Airbnb Investment Experience

The Airbnb Investment Experience

airbnb investment

So May of 2015, I closed on House #4. House #4 was an old bungalow  built in the 40s, that had not been updated since the 40’s.

The original plan was to turn this into another rental to add to my portfolio.

Mid way through my renovations, my pregnant sister, called to let us know that my niece had been born. I had to get back home to Detroit to see her and the baby right away.

My family and I are originally from Detroit, so we visited frequently. We generally preferred the comfort of hotels, but with 2 children, we always sprung for the suites, to have a private area away from the children. The suites at

 

The suites at Motor City Casino are EPIC, but pricey starting around $475 per night. We began to look for vacation rentals and I stumbled across Airbnb. If you are not familiar with Airbnb, it’s an innovative start-up which allows host to rent out spare bedrooms, and entire homes to guest traveling for short periods of time. I stayed in vacationed in rentals from VRBO many times, but Airbnb investment homes seemed to have a cozier at home feel. After searching I found a cute apartment in Dearborn, Michigan(a small suburb east of Detroit) for the low price of $87 per night. The cost for 4 nights was the same as 1 night in a suite.

After our flight, I was anxious to see what our accommodations for the weekend would look like. We jumped in our uber to and headed to our destination. When we arrived, I was impressed. It was 2 bedrooms, I had my own kitchen, and plenty of space for the kids to have there own beds, and I was close to everything. The whole experience was excellent. Having access to a stove, and refrigerator was extremely convenient. The idea of an Airbnb investment intrigued me.

Airbnb Investment Property

When I arrived back to Florida, I was intrigued. I looked on the Airbnb website to see if anyone else was hosting in my city, to my surprise they had quite a few host. I started clicking listing and looking at everyone’s calendars to see how many bookings they were getting. Almost every property had at least 20-25 days booked. I looked where House #4 was on the map and saw a listing around the corner, that was booked solid for $99 a night + $60 cleaning fee, with a lot of reviews. I knew I could rent House #4 for around $850 per month, this was the original plan, however I pulled my calculator out and did the math…if I could book 20 days per month @ $99 per night, I could easily gross approximately $2000 a month. After bills(electric, water, and cable) I could take home $1700 per month from a house that I only anticipated $850 from, literally double my money, not bad for a side hustle. I had to try it. Ill admit I was nervous as hell to spend all this extra money, furnishing, paying bills, and getting all the small items a person would need to feel comfortable. Now one thing I know is how to find bargains.

airbnb investment

I had about 2 weeks left on renovations so i frantically stalked craigslist furniture section for good deals on nice upscale furnishing.

I’m actually proud of my interior decorating skills. I found myself doing stuff guys where I’m from don’t do, such as picking out wall decor, and making sure the furnishing matched the carpet. I spent about $1500 total, on furniture, a few cheap LED TVs from and bed sets from Walmart. I decided order

I found myself doing stuff guys where I’m from don’t do, such as picking out wall decor, and making sure the furnishing matched the carpet. I spent about $1500 total, on furniture, a few cheap LED TVs from and bed sets from Walmart. I decided order

Now one thing I know is how to find bargains. I had about 2 weeks left on renovations so i frantically stalked craigslist furniture section for good deals on nice upscale furnishing.

I’m actually proud of my interior decorating skills. I found myself doing stuff guys where I’m from

don’t do, such as picking out wall decor and making sure the furnishing matched the carpet.

I spent about $1500 total, on furniture, a few cheap LED TVs from and bed sets from Walmart.

Now one thing I know is how to find bargains. I had about 2 weeks left on renovations, so I’m frantically stalked craigslist furniture section for good deals on nice upscale furnishing. I’m actually proud of my interior decorating skills. I found myself doing stuff guys where I’m from don’t do, such as picking out wall decor, and making sure the furnishing matched the carpet. I spent about $1500 total, on furniture, a few cheap LED TVs from and bed sets from Walmart. I decided order

I decided order wall mounts to keep the TVs aways from toddler finger prints. I bought wall art, rugs, dishes, pots, pans, silverware, everything Id need or so I thought. Took a few pictures of my house on the inside and out and listed on Airbnb. Then I sat by my phone and waited for the Airbnb in app to start doing its things….show me the money!

Airbnb Investment Property

my Airbnb rental

After a week of no action I was getting nervous about my investments on the various furnishings and knick knacks, I’d purchased to dress the home up.

I met my contractor at the house to do a final check, paid him and now the house was fully renovated, furnished, and making no money. I remember this day because I was bummed out, I had my home on Airbnb for a week and nothing. I locked up the house and headed home soon as I turned off the street I heard an alert from my iPhone I had never heard before.

