Exiting a House Hack with tightening Airbnb regulation

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Exiting a House Hack with tightening Airbnb regulation

Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes

I own a duplex in Denver. Living in 1 unit and renting the other on Airbnb. My intention was to rent on Airbnb upon exiting the property. That seems risky now considering the current trajectory of regulation in the city. How are other people thinking through this? Long term rental cash flow isn't great. Hard to turn my back on short term rental income. Thoughts?

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Ethan Cooke

Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes

@Jason Breton - @Andrew Myers has it right: you can rent out one or both units as medium-term furnished rentals for 30+ days and still make a good margin compared to a traditional unfurnished rental. I operate a 19-unit furnished rental business in San Francisco and just south. SF has some of the toughest STR restrictions in the country, but there is a strong year-round market for medium-term business travelers. It's a nice way to earn decent "semi-passive" cash flow in any market with a lot of business travelers. Tech workers, construction workers, consultants and medical professionals often travel for more than a month. Good luck!

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Eric P.
New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
Originally posted by @Jason Breton:
I own a duplex in Denver. Living in 1 unit and renting the other on Airbnb. My intention was to rent on Airbnb upon exiting the property. That seems risky now considering the current trajectory of regulation in the city. How are other people thinking through this? Long term rental cash flow isn't great. Hard to turn my back on short term rental income. Thoughts?

I’d consider selling it & buying a vacation rental up in the mountains where they’re not regulating as heavily, right? Do a 1031 exchange
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
7y
The 1031 exchange sounds like a good idea.
0 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Eric P. That would make perfect sense, however having just bought the home recently w/ 90% LTV it hasn't appreciated enough to sell. I'm thinking through other creative ways to use a co-host on Airbnb to turn one into a LTR, while keeping the other a STR. Have you heard of other people doing that?
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John Teachout
Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
7y
Is STR an option now? If so, do that. Worry about next steps if that opportunity goes away. (or are the laws already prohibiting it?)
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Andrew MyersBusiness Member
Investor · Denver, CO · Member since 2017 · 26 posts · 16 votes
7y
@Jason Breton you could consider "medium-term" rentals instead. Leases or Airbnb/VRBO agreements longer than 30 days. I don't believe there are any regulations other than standard landlord/tenant laws for Colorado. Lots of corporate housing, travel nurses, blue collar/trade folks looking for 1-6 month housing. And being furnished, in Denver, you could probably demand some good rents. (I'm in metro Denver area as well and have considered the same for my STR). Hope that helps!
[email protected]303-503-6555
SVN | SFRhub Marketplace
Website View Page
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Eric P.
New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
Originally posted by @Jason Breton:
@Eric P. That would make perfect sense, however having just bought the home recently w/ 90% LTV it hasn't appreciated enough to sell. I'm thinking through other creative ways to use a co-host on Airbnb to turn one into a LTR, while keeping the other a STR. Have you heard of other people doing that?

A duplex with one LTR & one STR might not go that well as LTR tenants tend to get super annoyed by having a constant stream of drunk partying STR people on vacation next to them all the time. I'd STR it to the max until it's illegal, while keeping an eye toward the medium term rental / corporate housing / nurses, etc. Denver has huge hospitals right? Try to target traveling nurses for 3-6 month rentals!
0 Reply
Ronnie Williams
Member since 2019 · 6 posts · 5 votes
7y
Originally posted by @Jason Breton:
I own a duplex in Denver. Living in 1 unit and renting the other on Airbnb. My intention was to rent on Airbnb upon exiting the property. That seems risky now considering the current trajectory of regulation in the city. How are other people thinking through this? Long term rental cash flow isn't great. Hard to turn my back on short term rental income. Thoughts?

Check out furnishedfinders.com. That's how traveling professionals find medium-term leases.

