Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
Greetings BP
I have been looking at AIRBNB. Has anyone been able to scale an AIRBNB business? There has been a lot of chatter on BP about it. I am interested in hearing from anyone whose is doing it in scale and making money 5+ units.
I have seen a lot of XLS that at 50% rental you are $xxx profitable. What is the reality of those assumptions? You have all the traditional costs of owning RE, roof, plumbing, electric. Additionally, you have a complete house full of furnishings. Taken one step further instead of having one tenant you have 50 in a year?
It seems to me that you would have to do it full time to effectively manage it. Using a management company could be tough or really expensive.
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
6y
I made $0.00 this year from Airbnb or any other vacation website. But I've had about 75% occupancy on average with my STRs. Sometimes it's 50-60 percent. Other times it's 90-100 percent. So it averages around 75%.
My renters are refinery contractors. Welders, pipefitters, boilermakers, electricians and the like. Big burly scary looking guys with neck tats that drive jacked up 4x4s. They smell like diesel fuel and chew tobacco in their sleep. You'd avoid the Wal Mart aisle if you saw one there. I'd punch him in the arm and say "What's up mofo?" If he saw me in a bar, he'd send the waitress with the most cleavage over to my table to deliver a round of drinks. I decorate my STRs like Hugh Hefner would decorate his own place.
Craigslist, word of mouth and repeat customers are how most of my places get rented. 23 STRs, 83 beds. All are 3-8 minutes away from my house, I self manage. It's a full time job. My part time job is working at a medical clinic doing pre-employment drug screens for contractors coming here to work at the refinery, a good way to meet potential tenants My wife keeps the STRs clean, that's her full time occupation.
Investor · Canton, GA · Member since 2014 · 727 posts · 500 votes
6y
My question with almost all these STR's is how will things cash flow during an economic downturn? Lots of vacation rentals, and I understand why, but discretionary spending is the first causality in a downturn. I would be very concerned owning property in a tourist location period in a downturn, but moreso for STR's. If these are leveraged how will things be when when the economy doesn't support the requirements needed to sustain STR's? Also, an economic downturn will effect all locations, but not evenly.
Not necessarily criticizing the model, just wondering about what I see as sooner or later a big bad hangover when the air no longer adequately fills the sails. Enlighten me please.
Real Estate Agent · Jacksonville, FL · Member since 2015 · 1k+ posts · 1k+ votes
6y
Great information. I have 2 beach rentals and they are vacant I have been doing LTR and may put them out on the STR market. How much are people spending on furnishings? How often do you have to replace them?
Real Estate Agent · Colorado Springs, CO · Member since 2017 · 224 posts · 201 votes
6y
@Lesley Resnick we have a 2/2/1 in Old Colorado City in Colorado Springs and use a management company. It's been extremely profitable so far. We started in December last year and it took a couple of months to get reviews but it's been booked pretty solid since. I'll be interested to see how we do this fall and early winter. We are finishing out a studio on the same property and plan to do STR with that as well. I can't say enough about how much we love our management company!
Rental Property Investor · Dallas, TX · Member since 2019 · 22 posts · 13 votes
6y
@Cody L.
This is something I've considered doing. I don't have 100...only 3 lol. But would you by chance be willing to share the agreement you sign with them for this purpose? Is it pretty much a traditional lease with some sublease verbiage added? Do you get more revenue than you would with a traditional LTR, or are they paying Market rent?
Rental Property Investor · Danville, KY · Member since 2019 · 1 post · 1 vote
6y
@Julie McCoy
Hey Julie, your post about AirBNB in the Gatlinburg area really peaked my interest. Than you for posting. I’d enjoy connecting with you to discuss your experience in that market sometime in the next couple of weeks if you have a few minutes. If interested, Let me know two or three good options in your schedule.
This thread has been really helpful. Thank you all. So it is overwhelming at 50% occupancy there is money to be made.
The part I am still struggling with is the management. I would not want to do it myself. I am busy working with other investors and running my own investments. It would be tricky to start building out a large enough short term rental portfolio.
Seems like all the little tasks would eat up a lot of time
Cleaning
Inspecting the unit for damage
Check in check out, Keys
Is anyone leveraging technology to mange their properties?
ddd
You need a good cleaner who will do a lot of the detail for you.
Technology: YES. WiFi/Internet-enabled thermostats, door locks, security cameras. Paypay & Venmo for payments. Dropbox for storage. OneNote for notes. Quickbooks. Email automation. All smartphone based.
My question with almost all these STR's is how will things cash flow during an economic downturn? Lots of vacation rentals, and I understand why, but discretionary spending is the first causality in a downturn. I would be very concerned owning property in a tourist location period in a downturn, but moreso for STR's. If these are leveraged how will things be when when the economy doesn't support the requirements needed to sustain STR's? Also, an economic downturn will effect all locations, but not evenly.
Not necessarily criticizing the model, just wondering about what I see as sooner or later a big bad hangover when the air no longer adequately fills the sails. Enlighten me please.
I think it depends on the market. In a recession people don't stop going on vacation, they just go somewhere cheaper. Which is why high-end STR's in places like Maui are probably at more risk. I'm in the Smoky Mountains in Tennessee. Not high-end, and not exactly cheap. In a recession the people who used to go to Maui will pack the kids in the car and drive to Tennessee. Half the population of the USA is within an 8 hour drive of my cabins. HALF. Having said that, you'd better have enough cash flow to handle a drop in revenue.
I invested $85k on a $500k cabin (15% down), and grossed $130k AirBNB/VRBO revenue the first year (incl tax & cleaning fees). Half of that went to expenses, half was net profit. That is an ROI that just can't be beaten, and I could absorb a large drop in revenue and not go bust.
This is something I've considered doing. I don't have 100...only 3 lol. But would you by chance be willing to share the agreement you sign with them for this purpose? Is it pretty much a traditional lease with some sublease verbiage added? Do you get more revenue than you would with a traditional LTR, or are they paying Market rent?
We use a normal lease since they're just leasing them from us the way any other tenant would. There is just a few small items in an amendment that allows them to sub/STR. Also language about them being required to take a 'block' of units (i.e., I don't want someone to have 1 unit of a 10 unit for STR. But if I have a 10 unit that's split into two 5 unit buildings, then I'd lease all 5 of one building. So if that building only had 1 empty at the moment, they could lease that one but in the lease it would obligate them to take the other 4 as they come up)
I don't charge them more. I charge them the same. The pro for me is they take care of light maintenance, and are likley to stay longer. The con is more wear and tear and they can be disruptive to my term tenants (thus why I require STR units to be only in buildings that they can be somewhat cordoned off)