Are you looking into buying a house for Airbnb? Airbnb properties are one of the best sources of passive income for a serious investor. Whether you want to be an Airbnb host or will leave the hosting to a property manager, there are some things you should consider when purchasing an Airbnb investment property. Here are ten tips for buying a home for Airbnb the right way.
TFS’s Top Tips To Consider When Buying A Home For Airbnb
Before you jump at the opportunity to buy a property for Airbnb, think strategically. An Airbnb investment property can become a money pit if you go into it unprepared. Here are ten things to consider:
- Look for a home in areas that are popular with tourists
Getaways, beachfront properties, and homes near other tourist attractions make for excellent Airbnb rental properties. Find a property near popular tourist spots or within towns and cities with large numbers of tourists to get the best return on investment. While expensive, they will have a high occupancy rate and, thus, high returns.
- Find a home that is centrally located and easily accessible
Everyone knows real estate is all about location, location, location. To run a successful Airbnb, you have to offer an attractive location. Buy a property that is easily accessible from multiple points in a town or city. Airbnbs that are centrally located near major events and city attractions bring in everyone from business travelers to college students looking for a good time. A central location helps you maximize the occupancy rate and increase your Airbnb income.
- Make sure the property is in good condition and well-maintained
When purchasing an Airbnb property, you don’t want to spend too much of your starting capital on making the house liveable and attractive. Look for properties that are as close to move-in ready as possible. Every maintenance cost will cut into your profits, at the start or ongoing.
- Choose a property with ample space to accommodate guests
You can work with whatever amount of space you have as an Airbnb host. However, it is easier to rent homes and apartments with more room. It may be hard to find an investment property with enough room in certain cities but ensure the one you choose has enough room for at least one person to live comfortably. If you’re hoping to rent to families, you should consider yard space and enough room in the house for children to play and run around.
- Consider a property with additional features that could appeal to guests, such as a pool or hot tub
Additional features are great selling points that help your Airbnb property stand out from the rest. A pool, jacuzzi, hot tub, or gaming room are great additions to look out for. Other interesting features include a nature trail, gym, sauna, or clubhouse.
- Select a home that is furnished and equipped with all the necessary amenities
Consider buying an investment property that comes furnished and equipped with appliances. Customers will expect these amenities, and you can start renting out a complete home much faster. Finding the right appliances and furniture for an Airbnb can be challenging, especially if you have a tight budget. Buying a house that already has them significantly reduces your starting costs.
- Make sure the property is priced competitively to attract guests
Before you sign the dotted line to commit to a mortgage rate, ensure that it allows you to price your Airbnb well. While you have to maximize your Return On Investment (ROI) and pay anyone you hire to help, you cannot charge too high a price or you may turn away prospective customers.
Do some comparative research on the average cost for Airbnbs in your area of choice. Consider the features and amenities your Airbnb investment property offers guests, and their ultimate value in the marketplace. Price yourself in the best way to attract guests — but also make money.
- Take into account the cost of utilities and other running expenses
Like any other home you own, an Airbnb investment property requires maintenance. Because Airbnb are short-stay rentals, they tend to require more upkeep. Consider the cost of utilities like gas, electricity, and water. You will also need an internet connection, cleaning, and repair fees handy.
- Make sure you are comfortable with having strangers in your home
If you plan to purchase a property that will also work as your home, ensure you are comfortable with strangers in your house. Whether you will be renting it out during certain months when away or renting a part of your compound every day of the year, it can get intrusive.
If you like privacy and do not enjoy the company of strangers, consider buying a separate home as an investment property. This way, you can rent that home as an Airbnb and keep your own home private.
- Research the local laws and regulations regarding short-term rentals
This should be your first step when considering buying an investment property. New regulations come up in every city and state regarding short-term rentals often. Knowing Airbnb laws and regulations in different areas will help you know where is best to buy an investment property.
Research the expected taxes and fees like property taxes and real estate agent fees. Also, ensure that it is legal to be an Airbnb host in that specific location. If it is legal, confirm the number of bookings allowed and what requirements you need to meet as a host. Ensuring you have all your legal boxes checked before you begin your Airbnb journey is a must.
- (Bonus) To save time and headaches, work with a real estate professional
A real estate agent can help you find and buy Airbnb rental properties faster. They have the expertise, local knowledge, and connections to make the process run smoothly. Real estate agents also understand the laws and regulations regarding Airbnbs and know the best features to look for in an investment property.
Here are answers to some of the most frequently asked questions about buying a home for Airbnb.
Is owning an Airbnb profitable?
Yes, when done right, owning an Airbnb is a profitable venture. Like any other business, it requires trial and error and has potential downtimes. However, with the right property in a good area and great reviews, an Airbnb can be very profitable for the real estate investor.
How much money do I need to start an Airbnb?
At the minimum, you need about $4,000 to start an Airbnb. If you do not already have a rental property or cannot sublet your home, the cost gets significantly higher.
How much do Airbnb hosts make on average per month?
On average, Airbnb hosts make $924 per month, according to research. You can earn significantly more as an Airbnb host if you have several Airbnb properties or have one located in a lucrative area.
Find the Perfect Properties With TFS
If you are wondering whether Airbnb investment properties are worth investing in or not, they are! You can earn a lot of money if you make the right moves. When buying a property for Airbnb, you need to make careful considerations.
Keep the above tips in mind as you start your Airbnb journey. The most important decision is your choice of investment property. Make it a wise one. It’s best to find a real estate professional to help you make an informed choice and speed up the process. Work with TFS and you will even get access to private listings not available to the public.
Contact us for free information about profitable Airbnb investment properties in your area today!