Can Airbnb house hacking be the key to building wealth?

Short-Term & Vacation Rental Discussions
3yFollow

Can Airbnb house hacking be the key to building wealth?

Mostafa Faghih
Financial Advisor · Los Angeles, CA · Member since 2023 · 17 posts · 15 votes

I'm currently analyzing a theory that can help many people achieve financial freedom, but I need your feedback to validate it.

The idea is simple: purchase a property with a mortgage and put it on Airbnb as a short-term rental. Based on my calculations:

• If the property generates $2,500 monthly, and

• The monthly mortgage payment, management fees, bills, taxes, etc. are below $2,500

The property can pay for itself, and you can potentially buy a house with just the down payment.


However, I need your help. Have you or anyone you know tried this strategy? Can you share any records or experiences to support this theory?

2Reply
92 views

Most Popular Reply

Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
3y

You buy a house you rent it out you buy another house you rent it out. Works for me! 

Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
4Reply
See this reply in the discussion

17 Replies

Jump to latestLatest
  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    3y

    You buy a house you rent it out you buy another house you rent it out. Works for me! 

    Podcast Guest on Show From Surviving on $30/Day to 30+ Properties Thanks to Blue-Collar Skills
    4Reply
  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    3y

    Absolutely people are doing this to at least offset their mortgage.

    Given the right property and location you could break even on the mortgage and utilities. 

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y

    It's been done before, hardly a new idea. But a good one.....

    1Reply
  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    3y

    Building wealth requires cashflow.  Appreciation is a bonus.  If the property rents for $2500/month and your all in expenses are $2000 that’s a $500 monthly cash flow.  I tend to use cash on cash return as an important metric.  How quickly can I get my down payment, closing costs and rehab if any back.  Example down payment is 20K and closing cost are rolled in the loan, no rehab.  That’s a 30% return on my money.  In 3+ years I’ll will have all my cash back and I can repeat the process.  That is how you build wealth amongst other investment strategies.

    2Reply
  • Leslie Anne Morris
    Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
    3y

    Yep. People are doing it. 90% of all wealth is created out of real estate. 

    1Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y

    Yeah @Mostafa Faghih, this isn't a new thing at all. It is what we are all doing here. This has been going on for decades. There is no theory here. It is a working model.

    Maybe I am not getting it. We bought a house with a mortgage, we rent it on VRBO and AirBNB and pay for it fully along with making a tidy profit. We do use it from time to time for family fun. That is it.

    House Hacking is generally living in the home while renting part of it or, if it multi family, the other unit. It allows you to live cheaper as your renter pays at least part of the cost to live there. This is usually done with a LTR. There are some STR folks doing it. Sometimes it is a duplex, triplex or and ADU on the property.

    So what are you trying to do? 

    2Reply
  • Brooklyn McCarty
    Investor · Member since 2022 · 1k+ posts · 754 votes
    3y

    House hacking is probably the #1 way to build wealth in real estate because you are living for free and someone else is paying for it all. 

    Buy a duplex, triplex, quad if you can with a residential loan, live there a year and do it again! 

    Great strategy 

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Mostafa Faghih:

    Is this a serious question? This is the definition of real estate investing and it's what all of us are doing. It's described in every book, blog, YouTube video, news article, etc. Buy a property, rent it out for more than it costs each month, rinse and repeat.

    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    2Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    3y

     Go for it Mostafa! In 1900 my immigrant grandparents bought a house in a Chicago slum. They lived in the living room while renting out the bedrooms. Then they bought another, and another.

    0Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    3y
    Quote from @Nathan Gesner:
    Quote from @Mostafa Faghih:

    Is this a serious question? This is the definition of real estate investing and it's what all of us are doing. It's described in every book, blog, YouTube video, news article, etc. Buy a property, rent it out for more than it costs each month, rinse and repeat.


     I'd like to think the OP had a personal breakthrough. A moment where it all made sense. A portal opened perhaps. Or, a light shined on him. Kinda like Belushi in the Blues Brothers. "the Band".

    0Reply
  • Mostafa Faghih
    OP
    Financial Advisor · Los Angeles, CA · Member since 2023 · 17 posts · 15 votes
    3y
    Quote from @Nathan Gesner:
    Quote from @Mostafa Faghih:

    Is this a serious question? This is the definition of real estate investing and it's what all of us are doing. It's described in every book, blog, YouTube video, news article, etc. Buy a property, rent it out for more than it costs each month, rinse and repeat.

