Park Circle MTR vs STR?

[Chanel Gargula]

Hi all,

New investor over here! I just purchased a property in North Charleston (Park Circle) that includes a 3bd house and 1 bd ADU. It seems like rental prices have gone up significantly across the board over the past year, but I've also noticed a number of new airbnbs, thanks to investor friendly regulations.

If you’re familiar with the area, I’m hoping for a pulse check on demand before furnishing the properties. Are MTRs consistent in the area? Are STRs becoming over saturated?

These are the numbers I’m considering. Decor would be upscale and the 9000 sqft lot will include an outdoor pavilion. Will the market support them?

STR: ADR: $350
MTR: House, ~$3600, ADU: $1800

[Troy Gandee]

@Chanel Gargula I have an STR in an ADU at my primary residence in PC. Been operating that for about 6 years. My opinion is that STRs have been saturated essentially everywhere for many years now. We're usually about 97% occupied, but we don't charge much for our space. It's small and we don't have any debt service on it that we have to cover, so we just want to keep it rented. The new restrictions in N Charleston should help those who are already operating, in my opinion. I've heard of quite a few people switching to MTRs or LTRs because they don't want to deal with the permit or may have a non-conforming unit.

I would say it mostly depends on the expenses. STRs require much more management. The management fees are typically 20-25%. Even if you self-manage, the work can be pretty extensive. MTRs obviously have much lower expenses. 

I have a lot of clients who go back and forth or both. Most of them tell me they prefer the MTRs and in some cases, perform better with the MTRs than the STRs.