It's the dream of every short-term rental property investor to own and manage a profitable Airbnb portfolio. This can be done either by slowly, yet confidently, building your portfolio one property at a time or by buying an Airbnb portfolio for sale. This guide shares all the information that real estate investors need to know about purchasing Airbnb portfolios, whether they are buying or selling one.
First, we'll define the concept of an Airbnb portfolio, after which we'll look at the best places to buy or sell one, and the pros and cons in each case. Finally, we'll go through the main factors you need to consider when valuing a group of Airbnb properties for sale.
Another option is to work with the Summer Acquisitions Team. With our access to reliable STR nationwide data, we can help you estimate the exact value of your vacation rentals for sale and market it to interested investors.
What is an Airbnb portfolio?
An Airbnb portfolio consists of all the real estate investment properties owned by a single individual or institutional investor that are rented out on a short-term basis for the purpose of generating income. A portfolio can range from two residential units listed on Airbnb, Vrbo, or other vacation rental websites, all the way to hundreds or even thousands of properties operated as short-term rentals.
An Airbnb portfolio can be homogeneous, comprising the same type of properties, or it can be diverse including different types of residential and even commercial properties. It can be built of single family homes, townhouses, studios, condos, apartments, cabins, lofts, duplexes, triplexes, other multi-family homes, boutique hotels, or any mix of these.
To construct their own portfolio of Airbnb properties, an investor needs to find profitable opportunities, repeatedly buy properties for Airbnb, fix them as needed, design and furnish them in line with industry best practices, and list them on short-term rental platforms. In addition, they need to continuously manage the properties in the best possible way to attract guests, generate bookings, and earn revenue. An investor can do all of this on their own or work with a team of partner investors, co-hosts, professional designers, or Airbnb management companies.
In some cases, large-scale investors choose to buy an entire Airbnb portfolio for sale–instead of building it from scratch–in order to quickly establish their business. This requires access to ample capital as well as reliable tools for evaluating the portfolio and forecasting its potential.
In other cases, investors decide to part with their portfolio of short-term rental properties all at once. This decision might be driven by the need for liquidity or an opportunity to make significant gains after strong appreciation in the markets where the inventory is located. Once again, to sell an Airbnb portfolio successfully, hosts need to have access to the right data and support.
Where to find Airbnb portfolios for sale
Finding entire portfolios of short-term rentals for sale obviously goes beyond finding individual Airbnb properties for sale. Note that here we'll focus on the best places to find portfolios that you can buy and own in full so that you have exclusive rights over all ownership and management decisions. This leaves aside options such as real estate crowdfunding platforms–like Fundrise and RealtyMogul–where you can invest in shares of portfolios passively, without being involved in the management.
Whether you're looking to buy or sell, start with these options:
- Real estate websites: Most traditional websites like Realtor.com don't usually have the functionality to list an entire portfolio. However, one platform that stands out is Roofstock as it facilitates portfolio deals.
- Real estate agencies and brokerages that focus on short-term rentals: In addition to helping you find individual listings for sale, agents may know investors who are selling existing portfolios. The most important benefit of working with a real estate professional is the access to their expertise and assistance in both the analysis and the purchase processes. The main challenge is that you are generally limited to a single market where the agent operates, and you'll have to be picky to find agents who specialize in the STR market.
- Airbnb property managers: Reaching out to local and national Airbnb managers can be a smart way to find an Airbnb portfolio for sale. As these professionals work with STR investors, many of whom own multiple properties, they might know of someone who is looking to sell their inventory. The main advantages of this approach are accessing a portfolio with proven performance and having a readily available management solution. The disadvantages include being potentially stuck with the vacation rental management company that helps you buy the portfolio–at least for some time–in case they put this as a requirement.
- Real estate wholesalers: Wholesalers of real estate properties might be able to help you build your own portfolio. While they are unlikely to sell entire portfolios, they usually have a number of properties that you can choose from to design your own inventory of short-term rentals. The most considerable benefit of this source is the lower-than-average property prices. The most important drawbacks include potentially distressed properties, limitation to a single market, and the need to conduct your own analysis before buying.
- Local real estate meetups: You can attend meetings of local real estate investors to find available short-term rental portfolios for sale. If an investor is selling their inventory of Airbnbs, they will certainly mention it to fellow investors at the local meetup. The benefits of this approach include the possibility to buy an entire portfolio at once and to gain information about its performance before the purchase. The negatives are that it might take some time before you come across an investor selling all their properties at once.
- Online real estate investing forums: Online forums, such as BiggerPockets, are another place where Airbnb hosts market their portfolios for sale. The good thing about this strategy is that you can connect with thousands of investors across the U.S. and you can discuss the performance of their portfolio before committing to buy it. On the flip side, you still need to do your own due diligence to confirm its potential.
