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What is the best age to invest in real

What is the best age to invest in real estate?

Knowing the best age to invest in real estate is one of the most frequent doubts that those who are beginning to think about their future have. Especially because they see in the real estate area a financial security that other types of investment as the stock market no longer offers.

The short answer is that there is no right age to invest, but the sooner you do it, the more opportunities you will have to make money – and your investment will last longer.

However, it is true that investing is not a habit that we have all been taught. Not all of us receive financial education, and some do not even have the habit of saving money. We know that it can be difficult to do when you are young and you are between your twenties or beginning the thirties: travel, shopping, transportation expenses and fashion technology tend to monopolize the attention of your money.

Unfortunately, this lack of financial education ultimately affects the future. Especially when you decide to start investing and you realize how much time you lost because you did not do it before.

Why should we start investing as soon as possible?

As you will remember, one of our 10 tips for investing in real estate and not die in trying your purchase, is to understand that in real estate investment, patience is the key to success.

Something that guarantees the value of a property is the capital gain that it has, depends on the location in which the property is located. The capital gain acquires more value over time. That is why the big investors are those who can analyze the market and see beyond what is trendy. Imagine if 10 years ago you had invested in real estate developments in the Riviera Maya, or in real estate developments in Tulumplaces that are currently a magnet for tourism and foreign investment.

That’s why we say that the best time to invest is now; the more time you spend, the less chance you will have of acquiring properties at a lower cost that guarantees a high return on investment.

We must also consider that the responsibilities we acquire over time can make it more difficult to become a real estate investor. Marrying or having children can make you reconsider your expenses and how much money you can use to invest.

Each individual has different priorities and opportunities. There are those who see in their twenties the opportunity to promote a future while there are others who can invest only after their 30’s or 40’s. It is also normal and natural for some to think about investing until after retirement, when they have the money to do so.

Nor can we deny that each generation has different perspectives on what we should consider a priority and what not. For example, while for millennials acquiring experiences is a priority -as traveling- for generation x and baby boomers, acquiring properties is more important.

However, this does not mean that millennials – who are between the ages of 23 and 38 – have a chip that prevents them from being good at investing in real estate, on the contrary it is they who are changing the notions of success and ways of doing business and even as we think about work and lifestyle, this makes them less incompatible in investing in real estate, they are the ones who are beginning to consider investing their money to obtain financial independence.

For example, for the baby boomers and generation X financial security meant having a stable job and a fixed salary in order to save for retirement or get their pension. Today the notion of working from home without the need to attend an office is a reality for many people, as well as the existence of jobs that 30 years ago were difficult to imagine.

30 years ago it was hard to think that ordinary people could make money using the internet. Computers and the Internet were exclusive to those who were studying something related to technology. Today you do not need to be a hacker to be able to use digital platforms to make money like blogs or investing in services like Uber.

The orange economy – that is, the creative economy – allows retirement to become more possible at an early age. Which has also become possible because more and more people decide to invest their money in a smarter way – and do it at a young age – to be able to live on their investments and not have to be dependent on a job.

Years ago we thought that buying a property was to live in, today thanks to applications like Airbnb, more and more investors decide to buy apartments and houses only to rent them on these platforms.

You do not need to be a millennial to start investing. The technological evolution has made both applications and platforms as well as access to them, are increasingly easier to use.

For example, since 2017 Airbnb host users over 60 years have increased by 120%, while women over this age have become the best rated on the platform. Which indicates that even baby boomers see technology as an opportunity to get a better return on investment with their property.

What is the best age to invest in real estate?
Investing in real estate is possible at any age, but the sooner you do it, the more opportunities you will have to enjoy your money.

What is the best age to invest in real estate?

As we mentioned, not all ages or stages are the same for every person. For some it may be impossible to invest in their twenties and find the possibility of doing it later.

Our best recommendation is that rather than being guided byan ideal age you start doing it for the goals you have and the opportunities that come your way.

There are many myths around investment, especially when you want to do it at a young age, and one of the factors that keep people away from real estate investment is the lack of knowledge on the subject and investor stereotypes. We are not surprised when we hear cases of clients who want to become investors but fear not being able to do so because they do not understand numbers or be experts in the subject.

Knowing the real estate sector is one of the biggest keys to becoming a successful investor, this does not mean that it is a privileged knowledge that you cannot access.

Many millennials have the fear of investing in real estate because they think they need to buy a house to do so, and they ignore the investment possibilities that residential or industrial lots have.

For this reason, they fear not being able to do it because they believe that it is economically impossible for them, and they do not consider the possibilities of acquiring properties in other cities. For example, for some foreigners, investing in Mexico is a better option than doing it in their countries, but in the same way for some Mexican residents, investing in states such as Merida where there is increasingly strong demand in properties not only for housing but also for businesses and offices, it can be more accessible and profitable than doing it in places like Mexico City.

That is why it is important that you do not wait to have an ideal age and start thinking about becoming an investor or making an investment from now on. So the sooner you do it, the sooner you can designate your budget and create a work plan to invest or start saving money and then invest.

