Why Buying an Existing Airbnb Could Be Your Smartest Investment

Key Takeaways:

• Buying an existing Airbnb allows investors to make money right away with minimal setup.
• Thoroughly research local regulations, compare the property to competitors, and validate the previous property owner’s performance data with AirDNA.
• Including existing furniture in the purchase can save time, money, and reduce stress.

Imagine standing outside a charming house, wondering if it could really become the thriving short-term rental you’ve envisioned. It’s one thing to dream about converting a property into a lucrative Airbnb, but another to see it already in action. That’s the beauty of buying an existing Airbnb—it’s the ultimate "see it to believe it" scenario for nervous investors.

When buying an existing Airbnb, you’re stepping into a ready-made opportunity. The property already has guest reviews, consistent bookings, and a track record of success. This takes the guesswork out of the equation and offers you a glimpse of what’s possible. You’ll have access to valuable data that can guide your decisions and help you hit the ground running. 

Ready to explore how buying an existing Airbnb can transform your investment journey?

The Two Types of Existing Airbnbs You Can Buy

It’s important to understand that not all short-term rental properties are created equal. Essentially, there are two main types of existing Airbnbs you can buy, each with its own benefits and considerations: turnkey properties and properties requiring some level of transformation.

Turnkey Properties

A turnkey Airbnb is a property that’s ready to welcome guests the moment you take ownership. A turnkey Airbnb for sale comes fully furnished, equipped with all the necessary amenities. They often have a proven track record of bookings and positive reviews. They might even already have bookings on the calendar for dates after the sale closes.

Benefits:

• Immediate Income: Although you will need to create a new host profile and listing, the established reputation of the turnkey Airbnb can help attract guests quickly. The existing bookings may not transfer due to Airbnb restrictions, but you can potentially negotiate with the previous owner to maintain some level of continuity. More on that to come!
• Proven Success: Turnkey Airbnb properties provide historical data on occupancy rates, average daily rates (ADR), and guest feedback.
• Minimal Effort: Since the property is already set up for short-term rentals, you can focus on managing and optimizing rather than starting from scratch.

Properties Requiring Transformation

In contrast, some properties might need a bit of work before they can become successful Airbnbs. These might be homes that are listed on Airbnb but are not optimized for success, either from a management or property perspective or both. They also might currently be used as long-term rentals or owner-occupied properties, but have the potential to be converted into short-term rentals. 

Benefits:

• Customization: You have the freedom to design and furnish the property to match your vision and target market.
• Potential for Higher Returns: Property renovations or changes to the previous owner’s short-term rental management strategy can potentially increase its guest appeal, leading to higher occupancy rates and rental income.
• Market Entry: These properties might be sold at a lower price point, providing an entry opportunity for investors willing to put in the effort to convert and upgrade.

Whether you’re looking for a hassle-free, income-generating asset or a project to tailor to your specifications, knowing your options is the first step to making a smart investment decision.

4 Things to Consider Before Buying an Existing Airbnb

Before diving into the purchase of an existing Airbnb, there are several important factors to consider. These elements will impact your investment and should help inform your decision to buy.

Bookings/Listings Don’t Transfer

If you thought that buying an existing Airbnb property sounded too good to be true, you were onto something. Unfortunately, there is a catch!

Bookings and listings on Airbnb do not automatically transfer to the new owner. This means that while you may inherit the physical property, the existing reservations and the reputation built up by the previous host will not come with it.

One workaround is to negotiate with the seller to keep you as a co-host temporarily, allowing you to manage the transition more smoothly. This approach helps you leverage the property's established reputation while you build your own hosting profile.

It May Be for Sale for a Reason

Before you jump the gun on a great-looking property, ask yourself why the property is up for sale in the first place. There can be various underlying reasons, some of which might impact the property's future performance.

• Regulation Changes: Short-term rental regulations are continually evolving, and some regions impose stricter rules that affect the viability of running an Airbnb. For instance, new zoning laws might limit the number of days a property can be rented out, or there could be increased licensing fees. Research local regulations thoroughly to ensure you're not blindly stepping into a bunch of red tape. 
• Disputes: Sometimes, properties are sold due to ongoing disputes with neighbors or the local community. Issues like noise complaints, parking problems, or neighborhood opposition to short-term rentals can create a hostile environment for running an Airbnb.

There Will Be a Transition Period

While inheriting an existing Airbnb certainly gives you a headstart, a transition period is unavoidable. 

