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Former Airbnb Rentals May Soon be For Sale

Posted On May 26, 2020

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Travel and tourism is one of the industries hardest hit by the coronavirus pandemic.  As Americans adapt to new social distancing guidelines, many have suspended travel plans and cancelled vacations.  Airbnb hosts are starting to feel the strain of reduced traveling.  Unlike large hotel chains with the capital to withstand market fluctuations, many Airbnb’s are owned by sole proprietors managing only one or a few properties.  As social distancing continues, many Airbnb owners will have to shift their business model or sell their properties rather than cover the costs of maintaining an unoccupied short-term rental home. 

Some Airbnb owners are cutting prices to stay competitive and attract some of the few guests searching for a short-term rental.  When you buy a rental home, you need to calculate how much you’re going to charge for rent and also how low the rental fee can go for you to still maintain the property.  In the case of a market shift, you’ll know how low you can lower the price if needed.   

Other Airbnb owners are choosing to sell their properties altogether.  This could benefit first-time home buyers in many inventory-starved markets.  With more, smaller, single-family rental homes now for sale, first-time home buyers could have more options.  Additionally, more homes on the market may lead to sellers lowering their asking prices to stay competitive.  If you’ve been thinking about buying your first home or downsizing to a smaller home, a former vacation rental could be just the right size.

Airbnb has made an effort to provide relief to hosts who are struggling with cancelled reservations and lost income.  As of this month, Airbnb allocated $250 million to help pay for coronavirus-related guest cancellations, paying hosts 25% of what they normally would receive through the Extenuating Circumstances policy.  The company also offers virtual experiences for travelers stuck at home and special accommodations for frontline workers, like healthcare workers, traveling to help with the pandemic.

Before you invest in a rental home, whether it’s a short-term vacation rental like an Airbnb or a long-term leased rental, it’s important to be financially prepared to cover the costs of the home’s mortgage or maintenance if it is unoccupied for a period of time.  If you’re going to depend on rental income to cover all of the costs of your rental home, you might not be ready for an investment property.  If you are financially prepared to purchase and maintain a rental property, this could be an opportunity for you to make a purchase.

Before you make any investment decisions, talk with a financial advisor and a mortgage lender ahead of time to be sure you are prepared to cover the homeownership costs until travel resumes.

 

Sources: Airbnb, Money.com