Apologies for using bad language. I was not in the right mindset while posting that question and the follow up post. @Brandt
Apologies for doing that! Regretting every part of it!
Was not in the right mindset.
Good thing I have 5 million, will I still be able to convert it to a million?
I will be up front.
I own my properties and I have 10 in total, but 4 are STR.
These four earned me $66000 annually on the LTR market.
I was over the long term renting issues of neighbours not getting along, domestic violence, mental health issues, chasing the rent, damages and ending up at our rental tribunal.
As STR they earn me around $197000 per year. I don’t have tenant issues, STR gives me a lot less stress, I am delighted when my guests are happy and my houses are appreciated.
Now obviously these are gross figures, but still making better money.
Thank you! @Debthecat, good to know you are making it happen!
You cannot imagine how much of a boost this post is in my overall thinking towards
Thank you and more power to you!
But! I am in a very small market! 35 properties in total in my area. 19 of these are an entire homes, of which 4 are mine. You need to look at where you want to do this and if there is a potential for changing of the rules and ability to do this. Sydney starts a maximum of 180 days of STR next year and I can see that market having massive issues and a similar thing in London and Paris.
For the last couple of years, we’ve generated enough STR revenue to cover the mortgage payments (EMI), all the operating expenses, and some extra, which we’ve used to upgrade the property and pay down the mortgage. We have a large home in a tourist destination that we rent out in its entirety, our location is ideal for all the most popular activities, the operating expenses don’t include any income for ourselves, and the economy in the US is very strong right now so we know we are at the peak of demand (nearly all our guests are from the US).
Is there a great return on our investment? Yes and no. If you consider the cash used to pay the mortgage and upgrade the properties as the return on our initial down payment to calculate the return, then we are doing much better than the stock market. But we’re not generating a lot of free cash for our own use.
From talking to other STR owners, I believe we are the exception and not the norm. We were fortunate to get the ideal combination of location and style of house, and I work very hard to create a great vacation experience for our guests. Our home is practically a destination itself - our last guests stayed at our home all week and didn’t go out and were delighted! And, like @Debthecat, there are not many competing properties - we compete mostly with higher-end hotels, so we can charge a high price.
There are a couple of YouTube vloggers (have I got that right?) who look at these sorts of questions that you might want to take a look at. One is called Short Term Rental University by a guy called Richard Fertig and I find his the more entertaining and even sometimes useful! I can’t remember the name of the other but if you google STR YouTube and ignore the official Airbnb channel you should be able to find it.
Are they going against the law? Those entrepreneurs?
If they don’t then it’s calls capitalism with the best it has to offer.
I removed one house from the leasing market myself because I wanted extra income which now became my only income
I have some places to sell you…
Nope, they’re not going against the law, but that was exactly my point: they’re doing something that’s having a big impact on the local community so laws are bound to catch up. It’s one part of the risk equation someone entering the business should consider.
My town of 15k residents has a tourist home permitting system for residential areas, but there’s no such thing for commercial properties. I’d estimate about 60-70% of downtown apartments are now STR; all of the “above the cafe” worker housing apartments, whole condos, and one whole apartment complex are now no longer available to locals. I will not be surprised when they apply residential rules to commercial districts.
Capitalism is a good system but it doesn’t operate in a vacuum - local laws will give voice to interests that may not be heard without dollar signs attached.
May be because you live in such small town that any small change becomes 60-70%.
On average Airbnb doesn’t have such a huge impact.
Mumbai where I am doing this is still a very immature market IMO.
People have only started to discover STR here.
Though there are a lot of hosts popping up there is still a lot of potential left.
Mumbai is economic hub of India, so I assume the demand will always be there.
Also I compared the google trend charts for vacation rentals and hotel searches.
It showed me the following
- The market is not yet educated about STR’s and still hotels
are predominant players.
- People have started searching for vacation rentals only recently and though there is growth,
there is still a wide gap between hotels and STR’s.
Mumbai attracts the same number of visitors throughout the year except for a 10-20% dip during monsoon. these are probably the tourists.
- One thing that was troubling though, is that google searches for hotels in declining, but i believe this is a universal trend due to emergence of expedia,kayak,booking,airbnb and other players. So people have started searching for their choice of stay directly on these websites.
