6 Things to Consider When Buying Your First Airbnb Property!
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6 Things to Consider When Buying Your First Airbnb Property!


hello YouTube this is richard founder of
short-term rental secrets.com and Airbnb super host today’s video is what
you should think about when buying your first Airbnb home now obviously this
applies to all short-term rentals and different platforms like the RBO home
away booking com and so on but let’s get started let me just say you don’t have
to have the money or even the commitment to go out and buy a place to get started
on the Airbnb you can do with the sleeper sofa in your living room you can
do with the spare bedroom it doesn’t really matter but let’s just assume that
you’re having a lot of fun with it you’re making money you’re like the side
gig and you want to get more involved and you want to buy a rental property
here are the things that I look for proximity is really important you’re
going to be hands-on you’re going to be involved you’re going to want to make
sure that the maintenance and the care of the property is to your standards so
I think proximity is really important to where you currently live so by way of
example if you live in an urban area like Chicago I would recommend the very
first place to be in or around Chicago and the suburbs just so that you can
like drive there and take care of stuff but if you live in a more touristy area
it doesn’t have to be in your exact community I would probably pick a place
that’s within driving distance maybe 40 minutes or less maybe an hour or less
whatever you’re comfortable with but that gets that increased demand and is
going to generate more revenue so let me just say these are just suggestions you
don’t have to follow this script like line by line but we want to get your
first property successful and cash flowing so you have some money you’re
having real good time with it and maybe you want to get a second or third
property for me now that I’m doing my 15 year plan I’m intentionally looking for
some of the things that I’m advising against like I’m picking places that I
want to go to and the fact that it’s hard to get to is kind of cool but I’m
experienced and I have that infrastructure and it’s something that I
want to do as part of a portfolio but for your first one let’s just keep it
really simple let’s get some cash in your pocket and let’s grow and get the
second and third under way so let’s remember that in real estate location
location location is the only thing that you really care about so let’s try and
figure out where people are actually already going and why they’re going
there think about business reason think about travel and tourism amusement parks
the beach these are areas where people are already going and you just want to
capture some portion of it this isn’t the time for you to take like the best
home in an unknown neighborhood and try and get it discovered because your
very first rental property so you want to make sure that it’s cash flowing let
me give you an example if there’s a beach community that everybody goes to
and it’s you know called two hours outside of a city you want to try and
buy a home as close or within that beach community as possible
don’t pick a less expensive place like Midway and hope that other people see
the value and want to travel an hour to the beach try and get as close to the
beach as possible even if it’s smaller but you want to get in on the demand
that already exists as opposed to creating the demand the third thing I
want to talk about is perhaps a little bit scary to you but I want to reassure
you it shouldn’t be scary it should be embraced and it’s a critical part of
like thinking about where you’re going to buy your Airbnb property and that’s
the law now the law is constantly changing and it’s going to continue to
change but I believe firmly that over time the law is going to reflect the
greater good and the greater demand and Airbnb and short term rentals are here
to stay and becoming more and more important every single day and so while
the law might be scary think of it as your friend if you know what the law is
then you can actually embrace it and adhere to it and operate legally so it’s
a good thing now when you’re thinking about your property especially your very
first one you want to be really caught up to what the laws are I recommend you
use a Google search and just put air B&B laws in the name of your community or
the city or whatever and then to take it one step further go ahead and create a
Google Alert with that town and the same search
because it’ll give you updates every single day and buying a property isn’t
an overnight thing it could take you three months six months heck even a year
to be clear this isn’t illegal because we’re breaking a law and we’re bad
people or anything like that there’s a lot of constituencies that are worried
about it like the Hotel and Lodging people the taxation bureau what we see
happening is hosts are becoming better screening guests better less parties
less of those nightmare scenarios and then it really just becomes a financial
thing like how much taxes do you pay and how many nights can you do it and it
just needs to be some civility brought to it where it was the Wild West as
always happens in like disruption over time it transitions into a more normal
in common and the laws help do that and so you want to find a place where
there’s a lot of opportunity the laws already
being you know communicated and channeled and in fact one of the things
that I look for when I buy a property is do they collect taxes on Airbnb rentals
if they do that’s fantastic because the communities embraced it and they need it
for things like schools and road repair and so on so like that’s actually a net
benefit so the next thing I want to talk about is finances I understand that this
might be first and foremost in your consideration and it is in mine too but
