Who owns one? How’s it going? How many hours per month are you spending on it? And pointers, cautions, or other learnings? I should add that I currently has a profitable rental. It has appreciated quite a bit and I’d like to avoid the capital gains by doing a 1031 exchange with the idea that eventually Turing it into a second home. I’m wondering if an AirBnB is a good option. #investments
In the summer I looked into buying a property for short term rent. It all sounds great until something happens (appliance breaks and floods the unit, tenants break something, etc) and suddenly you are out of rent income until the issue is fixed, paying the management company, contractors, dealing with their schedules. And unhappy renters who you have to cancel at the last minute leave horrible feedback AirBnB and your rating tanks. Thinking about all this while trying to focus on my full time job is not worth the $20-$30/ year a property can generate. Financially, for a software engineer I think it pays more to invest into my skills - technical and interviewing. So I didn’t go for the property.
Once in a while, I look on Zillow and daydream about having a vacation home /Airbnb rental. It would have been pretty great to have a larger place to escape the city during COVID... On the other hand, it seems like such a handful. And the prices have gone up, probably more than they would have otherwise with people moving out of the city during the pandemic. It's kind of weird to just sit on my money though (they're in stocks, and it might be better, but it still feels like I'm not doing anything proactively with it; I do know that my instincts regarding financial decisions are 99.9% wrong though haha)
About 5 years late to this game my dude
I purchase Airbnb’s and they do quite well. I specialize in 3+ bedroom houses and cater to large groups (up to 14 people) My purchase price is around $500k. My down payment is $50k-$75k (10-15%) I have $8k closing costs I have a furnishing cost of $12k Total investment of $70-95k Monthly expenses $3000 PITI (I use Proper for Airbnb specific insurance) $100 Landscaping $100 linens $100/supplies $50/internet $300/utilities $700/ cleaning (7 turnovers * 100) $20/your porter $4,370 Total expense (generally) Income $8000/mo ($400 average night *20) $1050/cleaning ($150 * 7 turnovers) $9,050/mo total income Net income ~$5,000/mo ~$60,000/year In recap, I generally invest $75,000/property and target $60,000 in NET income. I also indirectly benefit from: Equity pay down ($600/mo or $7,200/year) Appreciation: $20k (@4% Although it’s been much higher in reality) Depreciation For operations: I spend 1 hour to a couple of hours per property per month. Mostly adjusting pricing and looking at performance reports. An initial time investment is needed to get the property up and running. I use yourporter for automation: - message guests - create key codes for digital locks - auto-review guests Find a good cleaning company or build up your own team. No need for a management company. - cleaners are automatically scheduled when a booking request is made - they take pictures of the property after checkout and after cleaning - they restock supplies and order more - they wash linens - they let you know if anything is broken or wrong with the property.
I am doing pretty much the same, except wife is the manager so I get bigger tax write off. However, recently the short term regulations are getting on my nerves. MI d me asking if you are dealing with too? I can dm if preffered
Nice! I find it to be an exciting path to take. I’m curious how having your wife as manager results in a larger tax write off? Is it due to entity structure and how the business reports profits/income? Or because she is classified as a real estate professional and can pass through unlimited real estate losses? STR regulations are always a piece to look out for. I prefer states/cities with clear policies on STRs such that there is a clear path to compliance and it is unlikely rules will change.
@moonzoom. Thanks for sharing! Are your properties in the same city where you live? I would assume yes if you are running them without a management company.
My properties are actually not in the city in which I live. This is where having a good cleaning team is key.
If not in your city, how do you deal with emergent stuff - repairs, appliances, etc? Also, how do you approach the initial setup without a management company - do you fly to the other city and shop for furniture, hire contractors to fresh-up the house, etc? Thank you!
Stonks are better
Yes.