House hacking is a great way to get started on your real estate investing journey – short-term rentals (STRs) are the best way to maximize your return.
Most investors have heard of the house hacking and STR strategies as separate ideas. House hacking (renting out a portion of your primary residence to cover part of, all, or more than your mortgage payment) is an excellent strategy for investors to reduce or eliminate housing expenses and generate cash flow right where they live.
When most people think of Airbnb/short-term rental investments, they think of vacation destinations such as mountain or beach towns, often bringing them out of state. But in hot metro areas like Denver, which are both vacation destinations and residential hubs, investors have the unique opportunity to combine these strategies to boost their cash flow in their own city.
While it typically requires a bit more work than long-term rentals, house hacking with short-term rentals s in popular metro areas allows you to live where you want and maximize your return while living there. Let’s break that down:
Live where you want: Short-term rental laws in many U.S. cities are somewhat in flux, with many cities instituting a primary-residence requirement, meaning you must live in the property in order to rent part of it as a STR. For investors who want an investment property they don’t need to live in, these rules limit their search to the cities that allow for non-primary residence STRs. Renting out part of your primary residence as a STR opens your search to the majority of the metro area where, often with a license, you can legally rent part of your residence as a STR.
Maximize your return while living there: I have rented out part of my primary residence in Denver as both a long-term and short-term rental. While our long-term rental covered 60% of our mortgage, switching to a short-term rental consistently covered over 100%.
When you move out, if it’s in a non-primary residence STR-friendly city, you can convert the entire property into an Airbnb. If it’s not in a non-primary residence short-term rental friendly city, you can convert the property to a long-term rental and still cash flow if you run your numbers correctly when initially analyzing the property. You will have maximized your return during the time you spent living there, which will help set you up for your next deal.
If you have any thoughts or questions about STR our house hacking, reach out to us today!
About Good Neighbor Realty:
Good Neighbor Realty specializes in helping clients invest in short term rentals to achieve passive income and financial freedom. Whether you’re a seasoned investor or a beginner who wants to get started, the Good Neighbor team has the tools Airbnb hosts need to outperform their competition.
We are proud to be the leading brokerage in short term rental investment sales in Colorado and our clients are consistently ranked in the top 10% of hosts statewide. If you’re ready to make the first step towards financial freedom, we’re ready to help you get there. Give us a call/text any time at 720-702-9150 to start the process and follow along on Instagram for more helpful content!