Air BnB Strategy-Part 3

by | Jul 21, 2022

Three Basic Strategies:
  1. Own the property and lease to an operator
  2. Own the property and operate the Air BnB Business
  3. Be a private lender, equity partner, profit share or a combination of these.
Keys to Success:
  1. Location = Country, State/Province, Town, Neighborhood
  2. Target Demographic = destination travelers (vacationers) and business travelers or both.
  3. Marketing = website, Face book, Air BnB, Expedia, VRBO
  4. Air BnB aggregate income greater than traditional rents
  5. Zoning/Occupancy
  6. Systems
Important Factors:
  1. Subject properties should be in an area that is attractive to vacation and business travelers.
  2. Property will need to be or made to be ADA compliant with wide doors.
  3. Need to verify with zoning and occupancy for short term tenancy.
  4. Make it NICE!!! The nicer the better. The more amenities the better!
  5. The need is now. Air BnB owners have been sweating it out!
  6. 2X or more rental income
  7. Short term lease – more favorable eviction rules
Inventory of properties whose owners need to or want to sell. Owners who are advertising property for rent.
Here is the basic strategy. For example:
Assume a $500,000.00 purchase price.
20% down payment of $100,000.00
Finance $400,000.00
Average rent per room is $150.00 per room.
Four Bedroom Home and two + bathrooms.
Monthly Income is $18,000.00 per month
Monthly expenses is $4,000.00 per month
Net income is $14,000.00 per month
Less Debt Service of $4,000.00 per month
Net profit is $10,000.00 per month.
If the going rent for the same house is $2,000.00 per month the net increase in profit is $6,000.00 per month with the Air BnB strategy. Furthermore, with a traditional Rental strategy the investor would have to put a lot more money down to have net positive income.

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