These are the potential problems with renting a property on Airbnb and exactly how to avoid them as an investor…enjoy! Add me on Snapchat/Instagram: GPStephan
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To start, there’s nothing inherently wrong or “bad” about renting your property on Airbnb. In fact, I’m all for it…in many tourist dense locations, it just MAKES SENSE…if you can make QUADRUPLE the profit from renting your home short term, and you’re okay with the turnover…I think it’s awesome and using Airbnb would be the financially SMART move to make.
However, there’s a big distinction between THAT…and whereI see many, many people going wrong.
Many people have started to BUY properties specifically with the intention of renting them out on Airbnb…they’re buying properties that would NEVER cash flow or make a profit otherwise, and they rely on Airbnb and other short term rental websites to cover the cost of the home. This is where the problem begins.
First of all, if you’re buying a property for an investment, number one…above everything else…MAKE SURE IT CASH FLOWS without Airbnb. This is where MOST people go wrong in terms of their investment…if you rely on Airbnb for a property to cash flow, you’re doing it wrong and exposing yourself to a LOT of risk in the event that Airbnb is further regulated and then you lose money. I’d say the chances of this happening is fairly high.
Instead, you should view Airbnb as a way to supplement your income. If you have a cash flowing property BUT you can make more renting it on Airbnb, GO FOR IT and ride that gravy rain while complying with local regulations. In the event something happens and you can no longer rent it on Airbnb, like many places here in LA, no worries…you’ve still got a cash flowing property, anyway and it won’t hit you hard. Airbnb should be like the icing on the cake…not the cake itself. If you can follow that, you’ll be just fine.
In addition to that, it’s important to realize that the reason many people make so much money on Airbnb is because it requires a LOT of work. I know many people who run Airbnb’s and it’s a hustle to make sure the house is fully cleaned, sheets washed, and everything fully stocked after each guest. Many people will have minor issues and questions when they move in, as well, and it’s very important to EXPECT that and not be caught off guard when that happens.
With that said, if you use airbnb responsibly, comply with local regulation, buy a cashflowing property from the beginning, and use airbnb for ADDITIONAL income as an investment property…I’m all for it and you can make a LOT of money by doing this.
Just don’t RELY o this. I really believe the debates with Airbnb has just begun, and it’s going to take another 5-8 years or so for all of the fine print to be sorted out on both sides. I think we’ll go from having NO regulation, to TOO MUCH regulation, and then working out a fair middle ground…right now, we’re heading in the direction of TOO MUCH regulation, and it’ll be up to investors and home owners to prove otherwise.
For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness @gmail.com
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq