If you’re interested in buying a property to list on Airbnb, Avon is an up-and-coming short term rental market. It’s a small Eagle County town of 6,500, about 15 minutes from Vail and two miles from the Beaver Creek Resort. Avon rates a 98/100 from research platform AirDNA for its investment potential because it has strong income growth and house prices are meaningfully less expensive than in Vail. The average daily rate across all properties is $468 ($680 in February, $309 in May) and the average year round occupancy is 39% (23% in October, but 67% in March).
Let’s look at a 3-bedroom house and see what kind of numbers you might be able to expect on Airbnb. There is a huge variety of homes on the market, and generally speaking, if you’d enjoy a property for your own use someone else will likely want to rent it as well. The average Avon home price on Zillow is $613,600, so for our example we’ll take a 3-bedroom for $600,000. We’ll assume a $120,000 down payment, which is 20% (remember, if the home is not your primary residence, you generally won’t qualify for a low down payment loan). That leaves you with $480,000 to finance. At a 4% interest rate, you’ll pay $2291 a month for 30 years. Add about 50% for utilities, maintenance, taxes, fees, etc, and you’re at $3436 all in.
Now how about revenue? A $468 daily rate times 30 days is $14,040. Chop that down to 39% occupancy and you’re at $5475 a month. Subtract a few hundred for cleaning fees (don’t forget, most people stay more than one day so you won’t have to pay a cleaning fee each stay) and other expenses, call it $4800 income. After the expenses mentioned previously, you’re pulling in $1364 a month profit, or $16368 a year. Cash-on-cash, that’s a 13.64% return on investment. Now, if you are an above-average Airbnb user and boost your occupancy to 50%, you’ll be closer to $2734 a month profit. That’s a 27.34% COC return!
There are a number of other advantages as well. Most expenses are tax-deductible, Airbnb properties in Avon are appreciating in value, and at the end of 30 years you own the property free and clear. And don’t forget you’ll have year-round access to your property on nights you don’t book it out. A free vacation, a valuable asset, and a steady profit stream…these are the perks of short term vacation rentals in Avon.