Convert a 3/3 to a 2/2 & studio?

[Emily Wilson]

[Question for investors in California due to specific market demands in hcol and limited housing supply]

We have a 3 bedroom 3 bathroom house. 2 beds have ensuite bathrooms in downtown San Jose, California. The house is kind of an L shape and the 3rd bed/bath was an addition that could be blocked off and turned into a studio.  I think for someone to live in it comfortably, we would want to add a kitchenette and self-contained heat/air. It will also be easy to partition off part of the yard so each part of the house would have its own space.  

We will be leaving the country for one year for sure, so I was thinking to do the furnished housing for mid-term rentals (traveling nurses, business people etc.) That way we can leave our bigger furniture items while we figure out if we are going to make a longer term move.  

If we decide to move long term and keep this plan going indefinitely, I think the added cost of putting in a kitchenette is a good one because based on my rough estimate from looking at sites like furnished finder, we could probably make $600-800 more by splitting the units.  However, that will come at the added cost of putting in the kitchenette and self-contained heat/cooling.

Questions

1) Does anyone have experience with medium term rentals who has insight into the demand of a 2/2 & studio vs a 3/3? I was thinking a 3/3 would actually be in less demand, but that's why I'm asking to hear if anyone has other insight

2) How essential do you think it would be to put in separate heat/cooling? We have a smart thermostat so everyone could have access to it on their phone.  However, they may not have similar preferences on temperature and the studio gets considerably hotter than the rest of the house.  The estimates on split duct that I was given are about $6000-7000, so it seems like it would take quite a while to get a return on that investment, but I do care about my tenants having a positive experience. 

If anyone with experience in the Bay Area has insight, I would appreciate your thoughts.

[Osazee Edebiri]

Quote from @Emily Wilson:

[Question for investors in California due to specific market demands in hcol and limited housing supply]

We have a 3 bedroom 3 bathroom house. 2 beds have ensuite bathrooms in downtown San Jose, California. The house is kind of an L shape and the 3rd bed/bath was an addition that could be blocked off and turned into a studio.  I think for someone to live in it comfortably, we would want to add a kitchenette and self-contained heat/air. It will also be easy to partition off part of the yard so each part of the house would have its own space.  

We will be leaving the country for one year for sure, so I was thinking to do the furnished housing for mid-term rentals (traveling nurses, business people etc.) That way we can leave our bigger furniture items while we figure out if we are going to make a longer term move.  

If we decide to move long term and keep this plan going indefinitely, I think the added cost of putting in a kitchenette is a good one because based on my rough estimate from looking at sites like furnished finder, we could probably make $600-800 more by splitting the units.  However, that will come at the added cost of putting in the kitchenette and self-contained heat/cooling.

Questions

1) Does anyone have experience with medium term rentals who has insight into the demand of a 2/2 & studio vs a 3/3? I was thinking a 3/3 would actually be in less demand, but that's why I'm asking to hear if anyone has other insight

2) How essential do you think it would be to put in separate heat/cooling? We have a smart thermostat so everyone could have access to it on their phone.  However, they may not have similar preferences on temperature and the studio gets considerably hotter than the rest of the house.  The estimates on split duct that I was given are about $6000-7000, so it seems like it would take quite a while to get a return on that investment, but I do care about my tenants having a positive experience. 

If anyone with experience in the Bay Area has insight, I would appreciate your thoughts.

I would go the 2/2 and studio route.If you pay taxes on the STR income any work you do will be a will be a write off.

you will want them to be able to control their temperatures separately so for studio I would just do a nice wall unit, which shouldn’t be tool expensive. Close off any vents that go to the main house.

San Jose allows for Airbnb, you just need Business license with city which is easy and not expensive.