Getting Started - Airbnb rental
Hi All,
I wanted to get a second opinion on this topic. I recently graduated from college, and am currently living in NYC. I started with about 90K in student debt and now have under 40K left to pay. I am saving each month (to build up money to start investing in real estate) as well as paying off my student debt and paying extra when able. I currently work a full-time (approximately 50 hour per week) professional job, and I rent a two-bedroom apartment. I live in one room (the smaller of the two) and my roommate (who lives in the larger room) is moving out due to getting married. I am considering listing his room on Airbnb. I am considering this for three reasons.
1.) To hopefully make extra cash to either pay off my student debt or save for my real estate fund;
2.) To gain some experience dealing with tenants (i.e. Airbnb guests) in hopes that these skills will be useful once I start investing in rental properties.
3.) I am excited to get into real estate and this is something I can do with little additional investment.
My total apartment rent is $2,400 per month. I pay $1,175 and the room that I would be listing on Airbnb is currently rented for $1,225. The room has a queen bed, large closet (by NYC standards), two windows, and I will install a lock on the door. The apartment is located on the Upper East Side (96th St. Between Park and Lex) of NYC, and based on my research apartments similar to mine in this area go for about $100 a night on average. Given that I will be brand new to this, I anticipate having to rent the room at $75/night on average until I am able to build up solid reviews and raise the nightly rate closer to market. If the room is rented 67% of the time (20 days out of 30) at $75 per night I can make $1,500 a month (gross) which is enough to cover my rent, the start-up cost needed, and my time investment with the goal that I could make more as I gain experience.
I have the following issues with this strategy:
1.) I work a full-time job with inconsistent hours and am required to travel on short notice. If I have back-to-back bookings the guest would likely want to check in before I get off work (around 7:30 PM on average). This creates two issues. The first, is that they would arrive at the apartment and the bed would be unmade with dirty sheets on the bed. (I am trying to find a cleaner, but I can't find one at reasonable rates i.e. cheaper than $60 / day). The second problem is dealing with the keys at check-in and check-out. (I believe I have found a solution to this by using Keycafe which would handle this for me).
2.) The risk that the apartment will not list due to no reviews and no existing history, or that I build up reviews and then start to get negative reviews.
3.) In addition to covering the rent I estimate that I will have to spend close to $500 - $1,000 to get the apartment in shape to list (i.e. new couch, towels, sheets, etc). I have no problem spending this as long as it rents, but I don't want to sink money into this and have it fail when I could have been using that money to save to invest in rentals.
I wanted to get some feedback and get an objective 2nd opinion on this and see if anyone else is currently doing this in NYC or in a similar market and what their experiences are (both positive and negative).
I appreciate any comments or feedback.
Thanks in advance,
Brady