Our Short-Term Rental Adventure
Not as Simple as YouTube Makes It Look
By Lori Wyatt
My journey into the world of Short-Term-Rentals (STRs) began as an unhappy accident. I had purchased a home in 2006 as my primary residence. By 2012 we needed to move but were still underwater. We decided to rent to a long-term tenant. At first, she was great, but two years in she lost her job and became the tenant from hell. On her way out the door, on a particularly cold Chicago day, she shut the heat off. By the time I gained access, the worst had already happened. As I opened the door, I could hear a sound similar to Niagara Falls rushing through the entire house.
A full year and $110,000 later the house was put back together. By then it was 2015, and I could have sold it but wasn’t sure. When faced with the thought of another potential nightmare tenant, I couldn’t do that either.
I was approached by my neighbor who had been running a successful traditional rent-by-the-room sort of Bed and Breakfast. They lived on the top floor and rented out the other seven bedrooms in the house. He offered to rent the house so he could add more rooms. We couldn’t agree on a monthly amount, but it got me thinking. If he is having so much success, I should give it a try.
We dragged out every piece of spare furniture we had, hit Facebook for some used furniture, snapped a few pics, and thought we were good to go. Our hopes at the time were that we cover our mortgage.
The day we put our first property live, we were blown out of the water at the response as requests started rolling in. We were stoked. Initially, we hit some speed bumps and bad reviews as our crappy furniture didn’t cut it and we needed to upgrade fast. But we could also see that things get beat up, so what to do?
We found a high quality used furniture liquidator and started upgrading. Each year, we found a new property and renovated it to add to the portfolio. By 2020 we had six properties. They were all in an area called Bronzeville which was a Southside neighborhood that used to be home to the Robert Taylor and other notorious low-income housing projects. But, there was a convention center, U of C had both the school and the hospital, and there were several wedding venues nearby. And it was 15 minutes from downtown.
We had a great mix of convention goers, sports fans, and families coming for a graduation or wedding. Then COVID happened. When it was announced that the St. Patrick’s Day parade had been canceled, we knew we were in deep trouble. We had been toying with selling our house in the near future, but the near future became immediate. We put it up both for sale and rent. Less than a week later, we had a renter who needed to work remote and couldn’t do that with his two young sons running around.
We moved into one of the many empty Airbnb’s and got to work. Everything was up for grabs. Some we put up for rent, some for sale. We needed to pivot and fast. Luckily, the market was on fire, so we quickly sold two, rented two.
That left us with two; one we were living in as we sold our original primary. That home was a two unit, so we still rent one as a furnished short-term rental, but only for a month or more. It’s less work, and a more professional crowd, and since we live right on site we like it better. The last house was a challenge because I did NOT want to let it go. This was the original house that had been blown up, and I wasn’t letting it go. So, we rented to short term medical professionals, insurance companies looking to house a family whose house had burned, and a girl who produced a cooking show, and a few other families looking to relocate.
Conventions have not really come back yet, and I don’t know if they ever will get back to pre-COVID levels. We still own two of the other properties, but without business travel fully rebounding, it’s best to keep them rented with long term folks for now. One, we will most likely sell soon. We do plan to rebuild our small portfolio, but we won’t do so in Chicago.
Short-term rentals are a lot of work. We never trusted anyone to run them, so we did it ourselves. It’s a great business, and you can make a lot of money, but it is not some get-rich-quick situation, as portrayed on YouTube.
As more commercial operators enter the space, the bar is raised, meaning finishes and furnishings better be A+, or get ready for bad reviews. It’s amazing to me when I go on Airbnb or VRBO the shift I have seen in some of the homes. Travelers expect hotel quality beds, sheets, pillows, towels and swank furnishings. If you buy cheap trashy furniture online, expect that you will be replacing it within six months. These are the small things that eat up your profit.
Overall, we have met some amazing people and been able to travel much more because of our extra income.
My husband and I are a blended family totaling nine children between us. Our houses are large and fit large groups because we know if you have a large family or travel with extended family, STR’s are the only way to go.
We are heading to Europe this fall to explore the idea of owning a STR in France. The possibilities are endless. As we build our portfolio again, we will be mindful of where we go and who our audience is. We will build in places we would enjoy going and places that are business friendly.
Great professional photos are a must as is thoughtful design and great furniture.
I still believe in STR’s as a solid investment, but what I have learned is to diversify. If something crazy happens, you better know how to pivot quickly.
