Anyone regret buying a really large house for STR?

Question

I’m considering buying a really large house for my next STR. Trying to maximize heads in beds. Anyone do this and have any comments, regrets, etc?

Michael Baum · Answer

Ok, @Mark Miles, I want to take a step back for a second. How huge is huge? I say that because very large can mean different things to different people. To some folks an 1800 sqft home is gigantic, while to others it is a tiny shack.

I ditto what others have said to some degree. It is really going to depend on the market where you are looking.

For example, we are looking for our second STR and I am looking all over the place narrowing down the area. This will be a pure profit machine to as much as we can make it. Pigeon Forge area is primary along with several others.

Having started this a while ago, you can really start to see where size really does matter. In Tahoe, a big place (6-8 bedrooms 8 baths etc) with fine finishes can really bring in the nightly rate, but you are gonna pay. You have to be prepared to outfit the place if it isn't already etc etc. Smaller places do well, but the big places can bring in 2500-5k a night. No kidding.

Right now @Avery Carl has me all setup with her slick system showing me houses everyday. I think the sweet spot for the area is 2/2 or 3/2. It has the right size for families. It's not all about heads in beds IMHO. It is about the quality of the stay. We have stayed in some places that were just beds. Not enjoyable stay at all. We strive for a quality stay like they were at home.

Now our current house is 3/3 with a bunkroom downstairs that sleeps 4. The whole house sleeps 10. We get extended families, multiple couples etc and it has been great. We are about 2500 sqft. To get a larger house on the water would yield a better nightly, but with at least doubling our purchase price which we weren't prepare to do.

So, the bottom line is what do you think is very large? How many heads? What will bring large groups to the area to stay? We can probably provide better insight.

Valerie Rogers · Answer

When we were considering buying a STR in the college town (in VA) where our Alma Mater is located, most of the available STRs being advertised on VRBO/Airbnb were 1 or 2 BR bungalows common in the area.

We ended up purchasing a 4 BR/2 BA house because of its very close proximity to the University campus. I was a little nervous because I didn't know what to expect as far as bookings since there was not one other 4 BR home being rented in the market (that I could find).

We luckily realized that the floor plan/layout of the house would allow us to configure it into 2 lock-off 2 BR/1 BA apartments as well as one complete 4 BR/2 BA house so we felt better about being able to compete with the other STRs in the market.

To our surprise (and delight) it turns our the house has been rented most often as the 4 BR/2 BA configuration over the smaller apartments. Turns out there is a market for a larger house in the area!

A word of caution when considering purchasing a really large property: make sure the property meets anyrestrictive occupancy & parking rules in your location. The city of Destin, FL recently passed some new regulations including limits on occupancy & the number of cars allowed at each STR. You don't want to buy a house that can sleep 25 people if the local rules restrict occupancy to 20 or the number of cars to 2.

Emir Dukic · Answer

Agree with @Avery Carl. The bigger, the better. Boils down to supply and demand. There is much less competition with other hosts for the bigger properties and as such you are able to charge a premium.

Anand S. · Answer

Definitely bigger. All our homes sleep 14 and do well as a result. We had a 3/2 that slept 8 and the larger homes outperformed even though our price/person was less on the 3/2.

Folks are looking to vacation with extended family or large groups of friends and the smaller homes just don't cut it.

Richard Phillip Lewis · Answer

@Mark Miles

What’s your demographic you’re looking to rent to?

In my market here at the Jersey Shore. More People + Short Term Rental = Party House aka it’s gonna get trashed.

This is fine, but it’s easier to clean up a small house than a big house. In my market we rent a 3 bed 1 bath and they fit 6-10 people in the house.

Pat L. · Answer

Exactly!!

We just got back from Marco Island 5bed 5 bath for 12 days & already looking for a larger home for the next family trip. But we also came from our >4800 sqft empty nester home.

We also have a SFR that's >2200 sq ft & it's never vacant.

Luke Carl · Answer

@Mark Miles I regret NOT buying a large house. I’ve got 5 small/medium houses and I wish I had 2 Big ones because they’d make the same money in my market and I’d only have 2 bookings to deal with at a time. 2 roofs. 2 hvac. 2 kitchens. Instead I have 5 of everything.

John Underwood · Answer

For an area that supports vacation rentals bigger will yield more profit.

I often see extended families, grandparents, parents, kids vacationing together or attending college football games or being together for Christmas. So more beds allows more people to split the cost of vacation.

A book I read recently explained it well. People are spending vacation money, it is different than bill paying money in that they have saved up and are paying good money for an experience and memories. That is what you want to provide and people are will to pay for this experience while they are using their vacation days to get away from their normal life and routine.

Julie McCoy · Answer

Ditto what @Avery Carl said.  I was playing it safe and starting small, and while my investments have still been awesome, if I did it over again I'd start bigger.  But definitely do your research to see what the market is!

Avery Carl · Answer

In my market, while all sizes can yield at least 20% COC, anything above 4 bedrooms yields a significantly higher return (in most cases anyway). Not sure where you plan to invest, but if I had it to do over I probably would have gone bigger.

Anyone regret buying a really large house for STR?

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