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Updated 10 months ago, 02/09/2024
Is AirBNB really dead?
Hi all,
I'm a 19 year old and have been wanting to get into real estate, specifically renting a property and putting it on airbnb to get cash flow, however I been seeing around that airbnb isn't what it used to be. People complain that there are too much for cleaning fees and that hosts make the guests do a lot of work that really seems unnecessary. I also see people say that they rather get hotel rooms now instead of airbnb because it's a cheaper option. So, I just want to see if anyone that is in airbnb can justify that and maybe give me some tips for someone that is starting out or wants to start out.
Quote from @Daniel Muscarella:
Quote from @Curtis Mears:
@Daniel Muscarella
A bigger issue is finding a landlord willing to let you make money off his asset. I had a tenant try it and i removed him asap and was prepared to sue him to get any revenue he collected from my property. You will need to find a really bad landlord who allows subleases.
How would you go if you were 19 with no money and trying to get into real estate ? What path would you take
This might not be what anyone wants to hear - start an Air Bnb cleaning company. Charge a fair price, then you can upsell your customers into managing their Air Bnbs. Let the property owners worry about taxes, insurance, etc... while you make money every time a property is cleaned plus every time someone stays in the property.
You definitely should've led with TikTok.
Quote from @Bruce Woodruff:
Most of what you are hearing is not true. You're getting bad information...
1) Too much for cleaning fee - You charge the cleaning fee so you can set it at what you want. I hate places that have low nightly prices and stick you with a $150 cleaning fee. We charge $50 - $70 and do it ourselves.
2) Hosts make guests do too much work? I've never stayed in a STR that had me do anything except take out the trash and leave the place relatively clean...
3) Hotel rooms are not cheaper anyplace I've been lately.
Tips - Be honest, have a clean place in a desirable neighborhood, set your prices fairly. No problems
Well said.
Much of running any business is common sense. With short term rentals, creating an experience that is welcoming, comfortable, attractive(markets well), and reasonably priced gets it done. I have yet to have a client that follows my guidance that hasn't had a strong ROI.
In all fairness, I am seeing a big drop in occupancy rates for the average Joe and Jane landlords. But- these STR owners have homes that have below average marketing and have not made their STR's "unique"- giving them STR marketing "pop" and "sizzle". I advise my clients to have 1-3 special zones in their STR's that stand out and market well. This is curbing the current bump we are seeing in the market, and keeping their occupancy rate and cash flow high.
- Chad McMahan
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- (928) 300-9449
My AIRBNB hit a slow down, and we changed course and have been renting it out on less than 1 year leases. Found a good market niche with people who are building houses, moving, short term jobs, etc. We are now off AIRBNB & rent furnished houses out at a 10%-20% mark up on normal rents, just for being flexible. Right now we did a 3 month lease with MTM after, and told the tenant to just give me a month notice when there under construction house will be done. Less hassle & headache, and still get more of a return than a typical rental. Depending on your market you should definitely consider it. Also it removes a lot of the competition between AIRBNB & typical rentals.
Hello Daniel,
Renting through Airbnb could be more lucrative than renting to a long-term tenant, depending on your location as location is a major factor and you should analyze the Airbnb market in your area. Also evaluate your costs as you will have to provide furnishings, keep the place clean, and pay utilities.
Good luck!
- Wale Lawal
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- (832) 776-9582
- Podcast Guest on Show #469
Hey @Daniel Muscarella!
@Chad McMahan had quoted a great one from @Bruce Woodruff. Don't let bad news deceive you especially when it is coming from a consumer. I would ask yourself from this bad news you've heard how can you improve your business to be better than these other ones?
If you have any other questions please don't hesitate to reach out!
Best of wishes,
Josh Messinger
- Joshua Messinger
- [email protected]
- 484-986-5012
Quote from @Neil Ridens:
My AIRBNB hit a slow down, and we changed course and have been renting it out on less than 1 year leases. Found a good market niche with people who are building houses, moving, short term jobs, etc. We are now off AIRBNB & rent furnished houses out at a 10%-20% mark up on normal rents, just for being flexible. Right now we did a 3 month lease with MTM after, and told the tenant to just give me a month notice when there under construction house will be done. Less hassle & headache, and still get more of a return than a typical rental. Depending on your market you should definitely consider it. Also it removes a lot of the competition between AIRBNB & typical rentals.
