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.

[Laura2592]

@Richard531 oh heavens let's not let the husband hear something about 5 times more profit....

Its definitely market driven.  Our market isn't yielding that level of return. And interest rates on any investment mortgages are absurd. We need a small one as a tax shelter and it definitely changes the equation. But having said that, there's zero Airbnbs in the immediate area this one would potentially be. So who knows what is possible.  

I'm ok with not making top dollar in preservation of my sanity.  My husband has different ideas. 

[Pat271]

@Laura2592  Remember, you have 45 days after closing to identify properties for a 1031 exchange, and 180 days to complete the exchange. After a time, you can even convert to a personal use property. Lots of options.

If you can, get clarity on how you want your life to be at the end of it all, and then find properties that match that more closely.  If I’ve understood correctly, I don’t think another STR is what you had envisioned; if you’re going to do that again you might as well just keep the property you’ve got - it may end up making better business sense after you factor in the commissions, title costs, etc. involved in making a change. (And yes, I understand you can’t do that if it’s in escrow; I am being somewhat rhetorical).

If your husband insists on this new property, then acquiesce. Marriage is compromise, after all. Just make him run it.😜

[Laura2592]

@Pat271 we have a truncated time line as our exchange agent is swamped. So if we are going to do this at all we needed to tell them last week. You are right in that you have 45 days to identify after close, but had to give extra lead time to set it up before closing...theres only one exchange in our area.  I want to take the money and run....he wants to reinvest. 

Its a terrible time to buy. Terrible. Nothing on the market and crazy interest rates. We targeted New Orleans as we wanted to end up there but flood insurance and taxes made us rethink.  We put this offer in thinking "no way will they take it." And of course they did. 

We are still in the inspection period and I'm ok with pulling the plug. The lot may be sub divisible which is the real value so I'll play along for now. 

Our selling Airbnb is not in an area where good cleaning help is easy to find. For 3.5 years we have had to clean after cleaners and had unreliable house keeping...an hour round trip twice a week. That's reason enough to sell. The neighbor's who kept an eye out just sold. And another neighbor has been stirring up trouble with the new folks. It's time to peace out and move on. 

[Kelly149]

@Laura2592 There's nothing lost to LTR for a year and then reassess... Or can he and the cleaning lady manage it themselves??

The way I've made bringing the barn back after Covid and after family lived in it for 6 months work for me (current terrible story notwithstanding) is to be Request Only and I shrunk my guest count from 10 to 6 and really the extras are priced so exorbitantly that I haven't yet gotten more than 3. The 10-minute drive vs 60+ will make a big difference and I agree, no more niceties, no more gifts, no discounts, high prices every day of the week, NO IB, ruthless declines. Good luck with deciding!!

[Andrea4731]

I know this is not the case for many, but I realized I could make more doing LTR vs. STR after expenses! With LTR I no longer have to pay cable + internet, electric, water, cleaning supplies, Airbnb supplies, cleaning, and not to mention personal time & sanity! I loved being an Airbnb host for a year, but I also work full time as well so for me it ended up being too much. Now I just collect the rent check every month 😌

[Huma0]

@Andrea4731 

If you were making less with STR, then your listing/s must have been underpriced, but perhaps your market could not support higher prices?

Having said that, I certainly don't make anywhere near 4x or 5x with STR over LTR. I am not sure if I even make 2x, when all the expenses you mentioned are taken into account. I have never figured it out. I do know that I do make more though and at least the expenses are tax deductible. 

Then again, I am hosting long term guests in my own house, so that's obviously not going to result in the kind of profit that I'd get from a stand alone unit. 

I think there are pros and cons to both STR and LTR. I started airbnbing my rooms after a series of problems with long term lodgers. One of the deciding factors was that (pre-COVID) I travelled a lot for work and they were throwing parties whenever I was away. Some even threw raucous parties without my permission while I was here! 

