Being a part of a real estate membership exposes you to different real estate prospects. One of this is Airbnb investing. As a premierlodging service, Airbnb has helped travelers get alternative lodging, and has made profits for leasers who are renting out their pieces of real estate.

However, issues have arisen regarding Airbnb’s platform. Someneigh borhoods are not equipped to handle short-term rentals in tourist destinations, prompting them to take action. In addition, having an Airbnb does not equal profit, despite offering cheaper lodgings than hotels.

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Things to Watch Out for in Airbnb Investing

There have been plenty of red flags regarding property investment issues with Airbnb. These red flags are the reason Airbnb’s success should be taken with a grain of salt.

Below arethe red flags you need to look out for when investing in an Airbnb:

  1. Very strict laws onshort-term rentals
    Som epopular tourist destinations have enacted short term rental laws to control Airbnb visitors. As long term investors, this raises an alarm, especially if you want to set-up Airbnbs in those places.

    Here is a list of cities that have passed laws regarding short term rentals:

  • New York City, USA
  • San Francisco USA
  • Barcelona, Spain
  • Berlin, Germany

On the flipside, there are popular cities like Amsterdam, Netherlands, and London, UK which have laws more receptive to short-term Airbnbs. The Dutch city has a tourist tax agreement with Airbnb, while the British capital allows residents to rent out space for up to three months.

To make sure you’re not shortchanged by public policy, check local legislation regarding short-rentals. See if the laws are fully implemented on country, state/province, and city levels.

  1. Properties that are beyond your investing budget
    Want to get a funky tree house or a hilltop mansion for your Airbnb, but the price tag is amazingly high? Take a rain check on that. It is unreasonable if you expand your spending beyond your allotted budget.

    Return on investment is also another factor. Your ROI is determined by a combination of property price, rental rate, and occupancy rate. If you could not balance these all out to make a profit, better reconsider your investment.

  2. Investing in places with low occupancy rates
    When looking for an Airbnb within a popular city, invest in neighborhoods that people will surely go to. Yes, you can save by buying a cheap flat in New York and renting it out at a high rate. But if it’s far from a subway or any tourist spot, you will lure less guests and risk an investment loss.

    However, when the occupancy becomes aggressive, the red flag on legislation should also be considered. The best solution for you is to find a middle-ground rental to invest in. For example, look for a place 15 minutes from the subwaybut near convenience stores.

How to Respondto Airbnb Red Flags

Airbnbs are still a growing industry, and is still finding its footing. But you need to cut your losses while you are ahead. Here are some tips to keep in mind as you invest in Airbnbs:

  • Stayup-to-date with lodging trends. Read the news or follow real estate lodging pages so that you are well informed on the industry. Keep a look out on the latest markets for tourists, and check lodgings that are suitable for your intended market.
  • Network with fellow Airbnb service providers. No one else could provide the best insights on the industry than those involved in it. Talking to peers who have extensive experience will guide you in your investing decisions. You’ll be more prone to calculated risks in Airbnb, which is a good thing.

Networking with Airbnb investors in a real estate association will help you with your prospects in the industry.With your acquired knowledge, you can go about your Airbnb investing confidently.