Midwest REI Start-up Strategy? Military STRs or Traditional MF?

Question

Finally pulling the trigger on my first post!

I have been listening to the podcasts and reading every book I can get my hands on, so I will admit that this post is partly to start the clock and give me some accountability as I move forward, but I am honestly also looking for some guidance as I look to start connecting with the right team.

Here is the short of it: I work part-time with a military unit which has a built-in network of regular travelers with a predetermined number of travel rates and days per year. I have been thinking about going the military crash pad direction since I will only need to get a few committals and then could even ABnB additional days. I know with any military dependency you take a risk, but this is also a state-funded mission, so not on the same annual review list that other active duty units face. Looking at the numbers, I would basically only need 3 people to commit in order to have positive cash flow without additional STR, which could really make it a good deal in the end. The thing to think about here is if I can balance the cost of the amenities when these travelers would be comparing accommodations to hotels, although most have said that having a place they could store gear and feel at home would make it more attractive. I could also do some small things like keeping the pantry stocked etc...

Alternatively, since we are talking about a large city, there are several colleges and hospitals in the city center where I have found multi-family opportunities from 2-5 units that would fit a more traditional model if I could get it for the right price (yes I know this is always the major hurdle! haha). Prob the difference here is that my renter market would be much larger and easier to predict.

As I write this, I think a lot of this question comes from all the STR success I hear/read about and this market is especially good for that during elections as well, so I guess I am trying to figure out if that is a fad that I am too late on or if it is something I should seriously consider, especially since I kind of have a unique access to a steady stream of renters...I did talk to someone who isn't even downtown and he said leading up to elections he rents his basement unit for $300/mo and it was not even updated!

Appreciate any advice/insight for those that have traveled this road before!

Thanks!

Kerry Baird · Answer

First off, welcome. I am about six months into my first short term rental, though I have many other long term rentals, and flip-fix experience. My husband I both are veterans, and have used the military strategy as part of our model, right from the start. I could see that we could start with the housing allowance, and work backwards and ensure we were cash flow positive. If it works for military, that price point is great for teachers, firefighters, nurses and the like.

Your Plan A for transient lodging, is terrific as long as the military situation doesn’t counter that plan, i.e. no mandate that troops on orders need to be in a contract lodging, or on base in TLF lodging, or similar. I have gotten guests that were PCSing to another base and needed a month of lodging.

You are also wise to look at Plan B guests, such as medium term guests. There are a few sites that cater to traveling nurses, which seem to be 6 month stints, according to the few nurses I have spoken with.

When I started:

-I called local municipalities to verify our area was legal. -I applied for a state and county license.

-I used AirDNA to see where most guests were coming from and what the occupancy/vacancy might look like.

-I pulled the trigger, knowing that my place will rent long term and provide cash flow; if this didn’t work out for me, I’d be able to rent long term.

I wanted a Plan A and a Plan B, also. This is my shoulder season, and I’m barely making it this month...but still positive. And have a lucrative booking ahead of me. Will give it a year and look at the cash on cash return. If we don’t do as well as with long term rentals, we will switch out in six months.

Midwest REI Start-up Strategy? Military STRs or Traditional MF?

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