You'll need to gather and analyze data from both the seller and third-party sources like AirDNA. The transition period is crucial for understanding the property's past performance and planning for future operations.

For instance, the seller can provide you with historical data on occupancy rates, revenue, and guest feedback. However, it's also important to validate this information with independent sources. 

AirDNA’s analytics tools can help you cross-check the data, offering insights into market trends, competitive performance, and potential revenue growth. You can make well-informed decisions and smoothly transition into managing the property by combining these data sources.

You’ll Need a Larger Down Payment

Buying an existing Airbnb property often requires a larger down payment compared to a traditional home loan. This is because lenders perceive short-term rental properties as higher-risk investments, given the variability in rental income and occupancy rates.

Perhaps you’ve found a stunning lakefront property that's already a hit on Airbnb. While this seems like a dream investment, be prepared for a larger down payment that can impact your cash flow. Have adequate funds set aside to help you secure the property and cover any immediate expenses, allowing you to start your Airbnb business on solid financial footing.

Why Buying a Turnkey Property May Be Worth It

Investing in a turnkey Airbnb property offers several advantages, making it an appealing option for many investors. These ready-to-go properties can streamline your entry into the short-term rental market, providing immediate benefits.

You’ll Have Access to Their Data

One significant advantage of purchasing a turnkey Airbnb property is access to existing data. The previous owner’s data on occupancy rates, average daily rates (ADR), seasonal trends, and guest preferences can provide invaluable insights. This information helps you make informed decisions about pricing, marketing strategies, and potential improvements.

“While you’ll have access to all of their booking/ADR data, you won’t have access to the quirks of the neighborhood - or access to previous guest requests [made] directly to the property manager,” says Annie Sloan, CEO of The Host Co.

“For example, if you’re in a city where there are only a handful of flights out each day, you may have a property where you’re going to be asked about late checkout constantly. Build that into your offerings! Or, if you are in a location where people often get snowed in because of storms (hello Tahoe!) or where people will sometimes forgo a Sunday night drive home for a Monday one because of traffic, make sure you offer a ‘shoulder night stay’ at some point on Sunday morning!”

Leveraging existing data and insights like these saves you time and effort, allowing you to start with a well-informed strategy.

Earn Income Faster

Speed to market is another compelling reason to consider a turnkey property. Since these properties are already furnished and equipped with the necessary amenities, you can create your listing and start accepting bookings much faster than if you were setting up a property from scratch.

Picture this: you've just bought a beautifully furnished beach Airbnb property, complete with nautical interior design and every essential amenity–outdoor shower, deck, you name it. Instead of spending weeks—or even months—setting up and decorating, you can focus on perfecting your listing. This quick turnaround means you can begin generating income almost immediately, just in time for the summer rush.

The time saved on setup can be redirected towards optimizing your listing with better photos, improving the guest experience with an Airbnb guidebook or welcome basket, and managing your property more effectively. 

It’s Easier to Buy in a Different Market

Buying a property in a different city or state can be daunting, but turnkey properties make this process much smoother. Since these properties are already operational, you can rely on the established systems and routines in place. This translates into less frequent travel or intensive setup efforts.

With a turnkey property, the local cleaning crew, maintenance team, and even a reliable property manager are already in place. Everything that’s needed for the property to run smoothly is established, even if you can't be there physically. This setup allows you to confidently invest in attractive markets far from home, broadening your investment horizons and potential returns.

You’ll Know Exactly What to Change

Buying a turnkey property gives you the advantage of using existing data to make targeted improvements. Leverage AirDNA's custom comp set feature to compare your property to similar listings in the area and see what amenities and features are driving higher rates for your competitors. This insight, combined with guest reviews, provides a clear roadmap for enhancements.

For example, if the data shows that competitors with higher rates offer luxury amenities like a hot tub, you can consider adding these features to increase your property's appeal. Additionally, if guest reviews consistently mention a desire for better outdoor seating, you can upgrade the patio furniture to create a more inviting space. 

Using existing guest reviews in conjunction with a custom comp set means you'll be making evidence-based improvements that will directly impact your rental income and guest satisfaction.

What to Do Before Buying an Existing Airbnb

So, you've found the perfect existing Airbnb, and your nerves are starting to settle. The excitement of leveraging a property with a proven track record is kicking in, and you're feeling more confident about your investment journey. But hold on—there’s still some crucial homework to do before you sign on the dotted line. 

