Airbnb,  Financial Freedom,  Planning

House Hacking With Airbnb Changed My Life!

House hacking with Airbnb is, in my opinion, the absolute best way to get started in real estate investing. I probably believe that because it’s what I did and it worked out great!

Kate and I bought our home without any consideration for a house hack. We were fortunate in that we were able to convert our basement level into a full on Airbnb with a separate entrance.

If I could go back in time, I think we would look for some slightly different things in our house for the ideal Airbnb house hack. today, I want to talk about what that would look like for us (if we could go back in time).

A beautiful kitchen

My Story

Kate and I turned our home into an investment by listing our basement on Airbnb. It honestly changed our lives. Here’s the story.

Early failures

We had spent the last 8-10 months learning and taking steps to get into the world of real estate investment, with no luck so far. The original plan was to do a fix and flip.

Kate and I had read several books, done lots of research online and been listening to the Bigger Pockets podcast. We found a realtor (by calling the numbers we found on “for sale” signs), and had started to visit houses for sale. We even found a few place that we wanted to buy, put an offer in and got the offer accepted.

The problem was, after that we couldn’t get any banks to give us a loan for the property. We had to back out of the deal and it was embarrassing.

The turning point

After that experience we decided to pursue a long term rental (rather than a fix and flip) and meet with a bunch of banks in town to get approval for financing before we made our offers.

Two things happened within the same month, August 2017. We got an offer accepted on a triplex, and we got the idea to list our basement on Airbnb. The next few months were spent working with the banks on our triplex investment, as well as renovating our basement.

We installed flooring, painted walls, scraped ceilings, put up walls and a door to separate the basement from the main floor, and started furnishing our basement. I think we spent between $2,000 and $3,000 doing the renovation.

Within a few weeks we closed on the triplex and listed our basement.

Life changing surprise

The day we finished our renovations for our basement, Kate spent that evening taking pictures and setting up our listing on Airbnb. Then we went to bed for the night.

When we woke up the next morning (I’m serious, like 9 hours later) we had booked 8 different guests for 15 nights and were set to be paid out over $1,200 over the next month.

I mean we were HOPING for $300-500 per month and less than 24 hours after listing our basement, we had booked triple that amount!

For the last three years our basement Airbnb has been making Kate and I nearly $1,500 per month on average. It’s turned our home, that was once a liability, into a true cash flowing asset for us.

Our big pivot

After the surprise of all the Airbnb income, we continued working to renovate and rent out the triplex we had just bought. That triplex has done quite well for us, but we decided that every investment property we bought after that would be listed on Airbnb.

The results have been pretty incredible, but that’s not what this article is about. We now have three listings on Airbnb and we’re gearing up to do it again.

With the last three years of experience doing short term rentals, I want to talk about how we would do our Airbnb house hack if we were starting all over again from scratch.

The Perfect Airbnb House Hack

If I were stripped of everything today and had to start investing all over again. The first thing I would do is buy a house with the intention of doing an Airbnb house hack.

Here’s what my perfect Airbnb house hack would look like.

What guests are looking for

It’s important to first understand what Airbnb users are looking for in a listing in your town. You should spend some time asking yourself why people visit your town.

If you live in a large city, people visit for dozens of reasons:

  • Visit friends and family
  • See sports teams play
  • Job interviews
  • Attend events
  • A pit stop on a road trip
  • Vacation

The list of reasons may be much smaller if you live in a smaller town. One of the most important things to be aware of is where people will want to go while they stay with you.

If your city has a downtown, chances are lots of your guests will want to visit places downtown. If your city has a baseball stadium, or a university, or an event center, people may want to visit those as well.

You want your house to be as close as possible to those areas of interest.

But it doesn’t stop there. Here are lots of other things travelers will be looking for in an Airbnb:

  1. Can I cook there?
  2. How guests will it hold?
  3. How many bedrooms/bathrooms?
  4. Does it look relaxing?
  5. Will I feel at home?
  6. Will I feel safe?
  7. Is staying there an experience?
  8. What did other people say about this place?
  9. Do they have Wifi/Netflix/Cable/Local TV?
  10. Is there a coffee maker or breakfast food?

In order to succeed with Airbnb, it’s not enough simply to be an accommodating host. Most of your guests will book before ever interacting with you.

They will make their decision based on your picture, your list of amenities, and your reviews.

Being a great host will help you get good reviews, but it won’t really help you get bookings. You need your listing to speak for itself by making people click through (with amazing pictures) and checking off all their boxes (by providing all the amenities).

Once you’ve gotten into the mind of your guests a little bit, it’s time to find the right house.

Find the right house

In my experience, the best and highest paying guests on Airbnb want a “whole house.” They don’t want just a bedroom inside of a shared living space. They want privacy.

And in a post-Covid world, they want physical isolation from other people, too.

So I would look for a home that could be turned into two distinct living spaces. Here are my MUST HAVES:

  1. Separate entrance for myself and my guests
  2. Physical separation between me and my guests (walls and doors are sufficient)
  3. At least 1 bedroom for the guests and for myself (guest bedroom must have a King bed)
  4. At least 1 bathroom for the guests and for myself
  5. Some common area for the guests and for myself
  6. Home is reasonably close to at least one in demand feature of my town (downtown, stadium, university, etc.)

And here are my NICE TO HAVES:

  1. Separate ventilation for me and guests (not breathing the same air)
  2. Separate parking for me and guests
  3. 2 bedrooms for guests
  4. Kitchen or kitchenette for guests
  5. Washer and dryer for guests

I want to be able to host at least 4 guests, which means I need to fit a minimum of two beds in the Airbnb space. At least one bedroom in the rental space must be able to fit a King sized bed.

