Month: February 2020

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Airbnb Financial Update – January Cash Flow

Time for a recap of my January cash flow for Airbnb. January was another great month from an income standpoint, but I did end up incurring one large expense! Time to dive into the numbers.

To checkout how my November Airbnb investment went, click the link here.

To checkout how my December Airbnb investment went, click the link above.

January Income Generated

In January, I was able to generate $4,413 of income. Of the income generated, here is the breakdown:

  • Nightly Stays: $3,423
  • Cleaning Fees: $990

Another solid month from an income perspective. My Airbnb ended up being booked all but three nights in the month!

This last month, I didn’t end up having any additional income generated from early check ins or heating the pool.

December Expenses

From an expense standpoint, there was one main driver behind higher expenses. I received a message from my pool guy at the end of December stating my pool pump was coming end of life.  I have never owned a pool before, so this has been the first major expense I have incurred with owning one. My pool guy has always been a straight up and honest guy, so I listened to his advice on purchasing a new pump.

All in the cost of a new pump with installation and labor was $2,472. I was able to cash flow this expense with my W2 and Airbnb income generated. Moving forward, I will be tracking the amount of money saved in a CapEx fund and will take out from that fund when things like this come up.

December Guest Experiences

Now time to look at how many guests I hosted this last month. In the month of December, I hosted 51 guests across 7 different bookings. Of the 7 stays, I received a review from each of my guests! Many hosts know getting your guests to leave a review can be difficult. I am also excited to say of the 7 reviews, all were 5 stars!

Here are some of the reviews left by my guests:

“YRB was extremely helpful and quick with his responses. The neighborhood was amazing and felt really safe! Would definitely recommend to a friend and would definitely stay again!!” – 5 star review

“This place is clean and the host is quick to respond to any needs or questions. Would highly recommend anyone to stay here.” – 5 star review

“YRB was an excellent host from start to finish. His place was clean, comfortable with warming touches. YRB was very quick to respond and always made sure we felt very welcomed. Highly recommended! When we come back if this place is available, it will be our go too. Thanks so much YRB!!” – 5 star review

Key Takeaways:

  • Overall occupancy rates in January seem to be strong in my market. The overall price per night was also strong with a few nights be key around New Years. 
  • If you can’t handle a larger expense in any given month, you need to evaluate whether or not this is for you. I am fortunate to have set myself in a situation where I can cashflow a large expense or put it on a credit card if need be. 
  • Engaging with your guests and offering exceptional customer experience will help to get you reviews! Not only reviews, but 5 star reviews!

Don’t forget @TheYoungRetireeBy33’s 3 Core Principles:

1 – Your money should make money for you⠀⠀⠀⠀⠀⠀⠀⠀⠀
2 – Start early to realize the power of compound interest⠀⠀⠀⠀⠀⠀⠀⠀⠀
3 – Eliminate your largest expense by house hacking

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Your Home Is Not An Asset – Here Is Why

My first introduction to the Financial Independence community came after reading Rich Dad Poor Dad. This book was a fundamental shift in mindset for me where I learned why your home is not an asset. This comes down to one simple principle. Your home is not an asset because it isn’t by definition an asset. Let’s explore the definition of an asset and a liability for further understanding.
 
Defining An Asset and Liability
There is one and only one critical thing you need to understand. An asset puts money back into your pocket. It is that simple. If you want to read a more complex explanation of an asset, you can click the link above.
 
Now let’s define a liability. A liability is something that takes money out of your pocket. Again, it is that simple.
 
Things People Believe Are Assets That Are Liabilities
Now that we have defined an asset and a liability, it is time to better understand things people have mixed up.
 
The first and most common is someone’s home. If you were to ask most individuals, they would tell you their home is their greatest asset. Let’s take a look back at the definition of an asset. An asset puts money into your pocket. Does your home put money into your pocket? If you aren’t house hacking, the answer would be no; therefore, your house by definition is not an asset. If you want to better understand how to turn your home into an asset, read the article I wrote about house hacking! 
 
Another common thing people think is an asset is their car. Your car takes money out of your pocket through insurance, gas, and common maintenance. For these reasons, your car is also a liability and not an asset.
 
