Commercial property AIRBNB good idea?

Question

I’m new to the vacation rental business and looking to secure my 2nd vacation rental. 1st small cabin is in rehab. I found a commercial/ mixed building near (1 block from water and some views) a desirable vacation lake. It is a house 3 bed 2 bath ready to go, along with a pretty open 1st floor commercial space that can be converted into another airbnb. It could also be joined for one really large space which is a rare find. However, fixed costs when vacant… The space is on one of the busier intersections but the location is very good in proximity to restaurant (across street), party store walkable, beach park short walk. My main concerns are demand for “duplex style” (will this be always 2nd rate demand due to the connectedness?) and will this appreciate and have the same allure as a residential house over time? Thanks for any advice in advance!

Bruce Woodruff · Answer

First thing to check is - what is the zoning? If it is allowable to do 2 STRs there, then I'd check your local competition by going on VRBO and AIR and see what others are getting for nightly/weekly stays.

I don't think there is an issue with 'duplex style'....people looking for vacation lodging stay in hotels after all..

IT may not have quite the same appreciation value as a typical house, but does that matter so much if you're raking in the $$ with STR guests?

Brad Jungers · Answer

The value of the property will follow the cash flow. If you rake it in with a duplex, investors will buy it. AND they're more likely to buy it because they're getting two investment properties in one and that is easier to manage. I agree with the earlier comment, check zoning.

Jon Martin · Answer

I think you scored! People rent in condos and hotels that are stacked on 3-5 of 6 sides all the time, so I don't see why that would matter much. Plus you will get families or larger groups traveling together who can rent both and will have an extra kitchen, bath, etc and still be close together.

The demographic that have a problem with that setup would probably prefer to a bit further from town anyway, so I wouldn't sweat it.

Jerry W. · Answer

@Adam Hebekeuser, for what its worth, my first STR was a duplex.  It has done extremely well.  I think quality, location, and price are the primary factors.  The fancy side of my duplex is probably in the top 10 in my area as far as how often it is rented and 5 star reviews.  I have also changed over a former office with a very large heated shop in back and just started a few days ago with advertising it on AIR BnB.  It rented this last weekend for the first time and the folks who stayed there just raved about it.

Adam H. · Answer

Thank you! Yes, there is 2-3 spots for each unit of off street parking. Hoping long term appreciation beats inflation which is one of my must haves for investing in such an asset. I really appreciate the advice so far!

Michael Baum · Answer

Hey @Adam Hebekeuser, do you have off street parking?

Commercial property AIRBNB good idea?

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