Investing in an AirBNB unit? ROI?

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miamivice
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Investing in an AirBNB unit? ROI?

Post by miamivice » Sun Jul 23, 2017 2:11 pm

I'm looking at liquidating 300k of our taxable account and investing in an AirBnB unit.

I haven't spent a lot of time trying to develop a business plan, but wondering if others feel AirBNB / VRBO is a good return on investment compared to the stock market?

I'm thinking we could rent our unit for $200 per night. Maybe 1/2 of the year occupancy. Net revenue - $36,000 a year. Figure property management company takes 1/3, leaving us with $24,000 in revenue. After expenses, maybe $18,000 a year. That would result in a 16 year payback period.

If I were to take the same $300,000 and put into the stock market for 16 years at historical returns, I'd end up with 3x the original investment.

Based on my quick analysis, it sounds like spending $300,000 to invest in an AirBNB unit wouldn't be a great idea. Of course we might get appreciation on the real estate, but that's anybody's guess.

What are your thoughts?

Dottie57
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Re: Investing in an AirBNB unit? ROI?

Post by Dottie57 » Sun Jul 23, 2017 2:22 pm

Isn't an airbnb unit just real estate?

I would not do it. Too much money in one thing.

miamivice
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Re: Investing in an AirBNB unit? ROI?

Post by miamivice » Sun Jul 23, 2017 2:25 pm

Dottie57 wrote:Isn't an airbnb unit just real estate?

I would not do it. Too much money in one thing.
It's real estate with a revenue stream.

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ClevrChico
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Re: Investing in an AirBNB unit? ROI?

Post by ClevrChico » Sun Jul 23, 2017 2:31 pm

I'd rather stick with with index funds properly allocated. Likely more return, no work, and more tax efficient.

neilpilot
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Re: Investing in an AirBNB unit? ROI?

Post by neilpilot » Sun Jul 23, 2017 2:42 pm

Is 1/2 of the year occupancy typical for the area, using AirBNB. It's a fundamental part of your plan. It seems a bit optimistic to me, but I really have no data.

ny_knicks
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Re: Investing in an AirBNB unit? ROI?

Post by ny_knicks » Sun Jul 23, 2017 2:47 pm

Being a landlord comes with a lot of challenges and many people find that it isn't all it is cracked up to be. Airbnb just amplifies those challenges. I have a feeling it isn't as easy as buying a unit, turning it over to a management company and watching those $$$ stream in. It is going to be a lot of work.

Did your back of the envelope math account of taxes? Not a tax pro but have a feeling that will significantly cut into that $18,000 a year.

I have friends that Airbnb a room to supplement rent/mortgage. They seem to make out ok. I think the difference is that they are typically home when the tenant is to monitor them and they aren't treating it as an investment (more just as a hobby/side gig). If you can't monitor the situation the property will likely take a beating. Many people rent those units strictly to party for the weekend.

I'd steer clear...not worth the risk/hassle and doubt you'll beat the market.

indexonlyplease
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Re: Investing in an AirBNB unit? ROI?

Post by indexonlyplease » Sun Jul 23, 2017 2:47 pm

miamivice wrote:I'm looking at liquidating 300k of our taxable account and investing in an AirBnB unit.

I haven't spent a lot of time trying to develop a business plan, but wondering if others feel AirBNB / VRBO is a good return on investment compared to the stock market?

I'm thinking we could rent our unit for $200 per night. Maybe 1/2 of the year occupancy. Net revenue - $36,000 a year. Figure property management company takes 1/3, leaving us with $24,000 in revenue. After expenses, maybe $18,000 a year. That would result in a 16 year payback period.

If I were to take the same $300,000 and put into the stock market for 16 years at historical returns, I'd end up with 3x the original investment.

Based on my quick analysis, it sounds like spending $300,000 to invest in an AirBNB unit wouldn't be a great idea. Of course we might get appreciation on the real estate, but that's anybody's guess.

What are your thoughts?
How are you bying a airBNB. I thought that was just buying a condo or house and renting it nightly. Is this something you buy form someone that has an airBNB.

I see with your name you are in Miami. I live in Broward and not much you can buy for $300K

2pedals
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Re: Investing in an AirBNB unit? ROI?

Post by 2pedals » Sun Jul 23, 2017 2:49 pm

6,000/year for expenses, taxes and utilities does not seem to be enough to me.

musselpoint
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Re: Investing in an AirBNB unit? ROI?

