MAXIMIZE THE PROFITS OF YOUR INVESTMENT… There is a new trend in the Airbnb world that has shown to increase profit by a large margin for investors. There is no denying that an Airbnb investment property can be lucrative and profitable for people who want to become part of the short-term rental market. The question is how do you maximize your profit? How do you invest in a property that will generate a pretty penny? These are the questions you need to ask yourself before thinking about the next step. Lucky for you, we’ve got the answers. Here is everything you need to know to turn your Airbnb investment property into a multi-profit property.
Airbnb and Profits
Making profit is the ultimate goal for any real estate investor. Financial security is the reason most Airbnb investment property owners are willing to dedicate their time and energy to make it work. Making money via Airbnb has proved to be a good income because of its higher prices in comparison to traditional rentals.
Airbnb is considered the middle class of the accommodation chain for short-term rentals. Hotels are considered the high-class zone because of its higher prices and luxuries such as swimming pools, spas and 24-hour room service. Hostels can be considered the bottom of the chain due to their cheaper prices, lack of amenities, and communal spaces.
Airbnb investment properties are the balance in that system. It provides mid range prices that are affordable. It also provides a set of established services agreed on like free Internet, appliances for use, towels and amenities. For guests that’s all perfect and great because they get what they pay for in the end. Investors are ambitious; they don’t want to stop there.
A New Concept
The new Airbnb investing trend that has shown promise for owners who simply can’t afford to buy multiple properties is buying a large property (think something like a flipped two story house). It’s a relatively simple feat and has brought success in many parts of the world because. The idea behind flipping is to turn the purchased property into multiple Airbnb investment properties via renovation.
This might sound costly at first, yes. Renovating an entire property can definitely be expensive. The costs can include changing pipelines, sockets, entrances, windows and even walls. The cost will inevitably depend on the extent of the renovation and the size of the property itself.
After the restructuring of the property is made, the owner divides the house into smaller renting spaces, such as studios or one-bedroom apartments. All of them should involve the most basic necessities required of an Airbnb property like a fully equipped bathroom and a kitchenette. The investor will have eventually more than one Airbnb property that can be rented for a cheaper price. Yes, while the individual rental rates are cheaper than the whole property’s rates, consider this: An investor turns the property into 4 separate studios, each one accessible through the front door with privacy for each one. If the rental price of the whole property before remodeling was $90 per day, then 4 studios to be rented at a price of $50 dollars per day equaling $200 will generate 110$ more per day.
This idea can revolutionize the Airbnb industry. If you’re thinking of taking advantage of this revolution, there are some things an owner should be wear of.
Risks and Precautions
The risk of opting to go down this path with your property is the chance that not all mini-properties will be rented simultaneously, which means fewer profits. But that risk lies with the owner’s ability to advertise their property within the Airbnb community. A property of this type will need extensive marketing and customer engagement to make it work and cut the risk of vacancies.
Related: 7 Tips to Avoid a High Vacancy Rate
The main precaution that an owner must be aware of is the Airbnb investment property regulation within their state or town. Each city has its own regulations regarding Airbnb investment properties and it would be advisable to consult with your lawyer before engaging in this business activity. Cities like New York, Los Angeles and Austin for example have stricter rules than Tampa or Buffalo.
Related: New 2017 Airbnb Legal Issues
In conclusion, to make this type of investment work an owner needs to come up with a plan that best suits their location and property size. Paying a bit more to provide more services for your smaller properties will result in higher demand; their prices would be considered lower average. This is where the benefit lies: maximizing profit for investors by decreasing costs for tenants.
