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What to consider when switching a long term rental to a short term rental?


#1

Hi,

We have a 2bd, 1 bath apartment in the basement of our home in Portland, OR. Because of how the home was built, the basement has its own driveway, entrance and is completely separate from the upstairs (no stairwell even!) However, the whole house shares utilities and this is one of the greatest challenges with the long term rental because my furnace and hot water heaters are in the middle of the basement apartment and local laws require me to provide a 24 hour notice of entry for any servicing needs (unless there is an emergency). While we’ve been lucky to quality tenants, we’ve also never had a tenant extend their stay longer than the initial contract of 1 year. This turn over rate has me wondering if I may be better suited using the apartment as a short term rental.

Here are some of the factors I’m using to weigh the decision.

Short term Pro’s
1. Easier to schedule maintenance and care for the property.
2. Noise from our three children is not as big a concern.
3. Flexibility in how I use the space.

Short term Con’s
1. Unstable/inconsistent income
2. Cleaning the apartment after each guests
3. Managing guests expectations before, during and after stays

Long term Pro’s
1. Steady consistent income

Long term Con’s
1. Maintenance needs require more coordination with tenants
2. Turnover is getting old, searching for finding quality tenants that we’re willing to have on
our property for extended period of time.
3. We have three noisy children!

What other factors would you recommend I consider before making a change?

Thanks!


#2

See how much people charge in your area. If you think its worth the money then do it! You can try for 2-3 months and then go back to long term if its not working out


#3

Are your neighbors hawks? I had a long term rental change to short term and my neighbors complained. Didn’t impact anything but something to consider.


#4

Generally, I think the neighbors would notice all that much, though this is a great point. I may go ask around and see what they say. Thanks!


#5

Getting rid of the children! LOL. I kid. I have no children but I do board dogs in my home. My rental is attached to my house but has a separate entrance and closets between my space and theirs. Guests do not enter my part of the home except by invitation. I have had very few complaints about noise. My stated quiet hours are only 10 pm to 6 am, but still, no complaints. Of course I have options like putting the dogs in the garage on the other side of the house. All this is to say I think it can be managed.

I think your biggest challenge is finding your lane. You are somewhat late to the STR game. What is the competition like in your neighborhood? What are you offering that would make people choose you rather than a nearby host with 300 reviews? Have you run the numbers? How long can you go with less income while you build your airbnb business.

Welcome to the forum. We have a wealth of free information here if you have a thick skin. LOL.


#6

Factor in higher rent per-night will less nightly occupancy. The cleaning fee helps guests know you do a good job keeping it clean and can allow youth higher a company to do the work. Call cleaning services and see what they charge. Set your fee accordingly. It will help you feel good about spending your time to clean and give you an easy solution if you’re not able to keep up with it. I am converting a duplex from long to short right now. Big renovation at the moment. But the numbers work great for me.


#7

Why do you think ST guest won’t be concerned about your ‘three noisy children’. They absolutely will!


#8

STR take a lot of personal time if you plan to run and maintain the home yourself. it isn’t just the cleaning but coordinating and conversing with each guest. It is dealing with unexpected 'emergencies" in the middle of the night (accidentally locking themselves out). Dealing with individuals with expectations that you don’t offer or can’t. I love it, but it isn’t for everyone. There are a lot of tips that help you through this but have both lTR and STR, STR is absolutely more challenging and takes up a lot more of my time than a LTR ever did. Choose one that will fit into your life style better.


#9

Barriers to entry are low if using the Airbnb platform – I started with a year trial run to see if I would make enough money to cover costs and bother to continue. Try it for six months, then you’ll know.


#10

So true! Only 17 years and 9 1/2 months to go… but who’s counting?!? That’s a good point, I am coming in late. I think there are a few pockets in the market in my neighborhood and it may be good chance for us to get in. For instance, if I were to lists the apartment, it would be the only 2 bedroom stand alone apartment within about a 2 mile radius. Thanks for the welcome note!


#11

Thanks Cindy! I was picturing running myself and it’s helpful to hear that it does take up more time to manage. I suppose the alternative would be to have a third party manage the rentals. It seems like this would eat up the profits pretty quickly, though is pretty common for third parties to manage a property listed on Airbnb?


#12

I agree, they’ll definitely be annoyed with it. That point is more about how many times I have to remind my children to walk with “soft feet” through the house. With long term tenants, it’s multiple times a day, with short term, I’d at least get a day or two where I wouldn’t have to!


#13

Thanks Jason. Can I ask how you calculated out that short term would bring in better numbers? For instance, how many nights/month do you expect to have guests?


#14

The best way is for you to do some market research with your local competitors to see you what they charge. Speak to your local tourism people about footfall. Look at Airdna.

Put together a budget with fixed and variable costs including your time and estimate days you will fill.

That will give you a profit.


#15

Figure for your situation if short term will bring in more than long term because every situation is different. Within the first few months with my AirBnB, I had already grossed more than I would have made all year on a long term rental. (That’s gross, not profit) – still figuring up profit as I just started listing in November 2017 and I my mind turns into a black hole when dealing with numbers). And, my STR people have done less damage to the property than my last LTR people. So far I have been fortunate with my guests. I do think that, since I am not in a vacation area, I might get less party people. Most of my guests are coming to work, weddings, graduation or other event at one of our many colleges, visiting friends/parents – just regular life stuff.
I do spend a lot of time making sure my guests have everything they need, especially knowledge about the community and road construction that could affect their stay. Currently, a friend of mine and I clean the place (mostly her while I take care of the flower beds, router updates and such). One source I was reading said that wi-fi speed and cleanliness were the two biggest issues for guests.
And, if you hire a cleaner, be sure they are trustworthy.
Judy


#16

In my experience you have a lot more control with STR. And I’m with jjcatfinder tenants don’t give a shit about your property.


#17

Something to consider - if you think a yearly turnover is old, can you imagine a. 2-5 times a week turnover? Cleaning? Contacts 24/7. etc.

To be successful with your STR you have to be available, be able to deal with complaints ongoing, learn to spot the bad apples. (this forum is a great tool for learning), deal with bad Customer service, and get special STR insurance. Also, have you looked at the laws in your town/state. Hotel Taxes, etc.


#18

Ive had a lot longer term tenant in our basement suite. Never a complaint about my 3 kids. I have switched to STR and even in the off months have made more every month. During our high season I will make a projected 3x our mortgage each month. I also have it stated in several spots that i have 4 kids and 2 dogs that will be heard. Still 5☆ across the board and I can block booking when we have family come stay


#19

Also- since it is in an owner occupied home, I have a lot more control with any pests or noise makers. Our neighbors had no idea until we told them we had a bnb


#20

Cleaning services can be expensive. Once you get it up and running you can get a better feel for your property and get into a rhythm and it gets much easier. There is also the cost of set up. You didn’t indicate if your apartment is furnished but you will need to out fit with at least the basics and have at least double of all linens, towels etc just in case. Give it a try, if you are in a good market you may have more business than you will know.


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