Closing a chapter

Zacharias0
Level 10
Las Vegas, NV

Closing a chapter

This time last year I took the leap and decided to rent an additional property for one year to see if the concept of short term renting could scale in Las Vegas, before I went out and bought one. Well, happy to say the year is over and I'm closing that listing. It was a learning experience and  very time intensive. At the end of it all I came out wondering : how do hosts that have multiple properties make any money on them? Are these hosts just seeing money enter their account, but not factoring in the utilities, their time, and paying co-hosts and cleaners? I make more at my owner-occupied unit than I ever did at the one I'm closing.

 

Many will say 1 year is not a trend, but industry is very cyclical. The money may increase about 10% year over year, but that's only an additional $100-$200 a month. Not to mention that additional money is tied to me working more. The new listing didn't resonate as well as it should have. It was close to our main attractions so clearly location is not the all great indicator of success.

 

I'm not sad it's over, I'm happy it happened. I don't mind work, but the work has to make sense and the pay has to be there. Minus expenses I've walked away with $4k for the year of renting that space. Not too shabby, but I can make that in 3 months at my part time delivery job and I dont have to constantly worry about if someone is going to break something, always be in communication with an arriving guest or heaven forbid worry about the city telling me I'm doing something illegal.

 

It  feels like a weight has been lifted. This is a great learning lesson for many people who are thinking of moving into this market and considering buying a house for the exclusive purpose of renting it out short term. Be warned: add up the small things and time is an expense.

20 Replies 20
Annette33
Level 10
Prescott, AZ

@Zacharias0 , woohoo! glad your life is going to be easier again. you are one smart slot machine, how methodically you try out certain things, then make a decision. Way to go!

@Annette33thanks for the feedback. I was honestly surprised I wasn't knocking my goals out of the park with that unit.

Kelly149
Level 10
Austin, TX

@Zacharias0 I completely agree, I rent a space that is a part of our home (guesthouse). The extra $ is nice but it is a good lot of work. I'm happy with the on-site hosting but I can't see how str would be more beneficial than another type of part-time job or long-term tenant. Making $ on an asset I already own makes sense but I don't think I'd own property exclusively for str

 

 

@Zacharias0 at least you are looking for was to use platforms to your advantage.

I have a son who works for a big time reality company in NYC.

The dude is always working and if he is lucky three deals a year keeps him going.

Renting/buying in NYC is getting like getting vetted for a govt post.

And his name is Zack too.(the King of Corona)

@Kelly149@Clare0

@Melanie58@Branka-and-Silvia0

 

also, he never calls his dad anymore. 

 

@Kelly149 my listing is a guesthouse too.

I am moving a sidewalk this week and cutting an outside wall.

I had to close for a few days but I need the break at times.

any more than 75% booked I start to get stressed. 

I just enclosed all the property with a nice bamboo fence and new plants.

well have a profitable and happy season

 

(keep Austin weird)

 

 

 

@Bruce43 It's been yard work season here too. Dirt, pallets of grass, new herbs & plants. I'd love to do a bamboo section one day. Today was abb turnover day -- 6 out and 6 more in. The laundry is enough to require a break for sure!

 

And yes, Austin is still weird

Agreed. Whats I find interesting is that a lot of people are doing just that. I met on gentlemen who bought a really nice house here and wanted to just rent it out to short term tenants. Not only is that a lot of work involving a lot of risk and minimal payout but its an investment that requires daily hands on attention for the life of the mortgage and even thereafter. Kudos to those who make it work.

Branka-and-Silvia0
Level 10
Zagreb, Croatia

@Zacharias0

Of course you make more money on the property you live in then on the remote one. There are many additional cost but the worst is TIME. We can not wait for our guests at home and finish some other work at the time, we have to stay in the city, eat, drink outside and it is very time and money consuming especially where the average stay is just 2 days.

Not to mention car fuel, additional utility bills etc...

 

Melanie58
Level 10
Boise, ID

I have often wondered about how people host offsite locations and make a profit. There are several that have popped up in our town which is more of a drivethru/one night location. It's perfect for our lifestyle to do one in home because we have a large family and already do laundry and cleaning every day, and the mortgage is already a fixed cost in our budget.

 

I wonder if it would be effective to choose a location where people are likely to stay longer? I remember in my younger days hiking through Canyonlands and Arches for about a week and staying multiple nights at a multi-room dorm-style hostel with an onsite staff that was only $15 a night.  (But you shared the room with up to 10 people on bunk beds). No bedding was provided (you used a sleeping bag). I wonder if something like that, in a location where people tend to stay for longer, might be more profitable in the long run for someone considering Airbnb as an investment? You have to think most hotels built in the modern era are multi-story with many units for a reason - it helps to maximize the staffing costs. Traditional B&Bs were always an artisan experience, where people expected to pay more than they would at a hotel for the intimate setting and special service. I don't think Airbnbs have the same expectation unfortunately. And it is very hard to provide bare bones service for less cost than an Airbnb in someone's house, and also very hard to provide service that exceeds hotel standards at a cost that is only slightly higher than a ritzy hotel. But there has to be a niche market that is somewhere between the two.    

