Most real estate investors have considered Airbnb investment properties. It always is a question of the effort put into such investments vs the high rental income. To be exact, talking about Airbnb rental properties is a lot different than owning one. So, how does Airbnb work for owners? And, what measures do you need to take to have a successful Airbnb rental property?
Of course, being an Airbnb guest is a whole lot more different than being on the other end of the line with Airbnb property owners.
How does Airbnb work for owners?
To dive deeply into the process, here is a detailed plan that most real estate investors follow with Airbnb rentals:
Financing
Before asking “how does Airbnb work for owners?”, you must take the first step that property owners have to take: figuring out the financing. An investor must go through the inevitable financing details. You’ll most likely be going for a mortgage or loan. Make sure to study all aspects of the mortgage and have a mortgage broker explain all the details to you.
Finding the property
Finding a property is done through spreading your search as wide as you can. You might end up looking at 100 investment properties but only place an offer on a couple. It’s a funnel that filters through the possible real estate investments and the sure ones. Additionally, it’s not a bad idea to look at craigslist, online forums, bank foreclosures, and even local newspapers.
Analyzing the property
Conducting a real estate market analysis and an investment property analysis must be mandatory for all real estate investors. You might be asking, “how does Airbnb work for owners?” As for all journeys, it should begin with risk calculation. And that’s what an investment property calculator does. Through an investment property calculator, you can run a real estate market analysis to tell you all the real estate comps and measurable units that can make or break a real estate investment property. With Mashvisor’s investment property calculator, you can find out the cap rate, cash on cash return, and even Airbnb occupancy rate for any potential investment property. Click here to make use of the 14-day free trial with Mashvisor.
For more information about running a real estate market analysis, read this blog post: The Real Estate Market Analysis Tools That Every Investor Needs.
Fixing up the property
With any investment property you purchase, you are bound to fix a few things in it. Some more than others, of course. In many cases, the floors will need refurbishing or a kitchen update and a bathroom update will be a must. This will drive up your property’s value in your local housing market and on Airbnb.
Furnishing
As for the case of all short-term rentals, you will need to provide a furnished space. The furnishings include everything from kitchen gadgets to bathroom towels.
Listing on Airbnb
Listing on Airbnb requires high definition photos and a beautiful looking space in them. You need to describe your space well so that Airbnb guests will be aware of the space they’re booking. Also, don’t hesitate to set your own rules.
Filling out payment information
After creating a listing on Airbnb, you must update your profile with your payment information. Airbnb accepts all kinds of electronic cards, both debit and credit. For the US and Canada, you can get your payment in the form of a check or Western Union.
Figure out property management
While being a full-time Airbnb host may be the best full-time job for some, others may not choose it as a preference. With today’s rising economy, there are plenty of property management companies to go around. Many real estate investors hire professional property management companies to take care of the day-to-day operations, while they cash the rent checks and enjoy the rental income.
If you’re debating whether you should or shouldn’t go for professional property management, read this: When Should Landlords Opt for Professional Property Management?
Start you Airbnb Investment Journey
After all is said and done, you can sit back and enjoy your Airbnb rental property. Of course, you will need to attend to your property more than a long-term rental.
What follows?
Assuming you’ve done all the previous steps and gotten this far, how does Airbnb work for owners?
After listing a property on Airbnb, potential guests can go to the website and look for rental properties at any time of day. Airbnb guests must have a personal profile on the platform in order to book any property and they can link it to their Facebook account to verify. After that, the guest can message the host and book any potential Airbnb investment property accordingly.
Airbnb adds a varying percentage between 6-12% on top of the reservation value as customer support. When it comes to processing payments, Airbnb accepts all types of electronic cards and guarantees the guest that he/she won’t be charged until the reservation is confirmed.
After the reservation is confirmed and the payment is processed, Airbnb holds the payment up to 24 hours after the check-in and then posts the funds into the Airbnb host’s account.
Of course, there’s a service fee of 3% on every reservation that’s deducted from the host. This 3% fee is separate from the previous customer support fees.
If you’re still wondering how does Airbnb work for owners, read this blog: How Does Airbnb Work? Learn Here.
Keep in mind:
Laws and regulations in your city
If you’re a real estate investor and thinking of going for Airbnb rental properties as an investment strategy, make sure to be well-aware of your city’s regulations before purchasing a property. Some cities are trying to regulate Airbnb rentals and trying to mark legal grounds to impose taxes on them.
Taxes
Taxes might vary from one state to another in this case. Airbnb has started collecting information to provide you with at the end of the year of the income you generated through them. Not to forget that in many states, the income generated by Airbnb rental properties is taxable rental income.
To conclude,
Airbnb rentals are becoming more and more popular. With high rental income and occupied properties most of the year, it’s driving real estate investors to this type of real estate investment. If you’re interested in a high rental income and you wish to own an investment property, start Airbnb investing today!
If you have any further insights into how does Airbnb work for owners, feel free to share them with us in the comments section.