    Thanks, Nathan. So, why aren't all people utilizing this strategy to achieve financial freedom?

    0Reply
  • Mostafa Faghih
    OP
    Financial Advisor · Los Angeles, CA · Member since 2023 · 17 posts · 15 votes
    3y
    Quote from @Kenneth Garrett:

    Building wealth requires cashflow.  Appreciation is a bonus.  If the property rents for $2500/month and your all in expenses are $2000 that’s a $500 monthly cash flow.  I tend to use cash on cash return as an important metric.  How quickly can I get my down payment, closing costs and rehab if any back.  Example down payment is 20K and closing cost are rolled in the loan, no rehab.  That’s a 30% return on my money.  In 3+ years I’ll will have all my cash back and I can repeat the process.  That is how you build wealth amongst other investment strategies.

    Thanks, Kenneth. Is considering the occupancy rate and average daily rate of a property, along with taxes and all expenses, enough to accurately calculate the profitability of the property?

    0Reply
  • Mostafa Faghih
    OP
    Financial Advisor · Los Angeles, CA · Member since 2023 · 17 posts · 15 votes
    3y
    Quote from @Brooklyn McCarty:

    House hacking is probably the #1 way to build wealth in real estate because you are living for free and someone else is paying for it all. 

    Buy a duplex, triplex, quad if you can with a residential loan, live there a year and do it again! 

    Great strategy 

    Actually, I'm thinking about a similar way to house hacking that I mentioned in the question.

    0Reply
  • Mostafa Faghih
    OP
    Financial Advisor · Los Angeles, CA · Member since 2023 · 17 posts · 15 votes
    3y
    Quote from @Luke Carl:

    You buy a house you rent it out you buy another house you rent it out. Works for me! 

    Great! So, is considering the occupancy rate and average daily rate of a property, along with taxes and expenses, mortgage payments, etc. enough to accurately calculate the Net Operating Income of the property?
    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Mostafa Faghih:

    Why don't people save money? Why do people finance a $60,000 truck for six years while living in an dumpster rental? Why don't people live within their means? Why don't they save up a personal emergency fund? Why do they complain about the high cost of living in [name your expensive City] instead of moving to a more affordable area until they are financially stable?

    I could play this game all day long. Even the poor in America are capable of increasing their earnings, reducing expenses, saving, and investing. The bad news is that it requires effort, maybe some sacrifice, and time. Some people would rather watch TV, vape, drive a fancy vehicle, wear $300 sneakers, and complain about how the man is keeping them down.
    The DIY Landlord Book4.7247 Reviews
    WebsiteView Page
    2Reply
  • Michael BaumPro Member
    Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
    3y
    Quote from @Mostafa Faghih:
    Quote from @Nathan Gesner:
    Quote from @Mostafa Faghih:

    Is this a serious question? This is the definition of real estate investing and it's what all of us are doing. It's described in every book, blog, YouTube video, news article, etc. Buy a property, rent it out for more than it costs each month, rinse and repeat.

    Thanks, Nathan. So, why aren't all people utilizing this strategy to achieve financial freedom?

    A lot of people are. It just isn't easy. It is much easier to work a W2 job and max out a 401k to retire on. Investing in real estate isn't a cakewalk. There is a lot of risk involved for inexperienced folks. Plus the anxiety of dropping 500k on an investment that might not work out is too much for a lot of people.

    House hacking in the traditional sense is a bit invasive if you have a family. Would you want to rent a bedroom to a single person when you have 3 kids running around? I don't think I would do it.

    Frankly if I was a single person who is looking to get ahead, getting an FHA loan on a tri plex or 4 plex. Live in one while renting the other units. Live for free plus making some profit, then refinance after a year or so, rent the final unit after buying another one with a new FHA loan and do it again.

    LTRs are the slow and steady fire to financial freedom in this model,
    3Reply
  • Sarah KensingerPro Member
    Real Estate Consultant · OH · Member since 2023 · 2k+ posts · 1k+ votes
    3y

    I'm still not quite sure what all your after here, but if you're considering house hacking where you live in one side and make the other an Airbnb...preferably with two entrances. You should connect with @Curtis Towers, he successfully house hacked using airbnb in Texas. 

    [email protected]330-557-3021
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free