Why Airbnb is Better Than Stocks

Ayvio Marketing

14 February 2020

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Airbnb investment properties are popular ways for real estate owners to make money. With the stock market soaring, many people are electing to buy equities instead of investment houses. Investors may take a look at the stock market and see that the past ten years of gains have been amongst the best since the 1800s. Indeed, the market has done incredibly well over the past ten years, and there is no end in sight to these gains.


However, you probably shouldn’t ignore the value of real estate holdings. Here’s why Airbnb investment properties are a good option for your portfolio.


Real Estate Has Both Capital Appreciation And Income


While the markets may have tripled their money over the past ten years, real estate has not done poorly either. The average home selling price has risen from $257,000 to $382,000, a gain of 48%. However, this only tells part of the story as it doesn’t factor in the rental income portion.


While rental rates vary from region to region, let’s suppose that you bought this Airbnb investment property and were able to rent it out at an average income of $2,000 per month. In those ten years, you would take in $240,000 in rent (for the sake of simplicity, let’s assume that’s after all expenses). Once you add that on to the $382,000 value, you get a 142% return on investment, which is not bad at all.


Admittedly, it isn’t quite as high as the gains in the stock market, but it’s still a very healthy ROI and is an excellent addition to a balanced portfolio.

Best Practices

You Can Use Leverage In Real Estate


Suppose you had $50,000 back in 2009 during the peak of the financial crisis. Your investment would be worth approximately $200,000, which is a $150,000 gain.


Now, let’s go back to our previous example. Let’s suppose you bought the $257,000 home with approximately 20% down, or $50,000. Your mortgage balance is roughly $200,000, with a payment of around $1,000 per month. You collect the same $2,000 in rent. $1,000 of that goes to the mortgage. Now, fast forward ten years. You’ve received $120,000 in rents. Your mortgage balance is about $175,000, and the home is worth $382,000. You sell the house for a healthy profit of $207,000.


Your $50,000 has earned you $120,000 in rents over ten years plus a capital gain of $207,000, for a total of $277,000 profit.


By using leverage, you can make your real estate incomes surpass those of equities. While it is possible to use capital leverage for equity investments, it is typically much more expensive, and you can’t do it as trivially.


Airbnb Investment Properties Are A Healthy Addition


Adding Airbnb investment properties are a healthy addition to any portfolio. They have an ROI that competes and sometimes exceeds equities. Real estate also always has value in that people need somewhere to live.


Once you own Airbnb investment properties, consider partnering with Ayvio, a hospitality company. We work with investors all over the United States to provide world-class experiences for guests and owners alike. Learn about our innovative platform and how it helps partners achieve maximum returns on their properties.

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