‘Don’t screw up your life with an Airbnb’: Dave Ramsey didn’t hold back when this North Carolina woman floated the idea of refinancing her home to buy a vacation rental — here’s why (2024)

Coryanne Hicks

·5 min read

‘Don’t screw up your life with an Airbnb’: Dave Ramsey didn’t hold back when this North Carolina woman floated the idea of refinancing her home to buy a vacation rental — here’s why (1)

Home to beautiful beaches and a nesting ground for sea turtles, Topsail Island is a popular family getaway spot in North Carolina.

While eyeing up that steady stream of vacationers, local resident Cathy had a bright idea for how to turn a profit for herself — but she wanted to get some outside advice first.

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Cathy recently called into The Ramsey Show to get the radio personality’s input on whether she should buy property to turn into a vacation rental in order to capitalize on those seasonal visitors. She and her husband already have a rental unit that pays them $1,700 per month, but she could borrow against their primary residence to get a $280,000 property she could turn into an Airbnb.

To that, host Dave Ramsey promptly cautioned her not to ruin her life.

"No, you won't," Ramsey said when she ran the Airbnb idea past him. "You have a very good life. Don't go screw that up with an Airbnb."

What Ramsey's worried about

Listing your home on a short-term rental site like Airbnb or Vrbo sounds like a great idea in theory. Nightly per-room rates have risen 36% since 2019 with an average of more than $200 per night in North America. That's more than $6,000 per month if you can rent the room every night.

At first blush, it sounds like a passive income dream, but running a short-term rental property can quickly turn into a nightmare.

"This is not: ‘I'm going to just go to the mailbox and collect a bunch of checks,’" Ramsey says. "Airbnb is a lot of work."

Maintaining an Airbnb is essentially like operating a small business, Ramsey says. Much like running a hotel, Airbnbs demand intense involvement and oversight: you’re responsible for keeping the place clean, making repairs and being available to renters for emergencies or questions.

On top of that, you’re generally dealing with new, unfamiliar tenants every few days.

"They'll destroy your property," Ramsey says. And while you’re stuck doing the clean up, you may have to contend with angry neighbors complaining about noise. And there's always the chance you may run into other unexpected issues renting your place out.

Finally, there’s a growing backlash in certain cities against short-term rental properties — especially in downtown cores or high-tourism areas. Some cities are starting to restrict the type of eligible dwellings, require costly licenses, impose additional taxes and only allow you to rent out your primary residence.

Even if your area doesn’t currently have restrictions on rentals, the laws could change — leaving you on the hook for a home you suddenly can’t rent out.

Read more: 'It's not taxed at all': Warren Buffett shares the 'best investment' you can make when battling inflation

Alternatives to Airbnb

Airbnbs may not be the get-rich-quick plan you’d hope for, but that doesn't mean you can't earn passive income on any property. If you want to make money on residential housing, Ramsey suggests "buy[ing] cheap houses in bad ends of town."

A low-income rental provides a higher return on investment rent-to-value than high-end rentals in nicer areas, he says. Ramsey himself purchased a house for $11,000 many years ago that paid a monthly rent of $1,500.

However, that route also involves a lot of trouble: he recalls collecting rent personally on the doorsteps of his tenants’ homes weekly. And don't forget, it was Ramsey's ventures in real estate that led to him filing bankruptcy at one point.

And borrowing against your primary residence for an investment opportunity could be risky — especially with mortgage rates as high as they are these days. With recent changes made to Fannie Mae rules, it's become even easier to dip into real estate investing, but the more lax requirements could land overleveraged landlords in hot water.

For those who want to make some extra cash being a landlord, there are alternative options that don’t involve the risks of dealing with tenants directly. Real estate investment trusts (REITs), for example are publicly traded companies that own income-producing real estate like apartment buildings, shopping centers and office towers. They collect rent from tenants and pass that rent to shareholders in the form of regular dividend payments.

You could also consider crowdfunding platforms, where you can buy a percentage of physical real estate — from rental properties to commercial properties. Some options are targeted at accredited investors, sometimes with higher minimum investments that can reach tens of thousands of dollars.

If you’re not an accredited investor, many platforms let you invest small sums, even as low as $100.

What to read next

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

‘Don’t screw up your life with an Airbnb’: Dave Ramsey didn’t hold back when this North Carolina woman floated the idea of refinancing her home to buy a vacation rental — here’s why (2024)


Is Airbnb a dying business? ›

As a company, Airbnb is still reaping the benefits of high interest in travel, and people are still seeking out its listings around the world. It recorded 115 million nights, tours and events booked in the second quarter, up 11% from a year ago.

Why is Airbnb a bad idea? ›

Airbnb can have negative impacts on locals' quality of life. This is one of the lesser-known Airbnb problems. Tourists hiring a place on Airbnb to enjoy a “cheaper” holiday actually pushes rent prices up for locals who need to live in the city. Tourists are visitors competing with locals for accommodation.

