First furnished rental... how to handle?

Rehabbing, Fix and Flip, Rental Properties
1

I have a home in Las Vegas that want to start renting fully furnished. Have several unfurnished rental homes so good experience there. I typically prefer unfurnished as don’t want the short term tenant hassles however this particular home is already fully furnished so want to make the best use of it. All my places are fixed up very nice, rent fast for slightly above market, self managed, and are close by so can keep tabs on them.

A few questions…

How should I advertise? I typically do Craigslist, MLS, and a sign out front if permissible (i.e. no HOA).

Is there a way I could draw longer term tenants that still need fully furnished and what should the minimum lease be, perhaps 3 months? I hate turnover. Most tenants are several years but some bail after just a year like is common here in Vegas, and they drive me nuts.

Should I try to self manage or should I just turn this over to someone who specializes in this, and if so how do I find them? The low quality national spam sites have virtually taken over google search terms for “Las Vegas Furnished Rentals” and similar terms so how would prospects ever get directed to real local property managers that specialize in this?

2

If you hate turnover and dealing with tenants than you’d better try calling your local property management companies and asking who does furnished.

Here we rent for a minimum of 30 days. You have to figure out who are your tenants–people moving to Las Vegas to work? People buying or selling a home? You can try for a longer lease period, but most furnished tenants are temporary.

Other owners do even weekends or sporting events. You need to do what works for you.

Let us know how it goes and good luck.

Furnishedowner

3

If you hate turn-over, short-term may not be for you; but the upside of short-term is higher ROI if you can get your unit booked enough nights over the year.

For vacation renters, VRBO and HomeAway are a good option. You pay for your listing, but no extra fees for reservations, so you pay one fee for the year, not every rental you capture through the service. If you go the vacation rental route, you really do need a good cleaning service on call for turning the unit quickly between renters - a matter of hours can be all you have between a vacationer leaving and one coming in; you’ll also need a good supply of towels, sheets and other things that change out with each family - we have two sets per bed that go in for each rental, then those are taken out for cleaning and the clean set goes in - that’s quicker and easier than having to try to launder everything in the turn-around.

For short-term renters, your best market is visiting professors at your nearby university or transitioning executives who are moving to the area and need a place for 3 to 6 months while getting settled in their job and finding the house they’ll buy - often their company will be paying for the rental in their interim of finding the house they’ll buy. Finding those renters is easiest with agents in the area, sending letters to larger local companies whom bring in executives to their offices, and using postlets which posts your rental online to zillow, etc., so those looking can find you. You can also note in your VBRO and Homeway account that you do executive rentals, that way your listing will pop up in searches online too.

The profit difference, if you can get your unit rented routinely is huge - where a monthly one-year lease may get $750 a month ($24.65/night over the year), a short-term rental may capture $75-200 a night - you need to calculate your holding costs fully (taxes, P&I if mortgaged, insurance, replacement items, furnishings, supplies, utilities, etc.) to see how much it costs you per night and then look at the market you’re in and see what an average rental is getting per night and price in the middle to start - not too high, not too low, unless you have an extraordinary property that commands more, or a dump that can’t get that much (and dumps do have a market - folks who can’t afford the more pricey options, but will nonetheless pay for the short-term vacation at your place).

4

Any feedback on where I would go find a good local property manager that deals with furnished rentals? When I google typical terms that a prospective renter would use I just get the typical rentals.com, apartmentguides.com, craigslist, and a handful of self managing investors. I figure if the property manager can’t get in top 3 pages of google search results then not sure how they would even draw prospective renters for me.

Been reading other posts about furnished rentals, lots of great info btw, and sounds like too much work for me. Originally thought I could probably draw string of 3 to 12 month renters but maybe not so doable after all?

5

yeahgofigure,
Furnished rentals ARE a ton of work. And your best profit will be if you do the work yourself. Nobody will be as interested as you are in keeping the unit rented. Nobody will make that after-hours phone call and the extra showings that it takes to keep the top dollar rents coming in.

As for advertising, here we have an ad in our town’s relocation magazine. There are a couple of posters up at our airport, next to those from the Holiday Inn, Marriott, etc. We use Craig’s List diligently. We put month-long ads in our local newspaper if we get 2 or 3 vacancies. Realtors have our cards. Hotels have our cards. We have a website. We have advertised before on HomeAway and VRBO. We go to Chamber of Commerce meetings and hand out cards to local businesses who may have managers and trainees coming to town.

