Airbnb Rental Advice?

25 Replies

My wife and I are planning to rent out an older airstream in the Hill Country of Texas (between San Antonio and Austin) with views of mountains or on a river (prime location). Year round rental targeted couple's getaway.

According to data from Airbnb (purchased), we'll on average be able to rent it out for $110-$130 on weekdays and $130-$180 in the weekend. Occupation rate between 50%-80% (top 10% of properties). The numbers depend on the specific location in the area and vary a lot. Average nights booked will be 2 nights (assumption). Thought about 2 nights min. to lower turnovers, but could have the opposite effect too.

We've seen an airstream for $15K in great condition. We're still looking for a place to put the airstream, though. We want to rent land instead of buying. Land is getting expensive in this area and not a lot for sale, so that made me think it'll be too expensive to own vs. leasing. Rent will cover land expenses (property taxes, utilities, etc.).

We'll be managing the property from Houston, TX (3 hours away). We'll install wifi controlled A/C, install a keyless lock and hire someone to clean the place. We believe it'll be difficult or very expensive to find someone to come clean the property out in the country and be available on short notice. I was hoping to get away with $40/clean-up.

Revenue: $2,000 (50% occupied) - $3,000/month (80% occupied). $24,000-36,000/year.

Expenses (assumptions): $40/clean-up (have no clue), utilities $50/month (have no clue), internet and netflix $80/month, land rental $500/month, Airbnb fee 3%, food and beverage supply $5/booking (too much?).

Cash Flow: $1,000/month (50% occupied) - $1,800/month (80% occupied). It seems too good to be true and I don't like that. I like to be very conservative in my calculations.

Would you do anything different and why? 

Any advice on how to find land to lease or other ways to place an airstream on a prime location?

Should we get the airstream ($15K) financed to leverage our money?

Do we need insurance?

Experience with couple's getaway outside the city? What have you experienced is different from other types of short term rentals?

Should/should not get my cleaning fee covered? Maybe partial covered?

YES, it sounds too good to be true. $100+ for an OLD airstream, not going to happen. $50 electric, not going to happen. Internet out in the country??

You also have to think, how many people want to stay out in the country in an old airstream. If you really want to try airbnb, try it with something a little more traditional, like a house or condo. If it works, you get a good reputation, expand. But start with something a little more proven. Airstream MAY work, but quite a bit more risky.

ps I just stayed in my first airbnb in Houston not too long ago.  It was $62 total for a one bedroom apartment off of Westheimer and Beltway 8. 

Thanks for your input @Rick Pozos .

Actually the most successful rental in the area I'm looking at is an old airstream. And it's not even pretty inside. I like to copy an existing success to minimize risk. The most successful rental in the area is an old airstream. It has close to 100% occupancy according to several data sharing software I purchased access to. And they charge $130 on weekdays and $145 in the weekend. I base my rental prices and occupation rate on similar rental properties. I'm not comparing apples and oranges. I've excluded properties from my comparison that doesn't relate to my future property. Other properties are tiny houses and small cabins.

You're right about the Internet. It might be more expensive out there.

And what people buy is the experience. An experience you don't get in a small apartment in Houston.

Hey @Chris Frydenlund  Awesome idea. Tiny homes, container homes, Airstreams ... they're all pretty cool and desirable, in my opinion. You were asking about minimum stay requirements. A strategy that I've used and tell students in my Airbnb class to consider is to set a minimum stay that you're comfortable with. And then fill in gaps by creating a special minimum stay requirement for floating dates.

For example, when I was running a couple Airbnbs here in Denver, I used a 3-day minimum stay. So, I might get someone who booked a Monday, Tuesday, Wednesday and then a separate guest who booked Saturday, Sunday, Monday. That leaves Thursday and Friday dangling there and without the possibility of getting booked because your 3-day minimum will block those two days from coming up in anyone's search. So as soon as I saw those dangling dates on my calendar, I'd go to my calendar, click on "Availability Settings," scroll to the bottom and under the min/max stay boxes, click on "Add another requirement." Then you can set a 2-day minimum for those two floaters. I was able to stay booked around 25 days a month using this. It allows you to book most of your stays at a turnover rate you're comfortable with, but also allows you to plug in holes. Just two holes like that in your calendar that get filled could be $600 difference at the prices you're talking about. 

Good luck. 

