10 Sep

Generating a side income through Airbnb

I first setup my Airbnb account in 2011 as Hilary, Oliver, and I set out to travel around Europe for 5 weeks. Since then I’ve stayed at dozens of Airbnbs and loved all but one (unfortunately it’s not an interesting story).

Over the years I’ve always wanted to see the other side of it as a host—not just a guest. Though at the same time I didn’t want the potential life disruption renting out a room in our house, and it never seemed worth the effort to rent out our entire house while on a trip. So it never happened.

A few months ago we bought a small farm—4.6 acres in the middle of the city, but it feels like the country. Hilary has always wanted to have a homestead with farm animals and she finally got her chance. We’ve got lots of fruit trees, raspberries, a large barn, and no shortage of space. Best of all it’s still only 15 minutes from downtown Boise.

The guest house

One of my favorite things about the property is a small guest house on the other side of the orchard from the main house. It’s 550 square feet and has a small kitchen, living room, and even has it’s own little driveway and parking area. Basically everything you could want except for a washer and dryer.

Our little guest house

Remodeling

The place was pretty good, but still needed some help. The floors were a mix of old carpet, linoleum, and tile. The kitchen counters and cabinets definitely looked dated. And there was room for it to be a one bedroom place, instead of a studio if we just built another wall and added a door. The wall is done, but the door will have to wait until a time when we have a gap in our guests.

Tearing out old tile.

Gross.

The flooring cost $2 per square foot and then another $0.50 for the higher quality underlayment.

The flooring was pretty easy to install with help from a couple friends.

With family members coming in from out of town to stay with us for a month I didn’t have time to finish everything, but we got enough done that it was quite livable. Really we just had painting the cabinets and some other finish work left to do. Though it meant that I had to find a last minute solution for new countertops. I was able to buy butcher block countertops from Lowes for about $300 and install them in half a day. 

Starting to put the cabinets back in. Unfortunately we didn’t have time to paint them (yet).

 

 

You can see the new wall I built to make that doorway. Eventually it will have a sliding barn door turning this studio into a one bedroom.

The listing

The day after our family members went home I decided to list it on Airbnb. It was a Saturday night and we were leaving the next morning so I put the new listing live and went to bed. Since we didn’t have any reviews I started the price low at $50/night with a $25 cleaning fee. Then once we had a few reviews I planned to raise the price to closer to $70-75 per night.

Note: This place is super easy to clean, so the $25 cleaning fee is probably a bit high, but my idea was that I want to allow one night stays, but encourage a few nights. Including the cleaning fee it would be $75/night for one night, but only $58/night for 3 nights.

The listing was live by 10pm on Saturday night and I went to bed. When I woke up the next morning I saw that 30 minutes after listing it someone booked it for Sunday night, then 30 minutes after that someone else booked it for Monday night.

I was really surprised by the demand, then I remembered…the eclipse. Monday morning would be the total eclipse. In Boise it would get to 99.4% totality, but you could drive 45 minutes to get to 100%.

I had spent the last few days making our plans to go camping during the eclipse as well as to rent out our guest house on Airbnb. But for some reason had not made the connection between those two things.

When I looked on Airbnb for other properties available during the eclipse it was insane. Basically nothing was available and the little that was left was a guest bedroom for $300, an small house for $900, and then our guest house for $50. Oops. No wonder it was booked so quickly. I could have easily charged $200-300 a night and had it booked quickly (if anyone says I’m good at business, you can use this as a counterpoint).

Our first guests

Since we were headed up camping for Sunday night we didn’t meet our first guests. They checked themselves in and out quietly, then we paid the cleaning fee to a friend to clean the place and swap out the sheets (I did have to hurry out Sunday morning before we went camping to buy a second set of sheets).

Then other than a small mixup with the keys the second guests checked in smoothly. Both were out of town families who last minute needed new accommodations for the eclipse and were thrilled to find our place at such a good deal.

While camping we had a booking request for a month, but I declined it since the rates were still so low since I wanted reviews. An entire month booked to one person wouldn’t get me the reviews or make as much as I wanted.

Note: check your monthly discounts. I set ours at 35%, which sounded like a good number until I saw the numbers from a booking and it was less than I wanted to make. After that booking I dropped the discounts down to 10% for a week and 20% for a month.

