In the home buying process, it’s easy to let traditional values dominate your intentions. I remember my parents’ advice during the purchase of my first (primary) home. The typical mindset in a real estate transaction revolves around maximizing the resale value of the home; specifically how valuable the property is to a family unit. It’s important to remember, however, that your goal is not to move a family into their forever-home. While many of the attractive features of a family home remain attractive for a short-term rental, there are certainly differences. Knowing what to focus on – and what to ignore – can help you make the best use of your time and money. In this post I’ll talk about how, by keeping your customer in mind, you may find you’re able to find excellent investments in homes that others may pass right by.
Property Particulars – What we’ve been taught to look for in a home purchase
Here are several classic “must-haves” that were drilled into my head during my search for my primary residence. When I later switched my sights toward attracting guests to my short-term rental properties, I realized that these important features I had been taught really weren’t so important.
Number of Bedrooms
I was always told that houses with 3 or more bedrooms were best for resale. In fact, I was advised to completely ignore 2-bedroom houses. Even though I was a single guy with no intentions of having a family in my first home, I was supposed to plan ahead and accommodate a traditional family of 2 parents with 2.5 kids. 2 bedroom homes would perform poorly in the market when it was time to sell.
I identified 2 main issues with the bedroom count argument when looking for my first short-stay home. First, being a cash-flow investment property, I didn’t really care about how desirable the house would be for the next buyer. Second, given that the average Airbnb party is 2-4 guests, it makes sense that a 2-bedroom home actually makes the most sense. A queen bed is usually enough for 2 guests to stay comfortably, and most renters are happy to save money by doubling up. A third bedroom may actually turn this average-sized group off, due to the feeling of spending money on a room they don’t need. I actively search out houses with 2 bedrooms for my STRs and I’m surprised at the deals I’m able to find with these overlooked homes.
If I were buying for myself, there’s no doubt I would prioritize a garage in my search. Even when unattached, a garage gives a cozy feel – A safe place for your car to rest while you settle in after a day of work. Or, maybe a workshop for handy projects, a “mancave”, or a home gym – Not to mention all of the storage space a garage offers.
Of course, guests staying for a couple of days aren’t going to set up a gym or a home theater while they reside in an Airbnb. They aren’t going to bring with them a lifetime of clutter and seasonal clothing that needs to be stored away. And, they don’t need a garage for their car. They need a place to park. They need a safe place to park their car that is close to the home so that they can easily get their bags inside and get to and from their car for the days’ adventures. A driveway would be just fine in most areas. Even street parking would please most guests, if the neighborhood is perceived as safe and the street not excessively busy. According to Airbnb, free parking is one of the best amenities a host can promise guests. So, if your house doesn’t have a driveway, be wary of promising availability of street parking. You may want to mention the uncertainty in your listing description.
A Good School District
I don’t need to spend much time on this one.. It is well known that a school district can make-or-break a home purchase decision. A house’s location is pretty much the only thing that can’t be changed about it. Lucky for you, your short-term guests won’t be staying long enough to need to enroll their kids in class. So, they don’t care about the schools.
Peace and Quiet
When searching for my primary, it was always a big no-no when I’d arrive to a house showing appointment and could hear even the softest rumbling of traffic on the nearby highways. Of course, anybody looking for a place to come home to after a long day of work, repeatedly for the next 10+ years, wants to find solace and serenity in their abode. They come home to get away from the noise.
While peace and quiet is a valuable selling point for some short-term rental locales boasting remote exclusivity or beautiful views of nature, most guests staying for a couple of days in your rental home won’t mind – or likely even notice – the buzz of traffic or nightlife. In fact, if you read my earlier post about choosing a location, close proximity to major roads can actually be an attractive feature for potential guests. People traveling for work, events, or family in a nearby busy city will want quick access to the action.
If you’ve been paying attention, you may have had a lightbulb go off in your head or dollar signs in your eyes… I hope you did. The main takeaway here is that many of the features (or lack thereof) that make a home undesirable to the traditional buyer, and therefore cheaper in the market, may provide you the perfect opportunity to swoop in and get a great value on your short-term rental property investment.