I'm earning 4-5x on Airbnb. Do you think Airbnb is here to stay?

Question

So I switched my fix & flip on a rehab project and instead leveraged the property (after rehab) through a refinance and instead using it as an Airbnb rental, which is earning me 4-5x average market rental each month. That's only since 3 months of being on Airbnb and with 50-60% occupancy since it's slow season.

Obviously I love the Airbnb model and will be doing it on a duplex rehab so that I can double my monthly income. However, I'm trying to gauge how long will Airbnb hang around since cities are toughening up on local ordinances.

Thoughts and observations based on Airbnbs in your city?

Nik Moushon · Answer

For the most part its here to stay but its going to vary dramatically by location. There are already plenty of vacation towns that have straight out banned them. I'm sure there will be more. I'm also sure there will be cities that set up rules/laws correctly and will be able to take advantage of this new business model and really rake the tax dollars along side the owners that are bringing in good money. Real estate is always location, location, location but now location is going to be even more important if your focus is completely on STR.

Caleb Webster · Answer

The model is here to stay, but regulations, margins and even platforms may change. We have passed the tipping point with the cultural perception and adoption of the model. The hotel industry is scrambling to act as they see their market share eroding. That said, I believe that the profitability of short term rentals will continue to decrease until maybe only the industry heavy weights or the owner occupants can stay afloat.

Tyann Marcink · Answer

Even if Airbnb were to leave, the short term rental industry is here to stay. So as you are building your business, look at other listing sites and marketing platforms so that you are not relying on one listing site and their rules.

Tyler Blackwell · Answer

I was looking for a vacation rental in Palms Springs. They have legislation preventing using multi-family properties as short-term vacation rentals and they have other regulations about parking, noise levels, etc. I think municipalities would be very smart to do the same thing, since converting multifamily units to AirBnB rentals reduces affordable housing inventory and drives up prices. It's a problem in high cost of living areas, maybe not so much in yours.

I can say in our experience (we have a basement apartment AirBnB), there are vastly more AirBnB units now in my city than when we started a few years ago. This has increased competition for price, so we've had to lower our nightly rates about 15% from our peak. It's still better than renting to a long term tenant...

Mike Reynolds · Answer

I think it is here to stay myself. I even heard that Austin was thinking about softening the rules a bit. There will be ups and downs (like the AirBnB property in Costa Rica where that woman was murdered and they arrested the security guard) but by and large I think it is here to stay.

Al Williamson · Answer

The internet is here to stay. If Airbnb goes away, then another version of it will replace it. If your city changes it's short-term rental policy, then it's up to you to find a loophole.

Tia K. · Answer

Account Closed My Airbnb property is nearly 3,000sq ft and located in a historic area in my downtown. I completed major renovations a few months ago with premium finishes and was initially going to flip and priced it at the top of average comps, but once my appraisal came back about $55k higher than my listed price, I pulled it off the market and have been using it as an Airbnb ever since. So it's definitely not a low income property.

There are a lot of Airbnbs out here like mine that are earning 4-5x what we would on rent and all of these new changes makes me nervous about how long this may last.

Myka Artis · Answer

This is a really good question. I personally think Airbnb is here to stay but it will be limited to corporate arbitragers and homeshare hosts in the cities that don't currently have ordinances due to the bad PR that Airbnb has around it. I have units in several cities and the cities that I see shutting it down are the ones with strong hotel markets and the cities that are putting in strict ordinances have a lot of city complaints from neighbors. Airbnb is here to stay but I tell people if you are looking to invest with Airbnb in mind make sure the LTR numbers work and make sure the city has ordinances that will work in your favor.

Nik Moushon · Answer

Leavenworth, WA and South Lake Tahoe, CA are two I know of off the top of my head. I know there are more that I dont know about. Its usually small vacation towns instead of large cities so info on them might be hard to find. There are a ton of cities that are putting up HUGE restrictions and regulations on them; more every week. I'm not against regulating them, I think they need to, but with in reason of course. Some cities are going to the extreme though.

Tia K. · Answer

@Nik Moushon Now you have me looking up to read about those vacation towns that have completely banned Airbnb...hadn't heard about that yet.

I'm earning 4-5x on Airbnb. Do you think Airbnb is here to stay?

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