Converting yearly rental to furnished monthly

[jw72]

Hello,
Thinking of taking a regular rental property and and converting to a monthly furnished rental. Anyone have any experience with doing this? Any thoughts? If I can keep it rented it could pay off. Was rented for 2200, tenant moved out and I did a total remodel and posted for 2850. A rental agent called with lady who wants to rent furnished for 3600 for 6 months. Then I would rent month to month when she moves out. The agent takes 4%, Ocean view property in Sunny CA.

[brucethebroker]

Mr. Money mustache recently interviewed a young lady who retired early based on her experience running an airbnb. https://www.zeonamcintyre.com/ is her web page.

Might be something to check out since you seem to be in a tourist type area.

[MooreBonds]

Quote:

Originally Posted by brucethebroker Mr. Money mustache recently interviewed a young lady who retired early based on her experience running an airbnb. https://www.zeonamcintyre.com/ is her web page. Might be something to check out since you seem to be in a tourist type area.

Ah yes....another MMM "early retiree". This one teaches others (for a fee, of course) how to run BNB businesses, and owns 5 properties and manages 15. All in her "retired time".

I guess you might as well call Kiyosaki retired as well.

[Scuba]

Quote:

Originally Posted by jw72 Hello, Thinking of taking a regular rental property and and converting to a monthly furnished rental. Anyone have any experience with doing this? Any thoughts? If I can keep it rented it could pay off. Was rented for 2200, tenant moved out and I did a total remodel and posted for 2850. A rental agent called with lady who wants to rent furnished for 3600 for 6 months. Then I would rent month to month when she moves out. The agent takes 4%, Ocean view property in Sunny CA.

I say try it! You already have a potential tenant. I would stay away from short term (less than 30 days) rentals. Too much potential for damage from parties based on our experience. But a furnished ocean view CA property should be pretty marketable.

[ivinsfan]

Have you done a general budget for furnishing? Most people in short term rental want everything new and nice. Also a 30 day rental is going to require everything from a complete kitchen supply to a washing machine and everything in between.

If I was furnishing my own second home I'd do Craigslist and thrift stores for just about everything but the beds. That's right you'll need bedding too.

You'd net about 600 a month more but don't expect people to move in on the 1st and out on the 31st....you most likely are going to have empty days and weeks on your calendar.

A regular tenant with their own stuff and the right qualifications might be better.

[BreathFree]

Quote:

Originally Posted by jw72 Hello, Thinking of taking a regular rental property and and converting to a monthly furnished rental. Anyone have any experience with doing this? Any thoughts? If I can keep it rented it could pay off. Was rented for 2200, tenant moved out and I did a total remodel and posted for 2850. A rental agent called with lady who wants to rent furnished for 3600 for 6 months. Then I would rent month to month when she moves out. The agent takes 4%, Ocean view property in Sunny CA.

Short-term rentals may have tax consequences different from long-term rentals. The IRS may regard them as active businesses rather than passive income, much like hotel operations. If so, income would be earned income and subject to payroll taxes. This would put the short-term at a ~15% disadvantage to long-term.

[97guns]

Quote:

Originally Posted by MooreBonds Ah yes....another MMM "early retiree". This one teaches others (for a fee, of course) how to run BNB businesses, and owns 5 properties and manages 15. All in her "retired time". I guess you might as well call Kiyosaki retired as well.

My entire source of income is derived from the rental income of 5 houses, just finishing up an eviction and will be taking possession back today or tomorrow. We went to Hawaii in May, just got back from Reno Tuesday and leaving for Seattle in 10 days, really got nothing going on today might head up to San Francisco for the day..... I guess you can call me a working schmuck too

[BreathFree]

Quote:

Originally Posted by 97guns My entire source of income is derived from the rental income of 5 houses, just finishing up an eviction and will be taking possession back today or tomorrow. We went to Hawaii in May, just got back from Reno Tuesday and leaving for Seattle in 10 days, really got nothing going on today might head up to San Francisco for the day..... I guess you can call me a working schmuck too

+1 This board is my favorite source for financial information; however, I am not retired. I will probably always derive an income from somewhere other than strictly passive income; I like to make money. I also am living exclusively off my rental income. I also derive a small income from software I sell online over and above my needed income. I am not retired, but there is a big difference between commuting everyday to work for 40+ hours, dealing with co-workers, bosses, having to work sick, dress codes ect.. versus working 10 hours a week from home at your leisure.