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Ethan Cooke
Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes
7y
@Jason Breton - @Andrew Myers has it right: you can rent out one or both units as medium-term furnished rentals for 30+ days and still make a good margin compared to a traditional unfurnished rental. I operate a 19-unit furnished rental business in San Francisco and just south. SF has some of the toughest STR restrictions in the country, but there is a strong year-round market for medium-term business travelers. It's a nice way to earn decent "semi-passive" cash flow in any market with a lot of business travelers. Tech workers, construction workers, consultants and medical professionals often travel for more than a month. Good luck!
5 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@John Teachout Yes, regulation is tight now and prohibitive while the city is looking to tighten even further
0 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Andrew Myers Great idea, thanks! I have no experience in medium term rentals. Are ghost listing a good way to gauge demand and estimate pricing?
0 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Eric P. My plan is to STR it until something happens and it's no longer feasible, but didn't think about medium term. Great idea, thanks! How do you gauge demand and set pricing? Ghost listings?
1 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Ronnie Williams This is great advice - thanks! Is that how you’d determine demand / pricing?
1 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Ethan Cooke Awesome, thank you! I’m inexperienced with medium term rentals. What’s the best way to understand demand and set pricing? What’s your typical vacancy rate? Any pitfalls you can share from your experiences? Thanks again!
0 Reply
Eric P.
New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
Originally posted by @Ethan Cooke:
@Jason Breton - @Andrew Myers has it right: you can rent out one or both units as medium-term furnished rentals for 30+ days and still make a good margin compared to a traditional unfurnished rental. I operate a 19-unit furnished rental business in San Francisco and just south. SF has some of the toughest STR restrictions in the country, but there is a strong year-round market for medium-term business travelers. It's a nice way to earn decent "semi-passive" cash flow in any market with a lot of business travelers. Tech workers, construction workers, consultants and medical professionals often travel for more than a month. Good luck!

What’s the best way to find Tech workers, construction workers, consultants, medical professionals, etc for medium term rentals? FurnishedFinders.com, craigslist, airbnb, or something else?
0 Reply
Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
7y
@Eric P. Have some inside knowledge about the tech workers, construction workers, consultants, etc. I have inside knowledge about the refinery contractors coming to work in my town, and that's how I rent out my STRs. OP, do an inventory of your inside skills or knowledge or any other advantage you would have over your competition and utilize it.
2 Reply
Ken Latchers
Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes
7y
I would say the only problem was that you did not do proper understanding and due diligence before you jumped in chasing easy money.

Originally posted by @Jason Breton:
I own a duplex in Denver. Living in 1 unit and renting the other on Airbnb. My intention was to rent on Airbnb upon exiting the property. That seems risky now considering the current trajectory of regulation in the city. How are other people thinking through this? Long term rental cash flow isn't great. Hard to turn my back on short term rental income. Thoughts?

0 Reply
Ethan Cooke
Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes
7y
@Jason Breton - I use AirBnB to assess demand and pricing. Search AirBnB for comparable listings using future 1-month periods (Oct 1-Nov 1, Nov 1-Dec 1, etc.). Look for the listings with a lot of high ratings. Their pricing is a good market indicator. I generally find below-market-rent properties on Craigslist, decorate them nicely and then price them in the bottom 30% on AirBnB. My vacancy rate is 5-10%
2 pitfalls to avoid: 1. A unit missing any of the main features of a decent arbitrage unit (located near large employers, good neighborhood, at or below-market rent, private entrance, easy parking, private bathroom, kitchen or kitchenette) 2. A unit that has serious maintenance problems (insufficient electrical capacity, pest problems, mold, etc.)

@Eric P. - Most of my medium-term bookings come from AirBnB. I have also gotten some from Zillow. When you post a listing to Zillow, it also posts automatically to Trulia and Hotpads. My Home Away/VRBO listings produce very little action.
NINJA TIP: look for a place for rent that has two units in one. For example, a single-family home with an Inlaw unit with separate entrance. Sometimes the owner will rent out a place like this as a single-family home. But the second unit has a ton of value as its own furnished rental. I have two places like this and they are very profitable.
Now go out, get your first place and kill it! :)
1 Reply
Jake CohenPro Member
Rental Property Investor · Denver, CO · Member since 2017 · 200 posts · 126 votes
7y
@Andrew Myers I just started renting out one of my properties mid term in denver and it is going great so far. Caught a couple between houses for 4 months at about 140% long term rental rates. I think it’s a good secondary market to target.
0 Reply
Jake CohenPro Member
Rental Property Investor · Denver, CO · Member since 2017 · 200 posts · 126 votes
7y
@Ethan Cooke this is amazing info. We takked about this a few months ago and it is working great for my first mid term rental. Would you be interested in doing an interview/ podcast episode on your tactics? I think people would be really interested in your story.
0 Reply
Ethan Cooke
Rental Property Investor · San Francisco, CA · Member since 2016 · 227 posts · 365 votes
7y
@Jake Cohen - I’m glad it’s useful to you. I’d be happy to speak with you about a podcast. I’ve done a few Meetups and podcasts, and it’s a lot of fun. I will send you a Connection request and we can take it from there.

