If you're dying to invest in an Airbnb but feel like you can't afford to buy a property right now - this episode is for you! Because the easiest first deal isn't always buying a whole house, instead it could be turning space you already have into a cash-flowing machine.
Today we're interviewing a man who did exactly that — and he's sitting on 55 five-star reviews while his basement Airbnb brings in $2,000 to $3,000 per month, covering most of his million-dollar mortgage!
By the end of this blog post, you'll know how to spot the "Airbnb opportunity" in your own home, what upgrades actually matter (and which are a waste), and how to create a five-star guest experience without spending hours glued to the Airbnb app!
Topics discussed in this episode:
- The Real Cash Flow Comparison of Airbnb vs. Long-Term Rental
- The Easiest Way To Get Into Airbnb Investing
- Which Upgrades To Do in Your Airbnb
- The Best Way To Make An Airbnb In Your Home Work
- How to Create 5-Star Experiences with Simple Hospitality Touches
Host Coach Airbnb Podcast Episode 124 Show Notes:
You said a little bit ago that You hoped it would make some money and you thought it might make more than a long-term rental. How much are you actually grossing on average per month?
So a long-term rental in the, in this area, that kind of rental, that kinda layout would probably rent for maybe a thousand or $1,200 a month if you were lucky. Our lowest month was the month that we started because we opened it on the fifth and then I had to block out a bunch of different days because we were out of town and whatever. And that month we made $1,900. This month (February) we've made over $3,100.
Wow, that's awesome. So it's triple, the long term rental income you would have made!
And how's that doing against the mortgage on the house?
The mortgage on the house is a little more than that but not by much. I'm looking at where our Pricelabs is projecting us in April and May, and I think in summer months we might be covering 80% to 90% of our mortgage, with that little room downstairs on Airbnb. On a million dollar plus mortgage even. That's fantastic.
How His Basement Airbnb Covers His Mortgage
So in one of the most expensive zip codes in the United States. You're almost covering your mortgage with a studio basement Airbnb. That's awesome. Listeners, if you're like, I need to get started. I can't afford to buy a place. If you have an empty space below you- learn from Mike.
Mike, what made you look at your basement and think this could be an Airbnb? What was that specific moment that sparked the idea?
My partner and I talked about renting it out long-term. And I didn't want a long-term tenant because a long-term tenant translates to someone has to come into my house and access my kitchen. And I wasn't big on that. And the other thing is in our area, upi can't evict a long-term tenant under almost any circumstances. And so it's a little bit scary, and it pays, a certain amount. But, when we started looking at Airbnb, I was running numbers and I said wait a minute. Hey, it's a little tiny space downstairs. I don't have to give access to the house. It's probably gonna pay a lot more. That was a guess that turned out to be very true.
And I have to tell you, I'm so excited about this episode because I think renting a space in the house that you already own is one of the most accessible ways to begin being an Airbnb investor. And we've never touched on the topic.
Preparing a Basement to Become a Profitable Airbnb
When you decided to move forward, did you have to fully renovate the space or was it more of a strategic decor transformation to make it an Airbnb?
The space was my office and it had a bed in it. We had always thought of it as my office slash spare room. We only have a three bedroom house and of course in Berkeley, a three bedroom house costs 11 bajillion dollars. My first thought was, okay, I need to bring my desk upstairs, because I work remotely. So, we had to do some furniture rearrangement. I had a wine fridge down there and I changed that out for a little fridge where we just put drinks. We have like a little mini bar, which we don't charge for. It's all complimentary: a couple vitamin water zeros, a couple Evian bottles, that's it.
We did a few minor changes but the bed stayed, the end table stayed. The desk changed into a standing desk. Actually you guys have talked about this on the podcast, the idea of a sit stand desk that is motorized looks very fancy. They cost under $200 on Wayfair, by the way. You can get a monitor arm for about 40 bucks and a 4K monitor... it's under 200 bucks. So you have a whole setup for well under $500. It looks much nicer than what I have seen most hosts have on Airbnb and so that's what we did.
The overall renovation cost about five grand because of all the different furniture and different amenities. I put in a really nice microwave air fryer, toaster thing. That was a bit of a mistake. I didn't need to spend $500 on that thing, but fine it's in there. People compliment the amenities constantly in the reviews. They're like, oh, you have the nicest amenities. It's really beautiful space.
Airbnb Guests' Favorite Amenity
So which specific amenity just one. Like do your guests rave about the most?
They love the workspace. And many people come for the workspace. I also did a Mac, wireless keyboard and a Mac track pad, which that's another $300 you wouldn't need to spend normally. I think that's a bit extreme, but I did it because it was downstairs and it's 10 feet away from my desk. So it's if I want to work down there, I can. So there are a few splurges that I did that were probably not splurges I would do a second time if I were doing this, but I wanted to make the space a beautiful space.