Since you're off AIRBNB, do you just find a place for rent on zillow and pay that rent and have other people rent it out while charging more. How do you find already furnished houses or do you furnish them and rent it out to other people.
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This is a good question. And what @Ryan Moyer said is spot on. My STR investor clients in Denver and Colorado Springs who bought five years ago can run a mediocre Airbnb/short-term rental and still do well because they bought at a very different price. If you're buying now, the prices are higher, and you've got to up your game. The place has to bring something extra -- great interior design, a hot tub, a view, incredible proximity to the action, etc -- something that will make you stand out and be able to ask and get the big bucks that make the investment worth it.
To your question about what you should do as a 19-year-old. I'd say get a job and house hack as quickly as you can. Buy a 4br house, live in one room, rent the other rooms. If you're buying as a primary residence, you don't have to bring as much down, so you can get into real estate much easier. With the room rentals offsetting your mortgage, you'll pay little-to-no mortgage, save that money for two years, buy another home, move into it, repeat once or twice more. You'll have a few properties in a few years, most generating decent cash. Save it all and then buy a nice Airbnb/vacation rental.
Good luck!
Quote from @James Carlson:
This is a good question. And what @Ryan Moyer said is spot on. My STR investor clients in Denver and Colorado Springs who bought five years ago can run a mediocre Airbnb/short-term rental and still do well because they bought at a very different price. If you're buying now, the prices are higher, and you've got to up your game. The place has to bring something extra -- great interior design, a hot tub, a view, incredible proximity to the action, etc -- something that will make you stand out and be able to ask and get the big bucks that make the investment worth it.
To your question about what you should do as a 19-year-old. I'd say get a job and house hack as quickly as you can. Buy a 4br house, live in one room, rent the other rooms. If you're buying as a primary residence, you don't have to bring as much down, so you can get into real estate much easier. With the room rentals offsetting your mortgage, you'll pay little-to-no mortgage, save that money for two years, buy another home, move into it, repeat once or twice more. You'll have a few properties in a few years, most generating decent cash. Save it all and then buy a nice Airbnb/vacation rental.
Good luck!
How much do you think I should save up before buying a house? I'm moving to North Carolina in August to stay at an 2br apartment with my friend for a year. I plan to save money for a year when I move there and hopefully can do stuff in the mean time besides saving. I just really want to do something and I think wholesaling could be a good thing to do too.
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Quote from @Daniel Muscarella:
Look at the comparable houses in the area where you want to buy. Decide on an average price. Put aside 25% of that number for the down payment, closing costs and possible repairs
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@Neil Ridens how are you finding your customers in this niche?
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Quote from @Daniel Muscarella:
Quote from @Curtis Mears:
@Daniel Muscarella
A bigger issue is finding a landlord willing to let you make money off his asset. I had a tenant try it and i removed him asap and was prepared to sue him to get any revenue he collected from my property. You will need to find a really bad landlord who allows subleases.
How would you go if you were 19 with no money and trying to get into real estate ? What path would you take
Start by educating yourself on all aspects of RE but especially low and no money down purchases, use of Other People's Money (OPM) and value adds.
Virtually none of our properties have any of our investment trapped in the RE due to value adds and refinancing. What does this mean to a young, bright, hard working person? It means you could purchase largely using OPM a property with a good value add. You purchase RE, perform value add, refinance to pay off the lenders, ending up with property without virtually any money.
My oldest RE acquisition was a live in house hack value add. My second oldest RE acquisition had the STR as a value add. How? This was long before AirBnB (it was after VRBO, but virtually no one had heard of VRBO and our STR did not initially use VRBO). We purchased a property that in 2019 had a rent to purchase ratio of 4% (and I was hopeful that 2022 would hit this ratio again, but there have been a few issues).
Note to pull this off you have to have a good understanding of RE, be able to sell (best skill to get OPM), be able to underwrite properly, ideally be able to do some of the value add yourself, and be able to excel at asset management (manage the property or manage the PM). If you could do all of those things you likely would be successful in whatever you choose to do.
