The possibility of creating a steady stream of passive income through rent is, of course, a major motivation for people to invest in garage conversion. This motivation has become even stronger with the rise of short term rentals through online services like Airbnb, which have made it possible to earn significantly more on a monthly basis than through traditional long term rental. Still, many people are skeptical about this new phenomenon, and consider it a too-good-to-be-true type of investment. Add to that the inherent anxiety about new technologies that many people feel. However, generating income through Airbnb is completely realistic, simple and can be optimized.
From our knowledge and experience of the Los Angeles rental landscape we highly recommend Airbnb for at least six months out of the year.
Once you’ve completed the construction of your ADU in your garage, the time has come to reap the benefits. Probably the most profitable way to make your ADU start creating money for you is by offering it on Airbnb. Airbnb is a website and an application that mediates between landlords who are offering short term rentals and people looking for an affordable place the stay in a city or town they are travelling to. The landlord has to create an account on Airbnb’s website where they will advertise their room, apartment, a house or in this case an ADU. They can post pictures and write descriptions of the place that they are renting, and, of course, state the price per night. The customer can browse through all the places that are on offer in a city they are planning to visit and compare them in terms of price, quality and location. Because the entire offer is available to every client, it is very difficult to rip someone off and the prices balance out very quickly in terms of location and quality.
Once the client narrows down their choices, they can start contacting the landlords and initiate the reservation process. The landlord can determine the conditions of reservation and whether it is possible to cancel it and under which conditions. All of this is made clear to the renter in the description of the place so they have to agree on these terms before they make a reservation. After the reservation is made, the client makes the payment to Airbnb and Airbnb places the money in the landlord’s account. The company keeps between 6% and 12% on top of the value of the reservation that they are making, and another 3% is taken out of the sum that is sent to the landlord.
In order to make money off of one’s ADU, one simply needs to offer it on Airbnb and wait for the first client to renter them. In a city like Los Angeles, which attracts tourists from all over the world, the first offer will certainly come within a couple of hours or at most days. After that, the landlord begins to build a profile on the basis of the clients’ feedback, which is why it is very important to advertise one’s place honestly, price it fairly, and communicate politely with the clients. One’s status on Airbnb will depend primarily on one’s interaction with them.
One reason why some people are discouraged from short term rentals despite their lucrativeness is the fact that they need to be active on Airbnb and deal with clients and they are responsible for keeping the place clean. They feel like offering one’s place on Airbnb is like running a small motel.
However, NEO Builders uses a property management company that will take care of all these obligations for you and still leave you with a very decent side income every month. You should always remember that a granny flat in your garage has a separate entrance so you will hardly ever see your guests!