If you're looking to buy an existing short-term rental, it's essential to understand that it's not as simple as transferring ownership. There are several critical steps involved in making sure the property you're purchasing will continue to perform well.
This episode will walk you through the financial due diligence process, how to handle existing reservations and Airbnb reviews, and the potential challenges of dealing with third-party STR management. Whether you're a seasoned real estate investor or just starting your Airbnb business, these tips will guide you through the complexities of buying a property that's already operating as a short-term rental.
One of the most important aspects of this process is ensuring that the financials of the property are accurate. It's not enough to rely on the seller's numbers—you'll need to verify the income with actual bank statements and use tools like AirDNA, PriceLabs, or STR Insights to get accurate estimates of the property's revenue potential.
But beyond finances, there's also the question of what's included in the purchase. Are the photos, furniture, and even the Airbnb account being transferred? If not, you'll need a plan for how to manage existing bookings and recreate the property's online presence. We'll dive into these details so you can avoid the pitfalls that come with buying an existing short-term rental.
Episode highlights:
Financial Due Diligence: Verify all income claims with actual bank deposits and use tools like AirDNA and PriceLabs for accurate revenue estimates.
What's Included: Ensure the purchase agreement clearly specifies what's included in the sale—furniture, photos, and the Airbnb account.
Airbnb Account Transfer: Learn about the challenges of transferring an existing Airbnb account and reviews, and what to do if the seller won't transfer the account.
Managing Existing Reservations: Understand how to manage and honor existing reservations, or how to reschedule or cancel them if needed.
STR Management Tips: If the property is managed by a third party, know what to expect regarding the transfer of bookings and control of the property's listings.
I hope this episode has provided some clarity on the process of buying an existing short-term rental. There's a lot to consider, but if you take these steps, you'll ensure a smooth transition and protect your investment. Whether you're handling Airbnb reviews, existing reservations, or setting up new listings, the key is to stay organized and informed.
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welcome back to the show I'm happy you're here again today we're talking about something that's near and dear to my heart and exciting and that is acquiring more short-term rentals there's some really important pieces that go into this and we're just going to jump right in the first piece is our financial due diligence we've talked about this a lot on the show before so if you're new to the channel thanks for joining you can check out all of our prior episodes at Str strr riches.com we
also have a hand little AI bot in the bottom right corner where you can ask it simple questions like what are the due diligence steps for buying a property we actually have a checklist for you on there as well you can download but I want to break this down because we've been bringing on a lot of new partners it's been really exciting and a lot of them coming on are acquiring a new short-term rental we've even had Partners sell a short-term rental and go to a
new partner and so there's a lot of little challenges that you might not be thinking about that can pop up so again the first piece the first step to this is the financial due diligence we don't want to buy a property where the numbers don't make sense right and so we want to get all the historic financial information from the prior owner we want to have that in a CSV file an Excel file but we can't really stop there let's say that owner says a property
made $100,000 last year and they gave you an Excel file that shows $100,000 well if we go back to my days in the the apartment World working as an investment broker working with large apartment buildings buying and selling we didn't just take the owner's word for it as much as we'd like to trust everyone out there we would take it a step further and we would ask for bank accounts showing those deposits going in there so if you're buying a property that has a really high
past historic value I would take it a few steps further ask for a few bank statements just to verify that the next thing you want to do is get your own current estimates remember you can use tools like airdna.co you can use price Labs you can use mash visor but the reality is none of these tools are perfect and so the more you use the better that estimate the more accurate that estimate I should say is going to be these tools have a really big variation
we use them constantly throughout the week every week and we see really big scary differences between valuations they give on properties so make sure that you're getting your own estimates or if you're not comfortable doing that on your own that you reach out to someone they can help you with that there's a lot of uh industry help out there there's one company called St insights for example so the more information the better you have the next thing that you're going to need to verify is if
the property is actually actively listed so if this owner is selling the property they may have done what we call snoozing the listing and that means that it dis disappears from the search results that also means you have no way to verify Past reviews so if that's the case you want to make sure that you also get those reviews from the prior owner and ideally in a screenshot format or or a video format now we actually did a an episode on how to analyze Airbnb competition
in 30 seconds I know that sounds super crazy but it's reality using free AI That's episode 244 so if you're buying a new property I really recommend that you do that and you analyze the reviews and the performance of the property in just 30 seconds using that tool so that's the third piece really the financial due diligence we know that reviews have a huge impact on the revenue and the amount of reviews have a huge impact and so we want to make sure that we're checking
