Condo living Mon-Thur and then STR Fri-Sun?

Question

I just moved back to Nebraska so that I can help my dad on our farm and was hoping to find a small multifamily to invest in but have had no luck. In efforts to stop living with my parents forever and driving an hour to work in Omaha, I was thinking of getting an apartment in downtown that I could live in during the week and then rent out on AirBnB/VRBO/etc. on the weekends. Does this seem like a bad idea? I have found a condo that the condo association is investor friendly and allows to sublease both long term and short term (condo president himself used to do STRs until he had children). I know that I will have to get different insurance, hire a cleaner, and lock up my valuables or keep some items at my parents. Is there anything else that I am not considering that would make this a bad idea? I can only see this as a positive for me being that it gets me (30 year old man...) out of my parents basement, closer to work, and helps pay for itself?

Erin Spradlin · Answer

@Lance Peterson - that's great that the condo and HOA are pro STR. Is it written into the docs though? Those things can change quickly. Also, does the city have any laws yet about STR? If not, they will come soon enough. That said, I'm a huge advocate of STRs and the money they can bring in versus what a long or even medium term rental can, but it is more work and it can go away. I think if you can run the numbers and know you'll be lucrative if and when the time comes to flip to a medium or long-term rental than doing STRs for as long as you can makes a ton of sense.

Andrew B. · Answer

Would you be happy living there and paying for it if STR wont work and you live there full time?Would you be happy (cashflowing positive) if the hassle is too much and you decide to stay with your parents full time and rent it out full time?If the answer to both is yes, then your worst case scenario is positive and you should go for it.

Julie McCoy · Answer

@Lance Peterson Will you be spending weekends at your parents' to help them out anyway? If you're going to be making the trip regardless, your strategy is plausible - I doubt you'd actually profit off of it, but it could/would offset some of your costs. But definitely consider the "hassle" factor - you'll need to make sure your personal things are locked away or stored elsewhere, and make sure the apt is guest-ready with fresh sheets etc. prior to your leaving (or paying a cleaner to do it) and then also having it cleaned when the guest leaves and you move back in. Look on AirBNB at places similar to what you're looking for, see how much they're getting each night and how booked up their calendar is. How much can you reasonably expect to make from this venture? Does it outweigh all the hassle? I definitely applaud you thinking out of the box, and it could definitely work, just make sure your expectations are realistic and it's a better option than, as @Joe Papp suggested, just getting a roommate.

Luke Carl · Answer

Lance Peterson Go Big Red. As a Nebraska boy myself I wish you lots of luck! If it works you’ll end up buying a second condo. Then the whole building!

Erin Spradlin · Answer

@Lance Peterson - Hey Lance, no problem. A medium-term rental is a furnished rental of 30+ days. That's not a formal definition, but it is what I meant by that. The advantage to the medium-term rental is that you are probably not going to encounter laws/HOA rules that limit them (HOA can be tricky, so double check), they are less work than an STR, the money is still better than a traditional rental and the demand is relatively high if you are close to a college or a hospital or something with appeal that needs employees. Regarding the feel you got from talking to the HOA contact, I would check the docs and read minutes before making any decision. HOAs can be fickle and you never know when something can change and you have to transition out of an STR investment (this happened to us), so just keep an eye on it. Good luck!

April Vogt · Answer

@Lance Peterson Yes, I just made one closet a keyed entry and then left most of my valuable stuff in there. I was also lucky enough to have a small storage shed on the property, so that helped as well. I put some stuff on the highest shelf in my largest closet and kind of blocked it off. If someone really wanted to get up there and mess around they could have, but I wasn't too worried about it. While I like most of my things and they have value for me, I tend to buy mostly on craigslist or thrift so they are not too expensive to begin with.Also, if you might consider a backup offer on that condo if you do really like it and feel it is the right fit, you never know what might happen!

Jenessa NeSmith · Answer

@Lance Peterson Thanks for the colleague request! I think some of the other advice above is good advice, especially when it comes to getting it in writing that short term rentals are ok. I know of people who have had success with condos, but it just makes me nervous that a HOA could come in and pull the rug out anytime. With a SFH that has multiple bedrooms, if for whatever reason Airbnb doesn't work out you have more exit strategies. You can still find places in Omaha that will at least meet the 1% rule, or even more if you are willing to consider doing some remodeling on the property. There are a lot of great realtors out there that could help you find place, let me know if you want some recommendations!Another thing I was thinking...would you be opposed to renting a house or 2 bedroom condo with a roommate or Airbnb? Then you wouldn't have the expenditure of major repairs or the commitment if things don't work out. Again, just a thought!

Lance Peterson · Answer

Thank you all for more great information and opinions on this topic. And for the record, I did move out back when I was 18, I only moved back in with my parents while I was looking for a real estate deal that I could possibly use as I mentioned above or for a house hack. @April Vogt when you mention creating some secure areas, did you lock a closet or seal off a room or anything that the guests could not access? @Jenessa NeSmith I sent you a colleague request. I am not dead set on a condo, I was just thinking that the location would help with the STR listings being that the condo I was looking at was downtown. But, this condo I was looking at just went under contract yesterday just as I was going to make an offer. @Erin Spradlin the pro STR feelings were not in any docs, just the feelings of the condo president, but that condo I was interested in went under contract just when I made an offer so I hesitated too long on that one. What is a medium term rental if you don't mind my asking? @Nancy Bachety thank you for the encouragement!

Nancy Bachety · Answer

@Lance PetersonBased on what you’ve said, I would think the $80k condo is a fantastic idea for you, and STR on the weekends. You backed it up with visiting your folks on weekends anyway, hate the commute, living on your own, are comfortable with vetted guests in your home. The last one is usually the deal-breaker to some people who just don’t want to do that. In addition, you can cover the costs anyway, it has peak periods of really high income, and you understand it can go away at any time. Go for it before the May dates are booked up.

Jenessa NeSmith · Answer

Are you dead set on a condo? There are lots of SFH in the area that you can find for under $100,000, even close to downtown. If I were you, I would find a 2-3 bedroom house in my budget that is closer to work, and then put the single rooms up on Airbnb during the week while I am there (more income than roommates, and you can also block dates when you don't feel like having guests or if you have family coming into town), and then put the whole house up on Airbnb for the weekends. Just make sure in your listing specifically states that there are personal items in some parts of the house. You could even require a minimum stay for the weekend, so you wouldn't have to worry about cleaning or turnover when you are not there. But that is just what I would do! :)