Otherwise, as you let time go by, you will be less likely to find suitable properties for yourself and especially if you have the opportunity to invest in places that are in presale in areas that will later have even more capital gain.

What is the best age to invest in real estate?
Millennials are redefining what financial security and quality of life mean, so real estate investments are becoming an option for those who want to travel or retire early.

How to start investing in real estate?

One of the most common mistakes made by young people who aspire to become investors is to obtain immediate profits and be able to spend them on whatever they want. But as you know, this is not possible in the real estate market.

Being an investor is a goal of many to be able to have financial freedom and not be tied to a job or to live experiences like traveling or living in different parts of the world, investing to earn money immediately is not an actual goal.

This does not mean that you cannot earn an income in a short period of time. For example, apartments near tourist areas can generate profits if you decide to rent them. The same happens if you acquire property near schools, universities or hospitals.

What we really mean is that if you want to invest to enjoy the results you need to be patient and prepare constantly about the subject.

The preparation on the subject not only includes understanding how the market works, but also observing and analyzing where it is going.

That is why it is very important that you start to know very well and read everything about the area and the developments that are developing in the city you are looking to invest. Find out about the market and how real estate works in the place. About the papers you must have in order and the types of credits -if you’re considering obtaining one- to which you can access.

Begin to consume information and observe how other real estate investors are generating income with their properties. One of the advantages of investing in real estate is that it is a safe investment, but it also gives you the opportunity to take advantage of your investment.

There is a lot of information especially now that we live in the age of the Internet, but it is always good that you can approach the experts and work with a real estate agent to solve your doubts if you are already thinking about acquiring a property. Ask everything you need to know about the property and the area: the places of access, the maintenance fees, the projection of growth and the amenities with which the development has.

What is the best age to invest in real estate?
One of the keys to real estate investment is patience. Real estate usually increases its value thanks to the capital gain, and this depends on external factors of the property such as the location and the services that are around it.

What factors should I consider when investing in real estate?

We already mentioned in our definitive guide of the real estate investorif you want to be successful when acquiring a property you need to analyze the location and interests of your possible market without letting yourself be guided by the trends.

Actually, what makes your property acquire value is the capital gain of the area. This depends on external factors such as the location, amenities and even the roads that the property has.

Mérida is a city that we love to take as an example because the boom that is experiencing is related to the intervention of factors such as security and the excellent location in an area that attracts tourists and allows them to have access to beaches and archaeological sites.

In the best cities to invest in Mexico we have also mentioned the importance of decentralization that Mexico is living and Mérida is an example of how the diversity of industries can be an important factor in the development of the economy and in the demand for properties and offices, and therefore is another opportunity to ensure your future.

The more diverse of jobs and industries, the more likely you are to be victorious in your investment, as in the case of a crisis, for example, the closure of a factory or a big company that is in the area.

That’s why we emphasize the importance of not investing where everyone is investing, in the end -it may sound cliche- you get what you pay for.

Many new investors make the mistake of acquiring goods in areas that, although cheap, end up being insecure. In the end these investments end up being losses because they end up investing even in luxury finishes in areas where house prices are quoted in an amount lower than what they are thinking of asking for, whether they are rents or for sale.

The capital gain depends a lot on the area, the location and the amenities. And even if you get a very cheap property, in the end you will not be able to generate income if it is located in an area where there is no capital gain or the market cannot access the amount of money you propose. You will lose more money, unlike you decide to invest in an area with a guaranteed gain capital, thanks to all these external factors that we already mentioned.

Another factor that we highlight and that you have to take into account are pre-sales. There is no better way to guarantee your money than buying before, remember our example of the Riviera Maya and Tulum? Now imagine how much it will cost to buy a housing development once it is popular.

Acquiring properties in pre-sale is an excellent way to invest your money, since once the developments begin to acquire capital gain, your property will have more value than what it cost and you can adapt your income according to the costs of the area or decide to sell it to a higher price, or keep it to get more return.

So, if you’re wondering what is the best age to invest in real estate? It is better to start asking yourself; how can I start investing in real estate? And start making a plan so you can reach your goals and start creating a safe economic future for you.

Source:  Peninsula Development – OCTOBER 28, 2019

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The Top 8 Real Estate Calculations Every Investor Should Memorize

investment-portfolio
Despite what many of us math-allergic folk would prefer, real estate does involve some math. Luckily, most of the formulas are simple and straight-forward. In fact, if you can master the calculations below, you should be just fine.

The Top 8 Real Estate Calculations Every Investor Should Memorize

Cap Rate

Net Operating Income / Total Price of Property

Example:

NOI: $25,000

Total Price (Purchase + Rehab): $300,000

$25,000 / $300,000 = 0.083 or an 8.3 Cap Rate

This calculation is mostly used for valuing apartment complexes and larger commercial buildings. It can be used for houses and small multifamily too, but operating expenses are erratic with houses (because you don’t know how often and how bad your turnovers will be).

Related: The Investor’s Complete Guide to Calculating, Understanding & Using Cap Rates

You want to have a cap rate that is at least as good, preferably better, than comparable buildings in the area. I almost always want to be at an 8 cap rate or better, although in some areas, that’s not really possible. And always be sure to use real numbers or your own estimates when calculating this. Do not simply use what’s on the seller-provided pro forma (or as I call them, pro-fake-a).

