Thursday, January 8, 2015

20 Things I learned about being an AirBnB host: Tax time conclusions!

I made two postings (1, 2) about being an AirBnB host a while back and I wanted to post an update on the "Things I learned" now that we're doing the taxes for our final 6 months as hosts. 

(As a reminder, we were trapped in a bad lease when we moved down the street into a place we'd purchased. Our landlord didn't want to rent the place out after our lease ended so it was next-to-impossible to find someone to take it for such an odd term, trust me, we tried!)

Gross Earnings (Guest Fees + Cleaning Fees minus AirBnB hosting fees)
$21,847 

Our Costs
$28,200 rent ($4700 x 6) 
$349.76 facebook ads (worth every penny, IMHO)
$663.07 utilities 
$960 cable + internet
$600 cleaning person for monthly deep cleaning
$? for cleaning supplies (laundry, dish soap, swiffer pads, tilex, fabric softener, etc)
$? for extra bedding, plates, and supplies we had to buy
= $30,772.83
conservative estimate of uncompensated hours we spent working on it = 60

assuming our labor is free, we lost $8925.83

I'm hoping that our net loss is something that we can write off our taxes but I'm not an accountant so I'll have to consult with mine about it. 

Here are some notes:
  • We had only one renter in all of January and I didn't have the fortitude to place FB ads until January was approaching and I had a very empty calendar staring me in the face. LESSON: Place ads early and often! You can turn them off or dial them down whenever you want.
  • We had a cleaning fee of $50 on most of the reservations and that's included in the Gross Earnings so you could argue that our time wasn't totally uncompensated :)
  • Given that NYC regulations only allow you to rent out your whole apartment for periods longer than 30 days, we could have made more money if we'd rented out the whole apartment instead of just one bedroom in it. (it's a small 2-bedroom apartment and one bedroom was ours even though we were often not home). 
  • May was our best month by far – $6148. It's also the nicest month of the year in NYC and we were charging more than AirBnB's recommendation and still filled the place up almost the whole month. LESSON: don't be afraid to charge a lot for prime times, you need to do that to pay yourself back for all the bad times!
  • The math of having someone else take care of the place for you doesn't work out at all, IMHO. If I had to pay my cleaning person $100 after every visitor and then pay a service to do the meet and greet when people arrived — often with significant air travel delays and often into the wee hours of the night – I would have lost way more money than I did. LESSON: you're taking on a part-time job for almost zero pay, are you sure you want that?
  • Since rent is the biggest expense, I think the math works out better when you've had an apartment for a long time and you're paying comparatively little rent. (Given rent control laws in NYC, it's a general rule that the longer you live in a rental, the better deal you're getting). 
  • If it's a space you were going to have to keep and just lose money in any event, it's probably helpful to just view any money you made on AirBnB as "gravy" :)
  • It's New York City, so you just add a zero to the end of everything folks, I realize $4700 will get you a penthouse with a hooker in the square states, here it gets you a 750 sqft apartment in an 200 year old tenement building with no elevator, no doorman, and a 15 minute walk to the subway. Conversely, no one is going to pay you $250 a night for an apartment in suburban Tulsa. 
  • ALSO: i just read about this – a service that matches AirBnB hosts who need a place to crash when they rent their apartments out. Crazy. No way would I do that for free, even if I wasn't home. Especially if I wasn't home.

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