If you combine the top 5 hotel brands in the world, you’ll find that Airbnb has done better than them all. There are more rooms available on Airbnb than these companies have been able to put together, meaning that an Airbnb investment property is a pretty good idea.
If you’re considering an investment property in Puerto Rico, this could be the way to go.
Here are four tips for putting together your investment.
1. Find the Right Neighborhood
Short-term rentals on Airbnb typically serve a very specific purpose. Most hotel properties are located by airports and transit hubs. If not, they’re located in downtown commercial sectors for servicing working people and tourists.
If you’re looking to buy a property in an up and coming city, think about tourism and where people are looking to enjoy their time off the beaten path. The places to seek out an Airbnb property are near the hip bars, cafes, and restaurants that are starting to get written up in national magazines. Think about where the natural or cultural draws are.
To get a really strong idea of where to invest, look at the Airbnb site itself. You’ll notice that there will be certain areas with a high concentration of high priced short-term rentals. If you’re able to get an inexpensive place and price your space competitively, that’s the right neighborhood.
Do some research, ask around, and, if you’re from out of town, visit the place yourself. You’ll get a lot more from just walking around than doing research online or listening to word of mouth.
2. Beware of Obstacles
After you’ve found your location, getting it up and running takes some effort. You’ll have to do more than just front the money for a property and list it on Airbnb. You need to learn about local regulations and for how long you can rent your property each time.
In some cases, you can only rent the property out for a few days at a time without being present in the space. Every city has its own regulations and standards for short-term rentals so do your research in advance. Puerto Rico is no different than anywhere else when it comes to regulations.
There are often homeowner’s associations to contend with as well. They might have rules dictating what you can do. For yet another hurdle, look at your mortgage company’s rules and regulations about short-term rentals because you might not be allowed to sublet.
Rules are changing in cities around the country. As some people decry the practice for gentrification, your renters might feel unwelcome or be driven out quickly. You need to find a place that is friendly and welcoming to the plan that you have rather than operating at the margins of legality. There is a new law that is expected to pass soon that will make it illegal for HOA to not allow short term rentals.
3. Be Prepared for Expenses
The listed price for a home isn’t the only expense that you need to worry about. An Airbnb investment property requires a lot of setup and a lot of maintenance. You’ll be tasked with doing more maintenance on your Airbnb property than you would on your own home.
You need to be sure that you’ve got cleaning services ready to arrive after every stay. You’ll need to pay for landscaping and the maintenance of any amenities like a pool. You also need to pay for insurance because if anyone is injured on your property, you’re going to be liable.
If you have to wait to rent out your property, are you prepared to make no money while you perform repairs? You’ll have total vacancy while you prepare the property or if you have to do any major work.
There will be ups and downs, storms that cancel plans, and off-seasons. If you choose a fairly inexpensive property, you might have bought someplace that has only seasonal rentals. Are you prepared to absorb the fees while your property sits unrented?
You need to pay for all kinds of insurance to keep yourself from losing out on your investment, so make sure you’ve budgeted for everything.
4. The Field Is Competitive
With millions of listings in tens of thousands of cities, the competition on Airbnb is fierce. If this is going to be your full-time income, you need to make sure that you plan accordingly. You need to work to market your rental as unique and a better option than a place that might be right next door.
This requires great photos, great amenities, and maybe even a fridge full of groceries for every guest.
You live and die by your reviews, so you need to stay a cut above the rest of the competition. You need to spend a little more than other people to achieve success. It’ll cost you in bath accessories, nice bedding, and even some welcome gifts for everyone who stays.
Remember that you’re acting as concierge when you have people on your property. You might have to put together a map to show them where to go.
Don’t be afraid to start slow when you’re trying to figure out what works for you. It takes a while to differentiate yourself, especially if you don’t have a background in hospitality.
Start by renting out a room of your home and giving it your all. You’ll get a feel for what Airbnb renting is like before you’re forced to commit.
Airbnb Investment in Puerto Rico Is Smart
If you love the island and the culture of Puerto Rico, an Airbnb investment property brings lots of benefits. You could have your own place to visit as well as a reason to stay and work on the island. We have helped a number of new investors on the island find the right property and help them remodel the property to have it Airbnb perfect to make real returns on there investment.
If you’re wondering how the economy is doing post-Maria, check out our guide for details.