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I am just getting into this (actually acquiring a property) and looking for help. Could someone(s) answer my questions?
What is reasonable annual profit to expect on a 3 BR modest home in a large city that isn’t particularly a vacation hot spot but has plenty of attractions, hospitals, colleges etc?
What would be a good annual estimate for utilities and maintenance?
What are unexpected expenses?
When Airbnb offers “smart pricing” - is their recommended base price a good guideline of what to expect? Or too high/too low?
Is the “smart pricing” base price what I’d receive over and above cleaning, Airbnb service fees, and taxes?
What’s a good target occupancy for above-described large city?
How can I project occupancy? Do you trust AirDNA or other similar data analysis websites?
Advice, advice, advice - please let me know any pitfalls or other things you’ve learned or wish you would have known!
Thank you!
I have a whole house waterfront rental (3 bedrooms) at the Jersey Shore. My profit is only $10,000 a year which includes the cleaning fee since I do the all the cleaning. It’s seasonal so I only rent June-August. I’m a teacher so I consider this my summer job.
I personally would not recommend buying a home just to rent out on Airbnb. I purchased this home because I plan to live there when I retire.
I will tell you that there are many unexpected expenses such as guests clogging up washing machine, breaking the drawers in the fridge, scratching wood floors by dragging luggage, breaking screen doors, etc. etc. Airbnb will not cover damages because it’s hard to prove which guest caused the damage unless the guests admits to it. The deposit left is really a joke because it’s hard to collect it. I wish you well.
My advice is to read everything on this forum that you can. Most of your questions have been addressed multiple times already. The biggest barrier to our helping you specifically is that every market and nation is different. Most large cities have way more Airbnbs than they can fill so our comments on occupancy are meaningless. Is there already a glut of modest homes? How are you going to distinguish yourself from the established hosts who have 100s of 5 star reviews already? Do similar homes have lots of open dates on their calendars? (I guess that’s what AirDNA is for but I don’t use it) Others are trying to catch me, I’m not trying to catch them but that’s because I’ve been doing it for over 5 years.
If you aren’t going to live there that is exactly the kind of home that’s being targeted by regulators because you are taking housing stock out of the rental pool. How are you going to manage it. What are the neighbor’s attitudes towards short term rentals (STR). You also need to consider insurance and even financing.
Read the forum. there are dozens, if not hundreds of threads which answer your questions. There are no hard numbers for anything for your location. Two towns ten miles apart in New England will have drastically different demographics, so there are no magic right answers.
Generally speaking, the so called Smart Pricing is a waste of time and effort. Search for similar listings near your chosen property and average those values to start.
I second KKC’s advice. Your questions are general. You realize that the cost of living and the location of your property have a high impact in your revenue. Your management style, who is going to clean your house, your expenses (mortgage, utilities) etc, the traffic in your city in summer and winter, attractions and your proximity to them… etc… Yeah, people break stuff if you don’t screen your guests too well. Some of your questions are too general.
I never used AIrDNA. I just know what works for me via trial and error.
It’s not reasonable to answer this question without a LOT more details. What city? What neighborhood? We also don’t know all of your expenses and your definition of “profit”. E.g do you have homeowners association dues? Are you deducting the mortgage principle from your profit?
Can’t estimate this without a lot more info, such as the location (climate and utility prices), age of the house, etc. However, since you asked this question, can we assume you don’t live in the same city and don’t currently own a home? Otherwise, it seems like you should know this better than anyone here. If the answer to the previous question is “yes”, then you need to spend extra time on understanding remote hosting and remote maintenance because they have the potential for the most pitfalls.
Some examples: roof leak, plumbing or electrical issues, damage by guests, insect infestation.
The recommended minimums tend to be VERY low.
Maybe. Cleaning fees are separate. Host service fees will be deducted. Guest service are separate. Taxes may or may not be separate.
No way to know. Research other similar listings in your area.
You’re not going to get all the answers in this thread. As others said, spend lots of your time reading this forum.
Other folks have covered most of your questions, but I’ll add one more thing for you to consider. More cities are passing restrictions on STRs, so if you are purchasing a home just for use as an Airbnb you’d better have a backup plan for if they are outlawed in your city.
Personally I would not purchase a property solely for use as an Airbnb unless there were already laws supporting STRs in the location.