- Summer Investing: Another great way to find an Airbnb portfolio for sale is to partner with the Summer Acquisitions Team. They'll help you define your investment goals, set up criteria, and provide you with a list of vetted properties for sale that meet your exact portfolio requirements. In many cases, we can recommend lenders and agents to help you with the purchase process.
Ultimately, finding Airbnb portfolios for sale will be driven by your investment goals, budget, preferred property types, selected markets, research and analytical skills, and access to tools.
How to value an Airbnb portfolio for sale
Determining the value of a short-term rental property portfolio for sale will be based on a number of market-level, property-specific, and portfolio-based factors. Whether you're buying or selling an inventory of vacation rentals, you have to know the exact value of the portfolio in accordance with macroeconomic, housing market, and short-term rental industry conditions.
Major factors to consider include:
- Market conditions: Arguably the most important factor is the markets where the individual properties are located and how good they are for running a vacation rental business. Evaluate the demand from visitors, main attractions, availability of STR listings, typical guests, and seasonality trends in bookings. You also have to pay attention to market-level performance metrics such as average nightly prices, occupancies, and income.
- Airbnb regulations: Related to the location of the portfolio, take into account local short-term rental regulations as these can have a major impact on the feasibility and profitability of an Airbnb business. Focus on both existing laws and ongoing discussions about new potential legislation. Check out the websites of state, county, and city governments.
- Property fair market value: The current market value of each property will determine the price of the entire portfolio. While a portfolio will typically cost less than the sum of the prices of the individual properties to compensate the seller for the ease of selling them all at once, the discount should not be too steep.
- Property condition: When valuing a portfolio, take into consideration the state of the properties that make it up. You should check if they need any major renovations, or simple fixes and repairs will do. It might even be that homes have been recently renovated and are fully furnished and designed, ready to be listed for rent.
- Available furniture and appliances: The furniture, appliances, electronics, and tech devices that come along with the properties need to be included in the total value of the portfolio. A buyer will save a lot of money on getting the homes ready for listing if they already have the necessary furniture and extras.
- Average daily rates: The average daily rate (ADR) that each property brings in is another important factor as it determines the revenue that the portfolio can generate. The host or property manager should have these numbers ready to include in their valuation and to provide to the buyer for their own analysis.
- Occupancy rates: The Airbnb occupancy rate of each property is equally important as income is the product of ADR and occupancy. Once again, this is something that the owner needs to share.
- Airbnb income: How much money a real estate investment portfolio can generate is a crucial factor in determining its value, and it depends on the income potential of the individual properties within it. While the revenue that a portfolio for sale has actually generated is important, you should also evaluate the potential income as the current owner or manager might not have optimized performance.
- Operating expenses: Also account for the recurring monthly and annual costs associated with owning and managing these short-term rental properties.
- Profitability: You have to consider the return on investment that a portfolio can bring, based on the purchase price, startup costs, revenue, and operating expenses. The most popular ROI metrics in real estate include the cap rate (which ignores the method of financing) and the cash on cash return (which accounts for the financing method).
- Appreciation: If you're selling your Airbnb portfolio, take into account how much the value of individual properties increased since you bought it to determine your long-term profit. If you're buying a portfolio, you need to estimate expected future appreciation to know how much money you can make from the portfolio in the long run.
- Airbnb listings: Since we are talking about a portfolio of Airbnb properties, it's important to evaluate the quality and the performance of their listings on short-term rental websites. Consider overall ratings and guest reviews to estimate the potential of the properties to generate bookings and revenue.
- Financing method: Finally, when buying an Airbnb portfolio for sale, you have to factor in the way in which you will finance the purchase. Whether you are able to pay in cash or need to take a loan plays an important role in determining the value of the portfolio. If a loan is necessary, account for the loan terms, duration, down payment, loan amount, interest rate, and ongoing monthly payments.
Establishing the value of an Airbnb portfolio–whether buying or selling–requires access to reliable data. Summer Forecast provides access to institutional-quality data and forecasting tools, so you can make data-driven decisions for bigger Airbnb profits when appraising a portfolio.
Your Airbnb revenue forecast: Brighter days ahead
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Pros and cons of buying an Airbnb portfolio
Purchasing an entire portfolio of short-term rentals–rather than building it up from individual properties–offers some important advantages, as well as potential disadvantages to investors.