I wanted to cover those other items first because I think they’re really
important but turning to finance look obviously you know what your finances
are you know what you can afford you know what’s prudent there’s all
sorts of online calculators to help you work through some of that but let’s just
talk about a few things to think about like price appreciation what’s happened
in the market or the prices you know really high if there are all-time highs
I personally don’t care so much about that because I’m not really making the
investment for price appreciation that’s a fringe benefit what I’m actually
making the investment for is more cash flow and the way to analyze that is how
much is it going to cost you what is your mortgage going to be and
then what sort of rental income can you anticipate and the best way to gauge
that is two things one take a look at Airbnb in the area how much do they
command and then apply some reasonable occupancy rate I would suggest somewhere
between sixty and eighty percent is what we see good hosts getting and make sure
that that’s you know seasonally adjusted and cyclical so for instance if it’s
just renting during the summer realize that you’re going to have nine months of
vacancy and that might not be a good idea try and find a place that rents
year-round try and find a place that rents at least two seasons maybe it’s
good for summer and winter like my place in Colorado but trying to take a look at
what it’s going to generate in terms of income and assume a sixty to eighty
percent occupancy rate and that’ll give you one idea the second way that I
approach it is take a look at contact a broker and ask them what a similar
property would rent for and let’s just assume it rents for $1,000 a month the
framework that I use generates about two to three times that long-term rental so
you can anticipate about two to three thousand dollars a month in rental
income using that example so another consideration is infrastructure you want
to make sure that property you’re buying has like services and conveniences
around it because while I said earlier that
you may be willing to drive an hour to go and check in on the place and so on
to get to that like beach community if that Beach community is really desolate
or only accessible by ferry or something that makes it really cool but really
challenging realize that it’s going to be really difficult for you to get maids
they’re plumbers there they may not be willing to travel an hour and if they
are willing to travel an hour it’s going to cost you a lot of money so my last
tip is really important it needs to fit into your lifestyle it needs to be part
of your vision in short it needs to be part of your why and so let me give you
a very personal example about 20 years or so ago I bought a real estate
property that I thought was really interesting from a financial perspective
I thought the neighborhood was up-and-coming it wasn’t exactly anywhere
that I would normally go to but it was close enough and so I looked at the
numbers and I made that investment decision and I I bought the property and
turns out I was right if I had held the property for 20 years I would have made
a lot of money in terms of appreciation but I couldn’t hold the property for 20
years because it didn’t fit my lifestyle it wasn’t where I wanted to go I was
never in the neighborhood and every time I went there it was a chore and it
became a job and it wasn’t you know it wasn’t conducive to what it was that I
wanted to be doing so instead if I taken that amount of money and bought
someplace that I you know happened to be near or around or I liked going to on
the weekends like let’s say I go there I do some work and then I go for a bike
ride or a walk then I would be still holding that property and I’d actually
make that appreciation more likely I’d own it outright and it would all be like
free cash flow which would be fantastic so it’s really important to understand
what your why is and make sure that it’s you know attributable to it so I want to
riff on this a little bit more because it’s super important I think it’s
helpful to everybody you really have to understand what it is that you’re doing
and why you’re doing it because that gives you the persistence and the
capability to like endure and persevere and so let’s just use this YouTube
channel as an example I really believe in Airbnb I really believe in my 15-year
plan it’s changing my life and I want to help other people and like change other
people’s lives so if I have some ability to give a little bit of tips and
education I love doing it and the feedback that we’re getting now is
really encouraging and rewarding and like that’s what keeps us going but by
way of example you know the first five months that we did this YouTube channel
we did 100 subscribers and those were dark and
lonely in quiet days and you sit there and say like what am i doing and why but
the reality of it is I believed in it so I kept doing it and then if you take a
look at the more recent results in just the last couple of months we’ve gone
from that zero to 100 five months to 100 to almost a thousand in what like two
months in two months and I think we’re just getting started right if you take a
look at some of the comments people are suggesting we should have 10,000
subscribers and I’m sure that’s to come but however long that takes is okay
because this fits my why if it didn’t I would have quit so this is really
general and not applicable to you specifically I’m sure you have tons of
questions and the good news is we have a community that’s filled with expertise
on our Facebook group so just come check out the Facebook group the link is in
the description below we’d love to have you over there please like the video if
you found it helpful leave comments and feedback but most importantly if you
haven’t subscribed to the channel do it Thanks so very much have a great day

