How to Get Started on Airbnb
Those looking to make some passive income can easily use the Airbnb rental system to streamline bookings. Instead of standard lodging options like hotels, an increasing number of travelers are interested in personalized experiences like bed and breakfasts and private homes with room rentals. Owners can customize their Airbnb rental ads anytime, and the system can update pricing due to demand. Let's look into some tips for getting started on Airbnb. Find the Right Property For Airbnb Rentals Homeowners should first find out if Airbnb rentals are legal within their community. Apartment complexes and properties being rented rather than purchased by owners often have rules that prohibit subletting space. There may also be requirements to obtain a permit to create a rental space. With the legalities covered, research whether the property will be desirable for short-term rentals. Unless renting a room in an existing home, it's essential to consider housing costs and location when investing in a dedicated property. Cities with affordable housing costs, attractive tourist sites, or appealing amenities will likely reap greater profits. The lower the operating costs, the more profitable an Airbnb rental is likely. Furthermore, consider seasonal factors that may make the property more desirable. Consider Operational Logistics Owners not living on the site of the Airbnb rental space will need to consider what team members they need to operate it. Even onsite owners might want to consider logistical factors that include: Booking calendars House rules Cleaning Property management Airbnb has options permitting renters to see available booking dates, which listers can manually adjust. The company eases the rental process by letting renters make online reservations and ensuring that payments are secured. Owners renting space on their private property may be able to handle the tasks of checking guests in and cleaning duties after their departure. However, those renting a separate property or one in a different city than their location might consider employing a cleaning company and property management services. It is important to consider that cleaning services and property management companies will reduce profits, which makes logistics an essential factor. However, those wanting to be hands-off Airbnb hosts should have these teams on board to streamline the rental process. They also help ensure that guests have a better experience during their stay. Airbnb hosts will want to create a list of house rules to post on the website and a sign within the property. Are pets allowed? Is there a quiet time to be mindful of neighbors? Is smoking prohibited? Can additional guests come to the property? Clarifying the rules beforehand can prevent guest dissatisfaction and challenges for owners down the line. Create Your Airbnb Listing A key ingredient to making a listing stand out is showcasing the best features available to guests; this is essentially an advertisement for the space. Don't hesitate to list the property's perks, including any unique Airbnb amenities. To create a compelling list, start with the basics, such as: Location Public transit options Sleeping capacity Number of bathrooms Guest policies Pet policies Parking options Owners will also want to include details about nearby attractions and places travelers can enjoy. Depending on the location, season, and amenities, owners can then start considering their pricing strategy. Set the Right Airbnb Pricing Strategy While owners can set their rates, having a pricing strategy can make or break how profitable the property will ultimately be. Furthermore, pricing is often a primary deciding factor for travelers looking for short-term rentals. Setting nightly, weekly, and monthly rates takes a bit of consideration. Are there several hotels nearby that will be potential competitors? Excessively high rates could result in missing bookings, which negates profits. Owners can compare the prices of listings in the same area that are similar to their property. Rentals in popular tourist areas and those near top attractions can draw a premium in peak seasons. However, Airbnb helps owners with pricing via a Smart Pricing Tool that can be automatically adjusted seasonally. This tool considers more than 70 factors to set daily, weekly, and monthly rates. While convenient, owners will want to ensure their rentals are priced competitively among other options in the area. Competitive rates can draw in more guests, boosting the owner's overall profits. Affordable rentals are often booked far in advance and are a priority for travelers on a budget. With that in mind, owners also want to remember certain costs of running the property, including: Rental taxes Insurance Service fees Additional guest charges Cleaning costs Prepare the Space For Guests Special touches concerning furnishings, decor, and ensuite conveniences can make an Airbnb listing stand out. Furnishings should represent the “vibe” of the location. For example, rentals near the water might have soothing decor with a beachy feel, while those in rural areas might be more rustic. It's essential to consider if pets are allowed when choosing furnishings. The key is to select durable and easy-to-clean pieces to prevent the need for replacement. Guests will also appreciate the addition of basics like a coffeemaker, cups, glassware, plates, linens, and hygiene supplies. Some hosts might offer special packages for renters, such as snacks, flowers, or a bottle of wine to welcome guests. Owners will also want to arrange check-in procedures. Installing a lock box for keys is ideal for those who live off-site or want their guests to have access to late arrivals. Whatever instructions hosts want renters to follow can be posted on the listing or communicated through private messages on the Airbnb site. Are You Ready to Offer Airbnb Rentals? If you're eager to make a passive income with the services of Airbnb, these tips are an excellent start to help you begin the process. The Airbnb site also has many tools and information to streamline setting up listings and help owners maximize bookings. The post How to Get Started on Airbnb appeared first on RealEstateInvesting.com.
The Fed raised rates. So why did mortgage rates fall?
