I have a handful of STR-specific questions I was hoping I could get some focused replies for. I've read/skimmed through dozens of airbnb threads but there are just SOOO many on this site covering a wealth of topics it's hard to find all the advice I am seeking.
1) For those of you living in a property that you also rent out (either renting out extra rooms or renting out while you are temporarily away) do you attempt to deduct your utilities? How would you do this...just estimate a percentage?
2) Those of you who hire it out, what is your average cleaning cost for turnover? How did you go about finding the best cleaner/service since it isnt a standard clean?
3) If you have experience running an "entire property" rental vs renting out individual rooms, do you have any thoughts or advice to share? So far my 2-bedroom listings have generated a ton of bookings but I'm starting to consider STR for my larger properties and I dont think I'll have the same demand on 3 bedroom or larger properties so it would seem to be far more effective to rent out by the room. But that certainly brings on much more to consider.
4) Insurance. What do you do? lol i know this has been discussed often but always open to more thoughts.
Thanks in advance!!
@Maxwell Lee I’m going to try and give you all the answers you need here. A bit of a one stop shop and I’m always open to follow q&a.
When it comes down to deductions you can divide the utility bill by the number of days in the month. There’s your figure on the utility amount. Always run it by the accountant first to make sure you aren’t leaving anything on the table.
For cleaners, trial and error. For some properties I use a company and others I use a local cleaner. Quality help is hard to come by and when I do find them fair wages and appreciation is how to keep them. Rates really depend on markets, but I base it on unit size. For example, 50 for a one bedroom, 60 for two, 70 for three, etc. I use craigslist, Homeadvisor, and recommendations from other local hosts.
When it comes down to ROI for unit size typically 2 bedrooms do well, it’s like goldilocks. The larger the place the less frequent you will see bookings but you are also charging a higher rate. Some markets do well for private rooms and you can use services like Everbooked and airdna to get a better idea on what your market is producing.
For insurance, look at https://www.slice.is or https://www.proper.insure both are specifically designed for short term rentals and give 2 million in liability and full replacement value. Much easier than trying to fight it out with Airbnb and get the security deposit that was never taken.
Hope this helps!
3. Most people that I deal with don't want to share a house with strangers. So I rent out the entire house to that person and the rest of his group. It might be 1 or 2 people staying in a 2 bedroom house.
Michaels post above is dead on about ROI. I have 22 furnished rentals in this town. About half are 2 bedroom units. The other half are 3 or 4 bedroom, my largest has 9 beds and 4 baths in 3 stories. On average, they all make about the same amount of money each year. That house with 9 beds and another house with 6 beds have generated up to $1200.00 each per week, but around $800 is the norm. They sit vacant over half the year. My 2 bedroom places top out at $400 per week, and they are usually rented. Yes, it would be more economical to just have 2 bedroom houses, but you can score a grand slam every now and then with a big house that makes the higher cost worth it. I'm paying between $6-$8 per square foot on bank foreclosure houses.
These are all great questions.
1. I currently live in my house and I rent out the upstairs bedrooms by room or by the entire floor. It's completely up to each guests which they would rather have. I just use a simple formula for utilities/mortgage. I average them all up on a monthly basis and divide that number by 20. I set 20 as the number of days that I want rented out each month. Whatever that number comes out to that will be my minimum price that I set on my auto pricing tool. Then I can raise that number after I get good reviews.
2. Cleaners is really by word of mouth. You gotta search around. As far as my Airbnb I run out of my home we got lucky and we were able to hire our babysitter to do the cleaning. It's cheap and she does excellent work. As far as the properties I manage remotely I did trial and error/word of mouth. I created an Airbnb meetup group in my area and I was able to exchange a lot of information with other hosts and find cleaners through them. My wife also went out and talked to local businesses about what we do and we were offered great discounts on cleaning. My private rooms cost $20/room for cleaning and my entire spaces are $60 - $100 depending on the property. You can also try Care.com. You can find a lot of different cleaners charging different prices for their services. Use the share economy for good cheap labor as much as you can.
3. I do private rooms and entire properties. Entire properties are always higher in demand because most guests are looking for a place for themselves without a host present or other guests walking around. You would be surprised on the demand for larger properties. I rented out a 3 bedroom place before and the guests didn't even use the third bedroom they just wanted a large space for their family. This is also dependent upon your area as well. I know for my private rooms there are a lot of traveling nurses that are just looking for a place to lay their head and my private rooms are really appealing to them.
4. Insurance. I just called my regular home owners insurance and had them put STR insurance on my property. It was like a $20 - $35 increase on my insurance.
- I have my accountant handle this, but I believe it is a percentage of the property used as a rental. I only have one property where I rent out rooms, the others are full places.
