I’ve been operating an Airbnb for 2 years. At first, I lived in my apartment and rented it out part time and just recently, moved out and transitioned to full time. This is the 1st of a 5 part series on stories and tips for those who are interested in seeing the dirty (not literally) behind the scenes of an Airbnb host, or if you’re interested in becoming a host yourself.
In 2015, I bought a very cozy (that’s small in real estate lingo) apartment in a 1950’s pink concrete building next to downtown. It was my first venture into real estate after some major waffling the past few years.
This purchase was 110% an unemotional decision. The “T” of my ESTJ personality played a huge role in determining what to buy and I wanted to be as rational and value-driven as possible.
My criteria for this unit was 3-fold:
- It had to be under $275k. I had heard too many horror stories of people buying too much house and struggling to make mortgage payments after an unforeseen circumstance, like getting laid off. My adversity to risk meant no overstretching at all.
- It had to be an investment. Meaning, this apartment needed to make money for me in the very near future. I didn’t want to rely on just hopes and dreams of selling later and banking off market appreciation.
- It had to fit me. I was 26, living a car-less lifestyle and had been living in a hip, gentrified neighborhood for the past couple of years. Because I would get a personal mortgage, I’d live in my new home for at least the next year and didn’t want to be miserable.
This all meant that I was looking at lower priced studios/one bedrooms (first criteria) in neighborhoods with high walk scores (third criteria). The second criteria was fulfilled by finding a place that had the highest rent to price ratio possible. My plan was to live in this condo for at least a year and then lease it out to a long term tenant. Getting a place with the highest rent potential to purchase price satisfied my value-driven needs.
Then, my real estate agent told me about buildings near downtown where the HOA (Homeowner’s Association) allowed short term rentals. At first, I just filed away the information. The thought of letting strangers stay in my home, especially while I was still living in it, creeped me out a bit. Specifically, I thought about nosy guests going through my closet or vacationing couples having sex on my kitchen counter. However, after doing the math (which I’ll tell you about in a future post), the money won me over. Short term rentals would supplement my mortgage while I was still living there and would give the best rent:price ratio when I moved out.
My deepest fear.
You might be wondering how I would rent out a studio/one bedroom unit to Airbnb guests and live there at the same time. No, I wasn’t thinking of sharing the space with strangers. My plan was to rent it out during the weekends and vacate the apartment. I would sleepover at my boyfriend’s, where I spent every weekend anyway, or boomerang back to my parents, who were still not used to being empty nesters and always nagged me to come home.
After touring only 5 places with my realtor, a listing popped up in one of the HOA-approved buildings. It was an unstaged, not so tidy one bedroom 450 square feet apartment located next to the Convention Center and downtown with relatively new appliances. Sure, the salmon pink concrete exterior of the building left a lot to be desired (re: it was an eyesore) but the interior had been renovated. That same day, we went to see it and I put in an offer. After a few days of back and forth, it was mine!
These were some of the pictures from the listing. Definitely left a lot to be desired, to say the least.
Now that you know about my decision making process, tell me about yours! What were your criteria in purchasing a home/real estate investment? Are you interested in hosting short term rentals? Are you already hosting on platforms like Airbnb and VRBO?
I’ll continue this series on Airbnb in the coming weeks, including divulging tips on setting up a home for short-term rentals, how to manage it, and financial details. Check back or subscribe below to get updates directly to your inbox!