Should You Buy an Airbnb in 2021
Airbnb is one of those rare start-up success stories that inspire many. Indeed, it has truly revolutionised the hospitality industry. Ever since Airbnb was launched, a significant change has been noted in the way people make their travel plans or rent their properties to earn money.
Considering how people prefer staying in Airbnb properties, it's not surprising that real estate investors are drawn to the prospect. It does seem like an interesting idea to purchase an Airbnb property that you can then rent to travellers. But is it really that easy?
Due to the pandemic, a lot of people have cut their travel plans short. Many are reluctant to reside in hotels due to fear of the spread of the potentially fatal virus. And this is why they now prefer to stay in an Airbnb property even before. After all, what better way to relax amidst the virus scare than going on a vacation? And by staying in an Airbnb property, the risk of spread is minimized too. Yes, buying an Airbnb property undoubtedly appears like a sound investment.
But before you go ahead with the purchase, there are some crucial factors you have to keep in mind. Let's be clear. It's not necessary that your Airbnb property will bring handsome returns only because it's near a vacation destination. There's a lot more to this investment. And you need to be aware of all the details before you make buy the property.
Selecting The Right Location
The success of Airbnb property investment relies on location. Let's not forget that we are in the middle of a pandemic. There are very few tourist destinations that people are comfortable visiting in the current situation.
So if you want to buy an Airbnb property this year, you have to do a bit of research. Find out locations that still attract tourists, which would guarantee a high return on investment. But how? How will you figure out what are the best markets for Airbnb?
Even if you know the city in which you want to buy the Airbnb property, you have to realize that all neighbourhoods aren't the same. And to make a sound and profitable investment, you need to conduct a detailed neighbourhood analysis. You have to determine which areas of a particular city perform well in the rent in the rental market.
Only after you have managed to acquire a detailed understanding of how neighbourhoods fare in the rental market can you buy a property that will yield handsome returns.
Narrow Down Your Search
Your work is far from over, even when you have narrowed down the neighbourhood. You have to figure out what type of properties is popular in the rental market amidst the pandemic crisis.
Due to the virus scare, people are reluctant to reside in properties located in close proximity to others. The number of bedrooms, budget, and location would determine how much profit you can expect with your Airbnb property.
Keep An Eye On Market Trends
We are undoubtedly living in uncertain times. The pandemic has thrown the world into a flurry. So, the market is volatile at the moment. Real estate, too, hasn't managed to evade the repercussions of the crisis caused by the virus. So it's vital to be updated with the market trends.
You have to keep a close check on the rental income, cash flow, and Airbnb nightly rate to ensure that the investment continues to be profitable for you.
Sort Out Your Finances
We get it! The economy is unstable right now due to the pandemic. With the world closing down to contain the virus, many have suffered. So if you want to buy an Airbnb property, you will need to figure out how to get your finances in order.
Most investment properties require a down payment of more than 25%. One way to deal with this issue is by splitting the property with another investor. Yes, this means you would get half the profit. But it will also reduce the risks and expenses significantly. It's a good approach for those buying an Airbnb property for the first time and want to test the waters.
Of course, all the details of the partnership should be in written form. Draw up an agreement that's acceptable to all the parties concerned.
The Commitment Of Short-Term Rentals
Given the uncertain times, it does make sense to invest in short-term rentals. They also increase the scope for profit. But keep in mind that running a short-term rental is quite a lot of work. You will have to revoke security deposits and communicate with guests and vendors. You will also have to invest in the maintenance of the property and update your pricing according to the market trends.
Should You Go Ahead With Buying Airbnb?
Airbnb is a revolution. Regardless of how it fares in the future, one cannot undermine everything it has achieved until now. It has changed how people look for rent and accommodation. It enables people to stay connected and get a homely vibe even they are away from home. Airbnb has transformed the method of conducting transactions for people. Yes, the company is undoubtedly a vital part of sharing economy. It is among the most successful online marketplaces.
So if you want to make a sound real estate investment in the current times, Airbnb is undoubtedly a lucrative option. It has the potential to bring handsome returns for a long time.
Should You Hire an Airbnb Management Company?
Property management isnt easy, let alone Airbnb management. Airbnb property management is a full time job when done right and efficiently, our partner Atlis Hospitality runs and manages airbnb for our clients and they are producing very promising results. Check them out at Atlispm.com