@Melanie58you hit the nail on the head.

Clare0
Level 10
Templeton, CA

@Zacharias0 Very insightful commentary and useful to anyone considering a short term stay rental.  My listing is my Mom's house located on my property (I have 20 acres) and after utilities, taxes (property and occupancy), maintenance, repairs, I only pocket 30% of my gross earnings.  Nope, no one is going to get rich doing this...only get a small income.  That said, it's better than a poke in the eye with a sharp stick, so to say.

@Zacharias0

 

I totally get where you are coming from. I also have a listing which is a part of the house I live in - just a private room+bath for a single guest, but hosting is doable for me mostly because I live on-site. Maybe if I had multiple listings in  the same building as where I lived and was a full time host with some part-time help - it could? might? be financially worth while but that's a whole different "professional full time host" route and worrying about whether short-term renters are checking in/out on time, doing damage, or sneaking extra people in without paying is not how I want to spend the majority of my time 🙂 

 

I agree that many people tend to forget that even their own "time" is "money".  And the cost of utilities and upkeep for an entirely separate house for anywhere from 2~6 people vs. difference from 1~2 people and 3~4 people are altogether a different story. Based on my own hosting experience with 1 guest at a time only, I've had a slight spike (barely noticeable) in utilities mostly from the extra laundry (towels & bedding) and a little bit more cleaning than I'd usually do without a guest but that's about it.

 

I agree that Airbnb will not make anyone rich. It's a little extra cash that's nice to have for minimal effort coming from a guest room that will sit empty most of the time anyway - but if it gets to be more trouble than it's worth, I don't think I'd want to continue to host because I can manage my mortgage and living expenses just fine without the Airbnb income. A good example is the coffee machine I got a couple months back. With the extra Airbnb income I decided to splurge and got a really pricey high-end one instead of the mid-range average priced, more popular model that most people tend to get for their homes.

Helga0
Level 10
Quimper, France

Hi @Zacharias0, interesting experience, thank you for sharing the outcome!

We lived like nomades between two places since 2001, at the beginning having friends stay, then artists, but renting to tourists since 2004. It was stressful to always prepare the place for new guests, when we left it, sometimes without even renting it, the organization needs are horrible, especially in a place with no professional help to be had. I started onsite hosting by chance, out of the necessity to stay in Paris for a while and still generate a bit of income. 

 

Over the last few years,it became to much work for one person and I cut back on expenses. No more guests in the South, no more chaos with late arrivals, no more bills for everything twice, phone, Internet, TV, repairs, replacements etc. 

Although both places were home and investments profited me too, it was a lot of money. 

This year, I still rented the whole apartment in Paris whilst on a long trip, but to repeat guests. In the future, I'll only rent half of it in my absence, the unit I share onsite with the guest, but not my room. 

Renting onsite is much more profitable, as I only allow short term, the monthly rate would not be much lower than the whole unit was for two. I have less utility costs, more laundry costs and more contact with guests, but at times of my choosing (I kick them out during the day). If they arrive early, we can talk, if they arrive late, I let them in and leave them alone, in the morning I see them only between 9 and 10, if they are still here. They enjoy their privacy and I savour mine. 

After two years - only two years or an eternity? - I learned to protect my daytime as this is the time supposed to bring in my real income. Airbnb is partly extramincome to pay for some luxury, but mostly to widen my world. Renting the full units was mostly business. 

I can understand your feeling of liberation - I had that too when I switched off the full unit listings. 

Good luck Zach, with your return to your beginnings! 

 

 

Paul154
Level 10
Seattle, WA

What an intelligent and admiral experiment.

You have exposed a great truth - the risk/reward ration is very high in real estate.

For me, Airbnb is great. It increases my profit - ONLY because I am doing some of the work.

If I had it 100% managed, the reward would be small and not enough to cover the huge risks. 

As it is, my housekeeper makes more cash than I (but she does the work).

 

I have been in real estate forever. I put alot of money and time into building my "estate" , only to see it wiped out in the Recession of 2008. Prior to and During that time, my long-term rents were not high enough to cover my costs. I was devestated.

Airbnb allows me to have higher rents, prevents long downtimes and huge pent-up maintainence in between long-term tenants .

And for me, it's funner.

Zacharias, I have 100% confidence that you are going to find the "sweet place" for you in real estate.

Good luck