Apartment to AirBnB to Condo Conversion

[Loren Miner]

Here is a healthy modern day brainbuster. I am currently underwriting the following play -

Currently a 25-50 unit multi-family. Primetime location. No shortage of traffic. 

Renovated each unit

Convert to full-time Airbnb 

Exit plan - year #6 sell as condo conversion 

*Keeping it slightly vague for privacy purposes*

MY QUESTIONS - 

What vacancy rate do you run for short-term rentals? Has anyone run a large scale Airbnb? 

Expenses of condo conversions? 

Any other pitfalls I may be missing? 

I have done a fair amount of research on the subject, but feel the community would enjoy the challenge as it is not common practice! 

[Christopher Brainard]

There really isn't sufficient information in this post to make any meaningful contribution. Your vacation rental vacancy rate depends on the market demand, the location of your properties, the amount of supply, the amenities of your rental, the time of year, etc. These are all things you need to determine locally and need to know before going in. The expense of the condo conversion depends on what is needed to achieve the standards demanded by the market - in addition to the application fees, zoning fees, lawyer fees, permit fees, survey fees, etc.

Have you checked with the city of Houston to see if they would even entertain the conversion?

And my biggest question is why do you think this is a good strategy? The same things that make for a good vacation rental, don't necessarily make for a good condo conversion. Typically, you're going to want to pick the highest and best use for a property and stick with it, whatever that may be.

-Christopher