The Ultimate Guide For Airbnb Investors To Make Great Money
There are a lot of ways to invest in real estate these days. In essence, whatever your needs or personal investing strategy are, there is a real estate investment scheme that is perfect for you. This is great since you don’t have to be boxed in.
Airbnb is an example as it is becoming a very popular method since it has so many different facets and benefits. There are many people that are making a full-time living by investing and operating Airbnb properties.
There are a lot of things to know about running an Airbnb operation and if you aren’t sure where to start there is a great guide to Airbnb investing for beginners. However, in this article, we will go over some of the basics to help you understand if investing in Airbnb is a good option for you.
The Benefits of Airbnb Investing
One of the biggest benefits of buying a house to invest in Airbnb is the fact that you can make substantially more on the property by putting it up for short-term rentals than having tenants in the same property.
When you have tenants, you are settling for a fixed rental price per month that can’t be changed until the lease is over. If you raise it too much there is also the possibility that you won’t find tenants and risk a property sitting empty.
Instead, Airbnb can give you the possibility of having people paying more per night than a tenant would and the property being full every day of the month. If you feel like you can make more, then you can raise the price per night at will without running afoul of the local housing laws.
Of course, there are no guarantees that this will work out that way and you may have issues filling the property every night. It all depends on a lot of different factors, but the possibility is there to make substantially more with short-term renters over long-term ones.
Check Your Local Laws
Having too many Airbnb or short-term rentals in an area can have a negative impact on the locals living there. Since there is the potential to make more money with Airbnb, if too many properties are listed then this leaves renters with few options. It can also raise the average rent for tenants considerably and it prices out low-income workers.
For this reason, there are localities that have either banned the practice of listing on Airbnb or have severely limited how many properties can be listed. It’s up to you to understand the local laws before you go and buy a property to invest in or list a property that you already have.
Understand the Market
Running an Airbnb is not just an investment, it’s a business. As a business this involves understanding the market it’s in to be able to make it as profitable as possible. This means that you have to make an evaluation of what you need to buy and how to price it among other factors.
For example, do some research into the area where you plan to buy a property. Some areas will have different types of tourists with different needs.
You wouldn’t want to buy a property that none of the tourists are looking for in that area. An example would be if you bought a studio apartment but most of the tourists are families that need more space.
This also involves getting the pricing right so you aren’t leaving money on the table. If you price too low then you are not maximizing the potential profit. Pricing too high will see you with too many nights without a booking.
Make More Money
There are a lot of ways to make money from Airbnb yet, many owners end up limiting themselves. They end up making less money than they otherwise could if they understood some of the concepts about why Airbnb works so well. One of the keys to success is to always have some upsells available so you can extract more profit from the bookings that you already have.
One way certainly is to raise the price of the booking to make more money. The problem with that is you are not adding value to the higher price so as a result, you may price yourself out of the competition. Instead, look for ways to encourage the renters to spend more money.
For instance, if you have a parking spot then you can add a fee for that. Or, you could simply use that as a selling point to increase bookings.
A very popular way to increase revenue is to add Airbnb Experiences. One of the selling points that people love about Airbnb is that it isn’t a hotel. They expect a more authentic experience so you can create some that people will pay for.
A good example of this is to host a cooking lesson that specializes in some of the area’s specialties. Don’t worry if you aren’t a cook. You can hire somebody who is to host the events.
The same goes for offering guided tours of the area. If you are an expert on the locality then you could be the person to take them around or hire somebody who is. Airport and train station pick-ups are also things people are happy to pay for so offer transfers to your property at a price.
Scale It Up
Once you are making a stable profit off of your first property, you now have a positive result for the viability of the business. This means it’s time to reinvest your earnings and buy more property. Scaling it up is the way to make sure that you are making as much money as possible from the business.
It’s a good idea to look into more properties in the same area and offer alternatives to those that need something different in terms of the type of property and pricing structure which increases your bookings.