The main benefits of acquiring a portfolio of Airbnb properties include:
- Instant growth
- Enhanced revenue potential
- Better economies of scale while getting started and managing your properties
- Streamlined operations and management
- Passive income (after hiring a professional property manager)
- Discounts on management fees (if you hire a single vacation rental management company)
- Investment diversification
- Weakened seasonality impact (if properties are located in different markets)
- Investment risk mitigation
- Opportunity to build on existing reviews and rating
- Flexible exit strategy (flipping rental strategies, selling individual properties, or trading the entire portfolio)
However, the most considerable drawbacks of buying an Airbnb portfolio are:
- High upfront investment cost
- Significant closing and startup costs
- Limited financing options (due to the large size of the loan amount)
- Large-scale data and analysis required
- Need to build a strong professional support team to immediately manage
- Significant exposure to economic downturn and tourism decline risks
- Demanding business operations and management processes
- Potentially high management fees
- Seasonal revenue (unless properties are spread out in diverse markets)
- Difficulty in selling the entire portfolio at once (if needed)
When deciding whether to buy an entire portfolio of Airbnb properties, investors need to weigh the pros and cons against their specific situation to make the right decision for them.
How to get your Airbnb portfolio ready to sell
Before selling your vacation rental portfolio, you need to follow a step-by-step process for a smooth, successful, and profitable transaction.
- Inform your property manager(s) of your intent to sell your portfolio in due course to avoid paying early-termination fees
- Ensure clear title and ownership documentation
- Appraise your portfolio using the factors listed above to determine the fair market value
- Evaluate the conditions of the properties within your portfolio to decide if major renovations are needed and how much they would cost
- Consider implementing minor upgrades and fixes on individual properties to improve appreciation on the portfolio
- Provide detailed descriptions of all properties within the portfolio, focusing on their strengths as short-term rentals
- Create an inventory of all available amenities, furniture items, appliances, smart home devices, and electronics that are included in the sale to highlight the added value to buyers
- Ensure that all due taxes have been paid and documented
- Prepare detailed reports with historical performance of the portfolio as a whole as well as individual properties including bookings, ADR, occupancy, revenue, expenses, taxes, cash flow, and ROI
- Forecast future performance to emphasize the profitability potential to buyers
- Provide documentation of existing Airbnb insurance coverage
- Consider providing a summary of local Airbnb laws and rules for each market in your portfolio for buyers' convenience
- Prepare a list of listings on different vacation rental platforms for all properties in the Airbnb portfolio for sale
- Create a database of property manager information and fees, short-term rental management agreements, cleaning service providers, restocking suppliers, guest guidebooks, vacation rental contracts, guest message templates, emails of repeat guests, local tax breakdown, Airbnb management software tools, STR marketing and branding materials, and all other potentially helpful information to sweeten the deal for buyers
- Prepare a portfolio presentation featuring high-quality photos, virtual tours, and financial information
- Figure out the best channels for marketing your portfolio for sale
- Hire a real estate agent or broker who specializes in investment portfolios
While this might look like a complicated list of steps, it's important to go through each one carefully and diligently to sell your Airbnb property within the expected timeline and price range.
The most efficient channels to market and sell your Airbnb portfolio for sale include those discussed above.
Pros and cons of selling your Airbnb portfolio
Before making a decision to sell your Airbnb portfolio, it's important to familiarize yourself with the main benefits and downsides of this financial move.
The most important advantages of listing your Airbnb portfolio for sale are:
- Quick and easy exit strategy
- Significant capital generation to invest in a new strategy
- Attractiveness to large-scale investors looking for new opportunities
- Proven performance results to appeal to buyers
- Streamlined sale procedures (as opposed to selling each property individually)
- Ability to address an Airbnb market downturn or change in regulations
- Opportunity to rid yourself of large-scale operations and management challenges
- Potential for significant real estate appreciation
- Capital gains tax treatment
Some major disadvantages of selling your entire portfolio of short-term rental properties at once include:
- Loss of recurring income
- Potential long-term loss (in case of real estate market depreciation)
- Missed appreciation (as opposed to holding assets for longer)
- Discounted sale price (compared to selling properties individually)
- High transaction costs including real estate commissions
- Capital gains tax liability
- Loss of short-term rental tax deductibles
- Limited pool of potential buyers
- Reinvestment risk
You can decide whether it makes sense to sell your Airbnb portfolio only after carefully analyzing the relative weights of the pros and cons in your particular situation. In case you decide it's time to part with your inventory, make sure to choose the optimal way to do that.
Bottom line
Buying an Airbnb portfolio for sale offers a unique opportunity to become a large-scale investor and host to capitalize on the major profit opportunities provided by the short-term rental industry. Alternatively, selling your portfolio of Airbnb properties allows you to get rid of the burden of managing a large inventory or navigating increasingly complicated legal regulations or simply free up capital to move into a new investment strategy.
Either way, this is a complicated process that entails multiple financial, analytical, and market considerations. We've created this guide with the mission to empower you with the right knowledge and tools to make and implement the right decisions about your investment portfolio.
