Pricing STRs for people with a set budget?

[Paul Sandhu]

I've got about a dozen 2-bedroom STRs.  My only competition is motels.  A motel room with 2 beds is $400 a week (no pool, gym or free breakfast).  My tenants all have a per diem, and $200-$250 a week is their budget for accommodations.  So I charge $400 a week for a 2 bedroom place.  The situation I encounter is nobody wants to share a 2-bedroom place with a co-worker.  So I charge $250 a week for a single person to stay in a 2 bedroom place.  Eventually all the 2 bedroom places are rented out, and I end up putting a single person in a 3 bedroom place for $250 a week.  I'd normally get 3 people in a 3 bedroom place and get $600 a week.

So most of my properties are rented, but they are not filled.  1 person in a 3 bedroom house paying $250 when I would expect 3 people paying $200 each.  When I do get 2 people that would share a house, I end up putting them in a 4 bedroom place for $400 a week.  I'd normally get 4 people in there for $200 a person.

What if I eliminated the 1 person rate and had a standard non-flexible price for houses?  The 2 bedroom is $400, regardless if there is 1 or 2 or more people in there.  The 3 bedroom is $600 regardless of the number of people.

It's a catch-22 for me.  The places might be unoccupied if I had non-flexible pricing.  Or the people will butch up and share places with their co-workers and I would get the full rent on the places.  I'm expecting more potential tenants in 2021 than there have been in the last 6 months of 2020.

It's as easy to rent out a place to a single person as it is to pour water out of a boot with the instructions written on the bottom of the heel.  Renting out a place to multiple people is like juggling bowling pins while walking a tightrope over a pit of crocodiles while blindfolded in the wind.

What would you do?