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Tennessee Real Estate Insider is your go-to podcast for uncovering the latest trends, tips, and investment opportunities in Tennessee’s real estate market. Whether you’re a first-time homebuyer, seasoned investor, or just curious about the industry, we provide expert insights and local knowledge to help you navigate the ever-evolving real estate landscape with confidence.
Welcome to Tennessee Real Estate Insider. I'm your host, Allison Spencer, property manager and top producer here in East Tennessee. And today I'm joined by Bethany Oaks. Hello. Bethany, thank you so much for joining me today. It's a pleasure being here. Bethany is a broker and a business owner and she is also an Airbnb host.
Today we are going to be talking about, um, the profit and the pitfalls of short term vacation rentals. So before we get started, I just wanted to throw out a really interesting fact. Did you know that short term vacation rentals bring in over 80 billion in revenue? every single year. It's a, it's a huge industry.
It's a huge industry and it's become way more popular over the last few years for sure. Definitely has and I know personally I love. I love using vacation rentals. My preference of choice is Airbnb. Um, I know we've gone on a few trips together. So we've been overseas and local. We've stayed in Airbnbs. I personally find that they're just so accommodating.
Um, what are some things that draw you to stay in Airbnbs? I like, so obviously we come from a large family and we've, we've got, we've got lots of people that we're usually traveling with. And so I think, you know, I think that the benefit for Airbnbs in general is that you can have a lot of people traveling with you and you can actually all stay together.
And I think that that's one of the main benefits for Airbnb or VRBO or any of those other vacation rentals. Because you have the ability to kind of all be in one place. So, um, you're not having to stay in individual hotel rooms and kind of be separate from other people. From them, but you have rooms that everybody can go to and then you have common areas that that you're able to stay in And so I mean we've stayed in air B& Bs in London and Scotland I've been to Italy and Greece staying in air B& Bs and you know, and so amazing.
It's been it's been great. They're everywhere so it definitely has some profit potential and a we're gonna dive into the profit potential for Airbnbs. One of the things that I think you need to evaluate when becoming an Airbnb host, which we both are. Um, so just for the listener here, we're both Airbnb hosts. I've been a super host year after year.
I know you've been a super host. Um, I don't manage other people's Airbnbs. I do have personal Airbnbs. I'm more So manage long term rentals or even short term furnished rentals. But as far as the vacation nightly rentals go, we both have experience there. There are ways to set yourself apart to get that higher cash flow.
What are some things that you have seen to be helpful to keep your occupancy rights so high? Well, I think the first thing that most people do is, um, Um, they're actually look for the location. And I think that if you have a property that is in a good location, you're automatically going to have a lot of business.
And so I, um, I got into Airbnb, uh, about five years ago. Um, during the pandemic, I actually, I used my own personal home. You know, in the middle of Johnson City, and I had a roommate at the time, and I decided I didn't like living alone. She got deployed, um, and so I ended up moving in with a sister of mine, and so in that process, I was like, you know what, I think I'm going to Airbnb my house, because it is central to Johnson City.
I mean, it's right in the middle of everything. Absolutely. Location is so important. So I think for when you're looking at. actual properties and what kind of properties you want to get into short term rentals you kind of have to consider the location and that's That's the case with most businesses and most homes really is what's it?
What's it near? What crowd or Demographic are you going to be appealing to? Absolutely. Speaking of location I think there's a couple things to evaluate to really produce the most with an Airbnb that's gonna include, um, you know, what is the competition like? How many other Airbnbs are up against yours? I will tell you from personal experience, I had an Airbnb in a location um, where there was very little competition and we cash flowed incredibly.
Uh, as soon as there began to be more and more Airbnbs in that area, It was competition. So, you know, the occupancy rate definitely went down. So when evaluating the location, another thing you need to look for is what are the hubs? How close is it to the things that are attracting people to stay there?
How many other rentals are competing against yours? And then, um, what, what is going to set yours apart? Um, we'll get to that in just a minute. But another key factor is also events. You do have to stay on top of what, um, events are going on in the town that are going to draw more money. I know for us, we owned a, uh, race day condo at one point.
It was awesome. the room would rent out for 900 a night during the fall race, which is absolutely amazing. But if you weren't aware of those trends, you would be missing out on a lot of cash flow. Absolutely. You know, I think I think intentionality is really important with vacation rentals. I think that whatever your, um Whatever you're going to really gear your rental towards, I think that that is a really important thing.
Like, for example, the race day condo that you had, that it was right across the street from the racetrack. And so, anything, any event that was happening at the racetrack, that's going to be a draw. You know, my house Uh, is actually between two major hospitals and a university. And so a lot of the people that were coming to stay in my vacation rental over the past five years have been people who are either working in the hospitals, like Um, nurses, uh, that are, you know, kind of contracted out.
You've also got students that are coming in, parents that are coming to see students. Um, so there's a lot of, there's a lot of things for the, at least the first three years of my vacation rental that it was very geared towards. people in the medical profession and things like that, just because of where I was situated and where the location was.
I think once you determine the location and the demographic that is going to be attracted to your rental, you can then orchestrate the design of your rental, which we will cover in our next episode. Um, but a couple of things to touch on that. We have an Airbnb in Jonesboro. So we orchestrated our Airbnb to the people looking to come to Jonesboro.
