Can Airbnb be done with this?

Question

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.

Paul Sandhu · Answer

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.

Ken Breeze · Answer

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.

Jason Carter · Answer

@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.

James Carlson · Answer

@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!

Bettina F. · Answer

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.

Nathan Platter · Answer

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

Nancy Bachety · Answer

@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.

Jon Crosby · Answer

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!

Andrew Kerr · Answer

@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!

Can Airbnb be done with this?

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