Posted about 1 month ago

Six Month AirBnB vs HomeAway Income Only

While I have been renting long term for the better part of a zillion years, I recently acquired a house in the right area, at the right price, and with the right financing for short term rentals.

Some of my assumptions were incorrect.  For instance, my clientele.  I expected to have a number of international guests; my most prevalent guest has been a set of grandparents who meet up with their adult children and a number of grandchildren.  Most of my guests have been visitors from another part of Florida.  I started to cater towards those grandkids with bedding and toys, which appeal to children.

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Now at the six month period, I am doing a comparison between the income received from this one property, a three bedroom 2 bath single family house, on the barrier island of Central Florida.

AirBnb vs HomeAway or VRBO.  I have seller financing on this property, which is a low-payment interest-only mortgage.  That has been a fixed amount.  I am also paying for water, internet, electrical and lawn maintenance. 

I started out doing the cleaning (with my kids, who are learning how to do the cleaning and make beds alongside me), so that I could determine systems that I want to have used.  And then I hired a couple of local women to do the cleaning regularly.  When my kids have a desire for some spending money, I give them the option to do a day of cleaning.

Other supplemental applications: AirDNA to assess the areas in which I hope to buy, Beyond Pricing for dynamic pricing.

June  AB  $1113  HA  $0

July  AB  $1870  HA $1568

Aug  AB  $1410  HA  $2012

Sep  AB  $1740  HA  $0

Oct  AB  $0         HA  $2480

TOTALS: AB $ 7847 and HA $6061

Nov  AB $1714 (expected) HA $540 (expected)

BeyondPricing says my health score on AirBnb is 90, and reports 58% occupancy over 90 days

Beyond Pricing says my health score of HomeAway is 84, and reports 47% occupancy over 90 days.

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Are you thinking about starting a STR? Have any questions about how I got started?

If you have more experience with the short term or vacation rental market, and want to give me some guidance, please leave a comment below.


Comments (7)

  1. Yes, we do have a balloon, and because the house is and will continue to be held in an LLC, I cannot use conventional Fannie Mae/Freddie Mac financing.  


  2. Yes, @Dillon Kenniston, there is a balloon due. Since the title is in an LLC, I must get portfolio or commercial financing. I’ve used LendingOne and Visio for this purpose in the past, and will use similar in the future. 


  3. Interesting. I’m on the gulf coast of Florida and Airbnb outperforms VRBO 10:1 for me. I wonder why that is? 

    I blog about my vacation rental at thecurioushost.com - if you’d be interested in doing a guest post on this topic I’d love to have you! 

    Also, how useful have you found Beyond Pricing?

    Thanks


    1. @Owen Franks, I have been happy with Beyond Pricing.  It does the job, adjusting the price across HomeAway and AirBnb based upon its algorithm and takes a percent of the bookings as its fee.  Because I get snowbirds booking a year out, I could never stay on top of hotel pricing, or even comparable rentals.  I do like HomeAway's pricing better than AirBnb because the former keeps the prices higher, while the latter is a "race to the bottom" which means a fine price for them, but a lot of cheaper stays for me.


  4. Hi Kerry, thanks for sharing! One question:

    "I have seller financing on this property, which is a low-payment interest-only mortgage. That has been a fixed amount."

    Can you share about the terms you received on this loan and how you negotiated it? I'm interested in doing something like this, but am curious about financing, since I assume this isn't your primary (or secondary) residence? 

    Thanks again!


    1. @Dillon Kenniston, I spoke with the seller directly and found him off a FSBO sign.  He told me that he was tired of being a landlord and that he'd just sold another similar property.  I knew that he was going to have capital gains taxes on that first house, and suggested he carry back the loan for me, instead of getting cashed out.  He talked with his lawyer, who agreed. 

      He wanted a down payment, which I had.  He carried back $300,000 at 6% interest only, which is $1500 a month.  The going long term rent is $2200.  I figured that I could rent it out long term if this short term didn't work.  The *most *important part of this is that the local municipality told me that STRs are allowed in this area.

      I set up an LLC, we closed at a title company with paperwork drafted by his lawyer.  I got an EIN number for the LLC, and applied for a Chase Ink business credit card for that LLC, and bought the furniture, the sheets and towels (at Sam's Club and Target), plus internet, water, electrical and yard work.  All of that goes on the card.  I set up a business checking account at TD Bank, and pay off the card with that account. 


      1. Hey @Kerry Baird, thanks for the response! Makes a lot of sense. Does that mean you have a balloon payment coming due after a certain number of years? (And when the balance is called due, is the plan to use a conventional loan to pay off the balance?)