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3 misconceptions about hosting I learned this summer


My STR is in-home, but still under the umbrella of my S-corp (US). Every single dime I spend on Mortgage percent/oxyclean/utilities is factored into this P & L on my books. It’s all factored, and if it wasn’t still profitable? Trust me, I would not do it. Also I factor in my own labor.
Smiling is extra!!! JK


Well, this makes no sense why these hosts stay in business with zero or negative margin. Maybe they like the abuse? Friendship? Again, this is in jest, but really who would do that?


Because they don’t understand the ROI calculation: net yearly profit divided by capital investment (or a proportion of capital investment if it is a part of a property) x by 100. The figure should be above 8%.
Many hosts do not count even a partial capital investment if it is their own home. They give that away for free. Their logic is it’s their spare loft/basement/garage conversion/bedroom which they wouldn’t be using anyway. Personally I think this is a severe undersell.


Many people hereabouts.


My ROI is only 12% before my labour. Of course I would like more but neighbouring listings are priced too low so it’s impossible for me to raise my rates. At least my rooms are easy to clean and manage being single private rooms.


A couple of years ago I managed Airbnb properties in Melbourne, including my own but I won’t anymore. I was away for 3 months earlier this year and for the first time I didn’t list my own home! Too much competition and too low prices means it’s not worth the hassle.


Yes @poppy. Esp with lots of 1 bedders masquerading as 2 bedders with just an extra sofa bed. The ideal setup in Melbourne seems to be a one bedroom in the Southbank with a sofa bed. Breakeven point could be just 18 days in winter and 12-13 days in summer.


My scenario:
I live in the mother in law apartment of my homestead.
For 9 years I have rented out the main portion of my house. Garage not included. Mother in law apt not included.
It is in the “luxury” category, so my goal has always been to bring in the most money possible.
I started 9 years ago…and had no competition.
My house is now paid off. Mortgage free.
It is now worth more than I ever could have dreamed of. I accidentally sat in a very desireable location in the midst of a real estate boom.
Aside from my small business as a Travel Agent / Advisor, this is my income.
for expense, I must cover my taxes, insurance and utilities, plus guest amenities and supplies.
At my other house around the corner, I have a small mortgage and it could be paid off in 4 years.
Again, income driven. LTR would cover a mortgage and overhead, but STR brings in 7x that amount of money.
Yes 7x !!! That is because the the property values have risen enormously since we bought .
It would be very very hard for new investors to bring in that kind of income against investment now.
So bottom line…property values and cost of purchase have a lot to do with money earned.
“Buy Low / Rent High”


Your ROI is calculated at current property values, not what it was in the past. The increase in equity is a separate financial boon.
You are right to say buy low. This is key to future equity gains AND maximises the chance of a higher ROI. If a property is at the top of its game price wise, it might be worth selling it and buying two properties in the next hotspot.
The calculation for rental ROI remains: profit divided by the amount of equity in the investment x 100.
Personally speaking I have done well in terms of equity, now it’s time for me to get a bigger ROI.


And this is the real rub for a host who has to make a living off their Airbnb. Someone like you can’t possibly compete with hosts who happily host at below market rates. And yes, they depress prices for everyone but since they are doing it as a hobby or for the adventure and company, they don’t care about anyone else’s needs. At least in my market I’m able to take those last minute bookings so all the places going for less book up quicker but I’m still able to maintain my price.


But you also have a much more sensible property pricewise and I am looking to move more towards your model.


Also very different market. How many people can make a living in a city with a 90 day limit for example? The hobbyist is fine with 90 days, may only want to book that many day anyway. My city has no current Airbnb regulations and none on the table. If you invest somewhere and have a pissed off neighbor or new council rules, you’re screwed and it’s out of your hands. Not so for me.


@Barns and @Jess1 please stop.


There are no limits at the moment and not on the cards for the future in my city apart from absent hosts. I am happy with that. If it came to it in 3 or so years I would buy a double duty place that would work for LTR as well. There are more than 52000 students for a start.


My god… Seriously ? To have cold demeanor when guests arrive? This is unacceptable anyway you look at it.
Don’t do extras for anyone unless you want it yourself. To expect gratitude is setting yourself for failure.
Airbnb is not our employer.


You’ve got to be kidding me. I really am shocked by this! We have too many hosts here too and I think the prices are ridiculously low. I’m definitely charging more than some or maybe most hosts for the same type of rental. And I’m busy thus far. I hope these "hobbyiest airbnb hosts are not moving into my town!


I was chatting to a friend in a local cafe and she reckons the hosts who charge £25 a night in an £800k house round here just use the money to pay a restaurant bill or two lol


I love this and have adopted it. I find ‘cheeky’ does not translate into American English, so… tongue in cheek? Is it the same?


No tongue in cheek means you are joking, cheeky means you are pushing the boundaries.


Yeah but such fly-by-nights won’t last. They’ll cancel on a whim (ooh sorry, I have tennis that day) or they’ll screw up some other way. I don’t worry about these kind of hosts.

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