I pulled my phone out the pocket to discover a message from Airbnb, someone wanted to rent my house for 5 days :). I had my mojo back, I would be hosting my first guest in about a week and a half. I went home and slept a little better that night knowing at least I was going to see some money this month. When I woke up I noticed I had a new message from

I went home and slept a little better that night knowing at least I was going to see some money this month. When I woke up I noticed I had a new message from Airbnb, someone was in town and wanted to stay at my house that day. They wanted to stay for 6 days, I accepted the request. I still had loose ends to tie up, the TVs I had bought were still in the box, I cleaned up everything the best as possible, I installed a  Schlage electronic keypad on the door, so I wouldn’t have to worry about physically meeting guest for the key exchange. After finishing up I left and let the guest know the home was ready.

After the guest arrived I made him aware that this was my first time as a host, he told me he loved the place :). I let him know if he needed anything to call me I wanted this to be a positive experience. After a few hours he called me let me know a list of things that he needed, this is when I realized just how much humans require(he asked for a mixing bowl, toaster, coffee maker, and tea kettle). Yikes now I’m spending more money, I thought, but I obliged, I was sure these items would be helpful in the future anyway. A few days later, my first guest left. I had to clean the house, I was charging $60 for a cleaning fee, so I didn’t mind but it’s a bit gross to clean up after other people but, I was getting paid for it so I just did it.

The first time it took me 5 hours to clean the home. Later that day The first guest left me my first review…5 Stars!!!! I was proud of myself, I had a new guest checking in the following day, and before I could pat my own back I had a new guest request for the 8 days starting the same day the next guest would check out.

After the guest arrived I made him aware that this was my first time as a host, he told me he loved the place :). I let him know if he needed anything to call me I wanted this to be a positive experience. After a few hours, he called me to let me know a list of things that he needed, this is when I realized just how much humans require(he asked for a mixing bowl, toaster, coffee maker, and tea kettle). Yikes now I’m spending more money, I thought, but I obliged, I was sure these items would be helpful in the future anyway. A few days later, my first guest left. I had to clean the house, I was charging $60 for a cleaning fee, so I didn’t mind but its a bit gross to clean up after other people but, I was getting paid for it so I just did it. The first time it took me 5 hours to clean the home.

Later that day The first guest left me my first review…5 Stars!!!! I was proud of myself, I had a new guest checking in the following day, and before I could pat my own back I had a new guest request for the 8 days starting the same day the next guest would check out.

After the guest arrived I made him aware that this was my first time as a host, he told me he loved the place :). I let him know if he needed anything to call me I wanted this to be a positive experience. After a few hours he called me let me know a list of things that he needed, this is when I realized just how much humans require(he asked for a mixing bowl, toaster, coffee maker, and tea kettle). Yikes now I’m spending more money, I thought, but I obliged, I was sure these items would be helpful in the future anyway. A few days later, my first guest left. I had to clean the house, I was charging $60 for a cleaning fee, so I didn’t mind but its a bit gross to clean up after other people but, I was getting paid for it so I just did it. The first time it took me 5 hours to clean the home. Later that day The first guest left me my first review…5 Stars!!!! I was proud of my self, I had a new guest checking in the following day, and before I could pat my own back I had a new guest request for the 8 days starting the same day the next guest would check out.

I ended up renting my Airbnb investment property out 5 times that month for a total of 22 days at $99 a night with 5 cleaning fees at $60 a piece. This broke down to a gross monthly payment of $2500. The bills for the first month were $98 for the electric, $62 for the water, $120 for cable/internet totaling $280, plus I had to pay myself for cleaning(I don’t work for free, not even for myself lol) another $300. I was looking at $2500 – $580 = $1920 net. That is $1070 more income than if I had turned this property into a traditional rental. The Airbnb investment was successful!  I decided at that moment I needed more of these. I am considering turning my townhouse investment property into an Airbnb once the current tenants lease is up This was better than my projections. Airbnb was a game changer! If you would like to earn money renting your space on Airbnb sign up here and earn $50 for hosting your first trip!   I am currently LOVING the Airbnb Investment business model,  although my main investment goal is to be able to live off of passive income, and Airbnb is not truly passive, if success continues I will be converting House #1 and the Townhouse investment property aka House #2 into Airbnb Investment rentals as well.   P.S. To use my Airbnb coupon code click here, if you use it you get $35 of your first stay, and they will give me $35 off my next trip as well, so it would be really cool if you used it!

 

Are you an Airbnb host? Would you turn your rental property into a vacation rental? Let me know in the comments below!

 

UPDATE:

5 months later find out how the Airbnb investment experience is doing and how I made over $11,000 in 5 months in Part 2 of the Airbnb Investment Saga

start building passive income

How I Accidentally Started Building Passive Income.

