Arizona, BRRRR Airbnb. Thoughts & Criticism?

[Jason Martinez]

Hi BP, 

My buddy has 2 properties in Tempe, AZ. He is killing it with Airbnb. I am looking to get involved in this market as well. However, he has run out of purchasing power because he is buying turnkey properties. 

We are thinking to introduce a sidekick to BRRRR:

 BRARR (Buy, Rehab, Airbnb, Refinance, Repeat)

That way we can benefit from refinancing to increase volume and the STR income. If someone has done this already I would love to hear your story. I still need to speak to a lender to see if STR would qualify for a refinance.

My concerns is that I have a feeling Airbnb will be restricted in some way in the near future, but I also want to take advantage of this STR income while we can. If Airbnb becomes restricted I feel we can still flip the house for a profit in a worst case scenario situation.

What are your thoughts and criticism on this idea? 

[Pamela Sandberg]

The 2017 law prohibited cities from *preventing* AirBnB altogether, but they are allowed to place restrictions. Number of guests, noise, etc. have been big issues. They are working their way through the courts, and yes, some areas are restricting AirBnBs more than they used to. I highly doubt that AirBnB will ever be regulated ENTIRELY out of business, but I do imagine landlords will have more restrictions to contend with in the future.

However: owning in Tempe, you would have a fantastic safety net. If AirBnB turns out to not go your way, there is a constant demand for student rentals. If you don't want to rent to students, professors and parents are also looking for places to stay in Tempe. And if you want to get out altogether, your resale value should be protected by the consistent rental market in the area. So all in all, I think Tempe is one of the safest places you could try this out. Happy to answer any specific questions!