Can Airbnb be done with this?

16 Replies

Hello all.  I am asking this question for my sister as both her and I are totally unfamiliar with short-term rentals.  She owns a fourplex in Los Angeles which are fully rented out to long-term tenants (1850/mth each unit).  One of her units is about to become vacant and she is thinking of moving into the unit herself for at least part of the year.  She lives out of the area and wants to do this so she can spend more time with her newborn grandson who lives in L.A.  The problem is that she lives off of the rent she collects from these units and will be hurting without that 1850/mth.  I suggested to her that she look into using the unit as an Airbnb rental.  It's a 2 bedroom/1 bath renovated unit located about 15 mins from LAX.  I would say it's a B- neighborhood.   Do you think this is something she could do for say 6 months of the year and how much do you think she could make?  She owns the place free and clear.

Hi @Jenelle Harris , thanks for the post! 

Sounds like a reasonable idea to me, she gets to use the property when she needs it and gets some cash flow to fill the gaps.  I would caution on one piece, and I'm by no means a tax expert, but if she uses the property more then 14 days out of the year, she maybe forfeiting any tax write offs from the other properties, so I would just have her follow up on that piece first with a CPA.  That's not to say she can't make 'maintenance trips' to the property throughout the year also. 

Check out Everbooked's Comp tool here and you it will give you a quick high level analysis of pricing you might get as well as occupancy.  

Just remember, she will also have to fully furnish the home, pay utilities, permitting, taxes, cable, etc. all throughout the year even when she's not there so be sure to include that in your analysis. 

Best of luck! 

PS - I grew up in Petaluma!  

@Jenelle Harris - this is very possible. A couple things:

1) Have her check local laws. A lot of cities and counties are now requiring some form of licensing to do Airbnb. Some are now also requiring collection of a hotel type tax. 

2) I would recommend that she buys a zip code specific report from AirDNA - while this isn't exact, it does give her good data on short term rental rates, occupancy, lists of features, and more. This could give her a starting point for comparison.

3) Make sure she realizes she would have to furnish the unit. This can really add up as people think it is just a bed, couch and a tv. It is everything from blinds, artwork, furniture, pots, pans, silverware to wine openers. A 2 bedroom place might cost her $3-$5k. 

4) Have her look for short term rental management and cleaners that focus on short term rental cleaning on her next trip. She could look at an online company like Sondors or Evolve Vacation Rental Network to help her with the bookings. 

Good luck!

@Jenelle Harris I don't know that area in terms of STR but start by looking it up yourself on airbnb, as if you were a guest. You'll get a lot of the information you are seeking.

Good luck. 

Your sister may find she can airbnb a studio for herself nearby while keeping her 2/1 LTR.

Hi @Jenelle Harris

Another variable to also consider is the tax for the end of the year since rentals and Airbnb hosting are taxed differently.

If she wants input, she should reach out to current Airbnb hosts and ask them about their vacancy rate and monthly income, though talking with non-local Hosts may be more effective in hearing the pros and cons.

https://opportunity.airbnbaction.com/

https://www.eliotandme.com/estimator

It sounds very doable to me, but check out the AirBnB laws for LA.  I am in northern Idaho, and I AirBnB the guest apartment on my farm.  We are in a summer resort area.  Because the apartment is poorly insulated, we winterize the apartment, shut off the water, and close it down for the winter months.  I simply blocked out the winter dates as unavailable on my listing calendar.  This has not effected my bookings for the summer, which is the high demand time anyway.

AirBnB is very flexible, so she could easily rent out her unit year round and simply block off the times she plans on visiting LA. This would allow her to keep track of her STR and make any repairs needed -- and might even make part of her trip tax deductible. The key to long distance STR management is a dependable cleaning staff that cleans and restocks the unit, and a good check in/communication process. There are other tips. For example, she should somehow decorate the front door of her AirBnB, or paint it a different color and equip it with a combination lock. Then when she sends a photo of the front door to her guests with the check in combo, they will be less likely to bother her LT tenants by going to the wrong door. Entire websites and YouTube channels exist full of STR tips.

Very cool.  Thank you so much for the info, guys!!

Maybe you guys can give me advice on how to talk to other Airbnb hosts?  Every time I've tried to message someone on the site with a question, the system wants me to put in dates like I want to book a room.

Currently the laws for STR in Los Angeles is pretty tough. I work with investors and owners in the area that have had to close properties due to the new regulations. Since she isn’t looking to list the property full time this won’t be as big of an impact but as previous responses have said, do your homework. There’s also other options hat you can look at like Corporate rentals that allow you to rent for a higher price point than LTR but still for less periods of time than an annual lease. If you have any STR questions feel free to reach out, don’t worry I won’t require you to book lol.

I suggest that she move into the 4th unit. Let the 3 other tenants know that when the lease is up it will not be renewed, and that there is no penalty for breaking the lease early. Convert the 3 other units into STRs. In my market, one months rent in a LTR is equal to one weeks rent in a STR. If it doesn't work out, she can go back to the LTR but they would be furnished now. Great for college students.

