What’s up friend’s it’s Richard, founder Short-Term Rental University and Airbnb Super Host. Today’s video is going to be super helpful in figuring out the timing when to buy and when to close your Airbnb investment property. And it’s gonna be particularly relevant for people that are buying a vacation home in a seasonal area ie: like a ski area, or a beach community area, and/or people that are going to buy this as an investment property and not live there. So why are we making this video?
Well, I’m actually in the process of trying to buy yet another property in Jackson Hole. Also in the short-term rental market. Downtown Jackson Hole and the peak season for this property is clearly the summer. There are over a million people that come to Jackson Hole in the summer so July and August and even September are critical months.
So if I was going to take a look at a calendar and say, “Well is the best way for me to buy this business” and that’s what it is right, it’s a real estate investment business.
“The best time for me to buy this business, would be to capture the peak income period”
I don’t want to buy the property and close on it, after the peak income. Even though there’s opportunities to make some money here and there. And this weekend and that weekend that’s great, but the way to buy the property if you can stop and plan and think about it, and that’s what I’m encouraging you to do. Is to figure out when the peak earnings potential is and then work backwards from there.
So let’s just say July 1st is the peak earning period. In order for me to close, it’s going to take say 60 days to get all of my financing lined up, and then I need say 60 days to paint and furnish, and so on. So just take out your calendar and start to work backwards from there and by the way if it doesn’t work out then you have to take a look at your finances and say well how much money do I think I’m gonna make in these shoulder seasons or the offseasons and we should see a bump up in ski season although many people in Jackson would prefer to live up on the mountain as opposed to in town so I won’t make as much money in the winter months as I will the summer and so I’m playing currently and this is the reason that we’re making this video.
So, do I buy this property or do I pass? And the reason that that becomes an important consideration is, I have a cost of carrying if I have to carry this property for say nine, or ten, or eleven months until I get the peak. Or inherently that means that the cost for me to purchase that property is more. Conversely, if I can time it all and I can close and I can earn the peak potential in July, in August, and September, then, in essence, I’m buying the property for less. So the point of this video is to realize that the purchase price of the property also depends on when you close and if it doesn’t work out then maybe you should either wait or consider another location or find a property that has less seasonality it’s just money but it’s a big consideration when you’re making a real estate investment decision.
So, if you recall in the introduction, I said that this was really important for people that are in seasonal communities or if you’re not going to reside there. Obviously, if you’re gonna live there go ahead and buy your primary house and you know vacation there on the weekends every single weekend like don’t worry about the seasonality so much because you’re gonna be enjoying it yourself. But if this is purely an investment then it’s really important that you start to get cash flow as quickly as possible start to repay yourself some of the money that you put down in the down payment. Start to repay yourself for some of the furnishings, start to repay yourself for the closing costs, and all those expenses that you have. The sooner you can bring that back into your own like pocket the better the investment is going to be and the more comfortable you’ll be with it. So that’s it, it’s really just pretty straightforward:
Take a look at when you want to rent take a look at the calendar and start to project backwards, how much time it’s gonna take you to get the place fixed up and closed and so on and make sure you give yourself enough wiggle room so you’re not carrying this thing unnecessarily for many months before you start to cash flow
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Short Term Rental University