Landonrds that do Arbnb, is it a good strategy to....

14 Replies

Good Afternoon Investors, 

Ok so I want to buy a few properties and ARBNB them, I have a hard money lender that give me repair money along with the house loan amount. Goal is to ARBNB them the third month or so once they are completely renovated so that it pays for the monthly mortgage then, sell it within 6-8 months. 

I would buy it outdated, add value either square footage or upgrade it, and sell it for a higher price. 

-My question is how do I find out if the area I am trying to buy homes rent often?

-How much does ARBNB take from your monthly rental income ? 

-Is ARBNB even profitable after all expenses (Mortgate, water, electricity, internet, cleaning service. Am I missing anything ?) ? 

Thank you in advance for you response !

Go on to the AirBnB site and search for listings in your area.  You will be able to see the demand, and what the pricing is for comparable units.  Keep in mind your costs of doing an AirBnB are going to be in furnishing your spaces, and housekeeping/laundry costs, cable TV and internet costs. If your units are not sparkling clean and  comfortable, you will not get good reviews and bookings.  Plus, winter is usually a slow AirBnB season.  I think these "soft costs"  would make a short term AirBnB not profitable.   

Originally posted by @Bettina F. :

Go on to the AirBnB site and search for listings in your area.  You will be able to see the demand, and what the pricing is for comparable units.  Keep in mind your costs of doing an AirBnB are going to be in furnishing your spaces, and housekeeping/laundry costs, cable TV and internet costs. If your units are not sparkling clean and  comfortable, you will not get good reviews and bookings.  Plus, winter is usually a slow AirBnB season.  I think these "soft costs"  would make a short term AirBnB not profitable.   

Thank you for response, is this what you have experienced ? 

Frank, check out https://www.airdna.co and you can buy a market report for your area. They basically pull all the Airbnb public data and consolidate it into an easy to ready format.

My biggest concern with short term rentals is the changing city regulations. You could have a feasible business, and the city could pass a law that ruins your business. So know your local regulations inside and out.

I also see properties that trade off the short term rental rates which seems risky when a city hasn’t made short term rentals legal.

Originally posted by @Andrew Kerr :

Frank, check out https://www.airdna.co and you can buy a market report for your area. They basically pull all the Airbnb public data and consolidate it into an easy to ready format.

My biggest concern with short term rentals is the changing city regulations. You could have a feasible business, and the city could pass a law that ruins your business. So know your local regulations inside and out.

I also see properties that trade off the short term rental rates which seems risky when a city hasn’t made short term rentals legal.

Exactly this is what a market analysis was talking about, I know some states started regulating it already. I am trying to do it to capitalize until we can.  When I say capitalize I dont say it due to the money being generated by the short term rental, I mean by when it home is sold. Goal is to buy it outdated, updated it with the loan I get and rent it until summer gets here and list it on the market. If I can do it again next year I will if not I wont. 

Originally posted by @Frank V. :
Originally posted by @Bettina F.:

Go on to the AirBnB site and search for listings in your area.  You will be able to see the demand, and what the pricing is for comparable units.  Keep in mind your costs of doing an AirBnB are going to be in furnishing your spaces, and housekeeping/laundry costs, cable TV and internet costs. If your units are not sparkling clean and  comfortable, you will not get good reviews and bookings.  Plus, winter is usually a slow AirBnB season.  I think these "soft costs"  would make a short term AirBnB not profitable.   

Thank you for response, is this what you have experienced ? 

Yes, But I did am in a summer -only resort area.  Since you are in Arizona, winter might be your busy season.  Still you are going to have to include costs for furnishings, linens, pots and pans, etc in your feasibility analysis. My AirBnB is a pre-existing guest house on my little farm with my personal residence.  It was already furnished, so my costs to transition it to an AirBnB were minimal.

When figuring your anticipated revenue and expenses, don't forget to account for occupancy/transient taxes on both the state and local level.  Unless Airbnb has arrangements to collect on your behalf with your state and locality, you'll need to either add these charges onto your booking via the Resolution Center or calculate them into your listing price. (https://www.airbnb.com/help/article/654/what-is-occupancy-tax--do-i-need-to-collect-or-pay-it)

@Frank V. - we've been doing Airbnb in Denver and have found it to be very profitable. While I agree with those telling you to use AirDNA for a quick check- I'd also advise looking at what Airbnb projects for you. My experience with AirDNA is that sometimes it's data heavy and can also have limited sample sets that can skew the results.

