STR Near Major Airport. Good or Bad Idea?

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STR Near Major Airport. Good or Bad Idea?

Nathan Schloff
Rental Property Investor · Grand Rapids, MI · Member since 2018 · 18 posts · 6 votes

Hello!

I have discovered an apartment building for sale that is less than 10 minutes from a major airport in a relatively quiet neighborhood. I think the building would be a good deal as-is but there is a lot of uncertainty around a looming depression and I would like to get into more value-add buy and hold stuff, for obvious reasons.

I am wondering if anyone has experience in this arena? And are these type of STR's worth it? (thinking constant demand for people who have early flights or corporate housing for pilots). I am curious how CoVid will reshape the travel industry as a whole, I don't think people will ever stop flying, but how long will it be until we are back at healthy levels.

Being conservative and using a 40% vacancy rate, each apartment netting $50 a night, each converted apartment would net $900 a month. Market rent is $550 and that's what the building is currently valued on/a little under.

Everything on Airbnb is over $100 a night so I think these numbers are pretty conservative.

Somedays I think these numbers are way too conservative and other times it's like I could never get that! left-brain indecisiveness.

What are your thoughts! Is this a deal worth pursuing given the information provided?

Thank you for your time! Just trying to quit the rat race!

Nathan Schloff

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  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    6y

    You would have to clean each unit 18 times a month. That's a lot of laundry. Basing an STR on an aeoroport is kind of a shaky business concept. Basing an STR on tourism or a large industry that uses traveling/temporary workers is a better idea.

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  • Lauren Kormylo
    Rental Property Investor · Phoenix, AZ and Rehoboth Beach DE · Member since 2019 · 1k+ posts · 1k+ votes
    6y
    Have you taken into account in your figures for buying furniture to outfit each apartment?  And kitchen appliances like toasters and coffeemakers, and plates, bowls, silverware, linens and towels, plus consumables like toilet paper, paper towels, dish soap, etc?  Also, you'll be paying all utilities, including internet and cable.  All of the above is stuff long-term tenants would supply themselves.
    I also find it's not worth it usually to stay in a short term rental for one night, because of the cleaning fee.  It's almost always less to stay in a hotel for just one night.  So I would price the local hotels out too, and compare.
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  • Mike Stohler
    Specialist · Scottsdale, AZ · Member since 2011 · 32 posts · 15 votes
    6y

    Good evening.  I own several hotels.  I think it would be hard for you to scale a project like this.  What does your building offer that a hotel doesn't?  Why would I stay at your place and not a hotel?  How are you going to market? These are the questions you have to ask.  At hotels, guests get points.  At hotels, we have a full staff that is trained for hospitality.  We are all over the internet on every travel and hotel site.  It is very difficult to compete with hotels unless you turn your place into a very trendy independent hotel that people want to stay at.  

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