Advertiser Disclosure

advertising disclaimer
Skip to main content
booking vacation rental

Airbnb Needs Millions More Hosts -- Is It an Investor Opportunity?


Apr 26, 2021 by Matt Frankel, CFP
Get our 43-Page Guide to Real Estate Investing Today!

Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.

*By submitting your email you consent to us keeping you informed about updates to our website and about other products and services that we think might interest you. You can unsubscribe at any time. Please read our Privacy Statement and Terms & Conditions.

Home-sharing and vacation rental platform Airbnb (NASDAQ: ABNB) has a problem. There are about 4 million hosts currently using the site to rent out their properties, but this isn't nearly enough. CEO Brian Chesky recently told CNBC that the company will need to add millions of new hosts to the platform if it wants to keep up with demand.

This is certainly a good problem to have -- a massive opportunity to go after and a ton of consumer demand that should help convince hosts to use the platform. But it's still a problem for Airbnb, as not having enough hosts on the platform to accommodate demand will not only cost the company millions or even billions in lost revenue but could also be a turnoff to potential customers who can't find accommodations.

Specifically, Chesky anticipates a "travel rebound coming that's unlike anything we've ever seen." And Airbnb is currently trying to recruit new hosts as quickly as possible.

Could this be an investor's dream scenario?

At first, this might seem like a great situation for real estate investors, especially those who might be interested in buying a vacation home. After all, the CEO of the largest vacation rental platform in the market is telling you that there's going to be massive demand for vacation rentals that cannot be met with the current inventory on the site.

However, it's not exactly a no-brainer, so don't run out and start buying as many vacation properties as you can. The real estate market certainly realizes that there's a ton of pent-up demand for people to get out and about, and this is being reflected in many popular vacation rental markets around the U.S. And this is on top of the already strong real estate market fueled by generally low inventories and record-low mortgage rates. In fact, the typical home value in the United States has increased by 10.6% over the past year, according to Zillow (NASDAQ: Z) (NASDAQ: ZG).

It's also worth pointing out that because of high demand, many vacation homes are selling for more than their appraised value, which can lead to financing issues. In many cases, if a property doesn't appraise for the sale price, the buyer needs to come out of pocket for the difference (meaning that the down payment could be significantly larger than the 20% many buyers expect).

The point is that vacation demand has increased over the past year or so, but so has the value of real estate that could potentially be listed on Airbnb. Don't get me wrong -- buying a vacation rental could still be a smart investment, especially considering the expected wave of demand that's coming. But it's important to make sure the cash flow you expect to receive justifies the higher price you'll likely pay to buy a property. And, if you're seriously considering becoming an Airbnb host, it's a smart idea to look into what being an Airbnb host entails, as all types of real estate investing have their pros and cons.

Unfair Advantages: How Real Estate Became a Billionaire Factory

You probably know that real estate has long been the playground for the rich and well connected, and that according to recently published data it’s also been the best performing investment in modern history. And with a set of unfair advantages that are completely unheard of with other investments, it’s no surprise why.

But those barriers have come crashing down - and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.

To get started, we’ve assembled a comprehensive guide that outlines everything you need to know about investing in real estate - and have made it available for FREE today. Simply click here to learn more and access your complimentary copy.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Airbnb, Inc., Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool has a disclosure policy.