Spencer Buys Houses
Member
Owning a short-term rental can look like an attractive real estate strategy. A property is renovated, furnished, listed online, and rented to travelers who pay a premium for a convenient place to stay.
But the numbers can change.
That is exactly what happened with one of our Memphis investments.
A few years ago, we purchased a duplex and converted both units into short-term rentals. Between the acquisition, renovations, and furnishings, we invested more than $325,000 into the property. At its strongest point, the front unit alone generated approximately $3,500 per month.
Eventually, we decided to sell.
The property itself was not necessarily a failure. The decision came down to something much simpler: the return no longer justified the cost, risk, and amount of work required to operate it.
Owners also have to account for cleaning, maintenance, utilities, insurance, property taxes, platform fees, furnishing replacements, repairs, vacancy periods, and potentially professional management.
There is also the time involved.
Someone has to respond to guest questions, coordinate check-ins, manage cancellations, adjust nightly prices, handle maintenance problems, and keep the property competitive with hundreds of other listings.
What initially looks like passive income can quickly become an active business.
And when revenue starts falling while expenses continue rising, the investment can become much less attractive.
Insurance costs had increased. Property taxes and other ownership expenses were putting more pressure on the property. At the same time, competition among short-term rentals meant that maintaining strong occupancy and nightly rates required more effort.
The question became:
Is this property still producing enough return to justify keeping it?
After looking at the numbers, we decided that selling made more sense.
Instead of continuing to spend time managing a short-term rental with shrinking margins, we could take the equity and move that capital into properties that better matched our investment strategy.
A property bringing in $3,500 per month does not necessarily mean the owner is making $3,500.
Consider the expenses that can come out of that revenue:
That is why short-term-rental owners should periodically review their net operating numbers, not just their booking revenue.
Some Memphis short-term rentals continue to perform well, particularly when they have strong locations, reliable demand, efficient management, and favorable operating expenses.
For other owners, selling may be the better financial decision.
If your property requires constant attention but the net income has fallen significantly, it may be time to compare two numbers:
What are you actually earning by keeping the property?
versus
What could you net by selling it today?
That comparison can reveal whether holding the property still makes sense.
What happens to the furniture?
Do you need to remove everything?
Do you have to repaint?
Do you need to repair every problem before listing?
Not necessarily.
A direct cash buyer may purchase a property in its current condition, depending on the specific property and situation. That can allow an owner to avoid spending additional money preparing a former short-term rental for a traditional sale.
The exact terms depend on the property, but selling as-is can be an option worth exploring.
We continue looking for Memphis properties that can be improved and put to productive use.
That can include houses that need renovation, inherited properties, vacant homes, older rentals, and other properties where the current owner may be ready for a simpler exit.
The goal is not to hold every property forever.
The goal is to identify opportunities, improve properties, and make smart decisions with capital.
You do not have to wait until the property becomes unprofitable.
Compare your current expenses, net rental income, management workload, future repair requirements, and potential sale proceeds. Then decide whether holding or selling makes more financial sense.
Spencer Buys Houses purchases properties throughout the Memphis area, including homes that have been used as short-term rentals.
If you're considering selling your Airbnb, furnished rental, duplex, or another Memphis investment property, you can contact us to discuss the property and your situation.
Spencer Buys Houses
Memphis, Tennessee
Call or Text: (901) 979-9848
A conversation costs nothing, and you can decide what makes sense for you after seeing your options.
But the numbers can change.
That is exactly what happened with one of our Memphis investments.
A few years ago, we purchased a duplex and converted both units into short-term rentals. Between the acquisition, renovations, and furnishings, we invested more than $325,000 into the property. At its strongest point, the front unit alone generated approximately $3,500 per month.
Eventually, we decided to sell.
The property itself was not necessarily a failure. The decision came down to something much simpler: the return no longer justified the cost, risk, and amount of work required to operate it.
The Reality of Running a Memphis Short-Term Rental
Short-term rentals can generate strong revenue, but gross rental income is only part of the equation.Owners also have to account for cleaning, maintenance, utilities, insurance, property taxes, platform fees, furnishing replacements, repairs, vacancy periods, and potentially professional management.
There is also the time involved.
Someone has to respond to guest questions, coordinate check-ins, manage cancellations, adjust nightly prices, handle maintenance problems, and keep the property competitive with hundreds of other listings.
What initially looks like passive income can quickly become an active business.
And when revenue starts falling while expenses continue rising, the investment can become much less attractive.
Why We Decided to Sell
Our decision was based on the complete financial picture rather than one bad month.Insurance costs had increased. Property taxes and other ownership expenses were putting more pressure on the property. At the same time, competition among short-term rentals meant that maintaining strong occupancy and nightly rates required more effort.
The question became:
Is this property still producing enough return to justify keeping it?
After looking at the numbers, we decided that selling made more sense.
Instead of continuing to spend time managing a short-term rental with shrinking margins, we could take the equity and move that capital into properties that better matched our investment strategy.
Gross Revenue Isn't the Same as Profit
This is an important distinction for any Airbnb or VRBO owner.A property bringing in $3,500 per month does not necessarily mean the owner is making $3,500.
Consider the expenses that can come out of that revenue:
- Cleaning and turnover costs
- Utilities
- Property insurance
- Property taxes
- Repairs and maintenance
- Furniture replacement
- Platform fees
- Property management
- Vacant nights
- Marketing and pricing tools
That is why short-term-rental owners should periodically review their net operating numbers, not just their booking revenue.
Is Selling Your Airbnb the Right Move?
There is no universal answer.Some Memphis short-term rentals continue to perform well, particularly when they have strong locations, reliable demand, efficient management, and favorable operating expenses.
For other owners, selling may be the better financial decision.
If your property requires constant attention but the net income has fallen significantly, it may be time to compare two numbers:
What are you actually earning by keeping the property?
versus
What could you net by selling it today?
That comparison can reveal whether holding the property still makes sense.
What Happens When You Sell a Furnished Rental?
One concern many Airbnb owners have is the condition of the property.What happens to the furniture?
Do you need to remove everything?
Do you have to repaint?
Do you need to repair every problem before listing?
Not necessarily.
A direct cash buyer may purchase a property in its current condition, depending on the specific property and situation. That can allow an owner to avoid spending additional money preparing a former short-term rental for a traditional sale.
The exact terms depend on the property, but selling as-is can be an option worth exploring.
What We're Doing With the Capital
After selling the short-term rental, our focus is returning capital to the type of real estate strategy we know best.We continue looking for Memphis properties that can be improved and put to productive use.
That can include houses that need renovation, inherited properties, vacant homes, older rentals, and other properties where the current owner may be ready for a simpler exit.
The goal is not to hold every property forever.
The goal is to identify opportunities, improve properties, and make smart decisions with capital.
Thinking About Selling Your Memphis Airbnb?
If you own a short-term rental in Memphis and the numbers are no longer working the way they once did, it may be worth taking a fresh look at your options.You do not have to wait until the property becomes unprofitable.
Compare your current expenses, net rental income, management workload, future repair requirements, and potential sale proceeds. Then decide whether holding or selling makes more financial sense.
Spencer Buys Houses purchases properties throughout the Memphis area, including homes that have been used as short-term rentals.
If you're considering selling your Airbnb, furnished rental, duplex, or another Memphis investment property, you can contact us to discuss the property and your situation.
Spencer Buys Houses
Memphis, Tennessee
Call or Text: (901) 979-9848
A conversation costs nothing, and you can decide what makes sense for you after seeing your options.