Pros of Doing Airbnb

The lure of Airbnb investing can be tempting, especially for first-time investors seeking to enter the real estate market. Here are some advantages of Airbnb:

• Potential for Higher Returns – Nightly rates can be adjusted according to market demand. Hosts can charge premium rates if the property is in a popular tourist destination. They can be higher during peak seasons. This is why short-term rental properties often yield higher returns compared to traditional long-term rentals.
• More Frequent Income Stream – Airbnb hosting can allow you to receive income multiple times per week, depending on how often your short-term rental is booked. The more bookings you secure, the more frequently you can expect income to flow into your account
• Flexibility with Business and Personal Use – Airbnb gives hosts the freedom to set their own house rules. This allows them to establish expectations regarding smoking, pets, and noise. Charging the nightly rates is also at the discretion of the hosts.
  Airbnb hosts can reserve their property for personal use (or maintenance) whenever they want. They can just block specific calendar dates, making their rentals unavailable for bookings. This means that they can enjoy their property for vacations, holidays, or family gatherings without coordinating with a long-term tenant.
  Hosts can also decide to shift their strategy as they see fit. They can transition from a short-term to a long-term rental.
• Be Part of the FIRE Movement – Because of the reasons above, Airbnb allows you to enjoy a FIRE (Financial Independence, Retire Early ) lifestyle. The higher income potential, flexibility, and control over your investments allow you to build wealth while enjoying your properties when they’re not being rented out.

Cons of Doing Airbnb

All the best things in the world have some downsides. In the business of Airbnb, these are the following:

• High Turnover – This comes in the territory of doing short-term rentals. Managing an Airbnb can take much of your time due to frequent guest turnovers, cleaning, and maintenance.
• Unstable Income – Short-term rental income can be unpredictable, especially during off-peak seasons. You will have to plan for cash flow fluctuations and potentially lower income during lean months.
• Operating Expenses – Unlike traditional rentals where the tenants shoulder the costs, managing an Airbnb property entails various costs that will be covered by the hosts. These include cleaning fees, utility bills, listings commission, and different business and licensing permits depending on your state.  
• Round-the-Clock Availability – It is only a reasonable expectation for a host to be accessible whenever a guest needs them. Guests may encounter unexpected problems or have some urgent questions during their stay. These may range from a malfunctioning appliance to clarifying the check-in procedures. Being available allows hosts to address such issues swiftly, minimizing the guests’ frustration and inconvenience. 

Important Factors in Airbnb Investing For Beginners

People always ask, “Is Airbnb profitable?” The answer is yes – but only in the right markets! 

Location remains the be-all and end-all in real estate investing, including short-term rentals. In this section, we will show how to invest in Airbnb by doing simple math!

1. Location

It might not be news to you that you should invest in an Airbnb in cities that have high tourist traffic. After all, tourists are your target customers. You must already have a list in mind of your target short-term rental markets. 

But which one will give you the highest return on investment? I believe this is the most important factor for first-time Airbnb investors. The faster you get your return on investment, the faster you can scale up your short-term rental operations from only one unit to having multiple rentals!

One of the industry standards to know the ROI is by getting the gross rental yield in a market. This is calculated by dividing the average annual revenue of an Airbnb by its median property price.