Converting home from LTR to STR. Looking for Advice VA 22025

[William Garcia]

Hello BP friends!  I apologize in advance for the lengthy post, I have many questions and I am very appreciative of all feedback, critiques, and/or advice.    

Quick background, I'm relatively new to the BP community but have always been interested in RE. I wasn't until these past few months that I know feel somewhat knowledgeable about the subject. I was in the military and was stationed near my hometown back in 2011 when my wife and I decided to buy our first home. Prior to really knowing anything about real estate, we decided to purchase a short sell/foreclosure and purchased our townhome for ~185k in Dumfries, VA (subdivision Montclair) using a VA Loan. After living there for about a year, I received orders and it has been a LTR ever since. Our current tenant's lease expires at the end of this month. The home currently rents for 1800 a month and after factoring everything we are a bit positive. It has 2 master bedrooms (each with own bath) and a finished basement with a full bath. The living room, kitchen and a half bath are on main level. I originally thought we could offer some sort of full house rental for x amount (say ~$140) or individual room rentals (3 potential spaces with basement) for x amount (say ~60). More to come on that below.

I've listened to all the podcasts to date and the ones involving STR really appeal to me. We don't mind the added logisitics and work associated with turning our home into a STR. We've started to gather numbers so we can accurately project all the expenses and determine best pricing. I will outline what I've thought of and obstacles below. Again any advice or feedback is greatly appreciated.

1)  Insurance changes.  Currently, LTR policy is ~1100/yr and it will go up to just under 2K with a 1M liability per event/2M per year, 24k contents/personal property, 24k loss of income, and 258k rebuild cost.

-Like I mentioned above, I originally planned to offer individual rooms for rent.  My plan was to buy wifi enabled door locks so that I could program the main entrance and that guests room to have the same code, for all of the guests.  This would also prevent people from going in other guest's rooms.  Seperate code that works on all doors for cleaning service etc.  However, when I mentioned this to the insurance company they said they do not cover STRs that are set up this way - too much liability with having total strangers sharing common areas.  Does anyone else do something similar, and how is your insurance structured?    

-Any suggestions for STR insurance companies? I have USAA currently but they do not offer STR home insurance.

-Do you recommend an additional umbrella policy?  Current equity is a bit over 100k. 

2) Cleaning service:  As I mentioned, I had to move away from the area.  I have family that live in the area but they will only be available to visit property if there is a maintenance issue/emergency.  I've called a couple different cleaning companies to receive ballpark quotes for cleaning.  I'm still in the process of getting numbers.  I've talked to 4 different companies and only 1 seems viable.  2 of them only do cleanings M-F.  1 of them charges 35 per hour with a 35 admin fee (seems like they might waive fee if we book multiple cleanings.  The other, and most promising, seemed like they were very flexible with what we need.  They would need to see the house and go through what we would want them to do, to give an accurate quote on what it would cost.  I reviewed the "logistical plan" with the owner of the company and they seem to be able to accommodate daily cleanings if needed, specific times, pictures sent, etc.  

-How do you currently manage cleanings?

-Ballpark what should I expect to pay?  

-I know that airBnB has a cleaning charge, but I think I prefer to factor that into my price and making cleaning fee 0.  Kind of like companies that say free shipping when in all reality they just add the shipping cost to the price of the good.  

3) I remember from the ultimate guide podcast, they mentioned pricing software.  I've done some reading and know it's often recommended to price lower to build positive reviews.  The way we are thinking about pricing is to add all the expenses and divide by x(say 15).  If we get at least  x (say 15) rentals that month then we will break even.  Anything more = profit, anything less than we adjust. 

-Any formulas or software recommendations?            

4) The house is located near Quantico Marine Corps Base and other bases in Northern VA. We were also planning to get with the base housing for each of those bases to offer the STR for people awaiting their base housing. Are there any websites that companies with transient workers look in to house employees etc? Or other sources you use to book your STR? For example bringfido, airbnb, etc.

Thanks in advance,

Will