To BNB or Not to BNB
To BNB or Not to BNB
A few months ago Outlook Magazine’s cover story was on the “gig-economy.” As a real estate guy with two Airbnb properties in downtown Edmond, I suggest to you the ultimate side hustle was left out–rental real estate.
Airbnb has served over 30 million guests since it was founded in 2008. The company rose to prominence as a way for renters and homeowners to list spare rooms or even couch space to out-of-town visitors, or to rent out their apartments or homes when they leave town. Airbnb remains a private company, but with a valuation over $30 billion, obviously, the model has filled a void in the hospitality industry.
Since we had been successful with VBRO in New Mexico, my new question was what would make the “temporary housing” model work in Edmond? Most people told me it would not work because Edmond had very few tourists and already has many discount hotels. Well, as it turns out, we have been successful. In our first year’s experiment with Airbnb in Downtown Edmond we’ve achieved a 70% occupancy rate.
Should other landlords get into the temporary housing market? Here’s some things to think about…
With Airbnb it is all about location and this is the first key to our success. Guests to our community are looking for a walkable environment which is what they find in downtown Edmond.
Home decor and amenities –
Guests’ expectations are high and often difficult to meet. Everything in our units is new including furniture, appliances, pots, pans, dishes, etc. We provide a lighted courtyard in each property with lawn chairs and gas-fire pit. This market is not for those renting the typical home inherited after the passing of a loved one. Believe it or not, our amenity is the downtown charm, architecture, and friendly bartenders, waitstaff, and retail clerks.
When you sign up to be an Airbnb host you are signing up to provide a certain degree of hospitality to the guests. Some expect to socialize with their hosts, others prefer not so much.
Financial viability –
First, you have to provide/pay for all furniture and appliances. Next you have to account for paying all utilities for the property, all maintenance including yard cutting, cleaning after every guest stay, and local taxes including hotel/motel, income tax, and sales tax in some circumstances. In our analysis it is rarely more profitable to do temporary/nightly housing compared to annual leases unless, like us, you are able to get extremely high occupancy.
Who knew, right? Guests rate you and your property after every stay. We have achieved Superhost status with high ratings. This is important and a clear reflection of the host hospitality and quality of the properties.