We had been flipping houses for about six months. We would tear a house apart and make it look beautiful so that we could sell it to someone else. We quickly realized that if we ever wanted our circumstances to change (if we wanted to have passive income, and to also build wealth by holding real estate long term), we needed to stop selling off all of these nice houses!
We had heard that short term rentals were extremely profitable. It was also scary because it meant we would have to buy something and then furnish it and THEN hope it would rent out! We did our research and learned as much as we could. It made sense to us. The short term rental market continues to grow and people love to rent a whole house instead of multiple rooms in a hotel.
We found a house that needed a full gut and rehab. It was in terrible condition. Our other projects had been mostly cosmetic updates at that point. This project would include ripping all the dry wall out and starting from scratch with the plumbing, electric, roof, and everything in-between. It was 10 minutes from downtown Cincinnati so it seemed like the perfect location.
We bought that house for $14,000. We found a private investor to fund the rehab for $50,000. The rehab took about three months from start to finish. The house looked SO DIFFERENT!!!!!
We had been collecting some furniture items during the rehab phase. Once the house was ready to furnish, we ordered everything else we needed on Amazon. It looked like Christmas in June at our house! We had tons of boxes delivered to our front door- which was way better than having to drive around and shop around at a bunch of different stores!!! We loaded everything up and went to our freshly renovated house! It took a few hours to set up all the beds. The bunk beds were particularly annoying. The bedroom wasn’t huge. Plus, we had one year old Ethan helping us. 🙂 Check out our shopping list here
Once everything was staged and set up- we had a professional photographer come out. We paid $100 to get nice pictures taken so that the listing would look its best! We got the pictures back same day and were ready to activate the listing!!! It was mid June and we were nervous that we had missed out on all the summer bookings. We activated the listing and held our breath.
That night, we started getting notifications of reservations!!!!! During July and August we hardly had any vacancy!!! We were shocked! Pleasantly surprised- and shocked!
We partnered with another investor to refinance the property and pay off the $50k rehab loan. The house that we bought for $14,000 and put $50,000 into appraised at $116,000! We pulled our cash out and put the property on a mortgage. The total monthly expenses (including mortgage, utilities, internet, etc) are about $1,000/month.
In July (our first full month), that property brought in $3,800!!! Which means that after expenses, we made $2,800 in profit!!!! The following month we had $2,700 in profit! Even during our slowest month, we have been profitable.
Looking back, we laugh because we thought listing in the summer was to our disadvantage. When really it was a very positive thing because we racked up the reviews quickly, which encouraged others to also book there. We always try to plan for the worst, and have been pleased with how well this house has done and it continues to perform.
Keep in mind, this property is a 3 bed, 1 bath property with about 900 square feet. It’s also located at the top of 20 very steep stairs up the side of a mountain with on street parking. The interior is brand new and very clean. It’s well maintained and taken care of. The point I’m trying to make is that you don’t have to own a palace in order to be successful as a short term rental owner. There are several specific keys to success, which we teach in our online short term rental course.
When I (Heather) was working at Macy’s headquarters a few years ago, I was clocking 40 hours a week all year round. I made about $2300/month after taxes. One short term rental property made more than that in a month. I certainly didn’t work 40 hours a week while the Airbnb property was renting out to guests.
That first Airbnb property was a game changer for us. We also get all the other benefits of holding real estate long term. That mortgage balance is being paid down by our guests! (Principle reduction) The property values will continue to go up over time. (Appreciation) Plus- tons of investors are pouring money into that city with rehabs, so the entire area will improve over the upcoming years. Tax benefits… aren’t relevant right now. And last, but not least- the CASH FLOW is insane with a short term rental property. This same property as a long term rental might lease for $850/month with a $650/mortgage…cash flowing about $200/month. As a short term rental, it earns $3800/month sometimes to cash flow $2800. It’s undeniable that short term rentals-when set up and managed properly- can be cash cows.
Which means… we had motivation to replicate the process. We count our first Airbnb as a success!
If you are interested in learning how to set up and manage a successful short term rental, you can enroll in our online course! We walk you through every step from start to finish!
Read to activate your Airbnb Host account? Let’s get you started! Click here!
