For the nineteenth episode of the DNQ interview series, I’d like to introduce Scott Jewell! I met Scott during my mini US solo road trip from September 6th to September 19th, in which I visited Denver, Austin, Chicago, Minneapolis, and LA. During the first leg of the journey, I stayed at an AirBnB in Denver and met Scott Jewell. He was managing the property I stayed at, but I quickly learned that he owned 3 AirBnB properties which generate a full-time income. However the great thing was, he mentioned that it definitely did not require full-time hours to keep the business running.
I wanted to learn how Scott built this AirBnB empire from ground up as it is something I want to pursue in the future. So without further ado, here is our interview!
How to Build an AirBnB Business with Scott Jewell
Sharon: Tell us about yourself!
Scott: By education and experience I am an engineer and entrepreneur. Instead of college I opted for an electronics’ trade school, and was lucky enough at 20 years old to get hired by a global biomedical company repairing robots that performed blood analysis. My first business was mowing neighbor’s lawns when I was 17, starting with a small lawn tractor. I have attempted 9 businesses since then. Though only two of them ever made any profit, all of them were priceless “learning experiences”.
Since 2004 I’ve been a vocal proponent and mentor for the high school level FIRST Robotics Competition, and soon I will be launching an education business I’ve started with several students (now engineers) and other people I’ve met through FIRST.
Sharon: How did you get started with the AirBnB business? Did you always know you wanted to pursue this path?
Scott: In 2012 I moved to Michigan to care for my elderly grandfather. When he passed away 3 years later I moved back to Colorado to be near my 4 kids. I was renting an apartment and wanted to buy a home, but I didn’t want a mortgage, I wanted cash flow. It was a friend who recommended I consider Airbnb. I’ve always wanted to own rental properties, but was totally unfamiliar with the short-term rental concept.
Sharon: Can you explain what AirBnB is for people who may not know?
Scott: Airbnb is a system that connects people who need a place to stay with people who have a space. Hosts can offer spare rooms for rent or entire homes. Whether you are a guest or a host the Airbnb system is comprehensive, providing almost everything needed.
Sharon: If you don’t mind me asking, how much success have you seen AKA how much revenue/profit are each of your properties generating per year?
Scott: Let me just say I earn between 3 and 6 times the income, depending on the time of year, than I would if I rented my homes for a 12 month term. My profit margin is roughly 40%, after paying mortgages, utilities, and consumables (breakfast, coffee, toilet paper, paper towels, shampoo, laundry detergent, etc).
Sharon: What things have you found are the most important to making an AirBnB listing successful?
Scott: It is the same answer for all real estate–location, location, location. Becoming a Superhost is also an important milestone, and maintaining that status is key.
Sharon: What features do you have to arrange with your properties to make sure they are adequate for AirBnB? For example wifi, plumbing, etc.
Scott: I buy the fastest Internet connection I can get. That is a double-edged sword, because while it is very much appreciated by guests, they also utilize it a lot. I average 1.5TB download each month just from my location in Colorado. I also had to purchase a commercial water heater, for about $6,500, to ensure there are no cold showers.
Sharon: Do you have tips on identifying a profitable location to invest in a property and is it easy to purchase property in other states? How much capital would you say you need to start with your first property?
Scott: Determine who your target market is. In Colorado I am near the Denver airport, so I get a lot of tourists and airline employees. In Michigan my home is in the epicenter of Automation Alley, being very close to hundreds of technology businesses, so I cater to engineers and student interns. In Hawaii my home is in a town where people move to for the private schools. Buying homes is easy pretty much anywhere in the USA. It is the management that is the bigger challenge. Each property will take a different amount of money to startup, but as an example my Colorado property cost me about $100k, with a 20% down payment to get a good interest rate, and to fully furnish it.
Sharon: Where did you find your property managers/cleaners and how much are the fees normally?
Scott: This one is tough. I am the property manager for my properties. I’ve delegated to a company before, and been burned, so if I can’t manage it myself I don’t want to do it. The most important thing is to have reliable cleaners who prepare the rooms for the next guests after guests checkout. If those cleaners can’t make it, and a guest checks into a space that has not been cleaned, that is pretty much worst case scenario in this business. I’ve only had it happen once, and it was because a guest did not respect the checkout time and the cleaners could not clean the space before a new guest arrived.
Sharon: How do you manage your AirBnB remotely?
Scott: Airbnb provides the communications and calendar functionalities. With that, and an electronic keypad that is connected to the Internet, I can login to my system and add people to the door lock. My challenge has become how to maintain my Superhost status remotely, when I can’t be at each location to host in-person.
Sharon: Now that you have 3 properties on AirBnB how many hours on average do you spend on the business per week?
Scott: My Hawaii home is not on Airbnb yet. My tenants there move out June 8th, 2018, so that is when I will convert to an Airbnb location. For my Colorado and Michigan homes, from May through August I literally had only 4 nights with any open beds. With 32 active listings that is amazing to me. It does take time to manage the communications with prospective and booked guests. I guess my average time is between 1 to 2 hours per day. Many guests stay multiple nights, so there are days when it takes no time at all. Keep in mind I delegate all the cleaning now. For the first 1.5 years, when I was doing the cleaning and making beds, it took me probably an average of 3 or 4 hours per day.
Sharon: What happens if guests damage the property (e.g. cause noise violations, does illegal activities, set the house on fire)? Does AirBnB insure you in any way? And what is your worst horror story with guests?
Scott: Airbnb does insure hosts against guests damaging their homes. I’ve never had to rely on their insurance (knock on wood), but with over 2,000 guests in 2 years I’ve had some bad guests. It is about 1 percent, or 20 people so far. I am very happy with that number, though it is a little concerning not knowing what guest will be the next bad one, and what they will do. One time I had a guest drink 17 beers between 10am and 3pm, and he was smoking marijuana too, though legally and I allow it per my house rules. However, he claimed to have a gun, cocaine, and heroine in his room. He became more and more belligerent and aggressive as the day went on, and eventually I had to call 911. Three police went around one side of the house, three around the other side, and three through the house, and they surrounded him with guns drawn and laid him out on the back patio and arrested him. They found no gun or illegal drugs, and the next day after he detoxed he didn’t remember anything. Even though my next door neighbors were outside with their kids and they witnessed the incident, they never complained. I got lucky. I installed cameras in key locations due to that particular incident.
Sharon: Do you get business on any other sites/platforms or is it mainly on AirBnB? Do you plan on expanding anytime soon, for example creating AirBnBs overseas or starting a hostel?
Scott: Airbnb is by far the best site for short-term guests. I also advertise directly to certain groups due to my proximity to the airport in Denver and my proximity to technology businesses in Michigan. My next expansion will be in Hawaii, which I am very excited about.
Sharon: Any last words and advice for beginners like me who want to get started?
Scott: Find a mentor, someone with lots of experience who can shorten your learning curve and ideally prevent you from making the same mistakes they made. Some mistakes are very costly, in terms of reviews, time, money, and sanity. In Denver we have an active Airbnb Meetup group that meets weekly to discuss local laws, best practices, stories, etc.
Scott Jewell was extremely helpful with advice on how to start up your own AirBnB business. It was an absolute pleasure to speak with him! It makes everything with AirBnb rental properties seem more doable, and I am sure I will attempt this route in the future. Thanks Scott!