5 Questions to Ask Yourself When Buying a Property for an AirBnB

Short-term rentals are an amazing investment opportunity, but it’s not as easy as HGTV might make you think. Before you start looking for properties or start collecting color schemes or funky furniture, there are a few questions to ask yourself when buying a property for AirBnB. Especially since Chip and Joanna won’t be there to guide you on the journey.

That doesn’t mean you shouldn’t buy a vacation home to rent on AirBnB. This is actually a great thing and provides you with passive income and a nice vacation home.

You may be tempted by the spacious 4,000-square-foot five-bed, five-bathroom house your sister lives in and is listed for what you think is too low a price. But if it’s in an area that’s off the beaten path and an hour away from a football stadium, you won’t have much interest from your target guests.

Likewise, a charming town with friendly people may seem like a great location, but if there’s nothing to attract out-of-towners, you’ll struggle to get bookings to generate revenue.

So what do you need to consider before investing in short term rentals?

In this article, I have Here are five questions to think about to help you decide if a property is right for you.

Question 1: Will AirBnB investment properties be vacation hot spots?

You know the popular real estate mantra: location, location, location. Having a short-term vacation rental in a busy area will help ensure your property stays rented for longer.

There’s no plug-and-play calculator that can tell you if a location is good, but a few key metrics to help you determine potential are professional sports teams and major national events. Don’t overlook college towns for good rental properties. Homecoming and graduation weekends see a lot of traffic, as do home game weekends for football, basketball and any sport the school is known for.

Another great way to help analyze visitor potential is to check the city’s website and its chamber of commerce to see what activities are going on in a given year. Having national chains like Target and Starbucks doesn’t hurt. These companies spend millions of dollars on market research, so use that to your advantage and find places close to where the people are.

My short-term rental is in a sought-after area that receives a steady stream of visitors through festivals, concerts and community events. After some home improvements, I was able to price it so that with a few multi-night bookings, I could cover the entire year’s operating costs. Here are seven lessons I learned from my short-term rentals.

As you consider starting a short-term rental side hustle, consider the difference between active and passive real estate investing. Click the video below for a quick 60 second tutorial on both.

Question 2: Is the area short-term rental friendly for an AirBnB investment?

Another part of the due diligence you can’t skip is making sure the location allows for short-term rentals. Not every city allows its homeowners to sublease homes short-term.

Start by looking for properties in the city that already exist on Airbnb or your platform of choice. From there, check the city’s website for regulations. Don’t be afraid to call the city’s zoning department to ask. You can ask them if any permits or licenses are required to comply with city laws.

Question 3: Who will manage your AirBnB property?

For as much passive income as possible with a short-term rental, you need a property manager who can handle day-to-day issues as they arise. Hopefully, there won’t be many, but because of the high turnover, you have many more points of contact with a tenant on a 1-month lease.

The best way to find a good property management company is to get a referral from someone you know and trust. If that’s not an option, go to Google to search for property management companies Read all the reviews you can find, both good and bad. Give the owners a call and ask for contact information of current and past clients.

Trust your gut feeling as you sift through all the information. Remember, this is the person you will trust to run your short term rental Open, honest communication on their part goes a long way in building trust with you, the owner, and the paying guests in your home.

Not sure where to start on your short-term rental journey… Listen to our podcast episode “An Introduction to Short-Term Rentals”

Question 4: How much do you need to upgrade your AirBnB investment property?

Ideally, the less work you have to do on your property, the easier it is to prepare, rent and cash flow. A less expensive property usually requires more work, so keep a set budget range in mind for both finances and time.

Let’s say you choose a more expensive home in Austin that just needs to be furnished. You’ll pay more for it, but by spending some focused time cleaning, painting, and shopping, you can be ready to welcome guests in about a week.

A fixer-upper comes at a more attractive price point and can be a great option if you have a partner who can do the work. In this situation, you can contribute to the down payment while your friend or family member hires contractors or does the work yourself.

The main question is: Would you trade money for personal time savings? Do you love a good DIY? How quickly do you want your property to be listed for short term rentals?

Question 5: How much time do you want to use your AirBnB investment property onsite?

When I purchased my vacation rental, I intentionally chose an area that my family and I enjoy visiting. We are happy to stay there a few times a year for long vacations or weekend getaways. The property serves as a vacation home for us, also providing a stream of passive income.

In fact, what you might find more challenging is blocking off days to stay there because you don’t want to give up any income during its peak season. I get it! This is a real struggle that I believe most people in this situation face. But if you love the location and the home, you owe it to yourself and your family to actually stay and enjoy your vacation home.

As a bonus, by staying in the property, you’ll get an idea of ​​what can be added or upgraded to make the home even better. You will be able to create a better property description if you know the inside and outside of the house. Plus, you’ll have first-hand experience of local businesses (restaurants, coffee shops, parks, shops, and activities) and guests can keep your wishlist.

Start investing in short term rentals

After reading this, you’re probably ready to jump into the short-term rental business. But, maybe you’re not. Some people don’t enjoy the more hands-on nature of short-term rentals. You may be better off investing in a real estate syndication. If so, check us out Passive Real Estate AcademyWhere it takes you from zero to confidently investing in real estate without owning land.

Whichever path you choose, remember that action beats inaction every time. This can be called Passive Income MD and that is the end goal. But before an income stream becomes passive, you need to do some work. That’s where I come in and can help guide you on a clear path with advice and lessons from my experience.