The Great Airbnb Experiment
My wife was leaving me. I was going to be ALONE. A stranger in a foreign land. With a 15 month old child.
My wife was leaving me. To go on a work secondment. She’d be back in 4 months. I was going to be alone, in a place others dream of moving to – the Sunshine City in the Sunshine State. My wife would be in the Middle East working 16 hour days.
I felt so sorry for myself.
I needed something to distract me. I came up with a plan…
The Great Airbnb Experiment
I decided to make a run back to Britain, to stay with family, visit friends, to check on my rental property there, surf as much as possible, and mostly, to free up our Florida home so that it could generate some income. I booked my flights – I’d be gone February to June. I began preparing for The Great Airbnb Experiment.
Why do The Great Airbnb Experiment?
Life is an experiment. If you give something a go and succeed, your hypothesis proved true. If it doesn’t succeed, there was a flaw in the hypothesis, or in the method of conducting the experiment. This is true for everything in life.
If you can foster this attitude then risks are more manageable and failures are easier to swallow – just as a scientist doesn’t fail simply because his experiment produces a result he wasn’t expecting. He learns from it.
Specifically in this case, The Great Airbnb Experiment would test the following:
- How much money the house could make on Airbnb
- What the time commitment of running an Airbnb would be
- What unforeseen problems might occur
- Whether buying another property purely for Airbnb rentals would be a good financial and time investment.
Mostly, I wanted to see if the house could earn enough through Airbnb to cover the mortgage and other outgoings to enable my wife and I to use it as a vacation property rather than rent it as long term rental property when we eventually move on to pastures new. Having a vacation home on the Florida Gulf Coast that pays for itself (or even hopefully turns a profit) seems like a good thing – passive income, property investing plus free holidays!
Setting up The Great Airbnb Experiment
I wasn’t going to use a Property Manager. I spoke to a few and they weren’t really offering anything of value to me. They could save me time, but as a stay at home dad I have time in abundance – the boy takes long naps! I’ve thought long and hard about whether you really need a property manager, and in this case I didn’t. Since I was going to be 3000 miles away I needed to rely on automation as much as possible. So instead I came up with these 10 tips to Automate AirBnb to easily manage a vacation rental remotely – the most crucial point is using one of these electronic keypad locks*. Here’s how easy it is to install:
You can read my complete guide to picking the right Airbnb lock for your house here.
In addition to those tips above, since this was my primary residence I had some more ground work to do in advance. I had to :
- Ensure all essential paperwork was scanned and stored electronically and then box up the originals and store them at a friend’s house for safe keeping. Things like bank statements (which are available online) were simply shredded. I did a LOT of shredding.
- Lock valuables away – our house has 3 bedrooms, but we decided to put a lock on the master bedroom and store our personal belonging in there. Items of real value were stored with a friend, but most things were locked in the master bedroom. We also decluttered as much as possible. It really is true that the less you have, the less you have to worry about.
- Put Vehicles in storage – we wanted our guests to be able to use our drive way, and didn’t want to block the street with our cars which would inconvenience our neighbours. So my wife left her car at work (with their blessing) and I stored my truck at a friend’s car port – the Florida heat can be brutal on paint work, so I was grateful to be able to store it out of direct sunlight. Putting the vehicles in storage also meant we were able to save on insurance – about $600. Once I’d seen how big this saving was, I was inspired to keep going with my other bills – our phone contracts were put on hold, as was our gym contract, and our cable cut to the basic package. All in I suspect this saved over a thousand dollars. Life in America is expensive.
- Set up Paperless billing – I’d done this for most things already, but I now ensured every bill was automatic. I didn’t want my bills showing up at the house while guests were staying there. I also ensured that all correspondence was sent electronically (where I had the option).
- Mail forwarding – I considered setting up mail forwarding, so that the US postal service would forward my mail to the UK. However, the cost proved too much. I decided I had been thorough enough in combing through all my bills to ensure they were sent electronically, and so I asked the post office to simply hold my mail instead, which they do for free. In future I will look into a postal scanning service. If you have any experience with this type of service please let me know in the comments!
- Make up another guest room – I took the crib out of our son’s room (and all his clothes and toys) and put a king sized bed in there instead. We already had the box springs, so I just bought the mattress and bedding for about $150 on amazon. I added two side tables and some lamps as finishing touches. So in total we offered two bedrooms with king beds, plus an airbed and also a travel cot. This meant we could accommodate up to six guests plus a baby.
Results of The Great Airbnb Experiment
- Money
We made money. Success. We made around $12,000 in total over the four months. This made a small profit after deducting our mortgage, insurance and property taxes (which are ridiculously high in America). However, since we would have been paying these costs ourselves if I had stayed in Florida, and I was staying with family for free in the UK, this meant the Airbnb produced a nice lump sum of savings. Coupled with all the overtime my wife did during her secondment, we are going to put this money towards another Rental Property.
