Is NOW a Good Time To Invest in an Airbnb?
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Is there a time of year when it’s better to invest in an Airbnb property? Is now the right time? Look at 2 ways to know when to invest in this video.
A question I get asked often is, “is now a good time to invest in an Airbnb property?” This question often gets asked from two groups of people: people who are looking at buying properties for Airbnb, and people that are looking into rental arbitrage for properties on Airbnb. We’re going to look at both scenarios and see if now is the right time to invest in Airbnb. If you’re interested in learning how to earn a full time income managing people’s properties on Airbnb without any upfront costs, you will want to check out the free training below.
The answer to whether it is a good time to invest or not really depends on the deal and what you’re looking for when you invest in a property for Airbnb. No matter the economic conditions, you always want to find a property that makes sense. There are always circumstances that are less than ideal, like the low season, or an underperforming property, or the crisis we’re dealing with right now in the world. So no matter the situation, if you’re buying a property for Airbnb, I highly recommend buying one that will meet your financial goals for cash flow returns even if it’s on long term rental. That way, you’re earning extra on the property off of short term rental, but even if you’re struggling with short term, you can revert back to long term rental as a safety net.
When it comes to rental arbitrage, you ideally want to get a property that follows the same principle if you can get it below market rate. That means that in the worst case scenario, you could get a medium or long term rental in there and cover all of your costs so you aren’t out anything. The worst thing you could do would be to rent a property for over market rate so that no matter what you do, your hands are tied and you can’t break even if things aren’t going well. With rental arbitrage, you don’t want properties that have a thin profit margin, and you’re going to want to look at properties that can bring in on average 2 or 3 times the rental cost. That way, even if the property is sitting vacant for half of the year, you can still at the very least break even. Many people might think it’s impossible to find a property that can bring in that much revenue, but I have seen it. It is possible, but they are few and far between. That’s why I highly recommend using a management fee model because they make more sense than rental arbitrage for 95% of all listings, where you can make a lot of profit for no risk, because you aren’t paying the money for rent or furniture. One of the other advantages to this model is that you gain exposure to many different properties, meaning if one of those rare properties comes along where you could make great income with rental arbitrage, you will come across it more often and be in a position where you could act on it and earn $5000 a month on a single property.
So, if the right deal comes around, right now is always a good time to invest on a property for Airbnb. But there are generally some times that are better than others to pick up properties. That tends to happen in the lower seasons when there are better deals available. Not only are there better deals available, but people are a lot more eager to jump on board with the management fee models in the low season, because they aren’t making as much money, so the prospect of someone taking over that responsibility while earning them more income is appealing. Right now in the world we are in a unique extended low season in a lot of places. So right now is probably one of the greatest opportunities because there is an extended high season on the horizon; with the vaccine coming out we can see the wheels turning towards an uptick in travel and the tourism industry.
What's up guys? It's James here and in today's video, I'm going to answer a common question that I've been getting a lot of recently, which is, is now a good time to invest in a property for Airbnb. Now this question typically comes from two different groups of people, the people that are looking to buy properties for Airbnb, and the people that are looking to start rental arbitrage properties for Airbnb. So I want to tackle both scenarios, and I want to talk about is now a good time to invest in a property for Airbnb.
Now, if you want to get started managing properties on Airbnb without any upfront investment without having to buy rent, furnish any properties. And without any previous experience, then I highly recommend that you check out the free training that I've linked down below, that's going to link you to a free training that you can register for that will walk you through my step by step strategy for how to earn a full time income managing other people's properties on Airbnb, without buying or renting any property at all. So I highly recommend that you check that out. If you haven't done so already, that should be a really, really valuable training, we're going to leave you with a whole bunch of key resources that are going to actually be just free resources will give to you to help you build your business as well. So I highly recommend that you check that out.
Now, to answer the question is now a good time to invest in Airbnb? The answer is, as it always is, maybe I want to give that some more context. I'm not just going to leave you hanging with a silly, vague answer like maybe what I mean by that is that it all depends on the deal. And it depends on the on what you're looking for in investing in a property for Airbnb.
So here's what I mean by that. When I say it depends on the deal. What I mean is that you always want to find a property that makes sense, no matter what the economic conditions are, I always say that people, because if you buy a property for short term rental, or if you get into rental arbitrage, hoping that things are going to be good. And banking on the fact things are going to be good, then you're in for disaster when things are initially less than good.
Now this could be the low season comes along. This could be that your property just underperforms if you don't really perform quite as well as you expected. Or it could be something like the you know, cold crisis that we're dealing with right now in the world. Whatever the situation, if you're buying a property for Airbnb, I highly recommend that you buy one that will meet your financial goals for cash flow for returns, whatever those might be, even if it's on long term rental.
