Business

Top 5 Things to Consider Before Investing In An Airbnb Property

5 Things To Consider Before Investing In Airbnb

airbnb rentals

I have friends that have committed to buying up cheap Real estate and converting them into Airbnb properties. The opportunity to turn profits without finding a tenant and committing to a multiple year lease is drawing him in like a magnet. As his rental portfolio has grown, so have his concerns for sustainability. There have been some amazing months where he has made the mortgage payment and then money beyond that, and of course there have been times where the properties have sat vacant for weeks with him wondering if he would be able to cover all the mortgages. He’s smart enough that he has now tucked away a nest egg for future rental droughts, but there is still a lingering concern and questions about whether or not to purchase more properties. We caught up for a beer the other night and I asked him as an investor to share with me the Top 5 Things To Consider Before Investing In An Airbnb Property. Three beers later he had this to say.

 

  1. Barrier To Entry

 

Like any business, there is always a barrier to entry. That can be something that is easy to overcome, or it could be so complex that it could take years to get to where you need to be just to start. With Airbnb rentals, he suggested that there were obstacles beyond the purchase of the property. That caught me off guard, I assumed that once you owned the property you could just start renting it out, after all, it’s yours! Not the case though, there is an application process you must go through before being accepted. From city to city laws can be different in regards to rental properties, there may be time restraints on how long you can rent the property out for (never heard of that), or laws about you renting the property out while not being in-state (if you were out of state), taxes, setting up the rental as a business, LLC, state laws and regulations from state to state, HOA, legalities with the mortgage company, legalities with the homeowners insurance, and many other details he mentioned but I couldn’t write fast enough to catch them all.

 

  1. Don’t Go Into It Broke

 

In fact, he even suggested not going into it unless you had 50k lying around in a savings account or trust. The expenses really add up quickly, and if you are doing it right and running it like a business you will be paying lawyers and a property management company a pretty penny to help manage contracts and the property. You will need to furnish the property if it isn’t your permanent residence. Power, water, cable, and internet are all amenities that people look for when searching for an Airbnb. If you want your property to rent out, then you must offer competitive rates and have the furnishing and amenities that will attract business. This all costs money up front. Then there are post-rental requirements you will need to fulfill. You will need a cleaning company to clean the interior and exterior of the property, laundry, dishes, pest control, and monthly yard maintenance. If you own a pool or a hot tub you will need those serviced, gas grills will need to be refilled, light bulbs changed, and appliances maintained or replaced. If the property ends up sitting for a long duration of time, can you still afford those primary expenses? You can always jump in and mow your lawn, clean your pool, and tidy. But you have to pay the mortgage, water, and power. What if the property gets vandalized, a tenant is injured in the pool, or the place becomes subject to burglary? Take all that into consideration in addition to the fact that Airbnb has a 3% service charge that comes off the top. All those things will add up quickly, especially if you are managing multiple rentals.

 

  1. Competitive Market

 

Hotels and Motels have all had to lower rates and adjust to the new world of technology that we live in. No longer are they the gatekeepers for the traveling kind. We were once held hostage to their prices if we wanted to travel anywhere and stay in a comfortable environment that was safe and secure. Now with Airbnb, anyone with a condo or home can rent out the property or even an individual room at an extremely affordable rate. Take that into consideration when you are listing your property, people are renting out their primary living quarters for cheaper than you can rent out your rental property. They already live in the space, they just rent it out for a weekend and stay the night at a friend or family members. This has made it difficult for him to rent out his property at times. With Airbnb having more than 3 million property listings, you will need to do everything you can to stand out from the competition. Quality images and timely communications are required to get noticed. After the property starts renting, you will begin to rely on reviews to boost the listing. This will require you to cater to the tenants, be responsive, provide the amenities you advertise, and even offer “freebies”. Having some printed material accessible for local suggestions would also help with that. Like with anything else in business (especially customer service), if you go above and beyond for your clients you can expect to be rewarded with quality reviews and repeat business.

rental property interior

  1. Start With A Single Listing

 

Ambition is required if you want to be an entrepreneur, and it never hurts to have and apply it anywhere else in life you can. With this new venture however, my buddy aggressively suggested to start with a single listing. Thinking back on our conversation it makes complete sense. With all of the potential expenses that can really throw a wrench in things, it would be wise to get your feet wet first with a single listing. Learn more about the process, expectations people have, what the true costs of operation are, seasonal spikes in business, and seasonal drops. Once you have a true understanding about what it will really take for you to own and operate and Airbnb, you can consider the purchase of another rental property. The purchase of a new property may have financial setbacks of it’s own. The property will need to be appraised, who covers that? If there are structural issues with the home, who is responsible for repairing them? What if the repair is done but there are still construction defects? Who pays for that? Will it go to court? Will you need to hire a construction expert witness to testify that the construction done on the property is flawed? Between your time and expenses you will be able to extrapolate how many of these properties can be purchased and managed over the course of a year. If you have never had any experience managing a property, or catering to people, you will definitely want to go at this at a pace that will allow you to get a handle on everything before you are inundated with calls and requests. The other option for starting out slow is to rent a room or guest house on the property you occupy on a permanent basis. The barrier to entry is virtually nonexistent and you will get a first hand feel for what to expect.

