Michael Arnold investigates whether Airbnb are real estate gold mines

Michael Arnold Los Angeles Real Estate

Michael Arnold is a real estate professional and entrepreneur based in Los Angeles. In the following article, Michael Arnold discusses the compelling potential of Airbnb rentals, profitability, and investment value.

Los Angeles’ Michael Arnold explains that real estate is a deceptively diverse market that’s often lumped together as little more than buying and selling homes. But for investors with a creative flair, certain sides of the real estate market can become an untapped goldmine with the right timing. As Central America takes a summer vacation for the first time in two years, Airbnb owners could make a small fortune, says Michael Arnold.
By buying up small rental apartments in regional hotspots, real estate investors can generate a steady stream of income by offering Airbnb-listed apartments to mid-range tourists. Los Angeles-based Michael Arnold explores this lesser-known side of the real estate market and discovers how Airbnb is fast becoming the next great gold rush.

How renting an Airbnb becomes profitable

The first question most people ask is how investors make money by renting out Airbnb properties. The answer to this question is twofold. The first part of the equation depends on location, and the second part has to do with economies of scale, according to Michael Arnold.

Any real estate investor will tell you that one of the keys to being successful in any market is finding properties in high traffic areas. That rule applies whether you’re looking at traditional rentals or Airbnb, says Los Angeles-based Michael Arnold.

Tourists are by definition always on the go, which means they don’t stay in one place for long periods of time. However, there are still certain areas that become tourist traps due to their popularity (think Niagara Falls or Disney World).
Los Angeles-based Michael Arnold says these locations of breathtaking beauty tend to have higher demand for short-term rental options like Airbnb properties, as hotels can fill up quickly and be expensive. As a result, investors buying homes near these attractions can charge premium prices for their rentals while offering value compared to hotel alternatives.

The second part of the equation is economies of scale. Michael Arnold explains that when running a traditional rental property, there are many associated costs for each tenant (advertising, cleaning, maintenance, etc.). With Airbnb, however, investors only incur these costs when someone books their space. Each night costs orders of magnitude more than a single night’s standard rental, which helps offset costs and generate a profit, according to Los Angeles’ Michael Arnold.

This means that if investors have multiple Airbnb rentals in different locations, they can spread those fixed costs across all properties, resulting in a higher overall profit margin. In other words, it’s becoming more profitable to own multiple Airbnbs than just owning a traditional rental property, says Michael Arnold.

Why now is the time to invest in Airbnb rentals

Los Angeles-based Michael Arnold explains that investing in any type of real estate is all about timing. Investors need to find properties when they are undervalued so they can sell or rent them at a higher price. The same applies to the rental of Airbnb properties; Now is the time to buy while prices are still low and demand is high.

It’s no secret that COVID-19 has decimated the travel industry for the past two years. As case numbers continued to rise across America, people are increasingly reluctant to take vacations outside of their home state or country. But as the pandemic draws to a close, more middle-class Americans are hoping to return to their favorite vacation spots, says Michael Arnold.

Regional tourist attractions such as Disneyland, Dollywood, Graceland, Las Vegas and Washington DC are all expecting a massive increase in the number of tourists visiting their locations. This sudden surge in tourism is driving many investors to quickly buy and repair low-cost homes just to rent them out to Airbnb members, according to Los Angeles-based Michael Arnold.

Arrest of Michael Arnold in Los Angeles

The Risks of Tapping into the Airbnb Gold Rush

Of course, as with any investment opportunity, there are always risks to consider. Nationwide, real estate prices have skyrocketed in recent years due to a lack of new construction. That, coupled with steadily rising interest rates, makes for an unfriendly investment environment, particularly for anyone looking to buy homes, says Los Angeles-based Michael Arnold.

On the other hand, families with vacant rental units or vacation homes will benefit immensely from the expected return of American tourism. Barring another widespread outbreak of COVID-19, summer 2022 should see throngs of holidaymakers arriving en masse across the country.

The best advice is to invest wisely and keep track of interest rates for now. As previously mentioned, timing is everything and investing in the real estate market requires a keen eye and a finger on the pulse of the economy.

Final Thoughts

The Airbnb gold rush is a real opportunity for those with the funds to invest in local rentals. By leveraging economies of scale and tourists’ desire to return to their favorite vacation spots, investors can make a lot of money in the years to come.

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