Any AirBNB landlord/owners here?

Been doing lots of research on this and considering making an investment. Anyone here an owner? If so, would you care to share some numbers?

Not an owner but I have some close friends and partial roommates in NYC who have done it. In places like NYC you can make a killing but doing it - how shall we say - pushes the boundaries of the laws (much like uber does).

Also, here are some considerations:

• Airbnb is little more than a matchmaker. A bad renter threw a mega party with illicit drugs at my friends place and did quite a bit of damage to the property, but airbnb is not responsible, and they definitely don't care. Remember that this is you making a judgement call who you rent your place to. Making sure people don't book single night stays and turning off the 'instant book' feature allows you to probably cut down on bad apples quite a bit.

• As a renter (I have used it quite a bit for staying, and I like it), I really like the instant book feature, and am willing to stay in a slightly more expensive place to get it. I do see that this directly disagrees with my first point of advice.

• In many cities, big residential buildings frown on, or downright disallow Airbnb altogether. Many hosts do it anyway. Often I will get a message from a host saying something like: "Dont tell the doorman you are from airbnb. Tell them you are a friend of ***." This makes me incredibly uncomfortable (and is conveniently always after I have booked the place), and it is a dick move to make someone break the rules so you can make money. Do not airbnb from a building or space that does not encourage it.

• Pictures in the listing count. Both of the place and the picture of the host. Make sure the pictures are perfect, and even search out the studies that talk about what kinds of host 'selfies' get what type of renters. You probably want your profile to attract renters who are most like yourself, that way you end up with the fewest surprises.

• 5 star reviews count. Many hosts will straight up ask me to put a 5 star review. I think this is an obnoxious practice, but realize that is what you are competing with. Maybe find a way to request tenants call or text to rectify the issue before leaving anything other than a 5 star review?

Overall I love the idea and in general like the service. You have to use your head though.

Also planning on starting an Air BnB. We are renovating a separate building on our land to be an in-law suite and Air BnB seems like a good way to make a few extra bucks out of it when the in-laws aren't actually staying there. That way we don't have to deal with permanent tenants, we can be picky about who we allow, and we can have black-out dates for when the in-laws are there, or we simply don't want "company".

ProDarwin wrote: Been doing lots of research on this and considering making an investment. Anyone here an owner? If so, would you care to share some numbers?

What are you considering as an "investment"? Buying a property to use as an Air BnB? Renting out a space you already own? Something else? Just curious.

I've been a landlord with a conventional house for rent since 2007, so I have some experience with that. The intricacies of the ABnB model will be a learning curve for sure, though.

We stayed at an ABnB in PHeonix a couple years ago and had a pretty positive experience. It was a private room at a lady's house. We chatted with her for a bit about her experience- she'd been doing it for a year or two. Turns out we were the first couple with a child she'd ever had, but she'd do it again in the future, so I guess that speaks well of us.

One thing I recall her telling us was to make sure we didn't price ourselves too LOW. Originally, she was just trying to get people to stay there, to build a reputation and so set her price around $25 a night, but her first BnB'er was a bit of a sketchball (and her only real negative experience, she suspects drugs were used in the room). Afterwards she more than doubled the price (IIRC we paid around 55 per night for the room, which I still thought was pretty cheap for d/t Pheonix) and had only positive experiences since then.

This is somewhat similar to landlording...I have a friend who was LL-ing some lower-priced homes (rent around 1k per month) and had loads of terrible tales. I rent a nicer home in a nicer area (knock on wood) for about 1500 and have had generally better tenants (again, knock on wood).

So I guess my advice would be, stay out of the gutter.

volvoclearinghouse wrote:

ProDarwin wrote: Been doing lots of research on this and considering making an investment. Anyone here an owner? If so, would you care to share some numbers?

What are you considering as an "investment"? Buying a property to use as an Air BnB? Renting out a space you already own? Something else? Just curious.

Buying a property with the intent of using it as an Air BNB (or VRBO, etc). Most likely a small single family home (2BR/1BA).

How does the current real estate market affect your plans? Are you concerned at all about buying an investment property at what could be the height of the market? Or is purchase price a secondary concern to getting a low interest rate while it's still an option?

In reply to ProDarwin:

I think the most important suggestion in that case would be to make sure that you can carry the property as a normal rental if necessary and look at potentially additional income from AirBNB as gravy. Just in case there are zoning changes or the local municipality or HOA suddenly prohibits short term rentals.