Rent/Cost

Monthly Rent / Total Price of Property

Example:

Monthly Rent: $1,000

Total Price of Property (Purchase + Rehab): $75,000

Rent/Cost = $1,000 / $75,000 = 0.0133 or a 1.33% Rent/Cost

This is a great calculation for houses and sometimes small multifamily apartments. That being said, it should only be used when comparing the rental value of like properties. Do not compare the rent/cost of a property in a war zone to that in a gated community. A roof costs the same, square foot for square foot, in both areas. And vacancy and delinquency will be higher in a bad area, so rent/cost won’t tell you what your actual cash flow will be. The the old 2% rule can lead investors astray, and they shouldn’t use it. But when comparing like properties in similar areas, rent/cost is a very helpful tool.

According to Gary Keller in The Millionaire Real Estate Investor, the national average is 0.7%. For cash flow properties, you definitely want to be above 1%. We usually aim for around 1.5%, depending on the area. And yes, I would recommend having a target rent/cost percentage for any given area.

Gross Yield

Annual Rent / Total Price of Property

Example:

Annual Rent: $9,000

Total Price (Purchase + Rehab): $100,000

Gross Yield = $9,000 / $100,000 = .09 or a 9% gross yield

This is basically the same calculation as above but flipped around. It’s used more often when valuing large portfolios from what I’ve seen, but overall, it serves the same purpose as rent/cost.

Debt Service Ratio

Net Operating Income / Debt Service

Example:

NOI: $25,000

Annual Debt Service: $20,000

Debt Service Ratio = $25,000 / $20,000 = 1.25

This is the most important number that banks look at and is critical for getting financing. Generally, a bank will look at both the property’s debt service ratio and your “global” debt service ratio (i.e. the debt service ratio of your entire company or portfolio).

Anything under 1.0 means that you will lose money each month. Banks don’t like that (and you shouldn’t either). Generally, banks will want to see a 1.2 ratio or higher. In that way, you have a little cushion to afford the payments in case things get worse.

Cash on Cash

Cash Flow / Cash In Deal

Example:

Cash Flow (Net Operating Income – Debt Service): $10,000

Cash Into Deal: $40,000

Cash on Cash: $10,000 / $40,000 = .25 or 25%

In the end, this is the most important number. It tells you what kind of return you are getting on your money. In the above example, if you had $40,000 in the deal and made $10,000 that year, you made 25%. This is a critical calculation not only when it comes to valuing a property, but also when it comes to evaluating what kind of debt or equity structure to use when purchasing it.

The 50% Rule

Operating Income X 0.5 = Probable Operating Expenses

Example:

Operating Income: $100,000

Operating Expenses = $100,000 * 0.5 = $50,000

This is a shorthand rule that I judge to be OK. It is for estimating the expenses of a property. Whenever possible, use real numbers (i.e., the operating statement), but this is good for filtering out deals that don’t make sense. Just remember, a nicer building will have a lower ratio of expenses to income than a worse one and other factors, like who pays the utilities come into play. Don’t simply rely on this rule.

Related: Rental Property Numbers so Easy You Can Calculate Them on a Napkin

The 70% Rule

Strike Price = (0.7 X After Repair Value) – Rehab

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After Repair Value: $150,000

Rehab: $25,000

Strike Price = (0.7 X $150,000) – $25,000 = $80,000

This is another rule like the 50% rule, although I think this one is better. This one is for coming up with an offer price. Always crunch the numbers down to the closing costs before actually purchasing a property. But if you offer off the 70% rule, you should be just fine as long as your rehab estimate and ARV (after repair value) estimates are correct.

Comparative Market Analysis

Unfortunately, there’s no real calculation for this. It’s mostly used for houses, and it’s all about finding the most similar properties and then making adjustments so that a homeowner or investor would find each deal identical. The MLS is by far the best for this, but Zillow can work too (just don’t rely on the Zestimate). For a more detailed explanation, go here.

In the end, the math isn’t that bad. No rocket science here luckily. Instead, there are just a few handy calculations and rules to evaluate properties before purchase and analyze their performance afterward. Memorize these, and you should be fine.

What formulas do you use to analyze your deals? Any calculations you’d add to this list?

Let me know with a comment!

Source: BiggerPockets – Andrew Syrios
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How to Buy a Second Home (Hint: It Won’t Be Like Your First)

As a home buyer, you braved the real estate buying circus when you bought your first home, and you have a great place to show for it. You’ve trudged through the open houses, experienced exactly how stressful closing can be, and dealt with legions of moving trucks. And still, a part of you wants something more: an escape in the mountains, a beach cottage, or a pied-à-terre in the city. You want to buy a second home.

With current mortgage rates at a historic low, you might be tempted to jump in. But beware; buying real estate as an investment property or second home won’t be the same as your first-time home-buying experience. Here are some differences and advice to keep in mind.

First things first: Can you afford to buy a second home?

If you scored a sweet deal on a mortgage for your primary residence, don’t expect lenders to give you the same offer twice.