66 Comments

  • Mosaicmaster 1

    great video as usual…I got lucky because i wasn't paying attention to none of that,i just wanted a roof over my head. but i am close to all the tourist spots in the east of the island.

  • HairBear

    Only a week in , My first guests have asked to double their stay from 5 days to 10 days. They love it so much! Its like you have read my mind with this video. Having so much fun, we are thinking about buying a second home already. (something on the same lake as our home, but directly across the water with a dock we could paddle to)

    I think we will hit 99% occupancy in our first month. We will have an easy time making 3X what a long term tenant might pay. Prices are slightly low, because we are still waiting for those 5 star reviews to roll in.

    Ps, Our dogs love the first guests, and i think the guests want to keep them (thats why they doubled their stay)

    I signed up for Beyond Pricing, however, its not available in my area? Whats with that?

  • The Traveling Together Journal

    Hi, liked and subbed. We feel ya on the slow channel growth. We have been driving from California to Panama. We thought we would find property in Panama we loved, but didn't. We are on our way back towards California now. We will look this winter into properties in Baja, but once again if we don't fall in love we might just try to find a "good Airbnb" area…if we can afford something in a "good Airbnb area". I found your channel as I'm going to try to learn more for the next few months.

  • Kent Jr

    Help and reply to my comment,can i talk to hotels and furnished apartments to get customers for them so i list their properties on airbnb and i add up the cost for a profit,so if someone books via bnb io book on the property website,can that workout.
    REPLY

  • Joel Gierbolini

    Keep up the videos! Love them all! Quick questions:

    Planning on buying a duplex in Orlando.10 miles away from Disney parks and downtown. I want to rent one part of the unit and Airbnb the other unit. What do you think about this strategy?

  • Kai Maxfield

    Yep, rural or out of the way is very expensive and difficult to build/repair. We have experienced that and so have my neighbors.

  • Bader Alaraimi

    Man your videos are amazingly beautiful and informative. I hope you Succeed in your future plan. Thank you so much

  • fighterflight

    Your content is great I think your channel will keep growing it’s exponential once you hit a stride but the first months are the hardest 👍

  • realsunjim

    Hello Str university, is it wiser to buy a luxury home first or a normal house at around 250k? I want to start the airbnb business with my sister. We are not sure whats the better route to start off

  • Kay Tay

    I book a place with a women who turned out being a hoarder and when I reported this Airbnb took out my commit. I have pictures that I posted to my facebook https://www.bing.com/search?q=hoarder&form=EDGEAR&qs=PF&cvid=f93669770ead41099715a0fc5991ae0d&cc=US&setlang=en-US&PC=HCTS

  • Kay Tay

    I HATE AIRBNB I think they take side to whomever is going to make the most money for them. Remember AIRBNB is owned by EXPEDIA WHO HAS A LOT MORE I BELIEVE HAS A LOT MORE MONEY THEN VRBO. Because all EXPEDIA OR AIRBNB truly care about is the bottom line.

  • Kay Tay

    Yes I own a 4000 square foot house and I have had people walk off with stuff like a boom box, towels. I have even had people charge a cover charge and AIRBNB said unless I lawyered up they really didn't see how it effected them. AIRBNB IS HORRIBLE TO HOST FOR. I use VRBO and am treated much better. AIRBNB gets a lot of booking. Personally I hate working with them. They like I say they treat there host like Walmart treats their competitors. VRBO has a much more personal touch as a host speaking.

  • Kay Tay

    Given Airbnb’s rapid growth, Expedia probably looked at building its own competing service but decided to use its war chest to acquire HomeAway instead.
    “We have long had our eyes on the fast growing ~$100 billion alternative accommodations space and have been building on our partnership with HomeAway, a global leader in vacation rentals, for two years,” said Dara Khosrowshahi, the CEO of Expedia in today’s announcement.

  • Kay Tay

    The company also owns a portfolio of other rental sites, including VRBO.com and VacationRental.com in the U.S., as well as similar sites in the UK, Germany, France, Spain, Brazil, Australia and New Zealand. It also operates BedandBreakfast.com.
    Today’s announcement puts Expedia, which owns sites like Hotels.com, Hotwire.com, Travelocity, Orbitz and Venera, in direct competition with Airbnb.

  • Kay Tay

    Expedia will buy each outstanding HomeAway share of common stock for $10.15 in cash and 0.2065 of a share of Expedia common stock. The transaction will likely close in the first quarter of 2016.
    HomeAway says it currently features more than a million paid vacation rental home listings in 190 countries on its site.

  • Kay Tay

    Expedia Inc. today announced that it has agreed to acquire the publicly traded vacation rental service HomeAway and its brands (including VRBO.com) for $3.9 billion in cash and Expedia common stock.
    The Austin, Texas-based HomeAway was founded back in 2005. The company raised a total of almost $505 million in five funding rounds before it went public in 2011.

