Real Estate Consultant · Los Angeles / México City · Member since 2015 · 34 posts · 30 votes
10y
Hello Eric -
As someone who has personally and directly been involved with over 700 Airbnb reservations in my own properties, and over 100 in other people's properties, I have played around with the models quite a bit and have found many successful (and not so successful) methods of operating a short term rental.
Let me start with this:
One mistake that freshman short term rental or Airbnb hosts make is gearing their rental towards tourism only... Often times there is a focus towards tourism, however, a growing number of people are using Airbnb for business.
Also, there has always been a not-so-visible marketplace in real estate that has been around since way before Airbnb... Traveling nurses and doctor's are some of my client's most prominent guests... and though they may list on Airbnb... I often recommend that they go down to the local hospital's HR department and say hi, drop off a flier, and ask them who handles the housing coordination for their researchers and providers.
Military bases (I believe there's a big AFB in SA, no?), tech and other industries, government contractors, universities, oil and gas companies, and many other institutions have constant need for short-term housing for their visiting staff. A way to get some more information to answer your question may be looking some of them up and even giving them a call...
Just like many other areas in real estate, this segment is all about relationships (at least if you really want to rock out with it).
Also, as a follow-up to @Prag Patel 's well-worded response (remember of course to talk to your own tax advisor), but be sure to avoid the mistake many new hosts make in lumping the tax in with the Airbnb rate... you won't be able to line item it out easily for your taxes.
The local taxes will be 10.75%. If you are able to get in with people at the military base, etc., and/or hospitals which need spots for nurses and doctors for more than 30 days, the tax issue will be moot. If mixing the stays, it could become more of a pain to manage.
Just make sure you have good systems in place no matter what :)
Best of luck to you, and if you'd like some pro-forma templates or sample financials put together specifically for Airbnb type listings, feel free to message me. I'm just setting up a new website this weekend or I'd point you there directly to download.
Investor · Atlanta, GA · Member since 2014 · 41 posts · 20 votes
10y
Not sure what you mean by expected expenses, but I'm guessing 1594 is for property tax and mortgage.
Here are some points:
Did you factor in any applicable hotel tax San Antonio charges?
Did you factor in any expenses for bills? electric? internet? water? Airbnb folks will be expecting these things. Also you'll need property insurance which will be more than straight up rentals, guaranteed.
Did you factor in cleaning for each guests? If not, that will need to be factored.
Bottom line, I highly doubt you'll walk away with 1531 a month, unless you got a very premium location, and you can charge high season rates all year long. You need to factor in seasonality too.
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
10y
$125 sounds about right for a furnished house, maybe 2 or 3 bedrooms, bunk beds in one of the rooms, plates, silverware and in a good location. The problem is the days occupied. You will not get 25 days occupied. I have talked with a few people who have houses on the market and they get maybe a couple of weekends a month. Maybe you have some great marketing that will drive all kinds of people to your property, in that case I am sure you will get 25 days occupied.
Location is very important. If you are downtown, in the heart of the med center, or right by Six Flags, SeaWorld or UTSA it will work.
Talk to some people who have properties that are used as hotels. See what they are doing and how your property would compare. And YES there is 18% hotel tax that is collected by the city. Anything that is rented out by the day up to less than 30 days per month is considered a hotel room.
Real Estate Consultant · Los Angeles / México City · Member since 2015 · 34 posts · 30 votes
10y
Hello Eric -
As someone who has personally and directly been involved with over 700 Airbnb reservations in my own properties, and over 100 in other people's properties, I have played around with the models quite a bit and have found many successful (and not so successful) methods of operating a short term rental.
Let me start with this:
One mistake that freshman short term rental or Airbnb hosts make is gearing their rental towards tourism only... Often times there is a focus towards tourism, however, a growing number of people are using Airbnb for business.
Also, there has always been a not-so-visible marketplace in real estate that has been around since way before Airbnb... Traveling nurses and doctor's are some of my client's most prominent guests... and though they may list on Airbnb... I often recommend that they go down to the local hospital's HR department and say hi, drop off a flier, and ask them who handles the housing coordination for their researchers and providers.
Military bases (I believe there's a big AFB in SA, no?), tech and other industries, government contractors, universities, oil and gas companies, and many other institutions have constant need for short-term housing for their visiting staff. A way to get some more information to answer your question may be looking some of them up and even giving them a call...
Just like many other areas in real estate, this segment is all about relationships (at least if you really want to rock out with it).
Also, as a follow-up to @Prag Patel 's well-worded response (remember of course to talk to your own tax advisor), but be sure to avoid the mistake many new hosts make in lumping the tax in with the Airbnb rate... you won't be able to line item it out easily for your taxes.
The local taxes will be 10.75%. If you are able to get in with people at the military base, etc., and/or hospitals which need spots for nurses and doctors for more than 30 days, the tax issue will be moot. If mixing the stays, it could become more of a pain to manage.
Just make sure you have good systems in place no matter what :)
Best of luck to you, and if you'd like some pro-forma templates or sample financials put together specifically for Airbnb type listings, feel free to message me. I'm just setting up a new website this weekend or I'd point you there directly to download.
Real Estate Professional · Atlanta, GA · Member since 2015 · 279 posts · 109 votes
10y
Eric, if a professional property manager would be willing to pay you each $9186 per year (or more) to manage the home for you, would you be interested? They'd be liable for guests & most operational costs.
