Analyzing medium term rental deal

[Doug Davis]

I was trying to analyze a home for medium term rental.  Doesn't look like it will work well, however I'm more interested in if I am missing something. 

https://www.biggerpockets.com/analysis/rentals/249c5d76-1eba...

This is my first time analyzing a medium term rental. As I started entering expenses, it occurred to me that there were more expenses than I thought. Is there anything that you can think of that I may be overlooking in my analysis? I entered a higher CapEx than usual. I thought about renting as three separate rooms, although I've heard that this may lead to more issues, so may not do that.

10% Property manager (although, could self manage from out of state)

Electric, internet, water, garbage (with water bill)

vacant maybe 3 days a month due to how people schedule

a few fixes necessary

furniture/dishes etc.

lawn

insurance

taxes

cleaning costs

loan/loan closing costs

no HOA for this one

[Bonnie Low]

It's very hard to know if you're estimating your rents correctly without knowing more about your property. This is where MTRs vary the most from LTRs or STRs in my opinion. For LTRs, you're going to get the going market rate. For STRs, you're going to price according to your market but also most likely using a dynamic pricing tool to take into account location-specific demand fluctuations. With MTRs, there are many sub-groups within the broader MTR niche. For example, travel nurses and digital nomads are typically looking for very different property types than a family relocating to an area. Likewise, a family relocating to an area probably has similar needs to an insurance placement situation, but the insurance placement will almost always have a much larger budget to work with. You have to know who your property is likely to appeal to and price it accordingly. The property location, configuration, decor and amenities factor into who is going to want to rent it and how much they're willing to pay. 

I would not assume renting by the room is going to yield higher gross rents overall or decrease your vacancies. In fact, just the opposite is possible. RBR is a lot to manage with guests having different lengths of stays and managing move in/move out for some of your guests at any given time. In other words, you lose the efficiency of being able to turn over the entire property at once. You also need to make sure your guests are compatible. You don't want to place a couple of digital nomads who will be in conference calls all day in the same property as your travel nurse who worked the night shift and is trying to sleep during the day. Unless you're doing something like Crashpads where guests know what they're getting into an are specifically looking for that model it could be a lot of hassle. 

I also would not budget more for CapEx per @James Carlson's explanation. As for cleaning, we charge a cleaning fee to cover the cost of cleaning at check out, just like you would in an STR. We haven't yet required or charged for any mid-stay cleanings, but as people are starting to request longer stays, I'm contemplating starting to charge for one thorough clean a the 3-month mark if someone wants to renew. That way we get eyes on everything and things don't build up making that final clean far more expensive than we anticipated or budgeted for.