AirBNB Archives - Lazy Man and Money

The Most Expensive Vacation Ever?

July 6, 2021 by Kosmo 7 Comments

I’m away on vacation this week (and it is expensive), but here’s frequent contributor Kosmo with an article about his last vacation.

No, we didn’t go to Disney World.

In 2017, we made our first trip to Door County, Wisconsin. For those who aren’t familiar, it’s the “pinky finger” on the eastern border of Wisconsin – a peninsula with Lake Michigan to the east and Green Bay to the west. After the initial trip, we decided that we’d definitely make a return trip. We planned a trip in 2019, but it was derailed by a family health situation. Last year, it was postponed because of COVID. This year, we finally made a return trip. Even with a somewhat limited set of activities (because our 11-year-old isn’t old enough to be vaccinated), it was great. We’ll definitely be back.

A funny thing happened. We started looking at homes on Realtor.com. Just goofing around at first. What would we do with a second house? Especially a house that’s considerably more expensive (per square foot) than our primary residence. That’s just crazy.

Maybe?

The idea percolated and eventually turned into a new idea. Perhaps a rental property that we use for a couple of weeks per year, plus some sporadic weekends.

Financially, we’re in a position where we could try this. I’m 46 years old. We have about 75% equity in our house and have a bit of money in an investment account. We would swing the down payment and setup, and even get through some lean years with limited rentals, if worst came to worst. I actually don’t think we’d have trouble renting a place, because it’s a very high-demand area.

The hard part

The bigger factor is the fact that we live 400 miles away. Even if we bought something that didn’t require a lot of maintenance, trying to get things set up on weekends would cause the setup to stretch longer than we’d like. Setting up a short-term rental takes a bit more work than setting up a long-term rental. You need to furnish virtually everything. Not just beds, a couch, table, chairs, and TV, but things like spatulas, corkscrews, and frisbees. And, of course, toilet paper. Nobody wants to check into an Airbnb and realize there’s no Charmin.

We would also have to hire a local cleaning service, as well as have some sort of arrangement with a local maintenance person to handle any acute issues that arise. If there’s a leaky pipe on a Wednesday, I wouldn’t be able to jump in the car and go fix it, since I have a day job. Nor could I mow the lawn every week or clear snow in the winter. Naturally, paying locals to assist would cut into the profitability of the venture.

Does it make sense?

Of course, the venture doesn’t actually need to make a profit. We’d be getting some personal use out of the property, plus the likely appreciation in property values. We could lose a bit of money every year and wouldn’t cry about it. If we could simply defray a decent chunk of the costs, that would be great.

We’re going to dip our toes in the water. My wife (a CPA) and I are both the type to plan things. We’re putting together a list of the furnishings we’d need, so that we can get our arms around the potential cost. Everything from bed frames to pizza cutters.

We have a local realtor that we’ve used to buy two houses and sell one. We’ve always enjoyed working with him. It seems like a longshot that he’d know some realtors 400 miles away, but we asked. Yep, he knows a couple of people. He’s going to get their information to us today, and we’ll engage with them very soon.

Your thoughts?

Do any of you own and remotely manage short-term rentals? What has your experience? Is it worth the cost and effort? Are there potential pitfalls that I should be aware of?

What It’s Like to Stay at an AirBnb

October 13, 2017 by Kosmo 3 Comments

The following is an article by frequent contributor Kosmo. I’ve been interested in how AirBnb works to stay at as it seems like people are using them to save some good money. I’ve written in the past about potentially being an AirBnb host. If you have stayed at one, I’d love read your thoughts in the comments

We decided to visit Door County, Wisconsin on our vacation this summer. For those who are unfamiliar with the geography of Wisconsin, Door County is the “pinky finger” that sticks up on the eastern edge of the state. It has a smattering of small towns whose population can swell to nearly ten times its size in the summer to accommodate tourists who come to visit the state parks, lighthouses, wineries, and many other attractions.

My wife and I have two kids, age 9 and 7. When we started looking at hotels, we had trouble finding ones that were close to Lake Michigan, could comfortably accommodate four people, and were reasonable priced. That’s when my wife got the idea to poke around on AirBnb.