That work desk is, is your cover photo as I recall, right?
It is my cover photo because it also has a picture of my view. Our view in our front of our house is oak trees. You can barely see people walking up to the house, even from the office, which is on the lower floor because you're looking at oak trees. So it's pretty cool.
Setting Basement Airbnb Expectations
By the way, I was freaked out a little bit because it's below us, it's below our living room, right? We have a five-year-old daughter, like she's running around like crazy person and making noise and dropping stuff. I think the first sentence of the listing. I said, it's a lower floor unit you're below our living room right. Setting those expectations, no one has ever complained in private comments or public comments. Many people have said in private comments that they loved hearing our daughter run.
I'm a mom. You're a dad. How do you safeguard the fact that you have a young child and ywhat have you done safety precaution wise, because of that.?
Our Airbnb has a separate entrances completely, and obviously it has its own lock and all that kind of stuff. It does not have access to any part of the house. I'd say the closest I get to safety precautions is that when she's playing out front. I tell her, "someone is downstairs, she needs to stay on the upper part." But she loves to do chalk outlines and stuff on the walkways. And sometimes I'll warn people saying sorry, my daughter was decorating.
I think that's endearing, and I'm sure your guests do too. That takes one of my big things away. I would've been concerned like, "oh my gosh, like, do I feel secure sharing the bottom part of my house with someone?" but sounds like it's really not that big of a deal.
It hasn't been an issue at all.
Okay, that's awesome. And out of what 50 odd, reviews, you're hitting all five stars. I think we hit 55 five star review in a row. So the guests don't seem to mind.
How to Create 5-Star Airbnb Guest Experiences
Is there one thing that's really driving that consistent five-star guest experience?
I would say a few things that I really focused on was automating all the messaging. Making sure that all the messages were very clear about: thanks for booking. I'm gonna send you stuff in a few days. And then I even put at the bottom of that message, if you booked last minute, you're gonna get a whole bunch of messages. At the top of each of my messages, I put things like address in all caps so they can't be missed. And then I say, Hey, you're, you're showing up in a couple days. Here's the address. I put parking in all caps. Here's how to get parking and here's how to get into the unit. Because as you walk up to the house, there's two doors. So just being super, super clear in all of the messaging in advance, I think has really helped set expectations in advance.
Danielle's talked about this, I enjoy all the aspects hosting. I didn't realize how much I would love hosting, but it is just so much fun hosting and so when we're having a dinner party, whatever, I'll send guests a little note, I'll say. Hey, we're having a dinner party. It's gonna be a little noisy until eight or eight thirty. Our quiet hours start at 10PM. I say it's gonna be a little noisy. Do you want me to bring you down a slice of pizza? Do you want me to bring you a glass of wine? I've had some people take me up on it and I say, Hey, you want to come to the front deck here and look at the view of San Francisco Bay? It's just that hosting aspect, that kind of welcoming aspect to it. Even though it's a small room with a bed and a desk. It's still creating the experience.
If guestsmessage me that they're gonna get in super late, sometimes I'll go downstairs at 10 or 11 and I'll turn the heater on so that they're not walking into a cold room. Just little tiny things that honestly don't take very long. It might take three minutes in a day to do what I described. And I might do that two or three days a week at most. But that little stuff, people constantly compliment. They feel like they're they're staying at home. They have this great experience and I like hosting people. I don't know what to say. It's not what I was expecting.
You're reminding me, we have good friends in Turks and Caicos and they built a house, a small house for themselves, and then a guest house on the side of the pool for all of their children and their families to come visit. Without being disparaging. I don't know what's wrong with their children, but they very rarely came to the most beautiful place on Earth for free. So our friends ended up making it an Airbnb. And it's an island, so you don't get to see a lot of new people. They loved hosting. They would make little welcome drinks for people like a hotel or if people wanted their own space, leave them alone. But like you, they were surprised by how much fun they had being hosts and sharing the beauty of where they live with their guests.
The Importance of an Airbnb Moat
I have some pictures at the end of my listing that just are pictures of the park across the street. It looks like Rivendale and Lord of the Rings. There are beautiful little wooden paths and this beautiful dappled sunlight shining through. Those are the only pictures I didn't have professionally taken. I just took them with my iPhone at the golden hour. People are constantly saying, "oh, it's a gorgeous neighborhood, it's beautiful to walk in the park." I think a few episodes ago, one of your guests mentioned the Airbnb moat. I guess for this property, our moat our, is our park and our neighborhood. It's a very unique, pretty amazing thing.