I had set a cheap nightly price to begin with, to get some good reviews. I intended to push up the price once we had hit 5 reviews. However, Florida’s tourist season is from November to April – the warm sunny winter is perfect, but it gets too hot after that for some people. So I kept prices on the lower end. If I had done the experiment in the peak season, I think we could have got quite a bit more money per night.
- Time commitment
The main time commitment was the set up time. Cleaning the house. Decluttering. Sorting all our paperwork. Shredding. Pre-emptive maintenance work. Installing the keypad door locks*. Taking photos. Setting up our Airbnb listing. Changing our insurance provider to one that would allow us to do short term rental. The list goes on… Once I was over in the UK, the work was pretty much done. Using the 10 tips to Automate Airbnb worked a treat – I really didn’t need to do very much! Most of the time I just watched the dollars roll in! I didn’t have to reply to booking enquiries as I had set up automated responses. Most of the communication was automated – you can read my Airbnb communication strategy here. All I had to do was liaise with the cleaner and gardener. I will work out a way to do this automatically too if I do it long term.
- Problems
Online payments
I had to pay the cleaner and gardener and I didn’t want to use PayPal since it would charge them 4% commission for each payment. That didn’t seem fair. If you are from the UK, you’ll probably be wondering why this was complicated. Just do an online bank transfer, right? Well, US Banks are very outdated compared to UK ones. Cheques are still very very common in America, and most small service providers aren’t set up for card payments. Bank transfers between different banks are not free. They are not even always possible.
So I found Venmo. Venmo is owned by PayPal but is only used for sending money between friends. And didn’t charge a commission. It worked great, but when I got to the UK it wanted me to reconfirm my identity by sending a text code. To my US phone number… but I’d put my US phone contract on hold, so couldn’t get the code. Eventually they unlocked my account after 5 days. But it wasn’t ideal. If I did this remotely again I would try to find a better solution to this problem.
Plumbing
We also had a plumbing issue. The toilet blocked. When a guest was staying there. This was the true test of my remote management skills. I needed to liaise between the guest, the Home Warranty company, the plumbers provided by the Home Warranty company, and the cleaner (since the plumber wouldn’t come unless there was someone in the house to let them in, even though we had the electric door lock). This was a bit of a pain, but not much more than if I had been stateside. The only added layer was liaising with the cleaner to make sure she was in the house when the plumber arrived. Since this went above and beyond cleaning, I suggested we add a $25 “call our charge” every time I needed to ask her to pop over to the house for anything other than for cleaning. As she lives in the house opposite this wasn’t too big a favor. She was happy with this. I really relied on her, so this worked well for me too.
4. Whether buying another property purely for Airbnb rentals would be a good financial and time investment
Absolutely. Turnover was much higher than if I had just opted for a regular rental. But overheads are higher too, as you have to pay utilities and cleaners and gardeners etc. But crucially, it was the bottom line that did well. Profits were good.
What did I learn
- Size doesn’t matter.
Most people don’t need room for six people (plus a baby). Our average was three guests per stay. Our 2000sqft home was more than people needed. Nobody needs a dining room, two lounges and an outdoor dining place for a weekend Airbnb stay. So we weren’t really setting ourselves apart from smaller houses/apartments / mother-in-law style accommodation. A smaller place is less to clean, less to manage, less to go wrong. And with a smaller mortgage. So if I was to buy a place specifically for Airbnb, I’d go for a smaller, cheaper place. It only needs two bedrooms max – a one bed would do for most guests, with a sofa bed in the lounge if needed.
- Get good help
Amy (my cleaner) was crucial in making the experiment work. Without her flexibility for when she was able to clean, the high standard she worked to, her willingness to take on extra duties as well, and the trust I have in her I don’t think the experiment would have worked. That said, if it was a long term project, I would want to have more than one cleaner on the books. If Amy was sick, or just didn’t feel like doing it any more, I would have been left stranded. I also paid well. I think this showed my appreciation and made Amy feel it was worth her effort and commitment. Always pay good people well. They are very hard to come by.
The Future
Now that I have done the initial set up, it would be fairly easy to keep doing airbnb every time we are away on vacation. I know we are likely to be away over Christmas, so I will probably list it again then. If I move out of the property I would probably let it as a long term rental, but I now know the property is marketable for short term rent, and so I can use Airbnb to fill void periods between tenants if needs be.
If I’ve inspired you to be a host, you can sign up to become an Airbnb Host here*. If you have any experience of letting your own residence out on Airbnb, let me know how you got on in the comments below. Thanks for reading, Owen