The Ups and Downs of Airbnb

The Ups and Downs of Airbnb

Business

One of the more popular lodging options around the world today involves Airbnb. Just a decade in the making, there are already millions of listings online in places across the globe. You would be hard-pressed to find a location today that does not have at least a few Airbnb listings in the area. Because of this, you might be wondering how this business model is holding up in recent times and whether or not it is a good investment after its IPO. Here are some thoughts related to that very topic.

Pros

You Can Set Your Own Fees

Real estate investors like Airbnb because they can set their own fees. You might charge a fee for cleaning, Internet usage, use of the pool, and much more. Guests that choose not to use these items can decline, saving you the expense. You can even charge a fee for pets if you choose to do so.

The Listing is Free

There is no fee associated with listing a property on Airbnb. Perhaps this is why there are literally millions of listings. There is no harm in putting up a listing just to see if there are willing renters.

Hosts Can Set Their On Rates

It is possible to set your own daily, weekly, and monthly rates with Airbnb. Charge what the market dictates, or go even higher. You can also change rates based on the time of the year.

Cons

Additional Fees

Airbnb tends to charge a lot of fees that can eat into your profits. Renters pay fees as well, which might turn many of them off from the service.

Competition

As mentioned, there are millions of listings on Airbnb. During certain times of the year, the competition gets to be a bit much in some markets.

Potential for Damage

Airbnb does not come with the same protections that landlords might be used to when renting via other methods. While a deposit can be charged, it is not often near enough to compensate if major damage is caused to the property.

Is Airbnb Stock a Good Investment?

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With Airbnb having recently gone through its IPO, you might be wondering if it is a good time to invest. According to the experts at Money Morning, “While Airbnb is undeniably a dominant success, not everyone is happy with the home-sharing services.” In actuality, Airbnb stock is currently not a wise purchase according to many investors. It is believed that the IPO was overvalued and that current market fundamentals do not lead one to believe that there will be a turnaround in fortunes anytime soon. Of course, this could change in the future. If it does, then you might find that Airbnb may be a worthy addition to your portfolio. Until then, it may be best to steer clear of it.

Now that you understand the ups and downs of Airbnb, it is time to decide for yourself what you think about its long term potential. The current global pandemic has shown us that this is a business model that might have some inherent flaws, so you will want to understand the possibility of fluctuations in terms of value along the way. In the end, you will always find people who are sold on this investment, and others who will continue to give it a pass.

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