Eric, if a professional property manager would be willing to pay you each $9186 per year (or more) to manage the home for you, would you be interested? They'd be liable for guests & most operational costs.
Investor · San Antonio, TX · Member since 2015 · 17 posts · 3 votes
10y
Prag- that is all expenses, electric mortgage, insurance, water etc
We currently have an Airbnb that we purchased for$112k. He hours is a 2/1 900 sq feet. We charge $99 a night on weekend $109 plus a $35 cleaning fee. We are constantly booked 25 days or more a month and gross average is $3,000 a month. We don't have a weekend pave for 3 months and bookings for next year already.
Always have to turn down the traveling nurses because there is no avaibility.
We pay $2 a day to advertise on FB. Our listing is also near the top due to our proximity to downtown and our 5 star reviews.
@Patrick Diamond would you say that it takes a good deal of time and energy to keep the properties at 20 to 25 days occupied per month?? Marketing, reviews, cleaning crews, management, etc. It seems that lots of people think that all you do is take some pictures, post the property and the money just starts to come in.
Investor · San Antonio, TX · Member since 2015 · 17 posts · 3 votes
10y
Yeah after decorating we took pictures and went live. We got 5 bookings with in a couple hours. My wife and I wanted to stay there but we have been so booked we have not been able to spend the night there. I think it's easy, I clean most of the except when there is a same day turn over during the week and I'm at work. Yeah I would say it's that easy and money just started rolling in .
Real Estate Consultant · Los Angeles / México City · Member since 2015 · 34 posts · 30 votes
10y
@Rick Pozos - I find that it really depends on three key considerations:
1.) Physical proximity to the listing you'll be managing 2.) The amount of time you have available and how much you expect to pay yourself for your time 3.) The host's organization and entrepreneurial skills and experience
Of course, there are many other things to consider, but those three are a good place to start.
Beyond that, to answer your question, it really is rather individualized to the listing. Just as a standard tenancy building will have different attributes relating to its ideal tenant and the type of tenant that will find the building ideal, each Airbnb listing has characteristics which much be taken into account (many have already been listed in numerous posts above some by yourself even :) ).
I believe as the industry develops we will find more tools and templates come to surface to make it easier to determine individual profitability profiles and considerations for properties. While I tend to focus my work more on homeshare type listings, hospitality engineering and ergonomics, guest experience, etc., @Al Williamson has some programs geared towards landlords looking to make a transition, I recommend checking them out.
Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
10y
If you are booking 25+ days per month, and you don't have a weekend free for 3+ months, it is very likely your rates are too low and you are leaving money on the table. It's rare, even for hotels, to find situations where 10% vacancy maximizes revenue. Normally a higher rate, and a higher vacancy, will yield more.
Realtor · Brooklyn, NY · Member since 2016 · 42 posts · 10 votes
10y
@Eric Perez I own and manage an airbnb property myself - have been doing so for the past couple of years. If your numbers are correct, your ROI is roughly 68% annually. I don't know about you, but that's pretty darn good, if you ask me :)
Now, I do have a question for you, however. Why do you choose to advertise your listing on FB? Have you figured that the ROI is worth the cost of marketing?
Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
10y
@Eric Perez, WOW I am really impressed. I have heard from a couple of friends who do this, but obviously they are doing something wrong or not doing enough of the right things. They get some days, but did not really seem impressed with the whole air bnb deal. I guess I needed to take a bigger sample of air bnb users to find the ones who are doing well.
Congrats on your success!!! I am now your biggest fan. And also that of Air BnB. Thanks for sharing insight, @Patrick Diamond aka AirBnB dude.
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
10y
@Rick Pozos There is not much to say after @Patrick Diamond comments but I ALWAYS encourage landlords to compare their expected NET to the NET a traditional landlord would earn.
You might find that you bring in a huge gross but end up with the same net as a traditional operation. This can easily happen if you account for the time you spend managing and/or cleaning the unit.
Many Airbnb Landlords are fooling themselves with how much they actually earn.
With that being said - YES there is a way to earn more than a traditional landlord however, just as the Airbnb Dude said, you need good systems and the right mind set.
Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
10y
Interesting thread. What do you think expenses and net income would adjust to, if you fully outsourced management, cleaning, visitors communication, etc.? Have you considered any of the newer services that auto-price each day individually?
Investor · San Antonio, TX · Member since 2015 · 17 posts · 3 votes
10y
We do cleaning on the weekends and pay for cleaning in the weekdays. Our expense for cleaning for the month was $400. Cleaning is not bad, but the other stuff is actually fun. Getting to meet with people all over the world is not considered work for us. The Airbnb app suggests each day's price but we do not consider the recommendation because it is much lower then our daily rate.
We will eventually outsource everything and also wonder how much lower our net income will be
Rental Property Investor · La Quinta, CA · Member since 2014 · 1k+ posts · 779 votes
10y
I wouldn't recommend using Airbnb's rate, but rather a 3rd party service that let's you set your own base rate, and then adjusts that for peak times, seasonality, etc. Airbnb has an incentive to maximize the revenue for the system as a whole, not for your individual property, and their algorithm is widely regarded as sub-optimal.