After reading a post from Leon Yang and its comments a few days ago, I wanted to pass along some information that may appeal to those interested in this style of investing and to assure you that this does not only work in resort areas. My family and I have been on both sides of the deal for years from the big three firms: Airbnb, VRBO and FlipKey. We are a family of 5 that is still growing, so hotels are not ideal. We have used services both domestically and internationally, but our most frequent use has been on the hosting side domestically.
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Getting Started With FlipKey, Airbnb and VRBO
After traveling over state lines regularly, we decided to buy two separate properties, later adding a third, to spend our year. Currently, we spend about seven months at one location and the remainder at another. The time we do not occupy one parcel, we have it listed on FlipKey and Airbnb. From the hosting side, we pulled out of VRBO since the annual fee was $350, and we were not noticing any increase in attention to our properties beyond what we were already getting.
The three states we operate in are Illinois, Arkansas and North Carolina. Of these three the property in Chicago is the most tourist-oriented, but the others do well during different times of the year. As an example, Chicago is a two unit building in whose basement we built a three bedroom unit a little over a year ago (since it was adequately above ground). It is not in a tourist area and is on the North side in a suburban-like community. I rented the upper two floors to tenants under annual leases and have the ground listed on FlipKey and AIRBNB at times we are not present.
Making Multiple Units Profitable
As of the last time we left the property, about a month ago, we have had the unit rented every weekend and are already booked for the next three weekends. We would have never thought we would get this level of attention since we are not in a tourist area, but have been pleasantly surprised. The weekend takeaway after Airbnb fees is just over $400, and the cleaning fee is about $75, which leaves approximately $325 a weekend. Four weeks like this nearly covers the monthly mortgage, insurance, taxes and utility bills; and this is not accounting for the random weekday stays that we are booking and of course the rents from upstairs.
This permits us to have multiple places to call home while not having to pay for all of the mortgages out of pocket. Of course this won’t go on forever since we will return in a few months and flip our listings in order to list the Arkansas property while staying in the Chicago property. Arkansas will not receive nearly the same amount of attention, but the costs of that property are significantly less, so it works out well enough.
Now For The Bad News
Certain cities do have registration rules that can be an issue for you even if you didn’t know they existed. For example, Chicago requires that non-owner occupied units must be licensed at $500. Luckily, I have found no similar laws in my other areas, but it is something that you need to be aware of. Additionally, some people may not like that others are sleeping in their bed, but I have reasoned that my places with all of my mattress/pillow protectors and deep cleans after every guest is still cleaner than the alternative of a hotel.
After three years of using these services, I do not have any complaints. While I have only met a handful of the guests personally, they have always left the property in good condition and have not solicited any complaints from neighbors or other tenants. My final piece of advice is that an alarm system workable through an app was paramount for us. It allowed us to monitor when people arrive, leave, when they leave water running and it overflows or even when they don’t leave the temperature on the correct setting. Even though we have not had anything bad come through, it is good to know that at least the basics are monitored.
Have you rented your property through TurnKey, Airbnb or VRBO? What advice would you have for first timers?
Be sure to leave your comments below!