This post is targeted at Canadians although open for all to comment.
Has anyone purchased a property and evaluated the investment as an exclusive Air B&B (or similar)? Is this a viable, credible investment strategy that is profitable?
Is the management of such a property worth the potential reward?
What risks are associated with an Air B&B?
I am looking forward to hearing your experience with the strategy. I do feel that this is one type of strategy not commonly discussed so would love to hear your voice!
Hey Ram. I have started thinking about that strategy as well. Was considering looking i to a beach town in Costa Rica or Mexico. Some place very touristy. I know you can manage most aspects of an AirBnB online but the main concern is the turnover between tenants. Are there property management companies that would do that? Or do you need to hire a maid service. That is next on my list to research.
Hey @Ram Srinivasan I bought my 1 bedroom and turned it into a full time Airbnb listing and it has been a great investment. There are risks including financial (no guaranteed income) and liability (covered by the right insurance) but you can mitigate them by learning the ropes or getting a property manager. It is a very viable and credible investment strategy, check some of the other Airbnb forums on BP and you'll see there is tons of info on how to run one and where to invest.
@Tyler Work. Thanks!
As @Tyler Work said, it's absolutely a viable investment strategy. I work with clients who are buying in Denver and Colorado Springs exclusively for Airbnb. (Denver's a bit harder because of the rules.) But I know people are doing it around the country.
As with any investment, it's all about the numbers. Most major cities are going to have at least one (if not multiple) companies that specialize in short-term rental management. For full-service, that will usually run you 15% on the low end and up to 25%. (In the mountain towns here in Colorado, that fee can go up to 40%.) That all sounds like a lot, but you've got to remember that in general you are also get 2-3x the revenue of a traditional long-term rental. If you want to run it yourself, then you don't have to include that fee, but I would bet self-management only lasts so long before you tire of cleaning, laundering, answering daily questions, etc.
As for the risks ... there is always a small risk that someone trashes your place, but that's true for long-term tenants as well. The biggest issue I'd watch for is a changing regulatory environment in the city where you buy. City laws and ordinances are being discussed everywhere if they haven't already been passed. It's important that you know what you can and can't do (and what may change with that) before investing.
I manage vacation rentals in Las Vegas and yes they are a great investment, however the amount of work depends on the number of homes you have.
Dealing with your guests is a daily routine. From answering inquiries of potential reservations to answering phone calls from current guests. There is a huge learning curve in the first 3-6 months that takes place.
If you are only managing one property it's not that bad. It's actually pretty fun to manage your own property.
The second property becomes more of a job and then the third and beyond becomes full time work that requires systems and additional help.
Not exactly a passive investment but it can be a fun full time investment/business that gives you something to do every day.
If you have more detailed questions I'm happy to help.
I purchased a small condo in Jaco Costa Rica last year and I would recommend everyone interested in similar check out vacasa as a service to manage your vacation rental. They are a global company and we aren't very far into our agreement but they handled the furnishing of the condo for me and the remaining renovations that I was unable to complete the management of during my last visit.
Not much feed back specific to Canadian markets. My only advice would be to aware of future legal restrictions. Change in laws are coming and will place higher restrictions if not outright banning airbnb.
It is a business that is very much in need of regulation so beware of change.
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