Short-Term Rental Strategy: What is Airbnb Investing?
Whether you’re already investing in income properties or you’re looking to buy your first one, expanding to AirBnB is never a bad option. If you’re not familiar with it, Airbnb is a platform known all over the world as a place where you can book accommodation for your next travel adventure.
The good thing about Airbnb is that it allows travelers to find accommodation in any corner of the world, including your neighborhood. This investment strategy is a great way for you to diversify your income sources and generate passive income in the long run.
What is Airbnb Investing?
Most simply put, AirBnB investing is a strategy where investors purchase rental properties, renovate them (occasionally) and list them as accommodation for travelers on Airbnb. Platforms such as Airbnb make it easy for tenants and renters to find each other.
All you have to do is set the property up and you don’t even have to do any marketing - AirBnB will do it for you. Just list the property and handle the tenants as they arrive. This level of convenience and simplicity is what makes Airbnb a great platform for short-term rentals.
To sum it up, AirBnB investing includes purchasing a property for the sake of renting it out for short periods of time (either to tourists or locals looking for temporary accommodation in your area).
The Pros and Cons of Airbnb Investing
Airbnb is one of the most profitable investment strategies because it allows you to collect passive income from multiple tenants. Unlike renting out to one tenant per month, Airbnb allows you to earn more by renting the property out to multiple people. Besides, tourist accommodation is far more expensive than regular rent prices.
Here’s an overview of the pros of AirBnB investing:
Good Cash Flow: The reason why many investors opt for the Airbnb route is because of the strong cash flow that comes along with it. All you need is a well-furnished property with professional photographs (preferably at a desirable location) and you’re good to go. Renting the unit out is as easy as posting a listing on a website. In fact, if you do everything right, you can pull in two or even three times more revenue with AirBnB renting compared to traditional renting.
Easier to Maintain Top Condition: You’re probably thinking how difficult it must be to manage an Airbnb unit and keep it in good condition. However, you’d be surprised to find out that Airbnb units are actually easier to maintain compared to long-term rentals. Think about it - since short-term rentals get rented out more often, they are also cleaned thoroughly more often. The best part about it is that the tenants are paying for cleaning (AirBnB adds an additional nightly fee for cleaning services.) Besides, with tenants coming and going more frequently, you will be aware of any potential maintenance issues and thus you’ll be able to take those right away instead of letting them sit until the problem grows bigger.
Now let’s take a look at the cons of this investment strategy:
Communication: Keep in mind that Airbnb investing requires you to be active and to communicate with tenants. If you’re looking for a more passive type of investment, then AirBnB is definitely not the one. The thing about owning an Airbnb rental is that you have to continuously manage the property and put in the work in terms of communication. However, keep in mind that you can also hire an assistant to handle these tasks for you if it fits into the numbers.
The Risk: As with any investment, you’re bound to face some level of risk when dealing with Airbnb rentals. While having a lot of tenants is a great plus, it can also lead to many problems since you will have people entering and exiting your property all the time. However, the risk can be reduced by properly screening and selecting tenants, as well as getting insurance for all appliances and valuable items in the property. Learning how to efficiently manage short rentals will help you eliminate these risks.
Best Practices Moving Forward
While Airbnb investing does have its pros and cons, it is definitely considered a profitable strategy, as long as you’re doing it right. When it comes to ensuring your Airbnb investment is successful, here are a couple of things that can push you in the right direction:
Select a property in a desirable area.
Make sure the property is located close to the center and the amenities within your city.
Properties with freeway access are a good option to go for.
This will allow you to charge a bit more because of the location of the property. However, keep in mind that Airbnb pricing is quite dynamic and it allows you to raise and lower your prices to follow the market. Having additional amenities such as an extra bed or a pool can allow you to charge even more.