Advice on opening first Airbnb

[Rebekah70]

Hi all, I am looking into possibly opening an Airbnb but I wanted to see if anyone had feedback on what exactly makes a successful Airbnb and if my idea seems like a good one. Here is what I would offer:

A private, tiny, 1 bed/bath home across the road from the Neuse River in North Carolina. The guests would have access to the water and the beach. I would supply kayaks and bikes to ride into town. The tiny house would be about 5 minutes outside of town, a 15 minute bike ride. The town is small but is a sailing/boating town and is fun to walk around and shop. The views are incredible. 

This would be about a $50,000 investment. I have the money and land but do not want to waste it. What do you all think? Is it worth it? I love the idea of hosting and preparing a nice vacation home for someone, I would really love to do this but again, don't want to waste money! I can answer any questions you might have. Thanks in advance!

[Pete69]

$50,000 investment!!!!! That is just plain cost prohibitive. It would take an eternity to recoup that. Airbnb is great for people who ALREADY have the space. I pause just when thinking about the cost of furniture, bedding, etc.

Have you researched the supply and demand situation in your location? Some areas like Hollywood, CA are booming, while others are kinda dead.

Also you have the cloud over your head of government taxing, restricting and possibly banning Airbnb in your area. They did it in LA. If it's not your primary residence, then you cannot Airbnb it.

[Rebekah70]

Very true and good points! What Ihave found for tiny homes is that they really range in prices. The ones I am looking at come furnished and everything and usually ar $30-40k. The extra 10k is room for calcualtion error/getting it started. I realize that it works best for people who already have a space but I have read and heard a lot about hosts who simply buy to rent out. My husband and I are looking at investing in long term rentals but are also interested in this short term idea.

The area is somewhat hard to research since there are not many other rentals like this and it is a small town. This would be a very unique location too since it includes beach access and a private space. The other rentals in the area are in the home. It is not in town so would not follow the same rules.  

Right now the area is fine for renting. This would also act as our second home, a place to go on vacation. Not just an investment. 🙂 We would not be able to do it without it paying us back somehow though, which is why we are looking at renting it out. 

Thanks for your advice!

[Pete69]

Investing? Ever heard of stock and bond index funds like ticker symbols SPY and AGG? Or if you love paying higher taxes on real estate then ticker symbol VNQ? Best of all there's no cleaning, no work, no nothing to do.

[Rebekah70]

Haha trust me I have. The return on long term rentals are much better and more reliable than most other investments(i.e. stocks). I am currently looking into short term rentals and trying to gather infomation on that to see if it would be an even better investment. However, you being from California and I from North Carolina, we are playing totally different ballgames when it comes to taxes and such. 🙂 Good luck with your investments! 

[Mark1412]

How often do you expect to have the house rented?

From what I have found is a lot of our requests are for families. How many people will the house hold? Remember the more people the harder it is on the house.

The streets are not paved with gold, it can take work keeping the property maintained. You are dealing with the public which can always be a challenge. You will have to manage the property, often times it is not as easy as handing over the keys and getting paid (it can be that way at times but don't expect it all the time).

Look at your overhead. Insurance might be a major issue. Your insurance company might not be happy with you providing kayaks. Find an insurance company that will work with you and get all the numbers from them. Check with your local zoning laws and make sure short term rentals are okay in your community.

If it turns out you are not renting the property as often as you like, or it becomes a meth lab or party central, and you wish to move on, could you rent the property to a long term tenant (year round)? Could you sell the property and make a profit? It is nice to have a plan "B".

It sounds like you might be on to something but you are wise to make sure you have as much information as possible. Good Luck.

[Rebekah70]

That is a good question. I would hope that it would be rented out about every other week, if not more.

That is interesting that you have a lot of requests for families, I hadn't thought too much into that issue. This would be a "tiny house" ideally for a couple getaway. If successful, I would poteWhat issues have you seen come up in your experience that cause the rental to be more than "hand over the keys?"

Good points about overhead and plan B. I do need to do more research on insurance. I do know that under current law, I would be fine to rent out the place. My plan B is that since this will be a "tiny home" it will be resellable. If/when we sell it, we could sell the land or put a larger home on top just for us. 

I am very much in the info gathering stage and will not be taking any major steps for a few months! Thank you for your advice!

[Jackie378]

I built my Airbnb as a long term rental property, but when it was finished I didn’t like any of the prospective tenants. I was being picking because it’s across the road from me, so I thought I would give Airbnb a try. I invested 24k to build, landscape and furnish it. I don’t think it’s too ridiculous of an idea to build something for rental purposes, provided there is a plan B. 

[Jackie378]

It sound very similar to what I did. Plot of land across the road sitting unused, now I have a small rental unit there, worse comes to worse, I rent it long term.

[Mark116]

@Rebekah70   You would want to be sure that you could rent the property w/regular tenants and still recoup your investment, because the future of airbnb, especially units that are not owner occupied or adjacent, is somewhat uncertain.  Many hosts built nice little incomes only to have the local government one day, at random, completely obliterate the short term rental option.  So, if you couldn't either resell at a profit or make money on the house as a regular rental, I'd be hesitant to take such a step solely for airbnb. 

[Sarah977]

@Rebekah70  "What issues have you seen come up in your experience that cause the rental to be more than "hand over the keys?"

I would suggest you spend a week or so reading posts on this forum for an overview of the endless issues that come up. You wouldn't believe it unless you read it yourself, because it's unbelievable what some hosts have found themselves having to deal with. 

Thinking that handing over the keys is what being an Airbnb host is about is pretty naive.

You can't think about buying a place to Airbnb as being something that is going to reimburse you for the investment within any reasonable amount of time. If it's a place you would like to use yourself as a vacation home, great - Airbnbing it could conceivably pay the mortgage and upkeep and improvements, maybe even provide you with enough extra income to take a vacation you otherwise might not be able to afford. But I don't think you're going to be able to quit your day job renting out a tiny house for 2 people.

And if you don't live nearby, which it sounds like you don't, as you mention using it yourself as a vacation home, you'll have the added expenses of a co-host and a cleaner.