Air Bnb Property Criteria

13 Replies

Hey guys, I have been investing for several years now and am looking to try my hand at nightly rentals.

I am looking to do a hybrid of the BRRR strategy. I own a contracting company so it fits well with my skill sets. I'm looking to buy a run down or outdated property bring her back to life. Then refi it and furnish it for a nightly rental.

I have a few questions about criteria for the property.


1. Does a 3br perform better then a 2 br?

2. Is being in town close to everything aka walking distance to bars and restaurants outperform a quiet setting outside of town perform or can they do ust as well.  I know a prefer a quiet setting but everyone is different.

3. Does the type of home matter? rancher vs bi level matter? Or are the finishes more important.

4. Size ? Is 1300-1500 sq ft big enough or does it need to be a full on 4br 2bth home.

5. Are pools worth the extra expense? They seem like a money pitt to me.

6. Has anyone used an aprtment in like a multi unit as air bnb before? It seems to me that to take a 2 unit and rent both out would provide extrodanairy cash flow.


7.  Any other tips on what things to look for in a property?


Sorry if these are kind of general.  I am trying to be a lot more focused in real estae goals

  I feel like now that I habe decided on a strategy for the upcoming year.  I need to figure out what type of property would suit the nightly strategy rental the best.   But because I have never done this strategy before I figured I better ask someone who has.

Thanks in advance guys I appreciate you taking time to help me out.



Originally posted by @Gareth Fisher :

Hey guys, I have been investing for several years now and am looking to try my hand at nightly rentals.

I am looking to do a hybrid of the BRRR strategy. I own a contracting company so it fits well with my skill sets. I'm looking to buy a run down or outdated property bring her back to life. Then refi it and furnish it for a nightly rental.

I have a few questions about criteria for the property.


1. Does a 3br perform better then a 2 br?

2. Is being in town close to everything aka walking distance to bars and restaurants outperform a quiet setting outside of town perform or can they do ust as well.  I know a prefer a quiet setting but everyone is different.

3. Does the type of home matter? rancher vs bi level matter? Or are the finishes more important.

4. Size ? Is 1300-1500 sq ft big enough or does it need to be a full on 4br 2bth home.

5. Are pools worth the extra expense? They seem like a money pitt to me.

6. Has anyone used an aprtment in like a multi unit as air bnb before? It seems to me that to take a 2 unit and rent both out would provide extrodanairy cash flow.


7.  Any other tips on what things to look for in a property?


Sorry if these are kind of general.  I am trying to be a lot more focused in real estae goals

  I feel like now that I habe decided on a strategy for the upcoming year.  I need to figure out what type of property would suit the nightly strategy rental the best.   But because I have never done this strategy before I figured I better ask someone who has.

Thanks in advance guys I appreciate you taking time to help me out.



My answers are specific to my market because that’s the market I know. 

1. No

2. Up to you they all make money. I prefer in the woods all alone

3. Log Cabin with tongue and groove

4. 500sq ft - 10,000 sq ft. Depends on your budget. Income will be relative. 2 2 bedrooms for 250k each will gross about the same as 1 4-5 bedroom for 500k. Less roofs/less hvacs/less bookings per week. Same money. 

5. Indoor pools are more and more common in new construction. 

6. Bad idea.

7. Buy in a VACATION market not an urban market.  

8. If you hire a property manager you’ll be lucky to make a buck. Modern technology makes it easy to eliminate this. 
 

 

You are nowhere near ready to start. You're asking specific questions on a national level. People who respond may give answers that do not apply to you and your location. The worst thing to do is rush into short term rental thinking that what others tell you will apply. Short-term rentals far more difficult and far more complicated and a lot less profitable that you might imagine it for the most part. Especially for a newbie. It ain't more profitable necessarily involves a lot lot more work when you're new with a lot of potential risks. Is that what you were planning?

your knowledge of a long-term rental has almost nothing to do with what you need to know about a short term rental. The faster you move into short-term rentals the more problems you may find you struggle with.

posted by @Gareth Fisher :

Hey guys, I have been investing for several years now and am looking to try my hand at nightly rentals.

I am looking to do a hybrid of the BRRR strategy. I own a contracting company so it fits well with my skill sets. I'm looking to buy a run down or outdated property bring her back to life. Then refi it and furnish it for a nightly rental.

I have a few questions about criteria for the property.


1. Does a 3br perform better then a 2 br?

2. Is being in town close to everything aka walking distance to bars and restaurants outperform a quiet setting outside of town perform or can they do ust as well.  I know a prefer a quiet setting but everyone is different.

3. Does the type of home matter? rancher vs bi level matter? Or are the finishes more important.

4. Size ? Is 1300-1500 sq ft big enough or does it need to be a full on 4br 2bth home.

5. Are pools worth the extra expense? They seem like a money pitt to me.

6. Has anyone used an aprtment in like a multi unit as air bnb before? It seems to me that to take a 2 unit and rent both out would provide extrodanairy cash flow.


