When to Shoot a MTR in the Head & Abandon the Venture

[Brad Gibson]

I just converted a 2/1.5 townhome that has been a LTR for the last five years or so in my portfolio.

Renovated the place including kitchen, bathrooms, flooring, paint, & fixtures, cabinets, countertops, etc.  Re-did the unit with an eye toward traveling medical professionals. Upscale furnishings, great beds, high speed internet, flat screen TVs, etc. 

Great neighborhood. B+ to A. Super quiet. Very safe. Next to one medical facility and within 10 minute drive to two additional medical facilities. Unemployment rate in the market is less than 2.8% and falling. 

Before the conversion, I could get , $1,600-$1,700 for the place unfurnished and with no utilities paid by landlord. 

Placed the unit in service a couple of weeks ago. Furnished finder. Zillow, Trulia, Hotpads. Had it placed on the MLS as well.

It is competitively priced $2475. That’s $25 less than other units of comparable size and makeup. Same neighborhood. My unit is objectively higher quality in furnishings, style, & finishes. I figured we would start lower and build a quality rep & a book of former customers for repeat business. 

No bites in two consecutive weeks. No inquiries. No showings. No matches in furnished finder. 

Reduced the listing price to $2,350 today.  We will see what happens over the next couple of weeks. 

This is in no way close to the double or triple revenue above the rate for this unit as an LTR that has been cited as pretty standard return on forums and podcasts about MTR’s. 

Any lower and I’d run the risk of being upside down when someone runs the HVAC at 50 degrees during the Texas summer versus what I’d make off of an LTR. 

Need some advice or suggestions. Either this MTR thing is horse **** or I must be doing something wrong.