Tag: airbnb

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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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Analyzing A Short Term Rental – Estimating Cash On Cash Returns

When analyzing a short term rental property, it is important to be able to estimate cash on cash returns. This allows you to understand whether something is a good investment or not. When you estimate your cash on cash returns, there are a few things you will need to first do.
 
Before reading this post, read the first two posts I had at the links below:
Now that you understand how to input those values, it is time to look at the last variables I have added to my analysis spreadsheet.
 
Ability To Increase Nightly and Occupancy Rates
There are two additional factors that are important to understand. These are your base night minimum rate and occupancy rate increases. I have added the ability to see what the impact of these variables are to your overall cash flow and cash on cash returns. The below snapshot shows how the inputs look on the excel file.
 
Occupancy and Nightly Rates
 
The beauty of the sensitivity analysis spreadsheet I have created is you can completely customize it. I have given the ability to analyze the property at 4 different occupancy levels. I have also given you the ability to analyze four different nightly rates.
 
What The Short Term Analysis Numbers Look Like
Here is a snapshot of what the final output looks like!
 
Nightly Rate Analysis
 
The numbers I have input in the above scenario are a real analysis done on a property recently. Let’s break down what we are looking at.
 
In the rows, I have grouped together the nightly rates. Taking an isolated look at one snip from the top, we can analyze what the minimum nightly rate returns look like.
 
Min Night Cash Returns
 
In the above screenshot, we can see the ‘Min Price Per Night’ is $111. Now moving to the right, we can see four different rows analyzing the property at 4 different occupancy rates. For this example, those occupancy rates are 70%, 75%, 80%, 85%.
 
The next column details out expenses. For this example, the expenses are $1,894 per month. This includes everything detailed out in the previous understanding expenses post.
 
Next, we get to income. This is where the nightly rate and occupancy rates come into play. At a 70% occupancy rate, you can see income generated of $2,331. At 75%, 80%, and 85% occupancy rates, the income increases to $2,498, $2,664, and $2,831 respectively.
 
The next column details out the monthly cash flow generated at each of the occupancy rates. The next column details out your cash on cash return. To understand more of what cash on cash (CoC) return means, feel free to click the link above. To have your cash on cash return calculate properly, you will need to input how much cash you invested in the purchase of the property (or renting/furnishing, etc.). High cash flow is great, but not if your cash on cash return isn’t high. I currently target 15-20% CoC return on short term rental properties.
 
Last but not least, you have the yearly cash flow! And just like that, you have successfully run the numbers for a short term rental property! You can see this same analysis performed on the rows below for the increased nightly rates.
 
Key Takeaways:
  • Understanding all components of analyzing a short term rental allows you to effectively run the numbers.
  • Occupancy levels and nightly price have a significant impact on cash flow. The ability to alter these to be conservative when you run the numbers allows for a great perspective. The better you get at getting a higher occupancy and higher nightly rental rates, the more cash you will see.
  • Cash on Cash return is one of the most important numbers to understand. The higher the cash on cash return, the better!

Interested to utilize my Short Term Rental Analysis Spreadsheet? You are in luck, I am currently offering a discounted price of $10 for the file! 

If you are interested in receiving this file, fill out the form below and I will email it to you!

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Don’t forget @TheYoungRetireeBy33 3 Core Principles:
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Airbnb Superhost Tip – Why Addressing Someone by Their First Name Makes a Difference

Want to know how to make your Airbnb guests feel like they have a connection with you from the beginning? What is the most amazing single word to any human being? Think about it for a minute. There are plenty of words that probably come to mind.

What is the first thing that came to mind? For me, I didn’t even come close.

The single most amazing word for any human is their name. Think about it. This is the one thing you have identified with your entire life.

So here is a very simple Airbnb Superhost tip to make your guests feel welcome and excited to stay at your place. Address them by their first name in all your messages! Don’t say bud, pal, dude, gal, etc. These are all informal and leave your Airbnb guests without the best experience.

Here is an example of a message I send to my Airbnb guests after they have a confirmed booking with me:

file

This message starts with me addressing them by their first name and then giving them a lot of great information about my place! It makes them feel welcome and also helps to confirm the date they will be arriving. It is the simple things like this that help reduce the amount of questions or concerns I have from guests.

Key Takeaways:

  • Communicate with your guest using their first name. It will make you seem more personable.
  • Give more information in messaging than simply saying, “Thanks for your reservation”
  • In subsequent messaging, continue addressing your guests at the beginning of the message by their first name

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