all the boxes when it comes to our financial due diligence so let's assume we're comfortable with all the numbers we're moving forward step two is to determine exactly what's included in the purchase so we know if we buying an existing short-term rental it's going to have furniture in there but is all the furniture outlined in the purchase agreement is the spa included or is the barbecue included or you name it the towels the Linens we want to make sure that all of the furniture is actually
included because if the prior owner takes something out and the photos no longer match our property when a guest shows up well they're not going to be really really happy and that leads me to the next piece is are the photos actually included in the purchase so there's quite a few different scenarios when we're acquiring a new short-term rental it may be that we're acquiring a property that's run by a property management company in which many cases they will not pass the photos on to you
unless you continue to manage with them so we're going to go through those options we're going to run through the advantages and disadvantages of acquiring a property that's under a property manager versus one that's an individual owner with their own Airbnb account vers versus one that will transfer that account to you versus one that won't and that leads me to the final piece and what's actually included in the purchase and this is a really big one and that is the otaa account or the Airbnb account
or the accounts where that property is actually listed remember if you have to start over from zero a property that has zero reviews is not going to perform as well it's a property that has 50 excellent reviews that's just the reality now you may be thinking why would the owner not want to just transfer me their account if I'm willing to pay more for the property because it has great reviews and it has a whole bunch of them well there's several reasons for that the reality
is it's actually pretty uncommon that they're going to transfer the account so we'll dive into that in one quick second before we do I want to talk about the most ideal situation and that is if they actually do transfer that account to you this is step three there's only really a few things that you need need to do here so the first piece is you want to make sure that you have full access to the account you want to make sure that the banking information is
changed from the prior owner to your account of course you want to have all the existing reservations outlined in your purchase agreement and ideally held in an escrow account so that once the property actually closes you have 100% right to those existing reservations and you have a legal contract saying that even if they went to the wrong account the prior owner's account for example that you need to be reimbursed for those remember the the larger the property the more luxurious the property the more often there's
going to be reservations way far out in the future and depending on what channels this property was listed on a lot of those reservation payments might already be taken and you're going to need access to those okay so pretty easy if the owner's transferring the account over we just want to make sure that all the escrow and all the existing reservations are accounted for that we have the right Bank info in there one last thing that might come up is that the prior owner might need
a tax document from you at the end of the year let's say they operated the property for half the year and they made $60,000 well Airbnb and the different channels are very likely going to issue him a $ 1099 which only you would have access to if you actually took over his old account so it's pretty easy thing to do you just print off the PDF and send to them but you want to make sure that that's talked about beforehand okay so that's the ideal situation
we buy an amazing property with amazing reviews and a lot of them and we get full access to that account and all those future reservations now this is when it starts to get challenging let's jump into step number four a situation where the owner isn't transferring their accounts over to you and I know it sounds like common sense like this is the thing they would do because they can very likely sell their property for more with these reviews but a lot of times owners have multiple
properties under the same Airbnb account and unfortunately there is no way to transfer one property at the time of this recording anyways there's no way to transfer one property from an Airbnb account to another Airbnb account some owners might also be a little uh scared to to share an account that has some past banking information on there as well so there's there's quite a few Reon reasons really why you might just have to to start over from scratch and that leads me to step number five
we're starting over from scratch either that prior Airbnb account owner couldn't transfer their account we also can't transfer the reviews either so that unfortunately is not an option so if we're starting over and this property had existing reservations under the prior owner we're going to have to try to accommodate those guests as best as possible so we don't lose that income but it gets a little sticky so the first option would be for the prior owner to just cancel the reservations again they're not going to
want to cancel the reservations if they have multiple properties on the account because it's really going to affect their Airbnb account if they only have one then it's unfortunate for the guest it's not a great situation uh but they could do that and jeopardize the whole account the next option is for them to reach out to Airbnb EXP explain the situation that they're selling the property and there's a new owner purchasing it that's going to have a new Airbnb account created remember you're going to have
to have that Airbnb account created pretty much on the day the property closes unless you have blocked off a few weeks to make some sort of Renovations or something like that which I would suggest because as much as we'd like things to be as seamless as possible they usually aren't and if you're buying a property the chances are you only really saw it during the inspection phase and so there's a lot of things that you're going to have to double check like is the internet set
