Introduction
In this blog post, we’re going to delve into the exciting journey of how we acquired our most recent Airbnb property, transformed it through renovations, and turned it into a successful rental unit. From the initial purchase to the first booking, we’ll cover it all.
Let’s dive in!
How We Bought The Property
Our journey began when we spotted a property on Zillow listed at $339,900. Over time, its price dropped to $315,900 and eventually to $259,000, catching our attention. Despite challenges in reaching out to the wholesaler and agent, we persevered. After a back-and-forth with another potential buyer, we managed to secure the property at $253,000, backed by a closing cost of $2,595.
We invested $55,595 in cash for the purchase.
Renovation Costs
Initially, we estimated renovations at $50,000, but our vision grew. With thoughts of making it our primary residence, we invested more in upgrades. In the end, the renovations, including labor and materials, totaled $76,215.27. The improvements, from new drywall to upgraded flooring and unique touches, were worth it.
Getting It Airbnb-Ready
Preparing the property for Airbnb was crucial. We spent $3,890 on essential appliances, smart locks, and security features. Furnishing the property came at a cost of $7,900, encompassing everything from comfortable beds to homey décor. The total investment for Airbnb readiness was $11,790.
How We Got Our First Booking
Our Airbnb journey took an unexpected turn when we received our first booking sooner than expected. Despite the property being around 90% ready, we scrambled to make it guest-worthy. After a whirlwind of preparations, including cleaning, fixing, and furnishing, we welcomed our first guests.
The experience was both exhilarating and challenging.
Cash Flow Numbers
Our strategy paid off, yielding a 71% occupancy rate in July. Generating $5,810 in revenue, we subtracted $1,110 for cleaning, leaving us with $4,700 in rental income. Expenses such as property taxes, insurance, and utilities amounted to around $1,000.
As a result, our monthly profit stood at $3,700, a solid step toward our goal of $4,000 to $5,000.
My Final Thoughts
Our furnished rental venture was driven by a desire for location independence and financial freedom. The emotional connection to our project has made it more fulfilling, as we engage with guests and ensure their comfort. This hands-on approach has given us a sense of pride and satisfaction that goes beyond the financial gains.
Conclusion
Our journey from property purchase to a successful Airbnb operation has been an exciting one.
From strategic acquisition to thoughtful renovations, we’ve turned a vision into reality. Our journey is ongoing, with plans to expand our rental model and explore new ways to automate and delegate tasks. As we continue to refine our approach, we’re excited about the future possibilities and the positive impact our venture can have.
Thank you for joining us on this adventure, and stay tuned for more updates and insights.
Below is a transcription of the podcast. This transcription was taken from Otter.ai so it might not be completely accurate:
Sharon Tseung 0:02
This is the digital nomad quest podcast with Sharon Tseung. teaching people how to build passive income, become financially free and design their best lives. Hey guys, it’s Sharon Tseung. And in one of my previous episodes, I did a tour of our finished Airbnb and I got a lot of comps that you guys wanted to see the numbers on the property. So I’m going to go over how much we bought it at how much we put into renovations and how much we’re renting it out for as well as the expenses. So let’s get started. First, I wanted to recap and talk about how we bought the property. So we saw this on Zillow for months listed at $339,900 and I was watching as a dropped at $315,900. And then I saw that it was sold but then after months, I saw wholesaler listing it at a much lower price of $269,000 which piqued my interest but I didn’t do anything about it. And after a few weeks, it dropped to $259,000 and right then I decided I needed to find out more about it. I was wondering why it wasn’t selling but it was weird because I was having trouble reaching out to the wholesaler as well as the agent who listed it on Zillow. They weren’t picking up their phones or texting back yet the wholesaler dropped the price yet again to $255,000 while the agent posted it back on Zillow. And I was like, wow, both parties are just not answering me. But I know the property still out there, I decided to put an offer on the wholesaler listing at $245,000. But it was more of a casual inquiry to hopefully get some response. One day we were at the library working and the wholesaler called us saying he was looking for to under $50,000. So he put in the offer. But then he said there was another interested party and they needed a higher offer. So at this point, I was getting frustrated, especially because Shawn was saying he didn’t want to get the property we were arguing and it was a whole ordeal because it was something I really wanted for my goals. At first I was letting go the idea of buying it. But I realized I had let multiple properties slip away that I wanted and this time add to be more resolute instead of abiding by others. So at this point, we were kind of upset with each other. But Shawn actually got a call. And since he knew I really wanted it, he was able to win the house at $253,000, which I was super happy about the closing costs were $2,595. And we paid all cash for the $253,000 property. So all in on the property we put into under $55,595. Now let’s get into the renovation costs. Now initially, we estimated the renovations to be around $50,000. But because we decided to upgrade the house more and more, we ended up spending over this amount. The thing is, at one point we were actually considering living in this property and moving out and renting out our current primary. So we figured we should upgrade the home into something that we’d be happy living in. But in the end, we decided to go back to the original plan and making this into a future midterm rental the entire renovation, including labor and material cost about $76,215.27 And it took about five months. So yeah, we did go over quite a bit from the 50,000 projected but I thought that ended up being pretty good because we did end up making a lot of upgrades like using completely new drywall and flooring, adding a hallway lifting our bathroom further downs doing epoxy over our countertops and moving a closet from one room to another room and a lot of other things that puts us at $331,810 spent to purchase it and get it renovated. But now aside from that we had to get this place rent ready for Airbnb. So let’s talk