Friday, October 5

AirBnB September Performance

Our goal is to generate enough passive recurring income to be truly financially independent.  We are getting super close to reaching this goal:  the first milestone I'd like to hit is to consistently receive $10,000 per month in passive recurring income.

Passive Recurring Income (PRR):  Money I receive with minimal effort.  Meeting jobs, Amazon deliveries, etc. are NOT passive.  Stock dividends, long-term rental income, and our new AirBnB property represent the bulk of our PRR right now.

AirBnB is Live!

Last month we moved to our new house and went live with the AirBnB.  I expect this short-term rental to be an important contributor to our financial independence.

I want to nurture this business to give it the best chance of being hugely successful.  I went promo-heavy, offering a 20% discount for the first 3 bookings, and I kept the nightly rates super low to attract reservations.  I did this to generate traffic, which helps in several ways:  
  • First, most guests want to see reviews before they reserve a vacation rental.  I needed to lure in my first guests to generate reviews.   In September the home received 4 reviews, and they were all 5 star ratings!
  • Second, AirBnB uses an algorithm to decide which listings are prominently displayed in search results.  My home is in Largo, FL, adjacent to Clearwater, which I suspect is the city most people use when searching for a home in this area.  Keeping it prominent means my Largo home shows up on the map when a guest is looking at Clearwater homes.  
  • Another benefit (not sure if this is helpful or not) is that, since I generated so many reservations early on, my home is already considered a "Rare Find" on AirBnB.
My business plan for now is to maximize bookings, even if that means the nightly rate is lower than it needs to be.  I want to generate more guest reviews, get a good system in place for turning the property over, and stay high on AirBnB's search results.  Secondarily, I'm going to keep testing rate increases to determine the true market value of my home.  Some of the first bookings were incredible bargains:  $38/night for a 3 bedroom, 2 bath house.  But I have already begun increasing rates.  The latest bookings have been averaging close to $70/night.

Financial Performance

September 11th was our "go live" date.  From the 11th through the 30th, I blocked 4 days from being available (we were out of town).  Every other day was occupied.

Occupancy Rate:  100% (18 of 18 days booked)
Payments Received:  $736
Expenses:  $3,072
Net Loss:  $2,336

Like I said, early reservations were at bargain-basement rates.  Also, the house was only available for 18 nights.  The monthly income from this home will be much higher moving forward.  Expenses were very high because I've never been an AirBnB before.  We bought multiple sheet sets, pillows, and supplies to stock the home.  Expenses will decrease over time.  In fact, in October I expect to receive more income than I spend.  Profit in the second month?  I'll take that!

I plan to do a monthly post about this exciting new income stream.  If there is something I have left out that you would like to see, please let me know in the comments.

Wednesday, October 3

My Frugal Miser - September Expenses: $8,956


September?  Expensive as usual!  One new ongoing expense will be the mortgage on our new home.  It is important to note that the AirBnB income from our old home should more than offset the new mortgage expense.  I also made a quarterly tax payment, and bought some furniture for the new house.

Most of the other categories were reasonable.  I spent over $600 on gas, but half of that was for a gift card I will begin redeeming this month.  We spent a good deal on groceries and restaurants. I'd like to think this is because we were moving.  Between stocking up at the new house and eating out when our groceries ran out at the old house, a lot of cash went to food in September.  On the fun side of the equation, I am planning a 6 day vacation in Las Vegas for November.  All of the vacation spending in September was in anticipation of this trip.

September Expenses:  $8,956

$1,034 Auto ($374 for service, $136 for AAA, $82 credit for canceling cycle policy, $606 for gas)
$0 Bank Fees
$0 Clothing
$39 Computer
$350 Entertainment (movies, gambling, alcohol, concert tickets) 
$811 Food
$0 Gifts Given
$1,242 Mortgage
$2,587 Household/Housing/Home Repair
$0 Homeowner's Insurance (annual payment)
$28 Health and Dental Insurance
$0 Investment Expense
$11 Interest Expense*
$0 Medical/Dental
$0 Miscellaneous
$0 Personal Care
$0 Subscriptions
$1,819 Taxes (Quarterly Tax Payment)
$25 Sharing Economy Expenses (tolls, car washes, etc.)
$219 Unreimbursed Employee Expenses
$346 Utilities
$445 Vacation

*Interest expense includes student loans.  As the rate is below 2%, I am completely comfortable paying the interest each month and investing the money that I would otherwise use to pay off this loan.  

Monday, October 1

My Frugal Miser - September Income: $11,795


September was a great month.  Every property was rented and rent payments were received on them all.  We moved to a new house and converted our old residence to an AirBnB, which will be a reliable stream of new, nearly-passive recurring income.  I also had decent income from making deliveries for Amazon.  We worked a meeting the last week of the month that we haven't been paid for.  Otherwise, income would have been even better.  August was okay.  I did just a little meeting work; most of my active work was making deliveries for Amazon.




September Income: $11,795

$67 Mystery Shopping
$69 Meeting Jobs
($90) Reimbursed Job Expenses
$0 Uber
$0 Lyft
$0 Postmates
$1,892 Amazon Deliveries
$9,000 Rental Income
$736 AirBnB Income
$19 Interest Income
$102 Other Sources

Investment Accounts Change in Value:  $2,617



Notes:  
  • I don't include transactions in my retirement accounts.  This includes rental income, dividends and capital gains and losses.