Mortgage rates retreat toward 5 percent Conventional wisdom is that when the Federal Reserve hikes interest rates, mortgage rates are sure to follow. Well, not necessarily. After the Fed raised its benchmark rate by a historic 75 basis points, the average rate on the 30-year fixed mortgage fell to 5.22 percent on Thursday from 5.54 percent on Wednesday. On Friday, it dropped again, to 5.13 percent. Beyond the rate set by the Federal Reserve and other actions by the central bank, mortgage rates are determined by a range of economic factors, including inflation, unemployment and jobless claims, and supply and demand, according to Nest Seekers Chief Economist Erin Sykes. “There has been a pullback on new loan and refinance applications because of the general uncertainty in the economy. In order to counter this lack of demand, lenders dropped rates slightly, which brought the national average down a couple basis points, briefly,” Sykes said. She added that for individual loans, the rate is affected by borrowers’ credit score and the size of their down payment. Melissa Cohn, regional vice president at William-Raveis Mortgage, said mortgage rates are tied more closely to mortgage-backed securities and treasury yields than to the federal funds rate, the Fed-controlled rate that banks charge each other for overnight borrowing. “The higher federal funds rates are starting to impact the economy and there are signs of economic weakness and a possible recession,” Cohn said. “As a result, bond yields have dropped and mortgage rates have followed suit.” Other consumer debt affected by the federal funds rate include home equity loans, credit cards, car loans and other consumer and corporate debt, Cohn explained. Mortgage rates have been slowly cooling off since hitting 6 percent in mid-June. Rates reached record-breaking lows during the pandemic, in part, contributing to the home-shopping and refinancing frenzy of the past two years. However, a higher mortgage rate could return the market to something approaching normalcy. Slowing home shoppers down could lead to more inventory, which has been historically low, as well as fewer bidding wars and lower prices. From brokerages’ point of view, it is always a good time to buy. “Mortgage rates will undoubtedly increase, so now is a great time to lock in a rate and capitalize on falling prices simultaneously,” Sykes said. (Illustration: Getty) The post The Fed raised rates. So why did mortgage rates fall? appeared first on The Real Deal.
Mortgage rates flirt with 6%, but silver linings exist
Higher borrowing costs may cool market, giving brokers and buyers time After reaching record-breaking lows during the pandemic, mortgage rates have been climbing at a similarly historic pace this year, worrying brokers and especially buyers. This week, rates reached another milestone. The average 30-year fixed mortgage rate throughout the U.S. exceeded 6 percent Monday, just two months after breaching the 5 percent barrier. Also on Monday, the stock market plummeted into bear market territory on alarming inflation numbers and the Federal Reserve’s expected response. At 2 p.m. today, the central bank is expected to raise the federal funds rate, presumably sending borrowing rates up yet again. While the mortgage rate increase has been steep, industry professionals are quick to point out that historically speaking, 6 percent interest on a home loan is quite reasonable. After all, in the early 1980s rates reached 18 percent. “In near memory, [6 percent] is crazy high,” said Melissa Cohn, an executive at William Raveis Mortgage and a veteran of the industry. “Interest rates during the pandemic averaged 3 percent. So obviously, rates have gone up much faster than people expected. But at some point, this too shall pass.” Prior to the pandemic, the average mortgage rate on 30-year fixed loans hovered below 4 percent. After a modest initial spike in March 2020, the rate mostly remained between 2 and 3 percent until the end of last year. Toward the end of the year, inflation began climbing, triggered by supply chain issues, the war in Ukraine and other factors. The Fed, after some initial reluctance, began aggressively pushing up interest rates to stop the inflationary cycle. The increased federal funds rate indirectly led to higher mortgage rates, tempering but not reversing the rise in home prices. Last week the average interest rate for 30-year, fixed-rate, mortgages with balances of $647,200 or less increased to 5.65 percent — the highest level since 2008 — from 5.40 percent, according to a Mortgage Bankers Association report. Anecdotally, brokers are seeing some buyers, especially those looking for their first home, getting priced out of the market. “Six months ago, they might have been able to afford that apartment. With the higher interest rates, maybe they can’t,” said Lawrence Rich, a New York-based associate broker at Corcoran. “If they can only afford a certain amount, we might have to show them something a little bit less expensive.” Wild swings in mortgage rates aside, the dominant factor in the housing market has been incredibly low inventory, which has kept prices up but sales down. “The fact is that the market has slowed down a bit,” Rich said. “People are still buying, but it’s not as busy as it was a few months ago.” The home-shopping frenzy of the past two years frazzled shoppers and their representatives, producing no shortage of war stories. A slowdown could be “healthier for the market,” Cohn said. “Having to look at a new home over FaceTime, and knowing that if you don’t make an offer today that you’re gonna lose it tomorrow, that’s not a very comfortable place to be,” the longtime mortgage specialist said. “If you have the ability to go see that and go see another house and be able to contrast and compare, that makes for a healthier, happier buyer.” The housing market is even drawing some shoppers who find it preferable to the rental market, which seems to have been beset by madness. “The rental market is very extreme. I have had several buyers who are new, who are choosing to buy because of the rent increases,” said Emily Margolin, a broker at Douglas Elliman. The slower pace allows Margolin to spend more time talking to clients about how they want to finance their homes. “It’s a little bit more practical and less emotional,” Margolin said. “A big part of my job is finding someone their perfect home. [Now] the discussions are a little bit more granular.” (Illustration: Federal Reserve Chair Jerome Powell (Getty, Freddie Mac, iStock) The post Mortgage rates flirt with 6%, but silver linings exist appeared first on The Real Deal.
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