How Profitable Is An Airbnb (6 month update)

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What's up guys, it's James here. And in today's video, I'm going to be talking about how profitable Airbnb is really are. And to do that, I'm actually going to show a six and a half month overview of where our properties out, we've been operating our property. For that I've talked about a bunch on this channel for about six months now as an Airbnb, and it's property that we bought for $520,000. In the middle of 2020, we did some renovation work to it, we got up and let's says an Airbnb. So I'm going to go through that, and I'm going to show a full behind the scenes update on exactly what the financials look like, I'm going to break down the income and also all of our expenses on the property. So you can see exactly how profitable Airbnb investing really is. Now, before we jump into that, and jump over to the computer here, I just want to remind you, we've got a free training linked in the description down below. So if you are interested in building massive cash flow and long term wealth from short term rental investing, you want to invest in Airbnb and vacation homes, then I highly recommend you check that training out, it's completely free, we're going to also give you access to our projection tool that we use for running analysis on properties. I'm going to walk you through all that. So I highly recommend checking it out, it's completely free. And it's going to provide a lot of value. So with that being said, let's go ahead and jump in. So this first spreadsheet here, this I'm going to go over in more detail here. This is our monthly statement spreadsheet. So this is just a Google sheet here that we use for tracking all of our income and all of our expenses. Now here is the actual performance on Airbnb so you can see and actually see verified the amount of money we have coming in. So I'll refresh the page here, just because I know some people are skeptical, and there are a lot of people that lie on the internet. So I'm obviously cognizant of that. So this is how our property is doing in 2021. You can see we listed halfway through the month of June. And we brought in $111,000, just over in the in the second half of 21. There with obviously the lion's share of the income coming in in July and August. That is the high season for this property for the area that it's in. We did remarkably well throughout what we call the low season here, frankly, a lot better than I was anticipating. And we're doing very well in in 2022 as well. So right now the time of filming this video, it is February 4. So we're we're just entering into into February here. We've got you know, a bunch of bookings for February, we've got $9,000, booked for February, and they're booked out into March and April a little bit. And then high season, we have our rates set astronomically high. So if you can believe it July, I want to say we've only got maybe about five to seven days booked. And we're already at $10,000 in bookings for July. So that is an indication we have a lot of bookings but not an indication that our calendar is very full, our calendar is still quite empty for July. And then this is just our hosting dashboard that we use, we use a tool called Host away to see now if you want to see the actual listing as well. Let me jump to that just so you can see quickly what this listing is. Let's do a quick preview of it. This is a property like I mentioned we bought for $520,000 we did about we spent about $80,000 additional getting it set up and that went into renovating and then also furnishing the property and buying different amenities like for example, this hot tub that you see. And so this is the property here it is a six bedroom property a couple hours north of Toronto sleeps up to 10 guests. And it's got two full bathrooms. It's right near the water, but not actually on the water. And so that's our property. So now let's jump into the financials. So this again, is a property that you want to remember, we bought it for $520,000. So if you are doing, you know, a typical 20% down, that means you're putting about $100,000 down plus we spent $80,000 on renovating and furnishing the property. Now a big chunk of that money we're gonna get back out when we refinance the property because when doing the renovation, we bumped the property's value up to about $640,000 What we had it appraised at stern for two I think it was, so you would be able to pull out some money through a refinance. Now, a lot of the time, you can actually structure deals for 10% down in some cases, even 5% down, we were able to do this deal with just 5% down. So that meant that we were actually only putting in about $35,000 into the down payment in addition to that $80,000 meaning that we're in it for about $115,000. So we should make back most of that initial investment, just in cash flow alone over the first year, not accounting for the fact that we've also added what does that work out to I guess about $60,000 in equity as well.