How To Retire Early
Want to understand how you can become financially independent at a young age? Acquire assets and get rid of liabilities! It is really that simple. Once you have enough assets producing cash flow to fund your lifestyle, you will be out of the rat race. It is really that simple when you boil it down to the nuts and bolts.
 
The Key Problem With The World We Live In
The main issue with the world we live in is technology. We are being conditioned to believe we need things that bring us no value. These things are liabilities as they all take money out of our pocket. Some liabilities are much worse than others. The large car payment you took on to project a lifestyle you want people to believe you are living. The nice luxury watch you purchased to try and impress people. The larger home you purchased because you want to live in an uppity neighborhood.
 
These things are liabilities that draw you into a financial trap. You will never be able to get out of this trap if it you continue getting drawn in. You will continue wanting more and more. The last thing you purchased isn’t bringing you happiness which leads you to wanting the next thing. This cycle is an ever ending loop that is tough to get out of.
 
Key Takeaways:
  • An asset puts money into your pocket.
  • A liability takes money out of your pocket
  • Accumulate assets and get rid of liabilities. This will exponentially fast track you to financial independence.
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Are You Giving Your 100% Effort – Find Out By Asking One Question

Are you currently giving 100% effort it is in whatever you do? If you are not sure, here is one simple question you can ask yourself to find out. Look yourself in the mirror and ask, ‘Am I giving 100% effort right now in my life?’.
 
Simple.
 
If you can look into the mirror and you are okay with lying to yourself, my blog isn’t for you. It is important to always be subjective in your self reflection.
 
Why It Is Important To Be Truthful With Yourself
It is very easy to “drift” in this life. Technology and social media are teaching us more and more to forgot about doing things. It is much easier to lay on the couch and turn on Netflix while you are scrolling through your social media feeds. If you want to scroll through social media, at least check my instagram page out here. 
 
No matter where you are in life, and how much effort you are currently putting in, it is important to be honest with yourself. It is fine if you are not giving 100% today, this week, the last moth, or even looking back on your entire life. There is no reason to dwell in the past. It is all about refocusing your mind on the present and the future. There is one truth in life. You can’t buy time and you can’t go back and change things that have already happened. As bad as you may want to, as much money as you could pay, you can’t get time back. No reason to dwell on the past. Focus on the future.
 
Why This One Question Is So Effective
This one question is so impactful because of two things. First, because you are looking yourself in the mirror. It is always more difficult to lie to yourself when you are looking at yourself in the mirror.
 
Second, if you are being truthful with yourself, you will get a great understanding of how your effort has been.
 
Reflecting On The Last Month
When I look at myself in the mirror and ask if I have given 100% effort, here is my honest answer. No. I haven’t given 100% effort in all aspects of my life. There have been a lot of things going on, and I have let a few things slip through the cracks.
 
What I Am Grateful For
Although I know I can give more effort in many areas of my life, here are a few things I am grateful for:
  • Being able to promote three people on my team. There is nothing more satisfying than getting to see individuals grow and getting to pay them more.
  • All the amazing connections I have been able to make through my IG account and blog. I had the opportunity to meet a few people in person in January, and that was amazing.
  • Getting the opportunity to be on my second podcast! I am interested to hear how the interview turns up. There was so much we talked about in a very short amount of time.
  • All the amazing guests I have had at my Airbnb property in Orlando. Last month was a very good month from a financial standpoint. I am looking forward to sharing the numbers soon!
  • Continuing to have all three rooms in my house hack rented out to long term tenants. All young professionals and this investment has continued to be a great jump into real estate.
 
What I Can Give More Effort To
Here are some of the things I can continue to grow and get better at:
  • My regular day job. There have been a lot of changes within my companies leadership which has left a few things for my role up in the air. As things settle down, I am looking forward to see where I end up landing.
  • My search for more investment properties! I have seen a lot of great things with my first Airbnb property and want to snowball that into more properties! I have had a few weekends where I have gone all out, but I know I can do more.
  • That I didn’t put more offers on properties for my second house hack. I am excited and eager to buy my second house hack with a little different strategy this time.
Key Takeaways:
  • Look at yourself in the mirror and ask ‘Am I giving 100%?’
  • Be honest with yourself. It is okay if the answer is currently no.
  • Acknowledge where you are and aren’t giving 100%. There might be some areas you are and some areas you aren’t.