Who doesn’t dream of becoming a real estate tycoon or at least a successful real estate investor? If this is one of your goals, you’ve probably looked into flipping homes, which is the process of purchasing, upgrading, and then reselling a home at a profit. But, you can make even more in many areas by flipping houses into Airbnbs.
Airbnb is a well-known online platform that is an alternative to conventional hotels. People rent out entire homes (or condos) for their vacation stays because they come with amenities like full kitchens, backyards, and pools.
Why Invest in Airbnbs?
Depending on the conditions in your real estate market, flipping homes may not always be profitable. The last thing you want to do is purchase a home and end up stuck with negative equity. If you do your homework, this is unlikely. But it does happen. Also, long-term rentals can be problematic when dealing with tenant issues and potential evictions.
Airbnb guests prepay for their entire stay when they book the property. And, if they do cause any property damage, you can charge them to recoup your losses. The rates Airbnbs charge per night are much higher than a landlord would receive on a long-term rental, making these an attractive investment.
5 Tips for Flipping Houses Into Airbnbs
If you want to begin flipping houses into Airbnbs, it’s important to understand this market. Here are some tips to make your experience a success:
1. Stay in Many Airbnbs
Investing in something you don’t understand can be challenging. Before you dive into flipping homes into short-term rentals, stay in as many Airbnbs as possible to understand them from a customer’s perspective. This exercise can help you see how to replicate what works and improve on what you don’t like about the experience.
2. Learn About the Fees & Rules
Similar to other property purchases, you’re going to have to pay some fees. These include insurance, property taxes, and maintenance costs. Airbnb also takes a 3% cut of your earnings. Beyond these fees, make sure you investigate whether your local city, town, county, or community has any rules that prohibit short-term rentals.
3. Find the Right Property
Before you invest in an Airbnb property, make sure you are choosing one in the right location with the right features. Is it close to amenities or a popular attraction? Are other Airbnbs in the area commonly sold out or vacant? What are the typical nightly rents?
4. Don’t Spend Too Much on Upgrades
Since your goal will be to break even on your purchase as quickly as possible, you should be strategic about your upgrades. Consider what will add value in terms of short-term renters. You probably don’t need granite countertops, but you will need televisions, working A/C, and an outdoor barbecue grill.
5. Run Your Property Like a Business
Once you launch your new listing on the Airbnb platform, make sure it has a thorough description accompanied by high-quality photos. List clear check-in and check-out times for your guests as well as any rules to avoid confusion. If you don’t plan on handling it yourself, consider contracting with a professional property manager or cleaning company to manage your property. And don’t forget to ask guests for feedback after their stay.
Learn More About Financing Options for Your Real Estate Investments
If you’d like to start investing in real estate by flipping houses into Airbnbs, CAB Capital would be happy to start a conversation about how we can help. A conventional bank loan might work for your situation, but there are many other funding options for real estate investors that provide financing up to 100%.
We offer clients financing solutions that are flexible and fast. With access to over 150 products from over 67 different lenders, we can help find a solution to meet your needs. Contact us today to learn more and get your questions answered.