Let's jump into the numbers here and in a bit more detail. So this is basically our summary tab. And this is a summary for the entire property. So every single month is basically broken down into month by month tabs. I highly recommend if you're going to be investing in short term rental properties that you have a an actual spreadsheet or tool built out like this, so that you can keep track of everything. Because it's super important. There's a lot of different income that's coming in for the property. And there's a lot of different expenses that are going out for the property. So you want to make sure that you're tracking everything properly to make sure that you're not just, you know, bring money in, but then spending a whole bunch of money on your expenses every single month. Yeah, let's bring it down. So we've got basically gross booking revenue. And this is just from June when we pick the when we launched the property until the end of December. So we haven't actually done our reconciliation for the month of January yet. So this is just a six month period, basically. So we've got our goat gross booking revenue for Airbnb six and a half month I should say, which means that the monthly average you can see it's divided by 6.5. So we're averaging $15,000 a month from Airbnb, we brought in a little bit from other platforms. And then we've also got got cleaning fee revenue from Airbnb. So that brings our our actual monthly average average of revenue to 17 and a half $1,000. Our total in those six and a half months was $114,541. So a big chunk of change, right, that's over $100,000 In just six and a half months. So that's a pretty nice chunk of change. But obviously not all of that actually goes into the bottom line and ends up as profit. So we've got additional expenses, which I've detailed here. So this is going to be things like maintenance yard. So yard, like we've got a lawn that we need to be to mow, we've got quite a bit of yard that that needs just kind of maintaining. And then the winter time we've got snow removal we need done. So that's yard, you've got supplies. So that's going to be this this number is actually somewhat inflated, because we tend to buy our, our supplies for a six months worth of inventory at time, and we just bought another six months in December. So we've got all of our supplies that that amount, I think it was about $1,500 We spent on supplies, that's going to get averaged out over six months, but it's technically all logged in here. So this is a little bit inflated, but you've got your supplies and that's things like toilet paper dish. So pan, so paper towel, you know all the necessities that you have in a short term rental property. And then you've also got add ons. So that's basically going to be going to be anything that you're adding on amenities wise and for us because the first year operating this property, we're constantly adding new amenities to help improve the property. So, for example, we've added on snowshoes in the winter time, you know, we we've added on just different amenities. We've got a crib we've got a playpen for the bait for babies if they want if people want to bring their babies, just different stuffs, we're spending a couple $100 a month just kind of adding different amenities on. Now obviously, that's not going to happen every single month for all of eternity. But for the first year, we're constantly getting feedback from our guests. We're constantly adding things we're you know, we're going into a new season. So when winter time hit, we went, Okay, let's add some snowshoes there. I think that would be interesting. That'd be helpful for guests. So that's what that represents their cleaning expenses. Obviously, this
is a big one. That's where you're paying your cleaning team to go there and do turnovers at the property which for us in the in the high season. It's about one and a half times a week like they're going once to twice a week. Whereas they're going pretty consistently about two times a week in the low season just because we tend to get shorter length lengths of stay in the low season and then our carrying costs so that's going to be basically our mortgage our taxes our insurance on the property, which specifically covers robbery for short term rental, our utilities. So you know are water or propane or electric that kind of thing or internet expense. And so basically what this works out to is about $1,400 a month in additional expenses between maintenance repairs, yard supplies out on software, accounting, legal, all that stuff. And then yeah, there's a few software's we use as well those only equate to about $100 a month so nothing substantial there. Our cleaning fees are about $3,000 a month. By the time we pay our cleaners you pay them $450 to go by and clean the property because it is rural. So there's a bit of a drive out there and it's a pretty large property obviously there's a lot of beds there's a lot of linens to be done. And you know for us like I've always been of the opinion that cleaning is really the backbone of the operation. It's what ensures that the property is going to be up to par for guests. So I really want to make sure that our cleaners are getting fairly compensated for their time. I know people are going to be in the comments saying hey, you know you could do this for $15 now are paying $450 for a turnover is outrageous. I know I've been in the in the space for long enough to know that it is a premium we are paying for that cleaning. But my cleaners that I work with that we have for this property are absolutely phenomenal. I want them to succeed. I want them to love doing business with us. I want it to be a big win for them. And they are absolutely phenomenal. We consistently get ranked very highly for our cleaning. That's one of the things it's allowed us to achieve super host status which you know, just helps improve the performance of listing, they're constantly going above and beyond to make sure the place is absolutely pristine for guests, they're super reliable, I almost never have to communicate with them, they're super on the ball. So because of all that, I don't mind paying that premium for the cleaning, because they just do really, really fantastic work. And ultimately,
