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- Also see: I rented an Apartment to Airbnb in NYC
I have set up an Airbnb here in NYC as a new income stream.
There has been a lot of spilled ink about Airbnb lately, especially in New York where it is a VERY hot topic, to say the least. I work in real estate, so am particularly close to the issue.
I found an ideal one bedroom apartment in New York’s East Village neighborhood for $2,300 a month. And then I spent a lot of money on it. This post is about exploring the investment and starting up this side income stream with a focus on numbers. REAL numbers (except my electricity bill which I have to estimate.)
In This Post
$4,600 – first month of rent + security
$1083.86 – furnishings from Amazon.com (I used my Chase Freedom Visa for this and got 5x back in Ultimate Rewards points)
$504.71 – comforters, pillows, sheets from Kohls.com (Ditto with the Chase Freedom Visa for 5x back PLUS clicked through portals PLUS got Kohl’s Cash PLUS got Yes2Rewards points AND used promo codes for EVERYTHING on top of all that!)
$49.60 – Consumables from Costco.com
$31.61 – Consumables from Drugstore.com
$302.69 – Paint, hardware (hammer, nails, tape, etc.), cups, glasses, bowls, copies of keys, dish rack, small furniture, utensils, napkins, a few grocery items (cooking oil, salt and pepper, honey, sugar, hot sauce, etc.)
$61 – TimeWarner internet setup + one month of service (Set to autopay on my Chase Ink Bold for 5x back!)
$60 – First month of electric service from ConEd (estimate – have not received first bill yet)
This is everything I bought for the place. I mean everything. From an empty space to filling it right up. I also brought over a few extra things I had at home, found a shelf on the street, and had some things given to me. Seeing the numbers like this is kind of shocking, as I’m adding it all up from receipts as I go.
Grand total is:
$6,693.47 of cash outlay to get this going. Wowza.
So how much of that have I made back already?
Well, I gotta say, I started earning it back nearly instantly. No sooner had I installed the bed and put fresh sheets on it for the first time did I welcome my first guest. I mean that very literally. The second I set the pillows down, they texted that they were downstairs. I was so nervous! Would they like my place?
They did! And I continued to clean the place and welcome guests constantly during the month of November.
Here were my payouts:
and don’t forget this one! They checked in 10/31, but stayed through 11/2:
Grand total is:
$4,370 direct deposited into my bank account.
This is cash I’ve already received.
And here are the future bookings for December (so far):
And don’t forget this one! I’ve already had a paid December stay:
Grand total is:
$2,469 in pending payouts.
And here is what I calendar looks like as of this moment:
Note the increased pricing for New Years Eve and Day.
So as of right now, I have the middle of December wide open. But that leads me to…
What I’ve learned so far
Between what’s been paid and the pending payouts, I’ve earned/will earn $6,839 – all in about a month. My lease started 11/1 and it’s now 12/4. My total cash outlay was $6,693.47. In how many industries can you earn your entire investment back in one month? I’m already into profit mode after a month. That’s so crazy to me.
I’m having a blast doing this. But my nerves were jangled for a solid two weeks setting all this up. Self-doubt and fear of failure kept creeping in at the oddest moments. But I kept pulling out my credit cards, kept charging charging charging.
And the bookings. My god. I swear I screamed when I saw my first booking. And now, with so much time left on my December calendar, I’ll admit I’m nervous. But I shouldn’t be.
What I’ve learned is that people book 2-3 days before their stay, on average. I obviously already have late December taken care of, which was a long-range booking. But others have booked the night before. Every time I get nervous about it, there’s another booking. It requires a great deal of patience and almost a level of ignoring it until it happens.
For someone like me who enjoys a solid plan, it’s sort of like an endurance test. But then I think, it all happens so fast. Relax. It will happen. And so far, it has.
I can’t imagine what summer is going to be like it November/December was this successful. I’ve heard that January and February are the slowest months, for obvious reasons. No one wants to visit a cold place in the winter. But it’s New York. People are always in and out of here. I may have to take a little hit for those two months, but then the rest of the year is pure profit.
My one month of laying out cash was all worth it. I’ve made it all back, or will make it back very soon.
My time and future profit
There is always one variable that is at the top of list whenever I think of a new endeavor: my time. It’s the one thing I will never get back, ever, for the rest of my life. So I want to be sure it’s worth it. Is this worth it?
When I look at the bookings this past month, I see I had five in total.
Realistically, based on the numbers I just ran, I can expect to get at least ~$4,400 per month in cash from this side hustle.
The rent is $2,300 and I estimate the utilities and consumables to be another $100 ($20 for internet, $60 for electricity, $20 for soap, cleaners, etc).
So the pure profit is $2,000.
$24,000 a year is not bad for a side hustle. Not bad at all. I might turn this into acreage for sale in Mission BC that I have been on the look out for.
But back to numbers.
5 bookings a month, on average, and $2,000 a month in profit. It takes me an hour to clean and I have been meeting the guests right after cleaning up.
I’m not counting the few hours I spent making lists of things I’d need for the apartment, gathering my documents, or even setting it all up. I will chalk all of that up to market research and gaining experience. I’m talking about ongoing expectations of my time.
So 5 hours per month plus, and I’m overestimating here, 5 more hours per month with special requests to check in early/late, buying new things for the place, and taking care of laundry, repairs, extras, etc.
$2,000/10 = $200 an hour. Not a bad rate!
But what about taxes? I am setting aside 25% for taxes that I will pay, perhaps plus or minus depending on what I can deduct.
So that’s $1,500 per month/10 hours per month. Still comes out to $150 an hour. And still not bad.
Another thing I cannot forget it my own personal reward. My intention with doing this is to provide a space for travelers. I have loved my interactions with guests so far. When I am not traveling myself, it is a pleasure to host other travelers. (It all comes back to travel!)
I live through their stories, take them out for a drink or for coffee, and become a part of their New York experience. That is really something that has no monetary value. It simply makes me feel good.
And, all money aside, that’s something I really value. I get a lot of reward out of offering a nice, clean space to people passing through. I’ve already had a few Aussies, a lovely couple from Italy, a girl from Iowa, and a British gent. Where else but New York would I get to meet so many people in just one month? I can’t wait to see who will come in next. They’ve all been so wonderful so far.
These are real numbers here. Real time. Real people. Even after deducting 25% for taxes, I still get $18,000 in my pocket each year from 120 hours of work (a rate of $150 an hour). It doesn’t take up too much of my time and it’s fun.
In fact, I am considering getting a second unit, which would bring me to an extra $36,000 a year (based on the numbers in this post). That’s money I can throw toward my own travels, student loans, or simply save. I will probably use it for a combination of all of these things.
So far, I am having a blast with the Airbnb. I’m sure that some people make way more than me, and that others make far less. Even if my experience is the median, I want to move forward and do this with good intentions.
I worked it all out in this post as I went along. I can say now that I don’t regret doing this for a second. If you can do it, why not?
Anyone have any thoughts on this Airbnb stuff? Would love to hear about other experiences!
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