Seeking Advice - Multifamily Investment with Potential Short-Term Rental Strategy

[Sino U.]

Happy New Year, everyone!

I wanted to get your input on a potential investment opportunity I've come across in San Antonio, TX. It's a multifamily property in a good neighborhood with three units and a total of four bedrooms and three bathrooms. The breakdown is as follows:

• 2 bed / 1 bath
• 1 bed / 1 bath
• 1 bed (studio) / 1 bath

The property was previously rented out for a combined total of $3,400 per month. However, the studio unit was only rented for $800, which is affecting the overall cash flow. When I run the numbers based on these rents, the property operates at a negative cash flow.

If I increase the studio's rent to $1,400 per month, the property becomes cash-flow positive. My idea to achieve this is to convert the studio into a short-term rental.

I’m trying to determine if I’m forcing this deal to work by relying on the short-term rental strategy or if it’s a reasonable approach given the numbers. Would love to hear your thoughts on whether pursuing this adjustment makes sense or if I should reconsider.

For reference, I’ve included the following assumptions in my calculations:

• 5% for maintenance
• 3.5% for vacancy
• 10% for capital expenditures and management fees
  
  Thanks!