This has all taken time, now 9+ years in business. But now new Wal-Mart manager trainees, Salvation Army Officers, traveling Postal workers, doctors and nurses and airport technicians all have stayed with us. They are repeat customers and we can rely on that.

Forget keeping renters for 3-12 months. Just try for ONE month, 30 days, and anything after that is just luck. However, we have several tenants now who have been with us for years. This really increases the cash flow as we don’t have vacancy or renovation on those units.

Aim for triple the profit of an unfurnished rental. Because it is going to be triple the work. But it also means that you should be able to pay off that unit much faster. Otherwise I wouldn’t still be renting out only furnished units.

Furnishedowner

6

Furnishedowner
I enjoy reading your comments!

The short term rentals are not for everyone but we have had great success with it the past two years. It has really helped step up our income and it has enabled us to speed up upgrades to our properties. We have been able to market our units to construction companies. We did have one unit sit empty for six months this winter but it more than paid for itself in the six month in operation. For having 11 units I can live with that. Typically our leases are for 6 months construction season in North Dakota. We have been able to pick many customers that have gotten frozen out of the campers in the winter.

yeahgofigure
Real estate investment is hard and stress full work and contrary to many guru’s it does not happen overnight.
If you have openings in the fall month’s try advertising on Craigslist and Bizmanonline.com for snow birds from ND. I have noticed that hotel prices have started to increase in Las Vegas. Many people from up here are now buying places in Las Vegas and Pheonix so your option would enable them to search the options better. We looked at some places in the Anthem area last fall and liked it.

Good Luck

7

Randyscott,

You are in North Dakota? Where there is a big housing shortage due to the oil/gas industry boom? That would be a terrific place to do business…

Do you have any tips for marketing to construction companies? Right now we have 9 houses rented out to one company that is building an electrical sub-station. I am feeling a little panic since they were supposed to be finished in May. We allow people to leave with 2 week notice. When those 9 houses hit all at once…

My office manager says “We’ve been through this before. Remember we have been 95% full now for 7 months. Last September we had to move money and debt around when we were hit with too much vacancy, remember?”

Yeah, I do. But I hate vacancy and must slay that dragon when it rears its head.

I am going to plan to visit the city office that deals with permits and out-of-town inquiries. It is an asset for a town to have lower cost housing for construction workers. We cost less than the better hotels. We are the asset. It is time for me to get our info. out to that market again.

Please give me your tips for getting construction workers. I can use your help.

Furnishedowner

8

Randyscott,

Just read your very interesting post: “Let’s Talk About the Oil Boom”.

This site is so useful because we can get snapshots of what is happening all over the U.S. and even sometimes from abroad.

There is no reason for someone to sit home, unemployed, when there are areas of booming growth. Then later you can go back home and buy depressed real estate and wait for the wave of property value increase that we know is coming.

Furnishedowner

9

Sorry

I have been out of town for a graduation.

I would bet that I have rented to the same company that builds substations, are they located in NV or ID? We just went through the same experience and had 6 units at once go empty, it was scary. It turns out we got them rented very quickly, but we are in a good location right now. I have found that these types of companies will sign a contract and I require a 30 day notice. Always get a contract, I had one company come in on a month to month and they found a place a little bit cheaper and left my units. If they say the contract is going to be 4 months get it for 4 months. I had several guys from that company call me and say that they liked my places better.

When looking for construction companies I go to the State web site and search for upcoming jobs in my area that are going to be bid out. Once they are bid I cold call the companies to see if they have a need for housing in my area. The day after I got notice that I would have so many empty I noticed a pile of power poles laying out in a field. I called the local power company and they promptly put me in connection with the company. With in 2.5 hours the company rep drove 2 hours and I had a verbal agreement for all of my empty rentals. They did back out of one because of distance.

I like what you are doing with the medical field, because it would diversify our holdings, unfortunately most of my units are not close to medical facilities.

ND is still a great place to get into for the real estate market, because a individual can start small and work their way up. Despite what people say housing is still quite affordable. Williams county is one of the highest per capita incomes in the country and people should be able to buy here. It is a lot cheaper to buy then rent.

I find it frustrating that ND has the lowest unemployment in the country at 3% and I don’t understand why? ND has had the lowest foreclosure in the nation even before the boom. It was about 5 years ago ND lead the nation in the number of people who had two jobs to support themselves. It was about the same time that a study by Caldwell Bankers where ND had some of the most affordable housing in the country. It does say something about the work ethic here.

