All Forum Posts by: Sukhbir Grewal

All valid points Jason, and it is one of the reasons I enjoy the forum. We have two uniquely different perspectives but at the same time we are both adopting a collaborative mentality in order to share these unique perspectives. I appreciate you sharing your viewpoint and I will definitely be using a lot of the advice you have mentioned in the future moving forward. I'd love to discuss this with you in the future in person or outside of the Bigger Pockets forum.

Sukhbir

Jason, you make several great points and I believe you are definitely right about the difficulty of scaling an airbnb business in Las Vegas to anything more than 8-10 units. I will disagree in regards to the current structure not being broken and airbnb being a niche market. If you look at the average square footage and cost of a traditional hotel rroom compared to a standard airbnb unit, it's clear there is a need and large demand for airbnb. I'd argue that the casino and hotel industry is more of a true niche market than airbnb. Families with children, senior citizens/snowbirds,  international travelers, etc often prefer a spacious smoke free environment that is affordable. With the rise of a focus on healthy/organic food, many travelers want a full kitchen to cook while on vacation. Plus anyone staying in Las Vegas for more than a week would prefer to have their own space. 

Much like any business or new industry, the costs will go down as supply of hosts increases thus making it even more affordable and appealing than it already is. The city will be negatively affected if they do not diversify their product offering which is reflected in the reduction in gambling revenues and the increased emphasis by major casinos on entertainment (nightclubs and bars) as well as restaurants/shopping.

Sukhbir

While I respect everyone's opinion who has posted on this topic,  I will have to respectfully disagree with the "old-timer" way of thinking. It's a Luddite mentality to just hope things will remain status quo and not adjust to the changing technology. AirBnb and Uber for that matter are valued at several billion dollars and backed by venture capital companies with very strong lobbying power. These businesses are here to stay and the cities that fail to adjust will be negatively effected.

Liam, feel free to message me as I run the exact type of business in Las Vegas you are interested in. I'm at 90% occupancy on airbnb year round and have over 45 5 star reviews. I started 10 months ago and made over $60,000 revenue on two 2bd/2ba I purchased for a total of $180,000. High supply with low demand within the city result in low prices. At the same time, the high cost of hotels combined with high rate of tourism leads to great demand for vacation rentals. 

I look forward to speaking with you Liam and while the rules/regulations currently make airbnb difficult in certain cities, this is the perfect time to get involved as these cities will tailor their laws over the next 3-5 years. 

Sukhbir

Great conversation and I'd like to contribute to Gary's original question. 

First of all, know your target market and the demographics you're attempting to appeal to. $15,000 may be reasonable for a higher end retreat for wealthy travelers but obviously if you are targeting young professionals that would be way more than necessary.

After you determine your target market,  put yourself in their shoes and understand what they need not necessarily what they want. The goal of a vacation rental is to provide great customer service while maximizing your return. I disagree with some of the advice given in that buying the nicest beds, headboards,  etc increases your costs without necessary increasing the rates you can offer.

I recommend going to estate sales, moving sales, consignment stores, and Craigslist. For supplies such as laundry detergent, shampoo, soap I use dollar tree. All kitchen supplies I use target. Buy reasonable beds and then use Groupon to buy memory foam toppers. This serves the purpose of providing guests a quality night of sleep while minimizing costs.

Leave feedback cards asking guests what they liked and didn't. Offer them a percent discount in exchange for valuable feedback. These discounts will pay themselves off multiple times by learning what your guests truly care about.

Sukhbir

Great feedback from everyone and I'd like to add a few points/ideas to Shane's original comment.

One way to make the studio and 1 bedrooms more appealing/profitable would be to fully furnish them and charge a premium for these units. Students often want simplicity and by offering the units as fully furnished, you minimize the hassles associated with moving while differentiating your property at the same time.

You should be able to furnish a studio for $1500 and this furniture should last for a minimum of 3 years. If you charge an extra $125/month for these units as fully furnished properties, you will break even on the furniture after a year and subsequently make an extra $1500/unit for the next two years until the furniture needs to be replaced.

Also, you can depreciate this furniture on your taxes as a business expense which is another plus. Another final suggestion would be to target couples and graduate students as these market segments are more likely to live in studios or one bedrooms since they may be over the hectic roommate style as opposed to traditional college students.

Best of Luck Shane,

Sukhbir