Is It Wise to Invest in Owning an Airbnb?

Real estate owners and investors are finding that an Airbnb investment is a viable way for people to figure out how to make money on vacation rental property by renting them out on a short-term basis. Using an Airbnb investment property has its risks and is dependent on market trends, the economy, and other considerations.

Despite increased regulations and limitations on the number of days an Airbnb investment property can be used for rental purposes, Airbnb rentals are a good way to bring in some extra cash. If done right, an Airbnb investment can be quite profitable by using short-term rentals for long-term gains.

Factors to Consider For an Airbnb Investment Property

Location is Key

Owning an Airbnb investment property in a resort area seems like a great way to stockpile high-end short-term rentals during the busy season. While resort and vacation areas can yield high returns for short periods of time in the year, renting out homes in nicer, exclusive neighborhoods throughout the year could be a more stable, ongoing investment.

Local Ordinances, Regulations

Before making formal steps into an Airbnb investment property, it is crucial to take a hard look into the local ordinances and rules for short-term rental agreements. The landscape is changing, and some local agencies are looking to encourage rental properties to be put back on the market as long-term rentals. Restrictions and limitations frequently change to meet local real estate market demands.

Year-Round Rentals

In addition to figuring out how to make money on vacation rental property for supplemental part-time income, the property should serve other purposes and long-term goals to adjust to the ebbs and flows of the ever-changing real estate industry. Other housing options to consider bringing in additional revenue are offering furnished student housing or long-term housing for those relocating to the area.

Tax Considerations

When setting rates for an Airbnb investment property, it is important to consider how tax codes will affect your bottom line. The IRS requires rentals below market value are disqualified from taking into account expenses. The property must be used only for rentals to get valuable tax write-offs. If the home is rented for less than 15 days a year, it is exempt from being assessed any income tax.

Total Expenses

While using an Airbnb investment for short-term rentals can bring in some revenue, there are also expenses that go into the upkeep and maintenance of the property that needs to be taken into consideration. In addition to the costs for increased cleaning, maintenance, and repairs, bills for electricity, water, gas, internet, and cable will also need to be paid. Additional features like a pool, spa, or amenities will add to the ongoing expenses of renting out your Airbnb investment property.

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