When you think about selling....

[Laura2592]

We are exploring selling our cottage. The incident with the guest shooting animals on the property has really made us stop and consider if we want to keep dealing with the uncertainty of Airbnb. I just wanted to share a few things we are finding out:

1. Many realtors have no idea of what to make of an ABB property. We interviewed several. A few balked that our 2 bed 2 bath cottage "wasn't what families wanted" and gave us a very conservative estimate of values. Others have investors lined up who are looking for a turnkey ABB and wanting to tour before the place is on the market. Choose your realtor wisely. 
2. You have proof of income. The appraisal is always tricky if you have a unique space. But one thing ABB does is provide you with a proof of income statement that can be submitted to show the additional value your home generates. That will help.
3. Your bookings don't transfer. Many of you probably know that, but buyers may not. It needs to be really clear up front that they aren't just walking into your bookings. Likewise if a realtor has never sold ABB before they may not know that either. 
4. Turnkey may mean "furnishings included." In our case they can have everything. I have no desire to move furniture nor any place to put it. If we sell, we will offer it furnished for a particular price and unfurnished for a different price.
5. You have to plan. As you aren't allowed to cancel guests, you may have to have a plan in place months ahead to get your space listed. We pulled back our calendar and have been talking to agents for a late April/May time frame. Its super inconvenient as many want a listing right now. But if I ever want to do ABB again, I will need to handle it so as to not be punished.
6. Investment properties may carry capital gains taxes. In the US you have to live somewhere the last 2 out of 5 years to avoid them or roll the profit from the sale into another property identified within 90 days to avoid a hefty chunk given to the government. We are still mulling that over as we really don't want to jump from one ABB to another, and not sure if there are other types of real estate invest ments we want to get into at the moment. 
7.  Your place will already be staged! So that's the good news. Not much to do to get it ready for sale if its always ready for guests. 

I am still undecided, but if you are considering your options too I thought I might give you some food for thought. 

[Wende2]

@Laura2592...Hi....I too am looking to sell, same time frame.  I was going to offer my guests the same rates for the new location.  I'm selling for other reasons, a lot of changes going on in my tiny town and I don't like it.  They jacked up my sewer bill because I have 3 apts here, so instead of one bill for one grinder pump at $175.+, it's been $525.+ every quarter, which now is about the same as my property taxes.  A dollar general store is snooping around to build down the rd, and the hundreds of acres across the street was sold to a developer, yep it's time to get out. 

I can't get over what happened with you guys.  I'm really considering a different platform, just this evening I had a guy send an inquiry, name Z Daddy, he had one review, a very good one and his name is Josh.  I've had guests without a phone number or location where they're from on their profile.  I've only been with ABB going on 6 yrs Aug, and man have things changed, actually just a yr or 2 after I started.

Best of luck with whatever direction you go with the sale or not.

[Sammy-L-0]

Wait ... A guest was shooting animals on the property???

[Laura2592]

@Sammy-L-0yes. Left them in a pile in the yard, casings from a pellet gun all over the living room and porch and then complained in the review about curtains not giving him enough privacy (which oddly he removed. ) One can only wonder what he might do with more privacy....

[Annie1372]

@Laura2592 

3 years ago I rented a house for a month on ABB, the host was Kelly and the booking was done many months ahead.

We exchanged a few messages over these months. In the mean time, came along a co-host Luis, that did not engaged I the exchanges. One month prior to my stay, Kelly disappeared as the host and only Luis remained and now he was very responsive to all my questions.

then I learned that he had bought the place and he was the new owner.

in this way, he kept all the past comments, that were great, and did not have to go through the booking cancellation and rebooking. This makes perfect sence to me but i don’t know if the rules have changed since or if it is ‘ok’ as per the ABB rules.

I have been a guest for many years but a host for only a few months yet. Still learning a lot.

[Laura2592]

@Annie1372I think people do this. But its not allowed per TOU.

[Laura2592]

Talked to the realtor today. We have a free week on the calendar in early March for our own stay and maintenance. So we are listing that week. Will do an open house and take offers that Monday.  If it doesn't sell quickly, well, we can open the calendar back up. I will let you know how it goes. If anyone is interested in taking a look for their own investment purposes, send me a private message!

[Mark116]

@Laura2592 I'm sorry to hear you decided to sell, we had always a vague idea that we might spend a weekend at your cottage some time.  I would expect, given your proximity to DC and the current housing market, that you will do well.  Good luck.