 

  1. Reach Out To Other Investors In Your City

 

You may find that you get little feedback from the people trying to make money in your market, I mean who wants to share trade secrets with the competition? It still doesn’t hurt to reach out and touch base. Most people are pretty cool, and if they are renting out a room or a guest house on their primary property they are probably doing it for some side cash. Those people will be willing to help you out. The guys that are renting out 10 homes in a market will be less likely to give you any valuable advice. Reach out though, make that call, and get first hand feedback from people that are living it.

Some of these things may seem obvious and I guess they could be applied to any rental situation, but for me it was interesting since I have recently considered doing it. There are things here that I had not thought of yet that have me reconsidering the timeline and how I will approach this. I was thankful that he shared this info with me and figured I would pass it along to anyone considering something similar. The rental business seems overwhelming to me, a guy that has lived most of his twenties behind a computer, but I am up fo the challenge and will start this journey before the year ends. Good luck to anyone else considering the same.

Leveraging Online Partnerships 

Every business has an employee, partner, sister company, vendor, or associate that has a website. Are you leveraging that relationship to gain an advantage online?

There are plenty of web developers that partner with film crews, photographers, writers, and creatives to conceptualize and execute online marketing strategies.

Some of these strategies included product placement and cross promotional efforts within content that’s distributed on the web through social media and other media outlets.

Cross Promoting Products

I happen to be a fan of Five Finger Death Punch, so I am going to use this for my example here. If you look a little deeper into the photos taken (currently on their home page – see below) or the release of their new album ‘Got Your Six’ you will notice Zoltan Bathory in the forefront with a Zombie Brainsaw and another member of the band in the back with what looks like a cleaver. This is an example of strategic product placement. Weather it was intentional or not, I don’t know… but it was brilliant!!

5fdp homepage

The product placement by the production team at SDARR Studios is an example of a business capitalizing on an opportunity to get their products placed into a photo shoot for something or someone that has a longer reach on the inter webs.

It would be interesting to see if they noticed an increase in sales after this photo shoot. Product placement has been used for years in commercials, music, movies, sporting events, and everything else that has an audience. I even remember when Pepsi and Doritos had a cross promotional commercial during one of the main sporting events, might have been the Super Bowl.

To conclude on this and how you can leverage it with your online business, think about all the people you know with websites, Facebook pages, twitter accounts, instagram feeds and so on. Now, imagine if you collectively came together and promoted each other to your respective audiences. Your online reach just extended far beyond it’s current reach.

Think  more about networking on the internet like you might about networking at your local meet up, or coffee shop. Networking on the internet provides so much return that it can’t be ignored. Start paying attention to it!

The Power of Marketing With Music On Hold

I know you’ve heard it time and time again but what they say is true… “When you have an opportunity to potentially sell your client either further on your company or a service, do it!” This case study goes a long way in giving an outsider an understanding of the power that marketing through hold messaging. Fortune five hundred companies have done it for years so why hasn’t it trickled into the small business owners suite of tools? Simply put, until recently this was a very exclusive marketing tactic reserved for the big players until company’s like Music On Hold came in and made it an option for everyone.

https://thefinancialbrand.com/29630/easy-on-hold-music-messaging/“As a small financial institution, a little marketing can go a long way,” the CEO told me, “and we certainly don’t have money to throw around. We need to target our spending to make the most of our limited resources.”

When we began working with his team, he had just added a newsletter for its 3,900 members, increased the frequency of in-house marketing fliers from quarterly to monthly, and encouraged representatives to get more involved in pitching promotions to members as they visited the credit union or used the drive through.

This service is unlike any other marketing tactic you will employ because it’s the only time you will be able to reach your client in a captive state unless you have a very trained sales staff that knows how to frame calls. You customers can’t help but to be attentive to everything your promps are saying because one misstep could mean more time unwanted time on the phone.

But there was one element still missing: custom on hold messages for when members had to be placed on hold, and it was this service the CEO was desperately seeking. He knew that callers are captive, they’re listening and they want information. So we explained how we produce custom content and play it back into the telephone through a cloud-based player that starts and stops content on certain dates or days of the week, as granularly as the situation calls for — perfect for communicating their time-sensitive promotions to current or prospective members holding for assistance.