For listeners who missed that episode, a moat is something that makes your Airbnb property very hard to duplicate. It could be a gorgeous view, really crazy architecture, that sort of a thing. It is what protects you from having people do exactly what you're doing and upset you as the competition.
The Biggest Airbnb Hosting Surprise
Aside from just loving hosting, is there anything that has surprised you about becoming an Airbnb host?
I've had businesses before, I've started businesses, I've closed businesses. We've all had the business that didn't work out right. And for me, my experience with starting businesses is it takes tremendous amounts of time and effort - it's almost a black hole of effort. You can just put as much effort in as you want all day, every day, and it just keeps sucking up effort and then you don't get paid anything. With Airbnb it was the exact opposite. I thought hosting I would be spending an hour a day on my mobile app answering silly questions and it would take lots of time, but we'd make a few thousand dollars a month, so it'd be worth the six hours a week I'd have to put into it. But I have to say the amount of time spent on Airbnb answering those questions probably five to 15 minutes a week. The amount of time I spend doing these little touches that I'm talking about is maybe, maybe half an hour a week- all combined.
So I'm spending three or four hours a month and I'm making $2,000 to $3,000 a month.
Most people would love to spend three hours a month to almost cover their mortgage. Like we always say, it's the most amount of money we've ever made for the least amount of effort.
That has resonated so many times when you say that, I'm like, "yeah, that is absolutely true." It's like the most dollars for the least. And I enjoy the input. I love messaging people about our dinner party and saying, "Hey, you want a piece of pizza and a glass of wine?" It takes me five minutes, but I really enjoy doing it, especially when they take me up on.
Advice for Renting Part of Your Home as an Airbnb
So for someone who's considering Airbnbing a portion of their home but feels nervous or overwhelmed, what advice would you give them?
I would say definitely do your due diligence on your neighborhood, look at your revenue potential metrics, and talk to Culin as an Airbnb coach to see what you expect the return to be to make sure it makes sense.
Also, spend an extra $50 here or $60 there. You don't need to spend $8000 on the bed. I'm sitting on a $750 mattress in my Airbnb. Yes, they have a $1200 and a $1500 and an $1,800 version. This is a really nice mattress. So don't go super cheap, but you don't have to go super, super fancy either depending on your demographic. For that room, I went a little fancy on a few things, just because it is higher end. Now in my new medium end unit, I'm going a little more medium end. Don't massively overspend when you don't need to. But if you're looking at the $280 fridge and it looks really pretty, or the $240 fridge and it's really ugly, spend the extra $40.
I have never regretted getting the slightly nicer version or the slightly more visually interesting version of something. Absolutely. The slightly more visually interesting. And even this bed I'm sitting in. I had showed it to Culin because I was like, I don't know, this one seems a little wild almost. It's a little bit exotic and it's black and he goes, it's going to go great.
I love that you got your design advice from Culin - not me!
I'm just parroting back things I've heard. It seems like every couple does have a design person, so you gotta ask your design person.
The Airbnb Success Mindset
How has the success of this first Airbnb changed how you think about investing and has it encouraged you to expand and explore other properties?
I'm literally sitting in property number two. We've been at this for all of four and a half months and I'm already working on my second Airbnb unit. I've always been a real estate guy, but usually it was long-term real estate and it was always "oh, if we slowly do this for 30 years, we're gonna have a good retirement." That's how long-term real estate works.
Now with short-term rentals and this Airbnb, the cash flow is insane. Just looking at our first unit, just within a month or two I reached out to Culin and I said, "Hey, I need a coach because I think I'm doing this again." Our insane success for this first unit means that we can't sit on the other real estate that we're holding, so I'm probably gonna convert some of it or all of it to short-term rentals on Airbnb. And that's what I'm doing right now. I'm all-in on the short-term rental front. That's the play we're making. It moves fast and gets addicting.
It's also tremendous fun. Now, a week and a half ago when this place had no floors, I wasn't having as much fun. But now that there are floors and we're all of a sudden getting furniture in and it's starting to look like an apartment, it is super, super exciting!
Thank you so much for sharing wisdom and enthusiasm. I'm sure our listeners are considering unused spaces in their homes, and who knows? One of our future episodes might be someone that was inspired by you!
Are you inspired by Kevin and want to rent out your basement, beach house, or long term rental to cover your mortgage? If expert guidance to make sure you're making the right decision and fast track the success of your Airbnb investment will give you the confidence to take the leap - that's what we do! Head over to HostCoach.co to book a free 30 minute Airbnb coaching call with us. And remember, our joy is in your success!
