AirBnB????
Peoria, AZ · Member since 2015 · 9 posts · 7 votes
Hello fellow BPs! As a new member this is my very first post on the forums; with many more to come I hope, I'd like to say hello!
With all that I have been learning about multi-family rentals, I came across AirBnB and got to thinking about it as a full time business as you would with any other real estate niche. Has anyone had success with it? I'd love to know what thoughts you guys might have on this subject. With all these P2P (peer to peer) business disrupting major industries, such as uber, I feel like it could open new doors to the investment world. However, scary and new at the same time.
My business is vacation rentals, it's my full time job, produces decent income and the start of a nice RE portfolio.
I use VRBO, HomeAway, TripAdvisor (Flipkey), VacationRentals, GlampingHub, Airbnb and even Craigslist for my rentals.
WARNING about Airbnb - their cancellation policies are very lax, not good for the property owner, so if someone gets sick or has a death in the family (or any "extenuating circumstance" they can cancel at the last minute and you will not get paid for the rental. This is not good business for our investment properties, we cannot afford to lose a peak week of income due to this policy (and we have!).
So - we use Airbnb ONLY for last minute reservations. It's more work updating the calendars on each of our listings, but we get quite a bit from Airbnb for dates that might otherwise not get booked. We lower rates for last minute availability, offer even lower rates for midweek dates, etc. Lots of strategy, but it's worth the efforts.
Hi @Nick Jacaruso and welcome to Bigger Pockets. I'm sure you'll find it useful; I know I have.
As far as Airbnb goes, you'll find several regular posters on here besides myself who focus on Airbnb, including @Al Williamson who has a course and other materials designed for landlords looking to utilize Airbnb as opposed to standard tenancies.
Personally, Airbnb has been a real game-changer for me in many ways. It has helped me transition into other types of real estate and investing with a lower barrier to entry.
The first thing I would recommend is that you ask yourself the "why". As in why did you decide to get involved in real estate in the first place?
From there you'll likely get some better feedback on the pros and cons of each depending on what your interests are.
There are of course other factors to consider too, including local regulations, time you have to put into a new venture, etc.
Looking forward to seeing your posts in the future, and once again, Welcome to Bigger Pockets, Nick!
Hi Nick! Welcome to the site!
Participating in the sharing economy can definitely be lucrative (and sometimes easy), but whether you use Airbnb versus VRBO (or some other site) will be dependent on why type of property you're advertising.
If you have any questions at all about the vacation rental industry, I'd be more than happy to chat! I'm not a property manager myself, but I work with hundreds of vacation rental homeowners worldwide and would be happy to share what I've learned with you. :)
My business is vacation rentals, it's my full time job, produces decent income and the start of a nice RE portfolio.
I use VRBO, HomeAway, TripAdvisor (Flipkey), VacationRentals, GlampingHub, Airbnb and even Craigslist for my rentals.
WARNING about Airbnb - their cancellation policies are very lax, not good for the property owner, so if someone gets sick or has a death in the family (or any "extenuating circumstance" they can cancel at the last minute and you will not get paid for the rental. This is not good business for our investment properties, we cannot afford to lose a peak week of income due to this policy (and we have!).
So - we use Airbnb ONLY for last minute reservations. It's more work updating the calendars on each of our listings, but we get quite a bit from Airbnb for dates that might otherwise not get booked. We lower rates for last minute availability, offer even lower rates for midweek dates, etc. Lots of strategy, but it's worth the efforts.
Thanks for the responses! I definitely want to find out more and possibly use my rental home for a Airbnb trial. Just not sure if its a popular location for a "vacation rental"
Has anyone considered or heard of other businesses based off airbnb or vbro? Such as a turn down service for owners of these rentals? Grocery shop, staging, cleaning, etc..
