Rental property investments can be incredibly lucrative to the right person. Typically, there are low risks associated with such an investment, while you can also generate a high income from your property. Of course, there are advantages and disadvantages associated with rental properties, and it would serve you well to educate yourself on whether this investment opportunity is right for you and your current situation.
One perk of investing in rental property, however, is the opportunity to rent out to travelers. Websites such as Airbnb have become very popular worldwide, with many people opting to rent a private property over the standard hotel or hostel. Usually, this is because an Airbnb offers independence, privacy, exclusivity, and can be cheaper if you are renting with a group of friends or family members.
This popularity in Airbnb rentals has caused a lot of people to consider whether buying a house for Airbnb is a sound investment opportunity that will bring a return on their investment. If this sounds like you and you are considering whether rental property is for you, the following guide is here to help you come to a conclusion. (Source: Airbnb Financing website)
Short-Term Rentals Are in Demand
Vacation rental properties have exploded in popularity over the past few years, with many people wanting to rent out a property while traveling the world over booking a room in a hotel. The main reasons for this, as explained above, are because a short-term rental is cheaper and offers the advantages of independence and privacy.
That being said, you need to ensure that the property you buy is a solid investment. This means finding a property that is located in a popular neighborhood that can provide a good and high occupancy rate. Remember, you are only making a profit when someone is staying in your property and there is a lot of competition out there for you to content with.
Take the time to research properties in an area you are interested in. If you live in New York City, for example, you will want to buy a property that generates a lot of interest and is located near attractive tourist attractions.
You Can Decide on the Property’s Pricing
Being able to adjust the price of your property can help make your rental more attractive to potential occupiers. Typically, you will offer nightly rates that cover the basic costs of the property. However, you can increase them so that you also make a profit/cover the costs of cleaning, etc. You can also make your rental more attractive by offering deals for those who rent out your property for a certain number of days/nights or at weeks at a time. There’s also the option to add cleaning fees at the end checkout so that you know the property’s deep clean will be paid for and covered by the occupier.
This flexibility is incredibly lucrative to property investors. Traditional rentals do not allow you to control or adapt the monthly rental income of your property, meaning that once you have a tenant, you cannot increase the monthly rent before the lease is terminated. However, you will want to refrain from over-pricing your vacation property rental. If your rates are too high, then people are going to choose a nearby Airbnb over your own.
Lower Risks Associated with Short-Term Tenants
Airbnb guests are less risky. They are generally more likely to abide by your rules and pay for their stay. Long-term tenants, on the other hand, could stop paying rent at any given moment, causing you a lot of trouble and grief. What’s more, evicting a troublesome tenant can be a time-consuming and costly process.
Variety
You can be as involved with the Airbnb process as you wish, meaning you could leave the property’s keys in a lockbox and allow your guests to check themselves in and out on their own accord, or if you wish to offer a more personal approach, you can greet them and show them the property. Of course, your approach will help determine the type of guests you are likely to get. Older generations will prefer a more sociable Airbnb host, whereas the younger generation and millennials are more likely to want privacy and independence.
Having a variety of Airbnb guests, however, can be very exciting. You can leave a guestbook for them to sign so that you can see where your guests are coming from, what they enjoyed and whether they would return. This can add color and excitement to your Airbnb.
If you are in the market for a property investment opportunity, then investing in an Airbnb can be worthwhile. Short-term rentals are in demand, and with the added flexibility of being able to increase or decrease your property’s price at any given time, you can turn your Airbnb into a lucrative passive investment.
