Investing Your Home on Airbnb

by Steve Shwetz | Mar 10, 2016 | Investing

What is Airbnb?

Airbnb is a room-letting website that allows homeowners to post their accommodations for a price for the use of travelers and tourism. For instance, you may have a bedroom free in your house and would like to rent it out but not to long-time guests. By placing the vacancy on Airbnb you could possibly have short time renters on vacation coming to stay at your house for your listed fee from anywhere as short as a day to a week or two.

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But is this actually profitable? Looking at the numbers, and the hype about the new sensation, many would say absolutely. Despite being only seven years old, Airbnb can claim 1.5 million listing in 34,000 cities and over 190 countries, and it is estimated to be worth around $20 billion. By those numbers, investing in Airbnb would be highly profitable; however, there are some factors one should look into before listing.

Is Airbnb Right for Me?

For one, where do you live? If you own property or rentals in the Los Angeles area then Airbnb would be a good investment. LA is an area of high tourism so rentals there would be more likely to see a quick exchange of rentals. The same can be said for Long Beach as it has a good amount of tourist traffic and will likely get a spike in profit during the summer months. Areas like Palm Springs, however, are less likely to keep a steady occupancy rating.

Investing Your Home on Airbnb

Simply put, there aren't as many interesting things happening in less commercially recognized cities as there would be in “hyped up towns” like LA or Long Beach. In short, the best places to have an Airbnb property investment would be in locations were tourists flock to because of cultural hot spots. In fact, most people seeking shelter through Airbnb are “foreign” explorers looking for a cultural taste of the city they are discovering.

If you are looking into investing through Airbnb, then there are some key things to keep in mind. Areas with high tourism get higher occupancy rates; however, those areas tend to be very expensive in the housing market. Before you invest in the rental, make sure you can balance between property cost and rental profit. Depending on the location of your Airbnb listing, you may want to debate the merit of a two-bedroom vs private room rental. In general, you should know the Airbnb hotspots in your state.

The Future of Airbnb

If you can’t invest in Airbnb at the moment, it is still wise to keep an eye on the horizon, as it could still be a profit in the future, especially since Airbnb is showing promise for even more growth. Currently, Airbnb is pushing further into the Chinese and business travel market and it doesn’t show signs of slowing its growth or popularity.

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