Long term rental or AirB&B in Danville, VA

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Long term rental or AirB&B in Danville, VA

James Hunter Kight
Real Estate Agent · Hillsborough, NC · Member since 2020 · 1 post · 0 votes

I have a rental property in Danville, Virginia.  Still a year or so from the new Casino opening there, and my property is vacant at the moment.  Do I put another tenant in on a year lease and then short term once the casino opens, or should I start short term now.  There is no debt on the property and taxes and insurance are cheap.   I feel it may not do as well short terming until the casino is open but would give me some needed experience doing short term.  So, do I short term or am I overthinking and just need to stick a tenant in it on a year lease?

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  • Patrick McGarvey
    Member since 2019 · 6 posts · 0 votes
    3y

    I am assuming you want to wait so you can AirB&B it and even if that is the case, I would still rent it with a one-year lease at this point. After all, we are in this business to make money. In this area, letting it sit for a year or more can be 6-15k per year in lost revenue depending on what your home will rent for. You should have no problem finding renters here just vet them properly.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @James Hunter Kight:

    I would rent it as a long-term rental (month-to-month) and generate some income. Many of us rent out our short-term rentals as month-to-month rentals during the slow season. You won't make as much as you would doing short-term rentals, but you will make more than a typical unfurnished month-to-month rental. Rent to traveling nurses, people between homes, people moving to the area, etc. I just rented my 4bed/2bath to a single guy supervising a construction project while he looked for a home.

    I'm going to bring up a different topic. You said the house is paid for and I'm wondering if you understand the power of leverage and how it impacts your return? There are some good books that explain it in more detail. I like the Unofficial Guide to Real Estate Investing by Strauss but you probably have to find a used copy. Here's a very basic explanation to get your juices flowing:

    Assume a house costs $200,000 and rents for $1,500. The market appreciates 3% per year.

    Pay cash for one house and rent it for $1,500. After five years you'll have earned $90,000 in rent income and gained $34,000 in appreciation.

    Buy four houses with $50,000 down on each. Mortgage payment is $1,000 on each house, so you're essentially earning $500 per house or $2,000 a month. After five years you'll have earned $120,000 in rent income and gained $136,000 in appreciation. You've earned $132,000 more by splitting your money and leveraging it.


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