Using Aribnb to Rent in Vacation Areas

10 Replies

I've been looking into this more and more and was wondering what other investors thought of using Airbnb and whether they felt it could work or not. Airbnb provides the freedom to book renters for any period of time and at a rate that you set. In theory, wouldn't you be able to make a significant amount above what a regular rental property should?

I understand that every area has different regulations that might prevent this and that Airbnb also takes a percentage, but you can still rent for $50-$200 a night or even more.

Any thoughts?

David,

Yes depending on your market you can easily double or triple your rental rates monthly with airbnb. I've been doing Airbnb for the last 6 months where I live and I'll never go back to having a long term tenant unless it's a corporate rental. If you are near colleges, ball parks, or football stadiums then you are in business especially if you are in a city where Airbnb is supported by the city.

Hi @David Graham  You're spot on. If you're getting $800/month in rent and you could get $80/night on Airbnb, it doesn't take too many days to cover that and then some. It's pretty tough to go back once you've been spoiled by Airbnb-sized revenues.

You're also correct that every municipality is going to have its own laws. Here in Denver, you can't rent out anything that is not your primary residence. I'm constantly trying to get my clients to see the value in a home with a basement apartment or carriage house as those are allowed under Denver's new Airbnb law. 

You mentioned the percentage ... yes, Airbnb takes between 3-5% from the host's cut. As with everything, though, this money is not free. I ran a few Airbnbs for some years, and it was a lot of work. A lot of guest communication -- both before and during a stay -- a lot of cleaning  and a lot of calendar & pricing maintenance to ensure I was maximizing the business. But, as @Myka Artis  said, if you can do it right, it can be 2-3x a traditional rental's revenue. 

Where are you looking to buy?

@James Carlson I would more than likely buy in Florida or Pittsburgh Pennsylvania. It depends on my current job situation and where I end up.

As far as it having to be your primary residence, what is there as far as triplexes and renting out the other two units while living in the third? I feel like there are a lot of possibilities with Airbnb that no one is taking advantage of.

@David Graham I'd search the forums for Airbnb as this topic is discussed often. It is a great way to earn even more for your properties! 

There is also the BP Podcast #229 which discusses Airbnb rentals as well:

https://www.biggerpockets.com/renewsblog/biggerpockets-podcast-229early-retirement-short-term-rental-properties-zeona-mcintyre/

@David Graham Totally! There ARE a lot of opportunities that people aren't taking advantage of. But it depends on the city. There are plenty of cities that allow Airbnb in a lot of forms but not another form. In Denver, renting the other side of duplex or triplex, even if you live in one of the units, is not allowed because those other units are another address and therefore not your primary residence. Plenty of other cities, however, will totally allow you to do that. Check out the rules in Pittsburgh and wherever you're looking in Florida and see what they have to say. (BTW, finding the Airbnb laws can be difficult, so go direct to the source. Call the planning or zoning department and talk to someone.) Florida's probably a better bet for you as from what I've heard many of their cities have more lax rules. 

@David Graham  

Hey David,

I'm originally from Pittsburgh, have a SFH in the South Side, and also rent a house and two AirBnB properties in DC. For my numbers, AirBnB in Pittsburgh would be very difficult versus a long term rental. In short, it's very active investing. Managing schedules, guest needs, cleaning personnel, etc. You have the opportunity to make maybe $500 more per month in rent roll, but the extra costs associated with it make the margins tight. Look at AirDNA for some helpful info, but I think it's more profitable and scalable in the Pitt market to do long term rentals. Just my 2 cents...

Another thing to keep in mind about AirBnB is the taxes. It is active income, which means you are subject to normal taxes. If you can only make 50% more per month then you may not actually be making more profit after taxes.

@David Graham Also make sure the property doesn't have an HOA, we had a home that the HOA would not allow short term leasing. We are also in the process of purchasing a vacation home that will be on AirBNB. The plan is to help with the mortgage but we don't plan on cash flowing, the family will use it too much for that.

We have never used AirBNB for rental income but know a couple who do, based on the responses you have here it seems like you should run numbers and consider the active income (normal taxes) and additional costs. Might not be worth your time to short term lease through AirBNB after it is all said and done, unless you plan to use the property for yourself/family as well.

Depending on how long until you are looking to buy you can monitor Airbnb locations for occupancy rates.  I have been tracking 3 randomly chosen properties for about 6 months as I do my research and at the end of each month I look at the following month.  I have found for these 3 I am tracking 25-30 nights rented for the following month - pretty good occupancy!  There are services that provide analytics on occupancy and types of rentals.  Example:  https://www.airdna.co.   I am not connected with them and have not yet purchased anything - just an example.

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