A question I often hear among people wanting to start a house sharing business is how to buy an Airbnb house?
Buying a house for the sole purpose of using it as an Airbnb is a fair commitment, yet it can be quite lucrative. First, you must consider the location of your house to the city and to tourist attractions. Second, you must research your potential earnings compared to buying a house to rent out.
I will share you with you my first-hand experience at purchasing property with Airbnb in mind.
Over the past two years, I’ve bought six properties and turned them into an Airbnb empire. They are all averaging 80% vacancy and are turning over $15,000 USD in earnings each month.
I want to share with you exactly how I did, because it is not as hard as what you would think. As long as you follow a few simple rules along the way.
The One Thing That Will Make or Break Your Airbnb Business
In the world of Airbnb Location is key. I can’t stress enough the importance of being close to the centre of the city/town. Or, at least close to a major tourist attraction.
Properties near a main street or tourist park will always trump a beautiful, modern house with all the luxuries you could imagine. There are exceptions to this rule, for example farm stays and cabins in remote areas. But these are niche type properties.
When deciding on a location to buy your Airbnb house, the one thing to ask yourself is can I walk to the city? Restaurants? Shops and Grocery Stores?
Majority of guests won’t have a car. A short walking distance to everything will help to get your place booked on a consistent basis.
Access to Public Transport
Being close to public transport around your city is vital. Especially so if your Airbnb house is in a cold climate. Walking is great, but not when its raining or freezing.
Even if your public transport isn’t great, there are workarounds. It will make the world of difference if you can add on your listing that you’re close to a bus route or subway station. As a result, this will give your guest options and peace of mind.
Your guests will have to rely on Uber or Taxis if there is a lack of public transport in your area. It will make their trip more expensive and could be enough to make them pass on your listing and go somewhere else.
Put yourself in a guests shoes. When you go travelling, do you book accommodation close to the city, or do you stay way out in the suburbs?
What is the Occupancy rate for Airbnb?
There is a super easy way to help you find an average occupancy rate in any town or city. I will even show you a great way to work out the average earnings.
Go to the Airbnb website and look up the city or town that you are wanting to research. Next, select a listing that is close by to an area of interest.
Here you will find a booking box with the average night per night as well as an area to enter dates. Leave the dates blank, put the
The booking dates will now be visible to you. Greyed out boxes state when a night has a booking, while a bold number shows available nights.
So, you can see this Airbnb has bookings for 21 of 31 nights, giving them an occupancy of 67%. This is without accounting for weekend and special event pricing.
Now we can multiply the 21 nights by the nightly rate of $109.86. This shows us they are making over $2,300 which equates to roughly $27,000 per year.
Sure, this isn’t 100% accurate, but I find it a great guide anyway. It indicates the demand for an area and shows you earning potential in a month.
I used this method myself when I was looking for a location to buy an Airbnb house when I began.
What is the Best City for Airbnb Investment?
In my very humble opinion, the best city for an Airbnb investment is the city you live in.
There are some great companies that will run every aspect of your Airbnb house. But I find the personal touch is what your guests want and expect.
I recently travelled to Edinburgh and wanted to check into the Airbnb we booked a little earlier. It had been a long trip and we had very heavy bags.
Upon arriving, I tried contacting the host, only to find a hosting company run the property. The person I spoke to was less than helpful and very robotic assisting me. You should avoid giving a first impression like this as it can effect your business.
Another reason to buy an Airbnb house close to where you live is to remove the cost of outsourcing. Running an Airbnb is not cheap, you will have to consider hiring:
Potential Costs to consider
- Cleaner – $15 to $30 per hour
- Customer Service Manager – 15% of your nightly rate
- Maintenance – $50 per call out (Yes even for a simple 5-minute job)
- Landscaper – $45 to $75 per hour
Add on top of this your utility bills, insurance, rates and mortgage repayments. As a result, wont have much cream left on top!
Don’t forget you will need to furnish your house too. I have some good tips on how to furnish your Airbnb on a budget that is worth reading.
Another plus for buying in your own city is that you will be an area expert. A great advantage for an investor as you will be aware of all the hot spots and places to avoid.
My guests often message me asking for restaurant recommendations or activities to do. It’s a great idea to create some saved responses so you can reply quickly.
I also list these in my Airbnb house manual template, but if I am an area expert, it makes it so much easier.
Airbnb House For Sale – Can I buy an Existing Airbnb Property?
