AirBnb opportunity

[Joseph Bosco]

Does this look like a good opportunity? I have an opportunity to rent out the new beautiful units in my building for $1650. Its beverly hills california, 90210 zip code, the location is perfect for tourists. I want to rent as many as i can and AirBnB them as much as possible. If you rent them for $100 a night thats a min of $2500 per unit for 25 days. $150/ night brings in $3750/ month $250/ night brings $6250/month per unit That is the worst case scenario, good case scenario and best case on 25 days. There is a reality between them which is still pushing a min 25% return on investment. I dont have experience with airbnb, I would appreciate some tips for the yaysayers, also if anybody wants to go in on this with me, message me asap.

[Michael Rutkowski]

Originally posted by @Andrew Wong:

@Michael Rutkowski, your condos arent under a HOA that cares? All the condo HOAs in my neighborhood are very against this type of thing.

Hi Andrew, I own my triplex. I actually had to de-condoize the 3 units to get a proper loan, and that process dissolved the HOA. The city told me that I was the only person to ever have done that, as far back as they could remember, and while it seemed like a bad idea, I knew I was going to turn it around and make 3 vacation rentals out of them. CAP rate on this property is like 15%, and I found it first! I needed to buy this property. We managed to buy in October 2015. One down, one starting, and one I live in for now. It's really tight for a family of 4, but we manage, and the neighborhood has some of the best schools in the country, so... Once the kids move onto middle school, we will have 3 vacation rental units, netting us about $100k/season (mid-May to mid-September). Any other residual income we get from the property, we use as investing money. Maybe this winter it will finally be spending money. The demand in my area is very high during summer, and in winter you just need to get very creative with marketing. This is my first winter in operation. Normally I would be renting to college kids at this time, but I don't need to cover much of my mortgage with this unit's rent, so we are going to go for it! It cost me roughly $36k to flip it from a dingy college rental, into a vacation rental with 20, 5 star reviews (and no others, out of 42 guests total so far). We were originally going to invest in land to build vacation rental cabins on, but that was turning into a pipe dream real quick, as I looked into associated costs... So this was an even better use of our money, I think. I've got a nice chunk of money coming back to me in losses and depreciations in January, so I'm pumped. Gonna start ripping out walls, and pipes!I did almost all the work myself on the first one, so I saved a lot there, but I spent about $16k on landscaping the yard down to grade, and about $16k on the inside, including furnishings. I made good use of Craigslist, and local auctions while I was remodeling.

Anyone interested in this kind of investing should definitely try it! It was a brutal path, of many many hours of work. You can pay more money and hire people, but at that point what is the point of flipping? I gained about 50% of the property's value in sweat equity right off the bat. Then when we sell, we are getting a commercial property auditor to evaluate the property and sell it as a business. This amount of equity now lets me leverage enough credit to buy another piece of land, where I can put up a dozen vacation rentals. This was another reason we decided to flip this property into a vacation rental instead of selling it.

I find that 95% of my traffic comes through AirBnB, no matter how hard I try to get off the lifeline of traffic they give me... I set up Adwords ads, I have a VRBO account, Craigslist, TripAdvisor, and I accept bookings from my site, but AirBnB is like the main driver of traffic for some reason. ALWAYS at the top of search engines on my end. So if you are interested in this type of investing, make sure you are comfortable with doing EVERYTHING online. I hardly ever meet my guests. That's the way everyone wants it. They leave my place pretty clean most of the time, and leave me great reviews. I feel good about what I am doing, and feel like I provide a service to these people. They can't afford to stay in hotels, and are usually large families, on a summer roadtrip. I love it! Before this I had a very dead end job. I paid more, was more stable, and had great benefits, but I would choose this lifestyle hands down. 

When you get bigger, there are large investment companies (like for every kind of real estate investing) which rove the country looking for hotspots to add to their management portfolio. Si it's super important to have very high reviews, and many of them. They split commission 50:50. When you're making $100k/season, does $50k sound good enough for you to just leave and never lift a finger? That's where this industry is headed I think. The biggest fish are getting very big, as people flood the market with their rentals. I also think HomeAway and AirBnB will merge at some point, and they will take a more active role in actual management of the property. There are already websites which do this, but they are a rip off. They function way too much like a property management company to be effective at cornering this market. This is an interesting time for vacation rentals!

So to answer your question, I don't have an HOA.