From the desk:Short-Term Rentals / Airbnb

Unit 3 is empty and I'm tempted to furnish it instead of re-renting

Four unit building, I've owned it three years. Unit 3 went vacant last month, a 1 bed I've been getting $1,150 on a year lease. There's a small college and a hospital about a mile away, and I keep getting told the hospital travel nurses pay real money for a furnished place by the week.

What I have so far: the city requires a short-term rental registration, $250 a year, and it caps you at one registered unit per parcel for non-owner-occupied buildings. So I could do exactly one of the four. Rough numbers I've built, and I'd like someone to tell me where they're wrong:

furnishing, $8,500 for a 1 bed done plainly
gross at 65% occupancy, $95 a night, about $1,850 a month
cleaning at $80 a turn, maybe 7 turns a month
platform fee, utilities I'd now be paying, internet

That lands me somewhere near $1,100 net if nothing breaks, which is basically the long-term rent with a lot more work. The weekly nurse stays are the part that could change it, longer bookings mean fewer turns and fewer cleaning bills.

The thing I keep circling is the other three tenants. They share a stairwell and a laundry room in the basement. I don't know how a rotating set of strangers with suitcases plays with people who've lived there four years and pay on time. Two of them are the reason this building is easy.

Decision in front of me is whether to list unit 3 in the next two weeks as a long-term or spend the money on furniture and try one season. Not sure yet.

Answer

1tashaford30PB2APRO7

Before the furniture money, call your insurance carrier and your lender. A landlord policy written for annual leases often doesn't cover nightly guest stays, and some carriers want a different form or a commercial policy for it. Mortgage documents sometimes have language about the use of the property too. I'd get whatever they tell you in writing, because a phone answer from whoever picks up is worth nothing later.

The other thing in your numbers: you have utilities as a line but no amount. In a four unit with shared laundry that could be a bigger jump than you think once a guest runs the heat at 74 all week.

2 replies

1laurenkim53Passive

Your travel nurse angle is the whole deal and it isn't really a short-term rental business, it's furnished mid-term. Different demand, different platforms, much lower turn count. If that's what actually fills the calendar I'd underwrite it that way and stop looking at nightly comps, because 65% at $95 in a college and hospital town is a number somebody sold you rather than one you counted.

Also, your registration is one unit per parcel today. Mine was one thing in March and another thing in October. Worth reading whether the cap is in the ordinance or in a resolution the council can move on a single vote.