AirBnB Hosting - In lieu of traditional rentals

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renue74
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AirBnB Hosting - In lieu of traditional rentals

Post by renue74 »

Anybody have experience with hosting via AirBnB instead of a traditional tenant lease?

I have a friend who tells me he makes a ton more money doing that...but the tradeoffs are a lot more hands on interaction with guests.
redrocker
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by redrocker »

Have your friend show you his numbers.
Keep in mind you'll pay all utilities, which will knock a chunk off your net compared to traditional rental.
If you're in a city that has legalized and levies taxes, that affects your profitability.
If you're in a city that hasn't legalized, fines could potentially devastate you if you're caught.
If you're in a neighborhood that isn't all that feature-laden/conveniently located to convention center/business district, you might have to lower your nightly price so much that conventional tenants are more ideal.
You essentially act as a full-service contractor (unless you outsource to a manager), so be prepared for 24hr customer service. And in the event of a dispute, assume that Airbnb will side with the guest.

What I've found in the 3 years I've rented one apartment as a vacation rental in my city is that supply has steadily risen, annual net has come down every year, and the quality of guests has been slowly on the decline. I will personally be switching platforms, likely to either VRBO or Homeaway. As I understand it, you get more mature guests, longer term stays, and pay less fees.
jbuzolich
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by jbuzolich »

I looked at setting up VRBO about the same time I was setting up AirBNB for our cabin. The fees were much higher then on VRBO so I skipped it. Figured I could always come back and add it later if I wanted. We end up having so many bookings through AirBNB that I haven't gone back. I also appreciate that for the county where our place is they directly collect and pay the required transient tax. So we're booked most of the summer season almost to being booked too much and we don't get to go ourselves. We're not making a profit as far as the tax return says but it brings our cost of owning the place down to a reasonable level. We did not buy it as an investment property.
itstoomuch
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by itstoomuch »

Son is a superhost.
He owns. He is single in a townhouse.
A roommate @1000/mn has a lot of issues. Rent agreement, housekeeping, kitchen, parking, compatibility,etc.
He Airbnb's year round but almost entirely over better 4 months of the year and some holidays. Earns about 10K +/-. for less than 90 days/yr . Legal. Pays hotel taxes.
We sometimes get to visit him inbetween his guests and get to deep clean before and after guests. We have to make reservations 2-4 weeks out.
He doesn't need to Airbnb. He does it for pin money and networking. Sometimes he "shares" his spare bedroom and other times "shares" the whole house.
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
BW1985
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by BW1985 »

itstoomuch wrote: Mon Sep 11, 2017 1:37 am Son is a superhost.
He owns. He is single in a townhouse.
A roommate @1000/mn has a lot of issues. Rent agreement, housekeeping, kitchen, parking, compatibility,etc.
He Airbnb's year round but almost entirely over better 4 months of the year and some holidays. Earns about 10K +/-. for less than 90 days/yr . Legal. Pays hotel taxes.
We sometimes get to visit him inbetween his guests and get to deep clean before and after guests. We have to make reservations 2-4 weeks out.
He doesn't need to Airbnb. He does it for pin money and networking. Sometimes he "shares" his spare bedroom and other times "shares" the whole house.
That is pretty interesting and sounds like a good gig. Where does he live? I would assume in a large city to have to have that much demand.
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
itstoomuch
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by itstoomuch »

His Seattle, copse of townhouses has several Airbnb'd hosts. Close in, on mainline bus line, amenities close by. His mother does a good job in deep cleaning and he does even better job in cleaning her cleaning :annoyed I guess the guests gives him an incentive to not make it a bachelors pad :oops:
He's fairly higher priced, he's not after the low end clients.
His net isn't that much since he is legal and is in 25% marginal. He could make more in a unreported fulltime roommate.
He's doesn't work it. His neighbors do but they also keep prices high.
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
WageSlave
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by WageSlave »

Mr Money Mustache's most recent post is a case study of exactly this: From Zero to Wealthy in Two Years – With AirBnb?.

My takeaway is that it's not that different from traditional renting, in that much of the hardest/most critical work is up-front: finding good properties, and then making plans for how to manage and service it all.
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renue74
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by renue74 »

My buddy has 9 properties on AirBnB now. He's been a landlord for 20+ years, but only recently moved to AirBnB on some of these.

We live in an a 60,000 pop. small town outside Charlotte, NC. He said there's a need in this area for long term temporary housing. He noted that he has travel nurses who rent for 2 months, people who's new homes are not ready, but they need a place to live meanwhile, etc.

There are also many regional sports events that happen on the weekends...a new BMX complex, Velodrome, Soccer, Softball tournaments.

I have a rental I'm rehabing that is near his AirBnB apartments. Initially, I planned on it being a college rental. It's 2 blocks from a 7,000 student campus and rent would get $1300-$1500 per month.

But, I thought about AirBnB. The local city ordinances haven't started making it hard for this yet. AirBnB is not huge here.

He said the drawback is the turning of the rentals. You basically turn into a cleaning crew where you have to make the beds, take the trash out, clean, mop, etc.

