How to Generate Over $5,000 Per Month With One Airbnb Property

Would you believe a $300,000 home could generate $5,000 a month in gross revenue? And that much of the work of maintaining your guest home can be automated?

I was intrigued when Boris from Build Your BNB reached out to me offering to write up a detailed account of he and his wife’s experiences as Airbnb hosts.

I’m a big fan of the platform. I’m writing this from an Airbnb rental in Spain in the midst of spending 4 out of 5 months in Airbnb homes throughout Mexico and Spain.

If you’re new to the platform, you can save up to $55 with $40 off your first stay and $15 off your first Airbnb experience with this referral link.

I’ve thought about ways we could become hosts ourselves, but I haven’t yet pulled the trigger on that. If and when I do, I will refer back to this post and to the other resources put together by my friends Dr. David Draghinas, Kevin Ha, and my new friends Susan and Boris.

 

How to Generate Over $5,000 Per Month With One Airbnb Property

 

For people who are thinking about financial independence and have considered investing into real estate, there’s a specific niche option should be on your radar, as it’s been growing by leaps and bounds and can outperform virtually any traditional real estate investment. Specifically, we’re referring to short-term rentals.

In this article, we want to talk about how we’ve gone from zero to hosting nearly 10,000 guests per year and becoming financially independent primarily through our properties. We’ll talk about how short-term rentals can actually be more stable, secure, and reliable than long-term rentals and how we automate most of the processes so that it doesn’t become a second full-time job for us.

 

living room in this particular airbnb property

 

How We Got Started with Airbnb.

 

My wife, Susan, and I (Boris) are a professional couple living and working in the Northeast. I run a small e-commerce company and she works as a marketing manager at a large corporate company.

We’ve been using Airbnb for many years ourselves — whenever we’d travel to a new destination, we’d typically check to see what options are available through that platform first.

It has led to some spectacular experiences as well — we stayed at a cozy houseboat in Seattle, a treehouse in Latvia, and a colonial house filled with history in the center of Shanghai – not to mention dozens upon dozens of regular apartments and bedrooms.

Inevitably, we’d come back home and think about becoming hosts ourselves, but were always concerned about having the ability to manage it and unsure whether it would be worth the hassle. Looking back, it was also that we didn’t really see the big opportunity in it – beyond just making a little bit extra on the side.

In 2017, I purchased my first apartment and we decided that it was as good of a time as any to try it out. We jumped into it and started by renting out the bedrooms. The revenues that we were able to generate from a few rented bedrooms exceeded all of our expectations.

Fast forward three years later and we’ve purchased a number of properties in cities around the U.S. that we now run as short-term rentals. Between them all, we’re on track to host 10,000 guests per year, while doing it entirely remotely – living hundreds and sometimes thousands of miles away from our cities.

For us, doing short-term rentals has been a much stronger strategy towards building passive income and wealth than long-term rentals due to a much higher return on investment.

In this piece, we want to break down our exact strategy and numbers of acquiring and setting up a property. We’ll do it with a specific example of one of our properties that we acquired in 2018 that grosses us about $62,000 per year (or $5,000+/mo).

 

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Our typical Airbnb investment:

 

Everybody will typically have their own strategy for what properties they consider to be the right fit, so we want to share what a typical Airbnb property investment looks like for us.

It’s usually a single family or a duplex, has four or more bedrooms, and it’s in an urban environment – although never right downtown where the prices tend to be too expensive for us.

This particular property, we purchased for $300,000 with 20% down. It’s a single family house in the Twin Cities with 4 bedrooms, 2 bathrooms, in a good condition and almost ready to move in.

It’s not in the downtown area, but is fairly close to the central business district, as well as the airport, university and shopping. You can get pretty much anywhere within a 15 minute drive or so, which is good because it widens the demographics of the guests we can cater to.

Plus, the neighborhood itself is very walkable and pleasant – with some great restaurants, coffee shops and bars within a few minutes away.

 

 

BuildYourBnB3
the kitchen

 

Our setup costs on that property were as follows:

 

Below is a breakdown of what we spent to acquire and setup that property:

 

  • $8,200 into renovations – interior paint job, new appliances, some other minor things around the house.
  • $13,000 to furnish it from top to bottom – this is in line with most of our properties. To do it nicely while on a budget, we’ll typically spend about $12-$14K on furnishing. You can do it for less or for more.
  • $7,000 in closing, licensing and setup costs – this is also fairly in line with what we’d spend on a typical property.

 

Combined with a $60,000 (20%) downpayment, we were all in for about $88,000 to buy the property, renovate it, furnish it and get it ready for launch.

 

Revenue breakdown:

 

Now, let’s take a look at what a property like this actually generates in revenue.

