Determining Airbnb Feasibility

12 Replies

I have heard great things about Airbnb and short term rentals. I live in a suburb of Toledo, OH and have come across a property that has a great 3/2 house that would be a long term rental, but on the property it has a separate building with a 1 bed/bath apartment above a finished garage with a full kitchen that would be a fantastic Airbnb. However, when doing some looking there aren't too many Airbnb in my area. I would think there would be demand since it is close to highways, population centers, The University of Toledo, and hospitals and it's in a nice quiet neighborhood. How have people determined location and pricing if there isn't a lot to compare to?

@Dave Poeppelmeier Check out Airdna - you can use their rentalizer for at least one property for free. It pulls data form that area, occupancy rates, avg nightly rate etc. I would also search on Airbnb and VRBO for the surrounding area - look how much each of those properties charge throughout the year and see how much they are booked out and see what length of stays most of their guests are booking for. This should be a good starting point. Outside of that, you could look at the local hotels and call and ask what their vacancy is, and get a rough idea of the travel in the area... 

@Dave Poeppelmeier I would suspect there is a demand for larger airbnb in the suburbs.  My gut tells me that many Gen X and Millenials who moved away after school now have family and aging boomer parents in the area.  You can only fit so many people in Grandma's house before someone is sleeping on the porch.  We are looking at starting the Airbnb model for some of our houses in Sylvania.  Happy to discuss more.

I've rented to about 1800 refinery contractors over the last 8 years.  The refinery is the largest employer in my town.  Maybe look at your market and see what industries utilize traveling workers and make them your target market.  But be careful, my target market is a bunch of ruffians.  I've dealt with escaped rattlesnakes, prostitutes, overdoses, dead bodies, fights, guns, drugs, abandoned vehicles, intruders and other things that would ruffle most peoples feathers.

@Dave Poeppelmeier Fantastic Airbnb for who? Broke people? I wouldn’t stay in a one bedroom over a garage behind a house. You’ll be catering to complainers. I would rent the unit long term. Hell rent the unit and the garage to a single dude with a hot rod and get a higher rent.

First step is google “short term rental Toledo” and see if is legal.

@Luke Carl Actually it's already very nice inside, someone make it a separate living space and all it needs is the kitchen revamped. Plus, local zoning won't allow me to put 2 separate tenants in, but there are no rules on Airbnb. Hence my question. But thanks for your input.

Hey @Dave Poeppelmeier We actually had an owner that had an AirBNB in Perrysburg, it was consistently booked every month (With maybe a week free).  It was a 1/1, fully equipped and furnished, a stocked kitchen, washer/dryer etc.  The owners had consistent travelers (Doctors that worked at Promedica or St. Lukes).  When they converted it into a 12 month rental, they lost about $1,600 a month in revenue.  I say, if it is nice, try it out for a month, if it does not work, try to rent it individually :) Sounds like a great way to gain experience!

@Andrew George Dennis Yes, lots of Hotels right off the Ohio Turnpike, easy access to Downtown Toledo and other major thoroughfares. I know that's one indicator that Airbnb should work well, but the lack of current Airbnb is what concerns me. @Mike Mocek that's what I was thinking, more business travelers staying for a week or two. 

@Dave Poeppelmeier

Airbnb can be very lucrative. I have some friends that do well with 3 - 5 bedroom Airbnb’s. But, I can also tell you that it’s very hands on. I had my Airbnb listed as a whole house rental for some time (5 bedrooms). Unfortunately it attracted a lot of partiers on the weekend. I could get big bookings for weekends but would struggle to fill non holiday weekdays. It is also a lot of work with managing cleaners and laundry. It’s not a passive investment. Or the more passive it gets the more you are paying out your profits to other people that work for you. Plus Airbnb increasingly is poorly run with bad customer service and unfriendly policies to hosts. Basically, you could make double or triple a long term rental, or you could make slightly more for lots of work. I would find a property that could make money as a str or ltr. Run your numbers based on local short term rental comps. If you want to do Airbnb give it a shot but also have the back up plan if it doesn’t work like you thought. I have my 5 bed house rented out long term (lost 20k in booking during the pandemic) and its way less stress for not that less money.

@Dave Poeppelmeier

We tried Airbnb on one of our nicer apartments in Sylvania Township. It stayed rented pretty consistently and ended up making about double what we get in rent for long term rentals. In the long run, it wasn’t worth our headache of having to change over the unit between guests. I think if you had the people in place and more units then it’s a very lucrative business model but just a little too hands on for us at the time. We ended up renting it furnished to a long term tenant.

It doesn’t hurt to try it though especially if you have the time or know the people to turn it over between guests. You’ll have some cost in furnishing it but it’s only a 1/1.

@Dave Poeppelmeier

1. Figure out if it’s legal in your area and your specific unit

2. Call str management companies in the area, they can give you more accurate comps.

3. If that doesn't help and you want a true market analysis to see how much that place can make as a str, send me a DM!

Hope it helps and good luck!

There are a couple of good questions in the original post, so we can unpack them here:

1. In general, I think there is demand for short-term rentals in all sorts of markets. It doesn’t have to be a big city, it doesn’t have to be a traditional vacation rental destination. If it’s a somewhat urban area with a hospital or a university or industry, there is always some level of demand for temporary acommodations.

2. It’s worth keeping in mind that there are different models too. You can focus on short-term rentals, mid-term rentals (1-3 months) or just furnished longer-term rentals (3+ months) . Although there is an upfront expense of furnishing a place, I think you’ll find that it’ll pay for itself with a premium that you’d charge.

3. You can use a tool like Airdna or AllTheRooms to estimate demand and get a sense for what competition is charging. But, at the same time, I think with a project like this, it’s really best to just go for it and put it out there and see what demand you’ll encounter. You’ll be able to use pricing as an ongoing level -- if you get filled up too quickly, you can increase pricing. If not enough bookings are coming through, you can decrease it.