We went to Georgia last year and one thing we are greatly missing is the great customers service we found down south.

Randyscott

10

I, too have been out of town…it is summer!

The company building the sub-station is out of Carmichael, California.

Very interesting tip, Randyscott, on cold-calling companies that have won state bids. That beats my old ploy of putting flyers on the windows of out-of-state trucks parked in restaurant parking lots. Desperation does fill those beds.

We are 100% full this Monday morning. Happiness reigns. there is money to replace that flat Casita roof before the monsoon rains hit big-time.

The posts from North Dakota are very interesting. Just like many previous Texas posts there are places where making money is just plain easier. It is called filling demand.

I’m glad that my little corner of New Mexico is also doing well. We just raised our rates 5-8% for new contracts. Not a single company has squawked. They just say, “Sign us up. Where do we overnight a check to?”

Furnished rentals are great because you can make triple the profit. You don’t need to own gazillion rentals, you just need to get the maximum profit from each one.

Furnishedowner

11

I have not had much luck with the flyers, the Man-Camp managers will go into the truck stops and gas stations and tear them down right after I put them up. I am glad to hear you got your places rented so quickly. We are currently renting to a high voltage electrical contractor putting in sub stations and transmission lines but they are not from Cali.

When we started 10 years ago I never dreamed it would be this good. It is easier dealing with the companies because they seem to get rid of the people who destroy things. Speaking of monsoon rains we just had the wettest April on record, almost 12". I changes several sump pumps during the rain and no catastrophe’s.

Are you in the NW corner, near Farmington? These new technologies are helping a lot of places all over the country. I have heard of new and old fields in Indiana, New Mexico, Texas, Penn, and Colorado. Our best luck has been in investing in smaller towns where property prices have been lower. The one thing even though it is easier in ND right now, it still takes a lot of determination, hard work, drive and the ability not to take a NO from a banker.

Enjoy your post, keep them coming!

12

Randyscott,
I give you the award for quote of the week:

WHEN WE STARTED 10 YEARS AGO I NEVER DREAMED IT WOULD BE THIS GOOD…

My little rental business here will hit 10 years this November. Some loans are close to being paid off. Some houses are close to being renovated (!). Debts are down. Overhead is down. Every time I get a little panicky the phone rings: “I am coming to your town for a new job and I am looking for a furnished place…”

So I am with you. Not getting rich-rich, but I see solid retirement funds on the horizon in fully paid off units with rent that continues to come in the door. With my trained office manager who can run things when I am gone.

With houses that can be sold for needed cash. And those fully-furnished homes SELL, people walk in and see that King Bed with linens, the coffee cups in the cupboard, the flat-screen TV in front of a recliner, the vacuum cleaner in the hall closet and it is THEIRS, ALL THEIRS and they buy.

We are in the SE corner here, near enough to some oil patches that we get the benefit.

I liked your term “Man-Camp”, a new one for me.

We just had 175 new hotel suite units hit the market in our little town but business continues to be good. Our rates are lower since we don’t have huge hotel financing loans to pay off. There are fenced dog yards and even some doggy doors. Private in-unit washers and dryers for those workers coming off a 12-hour shift. Recliners. TVs. Internet hooked up and ready to go. Home away from home.

Furnishedowner

13

Thanks for the compliment!

The man camps are basically dormitories where each person has his own little room with a twin bed. They furnish all food, linens, and Tv’s. There are no gun’s, smoking or drinking allowed and the best thing is they charge between $140-$185 per night! Many of these units can house up to 2,000 people, mostly guy’s. Most of them do have small gym’s as well. I will use this to my advantage when negotiating rents, you really have to know your competition. The furnished rental market is only going to grow.

We have allowed pets as well, it seems it’s never the pet, but more the owners if a problem comes up. Keep in mind as the oil moves toward you that many of the workers receive a per-diem, so don’t listen to much bs.

It sounds like your plan is very similar to ours. We only take out 10 year mortgages and we are doing our first refinance now and the term on this will be 5 years. We are looking to start spreading out our risk by looking to invest in other areas. We are still a few years away from this.

Keep the comments coming!
randyscott

14

Randyscott,
The Man-Camps sound like the old time boarding houses–a bed, 2 meals, a sack lunch and bath on Saturday.