To be honest, my wife did all the legwork for this. She searched for houses for rent in Door County and quickly narrowed it down to a handful of places. For the same price as a small hotel room, we found a two bedroom house to rent that purported to be a block from the beach and a block from downtown. I wasn’t born yesterday, so I was a bit skeptical, but it did appear to be close.

We asked the property owner a few questions about the property, and he was very quick to respond.

So we committed and made our reservation. One drawback is that you pay for the entire stay up front. So if you make a reservation six months before your stay, you’ll get charged immediately. It appears that AirBnb has been testing different payment options, but we only had the choice of the standard option.

AirBnb holds the money until 24 hours after check-in before transferring the funds to the property owner. AirBnb itself is the only entity that gets your credit card number in this process.

Shortly before our stay, we received an email from AirBnb with information the property owner had supplied. Most importantly, information on how to get into the house! There was a lockbox on the door, and the email gave us the combination to the lock. There was also information about the WiFi network, directions to the house, and general information about the area.

We left our home in Iowa on a Friday and stopped overnight in Madison, Wisconsin. We could have made the triple in a single day, but we didn’t want to press our luck with the two kids. Also, my wife wanted to visit Lambeau Field on the way to Door County. (Packers. Ugh.)

We arrived at our destination mid-afternoon on Saturday. The house was indeed very close to Lake Michigan – a few hundred feet from the very nice beach. There was a nice view of the lake from the living room window. There was a pizza place a few hundred feet in one direction, and one of the main streets (lined with restaurants) was a couple hundred feet in another direction. The location was awesome.

The house had two bedrooms. The master bedroom had one bed and the other bedroom had a bunk bed and another bed. In theory, the house could have slept six. There was also a good-sized living room and a combination kitchen/dining room. Definitely on the smaller side for a house (more of a cottage), but much larger than a suite at a hotel. The living room also had a bunch of board games, include a very nice glass chess set.

There was also a basement. My kids were fascinated by the basement (I had no idea why), but its most important features were a washer and dryer. They were on the small side, but they didn’t require coins, and the property owner even provided the detergent. Other than that, the basement area had storage for the consumable items (paper towels, etc) and it was clear that the property owner was working on a few projects in other area of the basement. The basement was pretty tidy, relative to most basements.

There was also a one car garage. It was a tight squeeze for our Ford Edge, but it did fit inside. It was nice to have a garage when the hail was falling.

Toward evening, we realized that the AC didn’t seem to be working, and we sent a text to the owner. Although we didn’t see his response until morning, he actually responded quickly with a suggestion to check the breaker box. I’m embarrassed to say that I hadn’t thought of that, assuming that there was a problem with the recently installed AC system. Minutes later, the AC was blasting cool air. The property owner knocked off $50 for the inconvenience, even thought it was mostly due to me being an idiot.

Overall, the AirBnb experience felt much more like home than a hotel. The house had all of the basics that we needed. Although we didn’t cook much while we were there, the kitchen had all of the pots and pans and utensils you’d need to cook nearly anything. There were plenty of plates and glasses, as well as paper plates, paper towels, tissues, toilet paper, etc. We were pleasantly surprised that they actually had name brand toilet paper instead of the thin, scratchy industrial toilet paper you see in most hotels.

The property owner did a great job of communicating. On a few of the days, there was the threat of severe weather, and he texted us to give us a heads-up, as well as letting us know where the weather radio could be found. As native Midwesterners, we knew of the dangers posed by severe thunderstorms, but it was nice of him to let us know.

We’ll definitely try AirBnb in the future. The process was very smooth and professional. We got a lot of space for the money, as well as a great location. Any of the hotels in the area would have been much further from the beach.

Rent a Tent for $900 a Month?

July 8, 2015 by Lazy Man 1 Comment

I couldn’t help, but notice this article about a tent renting for $900 on AirBNB. It’s not that someone is just crazy enough to list it at that price, people are actually paying it.

According to the article, you get a tent in a backyard with access to shower and can eat inside. It wasn’t quite clear if you are allowed to use the kitchen to cook. I tried to find the particular listing and the closest I found as this this tent, but the name and price is different, so maybe it is a copycat.

So who is going to pay $900 a month for a tent in backyard? It wasn’t long ago we were renting a 2 bed, 2 bath, 1200 sq. ft townhouse about 40 miles from Boston for that money. Well this tent is in Silicon Valley… very close to Google’s headquarters. And as long as it includes a parking spot, is really ideal commuting location to hundreds of businesses that are paying six-figure salaries.

