Anyone own property used solely for Airbnb?

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J295
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Joined: Sun Jan 01, 2012 10:40 pm

Anyone own property used solely for Airbnb?

Post by J295 »

If you do own such property, I would appreciate knowing your experiences and your observations with the investment.
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jfn111
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Re: Anyone own property used solely for Airbnb?

Post by jfn111 »

My kids moved and planned to use their old house for Airbnb. It was a great location 1 block from a lake and about equal distance between downtown and Mall of America.
They advertised it and the bookings came fast and furious. The first rental went great but the second group decided to have a party. Over 70 people spilled out onto the street in a quiet residential area. The police were called twice, it was a work night, and the neighbors were not happy.
They canceled with Airbnb and we listed the house and sold it. They occasionally regret that they panicked and got out because the cash flow would have been great. Superbowl is coming up in Feb. :moneybag
renue74
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Re: Anyone own property used solely for Airbnb?

Post by renue74 »

I have a house that I have been rehabbing for the last 10 months. It's a 3bed/2bath 2 blocks from a small college in town.

I had considered converting it to an AirBNB property because there are a ton of weekend sports teams who come to our town for softball and soccer. (Kids and parents)...and the hotel inventory is pretty low here.

I have a landlord friend who converted a rental property to an AirBnB around the corner. It's a huge old southern house that has been carved up into 4 small apartments.

He said he nets about $1000 to $1200 per month in AirBnB. His properties goes for $100/night.

But he said there are major downsides:

• You end up acting like a hotel. You have to clean, prep, wash sheets, etc. before each one comes in.
• You carry the cost of utilities (cable TV, internet, A/C and heat)
• He said that some people will come in and not be happy with the small apartments. They are about 100 years old. So then he has to deal with bad reviews, even though his photos on AirBnB are legit and he emphases the old "character."

We will probably not convert to an AirBnB...simply because we would have to furnish it.
pshonore
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Re: Anyone own property used solely for Airbnb?

Post by pshonore »

I also heard that if doing Airbnb for lots of short term rentals, you are in the "hotel" business and would file Schedule C for that rather than Sched E. If true, that has ramifications; possible SE Tax on Sched C net income among others, using the income for IRA contributions, etc.
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djpeteski
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Re: Anyone own property used solely for Airbnb?

Post by djpeteski »

You have to be wary of local laws and HOA rules. Some may not simply allow it.

We meet a couple last year that lived across the street from the University of FL campus. They AirBnB out their rooms during football season and hold the tail gate right their in the front yard. The neighbors are not real happy, but they are happy with the profits.

We looked into it for several properties near Disney, but we never pulled the trigger. We even looked at owning a hotel room, that is you own the room and the management company manages it. I feel we would have been very profitable, but it always comes back to one thing: insurance. How were we going to find a way to get reasonably priced insurance that will protect us against liability?
btenny
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Re: Anyone own property used solely for Airbnb?

Post by btenny »

I think you are confusing AirbNb with VBRO. AirbNb is mostly a room rental service for homeowners and city apartment owner to let out single rooms for a single night or two. Rentals of this sort are like hotel rooms and are designed to have the homeowner present at the property. VBRO is designed as a whole house or whole condo rental service. Most of the places on this service are rented for 3-7 days minimum and priced as vacation rentals.

I live in Tahoe part time. So I have friends who do both AirbNb and VBRO and make lots of money with both setups. IMO this whole concept of short term renting trashes neighborhoods. The zoning laws are being completely ignored. The key issue is it totally distorts property prices to the high side as it adds a income factor to a residential property. So prices are much higher than a for single family home. Houses in a VBRO area are sold based on income potential, not long term owner suitability. It also distorts long term rental prices to the high side and removes most the properties from that pool. So it makes long term rentals non-existent or ultra high in rent costs. So new town residents have a job but cannot find homes to rent. Plus as you discussed the "renters" are not all nice and quiet. This issue is part of what is driving the California working homeless population. Investors would rather AirbNb or VBRO rent rather than rent long term to locals.
Topic Author
J295
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Joined: Sun Jan 01, 2012 10:40 pm

Re: Anyone own property used solely for Airbnb?

Post by J295 »

I think you are confusing AirbNb with VBRO. AirbNb is mostly a room rental service for homeowners and city apartment owner to let out single rooms for a single night or two. Rentals of this sort are like hotel rooms and are designed to have the homeowner present at the property.
I'm familiar with both, having used Airbnb in US and Europe, and VRBO in the US. FYI, all Airbnb stays we have had did not have homeowner present at property, and likewise no one present for VRBO.

Appreciate the comments.
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Sandtrap
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Re: Anyone own property used solely for Airbnb?

Post by Sandtrap »

I have 2 R/E development friends who do both AirBnB and VRBO. All high end. One has several multimillion dollar "McMansions" in upper Scottsdale that are VRBO's. They do very very well. I am in the residential multi unit rental business but am considering branching to VRBO's.

As stated earlier, you must be very careful with the CCR's, and HOA, rules. Some also have limitations for regular rental lease durations. IE: must be longer than 30 days, 6 mos, etc. Normally they are complain driven rather than monitoring. So all it takes is a noise complaint or other from a "helpful" neighbor.

VRBO's and AirBnB's also require a lot more supervision and follow thru than normal lease rentals because of the high turnover. Also, invariably, they are always fully furnished which means potential loss of property. As there is no "interview" process as in regular tenant rentals, there are added hazards to that. IE: you may advertise "non smoking" but if someone puffs on a stinky cigar indoors with the A/C on full and no windows open, you will be upset trying to get the smell out.

