Thinking of Airbnb instead of Renting to Tenants

[Matt Chavez]

Alright, I just got done listening to podcast 229 with Zeona McIntyre. Dude my mind is blown as to what she’s doing with Airbnb. So here’s my situation, I live in Washington state and I have a house in the small town of Lindsay California. It’s a small farming town. This house is a 3bd 2bth and it sits on an acre of land just outside of town. Very quiet and very peaceful and very country. My renters are moving out in a week. And I’m on the fence of whether I should rent the house out again, sell it or Airbnb it. I have some equity in the house and the house does not cash flow. The house is an hour from the Sequoia National Forest, 3hrs from Yosemite, 3hrs from the coast. There’s a 9 hole golf coarse less than 1 mile away. I have family close to the property & they have an Airbnb and do fairly well with just a room in a mobile home. My entire goal is obviously to have the property cash flow. So I’m really here looking for any thoughts and/or advice. Thanks, MC

[Julie McCoy]

My STR is in Three Rivers - very close to Lindsay. It's quite a different situation because mine is riverfront and 10 minutes from Sequoia, it's designed to catch the tourist traffic passing through the town, but I'd be intrigued as to what sort of occupancy you'd get in Lindsay. I've occasionally had to look for a place to stay in Exeter and they seem to do reasonably well there.

My thought is - do the math on how many nights/ month you'd need to rent it to make the same amount as if it was a LTR (be sure to factor in the costs of utilities, furnishings, etc!).  Is it reasonable?  If so, push it a little further - would you probably make MORE on AirBNB than with a LTR?  AirBNB is more work, it's a different business model - IMO you NEED to make more for the hassle to be worth it.  People I respect use a 2% rule as their rule of thumb.

If your research shows that the possibilities are good, then IMO go for it - you already own the house, you can give yourself a 6-month experiment or something to see how well it might work.  If it's too much work/not enough money, just turn it back into a LTR.  There will be some up-front costs like the furniture, so just make sure you're okay with that.  

From my own experience, summer is definitely the high season for visiting Sequoia, especially for a property your size that is best suited for families or groups traveling together (mine is a similar size).  Jan-Feb are going to be your really down months.  Keep that in mind if/when you get started - just make sure your expectations (and finances!) are prepared for the seasonal cycle.

I'd be really interested in how it works out for you if you decide to do it!

Julie