Should you start an Airbnb or simply sell your property in 2018? Are you nervous about opting to start an Airbnb in your home more than selling your property? Perhaps you think selling your home and moving on is a better option. You may want to think again. Have you explored the income that you can generate from starting an Airbnb in your home? Let’s explore this together! To Airbnb, or not to Airbnb, that is the question.
There are numerous ways to get an estimate for your home on the internet. However, the most reliable and sure way you are listing for market value is to consult with a real estate professional. Companies like Zillow and Trulia can give you a ball park but even those estimates are full of errors. So if you are considering selling having a real estate professional on your side will give you a clearer idea of what your home is worth. However, there is another option other than selling. Consider starting an Airbnb in your home. But, how do you find out if it will be profitable for you?
Let’s look at the factors to help you decide whether to start an Airbnb or sell your property. Be sure to read over our companion post on crucial items to know before starting an Airbnb.
Cash Flow From Airbnb
The first step is to find out how much will you make by renting your place on Airbnb after cutting all the ongoing costs. This will include your utility bills and all the consumable items at your place, i.e, your soap, toilet paper, cleaning supplies etc. Are you making a profit after cutting the expenses? If yes then you should probably keep your home.
Return On Investment
If you are using a real estate professional to sell your home then you will have to pay for that service. In addition, there may be closing costs, title expenses, hidden defects, and other expenses involved in the transaction. Let’s say that you get an 8% lower return on your investment after selling your home once those services and fees are paid at the time of closing.
For example, you are selling your home at $250,000. After covering all the expenses you are left with $230,000 (8%). You may consider listing on Airbnb if you are getting positive cash flow. You can still keep your property on the market for sale and wait for the market to improve.
If you choose to list your home on Airbnb while your property is on the market for sale you need to take care of a few things. Be transparent with your guests that there might be a realtor and their clients visiting the property during their stay. Warn potential guests about any other inconveniences. You might want to offer a lower rental rate to compensate for this type of situation.
Consider the taxes you will be paying while selling. The IRS allows homeowners to evade taxes of sale up to $250,000 and $500,000 for marriage filling couple. The home should be your primary residence for at least two of the last five years.
Look at your property value five, ten, and twenty years down the line. Analyze the current market trends in your area. Is the city moving towards your neighborhood? Is there any new real estate and business development coming up in your area? Doing some market study will help you analyze the future. If your property is in an upcoming neighborhood, holiday destination and vacation getaway you may want to opt in starting and Airbnb rather than selling.
Lastly, running an Airbnb is a profitable business but it does require time and effort. You will have numerous guests stay in your home. Be smart and be insured. As a host, it is your job to review you guest profiles properly before you let them stay at your home. Airbnb can verify all its users and you should take advantage of this service.
Apart for screening guests, you need to give time to maintain your Airbnb. Between every booking, the space needs to be thoroughly cleaned for the next guest. Not everyone is looking for a luxurious stay but everyone needs a clean and well-maintained place. The experience of your guests is important at your Airbnb, your place will be reviewed and your success depends on the ratings and reviews.
If starting and maintaining and Airbnb sounds daunting, you might want to consider hiring a property manager or at least consulting with people that have been successful with their own Airbnb property. If you decide to hire a property manager they will charge a percentage of the earnings from your Airbnb income. This blog is aimed at empowering homeowners to take control and make their homes work for them. We want to give you the tools and resources to start and maintain your Airbnb. Ultimately, it is your decision to hire someone to help run your Airbnb.
After discussing the factors here is the is the bottom line:
Do your research and gauge all the factors carefully. Data can definitely help you decide whether or not you want to start an Airbnb or sell your property. This is your home and only you can decide. However, it is important to remember that many municipalities across the United States, as well as numerous cities around the world, are struggling to find common ground over the controversy with short-term renting. In reality, short-term renting may be illegal where you live. Therefore, it is imperative you become aware of your city laws and regulations regarding this type of renting before starting an Airbnb in your home.
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