North Tacoma Short Term Rental during Covid-19

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North Tacoma Short Term Rental during Covid-19

Christian Pirotte
Rental Property Investor · Member since 2017 · 12 posts · 4 votes

Hey All,

I am looking to purchasing either a duplex or an SFR with an ADU in the North Tacoma area with a VA loan. I am planning on house hacking for about 6 months, moving out and then airbnb-ing the second unit/ADU as a separate unit. However, I am currently experiencing analysis paralysis and have missed several deals because I'm having trouble coming to terms with the risk--particularly the inflated Tacoma market and rental demand during COVID. I have analyzed data from Airdna for weeks at this point and I'm reasonably certain that a two unit airbnb in North Tacoma would produce a good return (although I imagine the data is skewed from COVID). However, I would love to hear from the BP community if anyone can see any major pitfalls or shortsightedness in this strategy.

Appreciate any input I can get!

CP

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Michael HaasBusiness Member
Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
5y

@Christian Pirotte thank you for your service! North Tacoma is a great place to live, and the neighborhood around UPS is top notch. I lived there for 4 years and loved every minute of it. 

To @Michael Baum ‘s point- I think he's right about STR demand being weak in that area. Don't let the eviction moratorium scare you into STR's when they aren't the right play for the location and housing type. Within 7 blocks of UPS your highest and best use is going to be student rentals at $500-$600 a room, especially if you acquire a larger house or duplex. UPS just doesn't have enough year-round tourism traffic to make STR's profitable when you compare them to highly profitable student rentals.

As for location- you have a VA Loan Voucher, and the benefits of 0% down and no mortgage insurance or PMI far our way the downsides of investing in higher cost areas like Tacoma.

I’m happy to talk to you a little more about student rentals - I have clients with 14 of these in and around UPS and PLU and they’re extremely profitable. 

[email protected]408-439-7873
HouseHack Seattle | Michael Haas & Team572 Reviews
WebsiteView Page
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  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    @Christian Pirotte, Airdna is a great source for short term rentals. We still have demand, but things slowed down a little in the past few months because of Covid, and because this is not the peak summer season.

    After Covid, landlords also started to consider different types of short-term renters like traveling nurses instead of just focusing on tourists or city visitors.

    I like your plan, especially that Tacoma is allowing two ADUs in one house with no-home owner-occupancy requirements.

    Feel free to reach out if you got questions or comments. We can have a phone call or coffee to discuss more.

    Best of luck!

    2Reply
  • Christian Pirotte
    OP
    Rental Property Investor · Member since 2017 · 12 posts · 4 votes
    5y

    @Sherief Elbassuoni, thanks so much for the reply. As this is my first first foray into the Tacoma market and given the pandemic, I am just looking for more concrete information regarding the state of STRs. Sent you a PM.

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    5y

    Hey @Christian Pirotte, I am not a huge fan of AirDNA. What I would do is take the time and look at each and every competitor listing to get an idea of occupancy and nightly rate and plan accordingly.

    What is your plan for the STR? Vacationers? What locale are you looking at? I have never thought of North Tacoma as a garden spot frankly. Plus that is a pretty wide area. North of Hwy 16. University Place, Old Town, Ruston?

    What's the budget?

    Personally I think the major pitfall is investing in western Washington. This is not a landlord friendly area. Moratoriums on evictions, rent control discussions, the general hatred of investors...pick one. My vacation home is in Idaho. I looked at various places like the coast, Chelan and the Oregon coast, but the prices are too high and I don't want to be on the hook for the crazy things politicians do here.

    I don't want to add to your paralysis, I just want you to take some time, give us more info and go from there.

    3Reply
  • Christian Pirotte
    OP
    Rental Property Investor · Member since 2017 · 12 posts · 4 votes
    5y

    @Michael Baum I'm looking at the area near Puget Sound University close to old town and 6th ave. There definitely seems to be demand but I'm just not sure it's enough to cover what homes are currently selling for.

    My rationale is Tacoma's growing popularity and Tacoma being sightly more landlord friendly than Seattle. I am partial towards STRs just to avoid problems with the eviction moratorium, however. It's hard to gauge other Airbnb's at this specific moment due to the most recent shut down.

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    5y

    Ok @Christian Pirotte I did a quick VRBO search and there aren't many STR's in the general area. The most expensive places are 4 to 6 bed that sleep 12+ overlooking Commencement Bay. Nightly ranges from $500 to $600 for those. The average for all the STR's is $162 a night.

    The places bringing in $500+ a night are in the 1.8m price range. Inventory is a bit limited in that general area. You are going to be paying in the $450 to $600k range for your place I am guessing.

    The biggest thing I can see is empty calendars. Now I don't know if they get the majority of their bookings early in the year for the season or what but that is a bit of a concern. Some have a bunch of huge blocks for all summer. I can't tell if that is due to bookings or if they have a plan to open up bit by bit as the year progresses.

    I did do a quick scan for duplexes like you are planning and there are a couple. The average is $110 a night with all calendars empty at the moment.

    Now AirBNB has even less to choose from and their nightly rate is under $100. They are a mix of rooms, guest suites and small ADU's.

    The bottom line IMHO is that this will be a loser of cashola. I can see this working if you have owned the home for years or lived there for years and rent a room or ADU or whatever.

    I really appreciate you wanting to get something rolling but the numbers don't seem to work here from what I can see.

    Remember that I have just put in 15 minutes of data mining on this. I haven't looked an any wholesalers or anything like that. Those could make things work better. My 2 cents.

    2Reply
  • Christian Pirotte
    OP
    Rental Property Investor · Member since 2017 · 12 posts · 4 votes
    5y

    @Michael Baum thanks for the input Michael!

    1Reply
  • Michael HaasBusiness Member
    Real Estate Agent · Redmond, 🌧️ Seattle Investor-Agent | 🤑 Helped 400+ Clients Invest in Real Estate | 🏘️ Owns 23 WA Rentals & Airbnbs | 🏗️ Built 5 DADU's | 📈 You Can Do It Too · Member since 2016 · 724 posts · 3k+ votes
    5y

    @Christian Pirotte thank you for your service! North Tacoma is a great place to live, and the neighborhood around UPS is top notch. I lived there for 4 years and loved every minute of it. 

    To @Michael Baum ‘s point- I think he's right about STR demand being weak in that area. Don't let the eviction moratorium scare you into STR's when they aren't the right play for the location and housing type. Within 7 blocks of UPS your highest and best use is going to be student rentals at $500-$600 a room, especially if you acquire a larger house or duplex. UPS just doesn't have enough year-round tourism traffic to make STR's profitable when you compare them to highly profitable student rentals.

    As for location- you have a VA Loan Voucher, and the benefits of 0% down and no mortgage insurance or PMI far our way the downsides of investing in higher cost areas like Tacoma.

    I’m happy to talk to you a little more about student rentals - I have clients with 14 of these in and around UPS and PLU and they’re extremely profitable. 

    [email protected]408-439-7873
    HouseHack Seattle | Michael Haas & Team572 Reviews
    WebsiteView Page
    6Reply
  • Tim S.
    Investor · California, CA · Member since 2016 · 367 posts · 375 votes
    5y


    @Christian Pirotte
    As other have said it's not a very good area for short term rentals.  I have a student rental near UPS, I had to rent it short term to fill a 4 month gap a while back.  I was able to rent it about 60-70% of the weekends, but almost nothing mid week.  Didn't make enough to cover the mortgage.

    I'm in the process of building an ADU on it, it is full of surprises.

    0Reply
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