Since its establishment in 2008, Airbnb has become one of the largest online accommodation providers; it has made short term rentals more profitable than before. The increasing demand in such properties continues to drive rental income growth. Over the past few years it has gained public attention due to its disruptive effects on the housing market. It offers for rent more than 7 million houses and apartment across the world.
Investing in Airbnb has emerged as one of the most effective Real Estate Investing Strategy in the last decade. It merges tourism and housing for short stay allowing for airbnb owners/hosts to regulate their pricing as they wish while observing the demand and supply
GETTING STARTED IN AIRBNB INVESTING
- Be aware of local Airbnb Regulations
One of the most important things to do before you invest in Airbnb is to check and understand the local Airbnb laws and the local laws including the applicable taxes. Before picking a location it’s important to have a firm grasp of how short-term rentals are regulated in the area, always choose locations that have friendly Airbnb laws and avoid those that come with unnecessary expenses.
- Find the right Airbnb properties to buy
When choosing a property to buy for investing in Airbnb, it is important to choose one that boasts of ideal features, location and views and accessibility. The property should have modern amenities that are in high demand for short-term renters.
- Use an Airbnb profit calculator
An Airbnb Profit Calculator allows you to determine everything from Airbnb occupancy rate and cash on cash return to cap rate and expected rental income. If you’re planning on investing on Airbnb and you are not conversant with Real Estate Investing you will need an Airbnb Profit Calculator to determine the pricing and a professional in that area.
- Manage your expenses
Investing in Airbnb comes with several expenses that you need to manage carefully between the initial cost of purchase and furnishing expenses; the general expenditure of having an Airbnb property up and running can be significantly expensive. It is important to have an extensive plan and a budget that factors in all potential costs.
- Marketing your Airbnb
Due to the current wave and trend, the Airbnb platform is very competitive. The intensive competition has made Real Estate Investors constantly come up with creative ways to stay ahead of everyone else and to ensure their property stands out. Therefore, an Airbnb investor has to extensively invest in marketing efforts on several platforms such as social media and other digital media in order to maximize the visibility of their property and reach a higher number of potential clients.
- Understand the market in terms of pricing
More often than not the pricing of Airbnb would either mean the success or failure of an Airbnb property. As more people become aware of this platform as a means of getting affordable accommodation more and more people are also venturing into the industry as hosts. This means supply of similar properties is increasing daily and will in turn lead to price wars within the industry. Thus it is important to understand how other hosts are pricing their units and maintain your property in the right range so as to get more bookings via the platform.
PROS OF AIRBNB INVESTING
- Free Listing
It is easy and free to list your property on the Airbnb platform all you need to do is to create a profile with a written description and good photographs. Making it easier for guests and potential guests to understand your property and its amenities.
- High Potential Returns
A unit on Airbnb investing can provide the investor with very high return, if the property is at a favorable location with nice furnishing topped up with excellent customer service. This will make it attractive thus ensuring a steady stream of guests leading to a constant income which will be much higher than a traditional rental investor.
- You choose your price
Airbnb real estate investing allows for hosts to decide how high or low they would wish to charge their guests based on the demand, seasons and duration i.e. the cost per night, week or month. The price can vary since it’s fixed only for the specific lease term.
- Flexibility
The greatest benefit of Airbnb investing is the flexibility that its tenancy offers. The platform offers a feature that one can decide to block off dates when a property isn’t available hence guests won’t be able to book for the blocked dates. This allows the host to personally use the unit or work on repairs without inconveniencing guests in any way.
CONS OF AIRBNB INVESTING
- Unpredictable.
It is very possible to make more return off Airbnb real estate Investing than the traditional way of real estate investing. However, your Airbnb rental income will be more irregular and less dependable. This is because Airbnb occupancy rate is usually based on seasons hence it often fluctuates. This makes is hard for an investor to plan their cash flow especially if the investor is on a tight budget.
- Higher Risk
With several Airbnb guests in and out of an investment property on a regular basis a hosts opens themselves up to some risk. Most guests are responsible and kind however some guests might leave the house in a total mess after partying all weekend, others could break things by accident. For areas where there is no cover for Airbnb, constant repairs and replacement can become a recurring expense.
Time Consuming
Airbnb Real Estate Investing is a hospitality business, running it requires focus and attention. It is possible to have frequent new guests making its management tedious. There will be a lot of work to do, including cleaning, communicating with Airbnb guests, laundry, occasional repairs, calendar management, hence might not be a good passive investment.
CONCLUSION
Airbnb investing has acquired an iconic status and it’s in a strong leadership and competitive position for its rapid growth. Thus, an investor has to be competitive through tapping into the opportunities and marketing options to ensure highly lucrative and great returns, however, like any other business, it has risks. Potentially more risk than traditional rental investment. Before investing in Airbnb consider the costs, the running expenses, the pros and cons and their personal availability.
