Is anyone here using a unit in their duplex, triplex or renting out areas of their SFH to Airbnb regularly? It's something I've been giving a lot of thought and I'm interested to know what the numbers are and how it's working out for others.
- How much is your mortgage on the place?
- How often are you booked?
- What is your income from the Airbnb (before/after fees)?
I think that is a great model. My experience with the condos I've used with AirBNB is excellent. The HOA's are a problem. The only thing you need to worry about in Chicago are the city laws. Otherwise, go for it.
@Byron W. I don't know the Chicago market, but the answers are often Airbnb or short-term rental questions:
First off, as @Jean Norton said, check your laws. Here in Denver, for instance, the primary residence provision of the new Airbnb law does not allow you to rent a home that isn't the place you primarily live. (The other side of a duplex or triplex is not included in that definition.)
As for money ... it all depends on your space. Is it located near something to which people will come to see. Can they walk to bars/restaurants/arts venues/grocery stores/etc? If you stage a place well, get nice photos taken (use Airbnb's free photography service), provide prompt responses and good customer service, you can do very very well. In my experience, 2-3x the revenue of a conventional long-term rental.
The downside, as you'll see over and over on here, is the work. It can be a lot of work. I've never cleaned so many hairs off a bathroom floor as I did when I was Airbnbing places full-time.
And to add to what @James Carlson said - a good thing to do is check AirBNB from a competitive standpoint. Search that area as if you were a potential guest. If there are none, it could be people don't want to be there. If there are some, then check their calendars to see how many bookings are in their future.
Yes, absolutely what @Jean Norton said, though I'd caution against using a host's calendar as a gauge of how often they are booked. The calendar on their listing doesn't distinguish between dates that are unavailable because of bookings and dates that are unavailable because the host blocked them (likely because they live there and don't want to host during those dates).
The workaround is to dive into the listings in your area. Search as if you were going to be a guest. Leave the dates blank (you don't want to exclude hosts that are booked). Choose the same number of bedrooms as yours and zoom into your neighborhood. Then click on some listings that have a good number of reviews. Look at the first page of reviews. Were there a few left in the last month? If so, this person is probably getting booked a lot. If there's only a smattering of reviews over the last few years, then they're not getting booked as often.
I've starting doing Airbnb for a unit in Logan Square. So far it is about break even with just renting the unit since I have a management company. If you are going to self manage an Airbnb I would think you can make 25-30% more than renting to long term tenants. Occupancy takes a little time to full book from what I've been told until you have ~10 reviews. My expectation is to make 20% more than long term rent with the management company in place. My main concern is winter, I will probably look for a short term lease over winter if I can find one just to reduce the risk.
Chicago does charge hotel taxes to Airbnb, and another 4% fee on top of Airbnb's fees which are published. Chicago also require registration but I don't think anyone get denied and I don't think there is any enforcement yet.
@Vijay Prabhakaran are you living in the unit and renting out rooms on Airbnb or are you renting out the entire space?
@Byron W. , I have a good friend that has 6 units and I have one unit in a four flat that is run as AIRBNB. Mine is in a suburb, just outside of Chicago, so I don't have to worry about Chicago laws. My AIRBNB unit is beeing running for one year this month, and the numbers look good. After cleaning fees and a fair priced manager that deals with the bookings, I am making a good profit. I will say an additional $7000 per year. I did have few months in winter with no bookings, however, now I know that I can do short term, furnished rentals for the winter and increase the profit to about 10K versus market rent.
Good luck to you and stick with buildings. From what I've seen on the condo side, the HOAs are not friendly to AIRBNBs.
@Lumi Ispas are you paying out of pocket cleaning fees? All of my guests pay the entire cleaning fee so there is no cost to me. I haven't heard of a host paying out of pocket for cleaning fees.
@Ariel Vincent , I am paying a bit more than I charge on the site. I have a 3bed unit, about 1500-1600sq and the cleaning fees are larger than what I am willing to charge. So I am taking in consideration the difference that I am paying and the utilities and internet of course.
