My wife and I currently live in an apartment, would like to move into a home within the next year, and would also like to start investing in some STR properties. Is there a clear answer of which one we should do first? I know most people would likely recommend house hacking and then getting a STR afterwards through a cash out refinance or just built up savings, but I'd also love to know about strategies that don't involve house hacking. Our rent is relatively cheap, and given that interest rates are still rising it seems like getting an STR in the next few months could make sense if it cash flows well and can then help us get a family home.
There's probably no right answer, but any thoughts are greatly appreciated!
@David Martin Why not try to do both? Look for a property that can be used as an STR but also has a space that you can live in. I've been looking for these same types of properties for my wife and myself.
Some options includes small multifamily properties (2-4 units), homes with a mother-in-law suite, separate guesthouse, casita, or even a space that can be converted into a small apartment like a garage since STR guests probably don't need garage parking anyway.
This is the best of both worlds as you're taking advantage of the higher rental rates of an STR but also able to lower your living expense. Additionally, you'll be able to maintain the property and even do the cleanings yourself if you chose to. Realistically, these types of properties are rare so you may have to be creative in your search. Filter by keywords to try and get some matches and tweak your search criteria from there for best results.
@David Martin Why not try to do both? Look for a property that can be used as an STR but also has a space that you can live in. I've been looking for these same types of properties for my wife and myself.
Some options includes small multifamily properties (2-4 units), homes with a mother-in-law suite, separate guesthouse, casita, or even a space that can be converted into a small apartment like a garage since STR guests probably don't need garage parking anyway.
This is the best of both worlds as you're taking advantage of the higher rental rates of an STR but also able to lower your living expense. Additionally, you'll be able to maintain the property and even do the cleanings yourself if you chose to. Realistically, these types of properties are rare so you may have to be creative in your search. Filter by keywords to try and get some matches and tweak your search criteria from there for best results.
Just like @Marshall Leipprandt said, why not try and do both? There are definitely more than one way to go about this but a lot of factors come into play when you are looking to buy more than one place in a year.
My first question to you is, what does your income currently look like right now? If your Debt-to-income ratio is very solid you may be able to get away with doing conventional financing on both properties. But, if it isn't that good you may want to get your primary residence first then go the DSCR route with the STR property.
Once again, there are more ways than just these two to go at it. Be creative and get it done! If you have any questions please don't hesitate to reach out to me so I can help more!
If your rent is cheap now you could consider buying a home then rental arbitraging the apartment you have. You could do the opposite as well if you don't want to house hack/move. You can buy a house then use that as the STR while living where you are now. You mentioned that you'd like to move to a home in the next year, maybe you push that to two years and the first year the house just works to offset your monthly living expenses so you can save up for another AirBnb.
Your primary goals should be minimizing your monthly expenses and maximizing the rental income from whatever you're going to purchase.