- As others have mentioned it varies by unit size and market. I calculate the cost of each turnover for the specific unit, including laundry, consumables, cleaner, etc. and then make this my "cleaning fee". By doing this, I make sure I'm never taking a loss on the turnover since the guest covers it.
- Our units are mostly 2 bedrooms, which have done well. I make sure all of our couches are pullouts, so a 2 bedroom can accommodate 6 or sometimes 8 people. We charge extra per person after the amount of people that can be accommodated in standard beds. More people = higher turnover cost due to consumables and laundry.
- We have commercial insurance that is specifically for vacation rentals.
Is it that time of the week again? With a name like @Maxwell Lee shouldn't you be on a billboard somewhere? Ok I kid! send me a PM I'll send you my number and talk your ear off about everything you need to know.
Great questions to ask. Answers vary by region, as you know. My out of state 3000’ ft house gets rented from 2 - 8 guests, my max. My cleaner I met on a local to the area Real estate meetup I joined for networking and was a huge score. We pay her $175 + extra sometimes. I also did what Myka did and started a local meetup to network with. This group now runs whether I’m in town or not. I also like the way he explained his formula for nightly rent. Plus, you investigate what area hosts offer and rent at. I’m going to look into care.com since I never heard of it, but craigslist also works well. Good luck.
Thanks for all the replies!! I love it. I will take more time this weekend to respond and reach out.
@Account Closed I don't get it...time of week? On a billboard? Sorry it's gone over my head! Yes I'll shoot you a message.
2) It costs me about $20 to clean a place, give or take $5. Included in my cost is new bath soap, deodorant soap, dish soap, hand soap, toilet paper, paper towels, laundry detergent, and occasionally bath towels and bed sheets. The labor is free, as the lady that cleans my places does it for free. She also sleeps with me.
Originally posted by @Paul Sandhu :
She also sleeps with me.
Ah ha so it's not really free.
First thing to do is google "City XYorZ Airbnb Regulations" and check into the legislation. If you can currently do it in your city..... Google "City XYorZ airbnb" and hit the News button on google and see if there's talk of shutting it down or not.
If you can do it in your town, and you want to move forward... Then you just list your property and learn from your mistakes.
Juts make sure you can still make money on the property should you have to switch it to long term either when the city makes you or you get sick of how much extra work it is.
@Maxwell Lee I just link the single rooms to the full space calendar. Therefore if someone books one of the single rooms it blocks the dates on the fulls space while keeping the other single rooms open. Airbnb created a new feature where you can link your full space to single rooms. It makes managing it a whole lot easier. It's already automated for you.
Yeah I put STR insurance on my condo and primary residence by calling my insurance company and asking if they were familiar with short term rental set ups. They were quite familiar with it and just threw it onto my regular home owners insurance.
Sounds like you're already killing it. Congratulations!
I won't repeat everything above because it's all solid advice. I will reiterate two points made by @Lucas Carl
1. Know your Airbnb laws. I wouldn't rely on the news to get it right. Call your city's planning department, ask for the planner of the day and pepper them with questions. Here in Colorado, they vary widely. Denver's Airbnb laws only allow it in your primary residence whereas Colorado Springs an hour south of here is wide open for investment. (@Erin Spradlin has a nice blog listing the questions to ask. You'd be surprised at the wrong things city workers will tell you if you don't ask the right questions.)
2. If you're looking to buy for Airbnb, run your numbers as if it were a long-term rental to make sure you have a back-up plan should the laws change. (If it doesn't work as an LTR, maybe you still go forward because the cash flow is so good, but you'd better be pretty confident you could sell should things turn.
About short-term rental insurance: Definitely call your carrier. It does seem like more and more big companies are catching on and offer an STR product. I personally like Proper Insurance. They are STR-specific. It acts as a homeowner's policy and an STR policy, and their coverage areas seems broader than other products.
Hey @Maxwell Lee , I don't think anyone has mentioned this but sometimes larger, higher end properties can actually have the highest return. In Denver, there are very few properties that sleep 10+ guests, and therefore there can be a niche market for these homes. You'll have to deal with more bachelor parties, etc, but sometimes it can make sense financially. I personally know a host who made $19,000 in the month of July on his 4 bedroom 4 bath near DU. You just can't get those types of returns on 2 bedrooms since there are so many of them. Having said that I own a very small 1 bedroom that has been a great rental because it is in an area with almost no hotels.
I also very much second @James Carlson 's advice in doing your due diligence on your carrier and the local laws (I've heard Miami is cracking down).
Hope this helps!
ALL - I would love your thoughts on my question after #3 below. Thanks!
