Are Airbnb Properties Good Investments?

Are Airbnb Properties Good Investments?

Getting started with Airbnb requires a lot of faith. Most people are nervous about investing in short-term rental property, especially since it can be hard to determine if it’s a good investment. There are a lot of questions that people have when it comes to investing in these types of properties. An Airbnb investment is when you purchase a property intending to rent it short-term through Airbnb. Since over four million hosts globally, this type of passive income has become very popular. Most hosts who participate in Airbnb start as part-time workers and then grow to own multiple properties. There are many ways to make investing in this type of property work for everyone. Before you commit to becoming a host on Airbnb, it’s important to understand the various risks and benefits associated with this type of investment. Here are some of the pros and cons of investing in this type of property.

Pro: Passive income

One of the most attractive aspects of investing in a property on Airbnb is the possibility of passive income. This type of income is a revenue stream that doesn’t require you to actively participate in the operation. For instance, a traditional nine-to-five job doesn’t constitute passive income because the amount of money you earn is related to how much you work. Since you can earn money through bookings on Airbnb, this type of investment is considered passive income. In addition to not requiring you to actively participate in the operation, the amount of work you put in doesn’t directly reflect how much you earn. With passive income, you can boost your regular income or replace it with something completely different. For instance, many people who invest in Airbnb as a side project end up taking it on as their full-time job.

Con: High operating costs

The operating costs associated with running a property on Airbnb can be very expensive. You have to pay for various expenses such as electricity, internet, and regular cleanings. If you didn’t choose to rent out your property through Airbnb, these costs would be shouldered by a long-term tenant. Before you commit to becoming a host on Airbnb, it’s important to understand the various risks and benefits associated with this type of investment.

Pro: Some expenses are tax-deductible

Expenses that are related to running a property on Airbnb can be tax-deductible. These include marketing and advertising, as well as insurance and accounting fees. Many hosts don’t realize that these expenses can significantly impact their income. By reducing these expenses, you can maximize your earning potential and write off some of the costs. If you’re not aware of the exact laws in your state, it’s important to consult a tax professional.

Con: Higher down payment

The down payment required for a vacation rental property is significantly higher than for a primary residence. Usually, hosts need to put down 10%, though it can go up to 25% depending on the strength of their application. Before you commit to becoming a host on Airbnb, it’s important to understand the various risks and benefits associated with this type of investment. One of the biggest expenses that you’ll have to spend is on the quality of your furniture and decor.

Pro: Higher revenue during peak season

Through Airbnb, you can rent your property to short-term tenants and set your own rent rate. Unlike long-term tenants, you don’t have to lock yourself into a fixed rate. You can also adjust your pricing during the peak season to reflect the changes in the tourism industry. One of the main advantages of becoming a host on Airbnb is that you can earn a higher income than you would with a long-term tenant. However, this doesn’t mean that you can avoid the risk of instability. Since there’s no guarantee that your property will be rented, you have to accept the possibility of instability.

Con: Airbnb properties can be time consuming

Getting the proper resources to manage your property on Airbnb can be daunting, especially if you don’t have the necessary skills to make it easy for you. One of the most effective ways to reduce the time that you spend on your property is by using a management software like Lodgify. This online platform allows you to manage all of your tasks and activities from one place. One of the most effective ways to manage your property on Airbnb is using a channel manager. This tool connects all of your listings to the top travel agencies so that you can avoid double bookings.

How to Protect the Personal Data of Tenants

How to Protect the Personal Data of Tenants

As a landlord, you will access lots of personal and confidential information about your and prospective tenants. Highly sensitive information such as photo IDs, social security numbers, bank account numbers, and background checks will be available to you. One of your duties as a landlord is to ensure that this private information is kept secure and out of the reach of prying eyes and criminals. 

Protecting tenants’ private information involves physical and digital safeguards. Increasingly, most transactions and documents are in a digital medium, but that does not mean you can skimp on physical security measures. 

Intelligent doorbells and smart locks are high-tech ways to secure access to your office. Smart locks can alert you on your phone if someone tampers with your lock, while intelligent doorbells alert you if someone rings the doorbell. The mere presence of security cameras inside and outside the office will deter thieves. For even more security, consider getting a 24-hour monitoring service through a company. 

If you accept checks and money orders for payments, consider getting a lock box on your office door with a letter slot on the outside. This will let tenants drop off checks while preventing a would-be thief from simply prying a drop box from a wall.

Physical records such as leases, security deposits, and bank account numbers can be kept in a safe for maximum security. There is also an option of securing sensitive files and information in a safety deposit box at a bank or other off-site location. You should also shred any unnecessary files containing personal information that you no longer need. If you handle lots of paperwork, you can outsource the shredding to a document shredding company that will pick up and shred the files for you. 

Steps to take for digital security include securing your internet connection. Make sure the Wi-fi you use is password protected, and consider using a VPN for maximum privacy and security. Two-step authentication when accessing emails and software programs is a great way to prevent unauthorized access to your tenants’ data. Even if a password is stolen, the two-factor authentication system will prevent the thief from being able to access sensitive information. 

Accepting payment via a credit card may sound appealing and convenient, but it poses a security risk. It is best to accept payments through encrypted networks like PayPal and direct bank transfers if you can. 

Your work computers, laptops, and smartphones will likely store a plethora of tenant data. If they get stolen, that could mean trouble for you and your tenants. Consider installing a software program such as Absolute that will let you track the location, block access, and delete the contents of any stolen computers remotely.

