(Editor’s note: Welcome to the New Real Estate Barons, a Bold mini-series examining some out-of-the-box angles of real estate. Check out the first installment, which focused on monetizing interior design on social media; today’s installment dives into the rise of the Airbnb mogul.)
Real estate and property management has always been a lucrative area given the right approach. Having multiple properties for rent or lease allows owners to leverage their assets for income. And that income not only pays off existing loans and expenses but pads their pockets as well. Thus, it’s not surprising that real estate today continues to be an attractive pursuit for entrepreneurs. But what is new is the way real estate is leveraged within the shared economy of the Internet age. These changes have ushered in a new breed of real estate gurus known as Airbnb moguls. And through the right Airbnb investment strategies, these moguls are doing quite well.
Believe it or not, Airbnb rentals were introduced only 15 years ago. But since then, the name has achieved iconic status equivalent to the term hotel. One commonly hears someone seeking an Airbnb for an upcoming trip as much as a search for a hotel room. And despite the price of many Airbnb offerings increasing over the years, they remain preferred by many consumers. The spaciousness, personalized touch, and expanded locations appeal to many in comparison to hotels. All this is worth noting in relation to the rise of the Airbnb mogul. In essence, it is precisely these features that make Airbnb investment strategies work. This has these new real estate barons smiling all the way to the bank.
From Side Hustle to Career
In the early days, and even now for many, Airbnb investment strategies offer a way to supplement existing income. Offering a short-term rental for vacationers was a way to earn a bit of extra cash from a property. But fairly quickly, it became evident that short term rentals had a number of advantages over longer-term rentals. This fueled the rise in the number of Airbnb moguls who decided this could be a fulltime gig. For one, short-term rentals were much more lucrative. The amount charged for a few days’ stay was significantly more that the day-rate for a 6-month lease. And since guests didn’t typically stay very long, the ability to maintain one’s property and keep it clean was easier. This was notably true for those who charge a cleaning fee along with the rental price.
Looking at the numbers, it’s evident that Airbnb investment strategies appear to be paying off for many. Recent surveys show that the average income for Airbnb moguls can be as high as $73,000 in places like Hawaii. But even in other places like Tennessee, Alabama, and Arizona, these averages remain above $40,000 annually. And being the average, it’s evident many top out over six-figures. This income is in excess of monies going to pay mortgages, taxes, maintenance and permits. Therefore, it’s not surprising many people saw great opportunity and new career possibilities in Airbnb rentals. This is what drove substantial growth in the number of Airbnb moguls today.
Best Airbnb Investment Strategies
Becoming an Airbnb mogul, like any valued endeavors, does require patience, planning and commitment. As such, there are several best practices when it comes to Airbnb investment strategies. From a foundational perspective, it’s essential to know local laws and permissions available for Airbnb rentals in one’s specific area. This can vary significantly, and not doing one’s homework can be costly down the road. Likewise, it’s also encouraged to form one’s own LLC entity with separate banking and insurance protections. These offer safeguards to protect personal assets and cost little to put into place. In this regard, Airbnb moguls start out like any other entrepreneur.
In terms of more specific Airbnb investment strategies, it is also important to know your own local market. This means studying the area’s typical going rate for nightly rentals and occupancy rates. This information will allow one the opportunity know how much revenue a single property might generate. This combined with known expenses like mortgage, utilities, and cleaning costs provides necessary profit data. And depending on the target income desired, the number of Airbnb properties needed can be estimated. Lastly, Airbnb moguls who perform at high levels know their target audiences well. They know what amenities and services they prefer, and they constantly strive to improve on these over time. By looking closely at other property reviews as well as their own, they gain great insights on how to become a top Airbnb property. And this in turn helps gain their client’s trust.
Taking Things to the Next Level
While the Airbnb investment strategies go a long way in creating real estate success, there are additional actions to consider. Specifically, Airbnb offers a couple of other ways to gain income from the real estate market without financial commitments. One involves their Arbitrage Model, which lets individuals offer to rent out other property owners’ rentals. In the process, these individuals earn additional revenues without some of the hassles of ownership. At the same time, many Airbnb moguls pursue co-hosting, offering other Airbnb owners management services of the properties. This too is another way to boost one’s Airbnb income and career in real estate management. These are excellent ways to gain experience in the real estate market without paying one’s dues as a real estate agent.
Understandably, top-level Airbnb moguls rarely have a single property but typically have several. Therefore, it these pursuits sound attractive, it’s also essential to have a plan on how to scale operations over time. Unless arbitrage or co-hosting opportunities are strong, this will require investing capital or attaining credit to expand an Airbnb portfolio. But if done over time and with a high level of vigilance, success is definitely possible. While this new version of a real estate baron may not be extremely glamorous, it is very accessible. As a result, Airbnb moguls are much more common that one might appreciate in today’s world.