I bought an apartment in 2012 specifically to rent out on Airbnb. I’ve been managing it remotely for the past year. Here's everything I've learned so far, as well as some revenue numbers.
Each listing on Airbnb has a publicly visible calendar that shows which nights are booked and which nights are available. Using this tool makes it easy to figure out how much money hosts bring in—an invaluable resource when researching where to buy.
See also: How I Flew Around the World in Business Class for $1,340
Simply find a listing located in an area where you’re thinking about buying and click on the calendar tab. Then count how many red squares there are in a given month:
Red = Booked. Green = Available. Image: Jon Wheatley
There are a lot of places in the United States where housing prices are still very cheap. It’s possible to find a nice apartment in a major city for less than $50,000.
I found a place in Las Vegas for $40,000. It’s 750 square feet with one bedroom and one bathroom. There’s a shared pool with a hot tub and a tennis court, perfect for the weary traveler who wants to relax.
This is what the apartment looked like when Wheatley purchased it. Image: Jon Wheatley
I spent roughly $10,000 to update the apartment, including all furniture, an Apple TV, new hardwood flooring and fresh paint in all the rooms.
Shortly before installing the hardwood flooring. Image: Jon Wheatley
Unfortunately, there’s no IKEA in Las Vegas, so I spent a lot of time just waiting for stuff I ordered online to be delivered. If you’re planning on doing something like this remotely, I highly recommend checking delivery time or local stores before you make the trip to furnish the place. Order in advance where possible.
It took roughly three weeks to get the apartment ready for guests, but this could have been optimized.
This was Wheatley's bed, sofa and table for three weeks while readying the apartment for renters. Image: Jon Wheatley
Once your place is ready, it’s time to set up your listing. Guests are understandably reluctant to stay at a place that has little or no reviews, so I recommend lowering your nightly rate for a few weeks so you can build up credentials. Once you have a few positive reviews under your belt, you can increase the price.
You should also take advantage of Airbnb’s free professional photography service. They’ll send a professional photographer to your listing to take nice pictures of your place — no fee required.
It’s amazing how big a difference having professional photos of your space can make. A few months ago, I ran an informal experiment in which I listed my apartment for rent on Craigslist. They were both the same price, in the same area. One listing had photos taken with a high-quality DSLR and wide-angle lens; the other post had poorly lit pictures taken with my iPhone. I received 10 times more emails for the listing with the better photos.
Cost of apartment: $40,000
Cost of redecorating and furnishings: $10,000
Revenue
November 2012 through November 2013: $19,613
Average monthly revenue: $1,634
Rough monthly profit: $1,134 (after cleaning, bills and other expenses)
Yearly profit: $13,608
These numbers would be a little higher, but I’ve stayed at the apartment myself for a few weeks and also let friends stay for free. By these rough numbers, it should take a little under four years to completely pay off the apartment.
1. Find a great property manager or cleaner. Without having a property manager or someone who cleans the apartment, doing this remotely would be impossible. I found a great local cleaner on Craigslist who charges a flat fee of $200 per month, which covers unlimited cleanings. She also now manages the Airbnb listing for me, replying to all inquiries and is the point of contact for guests.
2. Be smart about check-in and check-out times. It’s not uncommon for new guests to check in the same day other guests check out. You need to make sure your cleaning person has enough time to prepare everything before the next guest arrives. I have a noon check-out time and a 3 p.m. check-in time.
3. Buy multiple sets of everything. I have about three or four sets of sheets and towels. This way the cleaner doesn’t need to wash everything in the three hours between guest check in and check out. They can simply take all the dirty sheets and towels home to wash.
4. Buy a Nest. Nest has a great “auto away” feature that activates when there is no one in the room for a predetermined amount of time. This turns off all heating and cooling so you or your guests don't have to worry about it. The cost of a Nest pays for itself in a couple of months with this feature alone. You can also log in to your Nest account to see if a guest has arrived safely.
5. Buy a Lockitron. The biggest challenge with managing a listing remotely is handling the key transfer. Guests' flights are often delayed, or they just get in really late. Having someone meet them at the apartment can turn into a logistical nightmare very quickly. Lockitron allows you to invite guests to your lock for a specified amount of time, so they can unlock the door with their phone.
6. Bad reviews can kill you. I live in constant fear of getting a bad review. Reviews are listed prominently on your listing page on Airbnb, so every potential new guest can read them before booking. It also means I don’t ever leave guests bad reviews in case they retaliate and leave me a bad review in turn. I don’t know how Airbnb can fix this, but the current review system is definitely broken.
7. This isn’t “passive” income. A large percentage of guests are happy to arrive, stay in your place and leave before their check-out time, all without any contact. Often, though, guests will have questions, or issues that need your attention arise. So, you have to always be available to jump on a call and help them out.
This article was republished with permission. It originally appeared on NeedWant.com.
Image: Jon Wheatley