Research Regulations

Let’s say the excitement is building after discovering a charming downtown loft for sale, and you can already picture the steady stream of guests and glowing reviews. However, you hit a snag—local regulations. 

The last thing you want is to buy a property only to find out that the rules in the area make your business plans impossible. It’s a gut punch, for sure, but it’s better to know now rather than after the deal is done. Doing your homework on regulations not only helps you dodge a bullet but also sharpens your instincts for spotting genuinely great investments.

Dive into the specifics of local short-term rental regulations to make sure you're fully prepared. Here's a quick rundown of the types of regulations you need to look out for:

• Business license requirements
• Short-term rental registration, permits, and licenses
• Zoning laws
• Owner occupancy requirements
• Restrictions on the number of available days
• Parking, noise, or waste management regulations
• Local taxation
• Insurance requirements
• HOA-specific rules
• Penalties for non-compliance

If the previous owner already has a permit for the property, see if the permit can be transferred over to you along with the house.

Stay ahead of the game by looking into potential future changes to these regulations. Engage with local government websites, attend city council meetings, or join community forums to stay updated. For a deeper dive into this topic, check out AirDNA's comprehensive guide on Understanding Short-Term Rental Regulations.

Talk to Neighbors

Don’t underestimate the value of a friendly chat with the neighbors. They can offer a treasure trove of insights that you won't find in any listing or official document.

If they mention that the last owner had frequent noise complaints, this could be a red flag. On the other hand, they may rave about how supportive the community is of short-term rentals, which is a huge plus.

Building rapport with the neighbors early on can also pave the way for smoother operations in the future. If you decide to go ahead with the purchase, having the neighbors on your side can help manage potential disputes and foster a supportive environment for your Airbnb business.

Compare the Property to Other Airbnbs

Remember the old adage: keep your friends close and your enemies closer? In the world of short-term rentals, your competition can teach you a lot about the market you’re about to enter.

Begin by narrowing down your rental market. AirDNA’s Market Research feature breaks down areas into markets and submarkets. In a large metropolitan market like Atlanta, we break out short-term rental performance into 162 submarkets by zip code and neighborhood. 

Once you’ve found an area of focus, scout similar listings within the same neighborhood:

• Are they consistently booked? 
• What are their nightly rates?
• How do their amenities stack up against what your property offers? 

This kind of competitive analysis is like getting the inside scoop on your rivals. Insights into the amenities they offer, for instance, can guide you on necessary upgrades or adjustments to position your property more effectively in the market.

“Research the attractions in the area and drill down on WHY people are booking in this city or neighborhood,” suggests Sloan. “Is it because the property is near a college and always gets booked for parents' weekends and big football games? Is it a romantic getaway destination to look at the autumn leaves? Look at the occupancy and rates on a more granular level than [seasonality] and you’ll find lots of opportunities to marry extra guest amenities and local upsells (e.g. a pre-packed tailgating service or even local college merch) to the stay.”

Double Check Performance

It's one thing to hear glowing reports from the seller, but you’ll want to verify those claims with hard data. 

First, get as much historical data as possible from the seller. This includes occupancy rates, average daily rates (ADR), revenue trends, and any maintenance records. Sellers should be transparent and willing to share this information, as it speaks to the health and potential of the property.

Next, turn to third-party tools like AirDNA to verify this data independently. AirDNA’s analytics can help you cross-check the seller’s information, providing an objective view of the property’s performance. Using a tool like AirDNA allows you to confirm whether the property’s reported success aligns with market trends and competitor performance.

Imagine discovering that the seller’s reported ADR is significantly higher than the neighborhood average. This discrepancy could indicate either an exceptionally well-managed property or potential misrepresentation. When you verify the data, you’re making an informed decision based on accurate, reliable information.

Spend a Night in the Property

One of the best ways to truly understand a property's potential is to experience it firsthand. Spending a night in the property allows you to see it through the eyes of a guest and identify any issues or improvements that need to be made.

As you settle in overnight, you start to notice the little things—a faucet that drips, a squeaky floorboard, or a mattress that's past its prime. These are details that might not be obvious during a quick walkthrough but can significantly impact a guest’s experience.

This firsthand experience ensures you’re aware of all the property’s strengths and weaknesses, helping you make a more informed decision and prepare for future guests.

