A mid-tier house that would not sell moved to short-term rental for eight months, and the numbers are worth unpacking
Say a house sits at 385k in a market where buyer traffic dried up after rates moved. Two price cuts and it is still sitting. The carrying cost on a 300k mortgage at 7.1 percent is roughly 1,775 a month in interest alone, plus tax and insurance call it 2,200 all in. A long-term tenant in that price tier might clear 2,100 gross, which barely covers the carry and leaves nothing for vacancy or a turn. So the owner lists it on short-term platforms instead, furnishes it for about 8k, and runs it while keeping it available for showings. At 65 percent occupancy and an average daily rate of 165 dollars, gross monthly revenue comes to around 3,200. After platform fees at 15 percent, cleaning at roughly 400 a month, and utilities, net operating income lands near 2,200, which matches the carry cost and covers the furniture amortization over two years if nothing breaks badly. That is the win version, and it is real enough to be worth studying. What does not show up in that math is the showing problem. A property under active short-term rental is harder to show, guests book weeks out, and a buyer who wants to close in 30 days will not wait for a checkout date. Two accepted offers fell apart in cases I have seen modeled this way, not on price but on possession timing. The other assumption doing the most work in the favorable version is that 65 percent occupancy number. In a market soft enough that the house would not sell, shoulder-season STR demand is often soft for the same reason: fewer people moving through the area. The occupancy rate and the sale difficulty are correlated, and underwriting them independently is where the projection goes wrong. The 8k in furnishings also sits on the balance sheet as a loss if the market softens further and the eventual sale price drops below the last list price, because no buyer is paying for IKEA. What market is the house in, and what is the actual seasonality curve for short-term demand there?
