Seeking Advice: STR or Long Term Rental

[Kaeli Wood]

Hey everyone, we moved to a HOC area (North San Diego county) where it seems the deals are few and far between. I've been an Airbnb host for the past 5+ years in UT and CT and the cashflow seems really appealing in this area. We have 100k in a taxable brokerage account, but I'd rather have a good amount of that in real estate for tax reasons and ROI. If you were in my shoes, would you rather have a more hands-on, higher price point STR close to home, or 1-2 property managed long term rentals somewhere cheaper? And should we wait for the market to cool down maybe in the winter, if interest rates go up, or jump in as soon as we find a good deal now?

A little background - my husband and I are both graphic designers. He has a W-2 job and I do freelance because I stay home to raise our 3 young kids. I'm considering getting my real estate license to save on commissions on investment properties. We’re on our 3rd live in flip and hoping to stay here for the next 5+ years.

Thanks in advance!

[Dan H.]

Originally posted by @Kaeli Wood:

@Dan H. Thanks for detailing that out. I'm actually interested in a duplex in Escondido, which I see is a lot of your holdings. Have you had any problems renting in that area? If we were to get something like that, my backup strategy would be LTR, which I think would still reasonably cashflow.

Our escondido units are LTR, none are STR and they are all small multiplex (duplex to quad).

We have never had issues finding tenants, but due to the Covid restrictions we spent a lot more time finding the tenants due to the necessary process. 

Normally we post to all the rental sites and answer the various questions via email.  Then we have an open house (scheduled for an hour but usually ends up taking 2 hours) and invite everyone.  The moderate turnout has the appearance of a frenzy, but typically we only receive 1 to 3 completed applications (virtually always at least 1).  I believe the appearance of the frenzy encourages the applications). 

During Covid lock down we scheduled one viewing at a time.  Even with reminders, around 50% did not show.  No appearance of frenzy resulted in less applications per viewer.  I guesstimate around 25 hours of showings (including the no shows) to place a tenant.  

Screen your tenants well.  A lot of local tenants claim to have emotional support animals (ESA).  Use pet screening.com and indicate such in your ads to reduce the bogus ESAs. We also indicate we charge clean HVAC ducting to place unit back to pre-animal state.  You simply have to make it harder for the tenants with bogus ESAs to rent your unit than it is to rent other units. 

Good luck