Using a house duplex or triplex unit exclusively for Airbnb?
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 Airbnb the guest bedroom in my condo unit and have been for almost two years. I've run into minimal issues with guests. Most of them in Chicago are simply looking for a place to leave their stuff and go to sleep; they will be exploring the city most of the time.
The biggest challenge, if you are looking to make a profit and not just pay down part of your mortgage, is handling the winter months where demand dips consistently. One thing I've been using to help combat this is using Beyond Pricing, which prices each day based on demand, seasonality, and a host of other factors. It has worked out pretty well.
+1 @Stephen Brieloff for his mention of BeyondPricing. A very cool system.
@ryan aydelott I sent you a connection request. I would love to ask a few questions. Thanks!
Originally posted by @Ryan Aydelott:
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.