Short Term Rental or Lease Based System?

Question

Hi, I just started (seriously) in the rental investing business. I have been successful with a cabin in TN on Airbnb starting in March21. It is a platform I am comfortable with and have seen first hand its potential revenue stream but also the time involved. I also have a leased 4/2 in TX that I am looking to sell along with my primary residence. This will put me in a position to purchase a larger property. I am struggling with whether to invest in a larger property with more capacity "doors" on a lease based system OR go for a smaller multi-family in a destination area for an Airbnb short term system. I project far greater return for the Airbnb however if my goal is long term wealth, is short term rentals smart?

Could anyone lend me tips, or their experience?

Richard Scott Dinnan · Answer

@Joseph Bafia

Thank you Joseph, as I start this BP I am looking towards the same type of thing. I will start with STTs to obtain CF and then diversify with some LTRs. Thank you for the advice!

R,

Scott Dinnan.

Joseph Bafia · Answer

@Richard Scott Dinnan

When I started REI, I was looking at balancing my portfolio with both LTRs and STRs.  As I saw the returns of STR and also started building some STR self managing systems, it became easier to scale, manage and get the better returns.  So even though I do have 2 LTRs, my focus has really been to grow the STR side for now.

I also maintain my W2 and it allows me to fuel the growth a bit easier.

Hope that helps and good luck!

Happy to answer any questions.

Richard Scott Dinnan · Answer

Thanks Cole, I appreciate your advice! I am working on setting that cash flow goal and my long term goals as well.

Cole Simpson · Answer

Hey Richard,

It is definitely a personal choice of what to focus on and in order to know what to focus on you need to know your goals.  For me my current goal is cashflow which means I am focusing on STR because they give the best returns. Once I have my cashflow number my goal will shift to long term wealth (of course we all want both). Hope that is helpful and wish you the best.