@Lumi Ispas gotcha. We charge $175 for each clean and pass it directly to guests. They seem to not have a problem with it at all even for stay of only 2 nights (our minimum)
@Ariel Vincent , that is wonderful for your market. Keep in mind that we are in different markets. You are next to San Francisco, one of the hottest and most expensive markets in the country and I am in a suburb next to Chicago. :) I am looking at the other managers, at the competition on how much they charge, as if my fees go too high, then I won't get the bookings.
@Lumi Ispas I am actually referring to my property in Indio, CA which is just outside of the Palm Springs area - still pricey! But yes, you are correct that it is very market, and even property, specific.
So I've airBNB'd entire properties/condos, and I've airBNB'd individual rooms. My experience is that you experience far less property damage, etc. with individual rooms. The airBNB "host guarantee" is a sham, I've tried making a few claims, even when providing receipts for everything they lowball you like cheap car insurance. You can insure with commercial, but it's around $1000-$1500/month for 'real' insurance. In this case, you are better off self-insuring unless you really get a doozy of a guest.
On condos, single family, I've found it like others to be roughly break even with regular tenants, perhaps a good short term option if you had the property listed for sale or something. But there are a lot of additional overhead expenses that chew up any of the additional revenues. The large groups that rent out condos/whole properties tend to overall be much more work then a couple of travelers.
Because of this the best model I've found so far is doing single bedrooms. I'm currently generating 4x-5x normal rental returns doing this. Don't think this isn't work, and you have to be savvy about how you design and market the property. I run near 100% occupancy and actually have guests asking to be on a waiting list if another guest cancels.
Part of this is that I've done split testing on everything from shampoos and towels, to paint colors on rooms, not to m mention the ad copy on the listing. Through this I have been able to extract unbelievable revenues out of a single property. But essentially you are running an e-commerce business.
I've run a multiple of those businesses before, so these optimization strategies are hard won. After all expenses paid and the operation fully staffed (I simply manage) I'm seeing around 50% net profit, this includes all overhead, maintenance, utilities, insurance, staff, etc.
If you are a passive investor, this won't be your cup of tea. I've debated on scaling this model, obviously need to be selective about the properties I do this with. Location matters of course, but in different ways then traditional real-estate investing, meaning there are tons of opportunities out there for this that get looked over by the normal folks.
I'm open to discussion from others if they had an interest in such a venture, I'd never want to go back to 'normal' renters again.
@Byron W. I currently house hack a duplex. I live in one unit and rent out the other full time. However, my girlfriend and I travel nearly every weekend and we use Airbnb every weekend we are gone to rent out our unit.
Although utilizing Airbnb is relatively new for us, every weekend we have posted (6 weekends) we have always had a guest. It has served as a great strategy for me to generate some additional income while traveling.
@Ryan Aydelott interesting! Can you elaborate more on the large vs small groups? Does this mean for a 2 bedroom unit you would list the two rooms individually vs the entire unit? If you list the rooms individually how do you deal with shared areas (who gets to use the kitchen? etc...)
I've found a couple of different common use cases for home sharing. When I would rent an entire house, it was large groups that wanted to have an event/party/gathering, but didn't want to pay the money to do something at a place setup for that. After renting to them, the house/furnishings/etc would have tons of wear, small damage, etc. Yoga retreats that would end up in carpet burned from incense, athletic groups using the house as a food prep/staging area, etc. It's because of groups like those at the lower end of the home rental market, that I would never engage in SFH rentals again at anything less then $1000/night, and even then only with a caretaker/staff onsite in a secondary home on the property.
The luxury property market is different and VRBO serves this better then airBNB, but again you have to price it high enough to get rid of many of your problems. Typically a $5k-$10k security deposit as well.
On to the individual rooms, I've modeled mine after co-living communities. There is still a caretaker, or for smaller homes a maid/cleaner that shows up every day to stock towels, do dishes, etc. Some things to avoid parties are the usual door locks that record every entry, ring doorbells w\motion etc. (in this manner a red alert is when a property starts tripping motion alarms at the front door every 5 minutes).
Everyone has access to the kitchen, bathrooms, etc (if it's not a bedroom it's a common area) it's stocked with basics (sugar, coffee, cooking oil, etc), same with bathroom (soap, toilet paper, shampoo, shower gels). Think upscale hostel. This will attract the under 30 traveller crowd, which is really the best market for airBNB anyways, given that the over 30, and especially over 40 crowd tend to be overly critical of homesharing with overall poor 3-4 star reviews (instead of the consistent 5's required to stay relevant on a platform) and in general high maintenance with regards to questions, needs, etc.
