We own a rental property Downtown and close to CMU. The lease is up soon (when college lets out) and one of our friends asked if we had thought about during it into an Airbnb instead of finding another 12-month tenant. They’ve certainly got us thinking! It’s a great location and we think we’d get quite a bit of traffic. Do you have many clients purchasing investment properties to use as Airbnbs? In your opinion what are some of the pros and cons of switching over from yearly leases?
Mike and Lynn, Grand Junction
Mike & Lynn,
I think it’s a great idea! Doing an Airbnb or VRBO can certainly be a very lucrative way to go and potentially prove to be much more profitable than a renter on a 12 month lease. We certainly have clients to look to purchase homes/rental units with the specific intent to use them as Airbnb or VRBO and many of them have proven that they work amazingly well, but they do take a bit more of a hands on approach than a traditional rental property.
If you use the VRBO or Airbnb website to schedule bookings etc. the interface is pretty seamless, however, it does take time to interface with each client who comes and goes. With the amount of traffic, new people coming and going on a day to day basis, that is generated you have to be aware that problems will arise. The key does not work, the pilot light went out, they are lost and trying to find out where to go, they arrive a day late, arrive a day early etc. Things happen and when they do many times you are the one they will need to reach out to. Also coordinating the cleaning of the property between renters takes attention and a bit more hands on effort. There are property managers for Airbnb’s and VRBO’s and I have heard they are very useful for cutting down the hassle, but they will take about 20% of the nightly rate for their management fee. If you don’t have property management in place, just expect that you will have to be aware of all the coordination of arrivals and exit, maintenance, cleaning and everyday issues that just happen.
Also keep in mind that one of the keys to success we have seen is having a super “cute” property in a great location. Location and electronic presentation on the websites (along with great reviews) will all dictate your profit or loss! It’s not a quick buck model, but if you take the time to learn how to do it right it can be fun, rewarding and financially beneficial!
The Kimbrough Team