Do they have cooks and a cafeteria, or do they just supply microwave meals?
Wow, $140-$185/night.

I agree that you have to know the competition. Here the competition is the hotels, like the new suite hotels. They are pricey. They do offer a stove top, refrigerator and microwave oven, and dishwasher. We try to offer way more: BBQ, yard furniture, blender, George Foreman grill, full set of dishes and silverware, not just 4 of each. Also washer and dryer in each unit. Sleeper sofa, dog yard, TVs, radio, pictures on the wall and books in a bookshelf.

The hotels are nice, granite counter tops, high-end decor. A lobby. Cookies. We don’t have any of that. But we do offer more space, home-like environment, and much easier on the tenant’s budget. Routinely people are waiting in hotels for their unit to come vacant and be cleaned. So we must be doing something right.

Just now we are starting work again on the “Bunkhouse”. This is an ugly little cottage squatting in the dirt. Walls lean. Roof shingles curling up. Porch sagging and looking like an old hill-billy movie. People have suggested it be torn down.

But instead I have 10 rolls of Faux Log Cabin Logs wall paper here in a box behind my desk. That Bunkhouse will take on the appearance of a real log cabin. The oak floor will be sanded a little and high gloss urethane put on right over stains and discolorations. The low ceilings now have wrought iron outdoor light fixtures installed–they are cheaper and lower profile than indoor fixtures. We will put wood framing around the windows. There is a huge old sink and ancient frig and vintage stove that must be lit with a little flame-thrower. People will either love it or hate it. But they won’t forget it.

The furniture will be all that rustic old crap that I have been saving up for years. The coffee table will be perfect to put your boots up on after a hard day’s work. Pizza stains on the wood will just add to the character.

But there will be a good mattress, recliner, washer, dryer and electronics. Decorating and planning is the fun part of fixing up a unit, along with studying the monthly cash flow sheets.

Most of the time I really like what I do. And there isn’t a single unit with beige carpet and white walls remaining.

Furnishedowner

15

Yes, they have cooks some even have chefs. Some of he low end ones are less expensive but they do not offer the food. The oil companies typically are using the man camps, that’s why we focus on construction companies.

We have been only furnishing with single and double beds, nothing fancy, but clean, modern and neat. Our furnished units also have TV’s, laundry units, grills, dishes, pots, pans, cable and internet. Most of the companies want only one person per room which is fine with me. Decorating has been my downfall, we have very few photos and stuff on the walls. Yes, all of our houses are the beige, you are talking about.LOL We are adding more as the budgets allow. Cost control is always an important item when doing the furnishing. One of our companies keep calling and asking for upgrades like the recliners you have in your places. We have been buying new leather couch, love seat and chair sets, which I can get for about $700 a set. They are not the most expensive sets but they are easy to clean. We will add more recliners in time, because you are right that is the little extra that will distinguish you from the others.

The bunkhouse sounds interesting, is it all one room or are they divided rooms with doors? We started buying houses that need a rehab and then we did the remodels. The one big problem about small towns is that you can buy a house remodel it and be a little upside down. It has been difficult to get comparable sales at a decent price. By small towns I mean less than 200 people. LOL The comparable issue has been much, much better in the past year. Our first rehab we bought for $1K, spent $40K and it was only worth $63 when completed. We used that money on our next projects, always reinvesting the profits.

We have not bought any new houses in several years, but continued to work at improving what we do have. Two years ago we put in 7 new furnaces in one year. Developing the vacant land that we now own is high on our list.

randyscott

16

Here I have just come back from an Alaska Cruise. Rested, but with extra pounds. Who knew that eating 3 desserts a day could do that? The best part was the scenery, crystal clear air, blue glaciers. The most fun was riding a dog mushing sled pulled by 16 huskies.

Our 6-month numbers are in and they are good. My goal was always to pull in $1,000 gross rent/day and we are way past that. Now if we could only get to $1,000 net PROFIT/day…

Randyscott,
About those recliners, definitely put them in. I am always scanning for good under-used recliners on Craig’slist and the newspaper or yard sales. Also we can get under $300 new recliners at a discount store. They have to be BIG, routinely 350-pound+ customers are checking in.

We don’t get loose woven weave fabric or leather because of CATS. They just gotta claw that stuff. New dirt-color heavy synthetic material is the best. It spot cleans easily, and looks like faux suede.

