Best cities to buy into for AirBNB?

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Best cities to buy into for AirBNB?

Tim Schroeder

Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes

So is Nashville dead for new investors wanting to buy now? Are the regulations too strict/prices too high?

What about Austin? Las Vegas? Palm Springs? Columbus?

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Jeff Piscioniere

Investor · Shelton, CT · Member since 2016 · 218 posts · 225 votes

@Tim Schroeder are you committed to a large city? Gatlinburg/Pigeon Forge, TN are year round destinations and a VR on Airbnb or any of the listing sites will do incredibly!

Good luck on your choice!

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Tim Schroeder
OP
Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
9y
@Carrie Penney what do the numbers look like in those Texas towns? COC return, monthly cash flow? Or even a rough idea of what a rental-ready 3BR goes for? Anything you have would be helpful.
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Tim Schroeder
OP
Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
9y
@Michelle McGee @Christopher Brainard @Greg Groves The problem with Las Vegas (for me anyway), is I'd have to add a line to my P&L spreadsheet for Blackjack losses when I am in town visiting my property. It will kill my ROI.... :)
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Kevin H.
Rental Property Investor · Greer, SC · Member since 2017 · 51 posts · 33 votes
9y
Philadelphia made AirBnB legal. You get taxed and the city takes out their cut. Plus there seems to be a nice flow all year long due to people on business, visiting their children in college or city events.
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Jenna Pham
Irving, TX · Member since 2017 · 7 posts · 0 votes
9y
Carrie Penney I’m curious about how you pick your property (in Waco) for Airbnb from a remote location? What are your criteria? I’ve been to a game in Waco and have to say there are a lot of tourists, alums, etc. Not to mention BU has a new football stadium.
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Tim Schroeder
OP
Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
9y
@Myka Artis @David Ivy @Kris Wong Thanks for the replies re:Austin. Would you say that investing in AirBNB in an area just outside of Austin is a good idea? Do you thus avoid the regulations but still benefit from Austin's attractions? Or am I just setting myself up for problems when the suburb cities get around to regulating it? If that happens, I would think that an AirBNB in an Austin suburb could be converted to LTR and still be successful.
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Carrie Penney
Investor · Lubbock, TX · Member since 2017 · 26 posts · 12 votes
9y
A traditional rental on a 3 bedroom in Lubbock could rent for $1200-$1500 depending on how nice it is/proximity to campus. Students easily pay $400-$500 per room. It would need to be at least a 2 bath to rent at that rate. Would probably rent for $900-$1100 if it had only 1 bath or was further from campus. 2 bedrooms can rent for $750-$1000. There are houses right now in a neighborhood that is walking distance to campus and MLS has asking prices starting in the 50k range. Most of those need some TLC but we have gotten lucky with some just needing paint/flooring. We're hoping to find some deals outside of MLS but we are really new to this, so that's where we started.
Several years ago, most of the neighborhoods surrounding campus were really bad/kind of scary, but investors have really cleaned up the neighborhoods. Luckily there are still some houses around that are cheap to buy, and property values are rising nicely.
We live close to the university and rent one room in our house for $500/month, and another room on AirBnB.
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Carrie Penney
Investor · Lubbock, TX · Member since 2017 · 26 posts · 12 votes
9y
@Jenna Pham I haven't actually invested in Waco yet but have been looking heavily at the market there. The prices and area feel a lot like Lubbock and I think our model could work really well there. My mom lives pretty close to there right now and I'm trying to convince her to actually move to Waco and do some kind of house hacking while we explore the market more.
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Jenna Pham
Irving, TX · Member since 2017 · 7 posts · 0 votes
9y
Originally posted by @Carrie Penney:

