Great question, Tyler! I get this one a lot because short-term rentals can be extremely lucrative if done correctly and not in opposition to local or homeowners associations (HOA) regulations.
You’ll need to split your short-term rental mindset into two different categories. One is when you are living in your condo, you will be what’s called "owner-occupied." This carries with it much more freedom to rent out the bedrooms than if you’re not living there. In almost all cases, you should be allowed to rent out rooms on Airbnb, VRBO, and other short-term rental channels if you also live in the condo.
This is a popular method of real estate investing that’s closely related to house hacking. Live in one unit, in your case your bedroom, and rent out the others to cover or exceed your ownership costs. Great work!
Where it gets a little trickier is when you move out and rent out the entire condo on Airbnb. In this case, the first thing you need to do is check with your condo board association to ensure that short-term rentals are allowed in your building and, if so, what are the restrictions.
Many HOAs place restrictions on short-term rentals, usually defined as stays under 30 days in length, such as capping them or completely disallowing them. Other HOAs have their own rental pool and will force you to enter those instead of renting on Airbnb.
Once you’ve consulted your building association, you will need to do some research on short-term rental regulations in your municipality. Do they have restrictions on these types of rentals? Many do, and the restrictions can range from an outright ban to fully allowing them. A simple Google search of your municipality with the keyword “short-term rental regulation” should do the trick.
Alright, so we’ve got your bases covered, Tyler, to ensure you’re playing by the rules. Now for the fun part.
Is Airbnb a good real estate investment strategy for condos? Absolutely. Average daily rates can range, but in my experience, you can typically expect a 2-4x return than if you had a longer-term renter in your condo. This higher income is great, but it does come with some drawbacks.
These include heavier wear-and-tear on your property, potential partiers, higher insurance costs, much more cleaning and maintenance costs, and more of your time spent answering questions and interacting with guests.
That said, it can be an excellent way to generate income, and here are a few quick tips to get you started on your Airbnb journey.
Daily Rates: You can utilize resources such as AirDNA to check the average daily rates in your region. This will allow you to make some income projections.
Insurance: Be sure to call your current insurance provider and get coverage specific to short-term renting, or use a company that specializes in short-term rental insurance, such as Safely.
Guest Experience: Be ready to provide an exceptional guest experience, as your ratings on Airbnb will make or break your business. Use digital guidebooks for a seamless experience, and be ready to immediately respond to all guest inquiries.
Channels: Don’t just rely on Airbnb for bookings, check out other channels such as Booking.com, Vrbo, HomeToGo, and so on.
Good luck and happy hosting!