This is an update to our “Airbnb: Does The New Kid On The Block Present An Investment Opportunity?” posted in March, 2019.
The year was 2007. Three air mattresses and the promise of breakfast turned an apartment into a weekend rental, and Airbnb was born.
Nearly 15 years later, in more than 190 countries and 81,000 cities, the short-term rental service has settled in to stay.
Over time, more than four million hosts around the world have opened their homes, apartments, camping grounds, and more to strangers looking for a travel adventure and a community to enjoy it in.
“On the surface, what people come to Airbnb for is a new way to travel, but below the surface, what they find on Airbnb is connection. They experience a deeper connection to the communities they visit and the people who live there. This connection is delivered by our hosts, and they provide guests with a deeply personal experience — after all, guests are welcomed in their homes, and they live in their communities.”Airbnb Founders
In North Carolina, beach house rentals, mountain cabins, glamping sites, and tiny houses are just some of the unique stays promised by Airbnb.
So, what if you have an extra room in your house or a garage apartment you could remodel and rent out — Is Airbnb a worthwhile investment?
Pros and Cons of Investing in an Airbnb
There’s no one-size-fits-all answer to whether offering a short-term rental is right for you. So many factors are at play.
The truth is people choose to rent out their spaces for a number of very good reasons:
- Extra money – Even the founders of Airbnb chose to rent out their apartment so they could make a few extra bucks to pay their rent. When you invest in a short-term rental like Airbnb, it’s easy to raise prices when the demand’s high and lower them during the off season, so you have some control of what you’re bringing in.
- Available vacation home – Invest in a home or apartment in a location you love, and your vacation home is set. Visit whenever you like and rent it out whenever you’re not planning to be there. It’s nice to think about owning a vacation home that actually earns money for you, isn’t it?
- Tax breaks – You’ll want to talk to your accountant about the benefits of owning a vacation rental property. Find out what deductions you can take before you decide to invest.
Extra cash, an (almost!) always accessible vacation home, tax deductions – sure sounds good! So, what’s the downside?
- Inconsistent rental income – Depending on where you live, you may or may not be able to get tenants renting your space consistently. Without a steady stream of renters, your income from the property could be less reliable than you’d hoped.
- Unvetted tenants – Airbnb has developed a robust system where property owners and renters alike rate one another, but who’s to say those reviews are completely trustworthy? Renting your property for short-term stays demands a bit of trust on your part. It also means you’ll want to be close by so you can routinely check the space.
- Ever changing local laws – Regulations for short-term rentals vary from city to city, and they’re subject to change with shifts in leadership. It’s best to carefully research the local laws in your area before you invest in remodeling that garage apartment or barn loft.
City of Raleigh Says, “Yes, But…” to Airbnb Short-Term Rentals
If you’re looking for proof that the short-term rental landscape is ever changing, you won’t need to look far. Right here in Raleigh, NC, the City Council adopted the term “short-term rental” in February 2021. Just two years before, it had been illegal for someone to rent out their Raleigh home as a short-term rental — defined as less than 30 days.
In 2021, the City has warmed up to the idea, and the Raleigh City Council added the term to the Overnight Lodging Category and clearly defined it: “A dwelling unit that can be used for overnight lodging accommodations that is provided to renters for no longer than 30 days for compensation. A portion of or the entire dwelling unit can be used for lodging, including part or all of an accessory structure.”
The City Council also included standards such as:
- The requirement that property owners apply for a zoning permit from the City and then renew it annually.
- Specifics on where cooking facilities are allowed — not in the bedroom!
- Guidelines prohibiting events and gatherings in short-term rental spaces.
- The requirement to keep a running list of everyone who rents the space for three full years.
It’s important to remember that these are the standards in the City of Raleigh. Other cities may have different guidelines, so be sure to check the regulations in the city you hope to rent property in.
HOAs Draw Boundaries for Airbnb in Neighborhoods
Local laws are not the only thing to be concerned about. Your neighborhood HOA may also have something to say about you renting out your condo or garage apartment. HOAs aren’t always thrilled about short-term rentals in a neighborhood, and it’s easy imagine why:
- More traffic in the area could result from renters coming and going throughout the week and on weekends.
- Temporary residents may not feel as invested in the property or as strongly about keeping it in good condition — they may leave the place damaged.
- Parties or large gatherings at the rented units may disrupt a typically quiet neighborhood.
- Trash and recycling responsibilities may be ignored, causing bigger problems with rodents or stray animals.
It’s easy to understand why HOAs may not favor Airbnb or other short-term rental services, so be sure to check out what yours has to say before you make the investment.
Some HOAs are navigating this tricky territory by allowing the rentals but putting rules in writing to address potential issues and keep problems at bay.
If you’re considering investing in a short-term rental property in the City of Raleigh, be sure to reach out to the Gaskill Realty team so we can guide you to ideal investment properties for your budget.