Is AirBnB the new way to earn high ROI?

air-bnb-the-way-to-live

AirBnB founders Joe Gebbia and Brian Chesky solved a huge problem for travellers who could not find a place to stay or afford a place in large cities throughout the United States. They created a solution, renting local apartments/condos for travellers to rent from individuals living in the city. Now with AirBnB being offered in more than 190 countries throughout the world, the company has proven that their company solved a global problem in finding rooms. The AirBnB founders, created two opportunities, one for the travellers who will be saving money, and two for the owners of the houses/condos that are being rented.

“Now with AirBnB being offered in more than 190 countries throughout the world, the company has proven that their company solved a global problem in finding rooms.”

Profitable Enterprise

 AirBnB has become a profitable enterprise for individuals who have decided to put their properties up for rent on the site. AirBnB is the new way for investors to get a high Return on Investment (ROI). AirBnB provides great financial returns to hosts and to their superhosts. Superhosts are hosts that have hosted over 10 trips, maintained a 90% response rate, received a 5-Star Review from at least 80% of the time of being reviewed (with at least half of the guests leaving a review), and completing each confirmed reservation without canceling.

Toronto Vancouver AirBnb

Location is a key factor with getting a good return on AirBnB investments. In Canada, the most successful cities are Toronto and Vancouver. Let’s take a look into what the numbers will be for a 2 Bedroom Condo in Toronto:

Cost: $400 000 Down Payment (25%): $100 000 (borrow $300 000 from the bank)

Monthly Expenses

  • Monthly Mortgage: $1800.00 (Taxes, Insurance, Interest) + Property Management: $700.00 = Monthly Condo Expense: $2500.00

Expected Bookings

  • Estimate 6 bookings throughout a month.
  • 6 Bookings with an estimated stay of 3.5 Days at the Condo = 21 Days of Usage

Other Expenses

  • 21 Days * 175/Night = $3675.00
  • Cleaning Fees = $50 * 6 = $300.00 Supplies Fees = $25 * 6 =$150.00 Rental Commission = $110.25

Approximate Profit: $3675.00 – $2500.00 -$300.00-$150.00-$110.25 = $614.75

Diversification of Investment Portfolio

AirBnB provides investors an opportunity to diversify their rental portfolio, by entering a market with a higher return, however the investors will also face risks. The investor will always face the risk of:

  1. A house being trashed and damaged.
  2. The risk of taxation issues with the local country’s tax board.
  3. Insurance Issues (Homeowner or Landlord) After weighing the pros and cons investors can quantify if this investment is suitable for them.

Buy Your Own Condo and Take Advantage of AirBnB

There are endless opportunities to start using AirBnB to your advantage. Have questions? Contact Us at 1-(800) 806-7611