@Paul Sandhu you can't do that in LA, especially if the building is rent controlled (which most of them are).  

@Jenelle Harris While your sister should definitely research the laws herself, based on my own research in LA, her situation might actually fit the parameters of the laws I've seen discussed for the city! That is, the unit would be her primary residence, and she would rent it out for only part of the year. My current understanding of the laws/proposed laws are that someone could only use their primary residence for STR and there would be a cap on how many days/year it could be used as such. It seems like legislation is leaning towards 180 days/year, which would be perfect! AND with it being her primary residence any applicable rent-control laws wouldn't apply.

Also: congrats to her on owning a 4-plex free and clear in LA!  Based on your description, is it in Inglewood, by chance?  Feels like that's exploding right now - some friends just got an offer accepted in the area, they're really excited.  The AirBNB potential has a big upside with the new stadium going in, and events at the Forum.  

As for how much she can make, as others have pointed out there are several ways to research that.  Since she's going to be living there half the time, of course she'll have it fully furnished and be covering the utilities and such already. :)  As long as the numbers crunch (and I suspect they will) I think she's in what could be the ideal situation to AirBNB in LA.

If navigating the STR rules & regs are too daunting, she could also consider renting to medium-term tenants of over 30 days, to which the STR rules won't apply. Traveling medical professionals, business people, or maybe construction pros working on the new stadium facility.

Best of luck to her!

Depending on how she wants to use it intermitently or in a block of time there are other short term rental options. Traveling nurse sites may allow her to book shorter rentals in the range of 3-6 months. Student rentals can be 9 months but the tenant quality can be an issue. This is if there is demand and these options fit her travel plans. As for furnishing it is important to furnish a place like this in a way that is not personal to her use for airbnb or short term. Durable wide appeal furnishings, easy to maintain, fully equipped kitchen, decorations with wide appeal. She also could consider if she needs the second bedroom, wants to rent it while she is there, or alternately wants to keep it for herself and only rent one bedroom of the unit. She will need an owners closet or storage area for when she isnt there. The overall calculation she will have to do is to determine what financially she needs to net and how much she has to rent to do this. Airbnb will possibly yield the most but the effort is greater on a regular basis.

@Jenelle Harris

You will need to open an account and create an inquiry with a host to open dialouge with them, Airbnb doesn't want people to connect off platform and lose business.  I have had a bunch of people reach out to me via this method.  Just select random dates and send a message and then you can communicate without actually having a reservation.  

@Jenelle Harris

Absolutely a good idea! And as you've laid it out, the current proposal before city council in L.A. would likely allow her to do it.

I'm here in Denver but am a bit of a dork about Airbnb laws. L.A. doesn't currently have anything restricting short-term rentals, but they're likely passing something early this year. 

The current proposal in Los Angeles would allow your sister to rent her place for up to 180 days a year as long as it's considered her primary residence. The ordinance defines a primary residence as a place in which she lives at least 6 months of the year. Now, are they going to check if she actually only lives there four months of the year? Probably not, but if she's planning on only visiting for a few weeks every couple months and renting out the place the rest of the time on Airbnb, the city might frown on that.

I'll leave the question of how much she could make up to others who know that local short-term rental market better. You can check yourself. Maybe buy AirDNA's report on L.A. Or just do the research yourself on Airbnb, zooming in to the area where your sister lives and seeing what other similar places are charging and how often they're booked. 

Good luck!

James Carlson, Real Estate Agent in CO (#FA.100071747 )
720-460-1770

@Jenelle Harris to talk to other Airbnb hosts, go to the Airbnb Community Center-this tab I not available on every screen on your profile so just google it and it will take you right there. There's a huge amount of information from seasoned hosts including groups and clubs from the LA area. Find the appropriate discussion board and start a new post about your plans and ideas and you should get a ton of useful information 

She can always move back in and rent it out the extra room.  Based on what you describe, I think you can easily rent out that unit on Air Bnb very easily to recover her rent plus more if priced right in the beginning and turn on the Instant Booking feature.  Also accept daily bookings versus minimums just to get her reviews up.  Being so close to the airport, I think daily bookings may be a better route.  You can install instant locks like August that changes the codes each time you let a guest in and also install Nest to control the temps of the place when the guest leave.  

@Jenelle Harris I suggest you and your sister check out the Airbnb Professional Hosts group on Facebook. I think that might be a good resource for you as well. 

310-266-8438

Great advice here. Every market is different. Research your local game rules.

Get smart on the legalities (@James Carlson ) and have a chat with your CPA. Use strong and durable  Lockstate remote WiFi smart-locks for your Airbnb account to automatically distribute access codes to guests. Attach a lockbox with keys to fight Murphy's law. In the USA use Nest for climate control. Make sure the dwelling is guest ready (clean, simple, no valuables). Outsource the cleaning and maintenance/fixing.

Keep in mind when dreaming up the big bucks that even if one month's rent LTR equals one week's rent STR in some markets, the three remaining weeks in the month need to be rented out as well for you to compare oranges with oranges. Many hobby landlords sugar coat that part.

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