Wendy and I get so. many. questions. on investing in real estate by flipping homes to rent out on AirBnB. Wendy’s definitely more of a pro at it than I am, as she has two dedicated AirBnB properties now - one of which I stayed at during my last visit to Phoenix!
Spoiler alert: I am not going to be talking about how to build a portfolio of short-term rentals, or how to run the numbers to evaluate if a property will get you a good ROI by using AirBnB. Because, while I can talk about the basics/logistics - like how properties that I would never consider as a flip to sell may be perfect for it, or how they can be way fun to design because eclectic is sometimes better for short-term rentals - I’ve never done it myself and so therefore I don’t really think I’m qualified to talk in-depth on the topic.
What I WILL be talking about is how to earn money (aka: investing in real estate!) by AirBnB-ing your own home. Either all of it, or maybe just one part of it, like a guest room or basement.
Part 1 (aka this one) of this two-part discussion will be on setting up your own home, that you already live in, as an AirBnB rental - the whole thing, meaning that you can’t stay there while it’s rented. People usually do this for big events that mean that there’s lots of tourism coming to an area, which usually comes with peak prices on lodging due to the high demand - meaning you can make some pretty good money by vacating your home. Part 2, coming up in the next couple of weeks, will be on AirBnB-ing out part of your home (which means while you’re there) on a more consistent basis, to earn some supplemental income - as well as some things to look out for if you’re currently in the market to buy and want to explore this as an option.
DISCLAIMER: Before you dive into this, make sure you know your city’s laws and regulations on short-term rentals, and your HOA’s if you have one. You may also want to check with your homeowner’s insurance. PLEASE PLAY BY THE RULES - if we don’t, that’s what gives cities ammo to want to shut AirBnB and the like down completely, which ruins the fun for everyone. Don’t be a fun-ruiner.
Back to the program. So before you think I sound completely crazy - “hey get out of your own house so you can charge people money to stay there!” - I’ve done this. I rented my entire house out for the Kentucky Derby last year and my dog and I went to stay with my parents - and I pocketed a profit of over $2k in 3 days. No, I’m not exaggerating.
How to maximize your profit: Step by Step
Step 1: Identify weeks/dates when you can charge the most money
Here in Louisville, it’s the Derby. But: there’s usually at least one annual event like this in every city - maybe it’s a professional golf tournament that happens every year, maybe it’s a traveling event like the NCAA Final Four or the Super Bowl, maybe it’s a convention like the Farm Machinery show or NRA convention, maybe it’s a Comic-Con, or Mardi Gras or halibut fishing season in Alaska, whatever. The point is, identify the events in your city that will command a premium for lodging, and start there. Make sure you (and your pets!) have a place to stay lined up for these dates.
Step 2: Prepare your Listing
In order for people to rent your house, they have to be able to find it: which means you need a listing on AirBnB.com (or Vacation Rental By Owner/VRBO.com, and/or maybe a local site - whichever you prefer).
The biggest part of what people use to choose an AirBnB is the photos of your place, so make sure you put your best foot forward here! This is a lot like taking listing photos for selling a house. Make sure everything is neat, tidy, and generally clean - the deep scrubbing will come later. Take GOOD PHOTOS (tip: point your camera into the corner of the room rather than a focal point like a bed or couch - it will make the room appear bigger).
Then you’ll use these photos to populate your listing! Load the photos, label them, and then decide on the specifics of your listing, like the dates available, house rules, check in/check out time, whether you’re going to provide coffee, etc.
Step 3: Choose a Price and get it rented!
Since you’re renting your entire home out and finding somewhere else to stay, this must mean that the price you can get is pretty high. How do you price it? Pricing for AirBnB’s is a function of 3 main factors: how many people does it sleep, proximity to the event venue (and other city attractions), and how many bathrooms there are. What I did was check out comparable listings I then priced my listing at about the bottom third of the price range of those listings, because I wanted it to FOR SURE get rented and not leave it up to chance. I was also late to the game actually getting my listing live, because I had our Alcott flip going at the same time and was spending most of my time trying to get that finished up.
Step 4: Prep the Host Materials
Trust me here: Anything you can get done ahead of time, DO IT. The week/few days before your guests arrive are going to be busy, because you’ll be vacating your house for a few days to a week - and CLEANING.
What I mean by “host materials” is that info guide that hosts leave in the house, and send out beforehand to renters. If you’ve ever stayed in an AirBnB, you know what I mean. This can be pretty minimal - house rules, logistical info like WiFi password, alarm codes and parking info only - or it can also be essentially a guide to your neighborhood, complete with your favorite brewery, hiking trail and brunch spot. It’s up to you.
Here’s what I’d recommend to include at a minimum:
Access to house: where the key is, alarm code, etc.
Parking info: designated parking spot, is parking on the street overnight allowed?
WiFi network name and password
Any house rules: no smoking, the hall closet is off-limits, etc.