Monika Haebich Maura Paler Patrick Diamond
Between the three of you there's obviously a wealth of knowledge. I too plan on purchasing a vacation rental. I would use this vacation rental in the off season and rent out during peak season. To start off my journey I am spending this year viewing the profiles of several similar properties in my area of interest to determine the vacancy rate and Gross income. I would like to know how should I turn over my property between stays? My property will be 90mins away so would hiring a maid suffice? Also what types of amenities should I offer? All input is welcome.
Good luck on your search Jason! It's very possible to manage your vacation rental at a distance, just by setting up the right systems and finding the right team. You'll want to have some way for your guests to check themselves in (how do they get into the property?) and some prepared information for them about the house. It shouldn't be very hard to find a maid to turn over the place, but when doing so, I encourage you to solicit those with hotel experience over home-cleaning experience - there's a big difference between the two - and make sure you negotiate a set rate. I'd also recommend that you find a local handyman that you trust - get references, have him do a few jobs for you when you're in the area to oversee the work - so that when things break down, you have somebody you can call and potentially rescue a guest's vacation. As for amenities, that will vary widely depending upon your chosen market, so take a look at competing properties and see what they're offering - take into consideration what is realistic for you at your target price point, and be sure that whatever you choose to offer, it's something you can maintain consistently with every guest.
Monika Haebich Maura Paler Patrick Diamond
Between the three of you there's obviously a wealth of knowledge. I too plan on purchasing a vacation rental. I would use this vacation rental in the off season and rent out during peak season. To start off my journey I am spending this year viewing the profiles of several similar properties in my area of interest to determine the vacancy rate and Gross income. I would like to know how should I turn over my property between stays? My property will be 90mins away so would hiring a maid suffice? Also what types of amenities should I offer? All input is welcome.
Sounds like a great starting point! Are you planning on managing bookings, maintenance, marketing, etc. on your own, or will you be working with a manager?
Seeing as you are 90 minutes away, I would assume working with a maid would be necessary. Evolve put out some really useful checklists of things to consider with turnover: http://blog.evolvevacationrental.com/vacation-rental-checklists/
@Monika Haebich, I am interested and I have a lot of family around the world and though i am just getting started, my partner in crime (GF) do like to travel a Lot, ( her more than me, its expensive but you got to please your woman right?!
Haha always :) @Jean-francois Ndomb
What's the best properties to buy for this? Beach home? In the city? Sporting facilities? I have my rental home in Peoria. Here we have massive amounts of spring training for baseball, year round golf, NASCAR, and snowbirds from colder areas come for the winter. If I you can reach and market to all of these activity goer's I can see the pipeline being full all year round? So I guess my question also would be how to market and advertise this rental to these specific groups of people?
And if anyone is in the phoenix area and wants to grab some food or drinks and discuss anything real estate give me a shout.
The business model for AirBnB & VBRO is becoming more and more risky every day.
The problem is various cities are intervening with new codes restricting what is know as Short Term Rentals(str). Length of stay may vary from city to city and some are declaring anything less than a full month as STR.
So if today there is no such restriction(s) and it is a viable business model for you now, how long can you assume that will continue and if it changes, can you survive the change.
CAVEAT EMPTOR.
Wow, again the BP community comes through with great info. I barely can add anything to what's been said.
But I'll try.
There's a different business model for home sharing, vacation rentals, and a dedicated short-stay inside a multifamily. They each have different standards for what makes the endeavor worth while.
I focus on landlording and always caution people to check the brutal facts. You need to make sure that you net more than a traditional long-term rental to be considered profitable. You also need to consider the cost of you time in that equation. Otherwise you're fooling yourself.
Each of business model (shared home, vacation, and landlording) has a separate approach. It's best to chose what your most interested in and then not slip into using the best practices from the other models.
Thanks @Patrick Diamond for the tag!
Have a buddy who rents out his parents in-law $200 a night 90% occupied using to pay off his college bill.
Spoke to a woman who bought an old Victorian in a tourist area in CA bunch of beds rents to tourist $200 a night per bed, huge cashflow 90% occupied she has someone living there and managing.