@Jenna Pham I haven't actually invested in Waco yet but have been looking heavily at the market there. The prices and area feel a lot like Lubbock and I think our model could work really well there. My mom lives pretty close to there right now and I'm trying to convince her to actually move to Waco and do some kind of house hacking while we explore the market more.
I probably misread your prev post about Magnolia market oops. Hope you could convince your mom to move there. It seems like a decent place for STR investment or traditional rental. Just gotta figure out someone to trust to maintain the place.
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Carrie Penney
Investor · Lubbock, TX · Member since 2017 · 26 posts · 12 votes
9y
Jenna Pham ah, yeah, I just meant Magnolia has helped make Waco more of a "destination" spot, which is always nice for us investors. Hopefully my mom will move. She has a paid off house in Temple (no attraction, house hacking not even an option) that's really just wasted equity right now. If I can get her into something producing income, that would be pretty sweet. I just keep on top of listings there hoping to score something. I also looked at AirBnB's site for Waco listings and they seem to be paid well and maintain good occupancy.
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Jorge Jimenez
Investor · Windsor, CT · Member since 2016 · 8 posts · 0 votes
9y
What about New Orleans? I'm looking at buying a duplex there and living in one side while renting the other out. I've been tossing around the idea of a STR. I know they recently changed the laws there regarding STR's but if I read them correctly, it sounds like you just need to apply for a license and as long as you live on the property, and it's not in the French Quarter, you can rent out an STR for an unlimited amount of time.
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Kimberly Jones
Real Estate Junkie · New Orleans, LA · Member since 2008 · 274 posts · 165 votes
9y
@Jorge Jimenez as long as you are planning to live in one side you will be fine. Are you familiar with areas in New Orleans?
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Jorge Jimenez
Investor · Windsor, CT · Member since 2016 · 8 posts · 0 votes
9y
@Kimberly Jones I am. Or at least I used to be. I grew up there, but I've been in the Northeast for almost twenty years now. Most of my immediate family lives there though, and I'm trying to move back. Things have changed a lot though, especially since Katrina.
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Kimberly Jones
Real Estate Junkie · New Orleans, LA · Member since 2008 · 274 posts · 165 votes
9y
Yes things have changed quite a bit. As long as you stick with the right parts of the city you can make a very nice income with an str. I just sold mine last month and it was funny because prospective buyers didn't believe I was being honest about the income, until I gave them the airbnb printout.
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Jorge Jimenez
Investor · Windsor, CT · Member since 2016 · 8 posts · 0 votes
9y
@Kimberly Jones What part of the city were you in? And, if you don't mind me asking, what was your occupancy rate?
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Kimberly Jones
Real Estate Junkie · New Orleans, LA · Member since 2008 · 274 posts · 165 votes
9y
Tax records say Bywater but I am lake side of St Claude Ave so that technically puts me in St Claude. I hated to sell it but it was across the street from my personal home so I rode the temporary license as long as I could and then handed it off to someone that is going to live in one side so they can go full year. Occupancy was always between 80%-98%. Times like Carnival and top festivals were extremely lucrative. There is one part of the new rules that sucks even for owner occupants though. Before, we had 2 beds in one bedroom, one bed in the 2nd bedroom and 2 sofas, so we were able to sleep 8 people comfortably. With the new rules you are only allowed 2 people per bedroom, PERIOD.
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Brandon Cobb
Developer · Mount Juliet, TN · Member since 2017 · 20 posts · 8 votes
9y
I just came from the codes department today In Nashville. They have stopped issuing permits for type 2 STR in residential areas. Basically, anything zoned with the abbrevation "R" or "RS" at the beginning will not be given a type 2 permit.
(Type 1 = Owner occupied, Type 2 = non-owner occupied, Type 3 = multifamily.)
However, If you find a property that is not zoned residential (most likely commercial) then type 2 is fair game.
Type 1 and type 3 permits are alive and kicking. You will have to jump through some hoops regarding taxes and fees but It may be worth it. Nashville is currently rated as an A+ market on airdna. The demand is through the roof and many properties are doing very VERY well. This is due to the demand for tourism. The hotels in Nashville are charging some of the highest rates in the county and this demand is pouring over into airbnb.
However, Nashville was suppose to vote on October 3rd 2017 to phase out all type 2 STR over a 3 year period. That vote just got punted to January. The word from those close to the council is that they will more than likely move forward with this. They have a special committee that has been looking into airbnb to decide what should be done. That being said the state legislature has already stated it would overrule any decision to ban airbnb's In Nashville so everything is up in the air and nobody knows what will happen.
My plan is to buy a multifamily property, live in it, and airbnb the other units. Mr. Codesman has stated that these other units would technically have to be type 2 but who is to say I am not occupying the entire premise? It is another gray area and who knows if they will actually give me a permit. That is my dilemma.
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Myka Artis
Rental Property Investor · Arlington, TX · Member since 2016 · 706 posts · 611 votes
9y
@Tim Schroeder I interviewed a guy that subleases and Airbnb's out of Columbus and he is killing it. He's had over 200 stays with 3 listings in a year and a half of hosting. There's definitely a market up there.
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Sal Zafar
Investor - buy and hold. · Cedar Park, TEXAS (TX) · Member since 2015 · 95 posts · 7 votes
9y
Austin also stop the permit, but I see many AirBnB and HomeAway around the city. Apparently, city is not pushing the code.
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Jorge Jimenez
Investor · Windsor, CT · Member since 2016 · 8 posts · 0 votes
9y
@Kimberly Jones I've been looking at Bywater and Algiers Point, but I can't believe the prices. Is the lakeside of St. Claude a decent place these days? When I was living there in the 90's I would've been scared to walk down St. Claude after dark.
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Robert EllisBusiness Member
Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
9y
Originally posted by @Carrie Penney:

