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- I rented an Apartment to Airbnb in NYC
- Airbnb First Month By the Numbers
- Airbnb by the Numbers: Q1 Update
- Airbnb by the Numbers: Q2 Update
- Airbnb: Us and Them
I’ve written a lot about my side hustle with Airbnb a lot in the past. So I thought I’d follow up, because side hustles are a big part of my FIRE, and a great way to dig yourself out of debt – or earn more income.
In my Q2 update, I estimated I’d make an extra ~$31K off the endeavor in 2015.
I took some knocks here and there, but doubled my original projection. All told, I earned an extra ~$60K from Airbnb in 2015. And most of it went toward debts. In 2016, I’ll earn less but hopefully knock out my student loans once and for all.
Here’s how I did it.
In This Post
The numbers are complex. I have 4 places in total, but split 2 of them 50/50 with my business partner, Chris.
So, 2 of them are 100% mine and 2 are 50% mine. For these numbers, I’m only looking at my side of things.
I added 2 new places in 2015, so those 2 have partial-year numbers available.
And tomorrow, I’m getting rid of 1 (long story… basically it’s no longer worth it).
But the raw numbers tell me I earned ~$60K in profit.
All of the money from Airbnb, absolutely all of it, was nearly $200K paid out in 2015.
- $47,730 went to my business partner
- $78,050 went to paying rent in NYC (!!!)
- $10,754 went to taxes
Which left me with:
Here are the 4 places and their associated rents:
- #1: 2300 a month X 10 months + 2875 (rent increase) X 2 = $28,750
- #2: 1600 a month X 9 = $14,400
- #3: 1300 a month X 7 = $9,100
- #4: 2150 a month X 12 = $25,800
As you can see, I had 1 place for 9 months of 2015, and another for only 7.
I paid a lot of rent in 2015.
Where did it all go?
This money is not in my checking account any more, but that doesn’t mean it’s gone. Well, most of it is.
Here’s how I spent it:
- $14,000 for down payment on a house in Dallas
- $5,500 for Roth IRA
- $35,000 to paying off credit cards
The lion’s share of it, was… credit card debt.
In the background of life, I managed to accumulate a ball of debt that would slow down most people. Thirty-five thousand dollars. Geez.
That’s why I got into this whole Airbnb business in the first place – to alleviate that debt, save up for a house, and then knock out my student loans.
This side hustle not only surpassed, but doubled, my expectations. And I’m happy to report I am credit card debt-free now.
And I did buy that house.
I even invested.
2015 was the first year I maxed out a Roth IRA. I contributed the maximum amount allowed. So this money lives on as retirement income, which will hopefully appreciate to much more in the next, oh, 30 years.
And I plan on moving permanently to Dallas in Spring 2015. The $14,000 includes down payment, property taxes, interest, fees, blah blah blah. So some of it was a sunk cost, but some of it lives on as equity in my brand new investment property.
And I’ve already got my eye on investment property #2. In fact, I plan on starting my search for a multi-family duplex in the Dallas ‘burbs.
But I’m not debt-free all the way yet. 2016 will suck up most of the profit toward previous debts, too (which is totally fine in my book! I’m just happy to be rid of them!).
I still owe a staggering $54K to the US government for student loans.
There are 2 more things I want to talk about real quick.
How did I surpass my goal so much in 2015?
If you read my Airbnb Q2 update, you’ll find find I threw out all of Q1 as a sunk cost. I broke even for 3 months.
I was kinda wondering what I got myself into. And now here I am again, back in another Q1.
I’m expecting the same results this year. 3 months of work for $0 return. But as you can see, it is worth getting through (it starts to turn around in mid to late March).
Q2 gave me hope.
But Q3 and Q4 blew it out of the water.
August and October were my #2 and #1 months this year, respectively. So I had a strong Q3 and Q4.
I got higher margins than I thought were possible, and even hit $10K in profit in October (my best month).
I attribute it to:
- Getting the best rates in the high season thanks to good reviews
- Low vacancy
- Low rents (relatively speaking)
- Quick turnover
- High rate of communication
- Good management (quick and thorough responses and double/triple-checking everything)
Why I DO NOT expect this to continue
The gravy train is slowing down.
One of my rents increased from $2,300 a month to $2,875 a month.
That’s… insane. That’s $7K a year in extra rent! Which severely cuts into my margins.
And, as mentioned before, I’m getting rid of 1 of them.
I expect to get rid of a 2nd in late April because I won’t renew the lease (the building is too difficult for Airbnb).
Finally, I don’t know how much rents will increase in 2016.
New York is a fierce, competitive, and growing market. Both with rents and with Airbnb. So I’m balancing rising cost of doing business with lower prices to remain competitive, which means I earn less.
Even still, With 3 places left, then 2, and maybe just 1 by the end of the year, I expect to keep the Airbnb stream going in 2016. But I do NOT expect to make nearly as much as I did in 2015, realistically.
With the profits, now that my credit card debt is gone, I’ll:
- Pay down my $54K in student loans
- Max out my Roth IRA again
- Save up for investment property #2
- Contribute to a Solo 401(k)
But my #1 focus is to eliminate my student loans in 2016. It’s just time. I’m tired of them hanging over me. Even if it’s the only one on the list I knock out this year.
Even if I repeat the success of 2015, I’ll barely get beyond my student loans and spend 90% of the year paying them off. I may have a little left over for my Roth IRA and the other financial goals.
And I’m already planning to create new income streams to help bolster those. And who knows, maybe I can move my Airbnb income down to Dallas with me.
2017 will be the year of real profit, or at least of rapidly building up equity and paying down mortgages.
Was it worth it? To have, on average, an extra $5K per month in income in 2015? Hell yes.
It paid off my credit card debt, bought me a house, and got me on track toward retirement income – all for my FIRE.
While I don’t expect 2016 to touch the levels of 2015 as far as pure profit, I do hope to at least pay off my $54K in student loans this year once and for all (the curse of the millennial generation).
I said it once and I’ll say it again:
If all this Airbnb side hustle does is pay off my student loans, I am 100% OK with that.
Here’s to side hustles, creative problem-solving, taking control, and living dreams in 2016. (Oh, and travel, independence, and freedom of schedule. It’s all tied together, in a roundabout way.)
I’ll report back with an update on how the year is going and progress toward getting rid of student loans once and for all.
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