Post by musselpoint » Sun Jul 23, 2017 3:14 pm

As with all real estate, location is the key. However, having been an Airbnb 'Superhost' for a couple of years I think your occupancy and ROI numbers are ambitious. First, it will take time to build up a reputation. Plan to list initially at very competitive rates. I assume you have done your due diligence and you know the going rate, but how is the demand? Are there signs of a glut developing (ie people purchasing units for the sole purpose of listing with Airbnb)? How long have equivalent units been listed with Airbnb and how many reviews do they have? Have you accounted for Airbnb fees, utilities, restocking, and all those 'special touches' Airbnb guests are increasingly expecting?

My Airbnb property is modest, listed for an average of $80/night. It has > 100 5* reviews since 2014. My ROI has been very good, especially since it has a basis of about $60,000. Better than my rental properties, in fact. However, this summer I have noticed a concerning trend: Folks who make long (week to month) reservations months in advance, who then gradually reduce the duration and sometimes cancel at or near the last minute leaving the calendar with significant gaps. I will change my cancellation policy as a result (although it's difficult not to refund somebody with an ostensibly good reason for changing their plans). But I think what is happening is that as Airbnb becomes more ubiquitous, the guest expectations are higher and their commitment level is lower. I'm starting to consider my options outside of Airbnb, for example, as a furnished long term rental for nurse temps.

I would not consider $200/night on a $300,000 investment a good ROI, even at a theoretical 50% occupancy.

itstoomuch
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Re: Investing in an AirBNB unit? ROI?

Post by itstoomuch » Sun Jul 23, 2017 3:22 pm

neilpilot wrote:Is 1/2 of the year occupancy typical for the area, using AirBNB. It's a fundamental part of your plan. It seems a bit optimistic to me, but I really have no data.
DS does airbnb, Seattle, his home, spare room with private bath or whole house. He makes about 50% of total cost of PITI, taxes not included. We have to make reservations to visit and in the summer we get to cleanup after a guest or before a guest. :annoyed
Off season, we can visit weekends :D :annoyed . He does far less than 90 days per year Airbnb.

We have a rental condo, Seattle. Yield 7.5% ROI, not including vacancies, taxes, maintenance, HOA, or depreciation. I am pleased to get net 5% and get a couple % from depreciation on taxes. I see it as a high div, high growth stock equivalent. Condo is from an unexpected inheritance so the investment risk is minimal.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo

Carefreeap
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Re: Investing in an AirBNB unit? ROI?

Post by Carefreeap » Sun Jul 23, 2017 4:48 pm

musselpoint wrote:As with all real estate, location is the key. However, having been an Airbnb 'Superhost' for a couple of years I think your occupancy and ROI numbers are ambitious. First, it will take time to build up a reputation. Plan to list initially at very competitive rates. I assume you have done your due diligence and you know the going rate, but how is the demand? Are there signs of a glut developing (ie people purchasing units for the sole purpose of listing with Airbnb)? How long have equivalent units been listed with Airbnb and how many reviews do they have? Have you accounted for Airbnb fees, utilities, restocking, and all those 'special touches' Airbnb guests are increasingly expecting?

My Airbnb property is modest, listed for an average of $80/night. It has > 100 5* reviews since 2014. My ROI has been very good, especially since it has a basis of about $60,000. Better than my rental properties, in fact. However, this summer I have noticed a concerning trend: Folks who make long (week to month) reservations months in advance, who then gradually reduce the duration and sometimes cancel at or near the last minute leaving the calendar with significant gaps. I will change my cancellation policy as a result (although it's difficult not to refund somebody with an ostensibly good reason for changing their plans). But I think what is happening is that as Airbnb becomes more ubiquitous, the guest expectations are higher and their commitment level is lower. I'm starting to consider my options outside of Airbnb, for example, as a furnished long term rental for nurse temps.

I would not consider $200/night on a $300,000 investment a good ROI, even at a theoretical 50% occupancy.
Excellent post.

We've had a cabin in the So. CA mountains as a vacation rental since the end of 2002. Our management fees have run from 25% to 40% depending on what the manager provides. We never expected that we would make money. We thought we'd be lucky if we could break even on the expenses. Our objective was to keep the unit because we're from So. CA and we have great memories of staying there with DFIL. From an economic point of view we would have done better to do a full time rental but we wanted to use it ourselves a few times a year.

We currently have great managers and it's renting far more than it used to. Previously it would rent a couple of weekends a month and the major holidays. We were fine by that schedule because more people means more wear and tear in addition to the utilities. When folks are on vacation they really don't care about how expensive propane is during the winter!