After declining that booking I worried that I had made a mistake when we didn’t get any bookings for a couple days. Then one came in to book for two weeks, and another for one night just before that.

After those bookings I raised the price a bit more (up to $70/night). Then the guest staying two weeks asked to extend it for another month. Oddly enough the day I was talking to them about that someone else requested it for a month as well, which I declined since I figured the priority should go to the person already occupying the house.

Earnings

So far we’ll have earned $2,611 from Airbnb once these bookings finish. Not too bad for our first 7 weeks. Ideally I’d love to get the rates higher and be making about $2,000 a month with more shorter bookings, but I’ve heard from a few friends who host on Airbnb that the summer is the busiest time and it starts to drop off after that. Plus there really is quite a bit of competition for places in our price range in Boise (and many are closer to downtown).

This latest month-long stay was $1,607, so that is a good chunk of money for the month. Our mortgage (including taxes and insurance) is $2,644, so it’s nice to have our little guest house paying well over half.

Final thoughts

Overall the Airbnb has been a great experience. Having an entirely separate guest house means we barely interact with the guests. The remodel projects are really fun and I like continually improving the house—though it’s been booked so much I haven’t had a chance to keep doing projects on it like a sliding barn door for the bedroom and painting the kitchen cabinets.

If this continues to go well I may consider building a tiny house and parking that on our property to rent out as well. Mainly because I always wanted to build a tiny house. Though with everything going on in life right now, that may be a few years off.

Excited to see what the next year holds!

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12 Responses to “Generating a side income through Airbnb”

  1. $2000 a night would be awesome!!! (Think that may have been a typo ;))


  2. Tim Wright says:

    That sounds cool Nathan. Curious to see if a tiny house would be allowed at my place. It would be nice to have an extra revenue stream flowing like that. Thanks for bringing this topic up. Wishing you great success with your budding real estate empire. 😀


    • Nathan Barry says:

      Thanks! Yeah, it would mostly be because I really want to build a tiny house and this would be a way to put it to use. Though we have too many projects right now. Plus we just have so much land. We could do a full tiny house commune!


  3. So the secret is to buy a house… And pay it from AirBNB =D ?

    btw nice guest house!


  4. Colby says:

    I would live in that commune.


  5. Thanks for bringing up this topic, we have a spare room incl shower and toilet that we rent via Airbnb. The interaction with people from all around the world is so wonderful. I’m not in a position right now to travel that much AND still meet all kinds of people who come to me!
    Besides, the extra income stream is indeed a welcome benefit!
    So if you have plans to visit the Netherlands, look me up haha!
    Keep on rocking ;-)


  6. This is my dream. I love to host and generating some extra income doing it will make me super happy. Working on it :)

    Thanks for sharing Nathan.


  7. Have you run into any zoning issues? I know that Airbnb hosts have run into that before.


    • Nathan Barry says:

      No, this house has had the guest house on the property since it was built in 1994. I’m not sure it would work if we tried to do something similar now.


  8. Good story.
    We bought a condo in a ski resort and thought we would rent it out when we where not using it
    It started out fine. We would use it a couple days a week and rent it out he rest. We would be the cleaners when we used it.
    We where surprised that we where making so much money from this. It became so booked up and profitable thatvwe bought a second one in the same complex so we could get there to use it. It now is also booked every day and brings in. 2x-5x our monthly cost every month.

    We then thought we would buy a condo in the big city is the best neighborhood so we could go there once in a while to stay the weekend.
    Our ski resort units allow nightly rentals. But the city requires 30 days or more no nightly rental. We thought for sure with this restriction we would have ample time in the city.

    Not to be the case it is tebted out every month at 3x our cost minimum. So we bought our fourth condo hoping to use that one but now it is rented out all the tine two.
    We too started by saying we will paint his or fix up that but our four condos are rented out so much we may never be able to do those improvements and yet people love our places.

    Airbnb started as a mortgage helper for our get away condo but now is turning into a second business. We are careful to work within the rules and the laws. Have the business license and pay all the taxes including hotel tax resort tax federal and provential tax and even income tax.
    All in it has been a great experience

    We are now planning a trip to Hawaii to look at condos there to do the same thing.


    • Nathan Barry says:

      Wow, that’s pretty incredible! How has it been managing all of those from a distance?


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