Our client agreed to the service. We shipped the equipment, his IT team installed it, we began to produce and upload messages and, several months later, received this unsolicited letter: “When we added Easy On Hold to our phones, booked loans increased from roughly $300,000 per month to $900,000 monthly. Clearly our policies, promotions and staff played a major role in our success, but without this marketing, who would ever know? Currently our members are telling us that they learned of our products and promotions in roughly equal portions: 1/3 from our newsletter, 1/3 from our teller line and 1/3 from Easy On Hold.” Read more…

 

How To Sound Like a Fortune 500 Company With a Call Tree

Even though that the automatic telephone greetings is usually the initial conversation a person has with a company, numerous small businesses do not consider the actions needed seriously to guarantee they truly are producing on the first-impression. Most small businesses don’t need the initial audio recording features that call tracking provides but they are missing a huge potential marketing opportunity by not investing in a personalized call tree. Determining what choices to provide to a customer, creating the greetings such that directs the potential client is vital.

Below, we determine several guidelines regarding establishing a telephone greetings that provides the impact you certainly will effectively and appropriately set for the potential client requirements, and are as structured as a fortune 500 organization.

Get The Most Crucial Information Immediately

The primary reason for your greetings that is automatic ought to be immediate these towards the correct individual to deal with their requirements, or to possibly instantly supply callers using the info they need. That you don’t wish to consider lower your phone menus using an excessive amount of info, however for many companies, you need to contain your workplace hrs (if you don’t run 24/7), as well as your website link, when you yourself have one. This can instantly solution numerous callers concerns, conserving these (and also you) period.

Depending the company, you might contemplate including other forms of related info on. For instance, if you run a clothes shop, you will include the place of one’s company in the beginning of one’s greetings and never have to search on the internet therefore clients will find you effortlessly.

Before anyone expose any choices for callers to select from, it’s also wise to allow callers realize when they understand it, anytime that they are able to enter the expansion of their celebration. Making clients once they know who they would like to achieve to hear a summary of options is just a certain method to displease them.

Call Prompting System Must Be Easy To Understand

Whilst an inclusive listing of extensions may ultimately get clients towards the individual they require, that you don’t wish to place these of ready via a listing of limitless options through the experience after.

For this finish, your greetings that is automatic must have a simple and very easy menus of choices which are simple to choose between. Mid-sized and many little companies need only one degree of choices e.g, using numerous extensions. “Push INCH regarding Revenue, Push TWO Regarding Customer Support, Push THREE regarding Charging,” . Usually utilize self explanatory expansion titles or perhaps a obvious call e.g, to action. “to listen to your balance, push THREE.”

Furthermore, be sure you listing choices in order that is statistical, e.g. “Push INCH for Reserving,” “Push TWO regarding Room-Service,” etc. (this might seem like a no brainer, but believe me, businesses do get this to error.) Do not leap about and allow it to be difficult for clients to consider which choice is. It’s also wise to usually provide callers the choice to become instantly associated with an individual that is stay by pushing several, such as for instance “NINE” or ” ” or stating something similar to “talk to a realtor.”

Listing the Absolute Most-Required Choices Initially

We’ve all been there: anyone push several, are attached to an expansion, explain the thing you need towards the individual who their initial reaction as well as solutions would be to move you elsewhere. Checklist the absolute most generally required choices at the start of the menus to ensure your visitors get wherever they have to continue the very first attempt.

For instance, in case furnishings is sold by your organization, numerous callers probably possess demands concerning concerns about repayments or the standing of the purchase, therefore these choices must certainly be outlined initially. Clients are most likely phoning in using tech support team problems, so that your customer support division must certainly be among the initial options in the event that you market application methods.
Use Plug-Ins that are Individual to Exchange Comprehensive Info
Auto-attendant providers usually provide extensions to info- mailboxes that are just. These mailboxes perform a pre recorded greetings that enables the harasser to possibly replicate the info by pushing a switch or move back once again to the primary menus and provides details about the individual or division using that the mail is connected. Make the most of these containers even to express extra information about deals and revenue, or to solution frequently-asked concerns such as for instance instructions for your company

Company Slogan Must Be Brief

 

Your organization mantra is a superb method to place in the beginning of the phone call but something greater than a brief phrase top in to the menus may irritate callers. For instance, you start with, “thanks ” is a great example of maintaining a mantra nice and brief. ” regarding phoning Beds Are People thanks. We are a household-operate company getting just the best quality beds for more than 30 years to clients, and it is our objective to assist you obtain the ideal evenings rest,INCH about the other-hand, is not way too short.