It’s possible to buy property that has an existing Airbnb business already set up. You will have access to the occupancy rates and yearly financials. Plus, you’ll take on the coveted future bookings from that Airbnb house.
It does sound appealing, I have to agree. The only issue with this is that Airbnb don’t allow a user to transfer their account to a new owner. They just won’t do it.
Luckily there is a workaround, but it requires the owner to ‘give‘ you the account.
They will have to change the email address, the login and the bank account details. They will then need to add you as a co-host so you will have access to manage bookings, editing the listing and the inbox.
This is about as far as the original owner can take it. They can give you total control of the account. The only time this won’t work is if the owner has several Airbnb’s and only wants to sell off a single listing. It cant work.
So to sum up, I would suggest setting up a brand new listing and starting from scratch. It is a much easier way than to buy an Airbnb house that already exists.
While this isn’t ideal, you will at least have an Airbnb of your very own without the hassle of only being a co-host.
Can you do Airbnb if you Rent?
Yes, you can. In fact, there are a lot of people all over the world making money on Airbnb on places they rent. But you must get permission from your landlord.
You don’t have to buy an Airbnb house to make money. In fact, I have dedicated an entire article on how to make money on Airbnb without owning property. Using a rental property is one of the best ways.
I love the idea of setting up and Airbnb in a rental. A good friend of mine rents out 10 properties as Airbnb’s and is making a very tidy profit.
Rentals are often in great locations and don’t need a large sum of money to take on and maintain. And, as long as the bookings cover the rent and monthly bills, there is no limit to how many you can run.
There are some things to be mindful of though before you head online to start your search. It is sometimes difficult to get a landlord to agree to let you Airbnb their property. And you will need their permission.
Also, you have to be aware to give up your listing when your rental term is up or if the owner ever sells.
You really need to weigh up the pros and cons.
Can you Make Good Money from Airbnb?
In short, yes you definitely can. Airbnb has been helping people pay their rent and mortgage for years now. I am generating a six digit salary each year myself, it’s my livelihood. In fact I have devoted an entire article on how to make good money from Airbnb.
The number of listings will influence your ability to make money. Savvy entrepreneurs have created fully-fledged businesses with using Airbnb. They have multiple listings and are generating six-figure incomes each year.
The type of listing you have will also make you more or less each month. Take this graph of listing types and their average income as example.
An entire place will make twice as much as a shared house listing. Renting a room in your house will fetch a tidy sum to help pay the bills.
Making just under $2,500 USD per month does seem impressive, but, you also have to factor in the costs.
Utilities, Rent/Mortgage Payments, Insurance, Amenities, Laundry Costs. As a general rule of thumb, your expenses are average out to roughly half of your earnings.
So the average Joe, listing their entire place will make around $1,500 to $2,000 per month. Listing a Private room will make around $800 to $1,000 and a shared house between $600 and $800.
Airbnb has a great tool to help you research the average income in your town or city. Here you can see exactly how much hosts in your area are making per month.
Should I Buy an Airbnb house?
Yes! If you can afford it, that is. This is the most important decision you will have to make. I’ve given you all the important information to consider should you want to buy an Airbnb house.
To run an Airbnb you will need two things; time, and excess cash to setup your property for rent.
Running a short stay accommodation takes time, a lot of time. It also takes cash to set up, you’ll need to furnish the apartment which takes up excess cash at the beginning.
But I’ve shown you how lucrative it can be. So the rewards are there.
I have written guides on how to furnish your Airbnb on a budget, as well the pitfalls of Airbnb insurance. I recommend reading these two articles to get a good guide of the costs involved.
The alternative is buy an investment property the old fashion way. Stick a long term tenant in for a 12-month lease. But the income will be nowhere near as high as an Airbnb house. The positive is requires no time on your part and the income is consistent.
Which option sounds most attractive to you?
Key Points
The key points that we have looked at that I think are most important in answering how to buy an Airbnb house would be;
- Location is key – Your guests want to be in the middle of all the action.
- Public Transport is a Must – Find a house near a subway or bus route.
- Renting is key for people wanting to Airbnb but can’t afford a house.
- Buying an existing Airbnb property can get messy, but is great to see proven results.
- How much you will earn will greatly depend on the type of listing you have and the number of properties you can run.
- You can easily research the average earnings and average occupancy in your area. It will help to determine if Airbnb will be profitable for you
Do you research and choose an option that is right for you and your lifestyle. There are a lot of great opportunities out there for anyone wanting to join the Airbnb family. Happy hunting!