In 2012 I bought an apartment specifically to rent out on Airbnb. I’ve been managing it remotely for the past year. This post includes everything I learned as well as some revenue numbers.
Finding a place to buy
Each listing on Airbnb has a publicly visible calendar that shows which nights are booked and which nights are available. Using this tool it’s very easy to work out almost exactly how much each host is making. This is an invaluable resource when researching where to buy.
Simply find a listing that’s in an area you’re thinking about buying and click on the calendar tab. Then count up how many red squares there are in a given month, and multiply that by the nightly rate listed on the profile and you have the monthly revenue.
There are a lot of places in the US where house prices are still very cheap. It’s possible to find a nice apartment in a major city for less than $50,000.
The place I found was in Las Vegas and it cost $40,000. It’s a 750 square foot with 1 bedroom, 1 bath. There’s a shared pool with a hot tub and even a tennis court. Perfect for the weary traveler who wants to relax after a long journey.
I spent roughly $10,000 on making the apartment look nice. This includes all furniture, TV/Apple TV, new hardwood floor and new paint in all the rooms.
Unfortunately there’s no Ikea in Las Vegas (the closest one is in Los Angeles) so I spent a lot of time just waiting for stuff I ordered online to be delivered. If you’re planning on doing something like this remotely, I’d highly recommend checking delivery time or local stores before you make the trip to furnish the place, and order in advance where possible.
It took roughly three weeks for me to get the apartment ready for guests but this could have been optimized greatly.
Getting it going
Once your place is ready it’s time to setup your listing. Guests are understandably reluctant to stay at a place that has little or no reviews so I’d recommend lowering your nightly rate for a few weeks so you can build up a few positive reviews. Once you’ve had a few guests stay and have a few positive reviews under your belt, you can start upping the price.
You should also take advantage of Airbnb’s free professional photography service. They’ll send a professional photographer to your listing to take some really nice pictures of your place, for free!
It’s amazing how big of a difference having really nice pictures of your space can make. A few months ago I ran an informal experiment (as research for another project) where I listed my apartment for rent on Craigslist. They were both the same price, in the same area. One listing had really nice pictures taken with a high quality DSLR and wide-angle lens and the other had badly lit pictures taken with my iPhone. The listing with the nice pictures got 10x the emails.
By the numbers
Cost of apartment: $40,000
Cost of redecorating and furnishings: $10,000
November 2012–November 2013: $19,613
Average monthly revenue: $1,634
Rough monthly profit: $1,134 (after cleaning, bills, and other expenses)
Yearly profit: $13,608
These numbers would be a little higher but I’ve stayed at the apartment myself for a few weeks and also let friends stay for free.
By these rough numbers it should take a little under four years to completely pay off the price of the apartment.
This post originally appeared on NeedWant.com. Visit jonw.com and follow Jon Wheatley on Twitter @jon.