All Forum Posts by: Bruce Tieu

Quote from @Bruce Tieu:

Quote from @Bonnie Low:

It's easy to get ahold of the planning department for the particular city or County you are in. Your bio says "Denver" but that could mean a lot of things and there are significantly different rules on renting out your property whether you're in Arvada, Westminster, Aurora, Denver proper, etc, etc. In many cases it is fully legal so long as it is your primary home and you occupy one of the units but definitely make sure you're in compliance before you move forward. Those jurisdictions are notoriously aggressive in researching and pursuing offenders so you want to be extremely cautious. As for furnishings, I like to see at least a slight difference in the decor otherwise when you put up both listings it can be confusing to travelers because they think they're looking at two separate listings for the same unit. You can do this simply by changing your bedding colors and the colors of accent items like throw pillows and towels. 

Additional things to consider: where is the breaker box and do both units have access to it if needed? Where are the HVAC controls and do both units have the ability to access it? Nothing spells trouble more than one unit having the heating/AC controls for BOTH units.

This property is in Denver County. I had the same thought with identical listings — it could confuse travelers unless I list them one at a time or on different sites.

The breaker box is on the outside of the house so it’s accessible. The water heater and furnace is downstairs, and the thermostat control is upstairs. They’re all accessible but would take a bit of effort to get to if there are tenants occupying both units.

It seems like this may have not been the most ideal purchase then, with the biggest problem being that it’s a single family being rented as two units. Worst case is I can still rent them as furnished room rentals, or rent the whole house as a furnished rental

Check your regulations before you give up. It really helps to speak to someone at the agency because they often will give you recommendations on how to do what you want to do legally. The biggest issue I see is control of the thermostat. Being that it's upstairs, that unit will naturally be able to control it and the bottom won't. You could solve this by using a Nest type thermostat that YOU control remotely. Let tenants know you'll keep it between a certain range of X - X in the summer or winter months. You could potentially install a mini split for the downstairs unit so they can control it themselves but that's a more costly remodel.

It's easy to get ahold of the planning department for the particular city or County you are in. Your bio says "Denver" but that could mean a lot of things and there are significantly different rules on renting out your property whether you're in Arvada, Westminster, Aurora, Denver proper, etc, etc. In many cases it is fully legal so long as it is your primary home and you occupy one of the units but definitely make sure you're in compliance before you move forward. Those jurisdictions are notoriously aggressive in researching and pursuing offenders so you want to be extremely cautious. As for furnishings, I like to see at least a slight difference in the decor otherwise when you put up both listings it can be confusing to travelers because they think they're looking at two separate listings for the same unit. You can do this simply by changing your bedding colors and the colors of accent items like throw pillows and towels. 

Additional things to consider: where is the breaker box and do both units have access to it if needed? Where are the HVAC controls and do both units have the ability to access it? Nothing spells trouble more than one unit having the heating/AC controls for BOTH units.

Are you saying this is zoned as a single-family and is not a legal two-family home? If so, you will likely get caught when it goes up on Furnished Finder by someone, and you will also have insurance issues and potential town issues. If not, maybe I misunderstood how you were phrasing it. Are there separate entrances and exits?

For design, it really depends on your preference? If I had two units, I would design them differently, but not drastically. MTR is more of a convenience and less of an amenity play.

Hi @Bruce Tieu! 

As you consider MTRs, I recommend reading 30-Day Stay by Zeona McIntyre and Sarah Weaver, published by BiggerPockets. They provide excellent, practical advice on every aspect of MTRs including cost metrics, location strategies, market data sources, needed furnishings, and more.

For furnishings, we bought Sarah Weaver's MTR shopping list. It's detailed, thoughtful, and specific with links for each item making it fast and easy to find and purchase everything you'll need. We spent about $9,500 on furnishings including furniture, electronics, kitchenware, bedding, towels, etc. for our 2/2 condos.

For market pricing, I collect LTR data from BP rent calculator and multiply by 1.5x. Then I get STR data from AirDNA to ensure it's well above 1.5x LTR data. And lastly, I search FunishedFinder listings nearby, find comparable properties, and track the listed rent for a few months (does it increase, decrease?). Of course the listed price may not be the actual rented price, but by tracking several listings for a while you can gain a better understanding of the market.

For assessing demand, go to FurnishedFinder.com/stats and you can see demand data for a given city. I just ran it now for Denver and it shows over 1.4 million housing searches in the past 12 months, and about 3,100 whole unit rentals available. There's also data on pricing. 

When I was trying to determine demand for our area, I selected about 20 listings near the location I was focused on, and tracked them for several months. If it gets rented the owner will update the listing with a new available date; if this moves by 30 days or more you can reasonably assume it was rented. If it moves a few days after reaching the available date, it probably hasn't rented yet. Tracking several for a few months will give you some understanding about vacancy rates. Also note if the listed rent changes. Our actual vacancy of less than 10% has closely tracked the data I collected this way. 

Lastly, Furnished Finder is known for providing tenant leads for travel nurses (about 40% of their travelers are nurses), but a broad range of professionals, relocations, students, and others use it too.

I hope this is helpful to you, all the best!

-Wes

@Bruce Tieu

Denver's about as good a medium-term rental market as there is. You've got to know that rents are down across the board all over the country -- be it LTR, MTR or STR. Don't let that discourage you. It's just cyclical.

What makes a good midterm rental in Denver (or Colorado Springs or just about any city)? Great design, professional photographs, great location.

Don't get hung up on micromarkets or submarkets. People are coming to Denver for all kinds of reasons. Remote work, travel nursing, school. Our MTR in the Capitol Hill area has been filled with every kind of tenant, so don't get bogged down trying to target some niche.

All of these groups of people have chosen a more nomadic life because they want to experience different cities. So MTRs that are close to the "action" are great.

Also, I think the MTR market is getting more and more like Airbnb in Denver and Colorado, in that it's not an amateur's game. You've got to professionalize your place. The design and furnishings need to be solid and photographs have be plentiful and professional. 

In terms of running numbers, I find that using Rentometer's LTR estimate for your location plus 30% is a good number for right now. Our MTRs in Denver and Colorado Springs fluctuate between 1.2x and 1.4x the long-term rents. 

Good luck!

Congrats on the potential offer. Good luck with it.

A couple thoughts on your situation:

-- When I'm looking at AirDNA for our Colorado STR investors, I don't care about occupancy and daily rates for STRs as much as gross revenue. At the end of the day, it's about the money they're pulling in every year. 

-- The last client I had with an up-down house-hack near downtown Littleton did a mix of short-term rentals and midterm rentals. They don't have much of a problem getting either. 

-- Are the comps you're looking at all 3br/1ba? I see a big drop-off for Denver Airbnb properties that are 3/1 versus 3/2, so just make sure you have the right expectations.

-- I find using 1.3-1.4x the LTR numbers on Rentometer for your MTR/medium-term rental numbers is pretty accurate.

Big picture? Don't worry too much about the edges of the numbers. What matters is that you're about to buy a property that will help you offset your mortgage in a big way, shoring up your reserves that you can then use to buy another in a few years. That's huge. The big money is in the appreciation of a long-term buy and hold, so anything you can do to amass properties quicker is the thing. Congrats.