Belltown The Perfect Airbnb Investment Opportunity (& the Numbers That Make it Work)
- Matt Miner,
- September 7, 2019
In Seattle, there’s only a handful of condo buildings that actually allow owners to Airbnb their units. These buildings include:
Our latest listing is (conveniently!) in Belltown Court, meaning that the perfect property with Airbnb investment potential could be all yours. If you do buy the property with the intention of renting it out on Airbnb, here’s how the numbers pan out:
For a studio condo in the Belltown neighborhood, you can expect to make an average of $150 per night (keep in mind this is an average—it might go for more during the summer months, and might go for less during the winter months.)
With a 90% occupancy rate, you could expect to gross $48,000/year:
365 x .9 occupancy = 320 days x $150 = $48,000 per year
And even with an 80% occupancy rate, you still fare pretty well:
365 x .8 occupancy = 292 days x $150 = $43,000 per year
Now, let’s factor in how much it costs to own the place. Of course, you have your initial down payment to account for, and if the Belltown condo costs $375,000 and you put down 20% we’re talking a $75,000 down payment. And then let’s say your mortgage ends up being $1,685. $1,685 x 12 months = $20,220 per year.
So, it costs you $20,220 to own the place for a year, and with an 80% occupancy rate on Airbnb getting you $43,000… $43,000 – $20,220 = $22,780 profit for you.
Now that’s just looking at the Airbnb + mortgage numbers, and says nothing about appreciation—this is just as is. Even if the market goes down, you’re still in good shape. You could pay off this condo in 10 years (which is fast in the world of real estate!) or just take the ~32% return. And of course, your return should take your initial down payment into consideration as well.
This property is a fantastic beginner investment property because it’s attainable, but also keep in mind that if you buy it as an investment property (so, not as your primary residence), you’ll have to put 25% down. Also, your interest rate will be a little higher since it’s an investment property, but there’s a way around this: buy this place as your first home (with the 20% down and great interest rate), and keep it when you go to buy your next home. Not only can you show that you have this rental income when you go to buy your next home, but you’re getting around having to put 25% down on your investment property!