Airbnb - my favorite real estate investing- Observation #1

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Airbnb or STR (short term rentals). The concept is furnished rentals that are rented for short terms as short as 1 day to 30days or longer if you desire.

I'm a newbie.  I only started in 12/2017 with my first airbnb.   So far I'm loving it.   it's a lot of work and I'm glad not everyone is doing it because it's hard or scary or too much work.

I want to share "observations" and reasons why I like Airbnb so much.   I've been doing traditional buy/hold traditional investor for several years and I have little desire to continue finding  another12 month or "long term tenants".

Observation #1:  Niche marketing.

I've been want to to market to a specific clientele or target tenant (without violating discrimination laws).   I'm not talking about race/ethnicity/social class.     My question is this:   Why market to the everyone?    Instead can I market ONLY to a specific type of tenant.  Specifically, can I attract a certain type of tenant - long term, stable, good income, low wear and tear, etc.  

Every buy/hold investors dream, right?   So I thought how about the education market - universities - not college students but rather graduate and professional students (e.g. medical students who spend 4 years in one place).

Targeted tenants.   I know we have all heard on BP podcasts and other interviews where successful investors have done this.

For example, one BP podcast (anyone remember?), an investor had a constant/nonstop tenant base from a sorority.   He did not have to do any mass marketing on Zillow, craigslist, or any other listing.   He had a captive audience that kept sending him tenants - College women from one sorority.   This gave him consistency, ZERO vacancy, and some leverage over his tenants in some ways.

I wanted to replicate that model.   However, i did not find this to be easy......until I found Airbnb.

Airbnb markets to vacationers, business travelers, etc.   it's not a "niche marketer".......well actually it is.

Do you know anyone who lost their job during their airbnb stay?   Do you know anyone who got a divorce and completely trash your rental during an Airbnb rental stay?     It just does NOT happen.   Even if it did, it would happen 100x less than in your regular 12 month lease situation.

Unfortunately, I've experienced both of those things in my traditional rentals.    The HIGH cost of repairs, turnovers, vacancy was killing my cash flow and starting to erode my faith in buy/hold investing.   Cash flow just plain sucks.   Without appreciation, this kind of investing is a sham.

So my clients in my very FIRST 3 bedroom/2bath home in Dublin, California is attracting a lot of wedding goers, some mix of business travelers, and families on vacation.    They all pay on time (since airbnb collects the RENT before they even arrive).   I have ability to charge for damages that Airbnb will be the arbiter AFTER each stay.   

How to niche market even further?   If I find one type of client/guest the BEST.   I can work to market to that ONE type of guest.   If my biggest money maker is wedding goers.   I can market/network with wedding related business close to my airbnb to attract ONLY those type of guests.   Now, this is just an example.  I'm too new to know if this the "best" guests.   

I love Airbnb/STR.

Check out my FIRST airbnb rental in Dublin, California

https://www.airbnb.com/rooms/22130761?s=51

Oh yeah, I'm always looking for "boots" on the ground - if you are a newbie, have lots of time and willing to get your hands dirty and learn this awesome new way of investing, message me.   If you are already successful, please keep reading my post but I really only have time to train a few people who are LOTS of times and eager to work.  I'm looking for people in SF bay area, Indianapolis, and Northern Atlanta.

This is cool. AirBnb has been something I've thought about but just not sure since it's temporary. In my mind, I'm just like, what if you don't have clients for months? How do you get around that? Clearly you're making it work!

Sounds  like you Are hitting it out of the park right now. We have found thru the last real estate downturn and recession the air b & b just like many others took a hit and just boiled down location  and amenities as to how much of a hit. We financed a very large air B and B in big bear with tons of views and amentities the revenue took a 50 percent cut. All in all the air B and B if managed right can work out pretty well.

I can be your boots on the ground in Indianapolis. PM if you want to chat

I’m doing this in Arizona, I love it it’s the only business where your efforts or lack thereof are immediately punished or rewarded, I’m standing up my second property this weekend. I’m starting small https://abnb.me/MTaBo8lrDR

@Lear R. Is the Arizona property in an HOA? I ask because many HOAs in Arizona (mine included), prohibit short-term rentals such as Airbnb and they are fining owners BIG TIME for violations.

If you need help in AZ, feel free to reach out to me.

@Lear R. , I have two AirBnB's in Florida and I LOVE IT!  The returns are outstanding.  I am looking to expand here in Florida and had a few questions. Your property in Arizona, after checking out your listing, it looks like an apartment or condo.  Like @Stanley Bronstein said, many communities have VERY strict rules about AirBnB's or STR. Are you able to use an apartment or condo or townhouse to AirBnB? I am a numbers girl and Apartments and condos provide amenities that bring value to my customers. In addition, I am also looking for additional niche' here in Orlando that produce great returns on investments. Who are you marketing to in Arizona? And lastly, do you manage the property remotely? Thanks in advance for any information.

Hi Joe,

Congrats!

Are you renting other people's homes?

What training course do you suggest to learn this method?

Are you willing to partner?

I am in based in Silicon Valley.

Sincerely, Franco.