0 Reply
Andrew MyersBusiness Member
Investor · Denver, CO · Member since 2017 · 26 posts · 16 votes
7y
@Jason Breton @Eric P.in my opinion it's really a marketing/advertising effort. The two medium-terms I've found have been off of Airbnb. I include a note our profile that says we are always looking for longer-term guests - inquire with us if interested. Other resources out there:

Airbnb, VRBO, Furnishedfinder.com, corporatehousing.com, Zillow, Craigslist, bluecollarhousing.com, facebook group - Mile HIgh City Healthcare Travelers (Denver-specific).

Also consider your own network & expertise - what industries do you know or who do you know who might work with traveling professionals to market your rental.

Pro tip: even if you find potential guests via Airbnb, consider signing an agreement outside of Airbnb - it will save you both money, esp the guest.

[email protected]303-503-6555
SVN | SFRhub Marketplace
Website View Page
0 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Ethan Cooke Amazing insight and guidance. Thank you!
0 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Jake Cohen Great feedback, thank you! Definitely want to figure out what to do post Airbnb, which is likely going to be an April - May decision. Glad to hear that medium term is solid in Denver. Where’s your place located? Do you target a particular market? Consultants, travel nurses, etc? Sounds like the people between homes is interesting one.
1 Reply
Jason Breton
OP
Rental Property Investor · Denver, CO · Member since 2017 · 33 posts · 19 votes
7y
@Andrew Myers Thank you! I’ve been thinking through the marketing piece and how to best to target certain market segments. My place is pretty centrally located and only 1/4 mile from a major Denver Hospital. Thinking about potentially seeing how to make inroads with Travel nursing agencies to get on a list of preferred housing. Might be overkill for only having one duplex though ...
0 Reply
Eric P.
New York City, NY · Member since 2016 · 470 posts · 348 votes
7y
Originally posted by @Ethan Cooke:
@Jason Breton - I use AirBnB to assess demand and pricing. Search AirBnB for comparable listings using future 1-month periods (Oct 1-Nov 1, Nov 1-Dec 1, etc.). Look for the listings with a lot of high ratings. Their pricing is a good market indicator. I generally find below-market-rent properties on Craigslist, decorate them nicely and then price them in the bottom 30% on AirBnB. My vacancy rate is 5-10%
2 pitfalls to avoid: 1. A unit missing any of the main features of a decent arbitrage unit (located near large employers, good neighborhood, at or below-market rent, private entrance, easy parking, private bathroom, kitchen or kitchenette) 2. A unit that has serious maintenance problems (insufficient electrical capacity, pest problems, mold, etc.)

@Eric P. - Most of my medium-term bookings come from AirBnB. I have also gotten some from Zillow. When you post a listing to Zillow, it also posts automatically to Trulia and Hotpads. My Home Away/VRBO listings produce very little action.
NINJA TIP: look for a place for rent that has two units in one. For example, a single-family home with an Inlaw unit with separate entrance. Sometimes the owner will rent out a place like this as a single-family home. But the second unit has a ton of value as its own furnished rental. I have two places like this and they are very profitable.
Now go out, get your first place and kill it! :)

Anyone have any ways to mitigate the fact that in certain states (specifically California but other states too), a renter can claim squatter’s rates after 30 days and refuse to leave?
https://www.airbnb.com/help/ar...
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