@Chris Frydenlund I live just outside of San Antonio and can only get satellite internet which is not unlimited and not worth the money.  I like the idea however.  If I were renting your place I would want it near other tourist draws like Fredericksburg wineries and shopping or the Guadalupe river or a ranch that does guided trail rides.  Just a few ideas.  Also, in case you haven't used an RV, you'll need some connection to a septic system or sewer since it will be stationary.  Maybe also budget for minor yard maintenance.  When you get it up and running let us know about it.  I agree with Rick that it seems a bit riskier but I also think you can make it work if you find the right location.   Good luck!

as mentioned above you will need to have a meens for waste removal between Stayes, having a legal septic system with running water would be very expensive. Or you would have to have a septic service come out between guests and also fresh water delivered and a working generator with gasoline delivered also. 

@James Carlson : Thanks for the great advice. I didn't know that was possible. No doubt I'll use that strategy. 

@Will Pritchett : Currently Wimberley, TX will be our chosen location. How much should I expect to pay for satellite internet? Is that the only way to get internet? What's needed to get regular internet? I most likely will lease/buy unrestricted raw land outside the city limit. 

@Scott Hohensee : I was thinking getting water tanks refilled if rain water collection system isn't enough. But I have to figure out what will be the least expensive option.

Concerning the waste I talked to a contractor in Wimberley who said that a septic system would be very expensive. So I am planning to get someone out to empty the black water tank. 

For electricity I thought of solar panels and then the airstream already has gas for bigger appliances. that should be able to replace a generator right?

In Texas you'll need ac which will require a pretty big solar system. I would price them out. Honda does make a very quiet generator that may work or Onan makes some that are comonly used for RVs. Do consider sound as there are some very cheap ones that would run the AC but ruin any hillcountry ambiance. Whatever requires the least work or is most automatic for renters would be a good idea. Also, gray water can be discharged legally in some areas. That would be a possible option for the sink and shower water. Black tanks would still need pumping which is worth pricing out. The Porta potty pump trucks aren't all set up for this task so definitely work out that aspect. RV tanks rely on gravity (in my experience)  perhaps you could let the tanks run into some sort of aproved tank that is larger and could be emptied less often, thus reducing expense.

     The Wimberley area is a good choice. Keep us posted on progress.  

@Will Pritchett : What about creating above ground sewer system? I read about a pump you can install on your black tank that'll pump the black water up (against gravity). Then I thought about placing a larger tank (325 gallons) far away from the RV and maybe place the line underground (maybe that part is too risky) and have someone come and empty the big tank every month instead. Is this a crazy idea or do you think it could work?

I read that a generator will consume between 0.5-0.7 gallons/hour depending on usage. I know it varies a lot, but these numbers were from people who have the A/C running all day. If the generator needs to be running 24/7 and I have an occupancy rate of 40% (12 nights/months) that's $500/month just for the gas, then I have to pay someone to fill it up as well. Seems like a lot of money. 

good thoughts. I would check with local ordinances (if any) about the big tank. Makes sense though. Fuel is an important cost to consider. Maybe just do that until you prove the concept and then drop power or set up solar which both cost quite a bit up front but less recurring expense and maintenance long run. 

@Will Pritchett : You are absolutely right. That's a very good point. These solutions cannot work long term with a high occupancy rate, but a great solution to reduce barriers to entry.

I just wanted to make sure you got my response to my email from several days ago.

Evening Chris,

Wimberley is a tricky place in general to set up a vacation rental operation. The city has been cracking down quite a bit here in the past 12 months. If you stay outside of the city limits you may have more options. I know of a group that has been trying to buy land for a similar operation that are either being out bid for the land or the numbers do not make sense.

A couple of thoughts for you to consider:

- to do this you will have to have a septic system in place - approx $10 to $15K  if there is not much rock to pound through. The other option is a 200 gallon black tank that will have to be pumped probably after each tenant. You will have to check with Hays county to see if this is allowed.

- you will need electrical in place - PEC Pole rate the last I heard is $3000 a pole from an existing line from a good friend who built his dream place about two years ago. He had to place 12 poles. $36,000

- Water? delivered, Rain water catchment or well based. The most basic system will be a water delivery is about $200 for 2000 gallons. A tank will cost about $1 per gallon to purchase plus labor and filtration system. $4000 +/-

Finding these three things on a open piece of land for lease is a challenge.

Will you be willing to do the improvements yourself?

Will you be willing to sign a multiple year lease to cover these costs?

Will the land owner want "strangers" coming onto the land that they do not know?

