Should We Start an AirBnB

Question

My wife and I are stuck and I would appreciate input!

We live in Conway, AR.  I have always wanted rental property and she would love to run an AirBnB.  We’ve got the following opportunity but are unsure if we should do it:

-Current house is 4 bed/2 bath with $1,100 mortgage.

-Found a nicer 4/2 for a little more across town.

-We’re considering converting our current house to a short term rental, but are hesitant as we don’t know how it will do in this area.  Also don’t know what the startup costs will be or how long it will take to rent consistently.  We’re considering setting aside $10,000 for startup costs.

Does anybody have experience in this area or thoughts overall?

Thanks!

Jimmy Woodard · Answer

@Steven James I'd recommend checking out Rabbu. Not only can you get an estimate for revenue potential based on your address, but you can check out free comps of other STRs near yours to see what amenities they offer and what you can add to your property to stand out from the crowd. If you don't find a lot of comps, then that means there's not really a market for STRs in your neighborhood/city.

Good luck!

Steven James · Answer

@Jonathan Greene we could increase the initial investment to $15-20k.  There are 3 colleges in our town and 2 medium sized hospitals (we considered renting to travel nurses).  There are quite a few STRs here but not many 4 bedroom.  Most are renting in the $90-125/night range.   The calculators say average occupancy is 67%, but it varies.  Some I have looked at have been closer to 50%.

Alex Talcott · Answer

Very nice! I would love to have more trusted people to manage STRs and LTRs.

Steven James · Answer

@Jimmy Woodard that’s super helpful!  I hadn’t found that website and had been searching for all of that info manually!

Aaron Oetting · Answer

@Steven James I would set aside 15 to 18k if you are going to be doing at a decent level.

Todd Goedeke · Answer

Your numbers of $200@ 50% occupancy = $36.5k gross revenues. After subtracting fixed and variable expenses; RE taxes, ins., maint., utilities, etc., will you average 10%+ before leveraging? If not, then the numbers don t support time and $ for an average cash flow business.

There seems to be no vacation draw for tourists in your area.

To make your property stand out from others you will have to add an amenity like a pool, hot tub to attract families and and or a higher day rate.

Peter Mckernan · Answer

@Steven James I would jump on Airbnb see what things are renting for in the nexts 90 day window, how long they are rented for and how much they are rented for in your area. I would also take this as an opportunity to see what the styles are in that area for the house to rent on Airbnb in your area. There have been areas I have seen that the property does not rent for more, and takes a hit on rents as an Airbnb due to the style of the interior/exterior not matching the area. These are things you need to take into consideration while getting it ready and renting it out.

Zachary H. · Answer

@Steven James hey man!!

AirBnBs in Conway area and surrounding are really good. They have started tightening down the restrictions. There is a small fee and the fire Marshall has to approve the property before it can be listed for short term rental. But most people in the area are generating 2-3 times their mortgage. So, it wouldn’t be a bad move.

I’m a long term rental guy, so I typically recommend  going that route. For a 4/2 in a solid area you’d easily get $1500-1,600 if not more.

Holler at me if you need anything!

Blessings

Zac

Steven James · Answer

@Alex Talcott she wouldn’t want to be bed and breakfast host, but wants to get it set up, coordinate cleaners and communicate with renters, and try to add some personal touches for guests who stay.  She is also excited to market it, etc.

It would work out nicely because she’s a stay-at-home mom currently and I have heard of she gets professional status we could take deductions against my W2 income.

Alex Talcott · Answer

I am very interested in expanding my investments into Arkansas. I'd be glad to chat with you on that.

The thing that struck me about your post was that you said your wife would love to run an AirBnB. I may be reading too much into it, but that could be fairly unique in the real estate investor community in the sense of operating vs. 'just' owning. Would she enjoy the soup-to-nuts, hands-on aspect of running it (like bed&breakfast hosts or innkeepers)?

Should We Start an AirBnB

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