[Laura2592]

@Mark116 thanks! You just never know what the market will hold. Interest rates will keep going up, and we have a dollar amount we need to sell it. We may get it. We may not. But the timing is right with listing/guests/our schedules. I hate to see it go. But it may not.  There is no risk in seeing what kind of interest is out there. 

[Laura2592]

Just thought I would update this as we learn about this process first hand. Some additional pros and cons to selling your ABB.

Pros:

1. Pictures are grabbable from your Airbnb listing. We have good quality, high resolution pics we took with a camera phone in our listing. Realtors often want a certain resolution and size. We were able to provide them with quite a few (particularly exterior shots as its quite icky looking with a late season snow fall) that went right into our listing. And the realtors hired a photographer anyway, so we were able to update the shots on our listing at no charge (with their permission.) If we don't sell, we have new interior photos!
2. Airbnbs are desirable at the moment. Lots of people are looking to get into hosting or expand their offerings. Most of the people who toured expressed that they wanted to use our space in the same way we had: as an investment. We have several years of proven success which reassures the next person they will be successful. Its less of a risk. 
3. Social media marketing. We have an Instagram account for our ABB. We got SO many hits, shares, likes etc when we posted the listing and tagged the realtor. If  you have already established an audience, you reach more interested people when you let them know your place is for sale. I was contacted by several former guests and local business owners who followed me before the listing even went up.

Cons:

1. Timing. Its a huge pain to coordinate the offering for sale between guests. You have to be really thoughtful. We took a week-- clean and stage Monday, pics/video taken Tuesday, finished pics sent Wednesday, listing up Thursday, tours Friday/Sat and open house Sunday. It was a tight turn around but we pulled it off. We have guests checking in today and the place is back to normal. We can't tour again while guests are there, so we put in an offer deadline. If your market is strong, this strategy may work. If we don't get a good offer, we will have to take another week off the calendar to allow more showings but can't do so until next month. Its certainly not a normal sales strategy.
2. Guests feeling uncomfortable. We don't want guests to have anything other than a great experience during their stay, so we did not allow signs nor the listing address to be disclosed while the space is occupied. We got a little push back from the realtor but we insisted. All we need is strangers lurking and knocking on doors to see if the place is for sale during a stay! Likewise we stowed all the marketing materials in our storage shed. 
3. Furnishings. We prefer to sell furnished, but anyone getting a mortgage will not be able to roll the additional cost of furniture into the financing. If we listed as a commercial property this would be easier. We did not, as our place is not specifically zoned as such and it does have appeal to people who would want it as a residence. So we are stilly toying with what to do with the furnishings if people don't want them/how to negotiate that if they do. 

[Laura2592]

Adding this as I find things out. I am not an attorney, accountant or intermediary so please check with your professional advisors before moving ahead with any of the below. Just sharing as I thought this was really interesting.

If you are in the US and own your property as an investment, you can do something called a 1031 Exchange to avoid capital gains taxes when you sell. I had a meeting with an exchange agent today and can share some info. 

1. You have to identify that you are doing this BEFORE you close on your sale. Planning is needed.
2. A third party (exchange agent) puts your proceeds in escrow after your sale. The proceeds can then be applied to a new investment property.
3. You have 45 days to identify and get under contract on up to 3 properties you are interested in as of the date of closing on your sale. 
4. You have 180 days to close on one (or more) of those properties after the closing date of your initial sale.
5. The exchange agent hands out the money. You never see it. They do not get involved with the deeds-- they work with the title company to close. 
6. If you change your mind or can't get under contract on any of your identified properties, it can take up to 180 days of your initial closing to get your money.
7. If you want to hold some money back from the profits you can, but you will want to talk to an accountant about whether or not that makes sense from a tax liability perspective (you get taxed on whatever you hold back.)
8. Exchange agents/qualified intermediaries charge for their services (mine quoted $1250 to give you an idea.)
9. You cannot put money from the sale of an investment property into another property you already own and avoid tax. 1031 only works on exchanging one investment for a new one.
10. If you reinvest the funds you need to do so at at least the amount of your tax basis (so let's say your property sold for 500K and you have depreciation of another 10K-- that is $510K. You would need to spend at least that on the new investment or lose the tax benefit.)
11. If you make a profit on your first exchange (let's say you make 100K) and then roll it into another property that loses money or sells at a loss, you are still (under current laws) liable for the taxes on the initial sale. 
12. This doesn't excuse you from capital gains, it just allows you to keep reinvesting your full profits. Eventually when  you cash out, you pay. And if you end up selling at a loss with no money to cash out over time, you still owe taxes. 

So it makes sense to do this if you have another property identified as an investment. But it does not make sense to buy an investment property in a panic just to avoid taxes.