Paul
I'm in Philadelphia and am also planning on this investment approach - check your area's regulations. Phila. has recently decided to allow airbnb and other short term vacation rentals with an 18% hotel tax. My individual strategy is to buy something with small square footage in a great location for visitors. Personally, I believe an awesome studio with great amenities (a super coffee maker, plenty of fluffy towels, etc....) in a high walk score area is better than a larger place. I plan to live there during any non-booked times (hopefully very few) and live at my parents during the booked times. I will initially do all management myself and see how it all goes. I'm going to stay away from a high-rise and look for a more unique space with separate entry. Would love to continue seeing what everyone else does!!
@Paul TimminsThanks for the info my friend. And thanks to everyone for alloof your input so far. This is a new topic I believe needs to be talked more about. This is something you guys may want to scale. Its disrupting the hotel industry and there is definitely money to he had. I say go get more than your share.
@Paul TimminsThanks for the info my friend. And thanks to everyone for all of your input so far. This is a new topic I believe needs to be talked more about. This is something you guys may want to scale. Its disrupting the hotel industry and there is definitely money to he had. I say go get more than your share.
This is a new topic I believe needs to be talked more about
Which is why I centralize the topic here:
https://www.biggerpockets.com/forums/48/topics/291117-short-term-rentals-airbnb-vbro-business-models
David Hays and Monika Haebich
Thank you for the advice. I would like to work with a manager as long as the numbers work but I'm thinking a good manager will pay for itself just in occupancy rate alone. I would like to expand at 1-2 properties a year and definitely build a team. My question to the team building is that should I diversify vacation rental locations? What should I expect in a depression. How do i become more risk tolerant?
I would recommend diversifying vacation rental locations if you are working with a manager (if not, that's a lot of travel for you). Should something go wrong in one location (i.e., no snow for ski markets, oil spill, strict ordinances, regulation, etc.), you'll still have another location that is hopefully immune.
That being said, you can also be more risk tolerant with vacation rentals by working with a manager that is offering fixed rental income, meaning they pay you a guaranteed, fixed amount every month. Regardless of occupancy, you'd be guaranteed your rental income.
To echo what @Patrick Diamond, @Lori Spadaro, & @Jeff B. said, yes, regulations are constantly changing, and it's important for invested homeowners to 1. be aware of what's happening, and 2. be proactive in preventing regulations.
With this in mind, my company just put together a tool to help homeowners monitor local short-term rental regulations. It scrapes the internet, and you can easily filter by your location.
Seeing as the tool is on my company's site & I don't want to be flagged as spam, please let me know if you want the link to it, and I'd be happy to message it to you.
@?lori
@Lori Spadaro I like your hustle strategy - I could work since you are not working with a typical rental - but your part-time residence. Your formula of counting on high turns is not the way to go for a landlord who faces hotel/transient tax.
Short stays are definitely a game that a live in "Inn Keeper" can profit from by reducing their personal overhead. It's not one that a typical landlord would find profitable. The turnover cost and taxes makes is so you would earn less money than if you just ran a typical rental operation.
Beware of this.
I promote the approach that landlords should use Airbnb and other platforms to seek out people staying for 1 month or more. This gets you out of burn out cleaning, get you out of short stay taxes, and sets you up to earn more than baseline.
Hope that helps. Don't do more work for no pay.
This coming summer, like most, we are going to have 2-4 furnished rooms available in our International Student House. We are usually able to fill these rooms for at least one of the university's shortened summer sessions, but this year are going to set aside 1-2 rooms for an AirBnB experiment. For a variety of reasons - one of them being the imaginary line between a landlord and a hotelier - we are going to stick to our policy of 1-week minimum stay.
Thank you @Al Williamson for that insight. I hadn't really considered the longer term, though still not permanent, rental option. I will look into that for sure. I listened to a BP podcast recently where this was being done effectively, mostly renting to traveling nurses.