We launched in January which is the slow season, so it took a little while for our numbers to ramp up. However, in our first full full year, we generated about $62,619 in gross revenue with about 90%+ occupancy rate.

Our revenues were as follows:

 

January: $3,335

February: $3,777

March: $4,454

April: $4,892

May: $3,955 *

June: $5,429

July: $8,171

August: $7,953

September: $4,954

October: $5,610

November: $4,888

December: $5,200

*In May, we actually underpriced ourselves by accident, which resulted in lower-than-could-have-been revenues for that month.

January and February traditionally are slower, as fewer people travel to the region – either for work or for leisure. Revenues started to pick up in March and went strong through December.

The busy months in the late Spring through the end of Summer more than make up for the slow months during the Winter.

 

What we charge for this Airbnb property:

 

We typically charge anywhere from $200 to $400 per night for the full house rentals (with 2-3 night minimums) and about $30-50/night for the private bedroom rentals (with no minimums).

Full house reservations tend to book up several months in advance, whereas private bedrooms typically sell out within 7-30 days prior to check-in. This makes sense, as larger groups typically need to plan further in advance and individual travelers tend to decide things more last minute.

We expect that our rates will increase by another 5%-10% in the second year, as we have the benefit of having more positive reviews, as well as a better understanding of this market.

We’ve also started to be more aggressive on weekend full house rentals which are very profitable, so we’ll dedicate more attention to that. And, across the board, this will allow us to raise rates a bit, focus more on the premium stays (full house rentals), and even optimize occupancy and other fees.

Of course, the expenses are quite different on a short-term rental than on a long-term rental. For example, we spend between $900 to 1,000 per month on a housekeeper alone that handles the cleaning between guests. We’re also responsible for all of the utilities and have to purchase regular supplies. These are the things that are usually the tenants’ responsibility when you rent long-term.

That said, after all of the expenses – including the mortgage, utilities, housekeeper / cleaning costs, supplies, and maintenance – our end cashflow is around $22,000 per year or around 25% cash-on-cash return ($88,000 that we invested in it).

Lastly, paradoxically, we also find that the house remains in a better condition with short-term rentals than with longer-term ones.

In part because we have our housekeeper who is there 4-5 times per week, so we can keep things clean and catch any maintenance issues immediately. And in part because guests who stay 2-3 nights usually just come home to rest and sleep, so there’s very little wear-and-tear on the rooms and the common areas.

 

 

Digging deeper – what makes for a successful Airbnb investment?

 

We firmly believe that there is no single right way to do an Airbnb, as it means different things to different people. However, if you do approach it from the perspective of a financial investment and want to generate maximum return without creating a 2nd full time job for yourself, these are the steps that we personally follow:

 

Step 1: Finding The Right Property

 

What’s interesting about Airbnb is that it doesn’t have to be done in a major city nor does it have to be in the downtown area to be successful. In fact, some of the best results are oftentimes found in smaller cities and areas where the housing prices are still reasonable.

When searching for a new property, there are a few things we always take into account:

 

  • Check legal requirements. Everything starts with this – you want to ensure that you can legally operate your short-term rental, so check the regulations and ordinances in your city first.
  • The more bedrooms the better. We typically focus on properties that have 4 or more bedrooms because it will provide the highest return in most (although not all) markets.
  • Stand alone home is better than a condo. There are multiple reasons for that – it’s easier to automate check ins and check outs, there are fewer potential issues with neighbors, and it gives you the most control.

 

We also typically don’t do properties that require extensive work because oftentimes they are not in the city that we live in. As such, the amount of time that we have to spend doing a renovation is a significant factor for us as well.

We’d rather pay a premium but be able to launch within a few weeks than have to spend a few months overseeing a renovation.This is quite a different approach from investors who are focusing on the fix-and-flip style properties.

 

1 of 4 bedrooms

 

Step 2: Deciding on a Hosting Strategy

 

Every market is different and the property should cater to the types of visitors that come there. We generally prefer to focus on urban markets with a wide mix of industry, academia and travel.

Other people will find success in more traditional vacation markets or other areas, so it’s quite subjective. But for us, this is what works.

More specifically, our approach to short-term rentals essentially focuses on renting out the full house as a single listing on the weekends and then renting out the bedrooms – individually – during the week.

 

The logic is simple:

 

  • On the weekends, there are more groups traveling together and they are willing to pay a premium for accommodations that allow them to stay together.
  • On the weekdays, on the other hand, there are many more individuals and couples that are passing through a city – be it for work, travel, or other reasons. So it’s much easier to rent out rooms individually than a 4-bedroom unit as a whole.
  • Contrary to many people’s expectations, we generally find that at the right price point, people don’t mind the fact that the common areas and bathrooms are shared. After all, they are paying a fraction of what they’d pay at a hotel.
  • From the revenue perspective, this will help keep occupancy high and will ensure that the property is not sitting empty during the week. We generally see occupancy rates of 90%+ across all of our properties when we follow this approach.