7.  Any other tips on what things to look for in a property?


Sorry if these are kind of general.  I am trying to be a lot more focused in real estae goals

  I feel like now that I habe decided on a strategy for the upcoming year.  I need to figure out what type of property would suit the nightly strategy rental the best.   But because I have never done this strategy before I figured I better ask someone who has.

Thanks in advance guys I appreciate you taking time to help me out.



 

These are specific to my market


1. Does a 3br perform better then a 2 br? Yes. Couple can rent a 2 or 3 bedroom, a medium sized family can't rent a 2 BR.

2. Is being in town close to everything aka walking distance to bars and restaurants outperform a quiet setting outside of town perform or can they do ust as well. I know a prefer a quiet setting but everyone is different. That is a preference and depends on what you want out of your vacation.

3. Does the type of home matter? rancher vs bi level matter? Or are the finishes more important. I think finishes are more important.

4. Size ? Is 1300-1500 sq ft big enough or does it need to be a full on 4br 2bth home. 1300 is big enough, but more beds equal more money.

5. Are pools worth the extra expense? They seem like a money pitt to me. Depends on the competition, if everyone else has you you probably need one. If not common then you should do fine without it.

6. Has anyone used an aprtment in like a multi unit as air bnb before? It seems to me that to take a 2 unit and rent both out would provide extrodanairy cash flow.  I have not.


7. Any other tips on what things to look for in a property? Look for something that attracts people, peace and quiet close to attractions, waterfront etc. Then market to thos people.

My market is refinery contractors.  Big burly guys with neck tats that drive jacked up 4x4s.  They chew tobacco in their sleep and smell like diesel fuel.  I decorate my houses like Hugh Heffner would decorate his own.

1. No.  They all gross and net about the same at the end of the year.  2BR, 3BR, 4BR and really big houses that sleep 6 or more.
2. Irrelevant, my town is small.
3. Irrelevant.  They just want a place to drink beer, cook food, do laundry, shower and sleep.
4. I put beds anywhere I can.  23 STRs and maybe 10 dining tables.
5. No way.
6. I'm doing that right now.  11 apts are STRs in a 14 apt complex.  I'm waiting for elderly people to move on.  @Lucas Carl would say I'm waiting for them to die.

7.  Bank foreclosures.  That's all we buy for about 25% of appraised value.

Hey @Gareth Fisher , everyone here has made good points and talked about their specific location. What you need to do is narrow down where you want to be.

You want a place that is a vacation spot. A place where people want to go to relax, do stuff etc. Once you settle on an area, you can then start to answer those questions.

For example, the Smokey Mountains where Avery and @Lucas Carl are at are all about the cabin. Mountains, relaxing etc.

If you settled on the Florida Keys, you would probably be looking at a classic Florida Key West style home.

@John Underwood hit the nail on the head. More bedrooms means more people can stay and you can usually increase your nightly. Our lake house is 3 bedroom 3 bath with a kids bunkroom. Sleeps 10 or 12 in a pinch. There is a limit to your profitability. Bigger isn't necessarily better. It will depend on the area and who you cater to. Families need the space and are our focus.

Urban area's aren't necessarily bad. Again it depends on your focus. You could do STRs for traveling nurses, people coming to universities for various reasons etc. Also, Nashville is a big vacation area and urban STR's should do just fine there. Or New Orleans.

Also, check the local laws and regs surrounding STR's. Many municipalities are restricting them or banning them outright. That is your main issue that needs to be resolved in your search.

Originally posted by @Michael Baum :

Hey @Gareth Fisher, everyone here has made good points and talked about their specific location. What you need to do is narrow down where you want to be.

You want a place that is a vacation spot. A place where people want to go to relax, do stuff etc. Once you settle on an area, you can then start to answer those questions.

For example, the Smokey Mountains where Avery and @Lucas Carl are at are all about the cabin. Mountains, relaxing etc.

If you settled on the Florida Keys, you would probably be looking at a classic Florida Key West style home.

@John Underwood hit the nail on the head. More bedrooms means more people can stay and you can usually increase your nightly. Our lake house is 3 bedroom 3 bath with a kids bunkroom. Sleeps 10 or 12 in a pinch. There is a limit to your profitability. Bigger isn't necessarily better. It will depend on the area and who you cater to. Families need the space and are our focus.

Urban area's aren't necessarily bad. Again it depends on your focus. You could do STRs for traveling nurses, people coming to universities for various reasons etc. Also, Nashville is a big vacation area and urban STR's should do just fine there. Or New Orleans.

