Investing in Airbnb overseas

[Martin D.]

Hey BP friends,

I was wondering if any of you had invested in Airbnb properties overseas, and if so, if you had some comparable metrics with some US-based markets? 

Average PP, Vacancy, ADR, ROI, tax advantages, etc.

I'm local to Sedona, Arizona and own a few properties in the area. I'm really happy with the way things are going and am now thinking of expanding my investments abroad. Most notably, so I can make use of them on my vacations instead of paying someone else to rent theirs ;)

Happy to hear about your unique experiences!

Martin

[Shiloh Lundahl]

@Martin D., @Mike Lambert, @Andrew Steffens hey guys, do you mind if I jump into the conversation to share a little on my experience investing out of the country?

I own 3 properties in Costa Rica with other investor partners and it has been a big learning curve. 

I used to live in Costa Rica so I have a lot friends there that help me manage my properties. In my opinion, that is really the only way that I think investing out of the country can be done successfully. You have to have a team on the ground that can help you take care of the property, and if it is an STR, to help you take care of the guests.

We purchased our first property there about 2-and-a-half years ago. There were 8 partnership shares altogether. Each partner brought in $117,500. The property is on 2-and-a-half acres and it has a main house, a guest house and a tiny house. It will probably bring in $160,000 this year. Our goal is to have it bring in $180,000 or more each year. This gives the investors about a 10% return on their money. It isn’t very profitable compared to my US investments but it is way more enjoyable. It also takes a lot more of my time because I have been managing it mostly myself since we purchased it. Here is a link to the listing for context: airbnb.com/h/bellavistacostarica

We then bought a house on the beach about 2 years ago with other investor partners. We put in some work after we purchased it and it is making some money, but we have not hit our 10% return goal yet. Last year it brought in $180,000. Our goals is to bring up the revenue to $240,000. That should make each of the 10 partners a 10% cash on cash return for their $110,000 share: airbnb.com/h/johnnysbeachbungalow

I more recently purchased a house in the rainforest of La Fortuna. This is a pretty sweet property. We purchase it with seller financing and we built a caretaker’s house and popped the top adding an additional story to the house. That should be done by the end of August. This property should bring in about $270,000 a year. This property will have 7.5 shares (6 are already taken so I’m still looking for 2 more investor partners on this one). Each share is also $110,000. After the seller financing is paid off in 4 more years, this property should create a 15% cash on cash return: airbnb.com/h/majesticlodgecostarica

We are currently also expanding our beach house, which is already a six bedroom home that can sleep up to 28 people. We are buying the lot next-door and we’re building an eight bedroom house that is three stories and will have a roof top pool, where you can look out and see the ocean. This property will sleep another 24 people. It will also have large open spaces on the first floor that can seat between 50 and 80 people for corporate events and retreats. The two properties will be separate, but they can also be rented out together by larger groups. There will be 10 investor partners on this deal as well. The share price is the same as the others. 

I would say, when you’re purchasing properties in another country, it’s important to visit there several times and do your research to find out which types of properties have the best returns. What we found out doing our research is that in Costa Rica, large vacation rental properties that are different than other properties can create a good return because the competition is lower and also money lending can be a good return because you can charge high interest with only a 50% loan. A lot of the money lenders will lend for two years at 12% with three points upfront and they only lend 50% of the value.

So that has been my experience investing in real estate out of the country. The returns are not as high as I get in the United States compared to the lease options that I do with single-family homes, but the enjoyment that I get from visiting these properties and hosting investor retreats out there is so much greater than any regular investments that I have in the states.

Let me know if you have any questions about the things that I’ve mentioned. I’m happy to chat.