My suggestion for you guys is to actually find a piece of raw land and buy it to pull this off. If you are anywhere close to a river make sure you read any and ALL documents if there is a POA / HOA which are probably in place to protect the "Silence of nature" (This is one of my main issues with this area as a whole). Almost all of them forbid STR.

The current positive side of all of this is that properties on the river are not selling at this current time as the effects of last years flood is still visible and will be for many years to come. The wound is still open. Now is the time to buy something along the river if you want it. Just make sure you are outside of the City of Wimberley Jurisdiction. The last property that I saw sell inside city limits went for $103,000 for an acre which has been the average over the summer for a blown out property that need a massive overhaul of a basic summer cabin.  Outside city limits would probably be about the same.

I will keep my ears open for anything for you, and will reach out to a couple of investors that I know up here that may have something that might work for you.

So I can reach out with more specific info:

-West, East, North or South of Wimberley matter at all?

-Would you be willing to put in the above mechanicals?

-How long of a lease?

other items that you have listed since you emailed me that you are asking about:

Internet cost will either be $57 a month with Texas wireless if you are in line with one of their towers or Exceed satellite for $150 for 30 gigs of download.

As to the Airstream you mentioned above, this one is rented about 1/2 mile from my place here in Wimberley.  The couple that has it has multiple properties that are all VRBO and have been running it for some time and work on their business daily.

Thoughts for you on buying an old airstream.   Are you going to rehab it yourself or have someone on hire to do it?  How are you going to handle repair issues that come up at night.  Tradesmen here are hard to come by currently as many are rebuilding many of the houses that were destroyed in the two floods last year.  They may be able to get to you but it could take several weeks.  

Let me know your thoughts and I will see what I can dig up.

Best regards,

Darin

For Internet at our 2 tiny houses, we've had to set up a wireless hotspot.  We use AT&T because they have a good signal at our location.  We limit our guests to 1 Gb of data per day - plenty for surfing the Internet, but not enough for streaming video.  

If you put in a black water storage tank, it's still regulated by the state.  I was planning to do this, and my eyes glazed over reading the regulations.  We ended up biting the bullet and installing a septic.  You can't make improvements like that on leased land, though. 

A/C is a necessity, and so you will need to figure out a way to provide that much power economically.

One caveat on seeing properties that appear to be occupied much of the time is that the owner may block certain dates because he's going out of town, letting family use it, etc.  It would look like the property is rented, but it might just be unavailable part of the time.

Oh, and about house cleaners....  I put an ad on Craigslist that I would pay $20 per cleaning, and I got someone who is working out great.  HOWEVER, you need to think about the laundry.  Every time a guest checks out, I have to wash a set of sheets, a blanket, 2 towels, and a bath mat.  Who would be doing that laundry?  For the time being, I am doing the laundry (our tiny houses are on the same property that our house is on), so the $20 to the house cleaner does not include that.

@Chris Frydenlund I've been living in an Airstream for the last 9 months while traveling around the country, and I've had similar thoughts about converting it to an AirBnB when I come off the road.

I would encourage you to do whatever you can to find a situation in which you have access to 'full hookup' for water, sewer and electric. Without these, you will have major headaches when people with limited RV experience come to stay in your Airstream and want to use water, sewer and electric like they are in a house. When relying on waste water holding tanks, fresh water tanks, and generators, a camper needs to be conscientious about creating waste water, using water, and managing power. If cycling a bunch of AirBnBers through who don't know any better, you will have problems, even if you educate them with rules.

I recommend you find a nice RV park in a desirable natural area, such as near a national park, and with some desireable amenities, like pool, playground, full bathroom facilities, and laundry, and try to work out a deal in which you rent a full-hookup site from them for the season or year, put your Airstream on it, and rent it through AirBnB.

If you find the right park, you could probably develop a solid business relationship and possibly add more units of it works. You may have to call around though, as I doubt all would be interested.

Don't know if this violates any AirBnB regs, though this is where I would start.

I have several rental houses with "underutilized" backyards.  I can set up a trailer for about $1300.  That's hooking up to the sewer cleanout in the backyard, fresh water supply and adding a 30amp 110v outlet to the side of the house.  (It's not legal to live in a trailer in most jurisdictions, but it's OK to store one on the property.  There are usually size limits.)

With City hookups like this you eliminate the problems @Mark Kelley mentions above.  Water, electricity and propane will be less than $50/month.