 

 

Step 3: Setup & Decoration

 

Once the property is found and acquired, the next step is to get it setup and launched. This includes handling any needed renovations, doing the decoration, and finding a local housekeeper and handyman that will help run the day-to-day.

If it’s local to you, the process is quite easy. However, if it’s not, you’ll need to figure out how to optimize the process.

The specific steps that you need to figure out is:

 

  • How to decorate and furnish the house.
  • How to apply for any necessary short-term rental permits.
  • How to find, train and hire a long-term housekeeper.

 

The last point is typically the most challenging part because it’s a bit of an art as much of a science. We typically post a few ads on Craigslist, speak to about 6-8 people and invite 3-4 of them for a trial day to our property. This allows us to see how they work, whether they show up when they say they do, and so on.

For us, as well, we have a housekeeper and a handyman team in every city where we operate. Once the right people are found, we usually continue to work for them for years and after a while, the entire process is quite smooth.

 

Step 4: Automation

 

This is actually the most important point and what separates an amateur from a professional host. If you simply launch and proceed to handle everything manually, it can quickly become overwhelming to manage it – especially if you’re running multiple properties.

In fact, it’s almost impossible to really scale it if you’re doing this all on your own.

Fortunately, there are now a number of tools on the market that can automate 95% of your work in a really simple and elegant fashion.

 

  • Use Smartbnb.io for Guest Communication – this tool allows you to automate all of the check-in and check-out communication for your guests. Combined with a smart keyless lock, your guests can come and go without you ever needing to manually tell them how. Moreover, Smartbnb can even detect questions about parking, early check-in, and so on – and send a pre-determined response to the guests, so that you don’t need to. It handles hundreds of messages per week for us and is worth its weight in gold.
  • Use PriceLabs.co for Price Management – this tool monitors the demand, competition, and myriad of other factors and automatically adjusts pricing for every single one of your listings every day. It gives you the same sophisticated, algorithmic approach that hotels benefit from when they adjust their pricing to ensure maximum revenue.

 

At the heart of it all, this is probably the single most important thing we can tell you. If you’re running Airbnb, automate all of the routine processes, so it doesn’t become a 2nd full time job for you to manage it.

 

Taking this to scale

 

What we love the most about short-term rentals is the fact how scalable it is and how quickly you get to see the results.

We’ve always loved the idea of real estate, but generating a few hundred dollars per month on a property on a side just seemed a bit too slow to really make a dent in our overall financial picture.

With short-term rentals, on the other hand, you get all of the traditional benefits of real estate investing, as well as a very respectable cashflow even from fairly small properties.

We’re now seeing that cashflow from having several properties can typically yield enough in profit to put down a downpayment on a new property every 9-12 months thus further accelerating the pace that you can build your portfolio.

 

About Boris & Susan

 

Boris & Susan are experienced Airbnb hosts and real estate investors hosting close to 10,000 guests per year around the country and managing their properties remotely while working full-time.

They write more about their experience, as well as help other people get launch, scale and automate their short-term rental properties at www.BuildYourBnb.com.

Drop by to say hello or email them at [email protected] with any questions you may have!

 


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Any Airbnb success or horror stories to share? Do you use Airbnb as a guest? Or as a host? Why or why not?

13 thoughts on “How to Generate Over $5,000 Per Month With One Airbnb Property”

  1. Great article! Thanks for sharing.
    Do you have someone that the guests can call for maintenance emergencies on nights and weekends?

    Reply
    • Hi Ryan!

      Absolutely. Since we have multiple properties now, the way we structure it is as follows:

      Our first line of defense is automation. We try to predict and automate as many scenarios and situations as possible through automatic replies using Smartbnb.

      Our second line of defense is this. We have an assistant (who’s actually based in Central America) who manages all of the guest inquiries during the day and he’s also on-call during off-hours. If there’s a situation, he receives the message and either handles it himself or relays it to the local housekeeper or handyman who then address it.

      If all of this fails – and only then – this would go to us and we’d handle it.

      As we keep scaling, if necessary, we can bring on an additional part-time virtual assistant so we have redundancy. But for the time, the system works quite well as is.

      In reality, very few issues are true emergencies and there are very few issues who fall outside of the scope of a couple of common scenarios (e.g. guest can’t open the door or guest checked into the wrong room).

      Hope this helps!

      Boris
      BuildYourBnb.com

      Reply
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  3. Great write up. This is in line with returns we’ve experienced on our properties.

    On your weekday vs weekend strategy, are you creating separate listings for each bedroom then a “whole home” listing and then syncing those calendars?

