FORTUNE — In the years following the financial crisis, the most unlikely homeowners have emerged: Hedge funds and private equity investors have been buying up properties at bargain prices and turning them into rentals until they become ripe for a profitable sale. This phenomenon has been widely reported, but less attention has been paid to individual investors who are doubling somewhere between landlord and hotelier.
Needless to say, these people have a lot less capital than institutional investors like Blackstone Group (BX) and Colony Capital. And rather than go to real estate brokers and such to rent their properties, they list them on Airbnb, a short-term home rental service commonly known as a place to rent out your apartment while you’re out of town for a few days. The site, however, has also become a place where people buy homes and apartments just to rent them out to tourists and the like.
It’s unclear how widely this idea has spread, but it’s hard not to see how this could be the it investment strategy for the average Joe. And a California-based entrepreneur has written a pretty interesting how-to guide to bank on the investment.
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In 2012, John Wheatley bought a 750-square-foot apartment in Las Vegas for $40,000. Wheatley put in $10,000 to decorate and furnish the place, which came with one bedroom and one bathroom, as well as comforts for the wearing traveler — a shared pool and a hot tub and tennis court.
In one year, Wheatley says he made a profit of $13,608, which factors in the roughly $500 a month he paid to have someone clean and manage the Airbnb listing and other expenses. At that rate, he estimates it should take just under four years to pay off the price of the apartment.
Sounds pretty simple, right? This may very well turn out to be a lucrative deal as a one-off investment. Anything much bigger gets tricky, however.
Wheatley chose to buy in Las Vegas after researching Airbnb’s listing, which makes public which nights are booked and at what rate. A little math — and kaboom! There’s your estimated revenue. Sounds easy, but it gets complicated in some states, which Wheatley fails to mention. New York, for instance, has been cracking down on Airbnb users, since renting to someone for less than 30 days is illegal in most residential apartment buildings unless the owners are present when they have the visitor. Of course, that doesn’t mean New Yorkers aren’t still cashing in.
Regulations aside, the right spot for an Airbnb investment also has to be in a city where real estate is cheap but also draws lots of tourists and transients. Think college towns or perhaps New Orleans or Nashville, Tenn., says Edward Glickman, executive director of New York University’s center for real estate finance research.
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“Whether this is a scalable business is questionable,” he says. A few years ago when Glickman first arrived in New York, he searched through Airbnb for a temporary apartment and met a couple that owned multiple apartments that were all listed on the website. They seemed to do pretty well, he recalled, but it’s still a lot of work if you’re not either retired or a student or just have loads of time to spare.
What Wheatley hasn’t factored in is the day-to-day wear and tear of the apartment. Unlike individual investors, hedge funds and private equity firms have way more capital to pay agencies to take care of this stuff. Appliances break, sheets and towels get old, and leaky roofs and what not need to be fixed. All that adds up. And if you have dozens of such Airbnb investments, maintaining them all can be a costly and logistical headache.
Of course, you can hire more people to manage your properties, but then that costs more. Which means you also profit less. So depending how it’s done, those looking to Airbnb as a lucrative housing market could certainly bank it — if they don’t get too greedy.
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