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Understand the law before investing in an Airbnb property

Everybody is talking about Airbnb. Whether you're a vacationer or a homeowner, you may have considered how you can benefit from this interesting service in which homeowners make money by opening up the doors of their homes to become mini-hotels for random travelers.

The money-making potential looks easy enough. According to the proponents of Airbnb investment, you could purchase a new property, run it as an Airbnb and make enough cash to pay the mortgage, while garnering a significant profit. But is it really that simple?

Unfortunately, the answer to this question is "no." Investing in an Airbnb property is a risk. That's because the law as it applies to Airbnb owners could change at any moment. What if Colorado lawmakers decide to tax Airbnb owners heavily? What if the law changes and homeowners are no longer permitted to rent out their properties? This could erase the income-generating potential of a new investment completely in one fell swoop.

Existing regulations in your city could also get in the way of your profits. What you're allowed to do with an Airbnb in Orlando, for example, could be entirely different from what you're permitted to do in New York City and Denver.

It's absolutely vital that you understand the law as it applies to the use of Airbnb as an investment in your area before you choose to invest in a property that you plan to rent out to travelers. Once you understand the law, you can perform market research on how much Airbnb users can potentially earn by putting their properties on the Airbnb rental market.

Source: Forbes, "10 Things To Consider Before Buying An Airbnb Investment," Omri Barzilay, April 04, 2018

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