“Second-home loans generally require more down payment and a better credit score than owner-occupied home loans,” says John Lazenby, president of the Orlando Regional Realtor Association.

You may have to pay a higher interest rate on a vacation home mortgage than you would for the mortgage on a home you live in year-round, and lenders may look closely at your debt-to-income ratio. Expect a lender to scrutinize your finances more than when buying a single-family primary residence.

“Lenders look carefully to ensure that second-home buyers are financially capable of paying two mortgages,” Lazenby says.

Make sure to review your budget with a second mortgage payment in mind, and make adjustments if necessary after you know what interest rate you will receive. And make sure you can afford the real estate down payment—a healthy emergency fund and cash reserves are essential if an accident or job loss forces you to float two mortgages at once.

Evaluate your goals

Understand exactly how you plan to use the property before you sign on the dotted line.

“Buyers should consider their stage of life and that of their children to ensure they are going to actually use the home for the amount of time that they’re envisioning,” Lazenby says. “A family with young children may find that their use of a second home declines as the kids grow older and become immersed in sports.”

If you’re certain you’ll get enough use and enjoyment out of your new purchase, go for it—but make sure to carefully consider the market.

For most homeowners, a second home shouldn’t be a fixer-upper. Look for homes in high-value areas that will appreciate over time without having to sacrifice every weekend to laborious renovations on your “vacation home.”

Buying in an unfamiliar area? Take a few weekend trips to make sure it’s the right spot for you. In the long term, you’ll want it to be a good investment property, as well as a place to play. Pay close attention to travel times, amenities, and restaurant and recreation availability, otherwise you might spend more time grousing than skiing and sipping wine. And make sure to choose a knowledgeable local real estate agent who will know the local real estate comps and any area idiosyncrasies.

Understand your taxes

You may be familiar with a bevy of home credits and tax breaks for your first home, but not all of them apply to your second.

For instance: You might be planning on using your new home as a vacation rental when you’re out of the area. If that’s the case, you need to calculate the return on your investment property purchase price that you can expect over the course of a year. How much can you charge per night or per week for your rental property? How many weeks will you rent out the property? And what expenses will you incur?

“Property tax rules and possible deductions for second homes used as rentals are complicated and vary widely, depending on both the number of days per year that the owner occupies the home and the owner’s personal income level,” says Lazenby.

vacation home offers more flexibility to buy based on your potential property tax burden—for instance, if you’re looking to buy in an area of high real estate taxes, consider widening your real estate search to another county, which can save you thousands of dollars. Your real estate agent should be able to help you find property you as a buyer can afford.

Lazenby recommends consulting with a tax professional about tax implications, especially if you’re planning on renting out the house.

A vacation home you use part time and also rent out may be considered rental property for tax purposes, depending on personal-use days as the homeowner, and the number of days you rent it out. If you rent out the vacation property for more than 14 days in a year, you must report the rental income on Schedule E of your individual tax return, and you can deduct the rental portion of expenses such as mortgage interest and property taxes. However, renting out your home as a short-term vacation home for 14 days or less in the year means you cannot deduct rental expenses, but the income from your renters is tax-free.

Jamie Wiebe writes about home design and real estate for realtor.com. She has previously written for House Beautiful, Elle Decor, Real Simple, Veranda, and more.
Source: Realtor.com –  | Aug 28, 2019
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New short-term rental regulations you need to know if you own property in Toronto

New short-term rental regulations you need to know if you own property in Toronto Image

The City of Toronto will be moving forward with the new short-term rental regulations that were proposed and approved back in late 2017.

The Local Planning Appeal Tribunal recently dismissed the appeal of the City council-approved zoning regulations for short-term rentals, so Toronto will soon have a different rental landscape.

“This is good news for Toronto residents and a step in the right direction when it comes to regulating short-term rentals and keeping our neighbourhoods liveable,” said Mayor John Tory in a release. “When we approved these regulations in 2017, we strived to strike a balance between letting people earn some extra income through Airbnb and others, but we also wanted to ensure that this did not have the effect of withdrawing potential units from the rental market. I have always believed our policy achieves the right balance which in this case falls more on the side of availability of affordable rental housing and the maintenance of reasonable peace and quiet in Toronto neighbourhoods and buildings.”

There are a few new rules that will be implemented soon. Short-term rental will be permitted across the city in all housing types, but only in principal residences (and both homeowners and tenants can participate). If you live in a secondary unit, you can rent out your home short-term, but only if the secondary unit is your primary residence.

You’ll be able to rent up to three bedrooms or your entire residence. If renting your entire home while you are away, you can do so for a maximum of 180 nights a year. If you are renting out any part of your home, you must register with the City and pay a $50 fee.

For companies like Airbnb, they will have to pay a one-time fee of $5,000 to the City, plus $1 for each night booked. This way, the city is benefitting from the success of a company that is leveraging local housing to make a profit.

There will also be a Municipal Accommodation Tax of 4% that you will have to pay on any short-term rentals less than 28 consecutive days. Companies like Airbnb will be able to volunteer to collect and pay the MAT on behalf of their users.

