Testing the STR waters?

15 Replies

We're getting ready to close on a 4 plex - units 3-6 for us. All 4 units are currently rented but we intend to end the month to month agreement with one of the tenants due to cleanliness issues. After that we're planning to spend $5k and and one month freshening it up. Toying with the idea of turning it into an air bnb property and keeping the other 3 units LTR to keep stability. The income from the 3 units covers all expenses with a little left over so anything I make on the STR would be gravy. Market rent on it long term ~ $850-900. I'd need to rent it 7-8 days a month at short term rates to break even.

I *think* its marketable being 5 minutes from our growing downtown where hotels are often sold out. Any reasons not to give it a shot? 

I say go for it. Check out all the competing properties in Des Moines, and make sure you are priced at or slightly below their prices. Offer a little bit of extras - like bottled water and single-serve portable snacks such as granola bars, and watch your rental fill up.

Or, if it doesn't work out, you can always rent it out as a long term deal. I see minimal setup expenses - furnishing it, and maximum potential. I would love to hear what you do with this.

@Ashly B. very cool! I am interested to hear in a few months how this works out. I've toyed with that idea in Des Moines as well but have not made the jump. I've struggled wondering where a desirable location would be for a tourist or weekend visitor would be. Maybe downtown, south of grand, beaverdale?

@Jedd Braunwarth

Our place is across from Union Park. I'm not sure its a tourist destination in itself but its less than 2 miles from downtown, close to the bike path and river, a mile from Grand View and 3 from Drake so maybe even get some families for college visits, etc. I'll definitely update how it goes if that's the route we decide to take.

Originally posted by @Andy Zapata :

@Ashly B. Did it work out? We're thinking about an STR ourselves.

 Sorry for the super delayed response - don't check here as often as I used to. I never made the leap. Ended up renting all 4 as long term rentals. Actually found this thread because I have an open studio apartment and am toying with the idea again haha. I'm just not sure I'm crazy about having to clean up after people to turn the unit or how long it would take to recover the initial investment of furnishing it.

I'm also currently renovating a sweet 1985 winnebago motorhome. Other idea I'm tossing around is whether I could airbnb my primary residence and stay in the RV when its rented... decisions decisions

No reason to wait any longer . No one is going to do it for you ..just do it ! Life is short ..If it doesn’t work then go back to your standard renting agreement with a tenant .

@Ashly B.

You make good points! These are big upfront costs my wife and I consider when getting an Airbnb.

Depending on the area you might be able to pass the cleaning fee off to the guest as they do pay a separate "cleaning fee"

The upfront costs of furnishing though...yup, that's a larger cost.

Hello Everyone, 

I wanted to chime in and offer some assistance, as I have been working with STR Investors and have done extensive research on the pros, cons, best cities, etc. @Ashly B. One option you may want to consider is a "trial" Airbnb offering for a period of 6 months or less. The best time to start would be around when many activities are occurring in Des Moines. Think festivals, conferences, etc. This will give you the opportunity to see how comfortable you are with the overall STR process. 

As for the furnishings, one of the options I provide landlords with, is to keep the purchased furniture after the trial period, and offer the unit as a furnished rental to the next tenant. You can charge a higher monthly rent for the unit, easily making back your initial investment costs for the furniture. 

There are also many software programs and applications that help to automate many of the things that make STR's more "active" than passive, including scheduling cleanings after guests leave. Another idea is to only offer the STR to corporate travelers, or consultants, as this would also cut down the property damage risk. I have a wealth of information and don't want to take up the entire forum, so if you have more specific questions, please feel free to inbox me! I'm happy to help :)

I’m more interested in hearing how a 4 plex in Des Moines was renting at $800-900 a month for each unit, 3 years ago!! I was looking for a 4 plex in Des Moines. Rents are junk compared to selling prices.

@Joseph Ammar Absolutely! I have a meeting I'm heading into right now, but feel free to PM me, in the interim, with any questions you may have. I'll be sure to reach out this afternoon.

This is a great idea and if it works you could expand into another unit and or build up your reviews so that your property always has the option to mitigate vacancies between LTR's with STR's. I would check out AIrDNA for the market report to get the hard data on your area with respect to invest-ability, regulation, occupancy and average rental rates. You should also employ a dynamic pricing software such as Wheelhouse or Pricelabs to maximize your occupancy and per night rent.

I too have considered the STR option and feel https://www.airdna.co/ has been a great resource for due diligence. This resource provided me key metrics such as rent price, competing locations around my city and vacancy rates. They also give you a little for free without having to pay any money.

@Ashly B. I know two guys doing that same thing with duplexes, they say it works great just a little more hassel factor thank LTR.

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