numbers here. So we spent $3,890 for appliances, doorbell cameras, thermostats, and smart locks and $7,900 for furnishing of property which we basically add things like beds, home decor, kitchen supplies, dressers, TVs, a bunch of other things to furnish the property. So including the two it was about $11,790 to get everything furnished so in total to get our Airbnb up and running we put in $343,600. And that’s a lot of money to be honest. And it’s kind of crazy writing this all down and looking back at it, but the ARV on the property is around 400,000 or more on this home with some comparables selling at 425 to $450,000 in the area. And that’s where four bedroom homes and our home is a fire we expect the price to continue to increase in the future as a neighborhood. It’s pretty nice. And in fact, it’s actually much nicer than our current neighborhood where we live and many people have told us it’s an up and coming area. Alright, now let’s talk about how we got our first booking. So right now our house is a short term rental because we are building up reviews but in the future we plan on making it a 31 plus night minimum stay making it into a mid term rental and we hope that we’ll still get good traction right now we’re renting it out for about 165 to $200 a night and for a decent size five bedroom home that’s pretty affordable to be honest. We took about a month to get the place furnished but the funny thing is we were lagging it for a while and we just threw up the listing thinking nobody would book it yet, especially as it lacked reviews, but we figured we might as well start advertising it already. Well. One day, we were playing video games late at night, probably around 10 or 11pm. And then we got a booking for the next day we were freaking out because the place wasn’t even ready. It’s probably 90% Ready, we were super excited. We created a game plan to wake up early in the morning to get it all ready, the place needed a good clean, and we needed to fix little things like adding the welcome basket and booklet installing curtain rods, smoke detectors, adjusting the doors to lock properly and buying kitchen things like pots and pans. And looking back that was a crazy day, we worked nonstop and split up all the tasks. And luckily I had prepared in advance when it comes to the cleaning like testing cleaners on our primary house. And we hired the cleaners through Turner, I’ll put a link below if you’re interested in checking that out. But cleaners through Turnell are experienced with furnished rentals. So we had a good experience with them and asked if they could help us out with an emergency clean the next day. And luckily they did it was crazy. But now our place has been booked out pretty well, it still hasn’t gotten three reviews yet, which is the minimum it requires for the star rating to be shown when searching. So I’m hoping that once we get that we’ll get more bookings, fingers crossed. All right now let’s talk numbers. So it’s about the end of July now and we got a 71% occupancy rate for the month, which I would say isn’t bad. In total, we were paid $5,810 for the month. But out of that number we paid $1,110 for cleaning. So that leaves us at about $4,700 in rental income. And since we don’t have a mortgage on this, our property taxes insurance and utilities on this property makes our expenses at about $1,000. So deducting that we basically profited about $3,700 This month, which I’m super excited about my goal was four to $5,000. Net, so I’m hoping that future months will be even better. But I’m already happy with the current progress to improve the occupancy rate. We recently went with a tool called price Labs, which helps automatically adjust our pricing settings daily to try to get our place booked out as much as possible. And we’re hoping that this helps if you’re interested in price labs, I’ll put it in the link in the description below. The next challenge will also be when we convert it to a midterm rental and we’ll see if we get similar rental income by doing so. But the great thing is when converting it to 31 plus nice day, there’ll be less turns which requires less management. But even without doing all this we’re also working on ways we can delegate tasks and use tools to automate things even more. So overall, I’m very happy with how things are going and basically has been going pretty according to plan. As you may have seen in previous episodes, I wanted to get a furnished rental so we can start building our system and team of cleaners and handyman who could actually manage when we are converting our primary home into an air b&b. So I’ve talked about this before. But basically we’re planning to move to Asia for at least three to four months, we’ve already signed up for this language immersion program in Taiwan, we’re going to be going to class 15 hours a week and really taking it seriously to get better at Mandarin. And in order for us to do this, I really wanted to rent out this place so that we could kind of do another Airbnb house hack. So now that we have the system down for this other furnished rental, we’re going to apply it here and we’re actually going to be in Europe in September. So I’m hoping that we can actually rent this place out while we’re there so that we can start practicing making sure the systems are right for this house as well. So I’ve been really enjoying this strategy of converting our primary homes into furnished rentals and kind of house hacking in this way. Normally we’d be buying aggressively out of state but ever since moving here in Texas, we decided we want to buy more investments in this area. So hopefully you guys enjoyed this episode on all the number breakdown. As you can see, a lot of this was tailored to my personal goals being able to become more location independent, financially free but also it’s really nice buying furnished rentals because actually have a lot of happiness doing this whole thing. For example, the other day, the guest wanted a toaster we didn’t have in the house. So we rushed over Walmart to get it and we got to talk to the guests for a little bit and for some reason, it just gave me so much fulfillment to be able to help them and they were really thankful they thought the place was great. And I’m just more emotionally involved I guess with this business because I like talking to the guests making sure they’re having a good time especially on this project that I really cared about when this house was potentially going to be our primary home you know, you end up being more invested into the project. So I hope you guys enjoyed this episode. Please make sure to rate review and subscribe. It really helps our podcast grow. And thanks again. I’ll see you guys in the next one.