If you are using your residence for an AirBnB and living there then things are vastly different as you are the host and "guests" have to live by your rules as it is "your home". There are a lot of advantages to this because the "guests" will be supervised to some degree and held to some modicum of behavior and hospitality. I have another friend in Hawaii who has a wonderful mansion type home in Lanikai who does this year round and finds it very rewarding, personally and financially.
I also know of a retired corporate couple who have a variety of VRBO's all over the world and travel to each, Blocking out their time, and have a wonderful time. All the while generating excellent income.

The difference between these many types of "short term guest rentals.per night" is that they are "guests" if you are living in the residence and using part of it for a "rental".. . . vs they are more like "tenants" (with all the hazards that entails) if you are 100% absent from the property. And, if it is your residence, then you will clean up after them vs using a cleaning company or other agent if your absent and hoping to run it in a passive and absentee manner.

I hope this is helpful to you.
j :D
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ohiobucks1
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Re: Anyone own property used solely for Airbnb?

Post by ohiobucks1 »

Sandtrap wrote: Wed Dec 13, 2017 11:01 am I have 2 R/E development friends who do both AirBnB and VRBO. All high end. One has several multimillion dollar "McMansions" in upper Scottsdale that are VRBO's. They do very very well. I am in the residential multi unit rental business but am considering branching to VRBO's.

As stated earlier, you must be very careful with the CCR's, and HOA, rules. Some also have limitations for regular rental lease durations. IE: must be longer than 30 days, 6 mos, etc. Normally they are complain driven rather than monitoring. So all it takes is a noise complaint or other from a "helpful" neighbor.

VRBO's and AirBnB's also require a lot more supervision and follow thru than normal lease rentals because of the high turnover. Also, invariably, they are always fully furnished which means potential loss of property. As there is no "interview" process as in regular tenant rentals, there are added hazards to that. IE: you may advertise "non smoking" but if someone puffs on a stinky cigar indoors with the A/C on full and no windows open, you will be upset trying to get the smell out.

If you are using your residence for an AirBnB and living there then things are vastly different as you are the host and "guests" have to live by your rules as it is "your home". There are a lot of advantages to this because the "guests" will be supervised to some degree and held to some modicum of behavior and hospitality. I have another friend in Hawaii who has a wonderful mansion type home in Lanikai who does this year round and finds it very rewarding, personally and financially.
I also know of a retired corporate couple who have a variety of VRBO's all over the world and travel to each, Blocking out their time, and have a wonderful time. All the while generating excellent income.

The difference between these many types of "short term guest rentals.per night" is that they are "guests" if you are living in the residence and using part of it for a "rental".. . . vs they are more like "tenants" (with all the hazards that entails) if you are 100% absent from the property. And, if it is your residence, then you will clean up after them vs using a cleaning company or other agent if your absent and hoping to run it in a passive and absentee manner.

I hope this is helpful to you.
j :D
What do you do if the "Guests" dont listen to your rules?
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Sandtrap
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Joined: Sat Nov 26, 2016 5:32 pm
Location: Hawaii No Ka Oi - white sandy beaches, N. Arizona 1 mile high.

Re: Anyone own property used solely for Airbnb?

Post by Sandtrap »

ohiobucks1 wrote: Wed Dec 13, 2017 12:51 pm
Sandtrap wrote: Wed Dec 13, 2017 11:01 am I have 2 R/E development friends who do both AirBnB and VRBO. All high end. One has several multimillion dollar "McMansions" in upper Scottsdale that are VRBO's. They do very very well. I am in the residential multi unit rental business but am considering branching to VRBO's.

As stated earlier, you must be very careful with the CCR's, and HOA, rules. Some also have limitations for regular rental lease durations. IE: must be longer than 30 days, 6 mos, etc. Normally they are complain driven rather than monitoring. So all it takes is a noise complaint or other from a "helpful" neighbor.

VRBO's and AirBnB's also require a lot more supervision and follow thru than normal lease rentals because of the high turnover. Also, invariably, they are always fully furnished which means potential loss of property. As there is no "interview" process as in regular tenant rentals, there are added hazards to that. IE: you may advertise "non smoking" but if someone puffs on a stinky cigar indoors with the A/C on full and no windows open, you will be upset trying to get the smell out.

If you are using your residence for an AirBnB and living there then things are vastly different as you are the host and "guests" have to live by your rules as it is "your home". There are a lot of advantages to this because the "guests" will be supervised to some degree and held to some modicum of behavior and hospitality. I have another friend in Hawaii who has a wonderful mansion type home in Lanikai who does this year round and finds it very rewarding, personally and financially.
I also know of a retired corporate couple who have a variety of VRBO's all over the world and travel to each, Blocking out their time, and have a wonderful time. All the while generating excellent income.

The difference between these many types of "short term guest rentals.per night" is that they are "guests" if you are living in the residence and using part of it for a "rental".. . . vs they are more like "tenants" (with all the hazards that entails) if you are 100% absent from the property. And, if it is your residence, then you will clean up after them vs using a cleaning company or other agent if your absent and hoping to run it in a passive and absentee manner.

I hope this is helpful to you.
j :D
What do you do if the "Guests" dont listen to your rules?
Rules and courtesies are posted, courteously, handout on the kitchen counter, etc. as one would in a four seasons resort.
Jerks are inevitable as are "accidents". Thankfully they will be gone shortly. If need be, a pleasant reminder. But most folks are amiable and want to have a good and pleasant stay. Different than regular tenant rentals.
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