STR 1 Bed or 2 Bed Split?

Question

Hi everyone! I'm considering purchasing a fairly high-end condo in a resort town. It is a two-story condo with two bedrooms and two bathrooms. Downstairs (450 sq ft) is one-bedroom with attached full bathroom (along with a balcony that has a hot tub). Upstairs (800 sq ft) is one bedroom, one bath, living room, laundry, full kitchen, another balcony. Both upstairs and downstairs bedrooms and living room have great views.

It's occurred to me that by adding a door to the interior stairs (the units would share a very small interior entryway before entering their specific unit) that I could make this into two separate STR units when preferred: a studio downstairs (I'd add a mini-fridge and a microwave perhaps) and a proper one-bedroom with full kitchen upstairs. (Or leave the separating door open when booked for a two-bedroom.) There would be no alterations to the exterior entrance of the condo. I feel like I'm doing something illegal, but I can't find a rule against it.Has anyone DONE this?

Seems to me this option of splitting the condo and essentially renting two one-bedroom apartments could make more money, and  be more flexible, than only renting it as a two-bedroom, however, I don't want to go through the expense of adding the interior door, mini-fridge, microwave, etc if you think it may not pay off. Thoughts?

(On a personal note, my husband and I are buying partly because we want to stay in the condo ourselves from time to time when it's not booked. STRs in this area rarely generate much cash flow, though the area is appreciating fast. I realize this is mostly an appreciation play and yes, we have adequate reserves if another Covid-level event strikes. Yes, STR are allowed in this building and there doesn't seem to be anything in the HOA rules to prevent my idea.)

Thanks in advance.

Valerie Rogers · Answer

We've done this to the house that we own in Lynchburg, VA It is a split level floor plan with an exterior door on the front of the house as well as one on the side of the house (leading into the downstairs level).

The house can be rented as an entire 4 BR/2 BA property, or individually as a 2 BR/1 BA apartment(s), each with its own exterior entrance.

There is a door at the bottom of the entry stairs leading downstairs that can be locked to separate the two levels. We bought a lock like this one (or this one) for that door. It cannot be opened from either side unless the guest has the code. (We only give the code to guests who rent the entire house.)

Surprisingly we found that the whole house rented more often than either apartment. We also found that the downstairs apartment rented more often than the upstairs apartment. The downstairs apartment is cheaper since the full kitchen is upstairs. We installed a microwave, coffee maker and small refrigerator in the downstairs apartment, similar to what you'd find in a hotel room. (Most of our guests come over the weekend and don't plan on cooking much.)

Best of luck!

Nancy Bachety · Answer

I’ll add that we’re staying in Amelia Island, FL next weekend in a beach front condo, next to the Ritz Carlton. Down the road, next to the Omni are two bedroom condos with a lockout. Both are as you described: beach view, private balconies, one is a full one bedroom and the other is a suite. It’s designed this way and functions like you want and as @Patrick McCabe described. One purchase, three options.

Patrick McCabe · Answer

Not sure if you were planning on doing this based on your post but If you do determine that this is something that is allowed by the HOA and worth the effort the best way to maximize the amount of bookings would be to make it 3 listings. 2-one bedroom listings and 1-2 bedroom listing. You would then need to link the calendars so that if a 1 bedroom listing gets booked, the 2 bedroom listing would automatically get blocked for those dates.

Michael Baum · Answer

Hey @Mercedes Smith, I think that you wouldn't gain much by doing this. Definitely check your HOA on STR and if they are even allowed. Plus many condo's like this have built in management that take a ton of your gross dollars.

Nancy Bachety · Answer

Your idea might not be original. Can you search on Airbnb or VRBO and see if another owner in the same complex is already doing this? Or ask around if you can. Get a copy of HOA documents and ask a lawyer to read, if necessary. If it’s fully owned by you, and you are responsible for interior walls, I don’t see why you cannot make those changes. I’d worry more about your HOA.

Paul Sandhu · Answer

I've got 23 STRs. Half are 2 BR.  The other half are 3 or 4 BR that sleep 5-6.  The 2 BRs are always rented out, but they don't bring in as much money as the bigger houses when they are rented.  The bigger houses are rented on fewer occasions.

But at the end of the year, they all bring in the same gross rent.  My market is kind of wierd.  You can buy a 2, 3 or 4 BR house for about the same price.

STR 1 Bed or 2 Bed Split?

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