All Forum Posts by: John Williams

Colorado Springs has some weird regulations about this depending on which county it's located in so be sure to check in with the planning department in the specific county you're looking at. I had this come up on a house I was submitting an offer on. I was intending to rent out the upstairs 3/2 as an LTR then convert the basement to a unit for myself half the year and rent it out as an MTR (midterm rental) when I wasn't there. El Dorado County prohibited this, though it seems there are "creative" ways to work within their framework. I could have rented out the entire unit as LTR, MTR or STR. Or I could have rented out either the top unit as one of the 3 OR the bottom unit, but not both the top and bottom unit. Didn't make a lot of sense to me, but sometimes regulations don't make much sense. The person I talked to in the Planning department was very helpful and agreed that the regulations are ridiculous, but for the time being, they're still in place. Call and find out exactly what uses your property is eligible for before you do your underwriting because it will make a huge difference.

All great advice so far and would agree with the other comments. I would reinforce making sure you know the leg work it takes for a STR and the potential hurdles that may slow you down (gov./city regulations, set up costs, doing things to stand out) and leave you with less cash in case of an emergency. Do plenty of research and find out what other mistakes have been made in your are and learn from them.

Both are great options but maybe doing a simple pros/cons list for both STR and LTR. Ask yourself how much work you want to do (real estate is not a passive income endeavor) and how does it or does not fit into your life right now. The good thing about your property and area is that it seems that you could potentially transition between the two if you had to. Maybe setting up for STR and looking into MTR since you have it furnished already, there is plenty you can do with your situation.

And someone said it before but make sure it aligns with your "why", don't just do it willy nilly and think you can just make a quick buck, what is your ultimate goal and which strategy will help facilitate that? 

Good luck and keep at it!

@John Williams like Bruce mentioned area is going to play a huge part. 

First I would call the town and ask for the STR requirements. Some towns require licenses, max out the days you can do it, etc.

Then I would run comps in the area. AirDNA is the best for this. Doing a quick scan off I see there are about 5k STRs in Colorado Springs (assuming you are there and not a neighboring town I am gonna say the town has minimal restrictions). Occupancy rate is about 60% and annual revenue is about 40k (without filtering anything). If you filter to 4/2s the revenue jumps to 51k with only 200 listings. The ones that are doing really well (close to 100k in revenue) are entire homes with all the amenities. 

It definitely seems like you could make a killing there, but it's going to take much more up front cash then LTRs. Most people who make a ton on Airbnb hire out designers, put in flashy amenities, and create a true experience. That may not be your motive right now. 

A lot to think about. Make sure your decision compliments your "why". 
 

Hey @John Williams, love this strategy! I think it comes down to your goals and risk threshhold. STR can provide more cash (potentially), but its a high risk high reward strategy - if you invest in the furniture, staging, photos, and management or self manage, there is a lot of time and money invested. Ideally it pays itself back over the next few years and could be great! But if it doesn't work out as you hope, then you take some lost. LTR is stable, slow, and risk is low but potentially not as much cash (right away).

Comes down to what goals you have and your risk threshhold - I have friends in CO springs who do STR and MTR, and works out great - but also have folks who LTR in that area and it pays for them self and it a great way to save money in places like taxes and build equity.

The cool thing is you have multiple strategys and just because you choose one, does not mean you cannot switch to another one - maybe one fits your short term goals and another one helps down the line with long term goals. Real estate is a LONG game and a good way to build wealth through equity. Good luck!