Converting Short-Term Rentals?

Question

I hear a lot of people wanting to give up on their STRs because the model has a lot of vacancy (inconsistent rent) and takes more work than a buy-and-hold asset. What do you think about the co-living model as an alternative?

Suppose you have an SFH that was an STR...meaning you've got smart locks on each door, furnishing in the common areas done, living and kitchen essentials provided, pictures taken...you get it...the whole nine yards. Would it make sense to use that property as a coliving house?

Let me know your thoughts!

Dave Stokley · Answer

Do you mean rent it out to long-term tenants by the room? I think that's a pretty common thing in college towns. Not sure what the market is for non-student tenants.

John Underwood · Answer

I'm not giving up. I have very consistent rent and it has been on the rise!

Once you have systems in place it is not that hard to self manage either. I also enjoy it.

Ronald Rohde · Answer

It is a problem, but no different than an apt complex with damaged pool furniture. You either try to prove who did it, or just eat the cost.

Ronald Rohde · Answer

It can definitely be done for higher, but stable income. You just have to keep marketing to fill your pipeline. We help clients draft good room rental agreements. It can also work well for lower income people. Just depends on your market.

Janos Castro · Answer

STR are more work due the higher rate of turnover. The real question: is the extra income worth the work and hassle? is hiring a cleaning service worth it? There are alternatives to STR that avoid this issue... corporate and nursing services that often bid for 2-3 month bookings instead of 2-3 days at a time. For this to work, you must be in the right location. I would look at the benefits of one vs the other. If it was my property, I would consider the earnings and the reputation of my business (reviews, vacancy).

Bruce Woodruff · Answer

Not necessarily, if you look at the long term. Yes, you do have to go over and clean once a week or so (in our case) but then you know the property is immaculate inside and out very much unlike a LTR. You also know the condition of the operating systems very intimately again unlike your LTR. No surprise calls (well much less) on a weekend where you need to get a plumber out ASAP.

So at the end of a 1 - year period, evaluate the 2 different properties (LTR vs STR)...

The LTR will need a complete cleaning, probably even involving new paint and flooring. There will be a myriad of little repairs the tenant 'forgot to mention'. Basically a years worth of neglect - and that's with a normal/decent tenant... :-) Now comes the time and $$ that you didn't have/get to put in at intervals during the year.

On the other hand, the STR will be in perfect condition.

Account Closed · Answer

Looks to me like self managing is a few phone calls a week. HOAs can be a problem, but if they allow STR it shouldn't be an issue. I've been following a couple of guys on BP who do STR and are very happy with it.

That being said, from a business point of view, if you were visiting San Antonio and staying in a STR, would you like 1. Between SeaWorld & Six Flags or

2. more around Prospect Hill/Five Points?

Account Closed · Answer

@Joe, I see you are in San Antonio. I have a rental in Kyle and I like S.A. for investing. If you were going to set up a Short Term Rental (VRBO) what part of S.A. would make sense? Between SeaWorld & Six Flags or more around Prospect Hill/Five Points?

Alex S. · Answer

@Kusal Kularatne IF your STR had high-vacancy and was a lot of hassle...I guess it could be a co-living space.  I mean, 4 x 20yr olds living in the same house...what could go wrong!?  Oh wait...they literally made a reality TV show on this exact topic and a LOT goes wrong. :)

All of my STR guest messaging is automated.  My cleaning crew is reliable and awesome.  I have a monster contact list of sub-contractors/handymen for leaks and breaks.  More work than LTR? Sure.  A big hassle?  Disagree.

Joe S. · Answer

So far I have never set up a STR. I have talked about it, but I’m a little nervous to self manage. I have had several houses that I thought would have been a good short term rental, but with HOA unknowns and the property manager charging such a large amount of the gross I backed off.

Converting Short-Term Rentals?

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