Converting Multi-Family into STR: Good, Bad, Ugly

[Vanessa Contreras]

I currently own and manage two STRs with my wife. I want to expand my portfolio outside of single family and condo properties, and I was wondering how others have done with multifamily STR properties. Any suggestions on financing options as well?

Thanks!

[Chase Hoover]

Do it!  No, it's not a hotel, it's a private apartment.  We managed several 2-4 unit buildings in Florida that did very well.  Their success gave us the confidence to jump into the boutique motel space, essentially the same concept on a bit larger scale.  

With rising inflation travelers are still traveling, but tightening up their budgets a bit - a well-done apartment at 50% the nightly rate of a cabin/home rental is attractive to many.  

It also gives you the flexibility to advertise single apartments or the entire building to sleep large groups.  MFHs are typically located in dense residential areas, so it's easier to switch back to LTR if short-term doesn't work out.  Run your proforma as a LTR to make sure you'll still cash flow.

I'd check out a DSCR loan (higher rates but typically easier to qualify) or talk to some commercial lenders from local credit unions who may be able to give you better rates.