short term rental investment property criteria

10 Replies

Hi, 

I am researching short term rentals as investment properties in downtown Pittsburgh pa. I have narrowed down location pretty well, but trying to decide on the actual property. plan to meet with a realtor early next week and would like to have some criteria to guide our search. Right now I am thinking 2-3 bed/1.5+bath, intending to be able to sleep 6+ with sofa/bed or similar, SFH or townhouse. So far it appears most apartment and condo buildings seem to be anti-short term rental, many listing this on there website, so the sandwich arbitrate strategy seems to be out.

we are currently rehabbing an 11 unit building, but I am not against buying a distressed property and doing the rehab, but that will delay us to close to the summer months which I imagine are the busiest for STRs, at least in Pittsburgh.  I could be wrong though, I can see rapid steelers fans doing a lot of bookings.

There is a developing area within walking distance of stadiums, casino and major hospital and museums, but half are rehabbed and half are rough.

any insight would be helpful!  

thanks!

John

oh, yeah

I have been researching the local super hosts and I think I have a good idea of the decor needed to get the bookings they do, as well as the importance of great communication and cleanliness.  its just that the properties they have seem to be all over the board in terms of beds, baths, overall size etc.

I think you need to determine the demographics of your target market and go from there. Make your STR what your target market wants.

My target market is refinery contractors.  They want a kitchen with all appliances and utensils, they want a washer/dryer, and they are happy to pay as much per week as a cheap local motel room.  $200/week/bed.

I go above and beyond the basic things they want.  SMART tv in the living rooms, basic cable in the bedrooms, gas or charcoal grill, indoor and outdoor manly type of entertainment (poker table, darts, fire pit, horse shoes), and lots and lots of artwork that I can not post a picture of on here without the post being removed.

@John Bucknum - I manage a furnished rental business in San Francisco and San Mateo Counties. The most profitable property I have is a simple, compact 3BR/2BA home in a nice neighborhood with a Studio in-law unit. I have also bought and remodeled 2 fixer-upper homes. So I recommend that you buy a property that has a small second unit or the space to add a small second unit. My 2 best money-making strategies have been to make simple improvements/ expansions and to AirBNB  multi-unit properties. Good luck!   

Originally posted by @Paul Sandhu :

I think you need to determine the demographics of your target market and go from there. Make your STR what your target market wants.

My target market is refinery contractors.  They want a kitchen with all appliances and utensils, they want a washer/dryer, and they are happy to pay as much per week as a cheap local motel room.  $200/week/bed.

I go above and beyond the basic things they want.  SMART tv in the living rooms, basic cable in the bedrooms, gas or charcoal grill, indoor and outdoor manly type of entertainment (poker table, darts, fire pit, horse shoes), and lots and lots of artwork that I can not post a picture of on here without the post being removed.

No special premium channels to fill their homes with love?

Originally posted by @Jim K. :

No special premium channels to fill their homes with love?

That is taken care of by several DVD's I leave by the BluRay player.

Originally posted by @Ethan Cooke :

@John Bucknum - I manage a furnished rental business in San Francisco and San Mateo Counties. The most profitable property I have is a simple, compact 3BR/2BA home in a nice neighborhood with a Studio in-law unit. I have also bought and remodeled 2 fixer-upper homes. So I recommend that you buy a property that has a small second unit or the space to add a small second unit. My 2 best money-making strategies have been to make simple improvements/ expansions and to AirBNB  multi-unit properties. Good luck!   

 Hi Ethan,

Wondering why the 3/2+Studio is a better mix than 2/2 s ? 

@Kevin Lefeuvre - RE: rentals, I have come across a few landlords renting out a SFH+studio as a single property for the market rent of the SFH plus a small increase. I have also viewed homes for sale with an added in-law or potential in-law that were just slightly more expensive than comparable homes with no in-law. Meanwhile it seems that most duplexes (e.g. two 2BR/1BA units together) are priced equivalent to 2 full units. For example, in the SF Bay Area I've seen a 1200 sq ft 3BD/2BA with 400 sq ft in-law for about $850K while a 1600 sq ft duplex (e.g. two 2BD/1BA units) in a similar neighborhood typically costs $1.2M. But on AirBnB (or the local rental market), the 3/2 with in-law will fetch about the same monthly income as the duplex. Does that make sense?

Go with the developing area, close to things. That is a strategy that has worked well in Columbus for us. Make the house nice inside, and be honest with people about the “rough neighborhood” in your Airbnb listing. It won’t be for everyone, but more than half of the Airbnb guests looking for a place on Airbnb wont care about that. You want to attract the half that is not bothered by it. What they will love is the lower rate, and better deal they are getting on their room because it is in a rougher location. 

Stay away from condos, do SFH, or 2 unit houses. If you do a 2 unit, there is more upside on renting the 2 units out to one group on Airbnb on high demand dates (like Steelers games). oh yes, also make sure you use dynamic pricing for your dates. It will be critical to your profitability.

If you need help deciding, or set-up, or managing, I would be happy to jump on a call. 

- Cheers! 

@Paul Sandhu - thanks Paul you never fail to deliver on good information and hilarious content. as far as the area we are looking in, I think its safe to say it would be mostly for sports events, museums, casino, etc.  so based on the other BNBs that have a lot of bookings  in the area the inside should be unique and trendy and fairly upscale

@Ethan Cooke -thanks Ethan, I like the efficiency/creativity of the model you have.  I will most certainly look into that, just as an aside, I thought San Fransicso was really cranking down on short term rentals?

@Benjamin Vail thanks Benjamin, good advice, i have been trying to get a feel for what superhosts in these areas are writing about their place and would just simply model it re: being a rougher neighborhood. 

Originally posted by @Benjamin Vail :

oh yes, also make sure you use dynamic pricing for your dates. It will be critical to your profitability. 

If you need help deciding, or set-up, or managing, I would be happy to jump on a call. 

- Cheers! 

 But DON'T use AirBNB's dynamic pricing, find a third-party app to do that because AirBNB's dynamics are terrible.  I wouldn't make any money if I used them.  :p