Rubbing your temples as you scroll through Zillow? Tired of putting in offers on investment properties only to be out-bid by buyers offering above asking price, all cash offers, with no contingencies? Thought you hit it big when you sold your last property, but now scrambling to find something reasonable to roll your 1031 proceeds?
You’re not the only one. Our company faces the same challenges, but we have found that buying short-term rentals can unlock opportunities that are less inflated because they are outside the buy box of traditional single-family rental investors and owner-occupied home buyers. Below are four Tactics, Techniques, and Procedures (TTPs) we have picked up in recent months that might help your search:
Look for weird homes. Octagons, geodesic domes, rambling ranches with choppy floor plans...all of these houses turn off SFR investors and homebuyers because people may not want to LIVE in these types of homes full time...but the same unique characteristics that make them less desirable for permanent residents often make them super attractive to short term guests looking for unique experiences on Airbnb, VRBO, and other home-sharing websites.
Look for properties in transitioning neighborhoods and in need of repairs. Neighborhoods in the process of revitalizing, but not quite there yet, are perfect for short-term rentals. Permanent residents might not choose to live in these spots for a year, but travelers in town for the weekend or contractors working remote jobs are less picky. As a result, short-term rentals can be a great way to get into neighborhoods that offer long-term appreciation potential, but present short-term challenges in attracting home buyers and long-term tenants.
Look for properties near commercial buildings, on busy roads, and in less desirable school districts. Again, these characteristics often turn off SFR investors and home buyers, but make little-to-no difference to tenants who are only there for a few nights or even a few months.
Look for properties with Accessory Dwelling Units (ADUs). Houses that have a mother-in-law suite, garage apartment, pool house, or cottage in the back are often perfect for short-term rentals because they offer additional revenue streams. Even if the smaller unit is just a studio with a kitchenette, you can still rent it separately to short-term guests in a way that you might not be able to do as a traditional long-term rental. And if you have an integrated property management software, like we use, you can then use this to create three separate listings: the main house; the ADU, and the two combined. This significantly increases occupancy because it allows you to market to different group sizes.
Our Swanky Savannah Style home with multiple units.
If you want to learn more about short-term rentals, feel free to reach out to us at info@patriotfamilyhomes.com. Whether you are a seasoned investor looking to convert your existing portfolio to short-term rentals, or a beginner looking to dip your toes into the short-term space, we would love to help. If you are in the multi-family or manufactured housing space, short-term rentals could still be a great option for your properties. In fact, we find multi-family and manufactured housing often perform as well, or better, than single-family homes.
DISCLAIMER: We are not a licensed real estate agents, so we can’t advise you on individual real estate investments. We advise you to always consult with an experienced agent in your local area. If you would like, we can connect you with an agent in one of the 20 markets where we operate. If you already have an agent, we are always happy to work with them in finding and underwriting short-term rentals in your area. After you buy a property, we can help you maximize revenue through effective marketing, pricing, and management.