It is amazing to watch the Airbnb evolve from the “shared room” model to the “entire home” rental model. Airbnb is now valued at $30b, has listings in 190 countries, 34,000 cities, and is hosting over $2m guests per night. The wave of consumer demand for “entire home” short-term rental properties in urban core locations that deliver local authentic travel experiences is growing stronger everyday.
So how can you participate in the short-term Airbnb rental revolution profits without having to master real estate investing or deal with day-to-day management hassles of hospitality home rentals?
Here is an option you might want to consider.
If you have capital but lack the expertise or time to source, acquire, and successfully manage and Airbnb investment property, an Equity Partnership can be a great structure to get in the game.
The model is very simple. An equity partner (Member) aligns themselves with an experienced and trustworthy Airbnb operator or sponsor who has specialized Airbnb knowledge and experience sourcing, acquiring, and managing Airbnb assets.
The sponsor forms a single-asset LLC through a real estate attorney that defines the terms and structure for holding a single Airbnb investment property. The sponsor provides the expertise and management (Member Manager), and the equity partner provides the capital (Member).
The sponsor’s role is to source, acquire, manage, and maximize the ROI for a single Airbnb investment property for the entity. The equity partner contributes the capital and maintains a passive management role with an active role and participation in making major decision for the entity.
Cash flow’s are split and distributed quarterly during the term of the single-asset entity. Upon the wind down of the entity, capital is returned to the equity partner and the equity partner receives a Preferred return prior to splitting any net equity as a result of the sale.
The equity partner benefits from working with a seasoned Airbnb operator who knows how to find the best opportunities and handle the management responsibilities.
Summary Benefits to the Equity Partner
- Leverage skill, knowledge, of an active Airbnb operator
- Leverage the business systems and processes of a professional investor
- Participate in profits without day-to-day management hassles
- Limited time commitment while maintaining active decision making control
- Earn a preferred return before splitting net proceeds with sponsor
Sponsor Qualifications You Should Consider
- Experience level of the operator buying and managing investment property
- Specific Airbnb experience of your sponsor and track record
- General investment experience and track record of results
- Character, trust, integrity and transparency of the sponsor
- General compatibility with your operating partner
- Bookkeeping and reporting experience of your operating partner
- Property management experience, systems, processes, automation
About Ventures 5280
Ventures 5280 is a boutique real estate investment service and private equity equity company that sponsors and manages single family Airbnb short-term rental and traditional long-term rental portfolio properties for investors who seek capital preservation, dividend growth, and long term equity growth.