Thoughts on Buying homes for their AirBnB value?

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Thoughts on Buying homes for their AirBnB value?

Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes

Hey BP, I have been talking to a lot of investors purchasing for AirBnB and even headed out west to see some new construction being valued for its AirBnB potential. Do you guys think this kind of investing (STR) is sustainable.

Couple thoughts of mine of why I think it could be volatile: 

1. Traveling is sometimes a trend. Tiktok has made it cool to go to one place one month and then another next month

2. Heard AirBnb is getting more strict with their regulations - larger companies/hotels are now listing their properties there. 

3. AirBnb is getting more expensive. Recently found that it was $200 cheaper to use Booking.com than AirBnB. The nightly cost was the same. After all the taxes and fees being charged on AirBnb it didn't make sense for a short trip. Possibly for a longer stay it could be justified. 

4. People are buying very expensive homes (1M and up) and hoping to get crazy returns - recession could impact how nice of a place people would rent. I hear lots of people who own airbnbs are getting most of their requests from 20 year olds looking to party in their mansion. 

Would love to hear what people have to say!

[email protected]267-767-0111
Alan Asriants - New Century Real Estate 590 Reviews
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David Ramirez
Investor · Tampa, FL · Member since 2019 · 1k+ posts · 1k+ votes
3y

While I don't currently own any STR, I understand your perspective. From my own experience, I believe that having a solid exit strategy is critical. Ensuring that you at least break even as a long term rental can be a wise decision in the long run

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  • Jay ThomasPro Member
    Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
    3y

    When investing in real estate, it's always important to have a plan A, B, and C. Plan A is typically the most profitable, such as short-term rentals (STR). But having plans and C in your back pocket can be essential if the laws change or the STR market becomes saturated. This could mean transitioning to a medium term rental or long-term rental (LTR) for Plan B and C respectively.

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  • Alan AsriantsBusiness Member
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    3y
    Quote from @Brad S.:
    Quote from @Alan Asriants:

    Hey BP, I have been talking to a lot of investors purchasing for AirBnB and even headed out west to see some new construction being valued for its AirBnB potential. Do you guys think this kind of investing (STR) is sustainable.

    Couple thoughts of mine of why I think it could be volatile: 
    1. Traveling is sometimes a trend. Tiktok has made it cool to go to one place one month and then another next month
    2. Heard AirBnb is getting more strict with their regulations - larger companies/hotels are now listing their properties there. 
    3. AirBnb is getting more expensive. Recently found that it was $200 cheaper to use Booking.com than AirBnB. The nightly cost was the same. After all the taxes and fees being charged on AirBnb it didn't make sense for a short trip. Possibly for a longer stay it could be justified. 
    4. People are buying very expensive homes (1M and up) and hoping to get crazy returns - recession could impact how nice of a place people would rent. I hear lots of people who own airbnbs are getting most of their requests from 20 year olds looking to party in their mansion. 

    Would love to hear what people have to say!

    ****************************************

    Sure, it's sustainable, str has already been around for many decades, before Mr. Gore created the internet. But it seems obvious that most people consider it a pure real estate investment, instead of what it really is. It's a business investment or opportunity, with real estate being a main asset of the business.  It's a hospitality business. The online platforms are just the newer shiny, bright objects putting the business in the spotlight. This creates a new cycle in the business, exposing it to more people. 

    Now, that said, many str's are in traditional neighborhoods and some in vacation destinations. Those in more vacation areas will typically have more business risk, but owners sometimes equate that to real estate values. it seems that many people conflate the two.


    I agree that the STR model is not really an investment as it is a business.

    [email protected]267-767-0111
    Alan Asriants - New Century Real Estate 590 Reviews
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  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    3y
    Quote from @Alan Asriants:

    Hey BP, I have been talking to a lot of investors purchasing for AirBnB and even headed out west to see some new construction being valued for its AirBnB potential. Do you guys think this kind of investing (STR) is sustainable.

    It is the worst business planning. I would run away.

    You have to think why the Red Roof Inn or Hilton didn't create a new hotel every 5 kilometers, it would create oversupply.
    The fantasy of Airbnb owner is assuming they are the only STR in the city LOL.

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  • Jarrod Covey
    Lender · Austin, TX · Member since 2018 · 241 posts · 136 votes
    3y
    Quote from @Alan Asriants:

    Hey BP, I have been talking to a lot of investors purchasing for AirBnB and even headed out west to see some new construction being valued for its AirBnB potential. Do you guys think this kind of investing (STR) is sustainable.

    Couple thoughts of mine of why I think it could be volatile: 

    1. Traveling is sometimes a trend. Tiktok has made it cool to go to one place one month and then another next month

    2. Heard AirBnb is getting more strict with their regulations - larger companies/hotels are now listing their properties there. 

    3. AirBnb is getting more expensive. Recently found that it was $200 cheaper to use Booking.com than AirBnB. The nightly cost was the same. After all the taxes and fees being charged on AirBnb it didn't make sense for a short trip. Possibly for a longer stay it could be justified. 

    4. People are buying very expensive homes (1M and up) and hoping to get crazy returns - recession could impact how nice of a place people would rent. I hear lots of people who own airbnbs are getting most of their requests from 20 year olds looking to party in their mansion. 

    Would love to hear what people have to say!

    @Jay Thomas nailed it -- if you can get licensed STR, they will provide the highest cash flow. If you have to transition into mid-term rental or renting by the room, you can still cash flow. If you go LTR, you might make right above your break even line or maybe even break even.

    1Reply
  • Taylor DaschBusiness Member
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    3y

    This is an interesting question and something I have thought about quite a bit. The way I see it, if you become an expert in AirBnB in one market, you would then be able to beat other investors because you will be getting significantly higher returns by using AirBnB. This would only really work if you were really confident in the numbers. Also, there is always a risk for demand for AirBnBs dropping so I would take that into account as well. 

    For me, I offer based on LTR and if It is successful as a STR then I will just get higher returns on it.

    [email protected]254-718-4249
    Taylor Dasch | EG Realty560 Reviews
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  • Alan AsriantsBusiness Member
    OP
    Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
    3y
    Quote from @Taylor Dasch:

    This is an interesting question and something I have thought about quite a bit. The way I see it, if you become an expert in AirBnB in one market, you would then be able to beat other investors because you will be getting significantly higher returns by using AirBnB. This would only really work if you were really confident in the numbers. Also, there is always a risk for demand for AirBnBs dropping so I would take that into account as well. 

    For me, I offer based on LTR and if It is successful as a STR then I will just get higher returns on it.


    I agree with this and you brought up a good point. I see my clients and other buyer here valuing illegal studio units and other illegal ADU's as rental income. Can't see myself justifying paying based on studio addition thats not legal. Who knows maybe with shortage of housing townships will start being more lenient with additional units

    [email protected]267-767-0111
    Alan Asriants - New Century Real Estate 590 Reviews
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