If I could get the bank financing, I could buy 5 properties in the market I am in and all would generate 25% cash on cash returns after a few months of renovations. With the scale I could hire full time staff and centralize laundry.
And before anyone jumps down my throat for this, it would be a social good in this particular market and help the local housing market (there is a surplus of housing and ample very affordable housing, the problem here is lack of jobs)
And if anyone thinks this would be a soft option, it would be a lot of work and a lot of responsibility and a lot of value added.
That is definitely not always true, and I would say its only true in the minority of cases.
To make more money renting short term than long term you have to be in a very desirable location in a town/city with a lot of tourist traffic, and you have to keep your labor and energy costs down ruthlessly.
Most cleaning companies want $30 an hour. You need to pay $120 to do a turnover. Plus you need to buy many things and replace them regularly. And you need to pay for utilities.
Unless you can book for high prices, at least $250 a night and more like $399 a night on weekends in season, and keep the calendar pretty full, its not worth it.
> Berlin, like most German cities, is experiencing an acute shortage of affordable homes. Rents are rising at a rate of nearly 10 percent a year, even though the city has a rent cap and has introduced one of the strictest bans on holiday apartments - many other European cities also have some kind of regulation.
From that quote I would say vacation rentals are being scapegoated. Rents are rising with one of the strictest bans on holiday apartments.
Affordable housing was a problem before AirBnB was ever conceived.
Person who bought an old triplex with a ton of deferred maintenance and has been running it as a vacation rental for a long time here.
This is not an easy side gig. It's more than a full time job, and I have been living in one of the units and only renting two and my SO helps out a lot. Bringing on a third unit and I am about at the point of needing one full time employee.
It is a never ending fight against entropy, as well as a not insignificant number of guests who will lie to get over on you.
You have to:
Manage bookings/field inquiries and sell property in these exchanges/make special offers to fill spots.
Accounting/legal/tax
Cleaning. This is very labor intensive. To properly clean a two bedroom apartment to hotel standards takes at least 3 hours and that's if guests left it clean. One stray hair in the wrong spot and you lose.
Maintenance. Decks/trim/walls need to be patched and painted each year. Things break. A very heavy-set guest will crack a toilet seat and it needs to be replaced in the 4 or 5 hour window you have between guests. You might get some animal infestation that needs to be dealt with.
Guest relations. Guests will forget things and want them mailed to them. They require handholding and strategies to keep review scores up.
People will constantly be trying to negotiate your price down, even though you offer 4 times the square footage for the same price as a nice hotel in the area.
I am working on automating and streamlining as much of this as possible, and there are gains to be made there. I have made gains with superior cleaning technology to save time as well.
FAQs and guides can help, but guests don't read them much of the time.
This is not real estate investing, its hospitality and meeting and greeting guests and chatting with the friendly ones is what gives you the good reviews where other less hands on places get the very critical ones.
Professional management is where this space needs to go in my opinion.
Vacation rentals have been a boutique industry for a long, long time. What was disruptive about AirBnB was the opening of it to spare bedrooms and the subletting of places people rent from others.
AirBnB has both made the space much more popular, and caused a lot of the ire and animosity we have seen towards the space.
And before anyone jumps down my throat for this, it would be a social good in this particular market and help the local housing market (there is a surplus of housing and ample very affordable housing, the problem here is lack of jobs)
And if anyone thinks this would be a soft option, it would be a lot of work and a lot of responsibility and a lot of value added.