Hello, I am considering buying a studio condo for $50,000 walking distance across street from the beach/ocean (where I also live 10 minutes from condo) and renting it out through Airbnb. I live close so, could clean it & manage on my own. I am 34 years old and finally have money saved to invest in real estate. I am of course nervous about this decision any helpful advice would be much appreciated. Thank you.
Have you done a business plan to determine how this will work? Unless your condo is in a very highly desired location, it will take a long, long time to recoup (or pay for) a $50,000 mortgage.
Do you have other ways besides Airbnb to make money from this condo?
A business plan is the place to start—before you buy anything.
Agree with @RebeccaF you need a business plan and budget to work out how profitable this might be for you before you buy.
Also have a search on the forum. This topic comes up quite regularly so worth having a look at previous advice given.
What plan do you have in place to cover your costs if you don’t get the bookings you need through STRs.
Of course you need to check out any restrictions on STRs before you buy.
Go for it! BUT first check if the association allows short term rentals. Just don’t spend a lot of money on furniture. Start calling relatives to see if anyone wants to donate some furniture. You can also start going to garage sales. And if Airbnb doesn’t work out, then just sell it or do long term rentals.
- Research the state/county/city/HOA ordinances on short-term rentals.
- Research similar listings to the type of property you want to buy in your area and get an idea of the nightly rate and occupancy.
- Estimate your costs for mortgage/taxes/insurance, HOA dues, utilities, consumables, estimated repairs.
This is all just to determine if it’s worthwhile to even start.
Remember that if the STR business in your area is seasonal, you will likely have periods where you have negative income.
Be aware that mortgage and insurance rates for short-term rentals are significantly higher, and omitting that detail to save money is fraud.
You mentioned that this is a condo? I would want to be 100% sure if STRs and Airbnb specifically are allowed in that building. Even if they are, if neighbours aren’t happy it could really cause you a problem down the line. So you need to research this in advance. Assuming that there is no problem on that front, I would say go fo it because $50k seems like a reasonable price considering its near the beach. Unless you are writing from North Korea, this seems like a good investment.
I’d wait until the next crash which I think is coming up. Then make your money and sell before the climate crisis hits the next gear. Cheers!
I want to know where a condo near the beach can be purchased for $50,000. (Not joking!) And yes, check into local regulations, condo association rules, and STR insurance rates as you do your business plan!
It’s only a studio. If it’s in east coast hurricane/climate crisis area it’s not hard to imagine.
It’s all hard to imagine for a coastal Californian like me. I’d need several times that just for a down payment. Of course, we don’t have hurricanes. Just earthquakes, wildfires, mudslides, and a few other fun potential hazards.
Find out your list local codes, nearby airbnbs and there pricing and accommodations and see if that will work with you and if it will actually work, price out everything you plan to put in it, get your mortgage rates etc or what have you, see if rates increase for concerts or events in your area and take that into consideration. It’s hard to be fully prepared, I was close but added things as time went on.
My city codes worked great for me, however I later found out the county requires a license and inspection which still works, no big deal.
Bit I guess the main thing of it being an investment is just making sure that if you go through with it will you see a return? And is it worth your time? Lots of questions to ask yourself .
Many good points being made about unhappy neighbors etc. Take everything into consideration including any future plans for law changes. Would hate to see you stuck with it and no income. Best of luck!
As others have said, condos are usually governed by a homeowners association, so you should not only find out who runs it and get a copy of their rules and relevant city laws to see if you can do short term rentals. And as others have said, a business plan is necessary, if only because the bank will want to see a realistic business plan if you will not be living there. Air B&B’s “host guarantees” are not insurance, so you will need to purchase short term rental insurance (not regular home insurance) to protect yourself for liability as wall as guest-caused property damage. When you furnish it, you should buy garage sale furniture. But most important you need to follow the market to see what AirBnBs are out there, what they charge, and how often they are vacant (you will need anonymous browser sessions to hide your identity from AirBnB when you do). $50k near the beach sounds ridiculously low to me, so I would ask what’s wrong with the condo.
Thank you everyone for the good advice. After reading all the comments on here I have decided not to move forward at the moment. I may pursue this idea in the future with a well thought out business plan. Thanks again everyone for your help much appreciated.
Yes, it is on east coast. It’s a small 1 room efficiency. It is in Cherry Grove beach, SC 30 minutes north of Myrtle beach. The building is old & condo unit needs some TLC for appearance purposes. I decided not to go forward with it though.