All Forum Posts by: Mike F.

@Chris Martin

I run multiple AirBnb’s in Chapel Hill, and I’m on the advisory committee to help their strategy group plan proposed legislature.

A more liberal reading of the NC Vacation Rental law is here,

https://indyweek.com/news/wake/raleigh-airbnb-rules-general-assembly-preemption/

@Greg Schuricht

Looking at "a week's worth of revenues" can be very misleading if you're not accounting for seasonality and vacancy.

No need to reinvent the wheel- just look at KPI's for the Hotel Industry.

Revenue Per Available Room (RevPar).

RevPar = Average Daily Rate (ADR) * Occupancy.  

As you get a better handle on expenses, it's a quick look at profit.  

Hi @Abigail Merrill-

I shared my story at Zeona's blog.  You can find it here.

For market analysis, it'd be easy to say start with knowing my target customer.  But, I actually stumbled into that after market testing different size houses in Chapel Hill and studying my data.

Currently, I have three that I own, arbitrage two, and manage another one for a friend.  I'm working on a portfolio loan now.  Once complete, I've pulled my money out of the business and basically have infinite returns.  With tax advantages from the first rehab, I actually got my initial investment back in twelve months.

For calculations, I'd recommend the following,

- Become very, very familiar with new tax code.  Bonus Depreciation is a dream!  See if your neighborhood falls into an Opportunity Zone and understand implications.

- For initial BRRR purchase, use conservative buy and hold estimates. Base it off rent market value. Don't count on the AirBnb income.

-For the AirBnb portion, plan for $2k / room to furnish / start-up cost and see if you can pay yourself back in six months.  Then, try to find a property where you can net $1000 month (do not count cleaning costs in this figure).

-For stress testing, I'm a bit conservative and want 65-70% LTV and 6-12 months reserves.

-Use AirBnb profits to pay off your mortgage.

-For South Durham market, you have to style out your home- hip, modern, etc...  From what I've seen, I think many folks are overspending and then having a race to the bottom with customer pricing.

@Dave Olverson @Erin Mullaney @Steven Griffith

My focus is Chapel Hill (launching units 4 and 5 right now). For the Triangle market, hotels have seen 5-8% YoY growth over last six years. AirBnb/STR has had roughly 2-3x growth over last three years. Hotels capture about 90% of the market.

My read of these stats is that we're opening up new markets.  But, we'll see what happens during next recession.

For supply/demand, we're also one of the top ten places in the country for flips, and most folks don't buy and hold. So, they haven't incorporated BRRRR+AirBnb yet. Rather, they take the quick money.

I'm working with the Town of Chapel Hill to write the proposed STR regulations, and we've set up a group of owners/hosts to lobby. You can join us here.  

Our position is that STR's are a vital part of the new economy and will help promote future growth.

@Jabari Seabrook

I just closed on an AirBnb property (Duplex) with seller financing. My terms were 20% down, 5% APR, 5 yr. balloon, 30 yr fixed. Property is brand new. Purchase Price is $320k, and it's worth $500k.

Here's some recommendations,

- Provide three offers with range of downpayment, interest rate (2%-5%), and terms.  Yes, you can do 2% if you raise the purchase price.  It can be win-win for both of you if you run the numbers.

-Make sure it's non-recourse.  

-Make sure that y'all have a good attorney that you both trust. 

-There was a good BP podcast a couple of weeks ago by a Seattle Investor that may be helpful for you. 

-Mike

Hi-

Town of Chapel Hill, NC is considering legislation to address AirBnb's inside the town limits. We are organizing in the community with STR operators and related small businesses to have a collective voice in the discussion.

Currently, we have a seat at the table with city planners to provide insight and perspective from STR operators.

Please feel free to join and help out if you are interested.  

https://chapelhillstra.org/

-Mike

@Erin Mullaney @Silvio Balcazar

Hi. I own and operate STR's in Chapel Hill, and I've help stand up one in Durham. Feel free to connect if you have questions.

For CH regulations, we're working with the town to craft their policies.  If you're interested, consider joining up.  

https://chapelhillstra.org/

-Mike

@Joseph Franklyn McElroy

I ran a quick search on Airdna and Airbnb this morning- there definitely is a market that you can tap into to raise prices on the one bedrooms to $150/night.

But, if you haven't done so, I'd start with doing segmentation on your parent's guest history to understand why folks come there and determine your target market and survey them for their willingness to pay.

The concept is actually very simple, and it's been done in pockets throughout Western NC.  Instead of shabby chic, motels and campsites are being upgraded to glamping and ecotourism- hints of luxury while maintaining simplicity.

For two examples (my family recently visited and loved) see Switzerland Inn and Bear Den Family Campground.

-Mike

@Joseph Franklyn McElroy

Have you run the numbers on upgrading for value add and raising nightly rates?

Your current pricing on the website is fairly low.

Mike

@Bob Mueller Jr.

Received this update this morning from AirBnb,

Hi Mike,

Starting on August 19th, guests who book long-term stays will have 48 hours after booking to cancel and get a full refund.

This grace period includes features that protect hosts:

Adding a grace period to short-term stays led to more successful bookings for hosts. We’ll add it gradually to all long-term listings to make sure that hosts like you get the same benefits.

We're excited to continue working with you and other hosts to create a better long-term stay experience.

Thanks for being a host,

The Airbnb Team