Financial Samurai - Forums

Real Estate Investing => Managing And Investing In Physical Real Estate => Topic started by: ConstructionPM on October 30, 2018, 12:50:17 PM

Title: Rental Property or Airbnb
Post by: ConstructionPM on October 30, 2018, 12:50:17 PM
A friend of mine is having this dilemma regarding the half of a double he rents out (he lives in the other half.)

What are some of the pros and cons of renting out a double to tenants on a year or 6 mo lease compared to putting in on Airbnb year round? The double is located in a medium-large tourist city that offers sporting events, music venues, and festivals year round.

He figured the pre-tax and pre-expense revenue would be roughly equal with either option. But what are some of the intangibles and efforts that go along with renting out vs listing on Airbnb?

If anyone has experience in both that would be great!

Title: Re: Rental Property or Airbnb
Post by: Cheezus on October 31, 2018, 06:34:31 AM
If the revenue is equal, why in the world would you want to deal with endless tenants through AirBnb?  The benefit would be higher rates and potentially much higher earning potential as a BnB.  Else, just get a more traditional tenant.
Title: Re: Rental Property or Airbnb
Post by: Kendall on November 02, 2018, 04:00:29 PM
From my discussions with vacation rental management in Lake Tahoe, Airbnb properties are seen more as hotels by renters, so the short-term renters may expect a high touch experience. We got into discussions of fresh flowers, individualized interest packages, linen service, house sanitation, 24 hour on-call assistance, and this was going to happen every week. I found it impossible to make a profit when a manager is charging 20-35% of the rent. An individual in a tourist location will probably have to compete with this level of service.
Title: Re: Rental Property or Airbnb
Post by: Cheezus on November 04, 2018, 06:35:22 AM
Quote from: Kendall on November 02, 2018, 04:00:29 PM
From my discussions with vacation rental management in Lake Tahoe, Airbnb properties are seen more as hotels by renters, so the short-term renters may expect a high touch experience. We got into discussions of fresh flowers, individualized interest packages, linen service, house sanitation, 24 hour on-call assistance, and this was going to happen every week. I found it impossible to make a profit when a manager is charging 20-35% of the rent. An individual in a tourist location will probably have to compete with this level of service.

I think the approach for a lot of owners in places like Tahoe is to have expenses covered by vacation renters, thus a "free vacation home."   Breaking even would be a win for them.  The management companies obviously know this as well and the market operates accordingly.
Title: Re: Rental Property or Airbnb
Post by: dpatton on November 05, 2018, 04:02:15 AM
 Our experience with an Air BnB was one that we were there only to sleep so no interaction with the owner was better for us.

As a landlord of a duplex and a house I've consider BnB as our next venture due to the wear factor. A long term tenant will have more stuff, an animal possible, moving furniture in and out, etc.

A BnB person will not have but a few bags of luggage. I'd say if you could manage it yourself like your friend can I'd go the BnB route.