Multifamily Airbnb (Can you use a triplex for short term rental?)
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Multifamily Airbnb is a big topic recently. We’ve turned a triplex into a short term rental. But what did we learn? Should you do long term rental and short term rental? Should you stick to single family?
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In this video I answer some of the big questions right now about using multifamily spaces (like triplex or duplex) for short term rental.
It’s like a small resort, almost.
But the pushback I get from lots of real estate investors is the risk.
They suggest mixing the units. Some long term rental, some short term rental.
But in the video, I share from personal experience the results of doing that. I share what happens after a few months of that.
We also discuss how these multifamily properties could be divided up. We talk about short, mid, and long term rentals.
I share my final verdict on how to handle multifamily short term rental properties.
Then, I share the story of my business partner Riley’s results. He did this exact thing recently with a triplex.
He was seen as a hero by the neighbors, in fact.
He ran the numbers for this triplex and found out what it could actually make a short term rental.
After the renovation, he listed it. He made… well, watch the video to find out the results.
I also share the thought process now that it’s been live for a few months, and what we learned.
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What's up guys it's James here and today's video I'm going to be answering the question of should you buy a multi family property meaning a duplex triplex four Plex something of that nature, multifamily property for short term rental or Airbnb? I get asked asked this question quite often, a lot of people wonder if they should buy a multifamily for Airbnb. And oftentimes the thought process is, you know, if I buy a multifamily that I can use it as a really strong backup for short term rental, or maybe I can have like a kind of a balance in my portfolio. If I buy a triplex and put two of the units on short term rental and one of them as a long term rental, maybe that'll kind of balance it out, give me a bit of security and a bit of upside as well. And so I want to dive fully into detail about whether or not you should spoiler alert, it is a good idea as long as you do it properly. So I just want to again, just go through that in more detail in this video that's we're going to be walking through. As always, if you're interested in learning more about how to invest successfully in short term rental properties, whether that single family homes multifamily in any different area, if you want to do it successfully, you want to check out the link in description down below. There's a link for a free training on how to invest successfully in short term rental properties, meaning Airbnb VRBO is vacation homes. And so if you want to buy a vacation home and you want to get a great return on the investment on it, that's what we're going to cover if you want to just buy a property that you want to invest in real estate specifically as a short term rental, you don't want to use it as a vacation home, you just want to invest for a really strong cash flow. We're going to cover that if you want to buy single family multifamily again, we're gonna give you all the training on our step by step process for how to do this successfully. We've bought many properties now all short term rentals, I've managed properties, a short term rentals as a professional property manager wrote the book, Airbnb for Dummies covering all the basics and best practices of host hosting on Airbnb. So if you want to learn the ins and outs, and you want to learn how to do it successfully, make sure you don't make any mistakes that are going to be really costly. And again, check out the link in the description down below that training is completely free, and it's comprehensive. It's gonna walk you through everything step by step, so I highly recommend that you check that out. Now let's jump into and let's talk about multifamily properties. So there are definitely some do's and don'ts when it comes to multifamily investing specifically for short term rental properties. So right off the bat, a lot of people think about getting a short term rental or getting it multifamily to use a short term rental and they want to go okay, let me get the best of both worlds, I'll have one or two long term rentals and then one or two short term rentals in the same building. So on the one hand, I've got this nice steady stable cash flow gives me security from the long term rentals. And on the other hand, I've got this nice additional cash flow that because it's going to be higher yield. If I do it a short term rental Yes, it's less stable, but there's a lot more upside. So I can get the downside protection and the upside both in one package. Amazing, terrible idea, absolutely awful plan, take it from someone who has managed properties like that, it's gonna run you into a whole bunch of issues. And I just don't recommend mixing long term rental and short term rental together in the same building. Now, if you're considering doing mid term rentals, meaning technically it's still just a long term rental, but you're looking at like a furnished long term rental, that's typically going to be rented out for 30 days, 60 days, 90 days, something like that, that can mix in well with long term rental. But anything that's true short term rental, where people are staying for just a couple of nights, it's a vacation spot for them or for when they're coming in for town for an event or something like that, it's just not going to be a good mix. Because what's going to happen is someone's going to come into your your triplex as a short term rental guests, and they're going to be there for a concert that night. And it's gonna be a Tuesday night, right. And so for them, they've already taken the next day off of work for the next day that you know they're going to come they're going to be louder, they're just not, they're not going to be as quiet as your neighbors would like them to be on a Tuesday night, it doesn't mean they're throwing a party, I'm not saying they're going to be throwing an absolute rager. But there is going to be louder, they're also not going to be especially if you've got like a stack where one unit is on top of the other, they're not going to be conscientious of having a downstairs neighbor, especially if they aren't used to that if they don't live in a house where they've got a downstairs stairs neighbor in there, and they have to be conscientious of that they're just not going to be. So what's going to happen is that over time, your long term tenant is going to grow resentful of the short term rental guests that are next door or that are, you know, above or below or whatever it might be, because you're just gonna be louder. That neighbor is also the longer person's not going to like the transient nature of it. In most cases, they're just not going to like having a lot of fuel coming in and out of the building. It's just gonna be really, really tough to make those relationships work. So what I recommend is on the flip side of that, if you are doing like mid term rental that can work well because