@Kaynea Bingham, I don't deal with HOA's, for every condo that has a HOA there are 10 that don't, several apartment complexes realize that for the traveling person Airbnb keeps the rents paid on time so some apartment complexes have explicit addendums specifying not to short term rental, others look the other way, and some welcome it. I'm currently working to partner with the larger property management companies like Greystar, and Costar to ask them to modify their anti-short term rental policies, in short term friendly cities like Scottsdale. I'm pushing this because these properties have the best amenties for guests, and STR Investors make better tenants than your average tenant. I do manage the property remotely and only come to town to solve a significant problem that is too much to ask of a co-host.

@Joe Kim, My former Scottsdale co-host, and Cousin is moving to the Bay area to start work, I want to stand a property out there up, but have received fearful, OMG's from a college buddy who is a property manager. He says since the city is hard on short term rental owners, and the city enforces like crazy. I am of mind that if the city needs you to register your property as a short term rental, and you register there should be no issues unless you are trying to subvert the law. What's the situation, is the city welcoming to STR Investors?

Never mind, just used the power of the mighty Oracle google.

https://www.airbnb.com/help/article/1849/san-francisco-s-registration-process--frequently-asked-questions

@Joe Kim Congratulations on your success! I have thought about airbnb but haven't tried it yet. You make it sound easy...

@Joe Kim   My niche market is refinery contractors.  These guys are welders, fitters, electricians, boilermakers and the like.  During any given week, there can be 50-250 contractors in town for a 2 week to a 2 month job.  They usually come from the Gulf Coast and I'm in Kansas.  My 3 main selling points with my 24 STRs are this.  

1. It's costs less than a motel.

2. There is a kitchen.

3. There is a washer and dryer.

Things like the Smart TV, wifi, outdoor grill, firepit, horse shoe pit, nude female artwork in the bedrooms, etc. are just bonus things above and beyond staying in a motel room.

@Paul Sandhu - that's a cool niche! Thanks for sharing.   How to you target them?  Do you have much concern of noise impact on weekends?  All around Kansas or one area?  

Sorry - lots of questions.  I have one local unit in Wisconsin as a test and personal use deal.  It's good for that but not sure it would be good for an investment only option.  Like the idea of doing a number of units in one city that is big enough to have more short term travelers.  

@Kaynea Bingham Are your STR's in Orlando? (or some other city) Seems like your units may be in apartment/condo spaces. An airbnb four-plex of 10 unit would be interesting. Based on tor REA experience do SFH's with a pool provide a decent return in the Airbnb market? Thanks!!

@Steve Dye   I target them by doing pre-employment drug screens to gain access to the refinery in this town.  The houses are all in this town.  I don't understand what you mean by noise impact.  Do you mean partying?  They don't have time to party when they work 60-84 hours a week.  

@Joe Kim

We have an AirBnB in the Outer Banks, North Carolina and really like doing it a lot.  We are planning on purchasing more property in the area in the next year or two.

Every time we get a new question, a new situation, a new anything, we create a templated response that we put on our smart phones so that the next time that same question/situation comes up, we just change the "Hi xxxxxx" and then paste the rest in.  It is a huge timesaver.

Mike

i know some people in DFW that have had some success but several cities here are trying or have already banned them. I ran the numbers in Frisco recently & it was not even as much as a year round tenant lease!

@Steve Dye Yes, both of my STR are in the heart of Orlando. I made the tough decision of buying a less than desirable property in a up and coming area of one our tourist districts. There is construction going on everywhere in Orlando. The economy is doing well. My condo is close to Universal studio. It is a Condo and was previous zoned short term rental, which was perfect for AirBnB. I completely renovated my unit to make the unit attractive to vacationers. It was my thought process, that as the area continues to improve, my property value will do well also, while I make money. And because I am a flipper, in the future if the market changes or I don't want to AirBnB anymore, I will be able to sell a completely renovated, updated unit.

Single Family Homes do well as Airbnb's, so long as you don't have a high mortgage and aren't in a STR restricted community. in addition, here in Central Florida, there are ton's of STR communities in the area that all have private pools and amenities that appeal to vacationers. Pool or pool access is almost a must to tourists her in Orlando, as people want a tan and to enjoy the warm weather. The complex my condo is located in has 3 pools, with one of the pools being indoor.

Although I have not yet marketed the airbnb strategy yet, I have family in Sedona, AZ making close to 1500-2000 a month with a 1 br/1ba rental. The location being a high year round vacation destination helps keep occupancy full year round. As always though, be aware of the city laws as some cities can and will issue fines with regards to Airbnb and short team rentals in certain cases.

@Joe Kim It’s mine too!! Congrats on finding your niche!! I live in a college town (Purdue University) and own 3 Airbnb’s. I’m actually working on adding a 4plex to the mix and I’m thinking of AirbnB’ng one of those units. All the best to you and others in the STR industry. Turnoverbnb is a good resource to use for your cleaners!

Hey @Joe Kim . I love this! Great line of thinking and I can definitely get on board with the "niche marketing".

An obvious one (or maybe not so obvious to those who don't live here) in Nashville are bachelor/bachelorette parties. I have a friend who profited 6 figures/year from a downtown spot targeting just that for several yeas in a row.

If you're ever interested in getting into the Nashville STR market let me know! I have a great and growing base of resources and knowledge of opportunities here!

Thanks for sharing!

@Kaynea Bingham I am looking to buy property in Orlando for STR purposes. I'm based in Fort Lauderdale so looking for an agent in Orlando. How can I get in contact with you?

@Lear R Don’t understand your comment. Every condo has an HOA

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