimate goal is a large portfolio of long-term rentals (100+ units). When the extra cash flow from STRs no longer justifies the work, we'll shift our focus to long-term rentals.

JD Martin · Answer

Aside from those already mentioned, just being tired of running an STR could trigger it. I have both and LTRs are infinitely less work and less headache. With experience in both, there's only 3 good reasons I can think of to do an STR instead of an LTR:

1. Make more money.

2. Potential for using the property yourself at times.

3. Ability to purchase and hold in a high appreciation market where LTR rates may force you to come out of pocket.

Andrew Steffens · Answer

Lack of performance I would say.  Some markets are so saturated a house may bring in more as a LTR than an STR.

John Underwood · Answer

Say the reason people came to the area didn't exist anymore.

Say everyone came to a theme park and that park closed.

Tanner Lewis · Answer

People typically prefer to do STR -> MTR since they still have a higher income, but are able to get around STR regulations/invest less time into the deal.

Bryan Maddex · Answer

Here is a reason to go STR to start, then flip to something else. Financing.  STR (if more than 50/100 miles from your home, or at a destination like lake house or beach house), allows you to put 10% down vs 15/20% down for conventional financing.  When you close on a mortgage you are signing a 1 year occupancy clause, meaning that you will use the property as intended for the 1st 12 months of ownership. I would rather have 2 appreciating/cash flowing properties than 1. Buying as Short Term (or possibly mid term rentals) would allow you to put 10% down and get two homes for the same down payment money potentially. You do have to furnish the homes and stay there "some" of the year, but after the 1st year you could convert into long term rental or SRO (Single Room Occupancy or PadSplit model). Backup plan for STRs should be that you can go LTR if city or county ordinances change, or if the property is under performing. I have a STR that we converted to Mid Term (we still allow short term), but marketing it for mid term (monthly rentals) has been more fruitful for us vs SRT.   I do want to convert that house to a SRO property in the near future!

Garrett Brown · Answer

It is just a safety net, mainly. What if you get into the market and absolutely end up hating running a short-term rental? It doesn't perform well; your neighbor is a nightmare, they put more regulations, you get tired of running it etc.

It may not be your first choice, but it will be a smarter investment overall, especially for newer STR investors.

What event would trigger a STR -> LTR situation?

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