If we hadn't inherited this cabin I doubt we would have bought a property like this as a second home. And from a financial point of view we would have been much smarter to have sold it, invested the money and used those proceeds to rent a house in different locations. But we've enjoyed it, could afford it and it's been a wonderful place to meet up with friends and family.

YMMV

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unclescrooge
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Re: Investing in an AirBNB unit? ROI?

Post by unclescrooge » Sun Jul 23, 2017 8:25 pm

miamivice wrote:I'm looking at liquidating 300k of our taxable account and investing in an AirBnB unit.

I haven't spent a lot of time trying to develop a business plan, but wondering if others feel AirBNB / VRBO is a good return on investment compared to the stock market?

I'm thinking we could rent our unit for $200 per night. Maybe 1/2 of the year occupancy. Net revenue - $36,000 a year. Figure property management company takes 1/3, leaving us with $24,000 in revenue. After expenses, maybe $18,000 a year. That would result in a 16 year payback period.

If I were to take the same $300,000 and put into the stock market for 16 years at historical returns, I'd end up with 3x the original investment.

Based on my quick analysis, it sounds like spending $300,000 to invest in an AirBNB unit wouldn't be a great idea. Of course we might get appreciation on the real estate, but that's anybody's guess.

What are your thoughts?
A 6% return on an actively run business is pretty awful. It's marginal even for a passive rental.

You can download a significant level of detailed numbers about hosts, pricing, occupancy and property management companies by city and zip code. Just google "airbnb data" and you should be able to find the site.

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Watty
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Re: Investing in an AirBNB unit? ROI?

Post by Watty » Sun Jul 23, 2017 8:39 pm

unclescrooge wrote:AirBNB / VRBO
One risk with these is that even assuming that they are currently operating within the laws and HOA rules(many are not) then the laws and rules can change in the future.

I would not buy it unless you can also justify the numbers with renting the unit as a conventional rental property.

chinto
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Re: Investing in an AirBNB unit? ROI?

Post by chinto » Sun Jul 23, 2017 9:45 pm

You do understand you are simply one home rule law away from having your investment abruptly terminated?

miamivice
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Re: Investing in an AirBNB unit? ROI?

Post by miamivice » Sun Jul 23, 2017 10:04 pm

chinto wrote:You do understand you are simply one home rule law away from having your investment abruptly terminated?
I'm unfamiliar with what you're talking about. Can you explain?

ny_knicks
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Re: Investing in an AirBNB unit? ROI?

Post by ny_knicks » Sun Jul 23, 2017 10:15 pm

miamivice wrote:
chinto wrote:You do understand you are simply one home rule law away from having your investment abruptly terminated?
I'm unfamiliar with what you're talking about. Can you explain?
There are a lot of new laws being created and existing laws being enforced surrounding Airbnb. A lot of people aren't happy their apartment/condo buildings are turning into hotels. Can't say I blame them.

Believe he is suggesting that HOA/City/State could create or enforce a rule/law that essentially prevents you from "Airbnbing" the unit. Suddenly your cash flow from your investment is gone.

NYC is one place that is already moving towards doing this. I believe Airbnb is illegal for people who rent out entire apartments for fewer than 30 days. You can still find a ton of listings for Airbnb in NYC. But they are cracking down and issuing fines.

chinto
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Re: Investing in an AirBNB unit? ROI?

Post by chinto » Sun Jul 23, 2017 10:26 pm

ny_knicks wrote:
miamivice wrote:
chinto wrote:You do understand you are simply one home rule law away from having your investment abruptly terminated?
I'm unfamiliar with what you're talking about. Can you explain?
There are a lot of new laws being created and existing laws being enforced surrounding Airbnb. A lot of people aren't happy their apartment/condo buildings are turning into hotels. Can't say I blame them.

Believe he is suggesting that HOA/City/State could create or enforce a rule/law that essentially prevents you from "Airbnbing" the unit. Suddenly your cash flow from your investment is gone.

NYC is one place that is already moving towards doing this. I believe Airbnb is illegal for people who rent out entire apartments for fewer than 30 days. You can still find a ton of listings for Airbnb in NYC. But they are cracking down and issuing fines.
Bingo. Years back I had a number of rental units. The my city went insane and started grating all sorts of rights to deadbeat tenets and enacted a lot of hostile anti-rental laws. I sold every unit I had to greater fools. I see some of the properties I once held on the market, with another fool who does not consider the legislative environment when making real estate investments.

