Having an Airbnb property allows you to make more money from short-term rentals. The popularity of Airbnb is very high, and it does seem like a good idea to look at brand new condos for sale and have it rented out to vacationers.
But before you take the plunge, you need to be aware what you’re getting into. To begin with, what exactly is AirBnB?
The company describes itself as a homestay network and peer-to-peer Internet marketplace that allows people to rent or list short-term accommodation in residential properties. AirBnB makes money by taking a percentage on the service fees from the host and guest with every booking.
It was established in August 2008 and is headquartered in San Francisco. The idea came to Joe Gebbia and Brian Chesky just a year prior, when they could not afford to pay the rent for their apartment. So they converted their living room into a B&B for 3 guests and prepared breakfast for them. And that’s how it all started.
The host makes money by renting out their property (house, condo unit, townhouse, villa, etc.). Currently, AirBnB has expanded to include not only accommodation but also packages such as tours.
Take a look at some of the main factors to consider before you make an AirBnB investment:
- You’ll have to face a lot of challenges along the way.
Making money from AirBnB is not as simple as buying a condo unit and listing it on this booking site. There’s a lot more involved than just the purchase of a property and welcoming your guests. To start with, you should check the local regulations. Find out if there’s a limit as to how long you can rent out your property, how much the taxes are, and what rules your condo associations have for rental properties.
- You’ll have to deal with expenses.
The list price of a property is only the start of your laundry list of expenses. If you own an AirBnB property, there’s a lot more involved. Things like utility bills, cleaning services, landscaping, and repairs can add up pretty quickly. Moreover, you also have to consider what will happen on lean months when you get fewer renters. It’s also worth noting that Airbnb charges a 3% service fee from you for each reservation.
- There’s a lot of competition
Airbnb is very popular and it operates in over 65,000 cities around the world. There are probably hundreds, if not thousands of properties in your area that are listed on AirBnB as well. So how do you make your property stand out?
Your success on AirBnB will largely depend on the reviews of those who’ve stayed in your rental unit. That means you’ll have to spend money to win them over. You’ll have to furnish your unit with a comfortable mattress and pillows, nice bath accessories, welcome gift baskets etc…
- You’ll have to start slow
You can’t simply go all out when you first list your property on AirBnB. You have to first figure out what works and what things to avoid. Perhaps you can stay in the unit for a few weeks or invite friends and family over to stay a few days so they can give their input, opinions and advice.
Without a doubt, there’s money to be made in buying an AirBnB investment and there are lots of success stories to back it up. Before you start, however, learn as much as you can and do your homework. Prepare a sizeable budget too since you’ll be getting very few bookings in the first few months.