It seems like these changes will mostly impact the condo rental market. Most investors renting their condo units through companies like Airbnb are not renting out their principal residence; it’s usually a secondary residence. Without short-term rental income as an option, we could see a slight drop in investors in the new condo market. Fewer investors means less sales and more supply for end-users. This could result in price moderation or even a price drop in the pre-construction market.

We could also see some condo units hitting the resale market and long-term rental market, as investors look to other options to profit off their properties.

There will be a transition period as investors figure out what to do with their condo units, but in the long-run, this change seems to make sense in that it delivers more supply to the people who are living in the city, as opposed to just visiting.

Source:  Newinhomes on Nov 20, 2019

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Should We Airbnb a Room in Our Home?

Young man and woman shaking hands

 

With the booming sharing economy and travellers often preferring to forgo traditional hotel stays, the notion of renting out a room in your home (or the entire house itself) could seem appealing. But before you jump into peer-to-peer short-term rentals, there are some things you should consider:

Costs of hosting: starting up, cleaning, higher utility bills and more

Becoming an Airbnb host requires some startup cash along with ongoing expenses. These include the costs to set up and furnish the space, ongoing utility and cleaning fees which is usually not more than $30 per room.

You’ll want to make sure each guest space is attractive and has all the amenities that a weary traveller needs such as fresh backup sheets and plenty of towels. A savvy host can reasonably furnish an empty room for about $1,000. However, $500 can do the trick if you already have an extra bed. Big box stores can help supply furniture for a range of pricing.

The upside of being a host is that if you work hard, possess excellent customer service skills and treat the platform like your own personal business, the revenue generated from the listing can surpass the initial startup costs and provide a nice monthly return.

 

Young man and woman shaking hands

Permissions

If your property is controlled by a homeowners’ association or co-op, check its rules to make sure you’re allowed to host; some may restrict Airbnb activity, while others may have no issue. If you rent, you’ll want to get your landlord’s blessing.

A proportion of Airbnb hosts could very well be renters, who may or may not be telling their landlord. It is recommended to get your landlord’s approval through a signed agreement. In most Canadian provinces, tenants cannot rent out their apartments without the approval of their landlords.

Airbnb Canada details here how tenants should go about this process.

Bike hanging on living room wall.

Taxes and business licenses

Depending on where you live, you might require a business license and you might owe local taxes on any income you earn.

Quebec law requires short-term rentals of less than 31 days to obtain a licence from Tourism Quebec. Vancouver has proposed regulations that only allow the issuing of short-term rental licences for a primary residence — meaning the host, whether owner or tenant, must live in the dwelling. This rule targets hosts with multiple investment properties who operate as commercial hosts and eat into the housing stock.

Toronto has proposed a two-pronged approach to licensing, requiring both companies such as Airbnb and hosts to register and pay an annual fee. Hosts of short-term rentals in Toronto would be required to pay an annual fee ranging from $40 – $150.

As tax is a relatively complex topic, Airbnb has provided some information about local regulations in different Canadian markets. Above all, it’s good to consult a tax professional to get more specific information.

Clean + Declutter

You’ll want to tidy your space, present it in the best possible light and hide your valuables before you photograph it.

Like the listings you love to peruse here on REALTOR.ca, the photos and listing title are the first thing a potential guest will see on Airbnb. This is your opportunity to catch their attention.

You can either take your own photographs or contract out a professional photographer. Many hosts opt for professional shots, given how important eye-catching photos are for your space’s profile.

Before photographing, ensure that you prep by arranging suitable lighting conditions and use a quality camera (now available on most smartphones).

Woman standing at bottom of stairs smiling

Insurance and liability

Airbnb’s Host Guarantee provides up to $1 million in insurance coverage for property damage in 29 countries, including Canada, the United States and the United Kingdom. Airbnb’s insurance is not a substitute for homeowner’s or renter’s insurance and it doesn’t protect against theft or personal liability.

Airbnb states that damage to a host’s property (home, unit, rooms, possessions) in every listing is covered up to $1 million USD. However, hosts must provide documentation as part of the resolution process. Payments made through the Host Guarantee are “subject to Host Guarantee Terms and Conditions,” meaning there are exclusions, limitations and conditions. As well, it’s common for Airbnb hosts to receive emails from Airbnb, at random, informing them that various terms and conditions have changed.

Call your insurance company to see what is covered, as some home insurance policies cover short-term rentals. But if there are multiple short-term visits, the insurance company might require you to buy a business policy that would cover a hotel or a bed and breakfast.

Damage

Airbnb’s host guarantee doesn’t protect against wear and tear to your place, but you can charge a security deposit to cover possible damage.

Installing a reasonable security deposit is a no-brainer move for new hosts. Airbnb allows hosts to set up a security deposit to cover minor damages that would not be covered under the Host Guarantee. For example, if a guest breaks a door handle while staying at your property, you’ll want to replace that before the next guest comes.

However, Airbnb won’t consider this damage to be major and won’t cover it under the Host Guarantee. As a result, this becomes an out of pocket expense for you, unless you charge the guest a security deposit. When guests make a reservation, they are not immediately charged for the deposit – only if a host makes a claim.