Good luck
Quote from @Bonnie Low:
@Neil Ridens how are you finding your customers in this niche?
1. Facebook Marketplace is the best place I've used. Example post is "furnished 3BR 2 BA - Month to Month leases OK"
2. The realtor who sold me the house has clients who sell their house and need a place to live for a few months.
Quote from @Daniel Muscarella:
Quote from @Neil Ridens:
My AIRBNB hit a slow down, and we changed course and have been renting it out on less than 1 year leases. Found a good market niche with people who are building houses, moving, short term jobs, etc. We are now off AIRBNB & rent furnished houses out at a 10%-20% mark up on normal rents, just for being flexible. Right now we did a 3 month lease with MTM after, and told the tenant to just give me a month notice when there under construction house will be done. Less hassle & headache, and still get more of a return than a typical rental. Depending on your market you should definitely consider it. Also it removes a lot of the competition between AIRBNB & typical rentals.
Since you're off AIRBNB, do you just find a place for rent on zillow and pay that rent and have other people rent it out while charging more. How do you find already furnished houses or do you furnish them and rent it out to other people.
Bought the house vacant and furnished it myself. I had it set up on AIRBNB for a while so converting to medium term rental was easy.
Short Term Rentals are not dead. With anything that is popular and a luxury there will be backlash. There are bad experiences on both sides of the fence, but short term rentals are not going away anytime soon.
I would say that you must heavily research the areas you are interested in investing in. Be prepared to purchase the best or most unique property. Competition is heavy.
The markets are changing heavily. Anyone who denies that has something to gain. Be cautious of investors who give you advice based on market prices they paid years ago when the profit margins were higher.
Read up and take the advice of the experts, albeit, with a grain of salt and disregard what they tell you that doesn't apply to today's market. The landscape on short term rentals is quickly changing due to market factors, the popularity fueled by success touted by experts, and the economic environment. I would caution against anything that seems too good to be true. Run your numbers!
Just like with all other types of real estate, there is still money to be made, sometimes in requires a shift in game plan or attitude.
For our short term rentals, we run facebook ads and we do gangbusters with those. Rarely have to lower our rates by much and we beat out competition.
Sometimes it makes sense to pay someone for information that will get you to a market that is not that well known, or for access to tools that can allow you to analyze different markets.
Additionally, it is not as easy as some people want you to believe to operate a short term rental. There is stress involved and it is a 24/7 type of job. If you think it is going to be easy then this is not for you.
I don't think it is dead. There are some fees like cleaning that you would charge the people that are renting from you.
@Patricia Berman, really great advise all around. It is easy to tell you know your stuff. The only thing I would respectfully disagree on is that "STR's are not as easy as some people want you to believe to operate". They are not easy by all means but with only a few systems set in place (STR specific cleaner, auto messaging, keyless entry), they are not that much work to self manage. Then again, "easy" is a relative term depending on who it is coming from :) Once you get past 4 or 5, yes it can be a lot of work. But for context, all of my STR's have been smaller 1 bed/1 baths. Not entire homes.
Golden is a great area!
As a guest, no it's not dead. We've booked 2 STRs via ABNB in the past 3 months. As an investor, my eyes certainly have wondered a bit from the STR model due to saturation and regulations
Quote from @Ben Einspahr:
@Patricia Berman, really great advise all around. It is easy to tell you know your stuff. The only thing I would respectfully disagree on is that "STR's are not as easy as some people want you to believe to operate". They are not easy by all means but with only a few systems set in place (STR specific cleaner, auto messaging, keyless entry), they are not that much work to self manage. Then again, "easy" is a relative term depending on who it is coming from :) Once you get past 4 or 5, yes it can be a lot of work. But for context, all of my STR's have been smaller 1 bed/1 baths. Not entire homes.
Golden is a great area!
Where do you own your STRs? Is it a vacation area or metro?
Denver is a great area to house hack in. I've had a great ride in the Colorado real estate market.