A friend of mine has a house in Tahoe that he rents out via AirBNB and his experience was mixed. It used to be his main residence, so it had nice fittings and finish. A summer of AirBNB'ing resulted in some damage to the furniture, a stolen (nice) showerhead that someone had replaced with the cheapest showerhead they could find (WTF?) and also some damaged speakers. I'm not sure if that was just bad luck or is a regular occurence, but he was a little wary of renting it out again after that. He's also not local so he has someone who looks after the property for him and I think they didn't notice some of the damage.

STM317 wrote: How does the current real estate market affect your plans? Are you concerned at all about buying an investment property at what could be the height of the market? Or is purchase price a secondary concern to getting a low interest rate while it's still an option?

Market here is not a big metro area... its relatively flat for the most part. There are a few very small areas that have climbed a lot, but not where I would be looking. So basically I'm not concerned about a market correction/crash - but I'm also not anticipating the property gaining much value in appreciation.

The price range I'd be looking in to maximize my return is fairly low, probably <$100k. ROI on 3+ BR properties is not very good, especially in this location.

I'd be looking for a low rate as I don't wish to pay cash.

BoxheadTim wrote: In reply to ProDarwin: I think the most important suggestion in that case would be to make sure that you can carry the property as a normal rental if necessary and look at potentially additional income from AirBNB as gravy. Just in case there are zoning changes or the local municipality or HOA suddenly prohibits short term rentals. A friend of mine has a house in Tahoe that he rents out via AirBNB and his experience was mixed. It used to be his main residence, so it had nice fittings and finish. A summer of AirBNB'ing resulted in some damage to the furniture, a stolen (nice) showerhead that someone had replaced with the cheapest showerhead they could find (WTF?) and also some damaged speakers. I'm not sure if that was just bad luck or is a regular occurence, but he was a little wary of renting it out again after that. He's also not local so he has someone who looks after the property for him and I think they didn't notice some of the damage.

Zoning is a concern, HOA is likely not.

I could carry one as a normal rental, but the profit margin is not really there so I would sell if I were put in that position.

Understood on the damages. Most properties have a damage deposit, but I guess you have to actually catch the damage to be able to charge someone. Of course since I would be furnishing this with AirBNB in mind, making it not very susceptible to damage would be the goal.

I think if AirBnB gets more popular, it's going to become the target of a lot of legal issues like Uber did.

There are laws that govern how hotels must be operated, and AirBnB is kind of ignoring that at the moment.

Sky_Render wrote: I think if AirBnB gets more popular, it's going to become the target of a lot of legal issues like Uber did. There are laws that govern how hotels must be operated, and AirBnB is kind of ignoring that at the moment.

I think there is an issue with volume in this case that will "protect" AirBnB for now.

My daughter has been doing it for about 5 years.

There really aren't many numbers to share. You make them all up.

It's less about the numbers than the marketing of the service. You name your price, but your renters are looking for a unique experience. If all you are offering is a bed and a hands off experience, don't expect repeat renters or good reviews.

My daughter is in the lower third of the pricing, but offers premium bed and breakfast style service- such as a few nice meals, big cozy comforter, and friendly hostess service. She's VERY picky. Her renters consider her a good friend by the time they leave.

For the record, it's illegal in most communities. I would not build a business plan counting on it to remain unchanged.

Full disclosure- I am buying 2 houses right now I intend to airBnB, and intend to make some revenue from it. I will not be dependent on the revenue.

And for the record, yeah I suck at good business plans.

AirBnB has put a hurt on hotel chains, and they are beginning to fight back. They have a LOT of resources for any kind of battle they need to fight.

I tried to book an AirBnB for a 2 week stay next week.

The first place I booked was owned by a scammer who was really looking for a month-to-month renter for a furnished apartment. Why she listed it as being available for 1-week stays, I'll never know.

So I tried again. The next place I booked, the owner cancelled 3 days later because he was "too nervous to be a host".

I gave up and booked a hotel.

In reply to EvanR:

There is a lot of stupid out there.

Owner here. Pays our mortgage on our vacation home and then some in 3 months, we enjoy it the other 9. We go camping and travel during the peak tourist season. You have to hustle and either clean your self or budget paying someone in the mean time but it can still be worth it depending on your property and location.

SVreX wrote: There really aren't many numbers to share. You make them all up.

I'm not sure I follow. For a property that is dedicated to AirBNB (i.e. not a spare room), one should easily be able to calculate property value, monthly gross income, cost of utilities, maintenance, etc.