So if you buy a property that will hit your financial goals and perform well on long term rental, and then you put it on short term rental, you're going to be earning gravy on top of that. And then if ever, you're not able to fill the property up on short term rental, you can still revert back to long term rental and use as your safety net. So the property is still going to be able to meet your goals even if it's not performing as well as you projected. So that's my advice in general for purchasing.
Now, when it comes to rental arbitrage, you ideally want to get a property that you can sort of follow the same principle with if you can get it below market rate. That means that worst case scenario, you can get a medium to long term rental in there, that's going to at least cover all of your costs. The worst thing you can do is to pay for a property at above the market rate so that no matter what you do, your hands are going to be tied and you're not going to be able to even break even if things aren't performing well. Another way to mitigate for this is to find properties for rental arbitrage that are going to bring in on average two to three times the rent.
When you're doing rental arbitrage, you really don't want to be working with properties that have a thin operating profit margin, because then it's likely to be eaten up by anything unexpected. If you have properties that are doubling or tripling their monthly rent, then that property can sit vacant for half or a third of the year, half or two thirds of the year rather, and have it still perform exceptionally well overall or the very least break even. So you have a lot more margin for error and a lot more margin for profit.
Now, a lot of people think that these properties are impossible to find that you can never find a property that will do two x or three x the amount of monthly rent, but in my experience, you actually can they're just few and far in between. That's why I highly recommend using the management fee model because it makes more sense than rental arbitrage for 90 to 95% of all listings you're going to come across the reality is you can oftentimes make a whole lot more profit with a whole lot more risk, I mean no risk at all, because you're not paying any money for rent, you're not paying any money for furniture.
So you're taking away all the risk and even oftentimes earn just as much money with management fee compared to rental arbitrage. So for that reason, it's usually a much better option. And what you also do by doing that is you're exposing yourself to all kinds of different properties. You can scale the business very quickly and get up to a sizable monthly income with management fee model much more quickly than you can with CO hosting. But you also get this added bonus opportunity of being able to look at and vet A whole bunch of different properties that you're going and seeing, if the right what I call unicorn property comes along.
It's one of those rare ones that's going to be able to double or triple the monthly rent, you can offer to do rental arbitrage. With that property owner, me making a really great income, we had properties on rental arbitrage, that are earning us four to $6,000 a month for a single property. If you come across a property that's that great, it's obviously a hard opportunity to pass up on and you're gonna come across a lot more of those if you're actively out there looking and doing management fee model and growing your business that way.
So right now is always a good time if you have the right deal. Now, one thing I'll add to that is that there are typically some better times than others to pick up properties for whether it's management fee model, whether it's rental arbitrage, or whether you're buying the property outright. And that's typically when there are better deals around which tends to happen in lower seasons.
If you go and try to buy a property for short term rental or try to get on rental arbitrage, in the in the peak of the high season, then your rates are going to be a lot higher. Whereas if you go in the low season, your rates are going to be a lot lower, people are willing to rent for less people are willing to, to sell the property for less. And people are a lot more eager to jump on board with the management fee model in lower seasons compared to higher seasons, when they're making really great money on their own. And the going is all good.
So they say. And so right now in the world, we're uniquely in a kind of extended low season in a lot of different places. So there are a lot of great opportunities to be taken advantage of now. That's why I recommend that you're always out there looking. And that especially right now, it's probably one of the greatest opportunities, because not only are we in this extended sort of low season, but we actually have our sights set on a high season on the horizon. Now with a vaccine coming out, we can see the wheels turning in motion towards the high season coming.
There's a lot of opportunity right now out there in the market. So with that all said, I highly recommend that you get started in one way or another. If you're thinking about it, then take this as a sign that you've been looking for that now is a great time to get started. It genuinely is a fantastic time to get started right now, whether you're looking at buying whether you're looking at doing rental arbitrage. Or if you're looking at doing the management fee model. Like I shared before, if you are interested in doing the management fee model, you want to get started earning a full time income managing other people's properties on Airbnb without having to invest any money to get started without taking any risk, then I highly recommend you check out the free training I've linked down below.
In it, I walk through every single step of the process, everything that you're going to need to learn, we go through three crucial steps that you need in order to have success in this business. I'm going to share with you my success as well as the success of several of the students that I've worked with what's worked for them, so that you can go and apply those skills and actually build this business for yourself. And who knows, couple months from now you could already be at 1000 2000 3000 $5,000 a month from hosting for managing other people's properties on Airbnb, you'll just have to click the link in the description down below to check out that training register select the time and you'll be able to access it for free.
And like I said, we're also giving you some free tools to help you build your business once you attend the training. So I'd highly recommend you check that out. And with all that being said, the last thing I'll ask is that you click that little like button in the corner to share that you liked this video if you got value from it, and also consider subscribing. If you're new to the channel just click that subscribe button so you can stay up to date with our videos. We post two new videos every single week that are all revolved around helping you to perform on Airbnb. I hope you've enjoyed the video and I'll see you in the next one.