up you know is all furniture still there is there any maintenance all those things so I would highly suggest blocking off a few weeks between the close and when your new listing is open for new bookings okay so a few options there not the most ideal option to cancel guest reservation if Airbnb can help transition those guests to the the new account that would be ideal uh but that's not always very seamless either remember a lot of times guests make these reservations and they're hard to
get a hold of between the date they made the reservation and when they're actually checking in and so that process could take a fair bit of time if you have a direct booking website on your new listing Well then that can be an easy workaround if the reservation's already cancelled and the prior owner shared all their contact info with you then you could just direct them back to your direct booking website but we know that not all guests are going to want to do this if
let's just say you have 50 reservations this is a little extreme but let's say you had 50 reservations existing the amount of guests are actually going to want to rebook direct is is a much smaller percentage right maybe 20% they don't have the air Airbnb protection there's a whole bunch other stuff that goes into it and just to continue on that thought a little bit if you're trying to reschedule existing res reservations so the prior owner notified all the existing reservations and said hey I'm selling
the property this is the new owner's contact info these are their new listing sites well depending on where those existing reservations were made maybe it was on vbo maybe it was on booking.com maybe it was via Airbnb all those sites we know have a little different set of rules and policies uh maybe the payment structures set up differently so you need all of that information from the prior owner you need the payment breakdowns to make sure that you have the correct taxes and all those types
of things uh and really the only listing site where we can create a custom price is Airbnb so I could go on for quite a while about this you can see how it can get complicated uh I just wanted to make you aware of these things because if you are buying existing property this is a bit of a juggling act and it's not a good guest experience either I do have a few workarounds to help facilitate all this so I'll get to those uh towards the
end but just one last bit of advice if you're buying a property that has existing reservations and you're planning on rebooking them rescheduling them and accommodating those guests then you're going to have to block your calendar on the new listing site on the new Airbnb uh listing site to make sure that they don't get booked by someone else right and so that means you're starting a new listing with a bunch of block dates which isn't exactly a great way to start off and if you do
decide to just create the brand new listing and leave the calendar open and notify those past guests and say hey Calendar's open feel free to book when you want remember if you leave instant book on which we highly recommend then other people could come in and book those days and so it's not it's not a great guest experience unfortunately now let's change things up a little bit let's jump into this sort of phase number six and that's the scenario where you're buying a property that's professionally
managed by existing property manager so there's a couple ways this could go right um You could continue to work with them in which case that's a pretty easy transition as well if you decide not to work with them though this is where we come up with some challenges so most the time property managers own that listing meaning the owner selling the property does not actually own the listing where they have all the reviews on Airbnb or vbo that's owned by the property manager you want to
make sure that you check the property management agreement between the property before buying as well but let's just assume that the property manager owns that listing and you want to manage it yourself or you want to work with a different property manager we go through this all the time as we've been bringing on new partners uh if you're new to the show by the way my my team and I have managed over 40,000 guests we've got properties in over 20 cities and over four countries and
uh we've gotten through this quite a bit there is a relatively easy solution to this though what's going to happen is that prior property manager is going to freeze that Airbnb account and delist the other accounts which gives you the ability to create a new listing at the same exact address you just need to make sure that you have all those pre-existing reservations from the property manager blocked on your new calendar otherwise if they're not there could be two bookings at the same time most property
managers also have in their contract and their agreement that they have the right to continue managing those reservations and so this isn't 100% but this is usually the case and so there's a bit of a phase out period right let's say you bought the property on January 1st the prior property manager had reservations through June well they're going to handle those reservations and your calendar your new calendar is going to be open for the days that weren't previously booked I hope this is making sense I
know there's a lot of steps in here but this is a really important decision right you're buying an existing short-term rental and we want to make sure that we don't miss any of these steps okay so just to recap a little bit these different steps these different phases the first step is doing our financial due diligence making sure the property makes sense for us the second step is really making sure we know exactly what's included in the purchase so including things like are the photos included
what furniture is included is the Airbnb account included the third step would be really the easiest situation and that's where there's an existing Airbnb account but the sellers passing it over to you and the just the few steps that we need to put into place to make sure that's a smooth transition steps four and five we talk about what happens if that owner doesn't want to transfer the Airbnb account remember there's quite a few reasons why they wouldn't want to do that and then step five
