As travel trends have changed over the years, infrastructure has had to morph along with it. People have come to want a more authentic experience as they explore a new area. Airbnb styled short-term rental options have ever-increasingly stepped in to fill the demand.
These can be an exciting investment, both financially and personally. If you are considering jumping on board with offering a home-like place to stay for travelers to your area, there are things to consider when deciding how big of an investment you are ready to make. What direction you decide will determine how much your start-up costs will be as well as how you can move forward. You will then be able to determine the size vacation rental loan you will use to take the next step.
If you are going to have guests coming and going the first thing to decide is what their space is going to look like. You have several routes you can take and what you are wanting to get out of the experience will help you decide which to take.
Airbnb Primary Residence
Level 1 is to adjust a spare bedroom or add on a room to your existing home to make a suitable space for a short term stay. Some people really enjoy talking with guests and getting to hear a different perspective on life. This can be a great choice to make if these interactions spark your interest. This route can require a smaller financial investment. If you like the idea of a more personal experience but want to safeguard your family from the unknown, perhaps consider adding a door from the guest room direct to the outside. This will give the guests direct access to their room while giving you the option of denying them contact with the rest of your home. If you want to take this route, you may need to install a full bathroom in the guest room.
Upgrading that spare room to be a money maker is a smaller financial investment than taking on another property, but it will likely bring in a smaller return than a completely separate building. However, if you are just getting into the short-term rental business, this can be a great first step to take.
Airbnb on Primary Property
The second level of commitment is adding on a separate building to your existing property. If you have a larger yard or even a bit of wooded property, this may be the step you want to take. A little cabin in the back can create a romantic escape for people needing to relax for a weekend. You may need to clear some trees or brush to make space. Another idea to consider is setting up a bonfire pit for those sweet summer nights. Building a new structure is obviously a bigger time and financial commitment but it will likely bring a greater return for you. If you are considering expanding your Airbnb business, or even if you are just starting, this can be a great course to choose.
Separate property Vacation rental
The definitive option for having a short-term rental is buying a house or a property to build a rental house on. If you are looking to grow your income, a bigger investment will likely get you there!
The benefits to buying property for Airbnb are abundant. A full house to rent out is what many people are looking for when they search through Airbnb’s catalog. There is physical security for both the host and guest with this option. Buying a home without needing to do any additional construction can get your income stream started faster than taking on a project as mentioned above. If you are renting out a stand-alone home, there is no need to add separate entrances to keep groups separate.
A full second house will likely require a mortgage for Airbnb property. Keep in mind, the larger investment will likely not only pay for itself, but it will give you the extra income you are looking for.
Questions to think through
As you think through the level commitment you want to move forward with, think through these questions to help you decide. Then, give us a call if you’ll be financing an Airbnb.
- How much access do I want the short-term renters to have with me and my family?
- How much access do I want the short-term renters to have with my living space?
- How do I maximize income potential for the property I am considering?
- How do I ensure the profit is reliable to use as Airbnb income for mortgage?
- Do I have enough cash on hand to add-on/create/buy the rental unit or will I need a loan for the investment?
Whether you are just starting to dip your toes into the vacation rental game or are looking to expand your short-term rental income, financing for Airbnb properties is something you will have to plan. There are different methods to financing a vacation rental, whether it is an Airbnb business loan or Airbnb mortgage, Brass Financial has the funding you need. Contact us to setup the Airbnb loan program that is right for you!