After looking at multiple investment strategies I came to the conclusion (I may be wrong) that the highest ROI I can find is by investing in AirBnb properties. I have 120k cash for down payment to invest, great credit and a high salary. I'm interested in buying in Florida or PR at the moment since those places are close to me. Anyone with experience in airbnb willing to give me some pointers of where to buy and what mistakes not to make? Also, I heard you can buy a bnb using 10% down as secondary vacation home. Is that true?
It may sound attractive, but all real estate investment options are still built on your number in and how you run them. So, in general, the ROI for Airbnb, done correctly, is very solid, but it comes with many more headaches than annual rentals so there is some trade-off between the two and what you want out it. Airbnb is not passive and if it is, you pay for it up to 18-20% to truly to be hands off. You can't only evaluate the ROI across the board because if you don't choose a good property, understand the metrics, and have good cleaners and management support, you will lose quickly in Airbnb.
Airbnb is a bigger time commitment, but I have found interacting with guests is more enjoyable than interacting with tenants. As you have mentioned the returns are significantly higher. Also find an area and property near your home that you truly enjoy and won't mind spending time there.
Congratulations on getting started and thanks for posting.
One strategy for Airbnb rentals can be locating properties near hospitals throughout Florida. With traveling and contract nurses (particularly since the start of the pandemic) these properties have seen steady occupancy and a good tenant base.
Best of luck on your journey.
@Ismael Ramos there are a lot of options in Florida for Airbnb with $120k down on a second home mortgage. Rather than steering you towards a specific facility, I'd recommend looking into the Florida Panhandle, Kissimmee, Miami, and Tampa as viable areas. Below are mistakes to avoid.
- Don't buy properties on numbers alone. Use a free tool like Rabbu to analyze properties near where you're looking at to see what amenities they have and what you can add to your own to stand out
- Don't just think "list it and they will come." Spend money on renovations (see above) and a photographer to make your listing pop
- Don't waste money on a property manager if you don't have to. That 20-30% of gross makes it harder to hit your numbers, and there are many tools like Wheelhouse and Your Porter as well as cleaners and handymen that can help you self-manage
- Don't get angry when guests ruin your property, leading to retaliatory reviews. There's host insurance, STR insurance (Proper, CBIZ) and reserves for any damages.
Good luck and DM me if you have any other questions!
@Ismael Ramos 10% down options are definitely do-able! I've got the piggy back on Jimmy, somewhat. The Florida panhandle has massive opportunities in the STR market vs places like Kissimmee that have become Saturated and you really have to stand out to maximize revenue. In Destin/PCB, we only have so much land and we aren't getting anymore. So when prime season starts, it's still hard for people to find a place to book.
As far as pointers go:
* Don't use a property manager, I can show you the system's we use to automate things as much as possible to save you 20%-25% of your income.
* You can utilize a 10% down loan in multiple area's IF you wanted too.
* Lean more on actual rental data from investors/agents vs airdna & other software's.
* Make sure the market's you invest in are STR friendly. Bigger Cities that aren't 100% dependent on tourist could enact laws that would hurt your returns.
Best of luck to you, Feel free to reach out at anytime!
Greeting, Ismael. We found that since family homes with the pools are most desired by the guests. So, I recommend to focus on these. Also, no more than 15 minutes drive away from Disney. Possibly either pond or conservation view. The rest you can determine by the purchasing price. Good Luck!
I have had amazing returns on my investment in Myrtle Beach, SC. I live in Atlanta, though. So don't feel confined to just the places that are nearest to you. There are some amazing markets out there throughout the South. With the right team (cleaner, handyman, etc.), you can really manage from afar. Also, if you are not keene on self-managing but don't want the fees of a PM company, a Co-host (10%-20%) can be really helpful. It's a happy medium between PM company (who I have seen take up to 40%) and self-managing (which can become time-consuming if you don't have great systems and processes in place).