How Did My Homes Perform? Annual Review!
Just a snapshot of the spreadsheet, click below for full copy.
Hello friends,
As we are nearing the end of the year, the reality of the impending need to get all my numbers crunched is starting to set in. Yay spreadsheets!
In March or April when I finally had all of last years numbers together, I had the idea to share them with you but then somehow it got pushed aside for one more interesting idea or another. Good news! I have them here for you today.
My aim in sharing the real life numbers with you is to a show a true snapshot of what you can expect from owning Airbnb rentals. At the end of the day, I am eternally grateful for the $36,840 of profit I was able to generate off of just 6 homes. Yet, when I step back and look at the numbers, considering all the hard work and time put in, it looks low to me and not an impressive, slam dunk of what some expect bnbs to be.
Explaining Some Metrics
Advertising: This is the commission Booking.com and Homeaway charge for listing on their website. Airbnb takes the cut out before paying us so it is not shown as an expense.
Property Management Fees: Wait?! Aren’t we managing our own properties? Yes and… we pay our head cleaner in St. Louis a little extra each month to make sure the trash cans go out, respond to on the ground emergencies, schedule and train other cleaners, plant some flowers, and replace small items (like a few bowls here and there) etc. It’s actually quite a bargain.
Replacements: These are the often bought or “replaced” items like: shampoo, trash bags, laundry soap and more.
Furnishings: These are larger, less often replaced items like a couch, furniture, and the initial set up.
Travel: 4 of the homes are in St. Louis so I try to make it out there every year and a half for a long week of full time improvements and organizing. I fly for free, but there are still some costs associated like renting a truck, parking, bus to/from airport, etc. I tried to split this based on which homes I worked on the most.
Meals & Entertainment: When I travel to St. Louis to work on the homes, I am able to write off my groceries, meals, and some entertainment or “research”, as I usually add in fun finds to my House Manual Recommendations!
Property Taxes: Some of the homes the property taxes were paid at the end of previous year (and at the beginning of the net year) so it is not a true snapshot of the full year.
Here is the spreadsheet (a few mentioned having trouble finding it at the top: https://docs.google.com/spreadsheets/d/1HsgXg5fxkkZglNLPp264-LH19qt3fLW02BC-iHnFvfg/edit
Let’s Dive Into The Properties Individually
Condo
This lovely little condo has been in great demand and performs extremely well in Summer months, making up to 3x market rate. It is paid off which helps with expenses and it still got a fairly high return even with me living in it part time.
Little Wins: Since it is a condo, the utilities are quite low and many of the capital expenses (furnace, water heater, roof) are shared. In my 5 years of ownership, I have been fortunate enough to have little to no maintenance to do there.
6507
This baby is over 100 years old and she went through a big transition last year in July. We moved from having two “Private Rooms” and a live in manager/cleaner to a “Whole Unit” 3 bedroom house. Earnings had a boost from that but this also required a bit of furnishing to make up for the 3rd room and some general improvements. Old homes = a lot of maintenance, as you will see on most of the STL properties.
Little Wins: I paid off the loan so the interest won’t be a factor next year / monthly expenses greatly reduce. I purchased this home with home equity line/lien from my private lender based on the condo equity for $0 down, so cash on cash is pretty stellar.
6525
This is my most affordable home, purchased at just $53,000 (with a $1000 credit) and it earns just as well as the others. My best investment so far. We replaced the carpets this year and vinyl in the kitchen/bath which we had be deferred since I purchased it in 2015.
Little Wins: Furniture has held up well. Just needed a new couch and some dining chairs. The new sleeper sofa I purchased was a killer deal ($30!). It was in excellent condition at Goodwill but was missing the fold out mattress. I just took the one out of my other worn out sofa and it fit perfectly.
Vernon
I own this home with a friend who has to be the easiest silent partner ever. He purchased the home with cash and lent me my half. We basically see each other once a year in passing at Burning Man for a quick hug. I run the home, he gets money deposited in his bank account. Both happy campers.
Little Wins: We had to replace the AC Summer 2018, my handyman was taking on an extra side job at the time with an HVAC specialist and was able to get us a deal (about $500 in savings)! I paid off this loan this year (2019) so I’ll have a little savings there on the next report.
Morganford
Oh Morganford, to be perfectly honest, I wonder sometimes if this home was a great investment. At the time we had been through 3 previous homes that fell through for various reasons — bad inspections — and wonder if we got caught up in wanting to just buy something! It has appreciated in value and still turns a profit so we’ll see. We bought it in 2017, so I don’t have a lot of data on it yet. It is only a 1 bedroom and I have since learned that St. Louis has more family traffic and demand for larger homes, more bedrooms, etc. It is also located in the city proper, rather than in the safer county where my other homes are, so its required more damage related maintenance and maybe doesn’t book as well due to the area. In 2018, we had to replace a window and repair the wall where some water had leaked in. I believe we paid half in 2017 (work done at the end of the year).
San Miguel
This home has a similar issue to Morganford. It is a one bedroom (although it has a finished basement so it operates like a 2bdrm) and Colorado Springs seems to be more of a family travel destination. We purchased this home in March 2018 and during the contract process it went up 50K in value! Colorado Springs was in an insane growth and demand spurt that Spring. We also got the home $25K under asking due to the location and it being a 1bdrm (family market) plus a $12K credit for repairs from the inspection report.
Little Wins: We discovered the Home Insurance was more expensive since it was under owner occupied instead of rental (mistake from my co-owner). It was annoying that the time, but the new insurance payment is much lower for 2019. We show a loss from closing costs and initial furnishing expenses, these won’t apply in the next report.
Looking ahead to 2019 and beyond.
In 2019 I paid off 3 loans so expenses will be greatly lowered and profit will be up! I am so tempted to attack the mortgages on the last 2 homes and yet I think my co-owner/partner is excited to be leveraging for now.
Ben and I are currently house hunting for a local Airbnb House Hack, I’m hoping to have numbers for you in the 2020 report! We are planning to use this strategy to build his retirement/fund his financial freedom.
Conclusion
I hope you have found this report helpful, I think it is important to see some of the true (high) costs of operating a bnb. Cleaning and Utilities really stand out to me. I raised cleaning rates in 2019 so no break there and have looked into ways to insulate or make the homes more energy efficient (high heating and cooling costs in St. Louis) but it hasn’t come together.
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Upcoming Events (See me Speak Live!):
Q&A event @MMM HQ in Longmont, CO - March 10th, 6pm-7:30pm.
Financial Freedom Summit - May 1-2, 2020, St. Louis, MO
Events I’m Attending
Best Deal Ever Conference - Feb 20-22, Keystone, CO
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