We have rented many places because there was a recliner.
What does a hard-working person like to do when they walk in their door? Fall into the recliner and drink something cold with a remote control in their hand.
I have tested this myself and it works for me. My recliner is even electric. Got it for $25, yard sale. Everybody likes an electric recliner! They weigh a ton and are very sturdy.

Also I don’t like couch/ love seat sets. They are too difficult to place so that the room looks good. It is easier to balance the room with a couch, recliner, and 1 other visitor chair. Once you figure out a pattern that is pleasing, just keep on with it.

The same goes for color. We use Cowboy Red in most living rooms, sage green in bedroom, and cream/white in kitchens. Over and over. Always looks good.

It is nice to be back. But I am missing the 1000 shades of green in the Alaska rain forest. Here it is 1000 shades of dirt.

Furnishedowner

17

Furnishedowner, I have been reading your posts and they have me really inspired. I am new to real estate investing and I am trying to decide what market to enter. When I read your post about rentals for people who are wanting short term due to short stays related to work, or people just moving to the area who need time to find a place to live, etc., it reminded me of a time when I was looking for the same thing and there were no places other than 6 month to year leases. As I read over your posts, many questions came to mind. First, would’nt you need a large population of people needing this accomodation in order to keep the units full year round? Second, when I am looking to buy a house how do you select the house and how do you calculate expenses and determine what rent to charge? Do you ever rent for 6 months? Are these one bedroon, two bedroom houses or duplexes?Would love to hear how you initially got started or what I need to do to start down this path.

Nancy

18

Nancy,
Welcome to REI Forum. I really enjoy renting out furnished units. I just came home from checking in a new doctor in town plus wife and two toddlers. They are building a new home, so therefore their need for temporary accommodations. I love tenants building a home…cpnstruction always seems to take longer than expected and a 4-month stay turns into seven. I like that.

My business is located in a small town of just under 50,000 population. No, you don’t need a large population for there to be a need for short-term housing. In fact, I am able to charge more because there is not the competition of scores of suite hotels or other furnished rentals like there is in a bigger metropolitan area.

Looking at our white boards I see the following tenants: Salvation Army officer, traveling nurses, sonogram technician, engineer building a flood channel, IRS auditor, laboratory director, oil company workers, emergency air ambulance pilots, US Border Patrol student, electrical workers. All of those people would otherwise be staying in hotels.

Every town has traveling temporary workers of every ilk. What happens when the local mortician dies? The Travel Mortician Agency sends a fill-in. Ministers hold revival meetings, hairdressers try out a new locale, new restaurant or store managers arrive for training, snowbirds, news media, retirees all call. There is a constant flow of people getting divorced and thrown out from their homes by spouses. Relatives arrive here to take care of grandma or her estate. Ranchers and cowboy relatives stay due to a hospitalized family member.

How do you determine if furnished rentals would work in your town? Drive past your hotels at night. How full are the parking lots? Are there “NO VACANCY” signs? Stop in during the day and get price quotes for a one or two month stay, and look at the rooms. This is good info to have for when your relatives come for an extended stay, right?

Furnished rentals are way more like a hotel than an unfurnished rental. You need to be priced less than the best hotels and more than the cheapest. You need to offer privacy, cleanliness, washer, dryer, TV’s, internet and home comfort. Put in a fenced dog yard even if it is small. We have a couple that are just 3 or 4 feet wide, being built in the lot line set-back. It is still enough for the tenant to throw open the door, “Fido, OUT!”

You can begin to calculate expenses by keeping track of your own home utility usage costs. Put those on a spread sheet now. Soon you will get an idea of the constant recurring utility costs. Here I have learned that studios and 1-bedrooms run almost the same. Two and three bedrooms run almost the same.

I will try to answer more questions tomorrow.

Furnishedowner

19

Thanks, eager to hear more from you!!
Nancy

20

Thanks for the advice on the recliners, I will be more dedicated in my search for good clean units.

The size of the town may not matter all that much. Most of my furnished units are in towns less than 200 people granted ND is a hot location right now. We focus on construction workers and we have been getting many good idea’s from furnished homeowner. Furnished rentals offer a great way to make extra money without owning as many units. Your mind set on marketing must be different than a typical landlord. As furnishedowner stated you must know your competition visit the hotels and know their rates and set your rates accordingly.

Good Luck!
randyscott