🤷🏻‍♂️ Should you buy an Airbnb?

After nearly 10 years hosting on Airbnb and 1,000+ 5 star reviews, we left the platform and Short Term Rental (STR) market last year. ✌🏼

Before I tell you why we left, here’s how we started.

Before we knew each other, Lex and I both became super hosts with our personal homes back when Airbnb was “weird.”

She was FLOORED to learn I was a super host in one of our early dates, mostly because my little bachelor pad at the time left a lot to be desired … thankfully, it was all about the hospitality back then and not so much the design. 😄

Within the first year of marriage, we invested in 3 more homes and went all in on Airbnb.

It was a great source of cash flow and became Lex’s part-time job (perfect for a soon to be stay-at-home mom).

We truly cherished the opportunity to host people from all over and help create special memories for them in our beloved Chattanooga.

As of last Fall, we had fully converted each of these over to Long Term, traditional rentals. The rationale:

1) AIRBNB BECAME LESS HOST FRIENDLY.

The early days of Airbnb felt like a special community – and as hosts, you always felt like Airbnb had your back.

Over the years, Airbnb tilted away from long time hosts. They took money out of our pockets with a few unconscionable, trust-breaking decisions.

2) THE ECONOMICS CHANGED.

For one thing, cleaning fees got silly. 🧼 😬

The market rate for cleans on our homes literally tripled since we started Airbnb.

It squeezed margins and made it more expensive than certain quality hotels if someone was only staying for 2 or 3 nights (the average stay for us).

Also, the market got saturated over the years with more supply coming on line.

On top of this, our trusted boots on the ground retired – this was the 🐪 back-breaking straw. And by this point, Lex had enough.

We were still making a healthy bit more than a traditional long term rental would, but the margin was slimming compared to the glory days… and just wasn’t justifying the additional headache anymore.

IF you’re considering a STR:

1) Understand the ”Second Home Owner -to- Pure Investor Continuum.” 📏

A vacation home you enjoy with your family and rent when you’re not there is VERY different than an investor purely seeking return.

The closer you are to the second home end of the spectrum, the easier it is to find STR deals that make sense.

2) Make sure it’s the right product in the right market. ✅

If you’re all about the ROI (you aren’t reading this newsletter if you’re not), the sad truth is there are actually very few STR deals that truly make sense these days. BUT they do exist.

🔑 General rule of thumb – the less saturated your market is AND the more unique your property is, the better chance you have to win.

(People have had success in smaller college and sports towns with the right properties, so something to consider … but take a look at what’s happening in Austin right now for how things can go sideways in “hot markets” 🤦🏻‍♂️)

3) Hedge your risk. 🦔

Lots of airbnb gurus out there preach about getting luxury places and tricking them out so you differentiate from the competition. Truth is, this does work and can make a good return.

But it usually takes major money to buy and outfit these sort of properties (people easily put 100K+ just into theming and furniture packages).

When the travel market is clicking, it can be justified by a great return … but what about when the travel market is off??

What if your municipality changes the rules on STRs?? (this happens)

💡I like to have multiple ways to win on a given property.

If STR doesn’t work, could you rent it Long Term and still come out okay? Could you sell it and at least recover your investment, or is the value fully predicated on maintaining high priced bookings?

BOTTOM LINE: STRs carry a lot more hype than boring LTRs, but most investors will come out ahead in Long Term all things considered.

With that said, there are STR deals that can still be compelling with the changing economics … just make sure you have multiple ways to win.

My favorite type of Airbnb / STR? An ADU (Accessory Dwelling Unit) or another creative, separate unit in your own residence (e.g. walk-out basement or room with it’s own entrance). Your risk is so much lower, and running it yourself as a side hustle can make the economics a lot more compelling.

^ People in our NWC community have offset their mortgage with these types of Airbnbs.

In your corner,

Blake Bozarth

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