Playbook #050: Airbnb / Short Term Rentals
🖼️ The Big Picture
Short term rentals (STR) like an Airbnb property might be the most exciting asset in the real estate space. Whether their brand of “exciting” is up your alley or not, however, depends largely on your mental capital (skills, experience, vision, passions etc.)
Owning a STR and renting it out through Airbnb or VRBO essentially makes you a mini-hotel. If run well, it’ll be significantly more profitable compared to getting a standard monthly tenant. And you can hire a property management company to make it almost completely passive for you.
However, as STR owners around the world found out in 2020, you’re also dealing with the risks of being in the tourism business. Even when the world isn’t in a pandemic, tourism is highly location-dependent, competitive, and can fluctuate with seasons and other travel trends.
On top of that, some cities just don’t like short-term rentals, and have stopped accepting new applications or enforced strict regulations on where and how they can be operated.
Some people - especially in specific markets like Phoenix that are hot-spots with Airbnb-friendly laws - are earning incredible returns while systematizing it to make it almost completely passive. But if you’re going to get involved, you’ve got to buy correctly, and be prepared with strong due diligence and a plan to get your occupancy as high as possible as quickly as possible.