After reading several stories about what a great source of side income AirBnB is, I started doing a ton of research on buying houses, and eventually settled on a beautiful remodeled
Did wrong, past tense. You should run numbers ahead of time. Next, has the property value increased at all? The equity in the home has value and it looks like the Airbnb is at least paying the mortgage.
It seems the price is too low. $126 a night for early June?
It seems that the hard work is done and now you need a bit of patience. Most businesses do bleed money at first. (Is Amazon finally profitable?) I wouldnât think travel to Pittsburg would be high season in the winter. If you are 85% occupied then that should be good enough to turn a profit.
Oh and also, finding this forum later instead of sooner. This forum has lots of great info and unlike many of those blogs, short on BS that make Airbnb seem easy.
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What are you doing wrong? How long have you got? However, you got it wrong from the start, it seems.
That.
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I canât see your ledger.
I donât understand your numbers here. What are your costs? Youâre pulling in what one room makes me for your whole house on your best month. How did you only make $82 in a month with an 85% occupancy rate?
Its true that youâll never get as much profit on a whole house rental as the same house renting out individual rooms. Its just because when you package things smaller, people pay more per unit. Its also more efficient because you can do the property management and cleaning for yourself.
For this listing, the only thing I could suggest is that you reduce your cleaning fee and add a fee for each guest after a certain number. The difference between your weekend and week day prices is a little bit big donât you think? It sounds like you have some software to figure that out for you so maybe thats right. The only other thing i would suggest is a length of stay discount. Find the length of stay that works best for you and adjust the discounts and prices accordingly to maximize.
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We started our Airbnb last June in our semi-remote Northern California mountain community. However, our Airbnb bookings slowed after five months.
Six weeks ago, I also posted my downstairs two-bedroom rental on Booking.com, TripAdvisor and FlipKey that increased our reservations.
Because my wife and I live full-time in our two-level house and guests may not use our private kitchen, I cannot list my rental on Trivago.
@Liface do you live nearby?
You can list on booking as well.
I think the difference between weekday and weekend is too low.
@Liface have you checked other airbnbs in the area for same guests on a Saturday night? If youâre booked from now for August means you couldâve charged more.
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It takes time to build up listing. First I would suggest doing as much of the work yourself as possible to cut down costs. Know your market and what your competitors are charging & offering. There are going to ebb & flow of the business, winters for us are hard we are now going into high season and that is where we make our money. I wish it was just as easy to list and let the money just flow inâŚit is hard work. Diversify of course when applicable. List on other sites and synch your calendars so no double bookings.
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So one way to increase your revenue by 25% is to stop paying your friend to manage it and do it yourself. Assuming a Cost to Income ratio of 50% (including mortgage payments of $160/week) that alone would boost your profit by 67%.
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What is not working out?
You either have more expenses than you anticipated? or you have less income then you anticipated?
95% financing is high, so your interest expense is higher compared to a typical commercial investment.
I would want to have a 7.0% cap rate on an Airbnb. So I would expect your NOI to be $13,370 annually (pre mortgage).
I think its the 95% leverage, and the fact that you are hiring someone to manage it. 5% is not a lot to put down, so you are paying off a lot more principle, plus PMI. You should also consider setting up the processes and software automation (and pay <5% of your gross) so that the Airbnb will run itself. No need to hire someone, especially if you are local.
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Itâs a beautiful listing! Youâre giving away too much profit to your friend- are they cleaning it too or hiring that out? There is very little to manage if you live somewhat nearby and have a good cleaning crew and handyman. Also, although you must have spent a ton on the beautiful furnishings, a good CPA will amortize all that out as start up business costs, and things like cleaning products and utilities are deductions.
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The home is beautiful. I think the issue is that it might be in a residential area and not in a hot spot with lots of tourists. I would not sell the furniture, I would sell the home furnished. You did such a great job fixing and decorating it that you will probably make your money back when you sell it, hopefully even make a profit. Just flip it.
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Side income is not full income. Prices for AirBnBâs are lower than hotels in most cases because hosts are just trying to defray their expenses, not cover all of them. Or they inherited the house, and all they have to do is cover property taxes and expenses, no mortgage and they get to keep Grandmaâs house for a little longer.
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Youâre question of âwhat am I doing wrongâ is confusing.
Can you tell us what figures you expected in each category and why you might be confused as to why those figures didnât match your research/expectations? I didnât look at your listing nor your spreadsheet. But what is off? Then maybe people can help you to analyze anything you are confused aboutâŚ
I feel for you. From looking at your listing, your arent doing anything âwrongââŚexcept perhaps not charging enough. It could be that you fell for the idea of âeasy moneyâ. With those numbers, unless you can do it all yourself, and / or raise your rates and also keep occupancy high, then I would sell or get a long term tenant asap. Lesson learned.
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20% of the gross, so on my numbers for my properties âŚthat would be $40K. They would need to be doing absolutely everything including a tap dancing floor show for that sort of money!
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I just did a test booking (up to the find-out-the-price stage) for the first week in September. The cost was 105 per night for 7 people! You realise that that is $15 per person??? That is totally bonkers. Either the OP has badly miscalculated when doing his initial sums or Airbnbâs site is in a weird mood this evening.
The house itself doesnât look too bad but at $15 per night any sensible personâs first reaction is going to be âwhatâs wrong with it?â
If they then go to the hostâs page, they see that the host is David (although Liam is also mentioned on the listing) and that âDavidâ has two listings, both of which are single rooms in a rather scruffy shared house. No mention of the townhouse at all. So already the potential guest is wondering whatâs wrong, and then they see that the host isnât the host. Or is he? Who knows?
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How can I see your spreadsheet?
Uh oh! My listing minimum is $120/night for 8 people, which is the exact same $15/person, but itâs 4 bedrooms/2 bathrooms and at least triple the living space.
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The listing says âI am a lifelong yinzer (Pittsburgher) and live three minutes away,â but Iâm not sure if thatâs the owner of the property manager/friend.
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