Should you invest in an Airbnb property or would a long-term rental be better for your real estate goals? I’ll go over a few pros and cons for you to consider today.
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If you haven’t used Airbnb yet, it’s a great experience. I’ve booked a 5-bedroom, 5-bathroom house in Rome for 10 of us to go on a Mediterranean cruise. We got the kitchen and a great location to see the city.
You can rent an Airbnb for $200 to $500 a day, which has many investors purchasing short-term rental properties. However, what are the pros and cons of investing in an Airbnb property? How do these properties compare to long-term rentals?
Investing in an Airbnb property is a great way to bring in a larger cash flow each month, but there are a few things you need to be cautious of.
First of all, pay attention to the location of the property. Is the property in a homeowners association or association complex? Some HOAs have rules in place that do not allow a rental for less than 30 days, so make sure you will be able to have a short-term rental before you purchase a property.
You should also check the zoning. Certain cities do not allow any type of short-term rentals except in certain zoning areas so that the city can establish a tax base and collect taxes for short-term rentals.
When you invest in a long-term rental, you typically buy a single-family home that will bring in $1,500 month. With Airbnb, you can bring in $200 to $500 a day, which could net you $9,000 a month.
With an Airbnb property, you could net as much as $9,000 a month.
You should also pay attention to commission. On a long-term rental, you’ll pay about 10% per month on the income you get from the property to a property management company. The property management company will take care of maintenance, cleaning, and day-to-day issues.
Airbnb commissions are more complex. People can check in on a daily or weekly basis, and the commission rate is closer to 50%. Make sure you get an agreement with a property management company that is fair for both sides.
Finally, what happens after you get tired of running an Airbnb? What is your exit strategy? That home needs to be in a good, rentable area so that you can transition the property into a long-term rental.
Your other option is to sell the property, so make sure you purchase in an area where you will be able to get all of the money you invested in the property back when it comes time to sell again.
If you have any additional questions about short-term or long-term property investments, just give me a call or send me an email. I would be happy to help you!
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