Interview Any Staff

If the property comes with existing staff, such as cleaners, maintenance workers, or property managers, take the time to interview them. These individuals are a wealth of knowledge about the property’s day-to-day operations and can provide valuable insights into its management. 

“Ask the current property manager what guests have been asking for and what guests generally need outside of the actual space,” says Sloan. “For example, everyone coming to town wants tickets to a specific national park, or…guests are always asking about where to purchase firewood.” 

Additionally, staff members often work at multiple properties in the area and can offer valuable information about the local short-term rental market.

Interviewing the staff not only gives you a clearer picture of the property's operations but also helps you determine if you want to continue working with them. Polite inquiries about other Airbnbs that they work with can reveal their job satisfaction with the previous owner and provide a sense of the local standard for upkeep, maintenance, and guest services.

“Being armed with the knowledge of what guests want can really help improve [the] guest experience,” reiterates Sloan. “Generally, most property managers or owners won’t think to tell you these things before they sell!”

Chatting with existing staff can also be an opportunity to assess their interest in staying on through the ownership change, or whether it might be worth your while to sweeten the deal for them—perhaps by offering better pay or benefits—to cement their loyalty and ensure top service from them.

Happy, loyal staff can be a key factor in delivering exceptional guest experiences and driving the success of your short-term rental business–especially if you plan on managing your Airbnb remotely.

Build Furniture Into Your Contract

You have the opportunity to negotiate for the furniture and other essential items as part of the deal when buying an existing Airbnb. Here are some benefits of negotiating to keep the furniture:

• Pre-Established Aesthetic: If the previous owner decorated the property tastefully, maintaining the interior design look can preserve the ambiance that attracted guests in the first place.
• Cost Savings: Negotiating a flat sum for all the furniture and essentials, reflecting their used condition, can be more cost-effective than buying everything new.
• Time and Labor Efficiency: Avoid the hassle of shopping for new furniture and arranging for its delivery and setup. This allows you to start hosting guests much sooner.
• Continuity for Guests: Keeping the familiar look and feel of the property can retain returning guests who have come to love the property as it is.
• Less Stress: Buying a home comes with a mountain of tasks, and furnishing it can be a major headache. Cross that off your to-do list and breathe a little easier.

Work with your real estate agent to include a detailed inventory of all items to be included in the sale. This inventory can cover everything from major appliances to smaller items like kitchenware and linens.

Plan for the Transition

A well-planned transition sets the stage for continued success in your short-term rental venture.

• Block Off Days on the Seller’s Listing: Coordinate with the seller to block off a few days before and after the sale to manage the transition without guests arriving or departing in the middle of the process. 
• Notify Neighbors and Staff: Inform the neighbors and any existing staff about the change in ownership. A simple introduction can go a long way in building good relationships and ensuring they know who to contact with any concerns. For staff, discuss any changes to their responsibilities and reassure them about their continued employment.
• Create Your Own Listing/Host Profile: Since bookings and listings don’t transfer, you’ll need to set up your own Airbnb host profile and create a new listing for the property. Consider marketing strategies to promote your new listing.
• Contact Already Booked Guests: If there are existing reservations, reach out to the guests to inform them about the change in ownership. Provide them with your contact information and assure them that their reservations will be honored. 

Frequently Asked Questions

Where can I buy an existing Airbnb property?

You can find existing Airbnb properties for sale through various real estate platforms, including MLS listings, specialized vacation rental marketplaces, and real estate agents who focus on short-term rentals. Websites like Zillow, Realtor.com, and platforms dedicated to vacation rentals, such as AirDNA’s investment explorer tool, can be excellent starting points.

Is it profitable to buy an Airbnb?

Buying an Airbnb property can be profitable, especially if the property is in a high-demand area with a good occupancy rate and competitive average daily rates (ADR). Profitability depends on factors like location, market trends, seasonality, and how well you manage and market the property. Using data analytics tools like AirDNA can help you make informed decisions and maximize your rental income.

Can you transfer ownership of an Airbnb account?

No, Airbnb accounts cannot be directly transferred to new owners. When you purchase an existing Airbnb property, you’ll need to create your own host profile and listing. You can, however, negotiate with the seller to temporarily co-host with them to maintain some level of continuity during the transition.

What is a turnkey Airbnb?

A turnkey Airbnb is a ready-to-rent property that comes fully furnished and equipped with all the necessary amenities. These properties have an established booking history and positive guest reviews, allowing new owners to start generating income immediately with minimal setup effort.