Can Airbnb rip you off? ›

Airbnb scams include false advertising and manipulating the platform to charge extra fees (such as for “incidentals” or “management fees”), obtain a guest's payment information, and discriminate against guests.

How to become financially independent with Airbnb without owning property? ›

Top 10 Ways to Start Making Money on Airbnb without Owning a Property
  1. Take the Airbnb Rental Arbitrage Route. ...
  2. Become a Short-term Rental Property Manager. ...
  3. Become a Co-host to an Airbnb host. ...
  4. Join a Vacation Rental Franchise. ...
  5. Become an Airbnb Consultant. ...
  6. Start an Airbnb Cleaning Service. ...
  7. Host an Airbnb Experience.
Aug 7, 2023

What is the biggest problem with Airbnb? ›

Based on feedbacks from other Airbnb hosts, we can highlight five main issues:
  • Guest-related problems. Some guests may damage property, steal items, or cause disturbances. ...
  • Additional costs. ...
  • Legal obligations. ...
  • Time commitment. ...
  • Uncertainty.
Mar 10, 2024

What is the downside of owning an Airbnb? ›

More maintenance. Being an Airbnb host also means that you need to take care of all the maintenance tasks related to your rental investment property. This includes making repairs when necessary, restocking amenities when needed, and keeping the place clean between each guest's stay.

Do people put hidden cameras in Airbnbs? ›

But despite popular services like Airbnb and Vrbo banning indoor cameras, hidden cameras may still be lurking in your guest suite. With whole TikTok pages dedicated to the topic, it's no surprise that 58% of the 2,000 people surveyed worried about hidden cameras in their vacation rental.

Are Airbnbs cleaner than hotels? ›

"With Airbnb's new Enhanced Cleaning Initiative, the company provides a better option than public hotel spaces. Airbnb homes are more private, so there is a lesser chance of being exposed to the coronavirus." Dr.

Why did NYC ban Airbnb? ›

Supporters of the rule argued it would free up apartments for New Yorkers, who pay high rent prices and are facing housing shortages and insecurity. But others, including small-time landlords, said it would take away a source of flexible extra income without making a dent in the housing supply crisis.

What are red flags for Airbnb guests? ›

Airbnb scams by guests that every host should be aware of:

Guests who ask for discounts. Threaten to leave a bad review if not refunded. Mention someone else will pay for their stay. Want to take the conversation to a private app.

Can police track Airbnb? ›

Except in circ*mstances in which Airbnb can accept an Emergency Request, all Law Enforcement Requests for information about Airbnb users must comply with local law. If you have questions about the legal requirements that apply to your Law Enforcement Request, you should seek appropriate legal advice.

Will Airbnb refund me if I get scammed? ›

Issues must be reported to Airbnb with 72 hours of discovery to be eligible under our Rebooking and Refund Policy. Note: You have up to 60 days after your reservation's checkout date to submit a Resolution Center request.

How much do Airbnb hosts make on average per month? ›

What Is the Average Airbnb Host Salary by State
StateAnnual SalaryMonthly Pay
North Carolina$37,432$3,119
46 more rows

How many Airbnbs do you need to make a living? ›

To become a full-time Airbnb entrepreneur, you'll almost certainly need to grow beyond offering just one property for rent. It may take three or even 10 rentals, depending on how often you can rent out your properties and for how much, to become financially secure. Growing your property portfolio is not easy.

What is Airbnb arbitrage? ›

Airbnb arbitrage refers to renting a property from a landlord and subleasing it on a short-term basis, on a platform like Airbnb, Vrbo, or Booking.com. In this way, you are both a tenant and an Airbnb host who acts like a middleman between the landlord (the property owner) and the Airbnb guests.

What is the future of Airbnb business? ›

Airbnb's 2024 strategy is officially the same as 2023: More hosts, better core product, expand beyond the core. Yet, after several years focusing on the first two strategic pillars, it looks like 2024 will see Airbnb start expanding its wings further away from short stays and travel.

Is Airbnb getting over saturated? ›

In major population areas or tourist locations there is an over saturation of short term rentals (STRs) and many hosts are now either closing down their listings or forced by government regulation to close. In 2018 in the US before the pandemic, occupancy was down to only 11%!

Why is Airbnb revenue collapsing? ›

According to the cited AllTheRooms data, in some cities revenue dipped nearly 50%. The narrative quickly became that Airbnb's business model was at risk, and everything from the tumultuous housing market, to municipal restrictions, to even stickler hosts were to blame.

Do people use Airbnb anymore? ›

Time reported in 2022 that many Airbnb rentals that were fully booked a few years ago are now sitting empty, as the vacation rental site has lost its charm. “It seems like a lot of people are kind of fed up with Airbnb, and they're angry about how some hosts treat them now,” host Jim Ewing told Time.

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