Occasional VRBO in Austin- Reasonable plan?
September 29, 2019 10:42 AM   Subscribe

My brother and I have inherited a modest home in Austin. It’s a mid century 3/2, a little worn around the edges but otherwise fine. There’s nothing special about the house but it is in a spectacular neighborhood 2 or 3 miles from downtown. Should we rent it two or three times a year as a VRBO?

So we own the house outright. I’d like to keep the house for reasons but my brother would prefer to sell it ASAP to avoid paying the $14K/year property taxes (!) If we kept it he would live there except for a few extended trips each year. I’ve heard that houses rent for enormous amounts during SXSW, and figure if we could defray the taxes with some predictable income that way it would be the best scenario. So my questions revolve around that.

How much might we expect to get for renting it during SXSW? Is ACL fest another good time to rent? Any other times of year? To what extent do we need to fix up and modernize, or could it be advertised honestly as a bit of old Austin? How much hassle are the legal hoops to jump through?

Assume it’s no problem for him to clear out for a few weeks each year; that he and I will handle co- ownership without any problems; that he (local) is not so great at handling minutiae and that I (Seattle) might have to do some of the work remotely.
posted by carterk to Home & Garden (9 answers total)
advertised honestly as a bit of old Austin?

You may get better answers if you give the neighborhood name, nearest major cross streets, any other detail about the house.

Another thing to consider. The house is probably worth a rather large sum by most middle class estimation, and I’d personally think a long while about renting it out to people who are flying in to party all week. Especially with my personal property on the premises. You’d want to carry insurance for that type of usage, and then your rates will go up.
posted by SaltySalticid at 11:01 AM on September 29, 2019 [5 favorites]

To what extent do we need to fix up and modernize, or could it be advertised honestly as a bit of old Austin?

As long as you’re open and specific in the listing about what the house does or doesn’t have, you should be fine in terms of kitchen technology and decor or whatnot. You’d want to warn guests about things like no washer/dryer or no coffeemaker, or if they need to bring their own sheets and towels. But the more bare bones the house, the less you can charge. And a more basic house at a lower cost might appeal to college kids, who are not always careful or thoughtful about rental houses (no offense to the more proper college kids who are good guests).

However, guests will expect the house to be safe, to look somewhat together (no peeling paint, etc), and most importantly, to have been cleaned right before their stay. You’ll also want to have someone they can contact in case of an unpredictable issue, and it’s usually helpful to have that person be nearby. I stayed in a VRBO in Austin once that turned out to be infested with mice (I don’t think the owner had any idea, but I left immediately and expected my money back). It worked out ok because she agreed and because I could call her right up and let her know. Another VRBO guest might have been more upset, because it was during some big conference and I had trouble finding a non-luxury hotel to move into.
posted by sallybrown at 11:05 AM on September 29, 2019

It’s off Shoal Creek, near 45th and Burnet. Very quiet neighborhood, but also close to Fonda San Miguel and new foodie destinations on Burnet. Yeah, given the neighborhood we’d need to be pretty strict about partyers...
posted by carterk at 11:11 AM on September 29, 2019

For reference, here's the page on short term rental licences from the city. There are zoning considerations if your brother wouldn't fulfill the definition of "owner occupied" (it's not specified, though from your question it sounds like it'd be his primary residence, so presumably? I trust the city would be helpful if you phoned and said "this is our situation, which bucket do we fall into".)

If you're emotionally attached to the house and haven't been in Austin recently, do be advised that there's a not insignificant possibility it'd be torn down if sold, especially if it's that kind of mildly-dilapidated-looking old Austin (regardless of the actual shape the house is in).
posted by hoyland at 11:56 AM on September 29, 2019 [1 favorite]

There are a few companies that specialize in AirBnB market analysis, like AirDNA. You could look into the data they have and then maybe get just a one-month subscription to pull the data you want. Edit: probably similar companies CV provide data for VRBO. But since millennials tend to use AirBnB, you might want to be on that platform, or both.
posted by slidell at 11:57 AM on September 29, 2019

Be realistic about the rates you can command that far north for festival goers. It's a 20 min bus ride downtown in normal traffic on the 3 or 5. Yes, you can probably rent it out during SXSW no problem but not for $1000 a night or something. You will not make up the property taxes in even the best two weeks a year - you might need to rent for 2+ months total to break even on taxes after all costs are considered. https://www.austinchronicle.com/daily/sxsw/2018-03-01/what-you-get-for-your-airbnb-money-during-sxsw/

I would encourage you to do the math with absolutely everything taken into account (costs of cleaning service and more frequent maintenance, lost savings from your brother's perspective compared to being in a smaller cheaper place?) and then add a hefty dose of inconvenience factor of having to deal with moving your brother's clothes out of the closet before every visit or calling a plumber at 10pm. I live less than 5 min from you and your brother's house in a long term rental and would gently encourage you to add some ethical weight in your calculations to account for the fact that inventory is already tight, and people like me would be priced 2+ miles out of the neighborhood if too much inventory disappeared to the short term market. I would like to stay but can never afford to buy a house like the one you inherited, but even so I want a person/family with a real sense of ownership vs absentee landlords and tourists for my neighbors, fwiw. Is your brother going to be that person or is the house bound to sit half empty falling into disrepair if he doesn't buy into this plan?
posted by slow graffiti at 2:12 PM on September 29, 2019 [4 favorites]

Sorry to thread-sit- yeah, I first lived in Rosedale in the early 80s. It’s painful to see what’s happened to Austin- every time I go back another cool funky house in the neighborhood’s been torn down for a McMansion. Thanks for the Chronicle link, slowgraffiti, it’s very helpful. I hear you re the ethical concerns- this really would be a way for bro to affordably stay in Austin, near food, people, music, etc., instead of moving to the boonies which he can afford but wouldn’t provide nearly as fun a life for him (or me such a comfy place when I visit.) Sounds like maybe we might pull in $5K over the course of SXSW, minus some substantial costs, of course. Hmm.
posted by carterk at 3:19 PM on September 29, 2019

Yeeesh; I'd cash out and leave with a smile. 14k for prop tax; I'm going to say all the gridlocked traffic has produced enough CO that half the population is on meds due to having low O in their blood.

Leave it vacant; it will be either occupied by squatters; or end up being another flaming ATX vacant.

Your profit:risk:maintenance:potential for disaster ratios are way out of proportion. Sell and move on. 14k a year of prop tax is about the farthest thing from 'liberal' imaginable.
posted by buzzman at 7:46 PM on September 29, 2019

I had a condo in Austin that I AirBnBed for SxSW the year I moved in with my wife - rates were not nearly as high as I hoped, and I was (theoretically) walking distance from downtown. I did pretty well with a full-time rental, though.

However, it's worth mentioning that there are way more than just those weeks for high short-term rental demand - UT graduation would be a win for that location, summer wedding season is a definite thing, the Grand Prix weekend is huge. If your brother is willing/able to rent out just a room in the house and AirBnB it a little more often, y'all might do just fine.

(Also, if he ends up living there, make sure you have a homestead exemption on file for that tax bill. It doesn't make Texas property taxes reasonable, but every bit helps.)
posted by restless_nomad at 5:32 AM on September 30, 2019 [1 favorite]

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