Vacation rental websites such Airbnb, HomeAway or VRBO (.com) is making it easy for property owners to rent out their own homes, condos, or townhomes offering unique lodging to tourists at rates sometimes cheaper than hotels. Is Scottsdale, Arizona a good idea to buy a property dedicated to short-term housing?
“It can be,” says Juan Pesquiera, Realtor at Attorneys Realty. “There is indeed money to be made in the Airbnb and short term/vacation rental market especially during the season. But you really need to understand what you’re getting into and realize that because this is all still fairly new, the rules are changing, and you also could lose money especially in the beginning.”
Here are 8 Things to Consider Before Buying a Scottsdale Airbnb Investment.
1.Home or Condo type property
Will you be buying a house or a condo (townhomes and lofts included) as a short term rental investment? Condos will allow you to get into locations like old town, Kierland, downtown, mill ave , Tempe town lake ((Scottsdale, Tempe, Phoenix) at a lesser price of a single family home. But then you must factor HOA fees and HOA regulations and rules.
Scottsdale, Arizona has seen its fair share of nightmare Airbnb stories. “Neighbors struggling with grief from short-term rentals will soon get a reprieve. But will it be enough? Gov. Doug Ducey on Tuesday signed a bill allowing for more regulations of short-term rental operators in the state… AZCentral. But Scottsdale struggles to enforce strict rule for Airbnb and other vacation rentals… Examine the local ordinances and rules. The biggest threat to the short-term rental business is swift-changing local laws that limit their use.
- Updated: Airbnb to ban party homes
3. Read the fine print on your HOA or CC&Rs
If you have decided on a condo vs a Single family home. You must find out – Does the Homeowners association allow for short term rentals? If you decided on a single family home, make sure to review your CC&Rs. Many of the new high rise condo developments and new single family home developments in Scottsdale, Phoenix, Tempe restrict short term rental and in the HOA disclosure forms allow a 3 months minimum rental policy for properties in the development.
4. Fees pile up before your 1st guest books
Most new homeowners quickly find out that the list price of a home or condo is just the beginning of a laundry list of expenses. Owning an Airbnb investment property is no different. You need to factor in costs like utility bills, cleaning services, landscaping, pool service and repairs. More importantly: what happens if you can’t rent it out right away or have a slow period of vacancies? Can you afford that? What happens if home values decline, thereby driving down the asking price on your rental?”
Don’t forget that Airbnb takes a 3% service fee from the host for each reservation, which also eats at the profit. Additionally, there are other unlikely yet potential expenses that must be considered. What if your tenant is injured in the home? What if you’re the victim of theft? Are you insured for unforeseen issues or injuries, etc.
5. You’re not the only one
It’s a competition. The company claims to operate in 65,000 cities with more than 3,000,000 listings. How will you differentiate your rental? Airbnb success is based on reviews from people who stay in your home. You will need to wow your guest which at the end will cost you more. This includes items like quality bedding and bath accessories; professional photos and staging the property; welcome gift baskets; not to mention your valuable time serving as a good concierge and providing a list of local vendors, attractions and other hot spots.”
Short term rental is seasonal, and you make more during high season in Arizona. Make sure the property works as a long-term rental or other use like a vacation or 2nd home and even a retirement home. You will retire one day why not decide sooner, rather than later? Short-term rentals listed on Airbnb.com, HomeAway.com or VRBO.com are a great supplement to your rental income, but it is not a good long-term strategy. So, when you’re analyzing a property to be made into a rental, make sure its cash flows as a year-long rental too.
7. Uncle Sam wants his cut!
Know the tax rules by speaking to your accountant. You will need to pay taxes on your rental property.
8. Have fun, enjoy the process, and learn
At the end of the day every real estate investment is the same. Your success is related to the overall market and price value increase. If you manage your property right, consider it a business, account for every expense, and provide a fun, safe, and clean place for guests. As a bonus offer some incentives like free uber/lyft rides, coffee Starbucks card, free dinner at a restaurant to stand out from the rest and the potential of turning a profit increases in return will be a great investment choice.
Scottsdale, Arizona (including Tempe & Phoenix and throghout Arizona) is a perfect place for Airbnb.com, HomeAway.com, VRBO.com, or any short term rental investment. Scottsdale, Arizona offers sunny weather year round. Our winters rarely go below 50 degrees. Arizona State University is the largest university in the country with over 100 thousand students. Our culinary schools are some of the best culinary schools in the country. During the months of October to May snowbirds, sports fans, and people from all over the country flock here. Our resort destination is one of the best in the country. We have cactuses, desert wildlife, some of the best and scenic hikes, best sunsets and sunrises, and a perfect place for you to invest. We are the 5th largest city in the U.S and growing. Who knows you might just stay and retire here? I know I am…
Buying or Selling reach out to Realtor, Juan Pesqueira – Contact