how we actually handle those reservations so they can basically all be cancelled um in several different ways or they can be rescheduled in several different ways either way you're going to need all that contact information from the prior owner and you're going to need an exact breakdown of those reservations so that if you're rebooking on a new platform the existing guest is in pay paying more for a housekeeping fee or they're not paying more in taxes remember those things change across a different listings so it
is a bit of a balancing act which just want to make sure we have all the information we can and ideally part of this transition process the prior owner is helping you or at least jumping on on some three-way calls for example just to inform the guest so they don't think there's something sort of sneaky going on we talked about in Step six how this would work if there was an existing property manager that you didn't want to continue working with you're basically going to create
a new listing they're going to freeze the one they already have so they're not going to accept new reservations you're going to block your calendar so that those existing reservations don't get double booked and then your calendar remains open for any new reservations the seventh piece to this is really just sort of dissecting the guest experience if they did have to rebook remember this isn't a great scenario your guests aren't going to be that happy and if they're rebooking on a brand new listing where you
have zero reviews well you've got to put in a a as much guest experience Hospitality as you can because you're sort of starting off on the wrong foot you may have guests that expect discounts for example you might have guests that are checking in just a few days after you actually close on the property so again you want to make sure that you've got enough room between when you take ownership and when that next guest checks in to make sure you've crossed all your te's and
dotted all your eyes and the guess is getting exactly what they expected and remember if you created a new listing this guest booked under a different property under a different listing that could had a could have had different descriptions could add different photos and now they're rebooking under yours so you want to make sure that the rules and the expectations where they originally booked are identical to the ones on your new listing so again not the best situation for a guest but as a new owner
you don't want to lose these really valuable reservations right so you just got to take it a step further add a little bit of extra Hospitality consider adding a gift basket or something like that just to make sure that they have a great experience and you start that new listing off with fabulous reviews okay I mentioned just a couple little workarounds that might help facilitate this transition one of those would be getting access as a co-host on the Airbnb account so as a co-host you have
access to all the guest Communications uh and you can continue to manage that reservation under the same listing again that prior owner can snooze that listing so you can create a new one but you at least can access all the prior reservations and you don't have to rebook anything that's on Airbnb unfortunately we don't have that luxury on the different platforms so if there are other reservations under vbo or booking.com will be a little more complicated the other somewhat easier solution that I mentioned is having
a direct booking website so if you're creating a new listing I hope you're using a property management software program we we talk about that a lot and there's literally hundreds in the industry now most of those will allow you to create a direct booking website really easily really in just a few minutes and so if you have that option that helps make things easier it's an option and you could provide that as the only option for your guest to rebook it's really up to you how
you want to handle this I just wanted to bring some clarity to the process it's not always super easy and it is very very important I hope those eight steps gave you a little bit of clarity and I reserve this ninth step or this ninth phase for those of you that are actually selling your property and so if you're actually selling your property all of these things are actually just the reverse right we want to remember that a new owner buying our property if we're not
sharing our accounts with them that property and that transition the property is going to be a little less valuable the transition's going to be more difficult and so you may plan for that you may create a new listing for that property earlier on before you're actually planning on selling that property maybe a year in advance if if you have that luxury that way when the time comes to sell you have the one property under one account you can transfer it over and everyone's happy including your
guests this one was a little long today in the reality is I could have talked about this for like another hour there's quite a few pieces that go into this but I hope that just gave you enough insight to where if you're buying a property that has existing reservations you talk about these things with the seller and your your real estate agent before the actual closing so that everyone's on the same page including your guests and remember if you're buying a new property and you don't
want to manage it yourself well our team would be happy to chat with you as I mentioned we've handled this process a lot of times in a lot of different scenarios and situations all with really good guest reviews to get in touch with us just go to strr riches.com you'll see a little Property Management button there uh and I'd love to chat with you personally and so until next time I hope you have a fabulous week if you're in the process of closing well I'm wishing
you a smooth closing and congrats until next time time take care want to get on the fast track to Financial Freedom through short-term rentals what all starts with the properties you acquire but you want to make sure that you acquire the right properties I want to give you my ebook that will show you how to do just that there is no charge it's my gift to you for being one of our subscribers
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