The real estate market out there has always been out of control. When we lived there, we found it a much better deal to rent. In September of 2006, I wrote about a 2 bed/1.5 bath, 1650 sq. ft home a few streets away from us. The price was $1.125M.

Of course a housing crash has happened. In New England, I’d say that most homes have not caught back up to their 2006 pricing. From a sampling of properties that I am familiar with, I’d say they are still down 20-25% from there.

Today, the same house that was 1.125 in Sept. 2006 has a Zillow Zestimate of over 1.5M. So while prices where I live now have dropped 20-25%, they’ve gone up 25% down there. The sample sizes here are tiny, but it’s consistent with what I’ve seen.

So while the idea of a $900/mo. tent seems extremely crazy the real estate market out there, almost makes it somewhat viable. My experience is that if you are working at Google or Facebook the expectation is that you essentially live on “campus” anyway. Maybe you don’t need much more than a tent for the rare 5-6 hours that you want to “get away from work?”

Usually when I see prices get beyond comprehension there’s a crash. Almost every fiber of my being believes something like that is coming soon. There’s got to be a way to get cheaper talent in other areas of the country without offering $200K salaries so that everyone can afford shacks that run 1.5M dollars.

However, I asked a friend who has been in Silicon Valley for more than 25 years about a crash. She says she’s never seen a significant one. In her opinion, things will just reach a peak and either slowly deflate or just stay stagnant for awhile. I could see that scenario as well.

In the meantime, if you live there and have the space, why not put up a tent? It’s probably not a lot of work for an extra $10,000 a year.

Looking at an AirBNB Property? Here’s What You Need to Know.

February 18, 2015 by Lazy Man 5 Comments

On Monday I mentioned how I was bitten by the real estate bug again. Essentially, I saw a property that looks like a tremendous bargain. When touring it, the condition made me think it was slightly less of a bargain, but still great.

How great of a bargain? A few years ago it was listed at 2.5M and steadily went down to its recent price of under a million. Several experts that I consulted with suggested that it should be worth 1.5M. The reason for it’s price under a million? It’s in foreclosure and it seems like the bank is trying to get it off their hands. It also could use an additional hundred thousand in repair work.

Originally, there was the thought of living on this property itself, but in touring the property, it isn’t a good fit for us. Instantly, my focus went to renting it out as an income property. My real estate agent has had good luck with his properties on Craigslist and AirBNB.

I had never looked into AirBNB. That would change this past snowstorm Sunday. Armed with a glass of wine and a healthy internet connection, I decided to learn everything I could about being a AirBNB landlord.

Today, I’m going to share with you the resources that I found most helpful. I’m also going to give you some of my analysis of the property and it’s potential on AirBNB.

My first stop is almost always a personal finance blogger. (They are awesome people!) This brought me to Paula Pant’s AirBNB experiment. It details her experience over months with dozens of guests. I learned what works (preparation, preparation, preparation), how much work it is (appears to not be much), and how lucrative it is.

What I learned: AirBNB isn’t for someone looking for location independence or has a crazy, busy job. Which means it that a certain blogger (who makes his own hours) with two boys (who have settled in a city) might be a very good fit. There is money to be made, but it can also be work. I also learned many, many tips on how to make an AirBNB smoothly.

The next article I found was ironically found on The Next Web. This tells the story of a person who bought a small apartment specifically to rent on AirBNB and how he manages it remotely.

What I learned: You can see what comparable properties are earning by looking at bookings and doing a calculation on their daily rates. It’s an estimate, not exact math. There are several tools such as Nest thermostats (my review) that can save you money when it’s vacant. Take advantage of AirBNB’s professional photographer, you’ll get a lot more inquiries.

Making the rounds, I found this article on Forbes that was full of tips.

What I learned: Managing your listing is key. Have the dates of availability accurate as well as all the amenities.

Next up, I found that there are services available to help with managing your AirBNB. For the most part they seem to be big cities… which isn’t very helpful for me.

