So, you’re ready to start making the big bucks? Trying to find out if the AirBnB market is your ticket to the big leagues? That’s AWESOME! Just make sure that you know what you’re doing first so that the opportunity of a lifetime doesn’t end up biting you in the butt and sending you back to square one. Buying your first AirBnB property is exciting, but it can be complicated, too, so here are a few things to make sure of before you sign on the dotted line. After all, you want to make sure that the investment you’re so excited in doesn’t have some important element that you’re overlooking.

Make sure that short-term rentals are allowed.

The first thing to check when you’re considering purchasing a property is always whether or not it can be rented. The first place to check is always any neighborhood covenants that might be in place, so be sure to get a copy of these before going under contract or letting yourself get past due diligence. Most neighborhoods do have restrictions on the amount of houses that can be rented at any given time. Unless the property you are purchasing has been grandfathered into that quota, many times that quota has already been met, and you never want to end up with a useless property on your hands. Even beyond checking neighborhood requirements and limits, however, if you are planning on using a property as a short-term rental, you should also check the city and county ordinances to make sure that there are no strange restrictions in place. After all, as short term vacation rentals have become more popular, there is more and more legislation in place about how many there can be and even how many a particular LLC can hold at a given time. Long story short—make sure that you’re educated about what you can and can’t do with a property before investing anything significant into it. 

Buy the home furnished or have room in your budget to furnish it.

Not every seller has great taste, but if you think the home has some great pieces already in it that the seller would be willing to leave behind (think mattresses, bedframes, couches, curtains, etc.), make sure to try to work that into a contract. One of the biggest time sucks of getting a short-term rental going is preparing it for the rental market, so the more “move-in ready” you can purchase it, the better. Otherwise, you may spend a month just trying to get it furnished and miss out on prime booking time. 

Investigate the home's previous rental history (if it has one)

Some home are obvious rentals (think rustic but chique cabins in the wood or river front homes), so if the home has been rented before, it’s always a good idea to ask how that rental history has gone so that you can get a baseline for how much you can expect to make per year and evaluate if there are any marketing elements where the previous owner has fallen short. If the history is terrible, you may be able to turn it around, but if you can’t think of anything additional you would be doing and the history won’t reach the profit margin you need, you may want to take that as a warning sign that there’s not quite the demand for this short term rental that you were hoping for. 

Determine your nightly rate potential.

Any time that you are considering making an investment in real estate, whether that is a personal purchase, a fix and flip, or a rental, you will always want to make sure that you’re paying the right amount by running comps on the area. Basically what this means is finding nearby properties being used for the same purpose and which are extremely similar to your subject property in order to discover what you should expect as your profit margin. When applying this logic to short-term rentals, you will want to find other homes nearby that are being used for the same purpose and see what their pricing looks like so that you can price your own correctly in order to generate the amount of traffic you need. 

Evaluate your competition.

While this tip ties in with the last one, it is so important that we still want to make it extremely clear.  There are two different strategies when purchasing a short-term rental: Buy where there is already a heavily established short-term rental need or purchase where that need is not yet being filled. In the case of the first one (think lake front opportunities or mountain homes in luxury neighborhoods with interesting amenities and no HOA regulations on short term rentals), you will need to be extremely thoughtful about what is going to set your rental apart and who you can attract that the others can’t. Don’t have something that sets you apart? No incredible view or lake access, hot tub, stables next door? Your differentiating factor may have to be nightly rate or some sort of unique theme that you add post-purchase that will attract a niche group of people. Regardless, be sure to understand your competition forwards and backwards so you don’t find yourself getting squeezed out of an ever-growing market. In the event that you fall into the second camp, however (no short term rentals around), your first piece of advice is to ensure that there isn’t a reason for this that you’re missing. Is there actually a market for short-term rentals here, or are you just getting fooled by a potentially easy buy? What would make people travel and pay the rate you need to stay at your home, and how do you create that both in the experience once they arrive or tell that story through your marketing?

Have more questions about short-term rentals and if purchasing one might be a good fit for you? Reach out to us today by sending a text or calling (678) 242-9981. You can also reach out to us by clicking on the messenger icon on the bottom right of your screen to send us a direct message. We can’t wait to hear from you and help you get started on your journey to short-term rental ownership. The time is now to start growing your portfolio!