Realistic return on investment

[Pedro1814]

Hi, I am thinking of hosting on Airbnb. I wanted to know if the ROI I hear about are realistic? Can anyone share their experience with me? Thanks!

[Helen3]

Do a profit and loss budget with an estimate of your charge out rates and number of days your market research has shown you are likely to let out each year..

this will give you your likely net profit @Pedro1814 

where did you hear about an 'ROI'

[Pedro1814]

Hi Helen,

I bumped into Brian Page's bnb course and was wondering if all the hype is true. He's boasting about people making 2x to 3x the rent if using subleasing. ROI is what I'm using to gauge my investments. Do you feel those figures are accurate? 

[Helen3]

As already explained to you @Pedro1814 no- one can answer that question for you as your ROI is based on multiple  factors .

the only way to estimate your ROI is as I've mentioned above is  doing your market research and putting together a profit and loss budget for a particular property.

sadly there are lots of so called STR experts who will tell naive investors want they want to hear in order to sell their courses/books 

as Mike pointed out many markets are oversaturated with falling demand so it would be true to say some investors are making a loss rather an achieving any ROI.

[Mike-And-Jane0]

@Pedro1814 The market is saturated at present and when added to the fact that guests have less money I would be amazed if the ROI claims are true.

As @Helen3 says - Do your research, buy data from Airdna or a similar company for revenues, estimate your costs and see what ROI it gives. 

[Pedro1814]

Thank you for the info.

[Fred13]

@Pedro1814  Tricky question. For starters, presently the POI of STRs probably happens to be a bit suppressed by the present economic atmosphere (leading to not enough bookings). Setting that aside since in all likelihood is temporary, albeit its duration is hard to guesstimate...

If its not rented at least 50% of the time at a 50% profit per stay, I wouldn't do it, since it is a lot of work (beyond its risk). As a very general rule....

We shoot (and pray) for 100% (charge) - 25% (running it + improvements) - 25% personal living = 50% profit).

Then there are taxes, but that highly depends on where you have chosen to live. Then there is luck.

[Pedro1814]

Thank you for the info @Fred13 . Have you had bookings 50% of the time in a month?

[Fred13]

@Pedro1814 We have never been not booked less than 100% for 8 years, thanks to - Airbnb (70%) and Direct (30%). For the first time in this Fall we will not be fully booked as usual and honestly we welcome it; time for a 'forced' break.

P.S. We are headed to England/Norway/Iceland in September and the South Pole in March. We won't miss the guests. 😎

[Pedro1814]

Wow, that's amazing. If you don't mind me knowing, can you share in which type of area is your unit located? For example, near a beach, city, country side, etc... Thanks in advance.

[Helen3]

@Fred13  Is in a unique  position check his listing . You can't expect those sort of occupancy rates doing arbitrage in what is likely to be an oversaturated market .

[Fred13]

@Helen3  & @Mike-And-Jane0 We ourselves honestly have yet to fully understand why it has done so well. Why would people undergo such an arduous journey (at least two flights) to come to a place so radically different than what they are used to for a mere 4-5 day expensive stint, after being in their bucket list for years and then be so consistently thrilled they finally did come? We ourselves have no answer.

[Helen3]

@Fred13  Who wouldn't want to go and stay on a private island in such a lovely setting . It's a dream holiday for many and of course you're a fab host.

long May it continue you deserve every success 🙂 

[Pedro1814]

Hi Helen3,

Just looked at his listing. Purely amazing!

[Mike-And-Jane0]

@Pedro1814 As @Helen3 says the listing that @Fred13 has is unique. Strangely it is neither near a beach, a city or in countryside. In fact you have to wonder why it books so well.

If you click on @Fred13 's profile picture and go to his profile you can see his listing for yourself.