Airbnb has had a huge impact on travel accommodations, and those who have chosen to stay in an Airbnb may wonder if hosting an Airbnb rental is a good investment. Becoming an Airbnb host is appealing in several ways, including the ability to add to your income without being an expert in real estate. However, hosting an Airbnb may not be right for everyone because there are some disadvantages to it as well. It is important for potential Airbnb hosts to research and learn if hosting an Airbnb will be a good decision and investment for their life.
The first thing potential Airbnb hosts should learn is the difference between an Airbnb and traditional investment property. Airbnb rentals are short-term with several different renters over time, and traditional investment properties are for tenants who plan to stay for a very long time, even years or decades in some cases. The next thing potential Airbnb hosts should do is research the market to find out if any outside circumstances are causing it to change, such as the recent COVID-19 pandemic. The pandemic had a huge impact on the Airbnb industry by creating quite a decline in customers in 2020. However, there has been a recent surge in Airbnb customers who are becoming more comfortable with the pandemic, trying to find ways to stay safe and have a fun vacation at the same time. Those people find comfort in an Airbnb that is located in a travel destination place that is both secluded and desirable.
Potential Airbnb hosts must also consider the legalities and expenses that come with renting out an Airbnb, including maintenance, furnishing the property, extra amenities like Internet and entertainment subscription services, utility bills, home insurance, and specific Airbnb laws in each state. On the upside, it is possible for someone to have an Airbnb almost anywhere since many people use Airbnb for business and events that could take them anywhere in the country instead of just the standard vacation spots that were once the norm. If potential Airbnb hosts price their rental correctly and does their best to make their rental appealing to potential tenants, an Airbnb can be a very smart investment income.
The commercial real estate market has changed significantly over the past several years. A world once dominated by large corporate conglomerates and developers with ties to major construction firms has slowly given way to new opportunities. Private investors and investment groups are cropping up in virtually every major real estate market. In large part due to the internet and advanced technology, real estate investing is no longer a mysteriously complex endeavor.
Benefits of Real Estate Investing
Real estate investment opportunities come in many different forms. Some investors prefer to have a role in the commercial real estate business end. Some hold positions of authority or make decisions for the commercial properties’ development, sales, or daily operations. Investment opportunities are plentiful for such individuals who want to be involved in the process.
Investors who are more interested in the income potential than the rewards of sweat equity also have plenty of opportunities within the commercial real estate markets. Passive income streams in commercial real estate are available for novice and experienced investors. Varying rates required for the minimum contribution amounts make it easy for even first-time investors to become acquainted with the many prospects available in real estate investing.
Pitfalls of Natural Disasters
Commercial real estate operates much like other traditional investment opportunities. They are subject to standard market conditions, although they typically respond more slowly to those changing conditions than more liquid investment vehicles. When external conditions impact the value of the commercial real estate, investors may opt to stay the course or alter their investment strategy. Aside from a global pandemic that forces mass closures of office buildings and retail space, commercial real estate properties face only a few challenges.
Natural disasters can literally threaten the very existence of commercial properties. Current building codes take extra precautions to ensure buildings withstand high winds, heavy rains, and even earthquakes. Despite the efforts to protect against the elements, some investors are still wary of investing in commercial real estate in areas that are likely to be impacted by natural disasters. Insurance premiums are higher in correlation with the propensity for natural disasters. Although this can add to the purchase price, it also provides some protection for investors.
The reputation of California has long been a desirable, dream destination. Sunshine, Hollywood, and endless opportunities drew in millions of people from everywhere in the United States and beyond. Real estate became an effortless way for people to make money if they could afford to invest. The desirability of California meant that almost any property purchase would increase in value. The market changed in 2020, and investors need to research rather than automatically buy.
Pandemic Brought Change
Shifts in trends and job opportunities always cause real estate values to fluctuate. In this instance, the changes were most often due to the pandemic. The virus forced people inside and made social distancing necessary. Less populated regions became more appealing. California and other densely populated areas lost residents to more rural areas. Less demand and more houses available caused declines or stagnant property values in California.
Buyers Still Available
About one million homes are sold in California each year, so the market still offers potential. Single-family homes have gained popularity in some areas as condo prices dropped slightly in price. The post-pandemic desire to remain close to job opportunities while still distancing from others could explain the changes. The preference of buyers tends to vary across the state.
