Advice? Converting Primary Residence into STR

[James Mitchinson]

Hi All,

I own an updated 4 bedroom, 3 bathroom ranch-style home in the Quail Creek neighborhood of Austin. I'm evaluating a conversion of my home into a short rental property and would love to connect with anyone who has experience in this area. Specifically, I'm exploring:

1. STR permitting - I understand I'd be eligible for a Type 1 STR permit as I plan to keep my house "owner-occupied". Wondering how successful people have been with getting these permits and what the process is like.

2. Taxes - with this model I wouldn't be able to move the property to an LLC (I would lose homestead status which is what is used to make the "owner-occcupied" determination). I'm trying to understand what implications this may have (for example, can I still write-off expenses?)

3. General advice on pricing, revenue, and how to set up a home for the area. I have checked out sites like AirDNA but don't really trust the data. Has anyone found any local consulting services valuable for this type of advice?

Thanks!

James

[Ryan Kelly]

@James Mitchinson as others have stated, your first decision is to decide if you want to run a "legal" STR in the city of Austin or to go around the rules. To be legal, the property will need to stay in your name (no LLC), have a homestead exemption, and be considered your primary residence (you live in it). You then apply with the city and go through the hoops to get an STR-1 license. As @Chris Schorre stated, there are a lot of STRs in the city, most of which are not legal, so you'll have some healthy competition. Ask yourself these questions "Am I passionate about STRs and building a hospitality business? Or am I focused on STR only because I think it will cash flow better?" If your answer is the latter, I find most of those clients don't appreciate the work it will take to have a profitable and long-term successful STR and bail on the strategy a year or two later. Nothing stopping you from success, so just go into it with the right intentions and take action.