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The Basics of Buying an Airbnb Rental Property

By: Elite Legacy Education, May 15, 2017

Airbnb offers a unique experience for travelers around the globe. Becoming an increasingly popular accommodation option, it has caught the attention of investors. More and more people are turning to the online platform to rent out an extra room or even an entire property. If you’re wanting to get in on the action, here’s what you need to know about buying an Airbnb rental property.


Finding the right Airbnb rental property.


Airbnb is an interesting investment. Not only are you investing in a rental property, but you also would be providing hospitality services. This adds a whole new dimension which makes these investments so unique. Here are some factors you should consider when finding an investment property that will be listed on Airbnb.


  1. Consider the location. What is tourism in the area like? If there are particular attractions, you should consider the respective location of your property. People will likely prefer to be closer to the action. You should also consider whether it is in a good neighborhood, which typically means asking if it is safe. Guests prefer to stay in safer areas.


  1. Consider the competition. Is there a lot of competition in the area? Competition can be both good and bad. It indicates guests are actually going ahead and booking rooms in a popular area. However, too much competition can make it difficult to compete if the area is saturated with Airbnb listings.


  1. Think about your ideal guest. Who are you looking to target? If you’re after certain types of people, make sure it’s a place where they will want to stay. This refers to the property type (i.e., private room versus entire house), as well as the location of the property. You can’t expect to attract families when you’re only offering a single private room.


  1. Current market state. How is the market of a particular area performing? Here you will want to consider things like the current rental and occupancy rates. This will help you gauge your pricing level, as well as estimate potential demand.


  1. The property value itself. It’s important to consider the financial implications of the rental property. The property value is especially important since you will need to recover this initial investment. Remember, the better deal you get on the property, the quicker you can break even. So, when you compare this to the market rate for rentals above, does the property value make sense? Consider all the areas of the property you could rent out as separate units. Or would you list the property as a whole? Knowing how much revenue you expect to generate will help in this assessment.


  1. Degree of management required. How much time are you looking to allocate to this investment? Some investors want active involvement while others prefer passive management. Active management generally entails taking care of the property yourself. This includes greeting guests, keeping the unit clean and being available for guest inquires. The other passive option is to hire someone to complete these tasks for you. Consider this beforehand, so you’re aware of any costs associated with hiring additional personnel.


  1. Length of rental terms. On Airbnb you can specify a minimum number of nights one must stay. That said, are you looking for long-term or short-term leases? Again, this may depend on the location of the property, as well as who you are targeting. Keep in mind though that with each new guest comes additional costs. For example, you will need to clean the unit each time a new guest is set to arrive. This could incur additional cleaning costs if you hire someone to do this for you.


  1. Local taxes, rules and regulations. All areas have different rules. Sometimes short-term rental properties are required to charge an additional occupancy tax in addition to the standard sales tax. It’s always better to be aware of this beforehand.


These tips are sure to help you find a profitable Airbnb property that suits your investment needs. The next step is creating the listing. Just make sure that your listing matches the property and everything it includes. If you make false claims, you are bound to get bad reviews. On a social platform like Airbnb, reviews can be the death of your profitability. Remember, this is a unique investment where you are a property manager and a host. Reviews and referrals are an important part of gaining repeat guests!


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