Local primary upgrade or STR

[Elizabeth Seiferth]

Hi all, First time posting here! My boyfriend and I currently own a condo in north county San Diego that we purchased in October 2019. since owning this property, we have renovated (all new LVT floors, upgraded fireplace, upgraded staircase, new kitchen, new bathroom cabinets) for a total investment of about 40k. The value of the property is about 300k higher than when we purchased due to the upgrades and inflation. So, we have about 350k in equity that we’re sitting on. I am adamant about investing in another property, ideally one that needs work so we can be a value add to that deal. We’re now debating between three different paths…

Path 1:

Upgrading to a new place around here that would give us our own garage (we currently have a shared garage), a bit more space but for a high price tag that would still need work. We would leverage our equity and rent out our current place. We wouldn’t be cash flowing very much based on my research but appreciation would be king in this scenario. 

Path 2:

Same as above but instead of renting our current condo, sell it to put us in a more comfortable financial position. (This is my personal least favorite solution). 

Path 3: 

Leverage equity in our primary residence for a STR in a mountain resort town in California instead. Possible cash flow of about 50k annually and a ski spot for a few trips. 😎

Would love to know if others have been in similar scenarios and which path they’ve taken or would recommend taking. 

 liz

[Joel B.]

From what I have seen, yes, absolutely! You will need to do the research in your area to get a good idea, but in my area there is definitely a difference. With rooms in my area, you can rent long-term for $500 to $800 a month. On FurnishedFinder.com, medium-term in my area is $900 to $1,200 a month. Not sure how many bedrooms your place has, but if you had two or three nurses staying there, that would be a great source of income. If your place is small enough, you could offer it up as a whole instead of renting each room out. Renting out each room will almost always net you more in the end though.

This is one that you will have to do some research on since medium-term rental is dependent on the area you are at. I'm close to a hospital and lots of other big businesses, so it's a little easier for me to find medium-term rentals.

Does that answer your question?