While more than half of Airbnb users rent out their spaces for supplemental income, more and more investors are seeing Airbnb rentals as a great source for primary income. The short-term rental market is continuing to increase, and investors are catching on to the benefits presented by Airbnb.
Just as YouTube did with TV and the blogosphere did to mainstream media, the share economy [of Airbnb] blows up the industrial model of companies owning and people consuming, and allows everyone to be both consumer and producer, along with the potential for cash that the latter provides. – Tomio Geron, Forbes
Millennials continue to influence the economy, including the real estate market. With that, there becomes a demand for multi-functioning spaces…and investments.
Currently, there is some resistance to real estate companies getting involved in Airbnb, especially in cities where apartments and housing are scarce to begin with. However, individual investors are seeing it as the next investment vehicle. Here’s what you need to know to decide for yourself:
Airbnb as a Source of Income
Whether you’re a single investor, or part of a larger group of real estate professionals, Airbnb may be something you need to add to your list of investments. As far back as 2014, Airbnb was already valued at a $25 billion-dollar company, by CNN. The industry only continues to grow and be used by just about every type of homeowner or renter.
Is there any risk with the investment?
The only current, potential risk with Airbnb properties, is you’re at the mercy of Airbnb, and really only Airbnb. There’s comparable companies, but Airbnb is definitely still the primary influencer. In other words, the company could decide to raise prices to rent, list or work in connection with them. Their guidelines and requirements can change at any time. However, since starting in 2008, Airbnb has not shown any sign of trying to overhaul or overturn partnerships with individuals renting properties through their database.
In 2017, as Airbnb continues to be the trend for travelling business professionals, celebrities and travelers alike – hotels and other short-term rental options are the ones who should be concerned.
What regulations are currently an issue?
In bigger cities, such as San Francisco and New York City, there are varying issues that renters are encountering when it comes to Airbnb. San Francisco has a current shortage of properties available for city residents. With Airbnb properties coming onto the scene, the property options are becoming even slimmer for long-term citizens. However, Airbnb continues throughout the city.
New York City’s Airbnb-ers are having different regulation issues – with their landlords. NYC isn’t the only city, but rather the largest with this standing discrepancy. Landlords in NYC already have regulations in place with the length of subletting or allowing someone else to stay within an apartment. Airbnb is influencing this aspect of the market, with new companies establishing ways to negotiate with the landlords.
Here are a few ways investing in Airbnb properties will be your next source of positive ROI:
If you’re new to the real estate investment market, or a long-term professional in residential real estate, Airbnb is a great avenue for a smooth, simple process. With the right location, property, and rate, you’ll see the ROI almost immediately. Here’s why:
There are plenty of available resources.
Since Airbnb has been extremely beneficial to numerous people – most of them first-time investors or renters, there’s countless resources available online. One of the most popular and beneficial companies, Learn Airbnb, helps new Airbnb hosts understand the profits, market and overall requirements of Airbnb properties.
There are established markets to help assess your investment.
Since Airbnb has been successful and in the eyes of investors for years now, there’s now becoming an established Airbnb market. As a newcomer, you can determine the best location and property type to meet your goals due to well-established research and studies on desired properties all over the world. Just as the real estate market, you now have comps available to also compare pricing and amenities. You won’t have to spend too much time researching to know what you need to outdo your competition.
You’ll have fluid turn-over of renters.
Once you have your property listed on Airbnb’s site, it won’t take long for people to start booking your stay. This means, consistent income without too much worry. That is, as long as the renters keep your property in top shape. There have been some horror stories about damaged properties.
However, the majority of renters keep the property in great shape – keeping you from doing too much work between tenants. Whether someone books your property for two days, or two months, you could have someone new in the property the next day.
There is flexibility for the property owner.
Don’t want to rent out the property for a bit for renovations or other situations? No worries. You don’t have to. As someone who rents properties on Airbnb, you have the full luxury of flexibility of when and how often you rent out your home.
The price is also not completely permanent either. While your price should be at a competitive rate, you also have the ability to change it as you see fit – say during the holiday times, or specific events in the city you’re renting the property.
The property can become a secondary home for you.
If you buy a property with the intention to only use it for Airbnb, you can still use the property yourself. Say, you’ve always wanted a vacation home. Why not purchase an apartment or a house in a city you visit often, then use it when you need it too? In the long run, you’re saving money on your personal travels, as well as making money during the rest of the year.
You can live in the property as you rent.
Some investors who purchase multi-family properties, actually live within the community. This approach would also work with Airbnb. People are searching for full properties to rent, yes, but also single rooms. You can live in the property, while you rent out a single room, too. This is quite unconventional, but is still an option, especially while you’re just starting to invest in Airbnb properties.