Even if a host is only renting a single room, a security deposit is a safe move just in case anything gets damaged.

Couple meeting with another woman.

Getting paid

Airbnb could require you to refund a guest’s payment if you cancel a reservation at the last minute, forget to leave the key, misrepresent your listing, don’t clean your home or otherwise fail to meet Airbnb’s hospitality standards. Airbnb suggests making sure you’re available during the guests’ scheduled check-in to address any concerns.

Airbnb’s payment system is quick and efficient. Payments are sent through direct deposit after the guest completes their first night (regardless of the length of stay).

When a guest books a host’s space, they also agree to the host’s cancellation policy, which dictates the percentage of the booking costs (minus Airbnb’s cut), if any, they will get back. Most moderate policies allow a guest to cancel within two days of the first night to get their money back. Less moderate policies allow the host to collect more of the booking money.

Host cancellations also happen from time to time. One study found host cancellations are the top complaint on Airbnb, representing about 20% of all complaints.

Depending on when a host cancels a stay, they’ll be deducted either $50 or $100. If a host cancels three or more reservations within a year, Airbnb may deactivate the listing.

To Airbnb or not to Airbnb 

If you talk to enough long-time Airbnb hosts, they’ll be able to tell you an endless number of stories about inspiring and interesting guests who shared their home. Others might have bad experiences. There are clear potential advantages and disadvantages to becoming an Airbnb host.

However, if all the regulatory checks are taken care of, the space is up to par and you’re taking your hosting responsibilities seriously, the platform can serve as a nice way to earn extra cash and meet interesting travellers from around the world.

The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.

 

Source: Realtor.ca – Joseph Czikk – Joseph Czikk is a Canadian freelance journalist. His work includes topics like homeownership, business, tech and personal finance. 

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WATCH: Why Being Near Water Could Be the Key to Happiness, According to Research

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Even daydreaming about traveling off to a faraway island, where the sand is warm, and the water is crystal-clear blue can give people a sense of calm. So, this should make it no surprise that actually sitting next to a pristine body of water actually does come with some pretty fantastic well-being benefits.

According to best-selling author and marine biologist Wallace J. Nichols, merely being close to a body of water, be it sea, river, lake, or ocean, promotes mental health and happiness. And he wrote all about it in his book, Blue Mind.

“The term ‘blue mind’ describes the mildly meditative state we fall into when near, in, on or under water,” Nichols told USA Today in 2017. “It’s the antidote to what we refer to as ‘red mind,’ which is the anxious, over-connected and over-stimulated state that defines the new normal of modern life.”

As Nichols noted, research proves his theory that being near water can help us all achieve “an elevated and sustained happiness.”

That elevated level of happiness happens because, according to Nichols, water helps in “lowering stress and anxiety, increasing an overall sense of well-being and happiness, a lower heart and breathing rate, and safe, better workouts. Aquatic therapists are increasingly looking to the water to help treat and manage PTSD, addiction, anxiety disorders, autism and more.”

Perhaps this is why we are all willing to pay more for a house along the water, or a room with an ocean view.

Moreover, being near water can increase our creativity, including our conversational abilities. But, being near water doesn’t only help us during our waking hours. It can help us in our sleep, too.

“There is some research that says people may sleep better when they are adjacent to nature,” W. Christopher Winter, M.D., author of The Sleep Solution, told Conde Nast Traveler. “No wonder sleep machines always feature the sounds of rain, the ocean, or a flowing river.”

And this gift of Mother Nature’s to soothe us all with a simple drop of water is precisely why Nichols believes it’s so important to protect this precious gift.

Source: SouthernLiving.com – By Stacey Leasca July 19, 2018

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How to Start a Successful Airbnb in the Country, from Scratch

AirBnB in the Country

Have you dreamed of designing and renting out a country retreat through a popular site like Airbnb.com? One family shares how they made their rural Airbnb home a success.

The Hartman family live on a small piece of acreage just outside the Asheville, NorthCarolina city limits.

The Hartman family

Despite their proximity to one of the South’s most popular tourist destination cities, their land is rural in every sense.

Walk outside at the right time of day in the right season, and you may catch a glimpse of a black bear, wild turkeys, deer, a bobcat, some turtles or any number of birds. They’re less than a mile from several world-class hiking trails and the winding road to their home is surrounded by pasture and nature.

It’s the ideal blend of mountain-country-living with hip-city convenience.

So, when their neighbor’s home burned down about four years ago, the Hartmans leapt at the chance to buy up the 2.5 acres that abuts their current home.

Their plans for the land were vague, but after much planning, discussion, decision-making and brainstorming, they decided to build an Airbnb-style minifarm retreat: Blue Turtle Farm.

The only thing was, neither of them had any experience running a microfarm OR a hospitality business…nor did they have much spare time to learn. Meggan is a psychologist, sleep consultant and faculty member at Meridian University and Brody is an executive at a leading branding agency, as well as a Purpose Guide, mentor and a meditation teacher.

Yet they forged ahead and have managed to exceed their Airbnb business financial goals in just one year.

How did they do it (and could you do the same)? Read on to find out.