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Re: Investing in an AirBNB unit? ROI?

Post by hightower » Sun Jul 23, 2017 10:45 pm

We operate an airbnb out of our house. We have an old home with a back room and separate entrace that can be kept shut off from the rest of the house. It's a bedroom with a bathroom, no kitchen. My wife manges it and cleans the room. We book probably 80% of the nights or more. Brings in about 1100-1300/month gross. It works well because of this arrangement. If we had to pay someone else to manage it I doubt it would be worth it unless we charged a lot more which would result in a much lower occupancy rate. I think airbnb needs to be cheap to do well. $200/night is no cheaper than an actual hotel unless ur located in a HCOL area. I think ours books for $49/night plus a $20 cleaning fee. Airbnb keeps $1 of that. We live downtown so we get a lot of tourists coming to town for sports events, concerts, weddings, etc.
If u can do it with your own home then I think it's worth it. But if you need to buy a separate property, it doesn't seem worth the risk.

MrsBDG
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Re: Investing in an AirBNB unit? ROI?

Post by MrsBDG » Sun Jul 23, 2017 11:19 pm

We have a second home which we put on VRBO in order to cover the costs of having the place, but it turned out to be much busier than expected that first season. I'd say we netted about 7-8% on our basis plus covered all the costs. I do all the bookings and accounting and have an onsite manager to whom I pay around 20%.
We are considering adding a second place in this area as it has some bucket list sites nearby and is popular, but I am trepidatious about the ROI if it has to stand on it's own versus every dollar being gravy.
There has been a lot of wear and tear & we will be doing some repairs and improvements each year.
Also, look closely at the area, I was house #40, but now AirBnB has 135 offerings, so the area is getting saturated. Look at AirBnB for the area you want, click through listings and view their calendars, see how much they charge and how much they are booked.
Go to http://www.airhostsforum.com/latest and read about the things people deal with, the problems vary with the market, but you have an ongoing series of issues which require decisions. I don't think I would feel comfortable just buying a place and turning it over to a property manager.
But, I must admit, I am enjoying it, and there is a real chemical boost when your phone dings and you get another booking!

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Re: Investing in an AirBNB unit? ROI?

Post by smitcat » Mon Jul 24, 2017 6:47 am

hightower wrote:We operate an airbnb out of our house. We have an old home with a back room and separate entrace that can be kept shut off from the rest of the house. It's a bedroom with a bathroom, no kitchen. My wife manges it and cleans the room. We book probably 80% of the nights or more. Brings in about 1100-1300/month gross. It works well because of this arrangement. If we had to pay someone else to manage it I doubt it would be worth it unless we charged a lot more which would result in a much lower occupancy rate. I think airbnb needs to be cheap to do well. $200/night is no cheaper than an actual hotel unless ur located in a HCOL area. I think ours books for $49/night plus a $20 cleaning fee. Airbnb keeps $1 of that. We live downtown so we get a lot of tourists coming to town for sports events, concerts, weddings, etc.
If u can do it with your own home then I think it's worth it. But if you need to buy a separate property, it doesn't seem worth the risk.
That sounds interesting - what are the costs related to the extra liability and home insurance? What does the effective tax rate turn out to be on this income? Did you need to pass any local housing inspections and if so what changes were required to meet the codes?

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Re: Investing in an AirBNB unit? ROI?

Post by MrsBDG » Mon Jul 24, 2017 1:05 pm

what are the costs related to the extra liability and home insurance? What does the effective tax rate turn out to be on this income? Did you need to pass any local housing inspections and if so what changes were required to meet the codes?
My place was insured at USAA, they don't allow STR so I changed and now pay double. I do have $1MM liability, but that did not add much to the bill.
Each area will be different, we have to pay a business fee, have a fire inspection & had to add a few more smoke detectors as well as a fire extinguisher and provide exit maps in each bedroom.

Some AirBnB owners are schedule E and some are schedule C, that makes a difference, tax wise (schedule C = 15% self employment tax)

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sdsailing
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Re: Investing in an AirBNB unit? ROI?

Post by sdsailing » Mon Jul 24, 2017 1:32 pm

Why are you choosing AirBNB over a normal rental with a lease? It must be a lot more work...like owning a motel, but with NO economy of scale.

The financial projections are more complex than a simple rental. This gets to your business plan. You need accurate numbers. You need an accurate estimate of the time/labor involved in this. I suspect it is a huge time investment. You need to do quite a bit of social media as well. I suspect the expenses are quite high compared with a normal rental.