Increases Outside California
Lower costs of real estate were part of the reason for people moving to different states over the last few years. The sudden competition for homes elsewhere caused a dramatic price increase in many cities and towns around the country. The change could benefit California as the prices in the Golden state seem less steep in comparison. As the recovery from the pandemic continues to build, it could also encourage former California residents to return to the state they love.
Life returning to normal will produce changes, but experts cannot predict precisely how it may affect the real estate market in the state. Investors can expect price increases over time. The potential profit, competition for desirable properties, and the best time to buy and sell will continue to fluctuate. Sensible investors will continue to watch the trends and act accordingly.
Real estate development is a popular career and past time for many entrepreneurs. Although the financial success is a tempting reason to enter the real estate market, developing land or office space requires a special skill set. Beginners have many questions about financing, permitting and regulations, and other aspects of real estate development. Luckily, there are tons of resources that provide sound advice and answer many common questions. Listed below are a few of the time tested favorites.
Real Estate Development: Principles and Process
This text written by Mike E. Miles provides a thorough overview of real estate development. Based on an academic perspective, this resource provides a general understanding of real estate development basics.
The Real Estate Game: The Intelligent Guide to Decision-Making
In this comprehensive resource guide, William J. Poorvu draws from his vast array of life experiences. Poorvu served as an educator at the Harvard School of Business for nearly three decades and has been in property management and development for more than four decades.
Property Development for Beginners: A Beginners Guide to Property Development
In this well written collection, author Steve Chandler offers a realistic look at the benefits and challenges of choosing a career in real estate. He provides pointers and additional resources for serious investors.
Raising Private Capital: Building Your Real Estate Empire Using Other People’s Money
Matt Faircloth is an accomplished real estate investor and published this resource outlining some of his most successful tactics. This title is geared toward current investors and serious beginners. Faircloth primarily focuses on fundraising and other financial principles of real estate development.
Professional Real Estate Development: The ULI Guide to the Business
In this textbook style resource, authors Richard Peiser and David Hamilton provide information vetted by the Urban Land Institute. Through a variety of case studies and valuable insight, this resource covers the basics of residential and multifamily properties as well as office space, retail, and industrial real estate development opportunities.
Making it in Real Estate: Starting Out as a Developer
John McNellis provides a true nuts and bolts overview for beginners in his latest educational title. He helps readers turn their ideas into reality by providing his expertise on topics such as leadership, turning down an opportunity, and taking risks.
The global pandemic changed the business world for nearly every industry. Many of the changes were unavoidable and unprofitable, but things look promising for 2022. Many experts are optimistic regarding commercial real estate development. Concerns exist, and all investors need to understand the possible challenges. To succeed, anyone involved in real estate development will need to remain flexible and adapt to the market.
Potential Market Complications
Real estate professionals do not expect any complications with the same negative impact seen in 2020 and 2021. COVID variants could continue to appear for many years. Health experts, however, do not believe any will cause the type of lockdowns previously experienced. Government agencies monitoring inflation risks will adjust as needed to keep the stock market as happy as possible. Price increases may influence some future development, but the improvements in the marketplace will prevent rises in oil prices and material costs from harming growth.
Expected Industry Boosts
Repairs to supply chain problems will ensure that products flow freely again. These repairs will prevent the past shortages of building materials and retail inventory that plagued all consumers over the last couple of years. An additional boost for real estate development is optimism. In 2021, new business license applications were up, and experts predict that in 2022 there could be an increase in applications of 28 percent over 2020.
Increases in Demand
The real estate development market could see a combined rush from different investors. Many businesses that thrived before the pandemic had to put their plans on hold, but 2022 offers the opportunity to return to previous expansions. Another possible effect is the endeavors of new entrepreneurs. Many business-minded individuals chose to find a new path after their jobs became obsolete during lockdowns. The options could make many real estate markets busy as buyers vie for all property types to meet their needs.
The last two years have been difficult for everyone. Optimism for what possibilities 2022 may hold has already boosted real estate value in many regions of the United States. Development has continued slowly and steadily over the last few months and is likely to increase substantially as the year unfolds.