Also, check the local laws and regs surrounding STR's. Many municipalities are restricting them or banning them outright. That is your main issue that needs to be resolved in your search.

I did do my research with the boroughs some are on board others are not. 

I was going to do one close to home.  Our market isn't really a vacation area but a lot of people do come to visit Hershey PA, Lititiz PA, Lancaster PA, and come to see Amish.  A lot of people end up moving here to transplant  from NY, and NJ.   Strong economy with a good family oriented communities.    My dad had one and had no problems staying full and I have talked to others.  I guess my market would be a mix from people vacationing to folks on business.   I haven't done a lot vacancy research but have talked to quite a few people and they all have been able to do well.   

My goal was to have a higher return on my debt.   My long term rentals, seem to killing my debt to income ratio plus I am trying to generate income not build long term wealth at this time.   

My plan was to start with one local, build systems.  Once I am comfortable with our systems we could expand into other markets if we felt that we could do better at the beach or another vacation hot spot.

I am leaning on trying to find a rancher from 1950s that has never been updated.  Pick it up at a discount, update it, and rent it out.   Pretty basic, but I am more of dive first figure out how to swim later type of guy.  It has worked well for me so far.   

Do you have any suggestions on other research I should do?  I look at local places online, seems like there filling up.   I ran the numbers based on 15 day occupancy.  Which I think is conservative and it looks really good.  I'm not really sure on how to do any more market research.  If it doesn't work out I could always turn it back into a monthly rental.  Our rental demand is huge hear its pretty much impossible to find a good rental at a good price if your tenant here.


Thanks in advance 

Ok @Gareth Fisher . Sounds like you have the beginnings of a plan! I am a planning kind of guy. Risk taking is very much in my makeup, but always trying to mitigate as much trouble as I can.

The biggest issue with looking at others rentals is making sure they are in the same area you are looking. It's funny, the denser the area, the bigger the difference in nightly rates. In Idaho, our STR density is rather low so I can plan my nightly rate and expected occupancy more easily. When you have a denser, urban area, neighborhoods can differ in a matter of a couple of blocks.

I think the 15 day occupancy is a decent start, but remember that you will have to build up a reputation to get that level. At first you will most likely be in the 5-8 night range if that. People want to see reviews before they pony up their hard earned money. So expect your first year to be light. Now if it was in Pigeon Forge or somewhere that has a massive visitor demographic and STR's being the name of the game, that risk is mitigated. Can you absorb a lower performing 1st year?

Also, are you planning on self managing? If not, kiss your profits goodbye. It is rare that you can make a profit without self management. If you are planning to self manage, are you prepared for what goes into that? You really have to have a customer service oriented mindset.

I take calls and texts from guests at any time. Even at 3am. That is rare for us I will say as we have a very well prepped house and a good guest guidebook that covers most everything. But you have to be ready to answer the lamest questions with a big smile and cheery demeanor. People are on vacation and want to have a good time. You have to be willing to make that happen for them. A mire of 3 or 4 star reviews will kill your STR in a hurry.

You will also have to furnish it top to bottom. That means plenty of linens, a full complement for the kitchen, pillows, mattresses, knick-knacks, art etc etc etc. That can really run the bill up. You can't cheap out either. You can't just go get a bunch of free stuff you find online or cheap garbage. It will really be reflected in your reviews. Believe me, the age of just tossing whatever you have laying around into your STR and doing well are long over. People have much higher expectations these days. You don't need to go nuts, but you need to pay attention. A home like you are considering would be 15-20k to do up if you pay attention. Maybe less if you do very well and possibly much more.

I will say that your systems for LTR's will not transfer over very well to STR. If you have a good handyperson, that is a win, but you will have to find a good cleaner. Someone to be your go to for lots of things. Now, if you are buying local, you can clean it yourself and watch over it.

Frankly, if you have a very strong LTR market, it seems like you should stick to that. It sounds like you have a good thing with your LTR systems.

What about flipping? That could get you some short term cash infusions without having to build a vacation/STR rep over time.

Thanks @Krystal Thomas ! At this time, we are not able to afford the area, but I would love to have a place there. I was using the Keys to show the difference between regions and styles of places.

I have read a lot about the rules regarding STRs in the Keys and it is a bit intimidating!

@Gareth Fisher

1. Does a 3br perform better then a 2 br?

- Yes, the difference might not always be a higher rate but more occupancy which still equals more profit

2. Is being in town close to everything aka walking distance to bars and restaurants outperform a quiet setting...

- Depends on your location. If you’re going to new York you know you’ll be in the city and don’t wanna be far for the center. On the other hand if you’re going to Lake Tahoe, you know you’ll want nature and outdoors. What does your location offer that people go for and want to see?

3. rancher vs bi level matter? Or are the finishes more important.

