I would like to get another air bnb property, but want to do it in the perfect place. Where is your property and what is your occupancy rate? I’d like to be able to charge $150+ per night with at least 85% occupancy, while paying no more than $2,000 per month in rent/mortgage payments.
Are you really willing to invest in a property anywhere in the world? If not, then you should narrow down your search criteria to countries you are able to invest in.
I am sure this question has been asked on here a few times already so do use the search function to have a look at previous responses.
Just because one host has a certain occupancy rate and can charge a certain amount doesn’t mean that you will be able to when you start out.
Why not do some of your own market research using software like AirDNA, by talking to estate agents, looking at local tourism footfall figures, in the areas you are interested in, by checking out legislation relating to STR current and future etc.
Only then can you put together your budget to see if your figures stack up(of course your mortgage is just one cost you need to consider).
2 Likes
Parkersburg, WV. 3 “entire house” rentals. An average of 70% occupancy across the three houses, with an average rate of $74 per night (the cleaning fee is added into that average). No mortgage on two of the properties and a small (25 or 30k) mortgage on the third. Obviously not the market you are looking for.
The problem is that the maths are all wrong here. (Okay, I’ve rounded the figures to make things easier but…)
Renting at $150 per night for 300 nights per year = 45,000
Mortgage per year (@ $2000 per month) = 24,000
Difference = $21.000
Now deduct from that property tax, TOT and any other local taxes - these can be $4000 per year bringing our total to $17,000, STR insurance will take a bite out of that annually as will other expenses.
Remember too that plumbing, electrical and structural emergencies WILL happen - we recently had to pay $4000 for AC repair/replacement. Wear and tear, not damage. Factor in the annual cost of someone doing the regular work (property prep, house tours, dealing with guests during their stay (including the bad ones), inventory management, getting supplies etc.)
Don’t forget any property costs that may apply such as condo/maintenance fees, lawn service, pool service, window cleaning. Plus costs to maintain your STR licence and inspections.
Add wear and tear on linens and other items, cleaning equipment, consumables, replacements etc and unless you’re relying on Airbnb and similar sites alone, time for promotion of the rental. Remember too that every few months there’s going to be something - there always is. Example: a broken or cracked window pane, a faulty water heater, a bunged up toilet or whatever that you discover when the guest checks out at 11 am that you have to get fixed by the time the next guest arrives at 4 pm - an emergency plumber costs more than it would if you could wait a few days but you can’t.
There are a hundred and one other costs - and that’s after you’ve updated and equipped the property to be rental-worthy.
Don’t get me wrong, I love being a host. But hosts really have to do their sums.
6 Likes
Also consider when you are asking established hosts it’s an unequal comparison. You buy a new place and there are already dozens if not hundreds of hosts there already and some of them have 400-500-800 reviews.
The place I have is not similar to what you want to buy but I do have about 85% occupancy (for the nights I want to make available) and for me the math is completely different than what Jacquo is talking about because I live in the home. My roof is 20 years old. When I need to replace it, I’m replacing my roof, not the roof on my rental, so to speak. New water heater? Well, I’m using it too. My home is paid for so having an airbnb that pays all the taxes, insurance and maintenence and I live for “free” is a great deal for me. So the math for a private room in a home is completely different.
Then finally, we can’t emphasize enough that laws could change at any time, especially for non-owner occupied properties so make sure you don’t overextend yourself. (Like the guy who posted recently that Airbnb de-listed him and he would have to declare bankruptcy within the month. Whoa! If you are cash poor this might not be the best business to get into)
5 Likes
To build on @KKC ‘s comment: as you do your research, investigate if the market support will converting your rental from STR to LTR if the laws change. Meaning can you earn enough from LTR of the home if STRs become limited or not possible.
You’ve mentioned several variables. I think in general if you consider purchasing in an area dependent upon tourist dollars you may have lesser risk of being legislated out. Those areas are dependent on tourist dollars and for tourist to come, they must have housing so local government will probably be less restrictive.
However if you buy in a community of building with a Home Owners Association, the neighborhood can restrict rentals.
Best wishes with finding the perfect property.
Like Karma, I live on site and make just enough for my home to pay for itself. I live in expensive Seattle and still have a mortgage, so this is a decent side-income. However, if I can ever afford an investment property, it is likely going to be a traditional rental. AirBnB income is too seasonal and I could be dropped from the plaform anytime.
1 Like
I was thinking the same thing. It just doesn’t pencil out and there are way too many variables to consider. You can’t just ask hosts on this forum where they are and what their occupancy rate is; that doesn’t tell you much at all. You need to know way more about the market you’re considering (saturation, regulations, seasonality, cost of living/labor, existing and future hotel construction plans, etc., etc.). Then when you say no more than $2K per month in either mortgage or rent, those are two completely different animals. A mortgage means you will also be paying property taxes, be expected to do all repairs/upkeep, etc., etc. Renting means, I assume, that you would be finding a rental that allowed you to have an Airbnb. That would mean the rules could change at any time or property could be sold out from under you. Also, IDK where your current Airbnb is, but I’m assuming you’re fine with hosting remotely, which means you’d be adding another layer of expenses in mgmt. fees? Not trying to be a naysayer but good luck!