I have pretty good estimates for all of these things, but wanted to see if anyone could share theirs. There are a few things I'm having difficulty putting a solid number on. How much does it cost one to furnish a place? Property management costs seem to have a wide range... 10-20%. What are the additional insurance costs associated with a rental like this?

If you have specific questions, drop me a pm.

In reply to ProDarwin:

What I am saying is that none of those costs have anything to do with it being an airBnB. Those are costs typical to any rental property.

They are also completely unique to your area. We can't answer generalities on a car website. You would be much better off asking someone with local knowledge, like a realtor, banker, investor, etc.

For example...

The insurance on my South GA rental properties is next to nothing, but the insurance on my Pensacola rental properties consumes 30% of the annual gross rental revenue.

While homeowner's policies vary widely, using your home for a business may present problems should a liability claim arise. Normally any business use generating over 2k$ per year is no longer eligible for coverage.

(consult your insurance professional regarding your coverage terms and limits)

Bump.

This may be happening, but for a different reason.  The wife and I have talked recently about renting a loft downtown and getting out of this house.  She mentioned 'we could AirBNB the house' instead of immediately selling as it would give us flexibility with respect to move-in dates.

Initially I discounted it, but I have gone back and read the full AirDNA report again for the city and run some numbers.  It actually looks fairly achievable.  And when I say achievable, I mean the income would exceed what I could get by pulling out my equity and investing it in the market.  It looks like all I have to lose is potentially a couple months operating expenses and some furnishing costs.

Any new thoughts or experiences?

We’re five years in as hosts and looking to expand. We’re grossing way more than we would with a long term tenant. Don’t in any way think of this as passive income; it’s essentially a part time job for my wife to work from home.

nderwater said:

We’re five years in as hosts and looking to expand. We’re grossing way more than we would with a long term tenant. Don’t in any way think of this as passive income; it’s essentially a part time job for my wife to work from home.

Do you rent a SFH?  Condo?  Room in your current house?  I'm curious what work your wife does from home.  

I sort-of think of it as passive income.  I've budgeted for some sort of management, cleaning, and having a handyman/maintenance guy on call.  Am I missing something?  I recognize that coordinating those services is an effort, but my goal is to not need to be available 24/7.

Our rental property is a modest home in the suburbs that I purchased before getting married. We had it as a long-term rental for years and always ran in the red due to thin margins, gaps between tenants, and expensive maintenance.

To be most successful with AB&B you need to run your property like its own business — dedicating time for marketing, customer service, vendor management, purchasing, bookkeeping, etc. My wife is really good at it and we’ve learned a lot, which is why we are now looking to grow.

Yes, I have new thoughts. I’ve been an AirBnB owner now for about 6 months, and I mostly disagree with previous statements I’ve made in this thread. 

The warnings I’ve given were true, but small in the overall scheme of things. There are other things I did not think of that I am now experiencing. 

- AirBnB is not as illegal as it sometimes seems. Communities are making the changes necessary to make them work. 

-It’s not an Uber comparison.  Uber is working hard to be disruptive and has no loyalty to their drivers, AirBnB is working hard to be integrated, and gives its owners lots of tools and assistance to succeed. 

- It’s NOT a passive income.  Landlording to “normal” tenants is passive, this is not (I do both). 

- Tax implications were worse than I had considered. You have to pay income tax (which we expect), but also local hospitality taxes, etc. If you are converting your primary residence expect to lose your personal residence exemption (for me that more than doubles my property taxes). Also be careful- you may not be able to claim a capital gains exemption when you sell the property (it’s now a business, not your residence)

- Guests have expectations.

- Online communication takes more effort than I expected.

- It’s hard to start without reviews. My daughter now has a business managing AirBnB spaces, and I am one of her customers. (She has a website, and a couple books). This let me ride her coattails and benefit from her reviews (she is officially the hostess, I am the Co-host). I will “fire” her after a year or so. 

- I work to be invisible. Guests are not keen on a middle aged white male as a host. 

- Vacancies are more common than you expect

- Have a “niche”, and market your property accordingly. Mine is traveling night nurses, and business travelers. My space is specifically set up for them (I have blackout curtains, know where all the medical facilities are and the best commute routes in off-hours, etc)

- I tried to AirBnB my old house as well as my new house. Numbers did not work. Area didn’t have as many travelers, and the utilities and changes in the tax liabilities put me over the top on cash flow (“normal”  tenants pay their own utilities, AirBnB guests do not)

Feel Free to PM me.