I'm paying a lot for peace of mind for myself, because I know that I don't have to stress and I don't have to worry about it. So it's more than worth it for me. Certainly, if you were starting out, and you wanted to, you could do the cleaning, and make $3,000 a month doing the cleaning yourself. And that's honestly a pretty decent gig like $3,000 A month $3,000 A month is not an inconsequential amount of money by any means. So if that's something that you want to do, when you're first starting out, you certainly can and you can earn some great additional income doing it that way. But for me, it's just I prefer to have the cleaning outsourced and to and I don't mind paying that additional, especially because it is such a variable cost, you know, we wouldn't obviously paying that it's not like we pay that regardless of the property gets booked or not. We only pay that because the property is doing so exceptionally well and getting booked up so consistently. So that's your cleaning fees, and then carrying costs. So for this property, the mortgage is about $2,000 a month, and then we've got our taxes, we've got our insurance, which is $3,000. For the year got our utilities, which especially throughout the winter months there, it starts to be a little bit higher with the heating expense, we've got our internet. So that basically works out to just shy of $3,700 a month, once everything is all said and done. And then baked into this as well. Yeah, there's just basically just all of our carrying costs for the property, our standard carrying costs. And so then we've got basically total operating costs, and our total operating cash flow, which basically works out to in those first six months, our Operating cash flow was $61,000, which worked out to on a monthly basis, sorry, this one's divided improperly. So this would actually be divided by 6.5. So just shy of $10,000 a month in operating cash flow. That's pretty awesome, right for one single property that we bought for $520,000. That is pretty insane, you know, six figures in income as an annual trend. And now the the last category you've got here is capital expenses. So those are going to be things like just any capital improvements that we're doing to the property replacing large ticket items, like for example, we had to we added an air conditioning unit, because it had central central heating, but didn't have central air conditioning. So those things are things that are going to actually help improve the value of the home their capital expenses, they're not, you know, your your maintenance expense or something that broke the use need to fix, it's a larger capital expense, you have to replace a roof, it would go in here, you remodel a bathroom, it would go in fear, that sort of thing. So we've been reinvesting into the property to the tune of $13,000 over the last six months. And so that basically works out to $2,000 a month that we're reinvesting back into improving the property. And so our actual net cash flow, like the actual additional money that we have in our pocket at the end of the six months is is $48,000. Just over that. So that basically breaks down to monthly just over just shy of seven and a half $1,000. So again, that's pretty fantastic. That's a really nice paying, you know, by North American standards, even that is a high paying income a high paying job, that puts you in the upper percentile. And that's just one property. So I hope you found this really interesting, I hope you found this helpful if you are looking to invest in a short term rental property, these are you know how the numbers work out on ours. Frankly, I think there's a still area for improvement, you know, I think our income has been quite high, we've done a great job of maximizing our income, but to be very candid and very kind of forthcoming in the video here and just kind of show behind the curtain of everything, I do think we can pull our expenses down quite a bit. So that's one of the things that I was just running through before doing this video. And looking at I think there's different areas where we can help to to decrease our expenses. And then one of the other things that's really nice is that as we're scaling and we're adding more properties to the portfolio, we do get economies of scale to a certain effect, because our maintenance person can, you know, can basically go buy different, different properties at the same time and kind of just be more efficient with how he's going. Going around to these properties. With them being more rural, there's a lot of travel time that we're kind of paying for. So being able to minimize that we'll be able to shave off some of some of those additional expenses. The other thing is we can buy supplies more in bulk and share them between property. So that creates a bit of efficiency there. But yeah, I think there's a little bit of room for improvement to the tune of a few $100 a month in terms of the additional expenses. But overall, I still think we're doing very, very well I'm very happy with the way this property is performing. So again, if you are interested in learning how you can pick up a property like this one and be able to do it in the best possible way in the best possible area that's going to profit really, really strong like this one and then either manage it yourself or hire professional manager so that it can be completely passive. Again, all that is linked in the training down below. We walk through step by step exactly how to do this some pitfalls to look out for. We give you a free resource which is basically the analysis spreadsheet that I use to analyze properties for the purpose of short term rental. So again, if you're interested in that if you want to get your hands on that training there's a link right down the description below I highly recommend that you check that training out. Let me know if you have any thoughts any questions anything you'd like to know more about, just let me know in the comment section below. If you're not already then make sure that you like this video and that you subscribe to the channel so you can stay up to date with our videos which we post twice every single week, or they're not yesterday and I will see you in the next video.