[brucethebroker]

Quote:

Originally Posted by MooreBonds Ah yes....another MMM "early retiree". This one teaches others (for a fee, of course) how to run BNB businesses, and owns 5 properties and manages 15. All in her "retired time". I guess you might as well call Kiyosaki retired as well.

Would you have preferred I referred to her as FI instead? I'm just passing along info to the OP, who asked for input.

[jw72]

Thank you all for the input. It will only be a month to month rental (thats all this property mgr does). It has washer/dryer and refrigiator now. I was thinking of going to Costco and spending about 10K, big screen, sofas, beds, towels dishes, ect. I am still 50/50, one advantage I see is trading homes in other countries for a month or two. Seems fun but I would not want anyone staying in my personal home. This would work perfect for that.

[brucethebroker]

Quote:

Originally Posted by jw72 Thank you all for the input. It will only be a month to month rental (thats all this property mgr does). It has washer/dryer and refrigiator now. I was thinking of going to Costco and spending about 10K, big screen, sofas, beds, towels dishes, ect.

We used Craigslist for furniture and appliances last time when we furnished our winter place. Saved about 75-80% vs buying new. Found some nice items, too.

[jw72]

Thank you, I have bought and sold a lot of things on craigslist and love it. I have been reading on vacation rentals and they say go with a thyme. Was thinking modern, everything flows the same style and Costco bring it to the door. Not an easy decision, My heart says try it like Scuba says but my brain says stay the course with yearly rentals like ivansfan says. Truly 50/50. As a bonus, It would make a great man cave if it does not rent.

[ivinsfan]

Quote:

Originally Posted by brucethebroker We used Craigslist for furniture and appliances last time when we furnished our winter place. Saved about 75-80% vs buying new. Found some nice items, too.

I would do this for my second home, but not a rental. I think renters in a VRBO type world have gotten pretty picky. It needs to really look good in pictures.

[ivinsfan]

Have you had any nibbles at your 2850 number? It occurs to me you are going to need better insurance with short stay vacation type rentals. You might ask your insurance person or the broker about that.

Are you hoping to attract snowbirds?

[jw72]

I had it rented for 3200 but they had small children and short term (not furnished). I told them no, that was dumb now that 3 weeks has passed. One of their kids got his fingers stuck in the dutch door and hoping to get no kids. Property mgr has it listed month to month furnished for 3800 and another has it 3100 not furnished yearly rental.

[Scuba]

I suggest IKEA for furnishing a CA rental. Everything looks very modern as tenants expect but it's relatively low cost. Costco might not be trendy/modern enough to appeal to tenants. You could get nice stuff on Craigslist but it could take quite a bit longer and hard to match up the style vs just doing a "big buy" all at once.

[jw72]

Great Idea, BUT, I must be getting old. I can not figure IKEA out. Been there a few times with intention to purchase, walked out confused. Kitchen, Closet shelving, bedroom furniture. Costco is just so simple for me to understand, and great return policy if I hate it.

[Senator]

Quote:

Originally Posted by jw72 I had it rented for 3200 but they had small children and short term (not furnished). I told them no, that was dumb now that 3 weeks has passed. One of their kids got his fingers stuck in the dutch door and hoping to get no kids. Property mgr has it listed month to month furnished for 3800 and another has it 3100 not furnished yearly rental.

That would be a violation of the Fair Housing Act, as well as excluding service animals.

[jw72]

Not against the law to hope for no kids. They could have had it on a 1 year lease, like anyone else. I also hope for a single 60 year old lady who travels 80% of the time and eats out every meal.

[Toocold]

My preference is to keep them in a long as possible to limit the number of tenant turns.

I personally like the tenants to have kids because we choose houses in good school districts.

I guess it depends on what your "strategy" is.