1) @Maxwell Lee - Myka is spot on here. Great answer.
2) My cleaning cost is $150 for a 4BR, 2000 sf house in San Francisco, which is a good deal. This is my primary home, and this is the "standard clean" from my long-term housekeeper. She's terrific and she knows other terrific housekeepers. Good professionals usually know other good professionals.
3) Your location combined with your marketing is everything. If you are in a location that is an attractive "reunion" or "bachelor party" location, a large home can be very profitable. I have offered up my primary home for 5-8 day AirBnB bookings about 20 times in the past 5 years, and it has been rented every single time. Certainly seasonality is part of if since it's typically available during summer, Xmas week or Spring Break. Renting single rooms for just a few days seems like a headache to me--a lot of time spent coordinating with guests and cleaners. What is the value of your time?
QUESTION: How do you recommend finding clients and marketing the heck out of a newly listed VR? I am targeting 30+ day stays for business travelers. I just signed a master lease on a spacious, 3BR/2BA home in my neighborhood which I have started renting out for 30+ days since San Francisco prohibits stays <30 days except in your own property. This home is a 20-minute train ride to downtown San Francisco, although some corporate rental companies only have units downtown.
Tyler - What kinds of areas would you typically target for a 30+ day VR? An area without hotels? How important is proximity to downtown?
@Ethan Cooke It sounds like you are looking for corporate renters instead of VR's/STR renters. If you are targeting those people you should look at advertising on places like furnishedfinder.com, corporatehousingbyowner.com, and joining the facebook group Gypsy Travel Nurse. All of these marketing tools target traveling nurses and other business travelers. Also create your own FB page for your listings as well.
@Ethan Cooke I'm not as familiar with 30+ day stays, as the city we have all our units in permits short stay as long as you pay a 7% occupancy tax.
For our listings, we have an amazing photographer which really makes us jump off the page when guests are browsing (we are the best photographed units in our). We also constantly tweak out listings to make sure we rank highly in the search. The search algorithms differ for each platform, but for Airbnb the main factors include response time to inquiries, instant book turned on, pricing, and reviews.
As others have mentioned, I would look into other platforms/websites that focus on corporate rentals. You may even want to reach out to some companies directly if you know of any who have teams who come for a few months for projects.
If you'd like to see some on our listings/photography send me a pm and I'll share the links with you.
@Ethan Cooke I'm with @Myka Artis and @Michael McKay in that I'm really only familiar with vacation rentals i.e. shorter term stays. In the year and a half I've been hosting I have never had a 30+ day stay from someone on vacation, but I know it happens occasionally. Also - I doubt you'd be competing with hotels so I'm not sure that would be a factor.
You should also try posting your listings to Craigslist, I know @James Carlson has success listing his corporate rentals pretty much exclusively through CL and gets significantly higher rent vs. long term rental. From what I've heard, travelers renting "mid term" rentals are also pretty picky on location and prefer smaller units with great amenities.
As @Tyler Work said, I do furnished, 30+ day rentals, but they're in small spaces. (An 800sf 1-bedroom and a 350sf studio.) I use Craigslist and Airbnb and have had success finding good tenants on both sites -- mostly traveling nurses and some IT professionals doing temp projects in Denver. They tend to be younger folks (late 20s, early 30s) for whom proximity to downtown/bars/restaurants is important. But I know there are areas more like the Denver Tech Center that's outside of Denver where corporate rentals also do well, so proximity to downtown might be important for my demographic, but it really depends.
For a bigger spot like yours, I don't think traveling nurses will be able to afford it, so you're going to need corporate travelers or maybe rotating doctors (if you're near a hospital) and like @Myka Artis said, I'd be looking at CHBO and furnishedfinder.com for that.
Thank you all for your quick, helpful responses.
Myka, I have my place posted on furnishedfinder and Craigslist and will also check out corporate housing by owner and the gypsy travel nurse FB page.
Michael, I am awaiting the professional AirBnB photos now but I’m thinking of setting up my own photographer so I can use the photos across sites.
Tyler and James, I have gotten a couple of bites from Craigslist. Also, I think my next “rental arbitrage” (sublease) will be a smaller unit, and I’ll see if I get higher occupancy and better profits.
I am certain that with some trial and error using different sized units in different areas, I can start running a great VR/corporate rental business! Just like my heroes, Al Williamson and J. Martin. 👍
Absolutely! Congrats on getting out there and doing it.
@Ethan Cooke I'd say it's definitely worth getting your own photographer. I've used the Airbnb ones before and haven't found them to be very good. The photos aren't bad, but they don't match the quality I'm looking for.
I also prefer to own the photos. It costs me $225 to shoot a unit and the money is quickly made back.