Should You Invest in an Airbnb Property?

Should you invest in an Airbnb property? There are three things you should know if you are considering this move.

Is Airbnb a good investment?

There are a lot of people researching this new investment opportunity. We have one person beta-testing a property in D.C. and another in northern Virginia strictly as Airbnb rentals, so I’ll be able to give your more specific information about those investments in the next few months and tell you if that provides a good cash flow.

For now, there are three things you should know if you are considering an Airbnb investment property:

1. Location and zoning. Make sure that your Homeowners Association allows short-term rentals. If you have a condo in D.C.,  Maryland, or Virginia, most bylaws do not allow short-term rentals. In fact, you have to have a lease of at least six to 12 months if you have a condo; you cannot do anything similar to a hotel rental.

That said, there are a lot of people who do use their condos as Airbnb rentals because they understand that the city does not have the manpower to enforce those laws.

I do not recommend going that route. You can definitely find townhomes or single-family homes that you can invest in without breaking any laws and still run a very successful Airbnb.

Ultimately, the most important thing is to understand the area laws and know what you should or should not be doing.

2. Decide if you want to hire a professional management company that specializes in Airbnb rentals. The company will provide a turnkey operation; you don’t have to do anything. They can take care of you and you will get a deposit every month, so it is a good way to make a profit. You can also manage the property yourself if you have enough time on your hands.

Make sure that you know the laws regarding short-term rentals in your area.

3. Have an exit strategy. I always recommend that you have an exit strategy for your investment properties. The first exit strategy would be selling the property. If you decide that the Airbnb property isn’t working for you six months after buying it, you need to know what kind of haircut you will have to get if you decide to sell.

Remember, with relocation taxes, closing costs, and broker fees, you will need to spend money to sell the home. You need to make sure that you can sell in six months without losing money on your investment.

The other option is to turn your Airbnb property into a long-term rental. Get a tenant in for 12 to 24 months so that you can create a positive cash flow without losing any money.

As I mentioned earlier, I will have some more details for you on Airbnb investment properties in the next few months. If you have any other questions in the meantime, please don’t hesitate to reach out to me. I would be happy to help you!