It All Started With 2.5 Wild Acres, A Chicken Coop And A Concrete Slab

Chicken in a chicken coop

Brody and Meggan knew they had something special in their new property (it’s not every day 2.5 acres with an existing house foundation and driveway go up for sale in your backyard). The trick was discovering the best use of that wild 2.5 acres.

“We sat on it for two years because we knew we had to get the overgrown land in order first,” Brody says. “So we got some chickens, got out there on weekends with the weed wacker and just dreamed about what we could do.”

Meggan adds, “We also had to set a clear intention for the property—do we want to have someone come in and do flowers, do we want to grow herbs or create a market garden? So we had to look at what we could feasibly do and manage with our limited time, andwhat made the most sense for income. We also knew we wanted continued access to the land.”

While they knew they wanted to care for the land by starting a sustainable “pocket farm,” they also knew the existing homesite would be perfect for an investment home.

“We always knew we’d build on that land someday and possibly move there,” Brody says, “the question was: just what type of structure to build and when?

“And if you’ve never managed or developed even a small piece of land, it’s a HUGE learning curve. So we had a ton of people come out to assess the soil, the water situation and where to place the home visually for functionality, off-grid capability and aesthetics.”

The Hartmans also talked to their neighbors about their plans and studied the local zoning laws.

Once the land was in order, they’d chosen the best homesite and decided on a short-term rental business, the next big choice was: what type of house to build?

Figuring Out What To Build: Tiny Home, Cabin Or Designer House?

Butterfly on a sunflower

The Hartmans originally thought they’d build something small and simple to keep costs low, but after talking to two real estate experts, they changed their minds.

“We consulted two of our friends in real estate and they both recommended we build-like we-needed-to-sell,” Brody says.

With that in mind, they began researching comps and found most buyers in the area were looking for a 3 bed, 2 ½ – 3 bath home with “X” amenities.

Brody says 3 other factors weighed heavily on their decision:

“#1: If we flip it one day, how do we get the most out of it for resale? #2: If we were to move over there, what would we want in a home? And #3: what would an ideal Airbnb experience be for our guests?”

In the end, the Hartmans hired a reputable local high-end builder to construct a modern 3-story, 3 bedroom/3 bath home with a separate basement suite on the existing foundation.

“Having a good architect or good house plans and finding a reputable builder is key. You also need to think about parking when designing your space,” Meggan says.

Next, They Turned Their Attention To Learning Their Local Airbnb Market

With a reputable builder in place and home design underway, the Hartmans re-focused on learning the local short-term rental market.

“We researched local Airbnbs and VRBOs for going rates, we read the reviews and drew on our personal experience as guests of Airbnbs,” says Brody. “We also talked to a lot of people who had Airbnbs. Knowing the market in your community is essential.”

How they determine competitive pricing:

While there are Airbnb-centric consultants, articles and content available, Meggan offered this advice on pricing:

“We knew we had to cover our costs and make a profit, and at the end of the day you’re working backwards from your mortgage—and it’s a bit of a moving target in the beginning because you know that number will change once you’re finished building.

“The Airbnb suggested rate for our area is lower than we decided to charge. But, we had a clear intention: we wanted to create the best experience in the best environment, and we knew people would pay for that.”

And they have. To-date, the Hartmans’ Airbnb earnings have already exceeded their monthly mortgage…and it’s been open for short-term rentals for less than one year.

“Pricing also depends on how you want to run your rental. For example, will it be a year-round rental or do you really want to crank it for just 4 months out of the year? So again, your intention and goals are everything.”

Tips On Creating The Best Experience In The Best Environment (without breaking the bank)

When it comes to creating an optimal guest experience, attention to detail is everything.

Bedroom

 

However, when you’re floating a mortgage and a construction loan you can’t typically do everything high-end. Here’s how the Hartmans furnished and decorated their Airbnb without breaking the bank:

  • Don’t go high-end on all the furniture. “Fortunately, the gentleman at our local furniture store runs his own Airbnb and told us where to invest,” Meggan says. “For example, he said not to invest in rugs, like use outdoor rugs indoors, and to think about high-traffic vs. low-traffic areas.”
  • Put your money where the details matter. “This means quality of the sheets, towels, beds, soaps and sundries. We’ve even gotten good reviews on our toilet paper, so little things like that matter to people.”

Once The House Was Complete, There Was Still A Lot To Do To Prepare For Guests

“In addition to getting the professional photography and branding/descriptions done, furniture had to be moved in and put together, detailed cleaning had to be done, window treatments installed, etc.,” Brody says. “It’s important you build in extra time to complete those details.”

When the house was finally done, the Hartmans invited friends and family to stay and critique the home.

“We told them to bring it! And thanks to their feedback we wound up replacing the downstairs bed and making some further improvements,” Meggan says.

To buy some time (and secure some more feedback) the Hartmans also rented the home to a local family of four for the first 3 months.

“That gave us a buffer and their feedback was extremely helpful.”

How They Promoted Their Brand New Short-term Rental Property

The Hartmans listed their home on Airbnb and VRBO and paid special attention to branding.

