Airbnb 4BR In College Towns

[Michael Glaser]

Looking at a total gut job on a home in Lawrence, KS where the University of Kansas sits. The numbers don't make sense as a monthly rental, but as an Airbnb they do. My thought is that's there's a very strong Greek system with numerous parent weekends, gameday weekends, graduations, speakers and other short-term prospects. 

My questions to BP, does anyone have any experience with Airbnb in a small college town like Lawrence, KS where the town isn't a major metro area? 

[Andrew Johnson]

@Michael Glaser You're missing some small things.  If you're doing an AirBnb you'll be paying for yard maintenance, all utilities, cable, high-speed internet, etc.  And if you're renting out for those college football game weekends you'd better (just to be safe) bump up those repair percentages!  One thing you will want to look at is the parking situation.  If it's common to get 8 alumni to pile into a house and happily rent it for a higher price, they all need somewhere to put their cars.  It's a different scenario if mom, dad, grandma, and grandpa are coming for graduation.  They probably loaded up the Escalade and carpooled.  

And your cash-on-cash calculation is way off.  Why?  Your total cash needed is not $42K (which is $37K + $5K closing cost).  It's $42K + $20K in furniture, TVs, etc.  So let's call it $60K.  Those added items like cable, internet, all utilities, landscaping costs, etc. will be at least...what...$400 per month?  So your cash-flow goes from $656 to $256 per month.  $256 per month is around $3K per year which on $60K cash needed gives you a cash-on-cash return of 5%.

Who knows, maybe my numbers are wrong or you've accounted for some of these things in your costs already.