AirBnB in Non-sexy Markets

[Brandon Laughridge]

I currently live in a really popular tourist area in Southern California (La Jolla) and know of many people that are having tons of success renting extra rooms, units, or their whole property through AirBnB.

My wife and I are relocating back home to Kansas City and I've wondered about the viability of operating an AirBnB business there. In the trendy areas of KC, the market looks to be pretty active (e.g. properties have lots of reviews and only a small % of folks even leave reviews in the first place so you can tell that their occupancy is solid).

Has anyone tried, or considered, the viability of buying a property solely for AirBnB rentals? Naturally you'd buy based on good fundamentals and the gamble is just on the startup costs of furnishings, vacancy, etc. I like this idea over a condo because the price per unit is lower and there's no 3rd party HOA or owners involved. Even if those folks bless the idea initially, they could easily change their minds down the road.

Some rough math on a property I think could work (a real property that is listed): $150k fourplex in a cool area of KC (attractive for business travelers, corporate rentals, education related travelers, etc). Supposedly the property is selling at a 10 cap and we'll assume that checks out. PITI with 25% down is $880/month. Utilities and other expenses are around $1500/month conservatively (this is accounting for turnover work/time and so on with a big markup to being conservative). Total rentable nights is 120/month (4 units times 30 nights). Let's say 50% occupancy (this would need to be researched with other hosts in the area, but appears reasonable) and an average of $79/night per unit. That's a gross of right about $4600/month after AirBnB's service fees.

Profit equates to about $2200/month, even after debt service.

I'm curious if anyone sees crazy assumptions in that? I think the real gamble is on the work and cash it takes to furnish the place. I know the ongoing management is pretty easy and flexible so very much worth the $2200/mo in profit (have seen this from friends' properties out here in CA).