Sell or Short term rental?

[Joaquin Johnson]

Hi all 

I would like your opinion on what our personal next step should be with our first investment property. 

Our first investment property has about 200k of equity and is currently cash flowing about $450/ mo after we pay our property manager.   It’s a 3 bed 2 bath home with all the major systems upgraded located in Beaverton Oregon. 

Our question is with our long term tenants leaving mid July, do we sell and try to find a better Cashflow Property or upgrade to a multi unit. Or do we turn this property into a STR since we currently run a one that Cashflows a lot more than this home. Our STR is only a 500sqft studio that nets 3k/Mo so you see why we are thinking of turning this home into a STR. it's in a great neighborhood with no HOA and 12 mins from Nike

By the numbers : 

Mortgage is $1980/mo  

With a long term renter we got $2600/Mo for rent

With a STR our total expenses out of pocket would be $2400/Mo with nightly rates around $200-$280/night

Cost to furnish would be $12k-$15K 


What would you do?  please consider a refinance is out of the question with our interest rate being 2.5% on this property.  
and a Heloc we got quoted would bring our total payment up to $3,000/Mo 

Thanks in advance!

[Joshua Messinger]

Hey @Joaquin Johnson! 

First of all congrats on absolutely crushing it with your studio that nets 3K/mo! Wild stuff!! 

I would recommend doing a STR since it seems like the market is in favor of it where you are at, but this is mostly because that's where my main focal point is.

But, before switching over to an STR I would keep in mind that a studio is entirely different from a 3BD 2BA home. In this case, I would run some analytics on 3BD 2BA homes in your area to check and see what their performance looks like so you aren't going into this blind. Also, I would try and figure out if studios may just be hot in your market and overall perform way better than a 3BD 2BA home.

If you need any help running the numbers or have any more questions don't hesitate to reach out! 

All the best, 

Josh