How to Calculate the ROI on a Rental Property

How to Calculate the ROI on a Rental Property

Rental properties can be a great asset to investment portfolios, particularly if they are successfully managed. There are many different types of real properties that can be converted into rentals. Commercial properties, when fully occupied, generally pay higher dividends for investors. Residential rental properties are said to be an addictive habit because investors purchase additional rentals consistently over time. Whether an investor chooses to select commercial, residential, or other property as a rental, there are some considerations that should be carefully weighed.

The return on investment (ROI) will be greatly impacted based on a number of different factors. Investors cannot simply calculate the purchase price of the real property and the average monthly lease income for the property. Many other conditions exist and must be factored into an accurate ROI on rental property.

Taxes and Insurance

The overall ROI depends in part on the geographical location of a particular property. There are various local and state ordinances that require lot rent, property tax, school tax, and other fees to be paid by the land or property owner. These may seem minute, but they will impact the overall return on investment. This calculation can be simplified by the net income gain of the property divided by the cost of the property. Net income gain is basically the income generated minus the cost of the property. These calculations can be based on monthly or annual figures and the end result will be the same.

Maintenance and Utilities

One major area that many landowners and property managers fail to consider when calculating rental income are the essential costs associated with the building or property. Commercial properties of course entail much higher overhead costs than residential properties, but these elemental items should be considered for all types of real property. Second to required insurance, routine maintenance and repairs are among the highest expenses that property owners incur.

Maintenance and repairs on a commercial building may require certified repairs that are filed with a city or county records office. Monthly utilities such as gas, electric, water, sewer, and trash pick up are generally required whether the property is currently being rented or not. Unless these are passed along to tenants, the property owner must deduct these monthly expenses from their net return on investment.

How To Protect Yourself Against Sketchy Turnkey Rental Property Companies

How To Protect Yourself Against Sketchy Turnkey Rental Property Companies

A growing number of investors have decided to flee the volatile stock market seeking safety, and they will find this in hard assets like in real estate. Nevertheless, many people wish to stay a passive investor, and they don’t want to knock on doors seeking foreclosures and fixing toilets while working as the landlord. A simple search on Google for passive real estate will equate to people becoming the victim of online advertising in a market property known as turn-key rental properties. But what is a turn-key rental property? And is it truly worth your investment?

Turn-Key: What Does It Mean?

To most investors, turnkey sounds like nothing more than a buzzword, and a lot of people throw it around. Many times, the people who throw it around are the new companies that don’t have a definition of what this means. What’s the standard that defines this word? For the uneducated buyer, you might assume that turnkey properties mean that you don’t have to do anything. Don’t let something that looks too good to be true pull you in. The false belief that someone else will renovate, buy, lease and manage the property while all the other people have to do is deposit the rent check is false.

The Truth

Some companies will sell a turnkey property that will be fully renovated to what looks like-new condition. You will need a property manager who understands how this works. Some companies only slap on a little paint, calling it turnkey. They have hopes that they will attract buyers from out of state.

How Can Investors Protect Themselves

People have to learn how to disregard the marketing in the message. The marketing is what investors have to stay alert to the most. People don’t want good marketers to manipulate them simply because they understand how psychology works. Beware of messages that say, “This is turnkey, and you won’t have to lift a finger.” In addition, investors should go to see the property before they buy it because of what it looks like in photos might be misleading in person.

What’s the bottom line with these investments? Although a may look like it has a cheap and reasonable price, chances are that there will be more work and time you will have to put in. If investors decide to pursue turn-key rental properties, they should always check to make sure that they will be receiving the best price.
4 Ways Landlords Can Improve Their Relationships With Their Tenants

4 Ways Landlords Can Improve Their Relationships With Their Tenants

4 Ways Landlords Can Improve Their Relationships With Their Tenants

Investing in a rental property can offer many benefits. Not only can it help provide a steady monthly income, but it can help build your net worth. However, by investing your time with rental properties, as a landlord, you will have to maintain it, and make it attractive for tenants, and find renters who can be trusted.

Often the relationship between landlord and tenant is poor and strained. Talk to any landlord and they are bound to share a tenant horror story or two about an unruly renter. By establishing a more professional and positive relationship with your tenant, you’ll find that you will have less tenant horror stories to share. The following are four ways that landlords can improve their relationships with their tenants.

Be Approachable

Often, tenants are afraid to contact their landlord about issues they are experiencing. Sometimes tenants don’t tell their landlords about repairs until the problem worsens or is out of control. Tenants are afraid of asking for help because they don’t want to bother the landlord or are afraid. Landlords should be both supportive and approachable to ensure that their tenants feel comfortable calling in their time of need.

Be An Effective Communicator

A good line of communication is essential to solving many rental problems. Tenants should have an understanding of why something is happening and be given proper notice for anything that may be disruptive. By landlords providing the most up-to-date information, the tenant will be more willing to work with the landlord rather than against.

Be Hands On

When you lease your property, you must be hands on. Often landlords will want to have rent out their property but make little repairs to the home. You should help your tenant feel important by going out of the way to make improvements. Not only will this make your tenants happy, but it will keep your resale value high.

Be Considerate

One of the most important things that any landlord can remember is that tenants are people too. Sometimes it can be easy to forget that your tenants are people with feelings and not just a monthly profit. As a landlord, you have a direct impact on the social and emotional environment for other people. That being said, treat your tenants with the same support and respect that you would want.