STR: 1 bed or 2 bed better?

Question

I'm looking at the possibility of buying a short term rental --- and see two that I like (different locations though). My question is, is it advantageous to get a 1 bedroom, or a 2 bedroom house?

1) The 1-bedroom is a cabin like place in the mountains, 600 SQ FT. (it was a  2-bedroom) but was remodeled into a 1-bed for the purpose of STR.) Looking at comps it can rent for 150-180/night.

2) The other is a 2-bedroom bungalow near a growing town in North Carolina. Breweries around, hiking, about an hour from charlotte. It can rent for 100-120/night.

Thoughts on wether a 1-bedroom, or 2-bedroom STR does better?? And re-sale value afterwards?

Account Closed · Answer

I too, am looking at starting an STR. It appears that 2 bedrooms are much more in demand. Also it turns out every community has it's licensing requirements, some places you file taxes like 18 - 24 times a year. STR has to be certified by the fire department. Property management can run 20% if you have a PM. You need to furnish the property. One post I saw said they pay about $1000 a month for electricity. You have to advertise or use VRBO or AirBnB and pay their fees. Set aside money for replacing towels and other things that wear out. Be prepared for lawn care, snow blowers and regular upkeep. If you self manage, find a cleaning company and handyman. For vacation rentals, presentation is very important. The first look a potential renter gets is from your photographs. It takes time to build a cliental and reputation, so plan low vacancy rates initially.

John Teachout · Answer

If the yield is similar, it would cost less to operate a 1 bed. Less showers, bedding, wear and tear and lower cleaning costs. So as the above posters mentioned, since it's a business, it comes down to a revenue and profitability issue. Let that be the primary factor in your decision making.

Michael Craven · Answer

In my opinion, it depends on a few factors. Are they priced around the same amount? Are these two in similar markets? For example, a 1 bed in the Gatlinburg, TN can likely perform better than a 3 bed in a small town with low occupancy rates. It sounds like based on your data that the 1 bed has higher rates, what about occupancy? If they are about the same then it sounds like, at least for cash flow, your 1 bed will perform better.

As far as resale, that also depends on the market. If selling to owner occupants or landlords for long term rentals, many would probably prefer a 2-bed to a 1 bed. That said, if you are selling to a short-term rental owner, then they'd probably care about which one performs better.