House #1

I moved to Florida back in 2010 on a whim, I had a little money saved up, and I wanted to make sure my family had a gauranteed place to live. We were staying with my finance’s cousin until we could get on our feet. I spent my days looking for deals on property. After a few weeks I came across a private seller with an 3 bedroom home. The owner needed quick money, and only wanted 21K.  He was renting the property to tenants who were about to move. The tenants were very messy, and had about 5 pets.  The home had roaches and part of the floor coming up in the kitchen and all the carpet smelled like urine. I paid cash for the home and suddenly I owned property, this was house #1.  After purchase my fiancé and I ripped up the carpet and put some cheap carpet in it, we replaced the kitchen floor with some peel and stick tiles, and painted the walls. I wasn’t thinking about building passive income, but rather how much it was going to cost me to fix up.

how i started making passive income, passive income, building passive income, how to build passive income, how to make money, how to invest, real estate, foreclosure, real estate investing, investing in real estate, how to start investing in real estate




I think at the time I spent around $2000 on making the home livable. The house did what it needed to, it provided gauranteed housing for my family and I, the exterior was ugly and it was located in what could be described as an industrial area, and not very attractive. I loved the fact that I had a home, that I didn’t have to pay a mortgage on, all I had to worry about was the taxes which were low. We lived here happily for 2 years.

Fortunately the ambition in me always pushes me to want to upgrade things. I knew on the market I could sell the home for around 35K, and the type of house I wanted to upgrade to was around 65K. I began searching for houses again for about a month before I came across a gem in Clearwater, FL, in a super convient location, close to the Tampa bridge and the major highway in the area. It was a nice looking home with a for sale sign that read 69K with contact info. I called while I was sitting in the homes driveway, and spoke to Phil, who flipped homes for a living. Phil explained he bought this home in a lot of 10 houses from the bank, and that he was looking to sell immediately. I arranged to check out the inside, and was viewing the house the next day. It was a little outdated but I loved it. The location was PERFECT. I had about 30K saved up and I knew I could get close to 35K for my current house, so I immediately listed my home for sale and told Phil I wanted to make an offer of 57K. I figgured listing my primary home cheap it would sell fast, the same day that it was listed I got a call from a gentleman, who appeared to be interested in buying my house, what luck. The buyer told me he wanted to come take a look at my house immediately, and he did the following day. After his walk through he made a verbal offer of full price, luck was on my side.

Now before you rag on me for accepting a verbal offer, I want to just say in my defense, at this point I was new to this, no one ever thought me anything about real estate. But back to the story, the guy who was buying my home arranged to meet me the following Monday to sign the contract, I set up an appointment with a title company and was excited that I was a bout to move into my dream home. Unfortunately, my luck doesn’t usually work out as well as it appears, when Monday rolled around I did not hear from my buyer, I gave him a ring and was sent to the voice mail. WTF! He was just talking to me all every day. I called over the next few days probably somewhere near 30 times, this guy was obviously avoiding me. I hate unreliable people. Saddened, I decided to call Phil and tell him that I wasn’t going to able to get my dream house. Phil asked why, I explained to him what I had been through. Phil then suggested getting a loan, “my credit sucks” I said, but Phil had an answer for me, “what about a hard money loan?”. A hard money loan as I learned, is private loan through and doesn’t involve banks. Phil had a hard money lender named James that he introduced me to. Phil told me as long as I had 20% down  he would approve me and didn’t care about the credit. I just had to make interest only payments and I had 3 years to make a balloon payment. I could come up with the rest in 3 years, this sounded like a good plan. Now I wasn’t relying on selling my old house and I was able to move, but what was I going to do with two houses. The answer almost came like clock work, I could rent it out to cover the monthly payments while I saved up for the balloon. I didn’t realize it then but I was laying the pavement to the road to retirement. I listed my home on craigslist for rent for $650 and found a prospective tenant immediately. I made sure to take the right steps to find a good tenant.  I was happy I was now generating $650 per month without doing anything. I was building passive income. The payments rolled in like clock work and I was able to cover my payments which were $475 a month and still saving $175 toward the balloon without any work. This random chain of events was crucial and a staple in the beginning of my career as a real estate investor, this is how I accidentally started building passive income. My home was now an income generating asset, and no longer a liability.

This is around the time I had just finished up reading Rich Dad, Poor Dad, by Robert T. Kiyosaki which is an excellent read, frankly the man is a genius. If you are interested in building passive income, I highly recommend reading it if you are looking to get into real estate investing. The book itself isn’t going to teach you any real estate methods, however it changed the way I thought about home ownership vs owning properties that allowed me to begin building passive income.