STR not working out, thoughts?

[Steve H.]

I have a 3 bed, 2 bath STR on Airbnb that's been a loss and I have to come up with some ideas to change it or sell it. I have some ideas but wanted to see what you all thought also. Here's the background on it and what I'm considering, please let me know what you think.

I’m a W-2 person using a local property manager, I love my job so I need someone else to do the work. In Fall 2022 I bought a 3/2 (half of a duplex) in a neighborhood that’s in the early stages of up and coming, my thought was to get a rental to break even or lightly cash flow and appreciate over time as the neighborhood improved. The city has a big improvement plan (working to bring more jobs & biotech around the health district it’s in) that’s being enacted, the neighborhood also has one that’s not yet being done. It’s in an area where OKC demolished some historical black neighborhoods to make room for the health center and interstate, and it’s finally starting to get momentum to rebuild.

The house was built in the last 10 years and looks modern, it's in good shape with a small backyard.  The street it’s on is clean and nice, but there are some run-down, overgrown homes & lots nearby, there’s also a new $1 million home that’s the only one of its kind (and been on the market for 18 months). There are quite a few empty lots. There’s a large apartment (a few hundred units) being expanded 3 blocks away.

It’s 4 blocks away from a major university health center (and embassy suites for hospital visitors) and 2 miles from another hospital (possible travel nurse MTR potential). It’s a 5 minute drive from a major entertainment district and near the crossroads of 2 interstates. There’s also new water park being built 5 minutes away. So I think it has some good long term potential, but right now the neighborhood doesn’t have much for walkability.

The property manager laid out a good case for doing this as a STR on Airbnb, so that's what we've done. I really enjoy the property manager, they're getting 4.9 reviews for it and their team is great to work with.

But I’ve only had a handful of profitable months, most of the time I’ve been paying either the mortgage myself or unexpected cleaning & maintenance bills, and my savings has run to zero, so it’s a big loss so far. The appreciation for the property is definitely going to be long term and not short term, so selling now isn’t ideal.

The property manager agreed to market it as a medium term rental, so we’ll try that. I believe there’s also room to rent it LT to grad/medical students. My friend is med student and she thinks it would rent out there. LT rent should slightly more than break even. Just breaking even would be great right now.

Thoughts from the wisened & experienced crowd here?

Thanks,

[Henry Lazerow]

Reality is in 2024 you will make no money using property managers unless you bought early on for cheap. Need to self manage and its really not that hard, I even have out of state clients do it in our class B or better areas. Airbnb works good for certain areas and runs poorly for others. I manage two and one barely nets over LTR the other gets +50%. Seen some deals where it actually nets way less then LTR as too much supply.