How to get Started with Airbnb

I am very excited about today’s post.  This is a guest post from my new friend Cubert from AbandonedCubicle.com.  In this post, Cubert shares how he is planning on retiring at age 46 and to abandon his cubicle for good.  As a more passive investor, this post has provided me with great insight into real estate investing as well as an introduction to what is required to operate an Airbnb business.  I hope you enjoy it and find it as educational as I did.

How to get Started with Airbnb

For those of you who don’t know my story, here’s a little primer. I go by the pseudonym Cubert to keep a little anonymity on my blog, AbandonedCubicle.com. I’ve been a student of early retirement since the fall of 2014.

Around that time I discovered that it is possible to retire early with very little actual sacrifice and much to gain. That’s a good thing. See, we’d had our first kids – twins – just a year earlier. If life wasn’t crazy enough with work, the home front changes pushed us over the line.

I’m now within a year and a half of ending my cubical days for good. I’ll be 46, which is nowhere near as exciting as others who’ve reached that milestone in their 30s. But then, I have no regrets. And honestly, who can complain about being done working for the man a good 15 or 20 years before Fidelity says you should?

My Plan

It’s interesting how life-changes sometimes come in bunches. Within a span of two years, we started a real estate rental business, changed jobs, had twins, and then locked in on early retirement. Whew. Makes my head spin just thinking about it!

The real estate rental business turned out to be crucial in our wealth building progress. We definitely went out on a limb, but with the help of a good friend already in the business, I had enough confidence to buy our first rental – a short sale single family house.

We weren’t flush with cash. I had to take out a home equity line of credit on our primary residence to afford the down payment. Once we closed, the list of improvements grew to a tally of almost $5,000. Man, what had we gotten ourselves in to?!?

Long story short – this first house got rented out within two months of closing. Rent checks started flowing in. We closed on our second rental just six months later, right around the time we welcomed our twins into the world. Rentals three and four followed in 2015 and 2016.

Ultimately, each of our four long-term rentals have paid off handsomely. Thanks to a strong market here in Minneapolis, we can command good rents. Plus, the tenants we attract have been great to work with. Never a late payment, and often they’ll put their own money into small improvements. We clear about $500 in net profit per house, per month.

1 Our First Rental – “Rental A”

How Airbnb Came into the Picture

In 2017, the pickins were slim. The housing market had really taken off in the Twin Cities. Houses that once sold for $100,000 were now going for $150,000. In my quest for our fifth rental, I kept running into windmills. Cash-on-cash returns just weren’t adding up on the overpriced dumps that were available.

About ready to give up, we visited my folks in Charlevoix, Michigan last August. I was perusing the local paper and decided to take a peek at the real estate listings on the back page. I noticed a condo for sale in the same development where my parent’s spend their summers. It was bare bones, with zero updates since having been built in 2005.

I figured, at $125,000 list price, what could it hurt to have a look? This area is a great summertime destination. A new vacation rental option started to dance around in my head.

What is Airbnb?

For those uninitiated (which included yours truly until a few years back), from Wikipedia:

Airbnb is an American company which hosts an online marketplace and hospitality service, for people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is a broker which receives percentage service fees from both guests and hosts in conjunction with every booking. In January 2018 the company had over 3,000,000 lodging listings in 65,000 cities and 191 countries.

For a company that started nine years ago, that’s a pretty impressive number of lodgings. How long did it take Hilton to build that many rooms? All Airbnb’s founders had to do was harness the Internet, create the marketplace, and take their 3% cut from each booking. Genius.

As we worked through the offer process and closing on the condo this past fall, I was also digging into my research. We’d stayed at a couple of Airbnbs, but we sure as heck hadn’t hosted any. A few helpful sources: Pinterest (see Financial Panther) and a very helpful book called “Get Paid for Your Pad” by Jasper Ribbers and Huzefa Kapadia.

The Easy Parts

Setting up your digs, whether it’s a spare room in your house, or a wholly furnished separate dwelling is pretty straightforward on Airbnb’s interface. I give them credit for creating a highly intuitive experience for hosts.

I will warn, however, that there are a LOT of variables that come with hosting. You don’t just set your nightly price, upload a bunch of pics and wait (and hope!) Nope. You’ve got to figure out check-in, check-out times. You need to create a house manual.

There’s more. Do you want to set a strict or flexible cancellation policy? Do you want to include a security deposit? How much will you charge guests for cleaning? This is where that handy book “Get Paid…” was a real life-saver.

1 So many variables to set!

Once you do get everything all set up, there’s a certain amount of apprehension that sets in. You have ZERO ratings. Who in their right mind would rent from you? This is why it’s super important to channel your inner marketing skills.

Study this sh*t out of your area Airbnb market. Use the best photos. Make sure your prices are strategically set to account for seasonality and local events. Even after you think you’ve got a handle on everything, be prepared to wait patiently.

