Austin, TX · Member since 2016 · 7 posts · 3 votes
Hello! My husband and I just finished out a basement efficiency apartment in our north Austin home. It has a private entrance, full bath, and a full kitchen with a tiny home/industrial concept. We had planned to rent it as a short-term vacation rental but have a current long-term renter who is interested in a 1 year lease.
I'm curious if there is anyone with short-term rental experience in Austin. It's a very popular strategy in the area and we'd like to know what supply/demand looks like in the market. If we go the short term rental route, how can we run the numbers to predict revenue?
It's tempting to go the long-term route because (a) it's guaranteed income (b) the income is more passive (c) lower start-up costs and (d) we like the renters. On the other hand, the short-term route is appealing because (a) appears to be greater income potential (b) gives us more flexibility with the space (c) the hospitality industry is intriguing.
@Jessie Wells Have you considered renting it monthly furnished? It might be the best of both worlds for your situation. Monthly furnished rentals are attractive because tenants are willing to pay a premium for the convenience of a monthly furnished rental and the incremental cost to landlords of furnishing the rental is small. Check out this Zumper report:
I have experience with both. In terms of how much money is to be made it really depends upon the location. Reviews play a big part as well but its location. On Airbnb you can play around with the dates and a general location to get a good idea about pricing. I had a place that I rented out short term rental near zilker park that did exceptionally well and was making an additional $900 on top of market rates. It was a pain to maintain and to meet guests and to deal with issues from across town. So, I ended up leasing it on a 12 month basis. I had a condo that I was leasing right on town lake that didn't do so well and was breaking even. I think its because folks didn't quite understand that Riverside East is going through a gentrification. All they saw, for the most part was the area history.
Since you are considering doing the airbnb out of your house it could be a really good one. After the current tenant's lease is up then try it. See if it works. And if it works stick with it. I have made several friends through airbnb that swears by it.
My ex has a duplex in which she lives in one side and rents out the other side airbnb. She makes easily $1500 above market rents. She can take care of it much easier than I could from across town. Its in a good location off Oltorf, south Austin. She goes way beyond "normal" to make sure that the guests have a good experience. In other words she treats it like a good business. She is active in it.
Passive income is great because you don't have to really work for it. Pick your choices. I prefer passive income. Two, you have to consider the time dollar of your efforts. Is the extra $500 or so monthly worth it if you have to do laundry alot, clean, etc.? For me it wasn't. I would rather just stick with passive income.
Also, you need to consider the city of Austin short term rental code compliance if you are doing it regularly. Austin isn't giving out anymore permits. I know that they are lax in enforcing it, from what I have heard. I read that the Texas Attorney General is suing Austin about its airbnb policy, so we will see.
But every time I travel I love airbnb. Its always a much better experience than a hotel.
I do not have much experience with homeaway which I am ashamed of. These guys are local and I should support local business. Airbnb has been good for me though.
My two cents. I hope that I have provided some insight.
@Jessie Wells I am curious if you have talked into local rental companies that do annual guaranteed Airbnb/vacation rental income arrangements with property owners in Austin.
I know some owners in the area who were able to find the best of both worlds (greater income potential of short-term route & the predictability of guaranteed income) by pursuing similar arrangements.
Feel free to direct message me or give me a ring if you are interested exploring one of these arrangements.
The location is my concern. We are in Great Hills off of 360 and can walk to the arboretum. It’s 12 minutes to downtown without traffic but when is there not traffic in Austin???? Our place really looks nice and we can make it very comfortable/high end for guests. I’d assume that for guests okay with the location it would be very appealing. I’d love your thoughts on our location. Perhaps it’s just something we’d have to take a risk, or not, on but I’d prefer to make our decision as calculated as possible!
In terms of the city policies, we would be considered a Type 1 rental and should not have problems with the permitting. Passive is attractive at this point but it would also be nice to make more cash over the next year or two so that we can pay off the finish out we just completed. Thank you for your input!
Thanks for the idea! That might be something we’d eventually move to but the space is our basement… It just seems easier to do it ourselves at the beginning because the primary reason we’d go that route is to generate cash. Perhaps we’d move to that option in the future though. Thanks for the thoughts!
Also, @Aaron Gordy, I attached a few pics to give you an idea of our space... We're hoping to catch some of the business travelers who might be working in the domain/etc.
We have both types of rentals in Hawaii and it's a draw between which is better. The Vacation rental has a lot more laundry and cleaning but makes more money so the question is do you have time for a couple extra loads of laundry and cleaning each week or not. My wife loves the vacation rentals just having guest from all over the world but it's more work.
Nice!! Super sharp work! That is very good quality with a ton of natural light! I like it. I would totally try to do the short term rental out of it. Airbnb has their own professional photographer that is part of their deal that will take pics of it for you. You should be able to net much more than as a regular rental. Keep an eye on the utility bills and the time that it takes to keep it rented so that you can see if its worth your time. I loved to meet all the different people and hear their perspectives. I would suggest getting a lock on the door that is programmable so that the guests can come and go as they please. I think that you can pick one up for a little over a $100 at home depot. Also, if you are at Home Depot and you are a veteran then you get 10% off, fyi.
Airbnb will have the suggested price on the listing. Pay attention to it but do keep in mind that they use math to compute it much like the airlines. I have found that during the peak times such as f1 or sxsw that I could get higher prices than their suggestions. Also, screen the folks as much as possible, if you can. Look at their history. I had some guests trash my place during sxsw. I made money at $200 a night but it was a real drag dealing with the consequences.
Even though I have a ton of experience with airbnb I would not do it unless I can hire a person to deal with little nuances that is cost effective or it was next door so that I can deal with it easier. As it is right now, my place off Far West and Mopac isn't the ideal spot for it. It was a good deal on the house and I went for it, then. I do think that airbnb and home away is a good business to be in. When I take my vacation I will be leasing out my place in the hopes that I make my vacation cheaper, no doubt.
@Tommy Sowell Yes, its worth it if you have the time and convenient. I like passive income better than driving across town in traffic. I love to work but if I can get free passive money...then heck yes, I will take it!
I would say check out the rules and regulations and see how much of an impact that would have on the investment (paying taxes, etc.) If it's all feasible, my guess is that you would make more money on Airbnb, but double check the numbers.
Airbnb might be more hands-on because you would have to clean up the property more often. I think you'll be able to better decide once you see the comparison in income.
@Jessie Wells Have you considered renting it monthly furnished? It might be the best of both worlds for your situation. Monthly furnished rentals are attractive because tenants are willing to pay a premium for the convenience of a monthly furnished rental and the incremental cost to landlords of furnishing the rental is small. Check out this Zumper report:
Someone needs to write a blog about “AirBnB vs long term in city XYorZ” so we have a quick reply to this ever present question in our small community. Julie or Paul.... get on it ;)