AirBnB: is it right for you?

Many investors or people who have a single rental are looking to AirBnB their property to boost returns by sometimes 300%. However, most don’t realize how much more work is involved as transitioning from landlording a long term rental to AirBnB is essentially moving into the hospitality business. So if you are the type of person that loves to provide a comfortable and pleasurable experience to others then consider converting your available space to a short term rental.

My mom and sister have been hosting travelers from AirBnB in our apartment on the beach in Santa Monica, CA. My mom is extremely artistic and is an expert in interior design so this is a perfect side project for her that she truly enjoys. My sister, on the other hand, has a very keen business mind and enjoys handling the process of booking travelers and ensuring they have a pleasant experience from start to finish. This experience has taught them a great deal about what people are looking for in a short term rental as well as the importance of having great organizational skills.

In a similar scenario, my dad and I learned a valuable lesson about the AirBnB experience. We were exhausted from traveling through Europe and after a long day we finally arrived to our AirBnB in the South of France. Waiting for us on the living room table were ice cold bottles of water and a bottle of wine. While I don’t personally care for wine, I really appreciated this gesture which showed the host’s forethought and care for his guests. The next thing we found were instructions to connect to the wifi on the kitchen counter. Since we were in a foreign country, we used our cell service sparingly and wifi was always a must have. My dad and I definitely valued the cold waters and wine more than the few dollars those items cost. This reminds me of a key point in the book Getting More by Stuart Diamond. I just finished reading this book and it is one of the best books I have ever read. It is jam packed with useful information as well as anecdotes that help solidify the lessons. Diamond emphasizes the power of trading items of unequal value. Our example of the water and wine is perfect because with just a couple dollars, our host earned himself a five star review.

I would note the only downside of AirBnB is the difficulty of achieving scale. AirBnB is a very personalized approach to real estate and hospitality. Therefore, it would not be very feasible to apply this business model to a sizable portfolio of single family homes, let alone multifamily.

In conclusion, I would recommend AirBnB to anyone interested in getting involved in real estate but only if he or she is committed to being extremely hands on. If you are looking for a more passive investment which requires less oversight, then read some of my other blogs about real estate syndication.