Filling in the necessities

Finding the right house helps with many of the amenities guests are looking for, but you need to take it even further.

Here are some things EVERY Airbnb should have:

  1. A King bed (guests want luxury if they’re paying to stay)
  2. Free WIFI
  3. A TV with something they can turn on (Netflix, Local TV, Cable, Disney+, Hulu, Amazon Prime, Blu Ray with movies ready to go)
  4. Coffee maker with coffee ready to use
  5. Something for guests to eat for breakfast (you’re running a bed and breakfast)

And here are some ways to really take your listing to the next level:

  1. High chair, pack n’ play, baby monitor for infants/toddlers
  2. Toys for kids
  3. Hair dryer, makeup wipes
  4. Stuff to cook with (toaster, crock pot, pots, pans, oil, salt and pepper, cooking utensils, silverware)
  5. A grill
  6. Soap and shampoo in the shower
  7. A guest book
  8. Suggestions for local restaurants and activities
  9. Washer and dryer with detergent and dryer sheets
  10. Gaming console
  11. Safety features (first aid kit, fire extinguisher, carbon monoxide and smoke alarms)

Ideally, you’ll take care of your guests needs before they ever have to ask for anything. They wake up and want their morning coffee, but they weren’t really thinking about that when they booked. They walk out in the kitchen and HELLO there’s a Keurig with coffee pods ready to go.

That will show up on your reviews and when people click through to your listing they’ll see reviews like “He thought of everything! I had food and coffee in the morning and there was a list of suggested restaurants on the wall. This place was amazing!”

Those are the kind of reviews that make people book. If your place has everything a guest could want, they’ll leave happy and satisfied with their stay, and that will pay huge dividends to you through great reviews AND lots of multiple-bookings.

Take care of your guests and they will come looking for your listing the next time they visit.

Create a beautiful space (and take intriguing pictures)

In many ways, the pictures are THE MOST IMPORTANT part of your listing. You have to think about the process a guest takes to booking.

First they go to Airbnb.com, then they type in the city they’re visiting and the dates they want to stay. They might even enter the number of guests. Then what comes back is a bunch of listings.

But what makes a person click on a particular listing?

Example of Airbnb listings in Los Angeles

THE PICTURE!!!

You absolutely, must Must MUST, have an engaging cover photo on your listing. This is how you get people to click through to your listing.

Kate is the master behind our Airbnb interior designs. Everything I know about designing an attractive space I learned from her.

If you’re not much of an interior designer, find a friend who is. You really have to spend some time making your space attractive, it is probably the best return on investment you can get for an Airbnb.

In the mind of your guests

Let’s tie this all together. You have to remember what your guests go through when they decide to book a place. Here’s how you get lots and lots of bookings to your Airbnb house hack.

1. Have a super attractive/inviting cover photo

You must have an attractive cover photo on your listing. This will get people to click into your listing when it shows up in the Airbnb search results.

2. Have every amenity imaginable

Once they click into your listing they’ll be looking at photos, sure, but they will also be checking your amenities. Do you have enough beds? Can they cook in your space? Will they have WIFI and TV?

You need to be able to check off all their boxes, otherwise you will lose lots of potential bookings.

3. Exceed expectations

If you have all the essentials, that’s great, but everyone has the essentials. You need to take it a step further by having those “thoughtful touches.” A guest book, a list of the best restaurants and attractions in your area, hand sanitizer, board games, instructions for turning on Netflix.

Whatever it is, you want to be able to answer your guests questions and meet their needs before they ever ask you.

If you do this then you’ll get loving reviews, and the reviews are what really seal the deal for inquiring guests.

Beautiful pictures? Check.

All the amenities? Check.

Rave reviews? Check.

That’s when guests will click that button to book.

Check In/Check Out Process

One last thing I want to talk about. You want a completely painless check in and check out process.

This probably won’t make or break your profitability, but it will make or break your sanity.

You need your guests to be able to check in and out without your intervention. They should be able to let themselves in, and then let themselves out.

Here’s the long and the short of it: you want guests to be able to stay in your place while you’re on vacation.

Here are my recommendations:

  • Get either a keypad, or a code secured lockbox with the house key
  • If possible, your keypad should lock itself
  • Don’t change the code for every guest. You’ll forget every once in a while and your guest will not be happy. Change your codes every month or two.
  • Use an automated messaging service (I use hosttools.com). You’ll never forget to update your guests about check ins.

We’ve run into lots of problems with check in and check out over the last three years and we’ve really dumbed down our process.

It’s a bit of trial and error, but my biggest recommendations are above. Don’t get too fancy. You want everyone from college kids to your tech illiterate grandmother to be able to operate your lock.

Keep it simple.

Conclusion

In my opinion, Airbnb is the way to go for house hacking. If you do all the right things, you can pay your home’s mortgage, utilities and maintenance costs with the revenue from your Airbnb listing.

The most important thing is always to remember what your guests’ experience is. From the process of choosing a place to book to the experience of staying in your space, your guests should have their expectations met or exceeded.

Happy investing.

Michael

I'm living the path to financial success and sharing everything I learn in this blog. I believe in the power of cash flowing investments, due diligence and time. This is my journey so far.

I learned everything I know from books, podcasts, conversations with friends and family and of course through real world experience as a cash flow investor. And I'm always pushing to learn more.

To see my investing timeline, check out our about page

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