  • Kay Tay

    This is from another host **Extenuating Circumstances, Unreasonable refunds! Airbnb just continues to take our money!** I totally agree and have doubled my prices on AIRBNB compared to what I have them listed for with VRBO and VRBO only charges a flat rate of $499 for a year. I think AIRBNB promotes scamming.

  • Prophit7

    You forgot to add to check if there are not too many Airbnbs and Vacation rentals in the area your looking at. You could invest in a property and all of sudden you have no renters and you are losing money! Its like the Uber drivers. They made great money at first but now there are so many that I hear them complain that they dont make that great of money anymore. They have to work hours and shifts they dont want to make it up. Their investment is a lot less.

  • zackdreamcast

    Great points, just a few things to add.

    Make sure to consider the ongoing fixed costs; utilities, cable, internet, Cleaning, amenities, taxes, etc. Check with all the service providers to know the costs to understand the cash flow. Huge error I made was the lack of understanding on the ongoing costs,

  • Ben Harper, Maui Real Estate

    Interested in Hawaii Air BnB opportunites? Check my channel for inventory and information on Hawaii vacation rentals!

  • Chuck Ball

    You have really good suggestions. Could you address house keeping services ? (Maybe you have, I have only recently subscribed)

  • Ali Hassaan

    Hello Richard,

    Very informational videos. What would be your opinion on hiring a property manager if I want someone to manage the property to deal with airbnb customers. I want to buy a property somewhere else where airbnb is used a lot but I cant be there physically all time. So I was wondering if there are people who can work like a property manager for airbnb.

  • Pentru Barbati

    Hello one question how do you manage your property listing on multiple sites you know to not have a booking on same date from 2-3 sites like booking and airbnb Regards and thanks

  • Jerry Jenkins

    We have ALL heard.."Location, Location, Location" But has anyone EVER explained WHY you say it 3 times??? First "Location" is for STATE LAWS, every state has different State Laws as to how property is transferred, taxed, and regulated. Some states east of the Mississippi use Attorneys to represent each side while west of the Mississippi Title Companies act to close the transaction. Also state property tax varies greatly between states and this is another cost to factor in to the cost of owning a property. Next "Location" is for you city or metro area; think NY where "tenant rights" can cause a landlord to fight for 23 YEARS to evict a tenant for non-payment versus Nevada where you can evict in 15 days. Ever hear about a California Airbnb nightmare when the guest booked for 31 days and then fell under tenant regulations and it took the Host over 6 months to evict? Zoning is another factor that might be controlled by your county or city as well as long property taxes. The last "Location" is for the community that the property is in… is there an HOA? Are there rental restrictions? Is the property located on a busy street, backing a cemetery or a national park? ALL of these factors from the state level, to the county, to the community MUST be considered when buying ANY property for ANY purpose because it will effect the cost to purchase, the cost of ownership, the ability to use the property for the intended purpose.

  • Wesley Trammel

    Could you help me get my first property subleased? I don't have the funds or credit to purchase my first property and therefore need to find an owner who would work with me.

  • M Khan

    Use my code to get $40 0ff 0n your 1st booking. you can share with other people to use and get the same discount.https://www.airbnb.com/c/shahbazf?currency=USD

  • angelo bonavera

    Airbnb is disruption and the wild west, but local government isn't crony and collusive? Sounds a bit biased.

  • MARLO TREE

    This just in from South Africa…..https://businesstech.co.za/news/business/312922/crazy-airbnb-regulations-show-that-government-just-doesnt-understand-business-fmf/

  • Kevin Smith - "KevCo" Realtor in Southern California - Family, Friends, Healthy & Active Lifestyle

    These are tricky but we have APPROVED STLU (Short Term Lodging Unit) ZONES in San Clemente California and surrounding towns.

  • Live Let Thrive

    You hit the nail on the head when referring to cities that Airbnb pays taxes to the city. That is actually the determining factor if I will buy an Airbnb property. There have been many cities that have shutdown STR’s but so far only one city has shut down Airbnb rentals where Airbnb pays the city taxes.

  • Matt Faraday

    Just a quick one, do you have or know someone who has an AirBnB outside the US ? I'm considering one in Spain because we want a vacation beach property.

  • Tararita Vaughn

    Hi, I have successfully set up and run my AIRBNB using this channel. Now I want to sell a compound of 3 houses that have 12 to 15 beds. What is the best strategy to market and sell this business? Thanks, Tararita

  • Indulge BeSpoke Private Chefs Inc.

    Very informative video! Can you please make a video on how to approach landlords to permit me to use there place for short term rental? Thank you!!

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