I then switched from short term to long term guests because I had two jobs, was travelling constantly and it was really starting to interfere with my work. So, I think I have found a happy middle ground. Hosting long term guests means less profit than hosting short term ones, but also less work. Hosting long term guests means more work than long term lodgers, but there's more profit.

I understand that this doesn't work for many Airbnb hosts, especially where tenants rights might apply. Luckily, because I host in my own home in the UK, I am quite well protected by the law.

The important thing, with guests or long term tenants, is to vet carefully. You can have great or terrible experiences with both. My mother unfortunately has awful tenants in both her rentals (I keep telling her to change letting agents) and is stuck with them. She has already gone through a lengthy and very expensive eviction process in the past and can't face it again, but she has one flat where the tenants are constantly breaking everything (the latest incident was that they pulled the door off the fridge) and another where she has spent a fortune getting pipes and drains unblocked because they keep putting wipes down the toilet, but deny doing so. None of them speak a word of English so she has to communicate everything via their school age kids. She is 78 and I honestly don't know how she copes with it. I would be freaking out at them by now.

[Andrea4731]

@Huma0 I think I was charging enough, but with working full time, I couldn’t have the house occupied 100% because I was not always available for turnovers/guest needs & also everyone has wanted to move to my area in the past couple of years so the long term market has gone crazy! Either way, just made more sense for me personally to rent long term. Also my water & electric bills were astronomical as STR, so I’m very glad to be done paying that 

[Huma0]

@Andrea4731 

Yes, I suspect the bills are lower anyway with long term tenants. Of course, it depends on the individual and their habits, but people are a lot less wasteful when it hits their own wallets!

I'm glad to hear that LTR is working for you. It's all about finding the right people. For much of 2020/21, I wasn't hosting due to the pandemic. I had a lovely girl move in with me for almost a year and that worked out brilliantly, but as she had originally stayed with me as a guest for one month, I already knew she would be a good fit. So, there are definitely former guests that I would consider renting to long term.

[Lisa723]

@Laura2592  I'm surprised that nobody has so far stated the obvious: if you undertake this venture, it is time for your husband to take over the hosting.

[Louise1073]

Amen to that! You can do all the financial plans in the world, just don’t forget to factor in the price of your own mental sanity…

[Stephanie]

@Laura2592 

Though, I really want what's best for you so I hope you can come an agreement with hubs!

[Jenny349]

Hi @Laura2592 I wish you well whatever you decide, and the choice is all yours, with your hubby.

i totally sympathize with the way you feel. It’s just darned tough work dealing with some folks these days! 
Hope you get a chance to rest up and recharge your batteries…

[Emilia42]

@Laura2592 

I make about 4x more with short-term renting than long-term. I don't think I would do it for 2x since there are so many more added expenses and it's a lot more work. My family is coming to the end of a 6-month eviction ordeal. (I say end but the tenants aren't out yet.) So because of that hardening experience, we could potentially be converting a 4th unit to short term. 

If you were to do this again, I would put your husband in charge. Use his profile and his communication style. Set up automated saved messages. Make the listing as standard as can be. Check-in time is 3 pm, check-out is 11 am. No pets, no smoking, no excess people beyond the max. Don't at all give the impression that you cater to dietary needs or special requests. Don't get emotionally attached to reviews. (The guest won't even be reviewing you, they're be reviewing your husband.) Easier said than done I know, but I believe short-term hosting is more about having the right mindset than anything else. 

[Amanda660]

I think the suggestion from  @Emilia42  re your husband hosting/corresponding/receiving the feedback is a great one.  You have the flair and experience so can set everything up but step back from the ‘peopling’.

Over the course of the year I earn roughly 4-5 times more in STR than I would in LTR.  I like being able to check the house over all the time and keep on top of things.  I sold my last tenanted property last year.  

I wouldn’t be doing it for 2 x the income though - you have loads to think about. 

[Laura2592]

@Amanda660 I think he is being conservative and there isn't a lot on the market that is similar. But I am not about to tell him that he could get lots more if I don't want to do this.