Emergency utility information: location of electric panel and water shutoff
Your phone number in case of emergency
TV/cable box/Netflix etc. instructions
Closest ER/Immediate Care Center location and hours
Closest pharmacy (CVS/Walgreens/RiteAid) and/or 24-hr pharmacy
Closest coffee shop
Checkout instructions: where should they leave the key when they leave? Do you want them to strip the beds? Do they need to take out the trash?
That’s the minimum. And you can stop there if you want. But, part of what is so awesome about staying in an AirBnB as opposed to a hotel is that it makes someone’s stay in a strange place a little bit more personal - it’s almost like a personal conceirge. I look at it like being a tour guide of my city - what impression of my city do I want people to leave with? Things like attractions a bit off the beaten path, your favorite restaurants, some good hiking trails, etc. would be great examples of things to include in your host materials.
Step 5: Prep your House
I don’t care how organized you are or how well you’re able to keep up with every tiny detail in your house: MAKE A LIST. When you decide you’re going to rent out your house, you’ll start noticing things you need/want to get done before that week gets here, like buying more towels or finally fixing that broken doorknob. Keep a running list in your phone’s notes app, on a shared Google doc with your spouse, whatever. I promise, you will forget things if you don’t.
My list included registering my house with the city as a short-term rental, buying additional towels, patching the two holes in my walls, installing blinds in my living room, fixing the door handle in my bathroom, washing couch cushion covers, installing extra towel hooks in the bathrooms, pulling weeds and landscaping, scheduling a cleaning service for a deep clean and doggy day care for the day prior to my renters arriving, and completing and printing host materials from #4 above. And SO many more things, but you get the idea.
I know this sounds like a lot. And I won’t lie, I spent a TON of time in the two weeks leading up to my renter’s arrival taking care of the items on this list; in addition to my full-time job and our flip project. But, some of them had been on my house to-do list FOREVER and it felt SO GOOD to finally cross them off. Some of them (like spring landscaping) needed to be done anyways, so it just put them on a deadline. And some of them were things that you don’t really NEED to do, but you SHOULD do, so you just put them off and never do them (like cleaning out under your bathroom sink. Yeah, that.) - but renting out your house MAKES you do them. AND, it’s an excuse to schedule a deep cleaning by a professional service, and have part or all of that cost subsidized by the cleaning fee that you charge your renters! When I came back to my house after my renters left and had NOTHING that needed to be taken care of around the house - It. Felt. AWESOME.
Step 6: Prep for your Guests to arrive
I also call this “get ready to get out”. It involves cleaning and removing personal items. It’s kind of like going on vacation, but x100. This is where you take everything you need with you, like clothes and toiletries; but also remove everything from your bathroom counters, make sure your dishwasher is empty and your laundry baskets aren’t overflowing, etc.
Things you need to remove from the house and/or hide or lock up:
ALL PRESCRIPTION MEDICATION
Valuables like jewelry
Personal electronics like laptop, tablets, iPods, cameras and lenses, etc.
If you are a gun owner, they need to be removed from the house or locked in a gun safe. No exceptions.
What I did is put everything I didn’t want to leave out into laundry baskets, and hid them in the unfinished storage area of my basement. Alternatively, you could install a deadbolt or padlock on one closet and just shove everything in there.
Some of the other things I did to “get ready to get out” that weren’t on my list or cleaned by the cleaning service were setting out all towels and extra rolls of TP in the bathrooms, putting my dog’s crate and food bin in the basement, cleaning out the fridge, taking out the trash and emptying the dishwasher, and leaving out a bottle of local KY small-batch bourbon for my renters.
I would recommend doing your neighbors the courtesy of letting them know that you’re renting out your house for the event week, and make sure they have your phone number. They’ll appreciate the heads up and will probably keep an eye on things for you.
Step 7: Profit!
Now that you’re out of your house and your renters are there - it’s time to relax! You’re 99% there.
Try not to worry. The type of person who rents through AirBnB does it because they WANT to get a little bit more personal feel for somewhere they’re visiting, and they’re going to respect that it’s your personal home. It will be okay! And if disaster does strike, AirBnB insures up to $1m in damages.
When I came back home after my renters left, there were a few dirty dishes in the sink, towels on the bathroom floor, my coffee table had been moved (presumably to make room for an air mattress), and a 12-pack of Bud Light was left in my fridge. Seriously, that’s it. I spent the afternoon washing my bedsheets and towels, setting up my dog’s crate and bed, and bringing my personal items up from the basement - and it was like no one had never been there. And I had $2500 in my bank account that wasn’t there three days prior.
Hopefully this has helped you feel better about preparing your house for rent on AirBnB - and eased a bit of worry too. Hey, I get it. This is my personal home with all of my things, I was definitely a bit nervous - but everything turned out great, and I used the money I got from renting out my house to pay for my next vacation - with some left over. My house is already rented out for Derby 2019 (at a higher rate I might add) and I have it listed for the Breeder’s Cup.
Part 2 of this post will be up within the next couple of weeks, and will talk about AirBnB-ing a portion of your house on a regular basis to earn some extra income - and some features to look out for while house-hunting that make a property more conducive to this arrangement.