Real estate investors are constantly looking for ways to maximize their profits and minimize their costs. They’ve gone through great lengths to optimize their business operations. Often, real estate investors find themselves in the landlord business. For many of them, this can be an ideal way to create a regular stream of income while maintaining an asset that is constantly appreciating. Ideally, real estate investors who are in the landlord business, maintain rental rates that are high enough to cover their basic expenses. These expenses can include their mortgage payments, utilities and maintenance for their investment properties. There are some unfortunate events when real estate investors have expenses that are higher than their profits. This creates an unfavorable situation for a business owner for obvious reasons. Recently, there has been a new business model that allows real estate investors to realize higher profits for their rental properties.
The Airbnb business model gives real estate investors an opportunity to recognize higher profits while maintaining the same expenses. Using a short-term rentals business model such as Airbnb gives real estate investors a unique opportunity to capitalize on a highly profitable market niche. As an investor, if you’re able to find the right property in the right location, setting up a short term rental business could prove to be a gold mine.
The Airbnb business model.
The short-term rentals market not only works for investment properties, but homeowners are also finding a way to capitalize on this very lucrative business model. These types of investments give real estate investors and homeowners an opportunity to make money on individuals who find it more cost effective to stay in a short-term rental versus paying for an expensive hotel room. This type of business model allows investors to gain higher margins than a hotel. With a hotel business model, there is a huge amount of overhead associated with running the business. The Airbnb model allows real estate investors to list their homes on a centralized website and make it available to individuals who are looking to stay in a particular location temporarily. This business hub brings real estate investors and prospective travelers together on one website. This provides a level of convenience for the real estate investor and allows travelers to stay in a home that actually feels like a home. For frequent travelers, staying in a hotel can make them feel confined or restricted. Utilizing an alternative such as Airbnb gives travelers the ability to operate as if they’re in their own home.
Arizona, Maricopa county.
With some of the most breathtaking sunsets, Maricopa County offers natural beautiful scenery that’s ideal for an individual looking to capitalize on a scenic and tourist area. Real estate investors are constantly looking for ideal properties in great locations. Cities such as Phoenix and Scottsdale offer prime real estate at reasonable prices. Tourist attractions like Camelback Mountain and scenic golf courses make these cities prime locations for short term rentals. Real estate investors are finding themselves investing more in these types of markets. With the demand of Airbnb rentals on the rise, investors have to find a way to remain competitive. By investing in areas such as Phoenix and Scottsdale Arizona, it provides real estate investors a way to competitively market their units to potential renters. If you happen to be interested in investing in the Scottsdale/Phoenix area look up The Kay-Grant Group, they specialize in this type of investment property.
Arizona loves Airbnb.
While other major cities are cracking down on or eliminating short-term rentals, Arizona is taking a much different approach. Even though there has been some acknowledgement for the need to regulate short term rental units, there haven’t been any plans to eliminate them. Arizona is an ideal state for short term rental businesses due to the various local attractions in cities such as Phoenix and Scottsdale. Whether you have a single-family home or a condominium, regulations pertaining to short-term rentals in Arizona are very friendly for this type of business model. This doesn’t mean investors can take advantage of the system by allowing 15 to 20 people to stay in a home with only four to five bedrooms. In fact, there are currently regulations being implemented to alleviate this type of activity. While it is important for investors to turn a profit in their short-term rental business, it has to be done professionally and responsibly.
Attractive incentives for Airbnb businesses.
Arizona provides a seamless process for investors interested in buying a home in the state. For first-time homebuyers, there are programs in place to assist with down payments. Since many real estate investors are not considered first time home buyers, there are other incentives to attract home purchases within the state. The city of Scottsdale offers online resources to help businesses find the right location for their operations. The real estate database resource allows real estate investors to locate prime locations to purchase their investment properties. In making the decision to purchase a home in the city of Scottsdale, a real estate investor would need to know information such as the amount of tourists that visit the city every year, the amount of traffic in the local area and overall demographic analysis. There are dedicated resources available to help any real estate investor make an informed decision.
Location, location, location.
Real estate investors purchase properties based on their location. Location creates desire and demand. When these two elements are increased, prices are sure to rise. With the rise in prices, comes a rise in value. The entire business model of a real estate investor is predicated on buying properties at a great price with the expectation of value appreciation over a period of time. Maricopa County offers some of the best prime real estate in the nation. With the housing market trending at 6.7% over a one-year period, this makes investing in Maricopa County highly attractive for any real estate investor. Couple that with the numerous tourist attractions and a booming Airbnb market and you’re sure to hit the jackpot when it comes to the short-term rentals business. The Airbnb market in Scottsdale has a variety of homes for potential travelers to choose from. There are homes with pools, homes located in family-friendly neighborhoods and homes that are priced for the budget-conscious traveler. With this type of activity, investing in the Arizona real estate market is a highly attractive business proposition for any savvy investor.
Affordable properties.
The average home value in Maricopa County is approximately $227,000 and is expected to increase between 3% and 4% within the next year. The average rental rate in Maricopa County ranges from $1,350 to $1,545. These rental rates sound really attractive to a potential real estate investor. The only problem with a long-term rental is the rental rates are fixed for an extended period of time. With short-term rentals, the rental rates are flexible. A business owner is able to legally change the rental rates whenever they need to. Depending on the time of the year and the situation, a property owner can lower the prices to create a higher demand. During more popular months, a business owner can raise the rates to increase their profit margin. If there is a time when a business owner needs to raise their rental rates to accommodate for unexpected expenses, utilizing an Airbnb business model allows them to do so legally. With long term rental rates, this type of activity is frowned upon and is considered illegal. This type of business model gives investors more flexibility to maximize their profits and adjust for additional costs.
The short-term rental market is a more attractive business model for real estate investors looking to maximize their profits. Purchasing investment properties in prime locations allows investors to obtain an appreciable asset while collecting monthly residual income. Maricopa county is an area that is sure to fit the bill.
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