Investing in real estate is a great way to protect your money and even grow it. It is one of the oldest investment strategies in history for good reason. People always need a place to stay. These days there are many different ways to invest in real estate but a very popular one is to buy an Airbnb property. There is a lot of money to be made when you do it right. The problem is that many new Airbnb owners end up doing it wrong and making costly administrative mistakes.
There are some common mistakes that get made that make it difficult to make money even though it’s a great opportunity. Knowing what these mistakes are will help you avoid them when it comes time for you to invest in an online rental property. In this article, we will go over several of the most common ones.
Picking The Wrong Location
Location is everything when it comes to investing in real estate, but the criteria about what makes the location ideal change depending on the type of property. For Airbnb, it is much different than buying a long-term rental property. When you are looking at real estate in Atlanta, for instance, you need to be looking for an area where there are lots of tourists.
A mistake that many Airbnb investors make is that they look at up-and-coming neighborhoods that seem like they would be profitable. However, that might be a great location for flipping houses but not great for short-term rentals. If that area is popular for renters then it is for different reasons than it would be for tourists. Look for areas where there are attractions nearby that people are coming to the city to see. There could be lots of theaters nearby and people looking to stay the night to take in a show. Or, there may be some historical sites that people travel from afar to see. Those are the areas to concentrate on.
Buying The Wrong Property Type
One of the biggest mistakes people make is buying a property type that doesn’t suit the average traveler for that area. There are different types of travelers with different needs so it is important to understand that going in. if you buy the wrong type of property then you risk having an empty property for the bulk of the month. For example, if there is an amusement park or another profitable entertainment business nearby then the travelers will mostly be families. If you bought a studio apartment thinking you would get backpackers then you will not have any interest in it.
Pricing Is Wrong
There is a sweet spot between pricing your nightly stay high enough that it’s profitable but not so high that people don’t rent from you. It’s a mistake to price too low as it will be hard to make a profit after your business expenses. Pricing too high is a mistake since people will rent a hotel if it costs the same since they get more services there.