Is Buying an Airbnb Tiny Home a Good Investment?

Hosting on Airbnb is becoming ever more popular. With the rise in staycations since Covid began and Airbnb CEO Brian Chesky’s prediction of “a travel rebound that’s unlike anything we’ve ever seen,” now could be the time for you to dip your toes into Airbnb rentals.

One way you may decide to venture into Airbnb is by investing in a tiny home. They’re the smallest rental properties you can buy and are highly favoured by potential guests. A tiny home could be the perfect option if you’re not looking to make a huge purchase for your first Airbnb.

What is a tiny home?

Tiny homes are small homes that have a minimalist design. They’re usually between 80 and 400 square feet. The tiny house movement is an architectural and social movement that supports the downsizing and simplifying of your living space.

The movement gained traction after the 2008 financial crisis when many started looking for cheaper alternatives to traditional homes. A tiny home could cost you anywhere between £35,000 – £60,000 or if you’re just looking to buy the shell of a tiny home and furnish the rest yourself, between £12,000 – £15,000.

Read Now: How to Get Positive Reviews on Airbnb

The pros and cons of investing in an Airbnb tiny home

Before making the plunge and investing in a tiny home, it’s wise to be fully informed of the risks and benefits and to seek the guidance of a financial advisor. Below we have listed a few pros and cons to a tiny home investment to help you with your decision.

The pros

The main advantage of a tiny home investment is their affordability but they’re also extremely cost effective due to their size. A smaller home with less lights to power and less space to keep heated means your running costs will be much lower than a traditional rental property. There’s also the option of running your tiny home completely off grid with solar panels for electricity and a wood burning stove for heating.

Another advantage of a tiny home rental is their increasing popularity as Airbnb reported tiny homes trending up 112 percent and 85 percent from 2019 to 2020, respectively. So, with the right property management you’ll be able to generate a positive cash flow.

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The cons

One of the main challenges of a tiny home investment is finding the right financing. Home loans aren’t structured to accommodate small amounts of money so unless you’re able to fund your tiny home outright you’ll need to open an motorhome or personal loan.

How to ensure your tiny home’s success on Airbnb

If you do decide to invest in a tiny home there a few factors you need to take into consideration to ensure your success as a host. Your top priority should be ensuring your property is rented out enough to make a profit on your investment. Below are a few elements to consider that will affect your rental’s cash flow:

Location – Location is very important when investing in an Airbnb. You want to choose an area that will be popular throughout the year and not just in the high season. Do some market research and see where the highest-rated tiny homes on Airbnb are located.

Airbnb regulations – Once you’ve chosen your location it’s important to check the local Airbnb regulations of the area. Make sure that short-term rentals are legal and that you can rent all-year round.

Insurance – Landlords are responsible for ensuring the property is safe to be lived in, so if a guest is injured on your property, you could be liable. It’s important to have an insurance protection plan for any incidents that may occur.

Essential amenities – To attract potential guests you need to supply all of the essential amenities and to stand out you should look into supplying luxury amenities at your Airbnb. This will lead to five-star reviews and a greater guarantee of bookings.

Read Now: What Amenities You Need to Supply as an Airbnb Host

Summary

For first time hosts, purchasing a tiny home to rent on Airbnb is a great investment option. It’s a cost-effective and affordable property which can generate a high rental income when managed efficiently. With the demand for tiny home rentals on the rise, now is a perfect time to enter the market.

For further advice on your Airbnb investment, contact our team of experts at Keey.