Opinions wanted on my proposed market niche (Executive Rentals)

[Christopher McGuire]

I stumbled upon what I believe is a niche in my local market and I want some thoughts and feedback.

Two years ago I had to move pretty quick for a year and I left my house and all my furnishings behind. I put an ad on craigslist to rent it furnished as a short term rental and the calls came flooding in. Here are the numbers...

$350 per month covers my mortgage, taxes and insurance.

Fair rent is (what I rent it for now) - $550 per month

I rented it furnished for $800 per month and the tenant reimbursed me for the power bill. (He set up his own internet/cable).

There are a lot of short term contract workers in my town who get a per diem and just stay in a hotel room. Usually that number is between $50 - 100 per day for a hotel. That is my competition. I'm thinking about buying another property and trying for $1,000 per month which equates to about $33 per day or after utilities, internet and cable $40 per day.

So my proposed numbers look like this. I'll be paying cash for the house at $35,000 or financing $25,000 at 6% for 15 years(around $350 per month with taxes and insurance).e

I'll have to spend about $5,000 to furnish it.

Revenue

$1,000 per month

Expenses

$350 - mortgage

$100 - replacement reserves

$200 - vacancy

What are some red flags you are seeing that maybe I haven't considered?

[John Lewis]

I know this topic is old but I have a similar niche with refinery workers in the area. They are paid a per diem (average $35/day). I charge a weekly amount of $175 per person renting with a minimum of 3 or a flat weekly rate if less than 3. This includes utilities and the house is furnished. An average 3 bedroom home may rent for $950-$1200 and I'm getting roughly $2100 and haven't had any issues finding tenants on craigslist. I know this doesn't work for every market but works fine here. Mobile home parks and small motels are also catching on.