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Re: Investing in an AirBNB unit? ROI?

Post by Pajamas » Mon Jul 24, 2017 2:00 pm

Can't think of many businesses that would be less desirable to invest in than a lodging facility with only a single suite.

If someone tried to turn a property near me into a lodging facility or short-term rental, I would do everything that I could do to prevent it, and that is exactly what is happening in many places with rentals on AirBnB or similar sites.

NYC is in the process of forcing AirBnB listings to include the property address to make enforcement easier.
Last edited by Pajamas on Mon Jul 24, 2017 2:14 pm, edited 1 time in total.

NotWhoYouThink
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Re: Investing in an AirBNB unit? ROI?

Post by NotWhoYouThink » Mon Jul 24, 2017 2:07 pm

I'm looking at liquidating 300k of our taxable account and investing in an AirBnB unit.

I haven't spent a lot of time trying to develop a business plan
Enough said.

miamivice
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Re: Investing in an AirBNB unit? ROI?

Post by miamivice » Mon Jul 24, 2017 8:49 pm

NotWhoYouThink wrote:
I'm looking at liquidating 300k of our taxable account and investing in an AirBnB unit.

I haven't spent a lot of time trying to develop a business plan
Enough said.
That's not a very polite comment. There's no rule that folks can't post questions here on Bogleheads without having done a ton of research and thorough business plans ahead of time. It was simply something that I've been thinking about, and I would appreciate thoughtful comments, especially those with some degree of insight to AirBNB investing.

J_Markov
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Re: Investing in an AirBNB unit? ROI?

Post by J_Markov » Mon Jul 24, 2017 10:17 pm

I wouldn't use your cash to purchase the property. I'd put 20% down payment and then finance the rest with a 15-year mortgage. You should be able to pay the mortgage and other monthly expenses with the rental income, and still get a few hundred bucks left. After 15 years the property is entirely yours and you will have both rental income and equity.

aristotelian
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Re: Investing in an AirBNB unit? ROI?

Post by aristotelian » Tue Jul 25, 2017 8:20 am

A colleague was making good money renting out a room in her house through Airbnb. However, she read an article about insurance issues. She called her homeowners insurance and sure enough they said they would not cover what she was doing. That scared her off. For those that are doing Airbnb, does your homeowners insurance know about it?

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Re: Investing in an AirBNB unit? ROI?

Post by yukonjack » Tue Jul 25, 2017 9:01 am

ny_knicks wrote:
miamivice wrote:
chinto wrote:You do understand you are simply one home rule law away from having your investment abruptly terminated?
I'm unfamiliar with what you're talking about. Can you explain?
There are a lot of new laws being created and existing laws being enforced surrounding Airbnb. A lot of people aren't happy their apartment/condo buildings are turning into hotels. Can't say I blame them.

Believe he is suggesting that HOA/City/State could create or enforce a rule/law that essentially prevents you from "Airbnbing" the unit. Suddenly your cash flow from your investment is gone.

NYC is one place that is already moving towards doing this. I believe Airbnb is illegal for people who rent out entire apartments for fewer than 30 days. You can still find a ton of listings for Airbnb in NYC. But they are cracking down and issuing fines.
This is what would give me pause. In Colorado, specifically Denver, Boulder and Crested Butte laws are either already in place or being drawn up to fight these types of short term rentals. I would guess that it will only get worse as time goes by.

chinto
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Re: Investing in an AirBNB unit? ROI?

Post by chinto » Tue Jul 25, 2017 10:11 am

yukonjack wrote: This is what would give me pause. In Colorado, specifically Denver, Boulder and Crested Butte laws are either already in place or being drawn up to fight these types of short term rentals. I would guess that it will only get worse as time goes by.
Worse depends on your perspective. Section 8 housing being rammed into our once stable and desirable neighborhoods is one thing, Airbnb is simply another element hastening the decline of our property values. Over the 4th of July we had an endless stream of police at the two Airbnb rentals. The city council is already moving to brand them nuisance properties.

hightower
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Re: Investing in an AirBNB unit? ROI?