Plus, you have to pay utilities, internet, etc.

My issue would be since it's a completely new rehab I'm working on, we would also have to furnish it, which would eat up $5K pretty fast for basic furnishings.
Carefreeap
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by Carefreeap »

We've had a vacation rental in the So. CA mountains in vacation rental service since the end of 2002. We've always lived too far away to manage it ourselves. Over the 15 years we've owned it we've had 5 different managers/management companies. We've kept it because both of us grew up in So. CA and we like a So. CA presence. We never expected it to make money; more like it was a way to help defray the costs.

The management fee is the primary reason we don't break even. We've always been on VRBO and Trip Advisor and only recently AirBnB. I think if you want to make money you need to manage it yourself. Our current manager is the best we've had yet; I've told her she's OCD in a good way. I personally don't want to work that hard. Between their 3 owned vacation rentals, ours and a cousin's, she's got a full time job with the reservations, pricing and scheduling cleanings. They've also hired a handyman who does small repairs and deals with on-site issues.

From a strictly financial point of view we would do better with a full time rental. A big issue is that guests don't care about your utility costs. That can be very expensive in the winter when your cabin is at 5,500' in snowy conditions and on propane.

Vacation rentals are more like running a motel than conventional rentals. The rules are different and the expectations are different. Like anything do your homework.
Every day I can hike is a good day.
Curlyq
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Tamarind
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by Tamarind »

If a self-managed rental is a full time maintenance job, intensive AirBnB hosting is a full time job at a hotel.

On the other hand, it's more flexible as there's no lease and you can stop for a while any time you need to.
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gasdoc
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by gasdoc »

renue74 wrote: Mon Sep 11, 2017 1:19 pm My buddy has 9 properties on AirBnB now. He's been a landlord for 20+ years, but only recently moved to AirBnB on some of these.

We live in an a 60,000 pop. small town outside Charlotte, NC. He said there's a need in this area for long term temporary housing. He noted that he has travel nurses who rent for 2 months, people who's new homes are not ready, but they need a place to live meanwhile, etc.

There are also many regional sports events that happen on the weekends...a new BMX complex, Velodrome, Soccer, Softball tournaments.

I have a rental I'm rehabing that is near his AirBnB apartments. Initially, I planned on it being a college rental. It's 2 blocks from a 7,000 student campus and rent would get $1300-$1500 per month.

But, I thought about AirBnB. The local city ordinances haven't started making it hard for this yet. AirBnB is not huge here.

He said the drawback is the turning of the rentals. You basically turn into a cleaning crew where you have to make the beds, take the trash out, clean, mop, etc.

Plus, you have to pay utilities, internet, etc.

My issue would be since it's a completely new rehab I'm working on, we would also have to furnish it, which would eat up $5K pretty fast for basic furnishings.
I just wanted to add, addressing the last statement, we put $20K into furnishing our 3 bedroom rental in The Villages, FL. When you have to add every lamp, spoon, blender, pan, etc., it adds up quick.

gasdoc
JGoneRiding
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by JGoneRiding »

So I tried it for a little bit when basically I wanted to keep a unit empty till I could move a different renter in there later. I didn't like it. It was WAY to hands on for me. It is significantly simpler to traditionally rent as long as the renter isn't to needy. Neediness is a screening factor for me that I try to determine when I turnover. The guy that is in that unit now has called me ZERO times in the last 14 months. I do have to go and pick up rent from him but as there is another unit that can't figure out mailing rent too and he works eve so its easy for me to get on lunch break or just after work it is ok. So i am truly doing the sit back and collect rent bit! :D Generally I just don't work that hard as a LL but Airbnb someone needs to be truly available 24/7.

A real estate agent/property manger I know well and do business with on occasion just turned one of their units into airbnb only. Its a downtown unit (well as much as that can be in a town of 12k) and its a small studio so more situated to a hotel like place but it can sleep 4. so most likely they were going to pay utilities anyway. So as that was clearly done as a business decision they think they will make more and during the busy season they probably well. The unit would most likely rent between 550-700/mos and they are asking 150/night. And if it rents just the weekends that is 300+ a weekend
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Meg77
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Re: AirBnB Hosting - In lieu of traditional rentals

Post by Meg77 »

I talked to a realtor recently who has several investor clients scooping up condos and renting them out as Airbnb rentals here in Dallas. He said one guy buys with hard money loans at 14% interest and says he still nets double his carrying costs (presumably including utilities, cleaning, etc.). Of course it's very active management and he's not accounting for his time. They buy under $200K within a specific 3 mile radius near one airport and apparently have them rented out 90% of the time. The biggest risk in my view besides demand waning would be the HOA banning short term rentals if you're using condos governed by a HOA. Of course then they could just rent the units out like a normal rental I suppose.

Several airbnb's my husband and I have stayed in appear to be permanent investment properties. One in San Francisco, one in Tulsa. If you are looking at the listings you can tell when you are dealing with a processional landlord sometimes if they have multiple units in a building or street available. Seems like some people are making enough money to deal with the hassle.
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