In this video, I am showing you a house that I was initially thinking about fixing and flipping, but am now leaning towards turning it into a short term Airbnb rental. This is a rental property of mine where the tenant recently moved out.
Market rents are around $2,000 a month for this house. In its present condition, if I simply paint the interior and make it “rent ready” I would get around $1,900 a month for it.
If I fix it up really nice with new kitchen, new bathrooms, new flooring etc. and list it on the MLS I could probably get around $330,000. I paid $115,000 for this house in 2018 so that’s a pretty decent spread for just 4 years of owning it. If I spend 30k in rehab that’s 185k of gross profit. Considering that I purchased this house with zero money down (borrowed the entire $115,000 from a private lender) that’s a pretty easy way to make $185,000. Disclaimer: The market moving up certainly helped!
So I could keep this as a rental, I could fix it and flip it for a nice profit or I could turn it into a short term Airbnb Rental. Current Airbnb rental rates indicate that I could get at least $210 a night on Airbnb. So if I rent it out for just 20 nights a month and assume 10 nights a month are vacant, I should still be able to double the return that a rental gives me.
If I add a swimming pool and nice outside built in barbeque area (which will cost $50,000) I can turn that nightly rate into almost $330 which would turn 20 nights of rent into $6,600 which would be more than triple the regular rental rate.
The tool that I use to calculate the Airbnb short term rental rates is: https://www.lexlevinrad.com/airdna-airbnb-market-rental-analyzer/
So what do you think? Should I fix and flip it this house? Should I keep it as a rental? Or should I turn it into an Airbnb? Fixing and flipping is easy. Keeping it as a rental is even easier. Turning it into an Airbnb requires a little more work but it’s hard to argue with the cash flow of the short term rental.