with mid term rentals, it's 3060 days, that kind of thing. So it is a longer term rental and it's technically a long term rental, whether you classify it as such, you're not legally speaking not still a long term rental. And so you're not going to run into those types of issues but you're giving up this to actual amount of cash flow by by doing mid term rentals as opposed to short term rentals, because short term rentals will still earn more. And the other thing is like if you're going to be doing mid term rentals, there's still a ton of security there either way. And so basically, all you need to do is just furnish the unit to make it a mid term rental. Otherwise, it's not really too much different from a traditional long term rental. And so you might as well just do all the units as mid term rentals if you're going to be operating that way. So the way that I recommend doing is have all of your units as short term rental units. And that doesn't mean that you don't get a backup plan. It just means that your backup plan is pulling the pulling the plug on short term rentals all together and switching either temporarily or permanently over to long term rentals. So my business partner Riley has executed this plan really well. And it's actually working out really really nicely for him. He bought a triplex where he did a It was honestly just a phenomenal investment buys a triplex that needs a bunch of renovation work. And he bought that property did the renovation work and turn this property that had some, you know, pretty low income tenants that weren't really that great, the neighbors didn't really like them, the neighbors were used to having the cops there every single weekend. And so now the neighbors love him because he went and renovated this place made it way nicer. And their standard for what they're used to is the cops being there every weekend. So having short term rental next door is like no big deal to them, they will love it, right. And they're actually really, really happy with him having done the work that he's done to clean up this property and get those bad tenants out of there. So he's now gone and done that he bought the property did a value add renovation to the property, now he's able to cash out refi the property so he's pulling all this cash back out of the deal from the renovation and the down payment, so he's gonna have zero cash in the deal. Now, if you run the numbers on doing that as just a long term rental, it still makes a lot of sense, it's still really good money, the return on investment is great for a long term rental, it's a really great option. So if ever he needs to, he can just transition that over have it as a long term rental and still be cash flowing every month. And it'd be great, right? But when you realize is that, hey, this is actually in a neighborhood where there's a really big rowing population, there's lots of rowing competition that comes in to this particular area. And so hey, why don't I put it up as a short term rental? See how it does, I looked at the data, it should actually do quite well, lo and behold, in just the high season, just about four or five months of the high season, that property did $75,000 In total bookings. And so the cash for context, it would have done not even close to that as a long term rental. So in just four or five months, it made more in revenue as a short term rental than the property would have as a long term rental in the whole year. Now we're getting into down season, the property is less occupied. So he's trying creative ways to get more bookings in there. But it's all upside from here. Even if the property were only get booked up during the high season, it wouldn't even matter because it would still be performing better than a long term rental, right? He can experiment trying to get people in there for like, longer term stays a week, two week, three weeks, four weeks, whatever, he can also decide that he's going to rent it for six months to someone who's looking to stay for six months in the in the down season. And then in the high season, just as a short term rental, it's got lots of options. If ever, he it came to the point where he needed to just transition it over to a long term rental for whatever reason, he absolutely could, if you want it to be completely passive hands off, just put some long term tenants in there, set it and forget it, he could definitely do that as well, right? He's got that option. He's got that really solid backup plan. But the thing you want to remember is that you don't need to use your backup plan right out of the gate, right. That's why it's a backup plan. The nice thing here is he's got way more cash flow way more upside this way. And the only difference is that he needs to just plan out his cash flow, right, he can't go and spend all that cash flow because he knows that there's going to be a down season, it's less consistent than a long term rental is but in four or five months, he made more than the property would have over the entire year as a long term rental. So that's really a solid way to buy a multifamily property and use it as a short term rental is to go hey, let's buy a property where the numbers do work as a long term rental. But let's just start out by launching it fully as a short term rental, and then use that long term rental as a backup plan if and when we need to or want to. So that's the way I recommend playing it if you're going to be buying multi residential and using it as short term rental. So again, if you want to learn how to actually find deals like that, how to analyze them, run the numbers on them, make sure everything makes sense. Check it out, you know, for everything from deal sourcing, how he's able to find a deal like that, how he's able to run the numbers on it, validate all that stuff. Again, the link is in description down below to our free training on exactly that. It's gonna walk you through step by step start to finish exactly how to find those deals, analyze them, set them up, furnish them, run them, optimize them absolutely everything. So again, check out the link in the description down below for our free training on how to invest successfully in short term rentals. It's going to cover all that it's completely free. It's going to give you our analysis spreadsheet we're going to share that with Have you completely free. So again, all that is linked in the description down below. So make sure you check that out if you liked this video, if you liked what I share on this channel, if you just want to help me out a little bit, then make sure you take a half a second and just hit that like button really does help me out tremendously with growing this channel reaching new people, which Hey, by the way, we're almost at 4000 subscribers. So I'm really, really excited about that. Thank you guys all so much for being a part of the channel here. Make sure you subscribe to the channel. If you're new here and you haven't yet subscribed. I post new videos every single week. So if you want to check those out and learn more about short term rentals, Airbnb and real estate investing, then make sure you subscribe to the channel just hit that subscribe button. All that said thank you for being here. Thanks for watching this video right till the end and I will see you in the next one.Expand