What are some of the things in that town that attract people? Let's put that in the home. And Jonesboro is so active with all of the things that they do. So not just Jonesboro Days or Storytelling Festival, but they've got pretty much, I mean, they've got an event every month that they're That they're kind of highlighting and doing so.
Absolutely. It's a great space for that as well. There's a lot of unique opportunities and I think once you design your Airbnb according to who might be staying there, it really increases the chance and the experience of the stay. So, we talked about some of the perks of having an Airbnb, one being the cash flow.
Just to recap on that, you know, I think it's important to always evaluate rental investment properties to see what is the cash flow potential versus long term. And Airbnb, I know our Airbnbs grossed a ton of money. But they also cost a lot of money. So let's talk about some of those cost pitfalls. What are some of the costs that you have seen with your Airbnb?
So, people are really hard on furniture. Yes, yes. That's the biggest, that's the biggest expense that I have, I have, I have done. I've actually, I've spent tons of money on. Now, the great thing about Airbnb, and I'm not sure about Vrbo and others, but they actually have what's called Airbnb Cover. And Airbnb Cover is an insurance program for hosts that experience damage with their stuff.
And so, now it can be a real pain to kind of get some payouts from them. But at the same time, like, over the past five years, I've used Air Cover a number of times to replace things. That have been broken by guests. And so, I think I've bought three different couches. Yes. At this point. And so now like, Same.
Yeah. So like, Couches are the first to go. The first to go. I buy the better quality couch. Yes. I mean, it hurts your feelings. You know, when you spend that much money on a couch. But, it's better to purchase a couch that has staying power. Purchasing something that's real cheap and pretty. Like, if you look at one of my pictures on Airbnb, it has this beautiful blue couch that no longer exists.
Because, because literally, it was so funny, my cleaning lady, she had a whole story about what probably transpired on that couch when it broke. But basically, somebody broke the whole back off of the couch. So I think furniture is people are really hard on furniture, especially in the short term rental game.
And I've had, um, like, you know, my house was built in 1950. So it's an older home, and, um, it's the plumbing has had has had some issues as well. People, you know, I had we had I called in a plumber. And because the toilet stopped working and somebody had flushed a bottle brush of sorts down the toilet. So I don't know if it was a child who did it or whatever.
But it's like, so, you know, there are things like that. Now, again, it was all covered under air cover, which was great. So I've not really had a whole lot of expenses. necessarily on the, on the front end. But, but yeah, so the, those have been my, my main. Yes. I've bought a few couches. Our properties, depending on the location to the one in Bristol, we had high HOA, so homeowners association fees.
That could be a cost. You want to make sure you factor that in. That's going to take away from your gross cash flow. And then also maintenance for yards and landscaping. The house in Jonesboro was on a beautiful lot. We paid so much money for, you know, tree trimming and grass cutting. Uh, mulch landscaping.
So those costs. And then, of course, um, there is also cleaning expenses and just consumables. You've got your cleaning supplies, your towels, linens. A lot of those are pretty durable, but you are going to have to replace those at some point. Oh, yeah. And, well, and, you know, something that we've talked about before is having multiple sets of those things.
Um, but they really only last. For six months-ish, depending on what your occupancy rate is. Right. So like I have a very high occupancy rate. Go ahead, tell us. Just brag for a minute. I'm impressed. So my first three years of Airbnb I had between a 94 and a 96% occupancy. That is insane. Which is crazy and, and I know that that was not the norm and I feel like I had to start building in chunks of time.
So I could actually go and inspect the property because I had so many bookings that I wasn't able to you know, really like Look at the property because I couldn't get in at the times that people were coming in and so on and so forth So I had a cleaning person who really was helping me kind of stay on top of those things Which is a very valuable asset.
So that that's like my number one thing with most Airbnbs is like if you're going to have an Vrbo or whatever, you're going to need to find a really good cleaning person and somebody to help you stay on top of your property, especially if you have such a high occupancy. Absolutely. How did you handle supply management?
Did you have your cleaner go and purchase supplies or did you do that yourself? So, there's a couple of things that I've done over the last five years. One is, um, my cleaner um, I've had, I've gone through several different cleaning people because some people are like, Hey, this is too much for me. I can't continue.
Um, then there are other people that are like, Oh yeah, I'm ready to take this on. I had to let some cleaning people go because they weren't upholding a standard and I actually lost super host status because of a couple of reviews. Um, and so it's, it's been a, it's been a dance, but I had one cleaner who would always like, she would just, She would just purchase stuff and then I would just reimburse based on what she purchased.
She would send me a receipt and I would just pay it. Um, but now what I do is I actually drop ship stuff directly from Amazon and then she just unpacks the box when she wants. That's awesome. There are so many different tips and tricks to Airbnb hosting which is actually our next episode. So I'm so excited you'll be joining us for that.
Yeah. Um, but before we cover the next. I just want to recap a little bit about why Airbnbs have pros and cons. They are super, uh, fluid if you are keeping up with it. If you're looking for passive income, I say buy it. Airbnb and Vacation Rentals is not as passive. It's not passive. It's very active. You are actively maintaining that property and that experience.
Um, you know, Long Term Rentals, it's a fix it and forget it somewhat. Um, so that cash flow you can count on. Your expenses are a little more predictable. But there is a lot more gross. Cash flow available to those short term rentals if you have the time. Yep And of course if you don't hire a company who can and of course I have plenty of resources to connect you if that's something that you're interested in getting connected with so thank you so much Bethany for joining today and Stay tuned for the next episode.
All right