?How to hack a STR market? Feedback please.

[Brad Morrison]

Here's the scenario...

Looking at a property to purchase ($695k) as owner occupied in a very strong STR market. The property has a main house that we will owner-occupy for the first 2 years, and it has a guest house. The guest house currently rents STR of 25k a year (2K a month). Monthly mortgage on the whole property would be $4100 per month; roughly 50% is covered by the STR. AirDNA projects rental income for the whole property would be roughly 100k per year once we move out.

Given the current interest rates and real estate prices in this market, this property only works as a STR (it would lose money as a LTR). Again, this is a thriving STR market.The calculators don't accommodate this kind of a hybrid strategy.

Other than the scenario of buying an expensive vacation home, living in it and carrying all the costs for the first year, then turning around and renting it as as STR, the owner-occupied/STR strategy outlined above seems to be a good hack?

We are already looking to relocate to this area permanently and this is one of the only strategies that will make housing affordable for our permanent residence and jump start our investment portfolio.

Thank you for your feedback! :-)

[John Underwood]

Sounds like you have done your homework.  I'd say make sure you have some reserves just in case. 

If you can qualify for the mortgage and then offset the mortgage with the ADU, it sounds like a winner.