I have been an Airbnb host since 2010, when I was getting out of debt and rented my futon for $20 a night. Later, my boyfriend (now husband) rented out our London flat on Airbnb whenever we traveled to make extra income. In 2016 I found out I was pregnant with my second child and knew unpaid maternity leave would be upon me within nine months. I bought a property with the express purpose of turning it into an Airbnb. It turned into a cash cow, and I quit my job as a tech lawyer for good (or at least for now).
How much money to quit your job?
At its height (the year the location my Airbnb is in was called Restaurant City of the Year), my Airbnb grossed $40k a year for the six months a year it rented. Due to local regulations, I could not rent the unit for more than six months on a short-term basis. Along with two other long-term rental properties, it enabled me to FIRE (financial independence retire early) in December 2019. Managing properties, being the primary caregiver for two young children, and being published as a freelance writer, is far from retirement. To rephrase, it was retirement from my previous 9-5.
The numbers of a successful Airbnb
I bought the apartment for $115k cash in Portland, Maine, USA. Portland, Maine is my hometown, and the 370 sq ft unit is right in the middle of the neighborhood where I grew up. I can even see the hospital where I was born from the window of the apartment. I bought the unit on November 21, 2016, and we welcomed our first Airbnb guest on November 30, 2016.
To begin with, we rented it at $40 a night and made a loss. At the height of autumn 2018, we rented it for $350 a night. When it netted $40k, I decided to quit my job. Making a 34% net on an investment is an incredible return, and I had stashed enough away in case it slowed down.
Furnish your Airbnb to get it up and running fast
Back to the beginning of setting up an Airbnb. The sooner you furnish it, the sooner you can rent it out. We asked the previous owner if we could buy any of her furniture. She sold us a rug, chair, small table, and chairs. We just needed to get a bed and a few other items. As the unit is small – only 375 sq ft and setting up the gas and electric was fast. Getting (fast!) internet always takes the longest to install and is the most essential, so sometimes you can arrange for this ahead of your closing. At first, we paid a neighbor for access to her wifi, and then once we had our own, changed our arrangement. Having wifi is imperative for any successful Airbnb. We repainted and furnished it in two days and had everything set up within four days.
Know thy local Airbnb laws
My hometown, Portland, Maine changed their Airbnb laws a year and a half after I bought it. Luckily I was able to keep up with legislation and get my unit licensed but it shut many owners down. As an individual owning an Airbnb, it can be a fleeting game as neighbors, local laws, or your team can fluctuate and change whether your investment is better off as an Airbnb or as a long-term rental.
Hire your team (and pay them well)
I spend half my year in Maine, but the time I am not there, I needed a great team to run it. I ran the site, listing, documentation, and arranged for as much as possible from away. My cousin acted as an on-site property manager who was especially important in the early days when we had some of the worst guests before we raised our prices. I had two local cleaners that I paid well above the cleaning fee. It meant that they put in that extra care to the place. They loved the unit as much as I did and thought of it more like a hotel. They were my eyes and ears and made my life so much easier as a person away six months of the year.
Take a loss on your first 10 rentals
My goal was to make Superhost and to do it fast. It takes ten guest ratings at 5.0 to make it (along with other criteria), so I did everything within my power to make sure that my first ten rentals went well. If one asked for an extra reading lamp (they did!), we bought one. If they thought the parking lot was too far away, we paid a neighbor for a closer space. For their $40 a night, they got a 5-star resort level of service. We didn’t make any profit in the first two months, but once we had Superhost status, things started to change. Our goal was to have it in time for summer bookings, which we did.
This article is just the beginning of how you go from saving $115k to turning it into an income that can enable you to quit your job and can FIRE, stay home with your children or become a digital nomad. Once you start examining your strengths and whether Airbnb can be for, you may be surprised. I find many of the advantages come naturally to people (ie mothers) who already keep a home.
Featured photo courtesy of Scott Miele/Triplepassport
This post is my genuine experience as an Airbnb host and not approved by Airbnb. The referral links are from my personal Airbnb account.