1st Out of State Rental Property (or AirBnB)?

[Casandra M.]

We currently invest in rental properties in our home state of Wisconsin but are looking into possibly purchasing a 1-bedroom or studio condo in Lincoln Park in Chicago, right near the zoo (with a great zoo view and bit of a lake view), with the intent of trying out AirBnB and other short term rental sites for the first 6 months-year of owning the property due to it's location. We are a bit nervous jumping state lines, even if it's less than 2 hours away.

What has been everyone's experience in purchasing an investment property out of state, near high-tourist areas?

[Daniel Kauffman]

We've had success doing Airbnb with an investment property in downtown Baltimore, MD which is about 2 hours from our primary residence. I would say that the key is find a high quality property manager first. You can search the existing airbnb listings in the area you are considering to invest in and filter by "superhosts" and find some existing superhosts that already manage multiple properties. An experienced superhost can provide you with some great information and advice. We have done this to create a passive Airbnb investment that has higher returns that a comparable long-term rental. We pay our property managers between 15-20% of earnings to handle everything for us. The biggest disadvantage is that you will likely have to invest several thousand dollars upfront to fully furnish the property. It may take you 30 days to furnish the property, during which time you will receive $0 income. The income in the 60-90 days of ownership will likely be a little depressed because it takes some time to get a property up and running and people are less likely to book a property with 0 reviews. So, it will likely take you longer than 6 months to recover you initial incremental costs required to do a short-term rental. However, the incremental costs are insignificant in comparison to your purchase price. Once it's up and running you should get a much higher cash flow, and you will be very happy that you put in the extra effort.