About the laws, I know the laws can drastically change sometimes in India but I am willing to take a calculated risk. Buying out properties with a loan on my head doesn’t seems like a good idea as property here is expensive compared to the rent.
I did all the calculations including the rent,interiors,furniture,employees and little tidbits. What I found that if I run a property for a period of 5 years I would essentially double my money invested in that property.
My plan is to build a vacation rental company,keep on adding homes, make it profitable and then exit it by selling it out.
I know there are risks but i will lose much more if I just never try.
Of course I will try this “master plan” of mine only after testing out the market with my own properties for atleast 3 months. I have 4 private rooms in total in 2 properties. So if everything goes well and I do feel that I made a tidy profit, then and only then will I go all in.
Thank you everyone for your input!
This forum has been a good place to gather information and just let my heart out!
Good Luck to all the hosts around the world!
I live in a small town in the mountains, 3000ish full time residents and about the same 3000ish second homes. We have always had vacation rentals up here but in the past few years its probably doubled and it has affected the supply of full time rentals and pushed up the price of remaining FT rentals. So yes, the smaller the town the bigger the impact. As a property owner I would much rather do str vs ltr
I live in NY and have been an Airbnb host since 2010. Two listings grossing over 100k.
I live rent free, yes, I live with guests and work on my other business… But I have a mortgage and expenses, because it’s an expensive city… that 100k gets eaten up.
Don’t get fooled by numbers. People love to say I’m making blah… yeah but what are your expenses… what’s your ROI and how much time are you spending on the business? The more listings and properties the more time… and is that the life you want then great.
Go for it. I went for it 3 years ago getting a property just for doing short term. It was unknown area for me then. Real estate is a good investment anyway you look at it. The only thing that I bit worries me when buying real estate for specifically short term is overestimate your income. If you didn’t deal with similar properties before how do you know what to calculate and what income to expect?
Do you have a plan B? I had plan B in mind if it doesn’t work with STR would I be able to at least cover my bills and mortgage with long term. In my case it worked every well with STR but as someone mentioned here I found my niche: I mostly rent to corporations when they have a project in my city and they need house for 5-6 people ussualy for a month or more
I don’t like renting to vacationers . They complain more and damage things more than workers.
where do you source these worker stays?
They find me through VRBO and Airbnb.
Good thing about these guests is that they stay for a month or longer . Once I had a group staying for 8 months!!. Ussualy they don’t negotiate , paying the top $$.
And they almost never complain. All Is good with them.
But I also adapted certain technics to attract them. Ussualy they book last minute. The most a week ahead. They depend on final approval from company and never know until last minute how.long they will stay or when.
I don’t accept any bookings too far ahead unless it’s 2 months stay. My minimum is 1 week .
When considering Airbnb or long term renting, I would say to consider your location. A place near a college or hospital might attract professionals needing housing for a few months or more. I’m in the middle of Portland so a lot of foodies and beer geeks and fun loving travelers come here, and I’m making considerably more with airbnb than I did with renting out my place.
City leaders In Portland are greedy and forever upping the taxes we have to pay. It’s a total ripoff, likely fueled with payoffs from the hotel industry by donations to their PACs. I am making less this year than last year as a result. I have the bookings (knock on wood) but I’ve reduced my rates based on comparable Airbnbs nearby; it seems they have been reducing their rates as well. Also there are many more of us, so the competition is fiercer than a couple of years ago.
My airbnb is a private upstairs apartment in my own home. I am sometimes tempted to check out the short term rental places (some charge $300-400 but I hear they’re the best ones). But out of the two airbnb guests who stayed 2-3 months here, one had really bad vibes, he was an angry man and I found I couldn’t really trust him. I was so relieved when he cut short the stay by a couple of months. Subsequently I changed my length of stay to 15 days and I still get the bookings. And more cleaning fees mean more in your pocket
First, listing 4 private rooms in 2 properties is significantly different to trying to manage a blitzkrieg amount of entire units.
3 month is also a bit short for your enterprise…
It is also very different to pulling it off nowadays with such an emphasis to consistently receive 5 Stars.
If your business model is heavily depending on Airbnb without a solid Plan B, be aware that they can pull the rug under your feet anytime over some made up allegations …read the threads about ‘help they shut down my account and I have no idea why’.
It happened to Airbnb ambassadors, Superhosts …listings with thousands of $$$ of upcoming reservations.