I just found out I can post. I am new to this. I am in the process of purchasing a property. Not sure if I should keep it as a rental or turn it into an Airbnb? Currently there are tenants renting out the property and they are section 8, which is sort of guaranteed income. I have also been checking in my area for Airbnb bookings for other short term rentals and it seems like some get booked more than others, and some have no bookings for the whole month.
How do some of you handle no bookings for a month or two?
Anyone have experience on this as far turning a rental into an Airbnb? also with section 8 tenants? I am a little nervous converting this purchase to an Airbnb because I am not sure how most people handle a whole calander month or 2 with no bookings? but looking to get insight.
No way to give meaningful advice without more information. What was your intent when you bought the property? I assume strictly an investment? What kind of property is it and where? Do you live in the same town and intend to manage it yourself or are you hiring a management company? Every town needs housing but not every town needs more Airbnbs. For the STR (short term rental) market you might be a bit late to the game. And if so you’ll have to work that much harder. Hopefully you aren’t depending on the income to make the payments in case it doesn’t work out.
Insurance and local regulation is different for STR than LTR, make sure you investigate both for your area.
Thanks for the reply.
Yes I am buying it as an investment property in phoenix. Its located near many amenities. I live about 20 minutes away from the property. I plan on managing it myself. I agree I might be a little late but not sure as I don’t have experience in either market but can learn fast.
This is just additional perspective for you to consider. In the Joshua Tree/Yucca Valley area, there is an attitude among many locals that Airbnbs are bad for the local rental market, as a lot of “investors” will simply come in, buy a handful of parcels with people living on them, give out 60-day notices to vacate, and in a few months those properties have become Airbnbs, making the new owners a lot more money than LTR would bring. And in the process several families have been displaced and they have a harder and harder time finding local places to live, because this keeps happening.
Granted we live here, 20 minutes from our cabin, and the “bad ones” are the folks who’ve never even been here, who own 10 properties and pay a management company to run these things, and who have no clue that they are causing problems for the community. But we still have to be careful who we’re talking to when we discuss our business. This is because many people who are long time locals feel we (as Airbnb owners) are part of the housing crisis that is going on locally, where people can no longer afford to live in their own community where they have worked all their lives and maybe even grew up here.
I imagine displacing a section 8 family so you can profit more, will appear to some as not beneficial to the community. Sometimes I wish our cabin could be “guaranteed income.”
I agree. I have been thinking about this too.
I would stick with the Section 8 tenant if they are responsible tenants and not requiring above average attention. I have LTRs and also do STR within my own home. I live in highly tenant friendly state in terms of regulations. Consequently I have thought of turning my smallest LTR into an Airbnb if the current good tenant ever leaves. I have the expense of furnishing it so consider that if your space is not furnished now. In addition to a myriad of regulations be sure to check out insurance costs. Mine are sinking me! Few companies underwrite policies with STRs thus they are very pricey policies. I am sure there are hosts who risk not having appropriate insurance, but it is required in my state. Ironically my daughter is considering taking a job in Phoenix and we’ve been looking at rental options.
I’ll keep it as a rental.
Personally I wouldn’t be comfortable turfing out long term tenants to run a short term rental business .
But to answer your question it’s only you that would know whether an STR model would work for you by putting together a budget for your LTR and STR option to see what’s likely to be more profitable .
You face 3 considerations: Section 8 (Government low-income) program), LTR or STR. Three (3) different risk/income combinations. Best to learn the pros and cons of each, in your area. and decide which is best for you.
In my opinion, your best bet is to keep your tenant. It’s a secured rental income because the gov’t pays the rent. You don’t have to worry about swatters.
If you decide to make it an Airbnb, there is a big initial investment in furniture, linens, pot and pans, etc. Right now everything seems to have been marked up 50 to 100% so a coffee table that used to cost $150 now might be $275.
If you estimate $4000 to get the apt fully furnished, keep in mind that you might not get any bookings till next spring.
In addition, you’ll need a commercial insurance instead of a homeowner’s insurance which will be more expensive plus you’ll have to pay utilities for a vacant apt.
My city just passed a bylaw that Airbnb can only exist in owner occupied properties. I suspect this may become more widespread in an effort to protect the long term rental market. I can’t speak for your area obviously, but it may be a consideration.
An Airbnb is never a guaranteed income. A jurisdiction can suddenly pass laws outlawing them, or that you have to rent for 30 days minimum, which then turns a guest into a tenant, subject to landlord/tenant acts, and Airbnb offers no protections in that regard.
Or something completely unexpected, like Covid, happens and all bookings get cancelled.
For hosts like me, renting a private room in my home, these aren’t concerns, as I don’t want a full-time roommate (therefore am not taking a home off the market for locals looking for housing) and don’t depend on the income. If I couldn’t use it as a str anymore, it would just go back to being a guest room for family and friends who come to visit, as it was before I started hosting, and for the 2 years I didn’t take bookings due to Covid.
But if it needs to generate constant, dependable income, you are best off with responsible, full time tenants.
The point here is that you shouldn’t be without bookings for a month or two BUT it’s up to you to ensure that scenario.
No one, in my opinion, should ever rely on Airbnb for producing guests year-round.
You have to do some work (quite a lot of work) yourself.
You’ll need to establish a local network, social media followings, personalised content (on your website or blog) and build relationships with your guests so that they refer you or they become repeat guests.
Yup, not easy.
@Helsi is spot on. You need to prepare accurate budgets for both scenarios. Don’t forget to factor in legalities such as licenses, taxes and STR insurance but importantly, your time.
I’ve done both STR and LTR and prefer the former. But it can be hard work and it’s not for everyone.
All good advice here. One thing I’d call out even further is your time. What is your time worth and how much of it do you have? Each rental type requires your time, but the STR one requires a lot because guests change frequently, you have to do a lot more marketing to secure those guests and ensure you don’t have empty dates, and do more hand-holding while they are on property. It’s not just which is more profitable although that’s important, you have to also consider your time.
Phoenix here too, where we have been operating several short-term rentals for over 18 years. If you are successful you can be occupied 75% of the year and with the much higher income of short-term rentals over long-term that can come out ahead. You can’t charge more for peak season or Super Bowl next year, etc. with long-term rentals, and you can keep the place in good shape more with regular turnovers and inspections. Those are all the advantages, especially if you live close.
However if you have the place bare bones and don’t want to furnish or decorate and want as little to do as possible (and aren’t worried about evicting or collecting rent from delinquent long-term renters with a lease) then it is an easier job to stay long-term. But also depends what kind of property it is and where it is located, as well as the HOA rules, etc.
State Farm recently (in late 2021) started offering policies for STR.
In my area, for years I had 10% of the usual bookings over 2-3 months (winter) and resigned myself to having a 9 month income stream. Then suddenly one year there were bookings in that time period. Who knows - maybe next year there may be a period again of slow bookings - or one with vastly more.
You will need to see what your area, your airbnb, and your willingness to ‘go with the flow’ impact income - every airbnb location is different, and income and booking patterns totally dependent on things you probably have no control over.