I’ve got four whole bookings set for the next 9 months. Once reviews (hopefully 5 stars) start coming in, I’m certain the bookings will ramp up.

The Hard Parts

Then, there’s getting a place ready for prime time. In our case, we had purchased a really solid condominium unit that was not much over 10 years old. As they say with houses, “the bones were good.”

That said, the place was used as a Coast Guard rental. The carpet was original, and the walls were beaten up all to hell. There certainly weren’t any improvements that I could see during that first walk through. All original fixtures, and a lot of wear and tear.

Before…

The bottom line is you’ll likely need to put in some good ol’ fashioned elbow grease to get your property ready for vacation rental use. A LOT of elbow grease. Remember, these types of rentals have to be fully furnished (unlike long-term rentals, where tenants furnish the space.)

After…

Conclusion

I’m really enjoying the journey to my early retirement. Over the past three-plus years of the countdown, I’ve come to appreciate all the trouble I can get into outside of a cubicle. Working on homes and managing properties gets me out of a seated-all-day position. I get to produce something tangible.

We’ll see how the Airbnb Experiment goes. I’m optimistic about its potential, but I’m still learning and researching as much as I can before the high season hits this summer. Just this week, I’ve opted to fire up a listing on VRBO.com. Marketing through more than a single channel is never a bad idea.

I’ll leave you with one last bit of advice: More than anything, I’ve learned that early retirement is simply a means to an end. It should never be just an escape from a bad situation. Instead, “early retirement” is best when you use it as a launch pad for big ideas, projects, and hustles that align with your passion. Endless vacations get a little stale after a while.

12 thoughts on “How to get Started with Airbnb

  1. Tom @ Dividends Diversify

    I have tracked you down here Mr. Cubert. Your concluding thoughts are interesting to me. In my early 30s, I went through a mental transition. It became less about what I didn’t want to do and more about what I could do being FI. I think that’s a better way to live your life. I changed employers a number of times in my Corporate days. On the way out, I would always emphasize what I was going to and the personal growth and opportunity it would provide. I would never mention to the former employer their issues I was trying to get away from. Tom

    Reply
    1. Cubert

      Hey Tom! Funny how that works, right? I can easily say that simply escaping was all that mattered the first couple years of the journey. Slowly you come to grips with what might (or might not) await you the first day of early retirement.

      Reply
  2. Mr Defined Sight

    Love your story my friend. That’s a nice shot of the “beach” there. Reminds me of the Duluth area. I think your plan should provide nice income for you in the early retirement years.

    Reply
    1. Cubert

      Hey there, Mr Sight! I love this area of Michigan. It is a lot like the North Shore, but the beaches are sandy and you can swim without freezing to death! 😁

      Reply
  3. Financial Panther

    Will be interesting to see your Airbnb experiment as it progresses. I’ve noticed over the years that, the more you do Airbnb, the more routine and systemized things become – especially once you get all of your automated processes down (definitely use Aviva IQ, Hostfully, and Beyond Pricing – although I’m a little bit peeved at Beyond Pricing because they drastically did not understand the Super Bowl market here, hoping that was just a one time thing because of how unique the Super Bowl is).

    You’ve definitely done a good job of educating yourself too. If you’ve got time for Podcasts while you’re biking your way into work, I recommend listening to the Get Paid for Your Pad Podcast, and the Hosting Journey Podcast.

    Reply
    1. Cubert

      Hi Kevin! Thanks for the kind words! I’ve too noticed some interesting aspects of Beyond Pricing. They seem to low ball during high season. I’ve had to ratchet up the base rate to meet my “par.”

      Good luck this weekend hosting with the Super Bowl!! $$$

      Reply
    1. Cubert

      Hey there, Angela. It isn’t bad at all. Part of what helped was being in a good position to invest when the housing market was still recovering (A) and (B) that interest rates stayed below 5% for so long. And (C) you get a little better as you get experience. Like working with an insurance broker to find really low cost coverage policies. It all adds up. I guess if there’s a (D), I hadn’t expected the Minneapolis market to get as hot as it has. Thank you millennials!!!

      Reply
  4. Kat

    I’m really curious how you’ll find managing the condo as an AirBnb versus your long-term rental properties. Are your parents going to help you with turnover (cleaning, prepping for the next guests)? Or will you be hiring that out? I’ve got one or two places that would probably be more lucrative as AirBnb’s but I’m not sure that I want to deal with the added landlord-action. I feel most happy when I forget that I have tenants, hahaha.

    Reply
    1. Cubert

      Hi there, Kat! I have found a good cleaning lady to help with that. So I charge guests a cleaning fee that basically gets passed straight to my helper. She gets a $25 bonus for every 5 star review we achieve.

      I can tell you it is certainly more involved than my LTRs. I enjoy it for now, but I can see how over time it’ll potentially become a drag. That’s why I need it to perform at least 5% better than an LTR would, cash on cash wise.

      Reply

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