Thoughts on Airbnb?

Question

Just wanted to know everyone’s opinions on the Airbnb industry, and tell me why.

Devin James · Answer

Hey Sannibel, in my opinion I don't see the Airbnb industry improving. It's getting to the point now where staying in a hotel is much cheaper because of the extra fees. It seems like Airbnb will only work for larger homes (big groups that pay extra for the convenience) and unique experiences.  But if someone is traveling to a city for 1-4 nights, I don't see Airbnb's being a superior option to a hotel.

Mason Hickman · Answer

@Sannibel Carter

I think it will continue to thrive for vacation travel with larger groups and for locations without hotel presence. For work travel, hotels won’t be going anywhere.

Jake Cohen · Answer

@Sannibel Carter I own 6 units that I rent on Airbnb. It is a great platform for vacation rentals. In my personal life when I travel I rarely stay at a hotel because I am usually traveling with my family. Having a kitchen and convenience of a house is much better for us. As Airbnb matures we will see more professionalization of the industry so people will shop certain brands etc when they are looking for certain amenities. I only see it growing for the foreseeable future. Many hotel companies are starting short term rental arms to compete. Let me know if you have any specific questions.

Corey Frank · Answer

@Sannibel Carter I am a pretty big newb but from what I have read in the forums, people can make absolute bank on air bnb. They never share their secrets though

Account Closed · Answer

There are definitely different types of investing that individuals are suited for. Airbnb's are not suitable for investors who don't have a massive amount of times to clothe, feed and babysit properties that require 247/7 365 days per year management. Stop and think about the difference between investing in either single family homes or multi-unit properties where you tenants stay an average of 2 years, you only need to collect the rents once every 30 days and maybe 1 or 2 times per year your tenant has some sort of maintenance issue like their water heater or garbage disposer goes on the blink.

When you invest in airbnb's your cost to furnish them is higher, your cost to constantly rent them is higher, you may have 50 to 100 different tenants every year and you need to clean inside and outside every unit every time a guest leave. You have to deal with changing the bedsheets, towels and leave pooper paper and sundries in the bathroom. Guests steal things and they have a way of leaving filthy dishes, a filthy stove and sometimes it is difficult to put all the dishes, utensils and pans in the location you want them.

Unlike conventional rentals, you income is not guaranteed, you have to pay management companies a super large portion of your booty because not only does a management company have to take care of your guests 24/7, they also have to deal with the cleaning services and destruction tenants leave behind them.

You have to constantly juggle your calendar for tenants who want to move their move-in date forward, backwards and cancel. You have to constantly deal with refunds, overcharges and credits and you have to take a sleuth of payments every month compared to a conventional unit and then you need to constantly do accounting. For a 40-unit rental unit I can do 100% of the accounting in 4 hours every year, be accurate to the penny and convert it to an Excel file for my CPA. Imagine having 100 or more rental transactions every year compared to 12.

Sure! You may be able to make more money with airbnb's, but not all money is good money because one of the major problems with airbnb's is you have to worry about bad reviews and guests write bad reviews for the lamest reasons.

I am a contractor and I work for many people who own airbnb's and they make a lot of money, but airbnb's is definitely not a passive business. These people work every day and some of them work 6 days per week. I know because I do remodeling for many airbnb owners and after speaking with them I was never ever interested in starting something like a hotel business where each unit is several streets or several miles apart.

Steve K. · Answer

I have several clients and colleagues absolutely killing it in Boulder with Airbnb/Short Term Rentals (STR's). However as Colin mentioned, there are tough restrictions here especially needing the property to be at least partially owner-occupied in order to rent for less than 30 days legally.

However Boulder County still allows nightly rentals, for now at least (with some restrictions such as needing a license and limits on the number of nights per year). Medium-term furnished rentals (30+ days) can do really, really well on Airbnb/other platforms in Boulder without violating the ordinance. There are some good platforms in addition to Airbnb to advertise medium-term furnished, like Furnishedfinder, corporatehousing, CHBO, sabbaticalhomes, FB marketplace, zillow, hotpads, etc. The high-end "executive" rental is in high demand here right now with tons of people moving here who are looking to buy property who need to rent until they find something, people who sold their homes and aren't able to find a replacement property, nomadic tech-workers working remotely/on contract assignments with google, microsoft, etc. I have several clients, friends and colleagues killing it with this strategy. Check out AirDNA to see what STR's/medium term rentals are fetching in boulder, the rates people are getting for places close to downtown are impressive. My wife and I set up a furnished rental here last year with the plan of renting it on Airbnb/VRBO, but our very first guest who we met through a colleague of mine decided to stay forever, so it's become a long term rental by accident (which is fine with us because it's much less work and less vacancy loss for us this way, and the tenant is awesome).

It's extremely rare to find properties that meet the 1% rule in Boulder but with this strategy it can be achieved. Beyond Boulder, I think the STR strategy is great for the right investor and the right property. It's definitely a more "active"/ time consuming way to to invest than others, but can be well worth it. I'd caution against setting up an STR in places without an ordinance (like Westminster for example), as more and more cities are passing restrictions. I'd focus on areas that already have ordinances that officially allow them, like Wheat Ridge, Arvada, Littleton/Highlands Ranch, Jefferson County, many mountain/ski towns, etc. or just go with medium-term instead of short term. It would be a shame to set up in an area like unincorporated Adams County that doesn't currently have an ordinance, but where STR's are operating "under the radar", only to have short term rentals banned completely soon after you set up (tighter restrictions on STR's has been the trend over the past 10-15 years, although lately some places like Arvada and possibly soon Lakewood have reversed the trend).

Colin Simon · Answer

Are you speaking broadly, or specifically in Boulder?

Boulder has a lot of restrictions, namely it has to be your primary residence(so you would live in it part-time). This makes it dramatically more lucrative for the period of time you do airbnb it. Best weekends are CU move-in, CU graduation, most summer weekends, and the biggest one of all, Grateful Dead. People pay through the nose for airbnb's in Boulder over that weekend.

Thoughts on Airbnb?

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