Airbnb VS traditional rental?

Question

Hello All,

I own a condo (studio) in Southern California that I have been renting out for the last year  and it provides $50 a month cashflow (this was initially purchased as a primary residence). I had the fortune of having a good tenant who has paid on time consistently. However, his lease is up in January. That being said, I would like to continue to rent it out, but feel I could potentially make more if I rent it as an Airbnb.

Has any one done this before? I need to make sure I can at least cover my monthly mortgage payments, but I am not sure how I can calculate this since I have no way of knowing how many people will be interested in renting it.

Any advice would be very appreciated.

GB

James Carlson · Answer

@Gaston Barua. I agree with a lot of what's been said. Short answer: Unless you're in the middle of a desolate wasteland, most people can make more doing Airbnb. I've hosted at ten different properties in Denver, and the returns were fantastic.

Long answer: There are a lot of factors to consider. As @Kurt K. said, check out your local regulations. Even if short-term rentals (STRs) are not allowed, that doesn't stop everyone from doing it anyway. I'm not advocating breaking any local ordinances, but you want to know what you're getting into and what potential fines are if you do break them.

As @Logan Chierotti , the work is intensive. Depending on the minimum stay requirement you set, you could be changing sheets and cleaning bathrooms every few days.

And @Ariel Vincent has mentioned a great resource in AirDNA. The less-scientific and free tactic is to go to Airbnb, leave the dates blank and then search for homes similar to yours in your area. See which ones are getting rented a lot and see what they're charging. Then do the math. How many days a month will it take to cover your mortgage and other costs? How much more do you want to make to make it worth the extra work?

One other option I'd throw out there, depending on your area. Here in Denver, as soon as they passed our city's Airbnb law -- outlawing STRs in non-primary residences, my wife and I decided to do medium-term furnished rentals. (Mosty 3-month leases, some 6-month.) We get traveling nurses, the occasional business person, and transplants who are moving to Denver and want a short-term solution while they search for a long-term house. We get about 50% more than we would from a long-term unfurnished rental. Just a thought.

Good luck!

Logan Chierotti · Answer

It depends on the area you're in. I personally converted a condo I was renting long term into an Airbnb and get double the $ that I was getting long term.  That being said, the Airbnb is a ton of work. It's like running a hotel, you have to schedule cleanings, checkin's and checkouts, make sure the place is stocked with supplies (toilet paper, coffee, paper towels etc) and communicate with guests. If you have the time to manage the Airbnb and you're in a heavily populated good area it's probably worth it.

I would recommend researching what others in your area are charging per night and how booked out they are. The more people you're able to sleep the more you can charge. If you can get a sofa-bed in the living room that will allow you to sleep 2 more people which allows you to demand a higher nightly rate.

Good luck

Ariel Smith · Answer

I would check out airdna.co. They have comprehensive data on Airbnb listings in many areas including Southern California. I would also research your local laws as @Kurt K. mentioned. These can make or break your business if they limit your ability to rent nightly.

Eugene Kemp · Answer

I have run an Airbnb.... be sure to check your city ordinances regarding short term rentals.....also your HOA. And you will need to be available or have someone manage the unit. Lots of laundry, cleaning, etc.

Simon Wold · Answer

Along with what others mentioned above regarding laws / rules, look for what other people in your area are getting per weekend for providing Airbnb.  From there you can calculate how many days out of the month you would need to Airbnb to make it worth while.  Make sure to include added management costs.

I stayed at an Airbnb last weekend in Vancouver, B.C.  The local 7-11 had lock boxes where Airbnbs could leave their keys for tenants to pick up.  All the owner had to do was give us the code.  Never even met the guy.  Pretty cool system in my opinion.

Jo-Ann Lapin · Answer

As well increased costs for utilities too

Kurt K. · Answer

I haven't managed any Airbnbs, but I imagine that you have to be very much more available in order to accompany guests questions once they arrive at your unit. Y2Y tenants dont demand that much interaction, whereas Airbnb turn overs could be every weekend. I have stayed at a number of Aibbnbs and it was almost like a B&B without the breakfast.

Also, there are laws stating that some units can't be short-term rentals. Not sure what the laws are in CA.

JD Martin · Answer

I know someone that is killing it with VRBO (another version of Air BnB essentially). He built to sell but has been cleaning up with VRBO. So it is worth a shot in the right areas.

Yousef Reda · Answer

AirBnB now automatically calculates a monthly income for your particular address by comparing local prices. They give you a monthly income based on 50% occupancy which so far has been consistent with our earnings. Also yes if you want to be double sure use airdna.co .

As stated above with concerns regarding increased attention to an airbnb. There has been many hosts that are able to own multiple properties with having the whole experience automated. They get in automatic email giving instructions to either pick up a key at location or have a pin code. They enter in and have instructions on internet and rules of the house. They leave and have a cleaner automatically come in the house to clean which you can charge an extra fee if you would like. Most guests are used to this extra cleaning fee.

Airbnb VS traditional rental?

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