All Forum Posts by: Ethan Cooke

@Lianne Ottaviano - What market are you in? You will get better advice if others can respond based on your specific circumstances. I manage 8 30+ day rental arbitrage properties for business travelers in San Francisco and San Mateo Counties. Given this market, I have found that the most successful properties: are in safe neighborhoods, slightly below market rent, include a dedicated parking space (very important), a place to cook (kitchen or kitchenette) and a high number of bathrooms per bedroom (e.g. if 2 bedrooms or more, make sure there are 2 bathrooms). Also 80% of corporate travelers travel solo or with their partner, so studios stay booked. Secret ninja tip: if you can find a property with 2 units (e.g. a home upstairs with a private guest suite downstairs), grab it! These can be very profitable since many owners will charge you the rent of about 1.5 units rather than viewing them as totally separate units, but you can rent them out as 2 separate units. 

@Blaine Alger - I also read @Paul Moore's article, thanks for providing the link. I love the rental arbitrage business but I think a more balanced perspective is important: "Martin" and "Al" are my two mentors and both worked very hard to build their rental arbitrage portfolios. @Al Williamson continues to work very hard to grow his business and teach others how to do the same, and a big part of Martin's profits go to the team that he has so skillfully outsourced his business to. It is absolutely possible to do well in this business, but it takes a lot of up-front work, hustle and some capital: to find the right properties, close the leases, finance the deposits and furniture, furnish the properties, bring in the bookings, get the ratings and then do it all again with the next unit. It can often take 9-12 months to earn back in profits what you have spent initially on deposit and furniture (especially in expensive markets), so that years 2 onward become the real money-making years.

@Anand S. - Count me in! I run 8 full-time furnished rentals for business travelers in San Francisco and San Mateo counties (just south of SF). Also I am part of a US-wide facebook community of furnished rental hosts led by @Al Williamson, and some like @J. Martin are brilliant with a ton of experience. 

@Jon Crosby

@Collin S. - I use a simple Google sheets spreadsheet with my cleaner. Feel free to PM me for it. It has columns for Property address, Guest name, Check-in date, Check-out date, Cleaning window start, Cleaning window end, Cleaning scheduled by, Cleaning completed by and Notes. Each time I get a booking, I fill in the first 6 columns (takes 1-2 min) and text my cleaner to confirm she can do it during the Cleaning window before the next guest.

I manage 8 furnished rentals in the Bay Area, mostly just south of San Francisco. And my minimum booking is 30 days so this system takes me about 5 minutes a week to manage. But if you do a lot of short-term stays or have many units, then you may want a more automated solution like

@Michael Greenberg or

@Jon Crosby

@Ben Israel - I rent out 8 furnished units in and near San Francisco including four 3-bedroom places/homes. It can be profitable but you need to know the furnished rental market in your selected area. 

The most profitable places in my experience are “2-in-1’s” where you have a home with an in-law/guest house. Studios/1BR’s are also very popular with business travelers. Other Important considerations:

- What are the short term rental regulations in your area? Are there restrictions on doing rentals <30 days?

- What are the most popular types/sizes/locations of furnished units in the area?

- How will seasonality affect occupancy and pricing?

- As a rule of thumb, I will use a home as a furnished rental vs. unfurnished rental only if I am confident that I can recoup the furnishing costs in under a year. So if I spend $12K to furnish the home (including all kitchen items, bedding, towels, etc.), I need to know the furnished rental can clear an extra $1K/Mo after expenses vs. unfurnished.

- Also, in my market (for 30+ day stays) it’s important that each unit has laundry, parking space, small kitchen and approx. 1 bathroom per bedroom. If I compromise on these things, bookings suffer. 

Good luck!

@Armand Farr - I am no expert. But San Francisco is very tenant-friendly, and the SFAA rental agreement is designed to be favorable to San Francisco landlords.

@Armand Farr - 

Find someone who has the latest rental agreement from San Francisco Apartment Association (SFAA), or you can join SFAA and get access to their forms and templates. It’s a thorough agreement that will cover your interests as a landlord.

@Andrew C. - I’m sorry to hear about your experience—what a nightmare! 

I think it comes down to time vs. money and how “passive” you want your investment to be. The good news is that your place is set up, the listing is live and guests are booking. You may need to lower your prices to keep the place booked and get past the negative reviews. 

The main activities to manage a Short Term Rental are:

1. Cleaning/re-stocking

2. Handling bookings/guest communications

3. Occasional maintenance-related issued

Re: #1, I recommend using yelp.com to find highly rated cleaners in the area. With some trial and error you can get a good person who will handle all the cleanings and re-stocking/inspection between guests. Offer them an extra $10 per cleaning if they keep they place stocked, plus of course you  reimburse them for all the supplies. Feel free to PM me with your email address and I can send you the online re-stocking list and cleaning schedule that I use with my cleaner.  I even put together big clear plastic bins full of supplies so my cleaner would have a big inventory of supplies to start with.

Re: #2, check out Evolve Vacation Rentals if you want to outsource this. They charge a 10% flat fee to handle marketing/ booking/ guest communications. And they offer other services a la carte. (I have no affiliation with them but I’ve heard they’re good).  

Re: #3,  ask your cleaner and  folks you know in the area for names of good handymen and then make a few calls to start building those relationships for when you need them.

Good luck!

@Sean Wilt -  I run a furnished rental business with 8 units in San Francisco and just south, and my  bookings are 30+ days. In addition to much less effort than Short Term Rentals, 30+ day bookings have no hotel taxes (14% in San Francisco). This “semi-passive” model works well for me and might be worth considering depending on how involved you want to be in managing your place day-to-day.

The AirBnB Expert’s Playbook by Scott Shatford, who made a killing on AirBnB units in LA and then founded AirDNA. Very practical, easy read.

@Scott Stover - Historically Bay Area housing values only go up in the long run. Even if the market drops 10% over 2-3 years, you’ll be in good shape over 7-8+ years. Given the housing support program, I say go for it. I own a primary home (bought 15 years ago) and investment property in SF. If I were to do it again, I would find a home with an in-law unit to rent out—probably on AirBnB, which has been great even as an occasional thing. Within 8-10 years, your little In-law will cover most of your mortgage!