What ROI you expect on Airbnb

Question

Experienced Airbnb investor with more than 10 doors. What do you expect in terms of ROI on Airbnb?

Daniel Johnson · Answer

@Avihay Ohana I underwrite my STR properties that I will get a 30% cash on cash return. Anything less than this with STR is a bit too risky for me. With 30% C/C return, I know that I have plenty of income to service the debt and adequate capacity to transition to nurse housing or long-term and still have enough cash flow. I want my properties to work as long-term rentals, then work really well as STRs.

Daniel Johnson · Answer

@Jonathan Stone - You might take a look at Galinburg/Pigeon Forge area, it is an extremely popular vacation destination with STRs having been the norm for decades. Areas surrounding Asheville we have found have great opportunity. The city is large enough to have traditional infrastructure demand (hospitals, medium size businesses, breweries, etc) but also a very popular vacation spot. We were fortunate for this when the pandemic hit and we had to find other uses for our properties. Regulations are high in AVL, but if you get outside of the city, it is much more manageable. I have a great property manager if you wanted someone to talk to.

John Underwood · Answer

I don't expect a large ROI from Airbnb and don't get one, but I am getting a nice ROI from Vrbo.

Jonathan Stone · Answer

@Daniel Johnson

@Zachary Beach

What markets are you guys investing in?

@Luke Carl

If I remember correctly you are investing in Nashville and Gatlinburg?

Jonathan Stone · Answer

Thanks for the feedback.  We have been looking at a STR here on the Oregon Coast and also looking at other markets around the country.

Zachary Beach · Answer

@Jonathan Stone my STR’s are in big bear Ca I also have a management company as well.

Daniel Johnson · Answer

@Jonathan Stone I am primarily in Asheville, NC with just a touch in the market I live, Winston Salem NC.

Zachary Beach · Answer

@Avihay Ohana that’s very much depends on your financing, cleaning how you manage the property and how much you put into it etc. Since I BRRR into my properties and have no money in them within less than a year. I look at the return on equity or the cap rate of the places but even return on equity is largely dependent on financing. CAP rate is dependent on the market value of the properties. So basically apples to apples is harder to find than you think. With that said I have gotten 11-28 cap rates the 11 is really 16 on the all in cost for me but 11 for the current market value.

Luke Carl · Answer

@Avihay Ohana

I don’t expect anything anymore lol.

50% is pretty common if you can do 10% down

What ROI you expect on Airbnb

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