Just when I thought I was out....

[Laura2592]

We are selling our ABB. We close May 20.

Talks with the accountant have made the hubs insane about paying capital gains (which are ridiculous in our state, taxed like income on top of the federal 15%). He wants to do a 1031 exchange which means we reinvest in another property. We made a lowball offer on a tiny farmhouse on 3 acres 10 mins from home. Cute, boringly updated (all new stuff-- it was a derelict property a few years ago and brought back from the dead) but workable, great views. They accepted which surprised the heck out of me.

We ran rental comps. We can make a decent return on it with the right tenant. Then my husband did a whole analysis (with spreadsheets!) on ABB potential earnings. TWICE what the rent would bring. Of course he wants to do that now. I mean we have the furniture....and we have a cleaner here who does our house. So he contacted her and got quotes, did a whole pricing strategy.

I don't even want to think about this. He has not done most of the interaction with the guests. I see his point, I see the potential earnings but at what cost to my sanity? He argues that we would be much more hands off because of a more reliable cleaner (we had a lot of trouble with the last one due to health issues and there wasn't a great labor market near our cottage), less personal interest in staying in the place, and less of a commute to go back and forth should we need to. I get it but just NO. He says "let's list on other platforms!" 

We may need therapy to overcome this. I am ready to pull the plug on the sale. Help with your sage wisdom, fellow hosts.

[Ann72]

@Laura2592  You can't leave us, that's what this story is telling you!  🙂

If I were you?  I'd just price it at any high price I felt like and let the money salve all wounds.  Don't hold back.  My Type A guests are only happy when they're paying the earth.  I hardly hear a squeak out of them.

[Laura2592]

@Ann72 you and my husband are in step. 

Though I agree that it is  better not to be super emotionally attached to your income property I just don't know if there is any amount of money to make it worth my while. I just wanted the profit and redo my barn. But the tax thing is brutal. 

[Louise0]

There are both head and heart reasons for pulling out of the purchase.

By reinvesting all you're really doing is deferring the eventual tax anyway, and as property values increase the tax liability will only grow.  If you're heart is no longer in STR and all the work it entails ,and you'd gain more pleasure out of fixing up your barn, then tell hubby NO!  

[Mark116]

@Laura2592  If you were to relist, I think that you should disengage and be much more hands off. 

No more 'what kind of wine do you like, and what do you want in your gift basket'.  No more doing searches for people to find them whatever.  You could even consider getting a co host who would manage the guest interaction, though I understand that would cost some $$ and might change the equation.  

I'd also not have things that you know cause extra problems like a fire pit and if there is a fireplace there I would make it off limits for guests.

[Laura2592]

@Mark116 absolutely.  I would have to be super hands-off.  I just can't deal with this again. No setting up anything special between guests. 

This place has a fire place converted to either gas or electric.  I'm honestly not sure. But it's not wood burning. That's a huge plus No matter who rents it. With a tenant they get to pay that bill.

[Helen744]

@Laura2592, oh no........ the numbers and the crunch are not the same thing.He must agree to take on more guests if that is the case or I think that is simply unfair . Personally I would go for a normal rental for a year or so , so that you can rest and assess. If you have a long settlement before moving then store your furniture in a storage unit for a while. I think you should have a certain amount of time before the house has to start being used to provide income . check that time and use it to update the house and get it ready for whatever avenue you decide but do take into account what other things you may prefer doing, Airbnbs can take up a lot of time so explain to hubby that the extra money comes at a price paid in your time  Good Luck

[Laura2592]

@Helen744 we could rent it to a long term tenant furnished if needed. But I agree....I need a break. 

[Mark116]

@Laura2592  You could also have it priced at a slightly lower price point to not attract the super picky guest demographic you had with the other place.  

[Laura2592]

@Mark116 we had worse guests at a lower price point.  Our white glove lady was when we charged $70 a night. No way would I charge less than I had. 

[Helen744]

@Mark116 Yes . Its not about the price often . The price is really related to other places and competition H

[Ann72]

@Mark116  I think higher prices put some sort of fear into people that prevents them from complaining.  Maybe they're more afraid of looking like they can't afford something than anything else?  And definitely don't give them anything.  Once they've paid top dollar and find that everything is provided for their comfort they don't seem to crave the extras.

[Debra300]

@Laura2592,

If you do stay in the STR game, please don't be so disconnected that you won't have anymore of you stories and anecdotes to share with us.  I have enjoyed and learned a lot from many of the threads you started or commented on.

[Laura2592]

@Debra300 aw thanks. It has not been dull. 

[Richard531]

@Laura2592 

I'm surprised that the spreadsheet analysis only yielded a 2x STR rental projection vs. LTR .  If you'd like to avoid the STR life, you can try working the angle that this kind of increased revenue projection is frankly not worth the risk/headache. 

For our operations, if it's not 5x an expected LTR, then it's not worth it to take the project on.  At least not in the markets we participate.  We find LTRs to be ~$2,500/month, and once the listing is renovated/running, each do ~$10K/month as STRs. 

There's of course added expenses operating STRs (cleaning, maintenance, permit fees, massive liability insurance, sundries, etc.) which is why the 5x revenue rule applies.  With 2x and having to expense all that other stuff (not to mention the stress), I wonder if you financially come close to breaking even as an LTR while losing your mind in the meantime!  

Granted, the listings have to be amazing and you have to invest a lot of money to get them there.  And it's a lot of work iterating the periodic awful guests. . .  But if you're not willing to invest a lot of money to make the listing amazing and get in a place where your in the 5x zone, I would, by far, go with the LTR and save your sanity!