How to Invest in an Airbnb From Out of State

There are plenty of reasons to think about investing in a short-term rental property out of state.

You may have been considering buying rental properties and then started seeing the comparison of long-term vs. short-term rentals. Maybe you were thinking about buying a home you would like to retire into and can’t imagine how expensive they will be by then.

Local Vs. Out of State

A much better reason is for the economics of it. If you are in an  area where housing is in high demand and prices are in high demand, but  the short-term rental outlook is average, it will be hard to make money  there. When investing out of state, you get to cherry-pick markets that  fit your criteria.

How to Select a Market

From a purely financial perspective, you will want to choose a market  with strong rental demand, low demand for property, and good prospects  for property price and rental demand growth. Unfortunately, these factors are usually at odds with each other, so it  will be a balancing act to figure out which factors have the most weight  for you personally.

Airbnb Expenses

Here are the main expense categories: – Mortgage – Property Taxes – Utilities – Insurance – Cleaning – Maintainance – Furniture – Linens

Airbnb Revenue

There is a rule of thumb that a good Airbnb should make 3x the long-term  rental rate. You can find an estimate for the monthly rent on Zillow or  Rentometer. If you find your estimates to be too far off of this  metric, you better have a reasonable justification for it.

The Revenue Calculation

Short term revenue boils down to this equation: Revenue = ADR (Average Daily Rate) X Occupancy The challenge comes to determining what both of these are. First, you can scope out some competition by watching how their calendars fill up and how much they charge. Next, you can use Airbnb to see what other competitive units are getting.

Main Tasks For Managing an Airbnb Listing

– Responding to inquiries – Cleaning – Maintainance Let’s look into each of these further to see what can be done to automate these tasks and achieve them from out of state.

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