Airbnb backed rental properties? Should I invest? Where? Why?

Question

Hey all!

I wanted to get everyones opinion on investing in single family homes for the purpose of running a short-term rental business through Airbnb. After running numbers on a handful of projects in Vegas, Florida and even San Diego I can't seem to find an argument to NOT invest in this business model.

Has anyone focused on this niche? Are you current investing in properties to exclusively run an Airbnb business? What are your feelings? Pros and Cons? Best areas to invest?

Thank you!

Justin R. · Answer

I have a colleague who just started doing this here in SD.  Just one data point, but he had to abandon Airbnb and switch to short term (greater than 30 days) rentals instead.  This came after neighbors saw what he was doing and took issue with it.

Just conjecture on my part, but there are neighborhoods where short term rentals are the norm, and I would think this model could work there.  But I wouldn't personally try it in a neighborhood that isn't already compatible with it.

Always anxious to hear input from folks with direct experience...

Al Williamson · Answer

@Eric Moeller

I operate one dedicated short-stay unit and use Airbnb and other platforms to fill gaps in my other two corporate rentals in Sacramento - where I focus.

My biggest take away is that many people are successful but then burn out. Very little longevity for those who fail be build systems and operate in a legal and sustainable manner.

This tool should not be used everywhere and at all times.

I think short stay rentals should be one arrow in your quiver to maximize your assets potential.

Casey Blakely · Answer

Hi @Eric Moeller. I'm researching and analyzing the vacation rental niche as well, but in the Atlanta metro area. I did the math, and a VR in Atlanta seems to be more profitable than the traditional long-term rental.

My main concerns are vacancies and municipal regulations to prohibit short term/vacation rentals. Someone else posted an article about LA possibly rolling out stricter regulations on short term vacation rentals. The article can be found here.

I'd definitely suggest keeping up with the news for whichever area you are thinking of investing in.

Good luck!

Eric Moeller · Answer

@Al Williamson - Thank you Al! This is a great resource. How many Airbnb rentals do you have going right now? Are you only focused in Sacramento? What is your biggest take away with investing in short-term rentals?

Eric Moeller · Answer

@Casey Blakely - Thank you Casey! Have you purchased a property for this business model yet? How is it going? Atlanta seems to be very hot for Airbnb right now. I haven't read anything inregards to the City of Atlanta cracking down on STR like NYC and S.F.

What sub-markets in Atlanta would you say is the hottest to focus on right now?

Eric Moeller · Answer

@Justin R. - Thank you for your comment and I apologize for the late response. I'd love to chat with you regarding the SD market and your friends short-term rental property.

Al Williamson · Answer

check out roomscore.org for a round up of how various cities come down on the short stay industry.

I use the platforms to fill my month to month rentals. So even though Sacramento gets a D grade, I'm able to do just fine.

Chris May · Answer

My wife and I stay in airbnb rentals 4-5 times per year and I've noticed changes in the tone of listings over that time. Many of the owners have requested that, if asked, we tell people we're friends of the owner because neighbors have been complaining about Airbnb.

There are also more and more cities clamping down on these rentals. I'd be wary of basing my business model on VRBO type rentals existing in their current form. Right now it's easy money, but cities are consistently implementing laws so they get their cut.

If the math still works even if you have to pay hotel fees/taxes, then it could still be a good idea. It's certainly easy to get renters through those sites and there's less worry about problem tenants.

Bill Schrimpf · Answer

Hi @Eric Moeller - As others have pointed out, look out for changes in short terms rental laws at the municipality and state levels but also watch for changes governing hotels.  Some jurisdictions are moving towards collecting room tax on short term rentals!

Location, location, location...

Airbnb backed rental properties? Should I invest? Where? Why?

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