Successful Airbnb Ventures
The success of an Airbnb depends on good reviews from your guests. It’s vitally important that you know how to market your property - incorporate a photo gallery staging your property at its best, ensure your guest’s experience with a welcoming gift basket, tasteful décor, state of the art bath and linens, soaps, candles, and accessories.
Just because the Airbnb platform generates so much money, you’ll still have to put in a serious effort in terms of market research to cash in on these opportunities.
Investors do their research before delving into an Airbnb loan. Every city is different. What may be feasible in one location may not be in another. The regulatory landscape varies greatly from city to city. For example, regulations with the amount of time spent renting it out without being physically at the property. You will need to check into your mortgage company regarding subletting. Do not overlook any possible stipulations with homeowner’s insurance.
Expenses to Factor in Your Strategy When Pursuing an Airbnb Loan
Investors incorporate costs associated with short periods of declined renting. If you have a pool, you will need a pool service. Other costs to consider are cleaning, landscaping, utility bills, and repairs. Also factor in the 3% service fee for Airbnb.
When Looking at Hot Locations, Evaluate Individual Neighborhoods
Locations where tourism is thriving, such as Orlando, are excellent areas to invest in Airbnb properties.
You can find plenty of information on which cities feature the highest growth rates for Airbnb rentals. However, finding the right city isn’t enough. You still need to evaluate the individual neighborhoods for the best results.
One of the biggest things to watch out for are homeowner associations. An HOA can impose restrictions that can ruin a property’s potential as a profitable Airbnb. HOAs have been known to clash with Airbnb owners in costly legal battles. In the long run, it’s best to avoid these problems altogether and buy-in neighborhoods that aren’t governed by HOA rules.
The Condition of the Property
When considering any property for potential as an Airbnb, you have to keep track of how costly upkeep and repairs are going to be. For example, if the property has a great location but comes with substantial structural concerns, you’ll have to weigh out the risks. For the most part, taking on properties in dire need of remodeling and repair is not profitable.
Anything involving mold, electrical, structural, or plumbing problems should be carefully evaluated and potentially avoided. If you buy a property known to have these issues and finance it with an Airbnb loan, you can end up losing too much money on repairs.
However, some fiver-uppers can bring in a tidy profit. The trick is to find the sweet-spot between potential and expense.
Deciding on How to Finance the Property
Once you’ve determined which property to acquire for your Airbnb investment, it’s time to make a decision on financing. Figuring out how to finance the investment is one of the most crucial decisions you’ll have to make.
While there are plenty of options out there, you’ll want to stay away from banks. Both banks and credit unions generally avoid extending financing to a speculative real-estate investment like Airbnb rental properties.
Part of the reason why banks and credit unions are so stingy when it comes to Airbnb properties is that they are subject to strict financial regulations. Another reason is that banks just don’t like the extra risk associated with rentals.
Blanket Mortgages and Stated Income Loans
There are two major financial tools available to you as a real estate investor looking to finance an Airbnb property. First, blanket mortgages are specially designed loans that combine the financing for multiple rental properties into one low payment.
As such, blanket mortgages are perfect for ambitious income property investors looking to grow an empire on rentals like Airbnb units.
Stated income loans are another great choice and help skirt restrictions imposed by the banks. Direct money lenders often provide borrowers with the option of stated income loans. The most significant advantage of these loans is that you don’t need to show your tax returns to qualify.
Since direct money lenders are comfortable taking on more risk and are not inhibited by the same regulations as banks, you can easily finance an Airbnb property using a stated income loan.
Found the Perfect Spot? Buy it, with Rental Home Financing
Once you’ve found the perfect property for your Airbnb you’ll need to partner with a lender you can trust to finance the acquisition. With an Airbnb loan from Rental Home Financing, you can buy choice properties for converting into Airbnb rentals and start turning a profit.
Have a chat with Rental Home Financing and make your Airbnb investment a well-funded success!