Moving Back Home - Primary Residence Short Term Rental?

Question

My wife and I are wanting to move back to our hometown in Cincinnati, OH.

We currently own our home in Jacksonville, FL and want to keep it as a long term investment.

We are planning on either AirBnB or listing as a medium term rental. We'd like to travel back to Florida during the winter time and stay in the house.

Has anybody done a medium term rental or AirBnb with their primary residence?

What steps or advice would you give to someone in my situation?

Thanks for all your help.

Minna Reid · Answer

Hmmm. Not sure  how successful an STR in that location would be.

Cash flow = Income minus expenses. Expenses are more than just the mortgage. Include taxes, insurance, repairs, maintenance, management, vacancy, legal, etc.

Breaking even is never a good business strategy. In fact, if you have not considered the above expenses, you are actually already in the negative. Breaking even, or worse, negative cash flow is NEVER a good long term business plan, and appreciation is never guaranteed.

Ron Brady · Answer

We did. Decided in
Aug 2020 to rent our primary out as a MTR in Dec 2020 and move overseas. 3
pieces of advice:

• Since our timeline was short,
     we decided to purchase a coaching course on MTRs from @Al Williamson rather than learn-as-we go. Smartest move we made--the return was
     well-worth the cost of the course.
• 
• We left more in the house in
     locked storage rooms than we should have. We thought we needed all that
     stuff and now a) cannot remember what we have there and b) we don't miss
     any of it. But now we have to get there and get rid of it all at some
     point.
• 
• Our MTRs, now 3 of our 7
     properties (with one more coming on line in 2023) are part of a larger
     diversified portfolio (the other part being long term rent-by-rooms). The
     two different types of rentals have different rental timelines, vacancy
     rates, rent amounts, property appreciation expectations, serve different
     types of residents, etc. and thus we feel comfortable about the entire
     portfolio regardless of overall economic conditions. Absent the
     diversification, we recommend having high reserves to weather any
     challenging times.

Best wishes.

Al Williamson · Answer

Thanks for the kind words. Just LOVE helping people make money.

Basit Siddiqi · Answer

Just be mindful that you need to pro-rate certain expenses if you live in a property that is also used as a rental during the year.Talk to your tax advisor.

John Mocker · Answer

Kyle,

Check with your Insurance Agent to see how the expected use will be treated on your existing policy.  Will this still be considered as owner occupied (important for Homeowners policies), does the company allow the rental (some companies limit the duration of the stay to weekly/monthly or limit the number of days rented per year) situation you are planning.

Because of the extreme turmoil in the FL insurance market, I would definitely check the impact of the change on the annual cost of the insurance if you have to change policies.

Kyle McGrath · Answer

Thanks @Minna Reid. We are in the Murray Hill area.When penciling numbers - what are you looking for for cash flow?Since this will be used as a second home for us, we are okay with it breaking even and realizing the appreciation over time.What are your thoughts?

Minna Reid · Answer

Where in the city is it? Theoretically any rental could work - if the numbers work. Have you penciled the numbers out including an accurate representation of all the income/expenses? That would be the first step in figuring out whether this is something you should pursue.

Joseph Cornwell · Answer

I would consider a few factors in your decision making. What are the income differences between the two models? What are the time implications of either model. Do you have a strong core team to help you manage it remotely, contractors, property manager, cleaning crews, etc. What does the market demand need more of? Do you have furnishings suited for either model, or is that extra capital investments that would have to be made? As for Cincinnati, I am based here if you need any help finding a new home when you move back, feel free to connect or to chat more real estate. Best of luck on your decision!

Moving Back Home - Primary Residence Short Term Rental?

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