“Professional photography is very important,” says Brody, a branding expert, “as is getting the descriptions and owner’s manual just right.

Stairway and living room

 

“I’ll never forget when I got that first notification from Airbnb, then the first booking. It was so thrilling to see. I still get excited when I see them come in!”

Since Airbnb is all about recommendations and ratings, the Hartmans are vigilant about responding to guest requests, addressing any concerns and rating their guests promptly.

This attention to detail earned them “superhost” status in October. “It’s really important to get those milestones met, and it’s a high bar—no cancellations, at least 4.5 stars every time—but if you deliver, then superhost status will come,” Brody says.

While they are listed on both Airbnb and VRBO, they’ve found each application has its own distinctive audience and find Airbnb’s interface more intuitive and easy to manage.

To avoid double-bookings, they use an integrated managing calendar.

Running The Day-to-Day (Without Quitting Their Day Jobs)

For day-to-day, the Hartmans highly recommend hiring an exceptional cleaning service that specializes in short-term rentals/hospitality.

“Our first service was good, not great,” Brody recalls. “They didn’t get all the details or what it meant to be a superhost. I spend a lot of time in hotels for my job, so I know what those details are!”

One day, their cleaning service didn’t show up and Brody and Meggan had to run over to clean the house themselves. After that, they found a better service.

“We wound up hiring a husband and wife team who also does basic maintenance, which has been a game-changer,” Brody says. “They know what it means to care for a short-term rental, for example, she brings local magazines and keeps them up-to-date, and keeps the house impeccable.”

They’ve also given the cleaning service access to their booking calendars, which automates the entire process.

“Now we could leave the country for a month and would not worry.”

With the cleaning and maintenance dialed in, there’s very little other day-to-day work.

“The only other thing we do regularly is bring over wine, crackers, cheese and a custom welcome note,” Meggan says.

Technology also helps keep the day-to-day tasks at a minimum.

The Hartmans have set up their online booking so guests can book automatically—provided they meet certain requirements. Then they send a personal reply.

They also use an app that tells them if the doors are locked or unlocked, and they are out on the farm regularly should the guests need them (which they usually don’t).

How To Avoid Negative Reviews

Negative reviews are the plight of any modern short-term rental business, here’s how the Hartmans have maintained a nearly unblemished review profile:

“Airbnb lets you communicate with the guests before your mutual reviews are published. So we always take that opportunity to ask the guest if there’s anything we can do to improve hospitality. says Brody.

“With that approach, we’ve only had one 4-star review on one attribute saying we weren’t truly 12 minutes from downtown, so we changed the listing to 15 minutes.”

They also recommend being clear about the role you will play as host.

“Some hosts live off-property, some hosts live next door and personally greet every guest,” Meggan says. “We let people know we’ll be on the property and will be as available, or not, as they want. Most of our guests want to be self-sufficient and just say hello if they happen to see us, and we’re fine either way.”

How Long Did It Take The Business To Become Profitable?

“Our profit goal for year one was to exceed our mortgage costs, and we managed to do that within the first month of full-time short-term rentals,” says Brody. “There are months now that we’re more than doubling our mortgage.”

The Hartmans believe their location plays a role in this, as does the quality of the home and the natural beauty of the land.

Dining room and kitchen

 

Insider Startup Advice: What They Wish They Had Known

When asked their biggest startup challenges, the Hartmans offered these lessons learned:

  • “Money out vs. money in while building is a roller coaster—I mean you’re furnishing an entire house. It creeps up on you, and then once you get caught up in it you know you can’t skimp, so there’s that sense of having faith in the process.”
  • “Don’t skimp on construction! We did this right, but it’s still good advice. Our construction company came in on time and on budget. They landed that ship nicely.”
  • “The initial house set-up is crazy, so be prepared! That was a lot harder than we anticipated.”
  • “Be prepared to let it go,” says Brody, “I remember going over to answer some questions for our very first guests, and I walked in and saw this young man lying on my couch with his shoes on. I wanted to say, get your shoes off that couch! But I knew in that moment, I had to surrender the house. And that was quite a moment.”
  • “It pays to set your intention for the place,” says Meggan. “We really wanted to create a retreat and respite for people to unplug and connect with family…and it’s proving to be the perfect spot for families.”
  • “In the beginning we were so worried that the whole house would not get rented that we built that additional basement suite. Now I wish we hadn’t, because we’ve never not rented the whole house,” says Brody.
  • “Get your house rules figured out right away. This will keep your house in good condition and your neighbors happy.”

Where Will They Go From Here?

Based on their success and excellent reviews, the Hartmans’ property is now being considered for “Airbnb Plus” status.

This means they have to meet a 100-point inspection list and have a certain level of aesthetic value which caters to a higher-level guest. Airbnb pays to have the home re-photographed, and if they pass inspection, the property gets a special badge.

They also plan to add a hot tub and possibly a wood stove to increase winter rentals, and will use the property for purpose-building workshops.

To learn more about the Hartman’s property and view the rental, check them out at: www.blueturtlefarm.com or on their Airbnb page.

 

Source: Rethink Rural – Posted by Kristen Boye on April 15, 2019

 

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