Post by hightower » Tue Jul 25, 2017 5:05 pm

smitcat wrote:
hightower wrote:We operate an airbnb out of our house. We have an old home with a back room and separate entrace that can be kept shut off from the rest of the house. It's a bedroom with a bathroom, no kitchen. My wife manges it and cleans the room. We book probably 80% of the nights or more. Brings in about 1100-1300/month gross. It works well because of this arrangement. If we had to pay someone else to manage it I doubt it would be worth it unless we charged a lot more which would result in a much lower occupancy rate. I think airbnb needs to be cheap to do well. $200/night is no cheaper than an actual hotel unless ur located in a HCOL area. I think ours books for $49/night plus a $20 cleaning fee. Airbnb keeps $1 of that. We live downtown so we get a lot of tourists coming to town for sports events, concerts, weddings, etc.
If u can do it with your own home then I think it's worth it. But if you need to buy a separate property, it doesn't seem worth the risk.
That sounds interesting - what are the costs related to the extra liability and home insurance? What does the effective tax rate turn out to be on this income? Did you need to pass any local housing inspections and if so what changes were required to meet the codes?
I called our insurance company when we started doing this and they told us that technically we're covered already for this sort of activity. But, they recommended adding an umbrella policy as well. It didn't really increase our premium by much at all. I've never calculated the effective tax rate (we've only been doing it for about 10-11 months now), but we're able to deduct certain expenses such as cleaning supplies, sheets, towels, etc. We can also deduct a portion of our utility bills adjusted for the square footage of the space and based on how many nights were actually booked. Those deductions definitely helped quite a bit. The city has no idea we're doing it and quite frankly I don't think they're even paying attention. Our city government is very ineffective with matters such as this. There's no "official" rules about it though from what I've been able to find.

chinto
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Re: Investing in an AirBNB unit? ROI?

Post by chinto » Tue Jul 25, 2017 6:04 pm

hightower wrote:
I called our insurance company when we started doing this and they told us that technically we're covered already for this sort of activity. But, they recommended adding an umbrella policy as well. It didn't really increase our premium by much at all. I've never calculated the effective tax rate (we've only been doing it for about 10-11 months now), but we're able to deduct certain expenses such as cleaning supplies, sheets, towels, etc. We can also deduct a portion of our utility bills adjusted for the square footage of the space and based on how many nights were actually booked. Those deductions definitely helped quite a bit. The city has no idea we're doing it and quite frankly I don't think they're even paying attention. Our city government is very ineffective with matters such as this. There's no "official" rules about it though from what I've been able to find.
Did you get the insurance company's response in writing? At this point coverage is very company specific. You would want the response on the insurance company's letterhead and not from a broker if you are using an indy agent. If the broker screws up your only likely recourse is going to be their E&O insurance for recovery.

Be especially cautious if there is any wording about business activity exclusion or business personal property in the policy. Once again, get it in writing and understand what is covered and what is not. I am no longer an adjustor, but generally business personal property are covered by a separate policy of an endorsement. If you have property that is used simply in ancillary fashion for you business it will be considered business personal property. So that antique clock in the room you are letting out will likely be excluded from standard HO coverage and fall under your business policy.

What would be open for debate is any damage resulting from trafficking through the house. For example, someone spills or knocks over a bottle of bleach while walking from your front door up to the room you are letting(obviously an separate entrance eliminates this concern to a great degree). An insurer could make a reasonable case that the access point to the room is excluded from the HO policy. If you allow your AirBnB guest access to the kitchen, hot tub, living room etc I think you are opening yourself up to a plethora of risks if you are relying on your HO insurance. If I was investigating I would be taking a recorded statement and specifically asking you for example if ANY AirBnB guest ever watched television in your living room, family room etc. I would also will likely interview the guest to test for exclusion. But that is my opinion. The last time I actively worked a claim was in 1990 or so. Once again get your confirmation in writing.

chinto
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Re: Investing in an AirBNB unit? ROI?

Post by chinto » Wed Jul 26, 2017 2:17 am


miamivice
Posts: 961
Joined: Tue Jun 11, 2013 11:46 am

Re: Investing in an AirBNB unit? ROI?

Post by miamivice » Wed Jul 26, 2017 4:44 am

I have a question about taxes.

Say I buy my vacation place and am successful in renting it out via AirBNB for $36,000 a year. I pay a property manager 1/3, so am left with $24,000 a year in revenue. Then I pay $7,000 for maintenance, and have say $17,000 remaining. Is this $17,000 taxed at ordinary income tax rates?

The top level of my tax bracket is about 28 - 33%, so I would be looking at somewhere in the ballpark of $6,000 a year in taxes, reducing my gains to $11,000 after tax.

I can say that there is no possible way that spending $300k to receive $11k a year in income pans out.

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