Salt Lake City Air BnB vs Long Term Rental
Riverton, UT · Member since 2019 · 2 posts · 2 votes
My husband and I are in the process of renovating our basement to be a separate 4 bedroom 2 bath unit. We are debating whether we should turn it into an Air BnB or have a long term rental. Does anyone have any experience on the decision between having an Air BnB or a long term rental that can weigh in on the pros and cons? Thanks!
@Sarah Caldwell I live in Lehi, Utah and we have been renting out our basement apartment for a little over a year now. We have quite a few long term rentals and I had always been interested in trying out the vacation rental market, but my husband never really liked the additional costs of furnishing the place with the variable income aspect and was always hesitant to give it a try. We decided our basement gave us a good opportunity to give the vacation rental thing a go without much risk involved. We hired a management company that did a good job and surprisingly, our basement was rented out with very little vacancy and we definitely made more than a traditional long term rental. We did finish the basement with a lot of upgrades and it is a 2 bedroom 1 bathroom. We also went through the city and paid the impact fees and had it registered as a legal accessory apartment, which was not difficult to do. To give you numbers, after all management fees and cleaning fees were accounted for, we consistently made about $1500-1700/month. Then, we got a tenant that wanted to stay longer and didn't want to go through the platform and just wanted to pay us directly, which worked great because we actually made more money that way and avoided the management and cleaning fees. After that tenant left, we decided to offer the basement as a short furnished month to month rental because as a property manager, I see a lot of that need as well in our market that doesn't always get met. We had no problem renting it out that way for $1650/month, and it was easier to manage. I imagine that if our basement wasn't furnished and we offered it simply as a long term rental, we would maybe get somewhere in the $1200/month range. Currently, we have been doing Air BnB again but managing it ourselves and it continues to be booked almost continuously. One potential negative to consider and that bothered us the most was that we didn't get to screen any tenants when we did not manage it ourselves. We don't smoke and we have our little children around, so we didn't like it when our guests came out to smoke. Not that big of a deal, just something to be aware of that I hadn't considered. Hope that is helpful for you.
@Sarah Caldwell
My humble opinion:
Short term rental:
Pros:
Possibly higher income - depends on location location location. Are you within 30 minutes of resort areas? In DFW, Dallas, and Fort Worth I would only consider a short term rent situation for homes around the downtown areas, sports arenas, and DFW airport.
Cons:
Unreliable/low income during off-season.
More cleaning
No guaranteed income
Utilities and cleaning increase price needed per night
Long term rental
Pros:
Guaranteed income every month
Utilities are covered by tenant
Less noise, drama, etc if tenant screening is thorough - short term renters are most likely on a holiday so a high percentage will be partying
Much more passive income
Cons:
Short term MAY have higher income depending on every other factor listed above. But it may not. Short term rental is riskier.
Long term rentals are going to be safer in the long-term in my opinion.
I would agree with Jon on typical properties that you might be purchasing and need to cover your debt. However, you are in a unique scenario where you already own the house and I am assuming you are paying for the renovation in cash and have not take on any additional debt. If that is the case, I would give the STR route a go first. If it fails, fall back on the long term.
I don't know much about Sandy, Utah but it looks close enough to Salt Lake and also very close to ski resorts. Take a look on airbnb or airdna and see how much similar STR rentals go for around you. You could make twice as much money with the STR, especially during ski season. Just food for thought, I don't think you can go wrong either way.
For what it's worth, Salt Lake City technically doesn't allow short-term rentals. There are still plenty around so you could get away with it, but it could be a liability hanging over your head if you choose to go that route.
Generally, you can get more revenue from a short-term rental if you keep it filled but it also requires more active management and even some higher costs associated with turnover and utilities. With a long-term rental, it could be a lot more passive but maybe bring in less revenue.
I prefer long-term as it's generally a more steady, passive income.
GOOD LUCK!
@Sarah Caldwell I live in Lehi, Utah and we have been renting out our basement apartment for a little over a year now. We have quite a few long term rentals and I had always been interested in trying out the vacation rental market, but my husband never really liked the additional costs of furnishing the place with the variable income aspect and was always hesitant to give it a try. We decided our basement gave us a good opportunity to give the vacation rental thing a go without much risk involved. We hired a management company that did a good job and surprisingly, our basement was rented out with very little vacancy and we definitely made more than a traditional long term rental. We did finish the basement with a lot of upgrades and it is a 2 bedroom 1 bathroom. We also went through the city and paid the impact fees and had it registered as a legal accessory apartment, which was not difficult to do. To give you numbers, after all management fees and cleaning fees were accounted for, we consistently made about $1500-1700/month. Then, we got a tenant that wanted to stay longer and didn't want to go through the platform and just wanted to pay us directly, which worked great because we actually made more money that way and avoided the management and cleaning fees. After that tenant left, we decided to offer the basement as a short furnished month to month rental because as a property manager, I see a lot of that need as well in our market that doesn't always get met. We had no problem renting it out that way for $1650/month, and it was easier to manage. I imagine that if our basement wasn't furnished and we offered it simply as a long term rental, we would maybe get somewhere in the $1200/month range. Currently, we have been doing Air BnB again but managing it ourselves and it continues to be booked almost continuously. One potential negative to consider and that bothered us the most was that we didn't get to screen any tenants when we did not manage it ourselves. We don't smoke and we have our little children around, so we didn't like it when our guests came out to smoke. Not that big of a deal, just something to be aware of that I hadn't considered. Hope that is helpful for you.
@Sarah Caldwell Depends on what you want. Are you looking for active management of STR or passive?
Hi @ Am Kendall Thank you for sharing your experience. I have a few rentals and I am always kind of curious about the expects of short term rental. But I am very busy . Don't think I can handle it myself. Do you mind I ask which one is the management company to handle your short term rental and what's the split ? Now you switch to month to month , my guess it's furnished right ? Do you have a favorite website to post? I have a condo in Millcreek that is allowed 30 days term rental , I have been thinking about that too . Thank you