Split Large Single-Family House and AirBnB half of it?

Question

Hello,

I am starting in real estate and the market around here is very lucrative for vacation rentals.

I was thinking buying a large house (~3000sqft), split it in a way to leave a granny flat for me (~600sqft), and rent the rest (~2400 sqft) to vacation rentals.

I have found a couple houses where the flow makes sense, and provide a separate entrance for each party. There will not be any shared space.

I would keep a door inside to make it legal, with deadbolts. And have an outdoor grill/oven with a small legal kitchenette inside (microwave, fridge, sink) for myself, guests using the actual kitchen.

Has anyone done something similar?

Apart from the usual vacation rental concerns, is there anything I should be aware of in this scenario?

Thank you

Jake Miller · Answer

I have a similar setup, a large 4br home with an accessory or mother in law quarters in the back with a private entrance for both. I actually live in the mother in law unit and use the main house for a Vacation Rental, however, if I'm traveling I also do my mother in law as a short term unit/airbnb/homeaway.

Both have turned out to be extremely profitable and I think you would be wise to try and make it happen if the numbers make sense. I do know San Diego is pretty strict against short term rentals so obviously look up what their regulations are.

You mentioned a granny flat and splitting the house, so if you're going to be having some sort of shared walls it may be best to put that in your listing as I have seen some people get negative remarks by not mentioning that the house is shared with the owner or some other tenant.

As well as lining up two to three excellent cleaning crews, the easiest way to ruin your profit is to start receiving negative reviews for cleanliness and or falsely advertising what your place really is. You can easily prevent both.

Brandt Matthews · Answer

Hey @Luke Mike, did you end up going this route in SD? My mother in law has a "shared" bnb in PB and is killing it!  Now my parents are thinking about moving out here and I'm thinking about putting them up in a similar set up that you are describing.  Looks like your location is in Norcal, and the post was from 5 years ago, but let me know if you ended up trying it out!

Jake Miller · Answer

That seems like a good alternative, I would look into the regulations with San Diego, you can usually call the city department or just a title company in the area and they will know. Some places are strict against renting out part of the house, some are strict against an entire house. Just depends, yours is a unique version.

Luke Mike · Answer

the kitchen will be for the guests only.

I will use an outdoor kitchen (grill + oven), and build a small kitchenette for myself inside (sink + counter + microwave + toaster oven). This should stay legal and allow the guests to have a full house with just a shared wall (no shared space)

Jake Miller · Answer

For my setup each unit has its own kitchen and the mother in law unit isn't attached to the main home.

You mentioned there wouldn't be any shared space, are you then not going to use the kitchen? or are they not going to be allowed to use it?

If you plan on having to share the kitchen then to me that's a bit of a deterrent, I don't know how the shared space market is within vacation rentals personally, I do know from my own research that the majority of the market isn't a shared space and most of the bookings that come through airbnb are with places that are not a shared space, this directly contradicts airbnb's message of being a platform that helps homeowners rent out spare bedrooms as I believe from the information I've found it's something like 70% of their bookings are for an entire unit. For example more people are booking an entire place rather then just a room within a house that is also being used by the owner.

Because of that you would also have a much, much lower rate to work with, I don't know the san diego market, but I know from my own travels that the cheapest option by far is to pick out a room within a shared home.

I'm really not sure what you could do, other then mention that the kitchen is shared, perhaps give them open access to it at set times of the day, or let it be a free for all. I've heard of people trying similar things, you'll likely still run across people who don't read the rules and use the kitchen whenever they please, hell I have my check in and check out time posted on the listing, within the welcome message and on my welcome pamphlete and people still ask me what time they can check in and check out.

If you're going to block out the kitchen from use then that is certainly possible, however, a home that large is a benefit to typically families, and they will more then likely want to cook which is one of the main reasons large units do so well as vacation rentals because their niche isn't easily filled in any other hospitality alternative.

An alternative would be to just rent out each room by itself within the large home, this way you're focusing more on singles and couples who may not want to cook. This creates more of a hostel sort of environment and of course you would want to list within your listing that each bedroom is rented out separately. I have seen other people do this with success, you're simply attracting a different clientele, however, one that would already be expecting to share the kitchen. Which is the main hang-up here.

Luke Mike · Answer

thank you @Jake Mille . I appreciate the feedback.

I know San Diego rules are strict, but I believe they wouldn't be any stricter in my scenario (SFH split. owner (me) lives in granny flat). Or would they?

Also, what solution did you find for the kitchen?

Split Large Single-Family House and AirBnB half of it?

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