There is a new market arising for home flippers due to Airbnb and VRBO. Some home buyers want a property fixed up so they can turn around and use it for short-term rentals or vacation properties. A few years ago, the answer to the question, “How has the fix/flip industry changed?” had to do with fewer foreclosures. Now many savvy home flippers are less concerned with foreclosures and more worried about finding homes in areas without restrictive HOA (homeowner associations) or county regulations that make it more difficult for Airbnb hosts and landlords. Home flippers also construct homes with two separate living areas in mind for the Airbnb hosts that want to reside in part of the home while renting out the other side of the house. According to an article by The San Diego Union-Tribune, the short-term rental debate drew a lot of people to the San Diego City Council’s committee on short-term rental regulations. Experts in San Diego calculate that if trends continue, the number of new Airbnb listings will surpass new homes constructed by 2019. As far as profits, some point out vacation home listings often gain a projected monthly income of as much as $9,800 in areas such a Pacific Beach. In Florida, short-term rentals are also popular.
Checking out the HOA
Before choosing a home to flip with the purpose of marketing to an Airbnb host, thoroughly check out the homeowner association rules and regulations. If possible, talk to the property management company associated with the subdivision. While outsiders are not necessarily allowed to attend an HOA meeting, most HOA presidents or board members will give an honest answer about the attitudes toward Airbnb or similar rental programs. Some associations require the owner to live in the home for at least a year before turning the home into a rental. Ideally, find a home to flip in an unincorporated area without CDD (community development district) fees or HOAs. With no deed restrictions, it’s easier to market the home as a short-term rental friendly home. Keep in mind the home is ideally near amenities, shopping, grocery stores or tourist attractions. If it’s too far off the beaten track, come up with a theme such as the “bird sanctuary,” or “fisherman’s haven.”
Constructing a home within a home
Ideally, it pays to invest in duplexes if you have Airbnb at the back of your mind. Airbnb hosts who want a place to live love duplexes because they can keep a watchful eye on their property next door while still enjoying privacy. If you invest in a single-family home to flip, find out how much it will cost to add a separate private entryway and second kitchen. For some hosts, a mini kitchenette is enough for them or their guests. The key is to make sure each separate living space has at least one private bedroom and bathroom, and small living area. If local restrictions do not allow for drywall to completely enclose the two different living areas, opt for a secure door that separates the spaces. Avoid making the access to the vacation apartment through a garage or back sliding glass door. Ideally, guests want to walk through the front door or a side door to their rental.
Other important factors for a home renovated for Airbnb include private yard access or outdoor living areas, parking space and good outdoor lighting. Invest in doors with a keypad for a key-less entry. Some guests want access to a washer and dryer. If the investment property is not close to a laundromat, consider a stackable washer and dryer. When marketing your fix-and-flip property, make it abundantly clear to potential buyers that the home is suitable for Airbnb or similar short-term rentals. By doing the homework for your home buyers first, you create a profitable niche. If you know the kind of money other hosts draw in a similar area, point that out to potential buyers. At Center Street Lender, we know investors often wonder how the fix/flip industry has changed through the years. We are an experienced private money lender ready to serve your financial needs. For more information, contact us.