House hacking 1st home, want to get into BRRR or STR but need advice

[Joy Ladignon]

Hello! I just joined since I've looked at some of the forum posts and love the helpful community and would appreciate some personal advice. 

I bought my first home (conventional loan 5% - 420K 3 bed 2 bath beach house) in NJ by Long Beach Island area. I am currently house hacking, converted a portion of my house into a studio apartment and rent it out on a month-to-month basis. I've known about short term rental arbitrage / airbnb but recently discovered BRRR strategy. I have enough saved up to put 20% down on a 200K property but after finding out about BRRR I'm debating refinancing my first house to buy a larger multifamily home.

What is the best thing to do? Buy a small short term rental turnkey property, short term rental arbitrage, or start BRRR and refinance my first house to have more cash to start? I am also open to investing out of NJ since I've heard NJ is not the best state for BRRR. I'm interested in the Philadelphia area but heard its more renter friendly than landlord friendly. Any advice would be much appreciated :)

[Steven Foster Wilson]

Hi Joy, welcome to BiggerPockets! It's important to understand the potential risks and challenges involved in STRs. Here are some things you should consider:

1. Research your local laws and regulations - Many cities and municipalities have specific rules and regulations governing short-term rentals. Make sure you understand the local laws before you start listing your property.

Take Ohio for example, here are the STR regulations in this state: https://www.columbus.gov/str/

2. Understand your target market: Consider who your ideal guests will be. This will help you determine what type of property to buy and how to market it.

3. Choose the right location: As with all other real estate properties, location is key in the STR business. Look for areas that are popular with tourists or have a high demand for short-term rentals.

4. Invest in the right amenities: Having an STR property, this is mostly dependent on good reviews, it's important to provide a comfortable and well-appointed space. This may include amenities like great internet service, a fully stocked kitchen and comfortable sofas and beds.

5. Work on a solid pricing strategy: Set your prices based on seasonal trends, market demand, and your own expenses. A property manager will be able to help you with this. You could also use some pricing tools available online.

6. Plan for maintenance and cleaning: Consider hiring a cleaning service and a handyman or contractor to handle any repairs or upgrades.

Lastly, be prepared for the unexpected: There are risks involved in short-term rentals. It is always best to make sure that you have adequate insurance coverage and a plan in place for dealing with any unexpected issues that may arise. All the best!