Verb. “𝙊𝙫𝙚𝙧𝙡𝙚𝙫𝙚𝙧𝙖𝙜𝙚𝙙 𝙞𝙨 𝙙𝙚𝙛𝙞𝙣𝙚𝙙 𝙖𝙨 𝙖 𝙥𝙚𝙧𝙨𝙤𝙣 𝙤𝙧 𝙖 𝙣𝙖𝙩𝙞𝙤𝙣 𝙗𝙤𝙧𝙧𝙤𝙬𝙚𝙙 𝙢𝙤𝙧𝙚 𝙢𝙤𝙣𝙚𝙮 𝙩𝙝𝙖𝙣 𝙩𝙝𝙚𝙮 𝙘𝙖𝙣 𝙥𝙖𝙮 𝙗𝙖𝙘𝙠 𝙖𝙨 𝙚𝙭𝙥𝙚𝙘𝙩𝙚𝙙.“
We’ve talked about investing in real estate and shared some of our best tips for short term and long term rentals, but one thing we didn’t discuss with real estate is overleveraging.
Currently, many of our peers in REI, in particular the short term rental market are struggling…(As are many others truthfully), but for some hosts who utilize Airbnb are furious. Recently, AirBnB enabled all guests who booked reservations before a certain date to cancel their reservations & receive a FULL refund regardless of a hosts cancellation policy. As Hosts, we can empathize with those who depend solely on their bookings for their business. However, as guests ourselves we use AirBnB when we travel too, & we commend Airbnb for issuing full refunds, especially with 27 million people without jobs who likely need that money for daily essentials.
‘But you are a host, doesn’t this affect your vacation rental income’?
YEP, sure does. This time last year our rental income was about double than where we are now. But we aren’t furious. Here’s why, unlike many hosts in our area, we own 1 Vacation rental cabin. It’s not uncommon for some hosts to own 3-5 vacation cabins in the Smokies. Most have mortgages. Without other sources of income, these hosts are overleveraged. They have more debt in their rentals than they can manage. (Same can be said about the US Government too).
Yes, we have a mortgage too, but we bought low, have a decent interest rate for a second property, and MOST IMPORTANTLY…an 𝔼𝕄𝔼ℝ𝔾𝔼ℕℂ𝕐 𝔽𝕌ℕ𝔻!
For those of you looking to invest in RE, a cabin in particular…feel free to reach out to us for second opinions. We’re here to help. The hosts furious at AirBnB are just taking their lack of planning out on them. Airbnb is merely a platform (a business, true…but) they just provide a website that you pay a fee to use to market your space. If you enter into real estate overleveraged, you are destined for trouble. Remember, CASH IS KING.