What types of properties can you rent out for cash flow on Airbnb?
Short term rentals are hard to ignore for real estate investors. They offer supersized incomes and yield potential, without the usual pains and eviction risks associated with long term and annual tenants. Many regular property owners and investors are using short term booking sites to rent out single family homes for great cash flow or to offset the cost of ownership of extra properties. Yet, there are many different types of units that can be applied to this cash flow strategy.
Spare Rooms & Shared Spaces
Airbnb started by its founders renting out space in their living room. Spare rooms can be a great source of extra income if you already own a place or are looking to offset the cost of buying a home. Though, you don’t even have to rent out a whole room. A couch, sleeping bag on the floor, or even a bunk in a shared room could be rented for some serious extra cash.
Airbnb hosts have gotten pretty creative with alternative spaces to rent. You’ll not only find things like tree houses and Airstreams, but even tents. If you can’t afford to buy a whole house, or build an extra unit, then this is about as cheap as you can get to invest in a cash flowing rental unit.
A whole new cottage industry and strategy of building Accessory Dwelling Units (ADUs)to rent them out has popped up thanks to Airbnb. Think of these like separate mother-in-law quarters and guest houses in the backyard. This can help serious maximize the income potential of properties, especially in areas with limited land. Just be sure to do your math carefully and calculate your true cost of building and profits. Don’t forget you’ll probably need a building permit and inspections to make them legal.
While perhaps not practical for full time living for most families, and not easy to finance if you are trying to get a mortgage, the tiny home trend is refusing to die out. These can make great part-time rental units, especially for short term guests.
Manufactured homes are making a big come back. HUD Secretary Ben Carson’s recent TV appearances have made a renewed call to advance manufactured housing as more affordable alternatives. He even has government teams working on reducing and clearing regulations and rezoning to allow more of them across the country.
While this may be a highly controversial issue in heavily rent regulated NYC, if you own apartments and apartment buildings, more and more of these units can be leased out for short term stays via sites like Airbnb, VRBO, Expedia and Booking.com. Finding a balance between serving the community with affordable longer term housing and the high rates of profits of short term rents could be what you need to maximize occupancy and your numbers.
Think big. Airbnb has even announced the launch of its own branded hotels. It won’t be able to build them everywhere fast enough to keep up with demand. That leaves plenty of opportunity to acquire underperforming and distressed hotels and rent them for premiums on Airbnb.
Luxury condos can make great Airbnb pads too. In premium locations and curated well, they can attract very high rents for weekends and even as seasonal getaways for the uber rich.
Of course the one caveat here is to watch out for condo and association rules which can block hopes to leverage short term rental rates. There may be a sweet spot in new condos where there are no hard rules yet, because the association hasn’t been handed over to the owners. Or make sure you can have some sway on the board, for example as becoming the HOA president. This can help prevent future issues and new rules from destroying your investments.
There is more than one way to make money with Airbnb. In fact, there are many ways to be creative and create new sources of cash flow from a wide variety of property types. Find what you are passionate about and what resonates with your capital investors, and claim your own niche. Or dip your toes into a few of them.