The upfront investment can cost a bit (takes us about $4K to furnish a studio with IKEA), but the money has been really good for us (again though, we're Denver based.) We were clearing about $3K/month after expenses, so the $4K quickly felt like nothing. Good luck! 

Originally posted by @Frank V. :

Good Afternoon Investors, 

Ok so I want to buy a few properties and ARBNB them, I have a hard money lender that give me repair money along with the house loan amount. Goal is to ARBNB them the third month or so once they are completely renovated so that it pays for the monthly mortgage then, sell it within 6-8 months. 

I would buy it outdated, add value either square footage or upgrade it, and sell it for a higher price. 

-My question is how do I find out if the area I am trying to buy homes rent often?

-How much does ARBNB take from your monthly rental income ? 

-Is ARBNB even profitable after all expenses (Mortgate, water, electricity, internet, cleaning service. Am I missing anything ?) ? 

Thank you in advance for you response !

Hi Frank,

It seems like you the money ready and are ready to pull the trigger on a property. Fun! Airdna.com is a great start. 

Airbnb takes a flat service fee and remits taxes (if applicable in your area). This means that it is passed onto the guests'. You can make additional revenue by charging for cleaning and for extra guests.

Airbnb is profitable after all expenses, but it is more time intensive. If you do it right (great pictures, good location, guests give you high reviews for a wonderful experience, etc) than your profit will only continue to increase. With this "time-suck" comes the need for more turnover - cleaning, maintenance, and, maybe most importantly, guest communication. Guest comm for 1) any hiccups and 2) for making their stay smooth and enjoyable.

We've found that it is more profitable for our clients (homeowners and investors) by 28-55% in Chicago.

Cheers -Jeremy

Airbnb is a great strategy! You can double and triple your income off doing this. Also if you are trying to do multiple properties I would suggest doing corporate rentals and using Airbnb as a tool to cover vacancy periods. You can make Airbnb money with corporate rentals and it’s way less work.

Originally posted by @Jeremy W. :
Originally posted by @Frank V.:

Good Afternoon Investors, 

Ok so I want to buy a few properties and ARBNB them, I have a hard money lender that give me repair money along with the house loan amount. Goal is to ARBNB them the third month or so once they are completely renovated so that it pays for the monthly mortgage then, sell it within 6-8 months. 

I would buy it outdated, add value either square footage or upgrade it, and sell it for a higher price. 

-My question is how do I find out if the area I am trying to buy homes rent often?

-How much does ARBNB take from your monthly rental income ? 

-Is ARBNB even profitable after all expenses (Mortgate, water, electricity, internet, cleaning service. Am I missing anything ?) ? 

Thank you in advance for you response !

Hi Frank,

It seems like you the money ready and are ready to pull the trigger on a property. Fun! Airdna.com is a great start. 

Airbnb takes a flat service fee and remits taxes (if applicable in your area). This means that it is passed onto the guests'. You can make additional revenue by charging for cleaning and for extra guests.

Airbnb is profitable after all expenses, but it is more time intensive. If you do it right (great pictures, good location, guests give you high reviews for a wonderful experience, etc) than your profit will only continue to increase. With this "time-suck" comes the need for more turnover - cleaning, maintenance, and, maybe most importantly, guest communication. Guest comm for 1) any hiccups and 2) for making their stay smooth and enjoyable.

We've found that it is more profitable for our clients (homeowners and investors) by 28-55% in Chicago.

Cheers -Jeremy

Thank you very much for your response and yes I have a townhouse ready to Airbnb and one studio that I should be fixing up here in the next month to do the same thing. I was just in Chicago last week and we did Airbnb, it was a great experience. 

@Myka Artis I agree that renting on the "extended stay" market (either corporate rentals, academic term / sabbatical rentals, etc) and then filling in the vacancy periods with short term rentals on Airbnb or HomeAway / VRBO is the best of both worlds. 

Hey Frank, looks like the others have pretty much answered your questions. Here's another reference for market analysis just in case: http://insideairbnb.com

Good luck!

I'm not saying which way you should go, but the upfront cost of furnishing the unit is not going to be cheap. You've got to figure out if it will be worth the upfront investment. It's it's a house then you can easily rack up a $10k-$15k furnishing bill. Have you considered doing a month to month rental instead?

Thank you very much guys for all your responses, I still have not gotten to some of you I will here soon. 

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