Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
It's troubles me that the WOW-factor associated with Airbnb is causing landlords to take their eyes of their income-expense reports which should guide their decisions. I see it as disservice to other rental property owners to tout gross figures and leave out the bottom line.
It's also important that we always discuss how much time is required to manage a short-term requires.
So, I locked myself away and came up with 10 helpful rules for short-stay landlords... not vacation rental owners or home sharers, but rental owners.
These 10 rules are based on lessons learn on the battle field and from hours of conversations with Super Hosts and short-stay providers all over the U.S.
If you're a landlord consider a short-stay operation, then this article is a good place to start your due diligence.
Tell me what you think of this BiggerPockets blog post:
Rental Property Investor · Friday Harbor, WA · Member since 2015 · 66 posts · 30 votes
10y
Hey Al,
I read your article earlier with great interest and I couldn't agree with you more...especially the distinction between investors and property owners (my classifications). Although my net return is close to 20%, I typically tell people who ask me that vacation rentals are not all that lucrative given the initial cost of ownership, assumed expenses (utilities, cable/wifi, etc.), cost of management, TAXES, and vacancy rate (I almost never have a guest in any unit for all of November!).
What I have found is that a large proportion of VR property owners do not have an investor's goals. Instead, they are wanting to fund their vacation place and use it at their leisure or they have unused space and for a little bit of work they get free "date money" (my wife's favorite classification).
Whenever I contribute to a forum post on BP I try to bring reality to the table--have you considered all the expenses in your calculations. After all, BP is about investors helping investors, right?
The Airbnb Landlord experiment that I'm posting about on my home blog is currently trending at 20% above my annual baseline. Similar to your results. For me, that's an additional $2K for one apartment unit. And that's equivalent to making my 8-unit building's NET income the same as a 9-unit building.
Thanks for your comments and I wholeheartedly agree, let's stop talking about gross income when it comes to VRs and Short-Stays.
As you grow your reviews and gain insight on your local market, I believe you can do much better than 20%. But that takes time; it's not for the get rich quick crowd.
So I'll tell you how I did at the end of 2016, but this venture is looking good. I'm using a strategy that optimizes the best of short-shorts and traditional landlording models. And my goal is to create a brand for future growth.
Rental Property Investor · Friday Harbor, WA · Member since 2015 · 66 posts · 30 votes
10y
Hi Al,
Is your VR region seasonal?
We are extremely seasonal--little to no vacationers between November and April. So an income stream I am employing is offering some units for monthly rental in the off-season. In our area I am able to rent a furnished unit for about 20-25% more than a similar unfurnished residential rental. There's a bit of risk with regard to damage, plus some wear and tear, but 2 years running now and still no problems (I'm ridiculously picky about these tenants).
I'm interested to see the marketing differences between our locations. It will be insightful for those with ski chalets as well.
Lender · Orlando, FL · Member since 2016 · 340 posts · 115 votes
10y
I've seen some investors do well (better than traditional long term rentals) in net numbers with Vacation Rentals, but its a balancing act, and I think it works at a certain scale and in certain markets for sure. I agree gross figures don't matter and vacation rentals are wrongly attractive to investors based on those numbers. If you have one vacation rental things can be a challenge, but if you have several then you can afford to have a good handy-man on call for quick maintenance on short notice, and a good cleaning person before/after short term tenants. Cleaning crews at hotels make sense because they work hourly and can clean lots of rooms, and the same principle hold true for vacation rentals. You cannot as easily pay $80 per house cleaning (2 hours = $40 hr) as you can afford to keep a cleaning service contracted for up to 20 cleans a month for 5 houses for less $ per house, or paid hourly if you have enough property... Some of the other plus's are 3rd party insurances, constant knowledge of the conditions of your properties, and constant and greatly diversified sources of income per property (lot of tenants paying in advance for their stays). Nashville, TN and Orlando, FL are 2 markets where I've seen investors do pretty well with them (in net numbers).