So you have heard and read all about how people are making loads of money with Airbnb, right? But is investing in real estate really such a good business idea for making money? Isn’t traditional investing better?
If you are considering to make an Airbnb investment by buying a property (or perhaps investing in extra properties), there are a couple of things that you will need to give careful thought to before you can embark on this exciting new journey.
What should you consider prior to investing in Airbnb property?
Remember that you will now be both a host and an investor. You will have to pay careful consideration to things like financing, time, rules and regulation and other competition.
Airbnb’s popularity has increased tremendously. Its success is partly the flexible Airbnb regulations. Though, there are still Airbnb regulations that you need to pay attention to. For example, some cities have regulations in place that restrict the number of nights a host is allowed to rent a property. In fact, there are several cities where the host must actually live in the Airbnb property in order for the host to be able to list the property.
Now that you have a better idea of what is allowed, shift your attention to financing. Would you need to take out a mortgage? If that is the case, first get approval for a loan so that you have a better idea of how much you can spend. Also, which expenses will you have to pay? Yes, the right Airbnb investment can for sure be profitable, but you will, unfortunately, have to pay typical costs related to your Airbnb property such as Airbnb insurance and taxes too. Therefore, you will have to take the time and calculate exactly how much you will need to generate in order to break even.
As mentioned earlier, Airbnb has grown more popular by the day. This is great, but at the same time, it means that the competition is fierce. It is both a dog-eat-dog and dog-eat-furniture industry. So, you will have to consider your competition beforehand by researching the local real estate market.
What are the main components to ensure that your Airbnb investment is successful?
You have probably heard it countless times already, but when you invest in property it is always about location. Although it will come at a price, you will have to ensure that your property is situated in a neighborhood that attracts many people. Also, make sure that things like public transportation, restaurants, shops and other attractions are not too far away (it is even better when they are in a walkable distance). By ensuring that your property boasts one of the best locations, you are also figuratively (and literally) one step ahead of the competition.
A second component that is important for any Airbnb investment is pricing strategy. Pricing your Airbnb investment correctly is not such an easy task. It is something that you have to think about very carefully while you are planning.
For example, if you can afford to buy a magnificent condo that boasts the ultimate location, you can afford to increase the rate per night significantly. Or, perhaps you already own a great property but have to move and do not want to sell this dream property. Well, in that case, you would want to consider long-term renting.
Pros and cons of Airbnb investment
It is not always about the money, right? One of the advantages of investing in Airbnb versus traditional forms of investing is that as a host you will get to meet interesting people from all across the globe. In fact, that is one of the main reasons why so many people decide to list a property on Airbnb in the first place.
Though, just like anything else in life, there are drawbacks too. One of the greatest risks of investing in an Airbnb property is that there is always a chance that a guest can cause damage to your property. The stock market might be uncertain, but one thing that is certain is that you will never come home to find that a guest’s dog ate your shares.
In any case, if you decide to invest in Airbnb business you will definitely gain a lifetime experience and will have a chance to make good money by accommodating other people.