I've found when rooming with strangers, they really enjoy meeting others, and more importantly in general 'behave' better as they are in the company of strangers (vs. them being there with just their friends in a SFH/entire condo rental). You will occasionally get bad actors, it's best to head those off and eliminate them as quickly as possible. In one instance I had someone trying to throw a party, I gave her a few hundred bucks cash to get her to take her and her underage drinking friends immediately off the property. Those instances are rare however, maybe 1 in 1000. In general there is maybe 1-2% of people who might be unhappy/grumpy for whatever reason, I also try to remove them as quickly from the situation as well.
The ideal setup for this is 5+ bedroom home, to really get a good mix of people. I'm currently doing 8 of my bedrooms like this, will bump it up to 11 this fall. I'm adding a cafe'/workspace area as part of this as well. In this model there is a full time person on-site, it's run more like a boutique hotel/high end hostel at that scale but it allows for lots of extra little perks you simply can't justify with less rental volume.
I rented out one of the units of my two flat which was a duplex up plus 3 small bedrooms downstairs (4 rooms total). I rented it out similar to a hostel, each room was booked individual so I would often have four sets of guests sharing the common area. Each room would book between 20-45$ a night depending on the season, I was consistently booked 20 days per month per room. The summer months I made around $3200 per month, winter was about $1600, after expenses. Mortgage was $1540. My place was about a 12 minute walk, equal distance from the Belmont and Logan Square Blue Line stops, so easy ride from O Hare and walk able to the heart of Logan Square so the location was good for tourists.
It was a lot of fun to do, and made more money than I would have if I leased it out. Main reason I did it is because I was renovating my unit and needed a kitchen to use in the time being, and the apartment came fully furnished as the previous owner died. I don't do it anymore because it was too much work, instead I have a friend rent the unit for a flat rate, and he does the airbnb, he is doing well.
Thank you all for the great information! I am a young professional looking to begin my REI journey. After educating myself I am in the process of taking action. I have a question regarding the AirBNB and vacation rental market in the Chicago and Greater Chicago Area. Do the Chicago suburbs (such as Lake or DuPage county) have vacation rental/airbnb demand? I am looking for a duplex in these areas but they are very uncommon and for the most part legal non-conforming. Most of the duplex's on the market do not sell because of the zoning status. I am wondering if anyone has experience with this and or vacation rentals in the suburban area? Thanks!
need research for AirBNB ,
Yes there is something called airDND
Hope this helps. If not, sorry .I tried . All the best.
Maria M., this is very helpful! What a great source of data. Thanks!
I also like the individual room AirBnB vs entire unit..as @Ryan Aydelott said entire room AirBnB will attract larger group of people normally looking to throw parties...safer to list individual rooms with amenities such as wifi, neat and clean bedroom/bathroom, breakfast areas, work desk etc which will attract business travelers and younger population.
I interviewed the author of Get Paid For Your Pad and he gave some great tips to start on AirBnB. First off, make sure the location is friendly to AirBnB, avoid condos, especially in the heart of the city. If it's a 2-4 unit, you shouldn't have many problems as long as your guests are respectful of the neighbors.
Check AirDNA.com for more info of what's going on in your area. There are AirBnB Facebook Groups that you should join as well.
I know a few investors using AirBnB instead of standard 1-year leases and some of them are making up to double what they would have made with a standard lease. Chicago is starting to crack down on AirBnB in general so keep your eye on the regulation changes.
Like @John Casmon mentioned revenue is about double than what i would have made for long term lease. About 80% of my units are Airbnb. I am looking to expand more units to Manage
I have been finding great success in Airbnb. City of Chicago recently gave me my registration number for my units
I also received City registration number recently..its valid for one year..I heard they sent out 4000 approvals and 2500 waiting to be denied notifications...not sure if people who got denials can appeal or not...
Having good success so far with individual bedrooms. I am not interested on whole house AirBnB due to stories I am hearing...