There is no arguing that Airbnb is the up and coming trend in the real estate market in recent times. Airbnb has revolutionized the real estate industry in so many ways that it has brought in a new batch investors who are willing and able to take risks on an investment property. These people who were not prepared to risk their money on traditional long-term investments have decided that short-term Airbnb investments are actually worth it and for a good reason.
Unlike traditional renting methods, Airbnb rentals have proven they generate more money for a shorter amount of time stayed by tenants. This happens basically because Airbnb properties aren’t considered ordinary rental houses but they’re being labeled as luxury rentals because of the services they provide.
Related: Real Estate Investing: Traditional vs. Airbnb Investments
While Airbnb sounds like an easy and laid-back plan to earn money throughout the year, there are some downfalls and challenges facing landlords all the time. Your Airbnb investment property becomes your reputation for the future of your business success in this specific market.
Traditional rentals don’t face this problem because none of their tenants have the chance to post their reviews online to million of other users to see and take a point from. In Airbnb, any mistake or unpreparedness will lead to negative reviews. I have personally throughout my travels just skipped past an Airbnb investment property so many times just as soon as I notice a couple of bad reviews. It is such a competitive rental platforms with so many options that I could afford time and luxury of being picky.
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I will be discussing the challenges faced by Airbnb investment property owners to maintain a high quality standard for their listing while also generating a stable income every year.
If you don’t have enough time to manage and be in control of your investment property then you will find itchallenging to increase demand for your listing. An Airbnb listing will need time to clean the house, being available for emergencies like repairs and finally being there to greet the guests and let them in.
If you want the property to be hands-off, there must be a routine plan in place. For example, you can send guests the information they need, they can use an app such as Lockitron to access the property, and a housekeeper can take care of turnover and restocking supplies. It’s important to build and maintain an efficient system.
Whether you are new to the real estate market or switching your focus from traditional rentals to short-term Airbnb rentals, you will find that expenses will be higher than usual. This affects most Airbnb hosts because when guests are making a booking on Airbnb they are expecting a few amenities to be provided by default. This includes consumables like shampoo, toothpaste, fresh towels, cleaning services, drinking water and in some houses refreshments or wine to give a good impression to the guest. All this comes with high expenses, but we have to look at it from a different angle. These expenses you make shouldn’t be scaring you into thinking that your turnover will be less than what you expected because these services you provide can be considered the exact equivalent of first person marketing techniques. If guests are staying at your property and all this leaves a good impression on them you can rest assured that their Airbnb review on your property will only serve as bait to attract more and more guests.
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Having a Killer Location
The simple answer is that it is very important to screen locations and check if tourists or short-term rental guests do rate that location to be desirable. They aim to be at the heart of cities they visit because the idea of commuting around town all day doesn’t appeal to a person who has a limited amount of time to explore his/her surroundings. However, in some cities investing in the city center can be too expensive. In that case the investor should be purchasing property that is easy to commute to or one that revolves around another busy district of the city. In real estate business, the more central the location of the property you are purchasing the higher the return it will yield in the future and in the case of Airbnb hosts that will be hitting two birds with one stone.
There are many ways to challenge this daunting prospect of having some months where your bookings will suffer a significant blow because of winter season mainly. During the off-season, your main concern should be minimizing your losses because for most investment property owners they will still need to pay taxes, mortgages and expenses. You can start by reducing the price of your listing for that time period to make enticing for guests to pursue their holiday at your place. Adding some incentives for guests like free breakfast or a free city bus tour can also make guests put your listing on the top of their list when choosing a vacation booking.
Related: The Ultimate Guide To The Airbnb Investment Property
Be prepared to deal with damages and troublesome guests
It goes without saying that any investment property that is up for rent will face this risk. However, with Airbnb it is higher because of the short-term rental system that gives a higher turnover of guests per year. This can make your property more prone to damages and it would mean at some point you would have to deal with troublesome guests. It is vital to solve these issues in a way that wouldn’t damage your reviews and reputation by studying the legal aspects of damages and fining or kicking out guests.
An investment property is a way to boost your income, with Airbnb it has become easier. These challenges are some of the most basic and common troubles that most Airbnb owners face on a daily basis. Knowing these challenges and being prepared for them can act as a guideline to ensuring the quality of your investment.