In Texas, good cities are mid-sized college towns, like Lubbock (Texas Tech) and Waco (Baylor, also Magnolia Farms for girl's trips). I live in Lubbock and have a couple of AirBnB properties that were really cheap to get into and do AWESOME on AirBnB (bring in more than double what a traditional rental would). I wouldn't invest in Austin when these kinds of cities are available. Sometimes I look at Austin MLS for fun and yesterday I saw a $190k "tear down" in an unlivable part of town. It's just insane right now.
Maybe look for affordable cities that have some kind of draw to them like universities (especially if sporting is big there) or concerts/festivals.
Just remember to have some exit strategies in case the city tries to shut you down or there is too much competition with short-term rentals.
Hi Carrie, have you looked into Columbus, Ohio? OSU is one of the largest universities in the country. With 6,000 plus graduates a year, being a state capitol and the tax incentives offered to companies to locate in Columbus, there is no shortage of tenants. Prices are very attractive and there are a lot of buyers that are buying properties specifically for Airbnb.
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John D.
Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
9y
Palm Springs proper has become a nightmare with changes to the vacation rental ordinance, heavy fines, etc. There are some insanely good numbers in the surrounding cities and nearby unincorporated areas though.
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Devan Mcclish
Investor · Nashville, TN · Member since 2015 · 688 posts · 607 votes
9y
Originally posted by @Brandon Cobb:

I just came from the codes department today In Nashville. They have stopped issuing permits for type 2 STR in residential areas. Basically, anything zoned with the abbrevation "R" or "RS" at the beginning will not be given a type 2 permit.
(Type 1 = Owner occupied, Type 2 = non-owner occupied, Type 3 = multifamily.)
However, If you find a property that is not zoned residential (most likely commercial) then type 2 is fair game.
Type 1 and type 3 permits are alive and kicking. You will have to jump through some hoops regarding taxes and fees but It may be worth it. Nashville is currently rated as an A+ market on airdna. The demand is through the roof and many properties are doing very VERY well. This is due to the demand for tourism. The hotels in Nashville are charging some of the highest rates in the county and this demand is pouring over into airbnb.
However, Nashville was suppose to vote on October 3rd 2017 to phase out all type 2 STR over a 3 year period. That vote just got punted to January. The word from those close to the council is that they will more than likely move forward with this. They have a special committee that has been looking into airbnb to decide what should be done. That being said the state legislature has already stated it would overrule any decision to ban airbnb's In Nashville so everything is up in the air and nobody knows what will happen.
My plan is to buy a multifamily property, live in it, and airbnb the other units. Mr. Codesman has stated that these other units would technically have to be type 2 but who is to say I am not occupying the entire premise? It is another gray area and who knows if they will actually give me a permit. That is my dilemma.
This is 90% accurate. The vote is a 1.5 year phase out to this point. It's July 2019. Commercially zoned property (Cl, CS, MUL, RM, OR, IR) is type 3 permits and they are unlimited right now. You can find property in Fisk, Charlotte Park, Chestnut Hill, even Hillsboro Village with this type of zoning. Type 1's - the ordinance says "Primary or Secondary Residence." So, if you are out of state, out of city, it's your secondary home that you visit. Just like a beach condo would be a secondary home. Type 1's also attach to the ground. So in the example of living in a multifamily and renting the others out on AirBnB, you need to be careful here. Only 1 permit is allowed PER LOT. It's not per unit when it comes to type 1. Type 1 permits attach to the ground, NOT THE BUILDING. Now if you have RM20 zoning for example, you can do each unit on AirBnB. But you cannot have more than 1 listing per lot as a type 1.
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Rob Beardsley
Rental Property Investor · New York, NY · Member since 2017 · 300 posts · 168 votes
9y
Hey @Tim Schroeder I have a friend who is running a few airbnb properties in West Hollywood in Los Angeles. I think a place that attracts many tourists should be your area of focus, especially where hotels are consistently booked and in very high demand. There are a few hotel markets that are experiencing oversupply such as NYC so I would recommend staying away from those.
Cheers!
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Brandon Cobb
Developer · Mount Juliet, TN · Member since 2017 · 20 posts · 8 votes
9y
@Devan Mcclish Devan, correct me If I am wrong. Nashville considers any property type you don't live in with 4 or less units to be a type 2 STR even If It is zoned Cl, CS, MUL, RM, OR, IR. To get a type 3 STR permit It would have to have 5 or more units from my understanding. These are rarely ever zoned R or RS anyway. In other words, the only way to get a non-owner occupied STR would be to buy a property with 5 or more units to qualify for the type 3. Am I missing anything? Very interested in doing a project like this and would love your thoughts.
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Tim Schroeder
OP
Rental Property Investor · Castle Rock, CO · Member since 2017 · 335 posts · 387 votes
9y
@John D. Can you please point me to the surrounding cities and unincorporated areas where it's allowed but are still popular with tourists? Thx
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