Two years old? Any engineering studies on soil conditions to determine if the soil will be stable long term with a four-story building weight? In commercial real estate courses is a seminar titled “Buyers’ Reconstructed Statement,” where we learned to reexamine the seller’s information to determine if the seller is truthful. Are the numbers accurate, or are they a projection? Is it a pandemic-related sale or is the pandemic an excuse? Sales of new buildings means proceed with caution. Why would an investor sell an almost new building? A short rental history lacks the test of time. Is this building part of a larger project? If it is part of a larger project, is the larger project not working? I would be more interested in the surrounding neighborhood than 5 – 10 minutes from major attractions. Then I wonder if these units were rented as apartments if those rents would support the returns on the project. I would ask a local commercial banker if they finance a six-unit apartment project the same way they would finance an Airbnb. When an investor changes course so early in the life of a project, is it a red flag event? Why sell a new cash-flowing project now? Also, they base the projections on a 35 percent down payment.Here are some questions to consider as you perform due diligence on the offering: Bed and breakfast operators have been around for many years, Airbnb’s reservation system organized them under one banner. Monty’s Answer: While there are differences in operating an Airbnb instead of apartments, I see Airbnb as a different operating model rather than a new category.
What is your opinion about Airbnb projects as an investment? There are numerous significant attractions within 5-10 minutes by car, but Airbnb is a new category. The six units generate an eight-percent cap rate.
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We have invested in other commercial property types, but this would be our first bed and breakfast.
Reader Question: We are a four-person group wanting your opinion on topics to consider when buying an Airbnb investment.
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