STR hold or sell

[Craig Jones]

Have a property in a popular vacation destination, 7 BR / 5.5 BA / 4000 sqft. Was originally our primary residence, but we began experimenting with part-time STR this past January, and then full time STR starting last month. I'd say it's gone very well, $45K of bookings in July alone.

AirDNA and Rabbu estimators agree pretty closely, around $280K gross revenue for the year ($1100 ADR @ 70% occupancy).  Could be higher -- our $45K July exceeds Rabbu's estimate for the month by quite a bit.  Hard to know for sure, the data set is sort of thin for properties this size.

Market value for the property is around $3.75M based on recent comps.  $1.6M 30-year fixed mortgage at 2.5%.

It looks like it will cash flow pretty well at around $180K/year net. On the other hand, a sale would get us around $2M in cash. I know there are frameworks for comparing the relative value of these, but thinking about it is making my head hurt. Some of it obviously depends on our outlook for the housing market vs. STR demand.

What say you BiggerPockets experts?

[Michael Baum]

Hey @Craig Jones, it would be nice to see where it is located.

Do you know what the projected appreciation is for the area? I don't like to rely on appreciation to justify a poor performing STR, but in this case it could help make the use case to keep it.

How easy would it be to replace the revenue? Frankly I think it would be very difficult. Also, that 2.5% mortgage is awesome and you won't be seeing that for a while.

Do you need the 2m now or is this just a what if?

Personally I think I would keep it if it continues to perform. Without knowing where it is located, I would assume that July would be a high month.