    I think it’s smart to focus on larger properties. As massive companies like Sonder & Lyric move in flooding the market with apt units, you must figure out how to differentiate yourself in the market.

    Reply
    • Hi David,

      Thanks a lot for your feedback.

      Yes, we do have multiple listings – 1 for each bedroom and 1 for the full house.

      Airbnb has a nifty feature that allows you to sync “nested” calendars. So if someone books a private bedroom, no one can book the full house. And visa versa. This makes it very easy to manage.

      For some properties, we also use VRBO and Booking.com. In that case, we use another 3rd party tool to cross-manage the calendars between all of the channels as well.

      Hope this helps!

      Boris
      BuildYourBnb.com

      Reply
  4. It certainly seems like you can make more money renting out properties on Airbnb but the Dude is very leery about the approach because there is never any such thing as a free lunch. In exchange for the potential for increased profit, you have to put up with a number of additional risks.

    (1.) Your “bad tenant” risk increases dramatically. If you figure that 1 in every X renters is going to be a jerk who trashes the place, you’re a lot more likely to get your place trashed using Airbnb (~500 people in your house per year) than a traditional lease (maybe 5 people plus guests). Further to this, for regular tenants, your house is their home, and most of them at least do their best to treat it well. For Airbnb renters, your house is their party pad, and plenty of them will be perfectly content to break things or barf in the sink.

    (2.) Some cities such as San Francisco are actively trying to shut down Airbnb because short-term leasing platforms allow property owners to circumvent rent-control laws.

    (3.) Your vacancy risk may or may not be higher depending on where you live. In a city like NYC you’re probably fine; I don’t know that I’d want to rely on Airbnb for income if I lived in Peoria. Unfortunately, the best cities for reducing vacancy risk (NYC, SF, etc.) are the ones most keen on rooting out Airbnb.

    (4.) Finally, it just requires more work and attention.

    The Dude has no objection to using Airbnb to make money from properties you already own while they happen to be vacant, but would never buy a property just to rent it on Airbnb.

    Reply
    • I think while there are risks, your assumptions may not be accurate.
      1) Sure, there’s a possibility of a bad guest but I don’t agree that AirBnb renters see it as a party pad. Do all hotel guests party and trash their rooms? With AirBnb, the guests’ would be liable for damages…their credit card is on file with AirBnb and assuming they use AirBnb often, they risk a bad review. With AirBnb, you get to inspect the premises pretty often whereas your tenant can be trashing the place and you might inspect it annually. While there are always going to be bad guests, I think they are in the minority.
      2) Don’t invest in a city that restricts AirBnb.
      3) You’d be surprised by the demand for AirBnb in secondary or even tertiary markets. You would have higher vacancy risk if you were doing a long term rental as well. Also, if it’s a location where it could work as a long term rental as well, you can reduce your risk since you can always convert it to a long term rental.
      4) It does require more work and attention, but that’s why the returns are much higher. It depends on what you prioritize.

      Reply
    • Hello hello!

      (1.) Your “bad tenant” risk increases dramatically.

      BM: I’m not sure if our experience supports that.

      Even when you do have a bad guest, and it certainly can happen, they are usually gone in a day or two and you can move on. If you have a bad tenant, that’s much much worse and more difficult to handle.

      Based on experience, most guests treat the Airbnb houses quite well (especially if you don’t cater to large party groups, as we do not) and I think there are many examples that we can all attest to of long-term tenants treating their properties poorly.

      (2.) Some cities such as San Francisco are actively trying to shut down Airbnb because short-term leasing platforms allow property owners to circumvent rent-control laws.

      BM: Yes, that is very true. As such, it is oftentimes important to look outside of where you live to get the best returns and flexible regulatory environment. But for what it’s worth, I don’t think you can purchase a property (e.g. SFH) in San Francisco today and have it cashflow as a long-term rental either.

      In other words, if you’re looking for cashflow from real estate investing, certain markets are not good whether they allow or disallow short-term rentals.

      (3.) Your vacancy risk may or may not be higher depending on where you live.

      BM: Sure. But it’s not vacancy that’s the key metric, but revenue. If you’re 80% occupied but make 2x profit with a short-term rental vs. 100% occupied but make half of the profit with a long-term rental, it would have an impact on your decisions.

      (4.) Finally, it just requires more work and attention.

      BM: This one is quite true. It does.

      Hope this helps!

      Boris
      BuildYourBnb.com

      Reply
  5. Thanks for sharing this article! We are currently long-term real estate investors and have considered doing short-term rentals. Saving this article for future reference! I really appreciate the automation tips!
    ~TheFireJourney

    Reply
  6. Can you please share how you can manage those Airbnb properties from far away? You hire an Airbnb property management? How do you find local housekeeper? With handyman I assume you can easily search online.

    Reply

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