How to Invest in an Airbnb From Out of State

Invest in an Airbnb From 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

When thinking about short-term rentals and Airbnb, people usually jump to thinking about great vacation destinations. While this is true, there is a huge demand for vacation destinations and excellent properties in those locations.

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.

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

You can do Maintainance similarly to finding cleaners. You will want to have someone or a companies number you can call for several maintenance tasks that can arise at your property.

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