Contemplating on switching to airbnb
Sorry it's too big but I don't post often. And really need some advice.
I bought a big old 5b2b house couple years ago. I had a management company but saw them struggling to find tenant. It's a single family house. Not only that it's hard to find a single family who needs 5 bedrooms, but also it's hard to find group of 5 friends who want to live together. The potential rent would have been 3k/m but the company had to advertise for 2k because 3k is too high for that area for single family with mom, dad, couple kids.
Anyways, very quickly I switched to an individual manager who rents rooms to students or young professionals. Current rent is 3k/m. The business has been profiting but one caveat: she does not advertise. So I, as owner have to. It is a rent per room business, so it's hard to find advertising agent who would legally do that in Philadelphia given 5 strangers are not allowed to live together. Also, all 5 tenants share 1 kitchen which I do not have the money to remodel currently. It's too messy with that many people using common space. I bought shelves for now.
Few dilemas I have:
- I look for long term tenants but people are more interested in 3 to 4 month lease. So I have to constantly find ones who want 9 to 12m.
- Even if I settle for 3m lease, then I have to start advertising again in couple months.
- My manager has one girl who does ad on the side who charges $50 to find tenant per room. What’s frustrating is, I have to give her $50 if she find 12m AND $50 if she finds 3m. And it’s mostly those 3m ones. And she isn’t that regular either. I have to constantly be on the lookout.
- I look for prospective tenants for 12m lease but my manager shows them her other houses too when they don’t like mine. Note, her other houses are brand new. So basically I am transferring tenants to her other landlords without getting paid for it. And I don’t wanna cause any friction so I stay quiet about it even though it does not seem fair to me.
- I really tried to find individuals to advertise on the side but haven't had luck. Even my family members are too busy for this.
If you are still reading, I am contemplating to switch to airbnb and hand it over to an airbnb management company who does full service. But usually companies charge 20% fee and I would have no clue who stays because they will handle advertising and booking. I see they might take advantage of that. And the high fee will cause a huge drop in my net income.
I am sharing this here to see what your thoughts are. I am a frustrating OUT OF STATE landlord with a full time engineering job and it brothers me to do my own advertisement. But I have been very close to my property manager and found her to be reliable (except transferring prospective tenants to other landlords). I worry, with new airbnb company, I will have these situations (in no order):
- Lose (trust in) my current manager and cause friction in our business relation
- Not sure how much transparent an airbnb company will be with bookings and net profit
- Much much higher management fee. Currently I pay 8%. It will become 20% and I won't have constant stays like rental
- Switching management while I can not be in that place physically adds more communication risk
- Also, my place is furnished. But I might need additional cost to make it airbnb ready
- Not only there will be less money coming in due to short sporadic stays, there will be more money going out
I’ve been contemplating on this for about a year. Please give some advice. I wanted to sell too but with capital gain tax and losing a source of passive income stopped me. I just wanna avoid handling advertisement myself and not pay fortune to have someone do it. And this kind of patching FIVE rooms between tenants for 3m to 4m honestly terrifies me when I have to handle the advertising for that myself. It's simply not sustainable that way. I would really appreciate your advice on this.