Read this first before you invest in an Airbnb
On the latest episode of The Richer Geek Podcast, I had Carissa Vivirito, real estate agent join me. Carissa has expertise in short term rentals in Scottsdale, Arizona. Normally, I would not be so location specific, because I have listeners all over the country. But I felt like for this mini series we are going through, it really does make sense to feature this local market and this agent. Why? You'll learn more as you continue to read or tune into the Episode 19 of The Richer Geek Podcast.
Carissa Vivirito is a realtor in Scottsdale, Arizona and she created her real estate company after 15 years in the digital media space. Carissa’s company is called Evolve. And she created this brand really to reflect how she experiences real estate which is from the heart, as Carissa shares with her community, which would be her clients, the partners that she works with and people that she interacts with on a daily basis. Evolve is a lifestyle brand that invites people called to work with her company that are driven to be involved in something bigger.
Because of Carissa’s knowledge,background and understanding of the short term rental market, specifically in the Scottsdale Arizona area, she took us through historical trends and background in just vacation and short term rentals and how it has led up to what we see now.
Airbnbs and VRBOs have been around for a while, but they really started to gain momentum, around the same time that we started seeing the Uber's of the world and the lifts and the Postmates. People realized how much space they have in their homes and either they could rent it out to help cover their mortgage, as a room share type situation, or rent out a whole property to families or travelers as a legitimate full time business to generate more income than you could on a long term rental from the properties.With the combination of the technology and the marketing awareness behind it, along with market demand of people wanting them more. People want a new experience when they travel so rather than staying at a resort or Four Seasons they now look at short term rentals.
The whole state of Arizona, specifically Scottsdale in 2016, passed a law in the state and the city level banning any restrictions on short term rentals. There are other cities that are the exact opposite. New Orleans and New York are both pretty strict. There's a handful of large vacation markets that limit that you can't rent for short term. So those who do are really getting premiums, and technically breaking the law and saying the risk is worth it. But the market here in Arizona is really primed to make more money because it's totally legal.
There have been a quick rise in the last three years. Since that happened in 2016,people have been wanting to get into that market and buy properties solely for the interest of short term renting them. Whether it's a condo or a full family home with a pool, it really has been on a rapid trajectory of growth.
Scottsdale and (please insert other town name) are ranked number 1 and 10 on the list of Top 10 Profitable Places to own a short term rental because it's a very friendly area and state to invest in. Scottsdale in particular and in the Phoenix metro area has always been behind travel and tourism. When compared to other markets, it's a very cheap market to buy in. The fact that you can buy a single family home totally remodeled with a pool for under half a million in Old Town Scottsdale. You can't do that in some of those other top markets. It's very beneficial for a number of reasons from an investment standpoint, and a market share return on your investment standpoint.
Key tips to follow if you are interested in purchasing property are:
Decide what type of property they want to get. It's much like long term rentals, it's usually better to buy a home or some sort of property that's not within an HOA. Since they are kind of rogue, they kind of can make up their own laws and limitations at any time.Obviously, they need ownership, approval of those things. But the risk is even if you buy somewhere that allows short term rentals. Now, they may not always allow them an HOA if they have jurisdiction to override those state and city laws that we talked about. However, if there is a good portion of short term rentals in a community when you are buying odds are you're fine because the owners aren't going to pass laws that hurt themselves.
You should also be running a performance analysis. Find out:
What can you expect for a nightly average rental rate? Check out Airdna to get competitive information about markets across the US.
What occupancy or vacancy can you expect?
How does that look from a total cash flow perspective?
You do want to stand out and being an outdated property usually doesn't cut it for people. It all comes down to how attractive your property is, how good you are at marketing it, how on top of it you are as a business.
How To Market
One area you can market in is self-managing or outsourcing the marketing. Some owners are very hands and self managed, meaning they run everything from the marketing, managing the profiles, make sure the places cleaned and turned over and the decor, photography, everything. With outsourcing management you can outsource everything or portions of it. Vacation management companies will usually offer a range of those, whether you just want some operational support, or you just want it all handled.
Other ways to market is you could have your own website for the product, social media profiles,pick a theme for the properties for example, green turtle. They would have green turtles everywhere, part of the decor is green, with a funky color green mural with turtles on it. They will then showcase this on social media to drive more visibility to you the property.
What Are Ways People Can Increase Income From Short Term Rentals
You can charge for items that are non necessities (ex. Bicycles, pack and play)
Charge for items people will need but not travel with.
Special Services (Pool heater)
Add on a cleaning fee
Use dynamic pricing tools to optimize your rates
How To Protect Yourself
It is advised to set up an LLC so that you are covered by the right insurance for your short term rental property. Make sure to protect your personal assets, look into creating an additional contract instead of just relying on AirBnB or any other site you are booking off of. It is also within your right to charge a security deposit.
How To Make Your Listing Stand Out
It's all about incredibly good photography, really strong marketing copy.Photography is so important as well as the decor of the place. It's worth investing in high quality photography. It's worth paying somebody a couple hundred bucks to get you high quality, wide angle, high resolution photographs. The photos aside from your reviews are everything. Helpful descriptions, create a brand theme for your property. Having a niche will also draw people in.
For more details, click here to check out Episode #19
Or, if you’d like to download a copy of Carissa’s presentation, click here.