I can rent the trailer for $500/month in Denver, I experimented with Airbnb, but it was too much hassle, and STRs under 30 days are illegal in most jurisdictions too.

Just some thoughts for you from someone that is Airbnb experienced. We converted a condo to Airbnb this summer and there's a few things that you probably want to consider beyond just "the numbers". I wouldn't trust your purchased software, send notes to people that are actually hosting. Folks here were very willing to talk and help me out. I'm in a college town and 50% occupancy was easily average, don't assume 80% under ANY CIRCUMSTANCES. Next up Airbnb is by no means a passive investment. You need to be available for reservations, questions and problems and that brings up cleaning, hiring someone is great but will they show up each time? What happens when you have an 11am check out and a 3pm check in, are they gonna get there? Who's going to do laundry? , Lastly think hard on your pricing model...price too high and you'll get no bookings. I'd recommend cutting your closest comp by 10% to get bookings and then busting your *** to get 5 star ratings!

I think whether this will work depends on the location of the property. Is it in an area that draws a lot of vacationers? If yes, then go for it. If no, then I agree that you should get your Airbnb feet wet with something more conventional, and something that's more of a "sure thing," like a small condo in a city.

I live in the San Juan Islands, where nearly our entire local economy is driven by vacationers. On the island where I live, we have year-round residents and then we have the vacationers. The population of our island quadruples in the summer due to so many vacationers coming over from the mainland. A location like this, where the location itself is the big draw, is the kind of place where I'd rent out something like an Airstream. In this type of location, nobody can find accommodation at the drop of a hat. If you don't come to the island with reservations already made, you're sleeping in your car (which the sheriff will ticket you for, if he catches you.) Something rustic, like a tiny house or an Airstream, would cash flow great in such a location. In fact, $1000 - $1800 would probably be a very conservative estimate.

But if it's just a chunk of land in the middle of nowhere, and tourists don't have a lot of reason to visit that particular "middle of nowhere," I think even $1000 would be better than you could hope for. What reason do people have to want to go to that location in the first place? Is it scenic? Is there a lot of outdoor recreation in the immediate area that attracts a lot of visitors? Annual festivals or other attractions? If none of those things apply, I doubt it'll turn much profit for you.

Also, keep in mind that STRs are very seasonal in almost every location. The only exception to seasonality may be within the limits of major cities. Cities bring visitors in consistently, year-round, because people travel there for a huge variety of reasons. But outside-the-city locations pretty much only bring in visitors for vacations (which almost always happen June through August), Christmas, and Thanksgiving, with the odd visitor here and there who's celebrating a birthday or anniversary.

What all that means is that you have to plan carefully. If you buy your place and open up shop in the winter, you may not see any cash flow at all, and may be operating in the red, until summer rolls around. Our studio unit on San Juan Island won't cash flow at all October through April, but will make up the difference big-time May through September. However, if you're paying your rent and paying your cleaner to flip units out of your own money, it feels like an eternity to get from October to the start of next year's tourism season.

It's all about the location. If your location doesn't have a strong attraction for visitors, it might not turn out to be the soundest investment. Especially if you can't save a little money by turning over the unit yourself.

Just my two cents!

@Darin M. Thanks to you I've been able to do some better research on this. You have given me a lot to think of. I really appreciate it.

I've decided to look for a different area. Land seems very difficult to get for a good price. Instead I've been looking into buying a homestead out in California where land is affordable and also popular area for short term rental.

@Chris Frydenlund   My pleasure!  Land prices are nuts here and is part of the reason we are moving.  If you know anyone who wants a slice of Wimberley this is our house that hits the market later this week.

https://journeylab.smugmug.com/Architecture/415-Lo...

And no unfortunatley can not be STR..... once again part of the reason for the move.

Best of luck!

@Chris Frydenlund Great idea! I am not sure if that is where you got your idea, but there is a guy in Downtown Austin who has been wildly successful undertaking a similar strategy that has attracted typical travelers in addition to large corporate groups and wedding parties (I believe he has a few Airstream on his property).

With that being said, that individual has been successful running the operation on his own because he also live in Austin.

I am concerned about your plan because it is so far away from you.  The general rule is it needs to be within 45 mins of your primary residence to be sustainable.

Have you considered either purchasing land in Houston area or getting an Airbnb rental manager? I have some local individuals who have helped other owners that I would be happy to get you in touch with if you are interested in exploring further.  Feel free to direct message or call me.

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