@Patricia Berman, that is very impressive you have some STR investment properties out of state. Nice work! My STR's are in the Denver Metro Area. I would say it is more metro area area than vacation. 50% of people staying are here for vacation. Other half are here for work, looking for housing, and to see family. Why are you giving up on the CO REI market :) ?
@Ben Einspahr Awesome! I love that you are doing STR in Denver. Denver has a lot of restrictions and it can make it difficult for STR. I was just yesterday looking up the laws on Arvada, Wheat Ridge, Golden, and Longmont. Looks like Wheat Ridge is the most easy going.
I definitely have not given up on the Colorado RE market. The properties I had were not producing enough cash flow and I decided to make that my focus for a bit. I still own my primary, and within the next year I plan on purchasing another primary and utilizing the strategy that helped me build my portfolio early on.
My thought is that the Colorado RE market will still thrive as people are flexible in where they can live.
Managing STRs out of state is probably easier than doing it when you can go to them. Mainly because you end up not taking on a lot of the labor yourself. So that is a great benefit. Especially if you already have a full time job.
@Patricia Berman, yes Denver does have a lot of restrictions which can make STR's a difficult long term business plan. Great plan B is MTRs and still using the airbnb platform.
With todays current market conditions, investing in Denver with cashflow as the goal is not a great business move right now unfortunately. It is very difficult to cashflow in the Denver Metro, but can definitely still be done. However, the real longterm wealth will be made from the other 3 quadrants (appreciation, depreciation, and debt pay down)!
You have struck the nail on the head. With rentals a quick drive away, the "I might as well just take care of it myself" mindset is very easy to fall into... coming from personal experience :)
Saw you are writing a book on leverage. Excited to read it after it is published.
Keep on crushing it!
LOTS of cancellations without notice by owners trying to maximize profits instead of keeping their word (I had 2 myself, this year alone). Horror stories on a daily basis of owners trying to skim cleaning fees and demanding guests clean - fully CLEAN before leaving and leave bad reviews if anything not finished. BAD stories. Folks, this is a hotel room, consider towels left on floor, food in fridge, unmade beds, dirty counters, dishes in drying rack or dirty, etc is part of the cleaning. People don't want to clean your house on vacation. Also, lots of scam stories, to boot.
I see that Airbnb is trying to crack down on host cancellations. I moved over to VRBO for my next rental and I'll be damned, they cancelled my reservation with no reason given again.
The stress of it is making hotels seem quite appealing to lots of travelers and after one horrible experience (for example, weird cameras in unit, or weird owner, etc) many are saying "no more Airbnb". Also, Airbnb has essentially no customer service if problems arise.
Just be aware this is what a TON, I mean a TON of people are saying. The travelers, the customers.
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A TON. What is a TON. That is 11.4 people at 175lbs each. :)
Seriously though, for every post you read about the bad, there are 100+ that never gets posted. No one goes out to BadAirBNB's.com (not a real site) and posts all the great times and experiences they had.
If I took all the negative reviews of anything I am interested in, I would buy nothing, go nowhere and just live in the woods...alone...
@Kelly Sennholz That is what you are seeing but I'm experiencing being fully booked at top dollar/no discounts.
By the way, as a consumer, the only time I've ever experienced a last minute cancellation was at a HOTEL! I had the misfortune of booking a reservation at a hotel in Columbus, OH right before the Presidential election in 2004. George W. Bush decided, at the last minute, to come to Columbus that weekend and his team took my hotel room and I was just out of luck.
It is rare, but hotels also can and will cancel on you, even at the last minute. It is rare that a super host will cancel a reservation because we lose our super host status if we do.
If you read the STR listing description and its reviews, and choose accordingly, you don't normally encounter surprises. If you are looking to rent the cheapest possible accommodation you can find, don't be surprised if you encounter some issues, whether you are booking a hotel room or an Airbnb/VRBO unit.
The days of super accommodations at super low prices are probably over. I'm also hoping that the days of us hosts asking our guests to do more than lock up as they leave, are also beginning to wane. Certainly the vast majority of the Airbnb places I stayed during my last vacation did not ask me to do anything other than make sure the windows were closed and the door was locked. And you are right, I resented being asked to do more...