My Niche: "the Dog-Friendly Medium-Term Furnished Rental"
Dumb luck (and a ton of work) got me into REI. In 2015 my girlfriend was spending 6/7 nights at my apartment. She had a cool little studio in a cool part of town, and we threw her apartment on Airbnb. A traveling nurse booked the place for $1650/mo (her rent was $620/mo). Wow, that was easy. I need more apartments!
This was before the phrase "Airbnb Arbitrage" was coined, and all my friends thought I was crazy. I had managed to get 3 owners onboard with my business model, and soon had 8 apartments in my name. I was working full-time as a bartender at the time, and quickly realized I didn't have the time to manage weekend turnover and shorter stays. I learned that if I increased my minimum stay to 28 nights I could still double my rent and minimize my effort.
I also learned that many of these medium-term guests book last minute. There'd always be sleepless nights towards the end of the month, with nothing but vacancy in my future and $8000 in rent due on the 1st. Sure enough, time after time, the apartments would fill up. My goal was to be the ONLY guy with nice, furnished rentals available for someone in a pinch at the end of the month. It still works.
Somewhere along the way I noticed that my dog-friendly units had almost zero vacancy. I bought a few SF homes and used the same strategy. I've since scaled back the arbitrage business, in order to focus my time on investing and my full-time career as a Realtor. Here is what I've learned along the way:
1. Dog owners are willing to pay more. I average around 80% over market rent on smaller apartments, and double market rent on SF homes.
2. Dog owners don't have many options. I'm always checking up on my competition, and I'm usually one of a few options for a month-long stay in St. Paul/Minneapolis. Many are forced to stay in extended-stay hotels.
3. Dog owners are easier to manage. They tend to be more responsible and less picky. They are usually grateful to have a nice, reasonably priced place to stay, and less critical/needy as guests. They leave great reviews.
4. Dogs leave hair behind, but (typically) don't damage anything **knocks on wood**. I've been doing this for 5 years, have probably hosted 100 guests with dogs, and I've yet to experience any real damage.
5. Cleaning fees kill you in the Airbnb business. Unless you've got a high-end property in a vacation destination, it's incredibly difficult to make numbers work hosting guests for 1-5 nights at a time. Paying someone to deep-clean a house full of dog hair once a month makes much better financial sense.
I will continue using this rental strategy until it no longer produces amazing returns. Does anyone else have a specific rental niche that's worked well for them? I'd love to hear about it.