Which is better for house hacking short-term rentals or standard rental

Question

I live in Santa Rosa, California part of Sonoma county. I'm looking to buy my first property and now it needs to be a house hack. Otherwise it'll be difficult for me to afford the payments. Which tends to be the better financial option when it comes to house hacking. Short-term rental or standard rental ( roommate or renting out a unit in a duplex). I've recently found a property in forestville near the Russian River that is a two-bedroom one-bath upstairs with a studio one bath downstairs.

What information do you need to gather when you're trying to analyze if it probably works as a short-term rental? Are there tools to help you analyze the deal? It seems a lot easier to figure out the prices on a standard rental than on a short-term rental and how much money I could make. Thanks for your thoughts and help!

Morgan Shupe · Answer

Hi Michael!

We bought a house hack in Colorado Springs and are finishing up our first summer as Airbnb hosts.
we have definitely made significantly more money over the summer renting the basement as an STR as opposed to a LTR. But I know bookings definitely slow down in the winter. So depending on if there is winter tourism in your area or not, you may want to do a hybrid STR/MTR.

You’ll have to do some research for a mid term rental to see if there are level one or two trauma center hospitals in your area, professionals visiting or moving to the area for work, and/or a good school district or that might attract mid term tenants.
You can go to the furnished finder stats page to see how many searches there were in the past 30 days vs how many properties are available and get an idea for demand.
I have a friend doing Airbnb a couple of blocks away, so I knew this area was good for STR. You could go to your local REIA and talk to other investors and you should also look at Airdna as others have suggested.
As far as the amount of work required, getting the STR set up was a ton of work. As someone who thought they had a good eye for interior decorating I 100% recommend hiring a designer. There are a lot of tiny decisions to make and it gets exhausting. The ROI for design and quality photos is definitely worth it.
Now that the listing is live it doesn’t take a ton of my time. I use Pricelabs so I don’t have to “watch my calendar like a hawk” as someone above mentioned in order to stay booked. And with the dynamic pricing we have been able to charge more than I would have thought without sacrificing occupancy.
I am a busy mom with a baby and a toddler, so I use Hospitable for automatic messaging. And if I have a same day turn I use a cleaner, if there’s a day between bookings I clean myself.
Let me know if you have any other questions, I’m happy to help!!

Samuel Cohen · Answer

Hello, I am a Realtor that lives and works the Sonoma County Market. Forestville IMO is not good for STR as it is too seasonal. You are better off with a 2-4 Unit in Santa Rosa/Rohnert Park in my opinion as LTR. Message me your contact info if you want to touch base. I am a Realtor but also have 2 Rental Properties and a Primary Residence. I personally have done house hacking throughout my real estate journey.

Myka Artis · Answer

On house hacks, I've always done short-term simply because of increased cash flow. You're already on site and can likely clean it yourself. As far as the numbers go, you can use Pricelabs and AirDNA. I find Pricelabs to be significantly more accurate because it pulls data from more legitimate sources than just Airbnb calendars. Good luck with your decision, but if it makes a good Airbnb, you can keep a whole lot more money in your pocket. You can also consider doing an STR/MTR combo model and really offset your costs.

Rick Albert · Answer

People here have posted good resources. I think there are a few considerations as I've looked into STR versus LTR. My conclusion was you net about the same but with way more work with STR.

Generally rule of thumb is monthly income with STR can be around 30% higher than LTRs. But then you have to subtract at least the following:

1. Utilities

2. Internet

3. Higher vacancy

4. Airbnb's fees

5. City fees and permits

6. Maintenance of furniture and restocking supplies

It is very time consuming. I've had clients in this space basically they watch the calendar like a hawk so if there are down days (for example a random Tuesday-Thursday vacancy), then they drop the price considerably just to fill it. Something is better than nothing. That's how you get your 98% occupancy rate. But you have to pay attention it.

I'm not saying don't do it, as there are a lot of reasons where it makes sense. Just you need to be aware of it plus any laws surrounding STRs. Many cities are cracking down on it.

James Carlson · Answer

Let the numbers be your guide.

STRsUse AirDNA. Plug addresses to see what rough annual revenues look like for a short-term rental.

LTRsUse Rentometer to gauge long-term rents.

In Denver and Colorado Springs where I work, STRs -- while not what they once were -- are still likely to generate more revenue even after expenses. But then it's a matter of how you personally balance the desire for the extra money with the difficulty of the extra work.

My house-hacking clients here are all over the map with how they rent out their separate space. Some do LTRs, some do mid-term rentals, some do STRs. Get with a good agent that knows STRs and house-hacking in your area.

Good luck!

Daniel McDonald · Answer

Airdna is your best bet. I manage STRs in TN and FL. There numbers aren't 100% accurate BUT give you a pretty good idea. IF you go that route you'll definitely want to invest in Pricelabs to make sure you're not leaving money on the table. Also definitely check the rules around airbnbs in the area. I assume it would be fine their but maybe not. Usually being owner occupied is a good way around it.

Which is better for house hacking short-term rentals or standard rental

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