- Finishes are more important BUT a house without stairs is always a plus. Many travelers, especially older people have issues with stairs

4. Size ? Is 1300-1500 sq ft big enough or does it need to be a full on 4br 2bth home.

- This goes back to location. If you’re in a great location, 1300 will do fine because people want to be there

5. Are pools worth the extra expense?

- Do you math and figure out how much you’ll make first. Then you can determine if the pool is worth the money.

6. Has anyone used an aprtment in like a multi unit as air bnb before? ....

- What are the regulations in your area? Where I live, this is not allowed.

7. Any other tips on what things to look for in a property?

- the property is important but my top criteria is the location and management. If you don’t have great systems in place then you should consider rental management services as they can potentially increase your returns drastically

Originally posted by @Michael Baum :

Ok @Gareth Fisher. Sounds like you have the beginnings of a plan! I am a planning kind of guy. Risk taking is very much in my makeup, but always trying to mitigate as much trouble as I can.

The biggest issue with looking at others rentals is making sure they are in the same area you are looking. It's funny, the denser the area, the bigger the difference in nightly rates. In Idaho, our STR density is rather low so I can plan my nightly rate and expected occupancy more easily. When you have a denser, urban area, neighborhoods can differ in a matter of a couple of blocks.

I think the 15 day occupancy is a decent start, but remember that you will have to build up a reputation to get that level. At first you will most likely be in the 5-8 night range if that. People want to see reviews before they pony up their hard earned money. So expect your first year to be light. Now if it was in Pigeon Forge or somewhere that has a massive visitor demographic and STR's being the name of the game, that risk is mitigated. Can you absorb a lower performing 1st year?

Also, are you planning on self managing? If not, kiss your profits goodbye. It is rare that you can make a profit without self management. If you are planning to self manage, are you prepared for what goes into that? You really have to have a customer service oriented mindset.

I take calls and texts from guests at any time. Even at 3am. That is rare for us I will say as we have a very well prepped house and a good guest guidebook that covers most everything. But you have to be ready to answer the lamest questions with a big smile and cheery demeanor. People are on vacation and want to have a good time. You have to be willing to make that happen for them. A mire of 3 or 4 star reviews will kill your STR in a hurry.

You will also have to furnish it top to bottom. That means plenty of linens, a full complement for the kitchen, pillows, mattresses, knick-knacks, art etc etc etc. That can really run the bill up. You can't cheap out either. You can't just go get a bunch of free stuff you find online or cheap garbage. It will really be reflected in your reviews. Believe me, the age of just tossing whatever you have laying around into your STR and doing well are long over. People have much higher expectations these days. You don't need to go nuts, but you need to pay attention. A home like you are considering would be 15-20k to do up if you pay attention. Maybe less if you do very well and possibly much more.

I will say that your systems for LTR's will not transfer over very well to STR. If you have a good handyperson, that is a win, but you will have to find a good cleaner. Someone to be your go to for lots of things. Now, if you are buying local, you can clean it yourself and watch over it.

Frankly, if you have a very strong LTR market, it seems like you should stick to that. It sounds like you have a good thing with your LTR systems.

What about flipping? That could get you some short term cash infusions without having to build a vacation/STR rep over time.

Ok thanks for your help.   I have thought of most of those things.  I never seem to make as much money as I hope to with any of my venture but that seems to be how it goes.  I was under the impression that the cleaning fee, takes care of the cleaning costs or at least the majority of them.   I was planning on building systems around dealing with clients, then hire an employee to handle them once we start to scale, but for now was going to self manage.

Any idea on how could research the amount of tourism that my market generates?

 

Originally posted by @Gareth Fisher :
Originally posted by @Michael Baum:

Ok @Gareth Fisher.Any idea on how could research the amount of tourism that my market generates?

 

You have the Mannheim Auto Auction and Kreider Farms.  I can see people spending a night or two, but not 7 days.  My minimum rental is 7 days.  But my tenants are refinery contractors.  Big burly guys driving jacked up 4x4s with neck tats.  The chew tobacco in their sleep and smell like diesel fuel.  You skip the aisle if you saw one in Wal Mart.  I'd punch him in the arm and say What's up mofo?  I decorate my places as if Hugh Heffner did it himself.

 

Having lived for close to a year in Seattle Eastside Airbnb properties, I can offer a tenant perspective on Airbnb.

1. You will be competing with the lodging industry, so you might want to check hotel/motel occupancy and rates in your target area first. 

2. You need to know who your potential customers are.  Do they come year-round to work longer-term contracts (e.g. Seattle Eastside is home to numerous contractors working at Microsoft and other hi-tech companies) or are they vacationers/tourists who stay for a week and return home?

3. Last but not least, even with longer-term tenants Airbnb properties require active hands-on management.  If the owner or someone who he can trust does not live in an Airbnb house, he/she'd better live nearby.