The Benefits of Airbnb Syndication for Hosts

If you already host visitors at an Airbnb, you may have thought about other ways to make money with this venture. Airbnb syndication is one way to generate more income with property investments. Buying an apartment or condo building as part of a syndication plan can help you achieve a higher return with little risk. These are some of the benefits of Airbnb syndication for people who already host short-term renters.

Key Takeaways

• Real estate syndication allows multiple investors to fund the buying of a property, and one party acts as a property manager or host.
• Syndication lowers barriers to entry for buying Airbnb properties.
• Syndication allows for more earnings and fewer expenses.
• Airbnb syndication can diversify your portfolio in a low-risk way.

What Is Airbnb Syndication?

Before you learn more about the benefits of an Airbnb syndication, you should understand real estate syndication. Real estate syndication occurs when multiple investors come together to pool funds and acquire a property. Essentially, Airbnb syndication is a form of crowdfunding the capital to finance a property investment. The investors passively provide money for the property, and one party takes a more active role in managing the property. In the case of Airbnb syndication, this party may act as the host for the visitors.

You Can Choose Your Role

One of the biggest benefits of starting an Airbnb syndication business is that there are several investment models. For instance, the investors can be general partners, meaning they invest more money and take on more risk, or they can participate in a limited partnership. In a limited partnership, the investment is more passive, and the risks are limited. As an investor, you can find a syndicate offering the type of partnership you’re interested in. You can also choose the size and scope of the syndicate.

Next, you can choose whether you’ll be an active or passive participant. If you’re already an Airbnb host, you may find that acting as the syndicate is simple. When other people invest their funds in buying the property, you can continue to host guests and manage the property. You can get a larger share of the returns as a result, and you will put less money into the investment to start.

You can also sell other investors on the fact that they can take a step back and enjoy the passive investment. Investors don’t have to spend time overseeing rental units and communicating with tenants. They have more freedom than with other rentals they may invest in.

You Have a Lower Cost of Entry

The barriers to entry for Airbnb syndication are lower than for other real estate investments. While you may not afford an apartment building on your own, you may be able to afford it when you join forces with other investors. If you intend to act as the host for short-term renters, you can keep your investment costs low and your return on investment higher. You’ll still invest some cash, but most of your investment may be in time.

At the same time, you’ll also be able to help other investors get on board by sharing the risk. You’ll be offering passive income to investors, especially if you’re the one who is willing to take on the Airbnb hosting duties.

Upkeep Costs Are Lower

If you choose to buy a building you can use for Airbnb rentals, syndication may be a better option than buying several single-family homes for this purpose. You can invest in a single property rather than in many, which may also reduce property taxes as well.

Additionally, you may be able to keep up an apartment building more cost-effectively than other types of homes. Instead of managing care for a variety of properties, you’ll only have one exterior to worry about. Ultimately, you’ll be able to keep those maintenance costs down.

You Can Earn More Nightly

One of the biggest benefits of hosting an Airbnb is that you can charge higher nightly rates than you would with long-term tenants. In the long run, you’ll be able to make more money from each unit you rent out. If you choose an investment property in an area with more visitors, you’ll be able to earn more money quickly.

Plus, you can count on many more on-time payments than you would with long-term renters. While a tenant with an annual lease may pay rent late, short-term Airbnb renters have to pay in advance. You’ll never miss a payment, which helps secure your investment.

Right now, many cities have a strong demand for apartment units. The short-term rental market is solid, and investors can use this to generate passive income. As housing costs rise, many people will be looking for more affordable short-term rentals.

You Own the Property the Building Is On

One more advantage of owning a large property with several units is that you can think about the future as well. Not only are you investing in an Airbnb property, but you’re also investing in the land that the building sits on. You may find that the land itself is well worth the investment on its own, and the Airbnb units simply help you improve the investment in the meantime.

You Can Get Tax Breaks

Owning property comes with many tax advantages. For example, property syndication allows you to earn money regularly, all the while without paying self-employment taxes. You can also avoid a capital gains tax. You may also be able to write off other types of expenses depending on your contract with the other investors.

You Can Diversify Your Assets

One of the best ways to protect your portfolio against market volatility is to have several investments. If you already own single-family properties in addition to stocks, you may want to get involved in Airbnb syndication as a diversification strategy. Not only will you have the option to earn some money more quickly, but you’ll also do so in a way that minimizes your risk.

For many investors, Airbnb syndication is a smart idea. Short-term rental development is expanding, and now may be a good time to find other investors who are willing to fund this endeavor. As an Airbnb host, you may already be familiar with the work involved in this kind of investment and already be prepared.