Some examples are:

HomeJoy – This is a cleaning service that I read partnered with AirBNB. Their website only seems to allow current clients to contact them. I called them out on Twitter and they gave me a phone number to call. Very weird for a web-based service company to not take web-based communication.
Guesty – This is a professional AirBNB management service. They will optimize your listing, respond to guest inquiries, screen guests, schedule cleaning, and coordinate key exchanges. The downside is that this is mostly the light work that Paula Pant was able to make very quick and easy through a set of systems. They upside is that it looks like a lot of service for a 3% fee. Also, guests may consider having a professional service one less thing to worry about and choose you.
Beyond Pricing – This service optimizes your pricing to make you more money. It isn’t available in my area yet, so I didn’t spend too much time looking into it.

Enough of the Sizzle, it is Steak Time

At this point, I felt I had a comfortable grasp on the ins and outs of running an AirBNB. I read a several more articles, but they had the same set of tips that were covered in the ones I mentioned above.

The next question was, “What about my area and the property that I’m interested in? What is it’s potential?”

I found a great website that has a ton of AirBNB information called, Renting your Place. Before I get to that website, I want to segue onto an Ebook the creator sells.

I found The Airbnb Expert’s Playbook on Amazon. A $30 Ebook is expensive and the reviews aren’t particularly glowing. However, on Renting Your Place it is $15, which is a big difference. It’s something to think about.

Let’s get back to the Renting your Place website. Holy crap is it filled with information! Let’s just say that I was looking at a place in Brookline, a suburb outside Boston. I’m specifically choosing a place that isn’t a major city itself so you can see that it covers nearly everything. Here’s the information available for Brookline.

What I found important is the large number of people renting an entire place. That’s essentially what I’d be looking to do. Next I noticed that there’s a median price per night per bedroom. This is extremely helpful.

As we go down the report, the next piece of the puzzle is the monthly revenue for all the places in Brookline. Again, this is very important information.

I like what the website has done with giving you general information. However, there’s more information that it isn’t giving you. There’s occupancy rates and monthly revenue for different size properties. This is really what I’d want. However, it costs a little money. It’s probably a good deal before I go spending high 6 figures on a place, right?

I didn’t go down that road just yet. Instead I built myself an Excel spreadsheet of properties in the area. You’ll want to click this image so that you can actually read it.

There’s a lot going on in this spreadsheet. The blue at the top is the property that I’m looking at. I put in some rough estimates at pricing based on it being three units (more information in this previous post). Instead of looking at the property itself, let’s focus on the 11 properties below.

These 11 properties are a sampling of what’s nearby. I tried to get a variety of shapes and sizes just so I could understand what the sweet spot in the pricing was. The first few columns are basic information about the property from what I could gather. The Daily, Weekly, Monthly are grabbed straight from their AirBNB listings. I created an annualized number of those numbers which give an idea of what 100% occupancy would bring in for income per year. Obviously 100% occupancy is unrealistic, but we can adjust for occupancy later.

Then I had the idea to normalize the properties’ pricing based on the number of beds and baths. I would do just bedrooms, but one place was a studio and dividing by 0 bedrooms is a nightmare (maybe I should have counted it as a half bedroom). This gives me the last two columns of daily and weekly pricing per year (100% occ.) per bed and bath.

For example the first one (1 bed, 1 bath) is $170 a day or $62,050 a year. Because it has a bed and a bath, that is $31,025 per year, per bed and bath. You can see I did this down the list and created an average.

Now we can go back and look at the proposed house again. The pricing that I put in place is an attempt to be competitive with the 11 property averages. In fact, I purposely put them below to be conservative. (They are still far below even when accounting for the bathroom issue above). You can see that I’m way below the other averages.

Maybe I should up my price estimates, but I’m very comfortable with what I have here.

I’ve estimated expenses to be about $8000 a month. That’s all in, with mortgage, interest, taxes, utilities, ongoing maintenance, insurance, etc. If I assume 76% occupancy (40 of 52 weeks) at the weekly rate of the conservative numbers I have here, it would bring in $16,667 in income… more than double the expenses. That occupancy might be a little high, but it appears it could still be very profitable at lower occupancy rates. Or if occupancy isn’t going well, I would have the pricing flexibility to lower even further to ensure that income is being made.

Of course this article would be better if I could say that I have hands on experience running an AirBNB. I’m not there, at least not yet. In the meantime, I hope you can get some great information from this meta-analysis and the resources listed here.