How much I am making on my Airbnb in Chicago

[Syed Lateef]

I wanted to update BP on how one my Airbnb's have been preforming. The location is Jefferson park Chicago. its a 1 bedroom that i would have rented for $900. See the cashflow i have been receiving on a monthly basis.

I started in February

[Luke F.]

Congrats on the success.  How much additional matienence have you had to do with that vs. a traditional rental?

[Todd Dexheimer]

@Syed Lateef What are your additional expenses? 

[Kevin Huang]

Echoing the same questions as above, how much of a hassle has this been as compared to a traditional rental?

[Syed Lateef]

@Todd Dexheimer my expenses are cleaning maids, electric, gas, and consumables 

@Luke F. I believe the maintenance from an Airbnb vs Traditional rental should be similar. If a faucet is going to leak  you got to fix it. If AC or heat breaks you have to come get it done. 

I would say its less wear and tear as i have cleaning ladies coming every 3 days to clean. 

I would say theres more work to make guests happy. If i didnt have enough blankets or pillows. I have to get that done immediately. If coffee machine breaks i have to buy one on the same day.

The benefit is i dont have annoying tenants that feel entitled and give me problems (and have tenant rights). If i dont like you as a guest i can kick your @ss out :)

So there are trade offs... pros & cons

[Syed Lateef]

@Kevin Huang it is a hassle. it is work. If you have a full time job It will get stressful. If you manage just one your self it is work. It only makes sense in my opinion if you have multiple Airbnbs because you get economies of scale. You use the same resources and systems.

Or you get a Airbnb Property Management company to do it for you. You share in your profits. But now you have someone who has a vested interested in your property being in good shape. Which there is a benefit to the owner.

Even with the property management company you will make more money with Airbnb is what i have found out

[Ted Kuhlmann]

Congrats on the success so far, but I'm sure you are preparing for a rough fall/winter.

I am a real estate broker and investor, and have helped a client buy a few Airbnb's in Chicago. He does EXTREMELY well with them in the spring/summer, but the only ones that truly make money in the fall/winter are ones located in prime vacation spots (loop, Gold Coast, Wrigley). Unfortunately, people coming to Chicago don't know what jeff park, portage park or anything that far NW is!

Do you get any pushback from the HOA on doing what you're doing? I'm seeing so many buildings blocking short term rentals and it's frustrating

[Ted Kuhlmann]

Hey Syed, do you have a recommendation for a Airbnb property management company by any chance? I don't and would love to have something under my belt for future reference. Thanks man

[Syed Lateef]

@Ted Kuhlmann Yes i am preparing/unprepared for the rough fall winter haha... I hope i beat everyone's expectations. I will be updated my graphs to show how he finished for the entire year.

My listings are currently in Jefferson Park, Logan Square, North Center and soon Pilsen and Edgewater (pending convos with property management companies).

Even though [potential guests dont know the areas, my positive reviews and the product i am providing helps people make decisions and come to my place. I am not far off the highway or blue line so that helps!

The ones that i currently have i own the multifamily and i do it for my clients.

I will PM you about property management

[Todd Dexheimer]

@Syed Lateef my question was, what is the additional cost in dollar terms. Double the income is great, but is that offset the expense? It sounds like from some responses you are managing it. Have you looked into having a management company manage it and what that would cost? 

What did it cost to furnish? Have you looked into how often you need to replace the furnishings? 

[Syed Lateef]

@Todd Dexheimer I have my own property management company. Typically the cost of Airbnb property management is 20 to 30% of revenues (that includes cleaning)

it costs $10k to $12K to furnish a unit from nothing to Airbnb ready this is assuming 2/3 bed and 1 bath. This assume procure, install, decor, and set up.

[Rick Baggenstoss]

Congrats, Syed.  How much did you pay for the unit?  What's your occupancy been?

[Todd Dexheimer]

@Syed Lateef good info thanks. Have you ran projection as to your ROI with and airbnb vs market rate using a property manager? Looks like you will be ahead with the Airbnb

[Syed Lateef]

@Rick Baggenstoss in this thread i talk about my Occupancy Rate.

https://www.biggerpockets.com/forums/530/topics/48...

I bought entire multifamily property. Its 5 units. Currently i have 4 of those 5 units on Airbnb

@Todd Dexheimer Yes i have done analysis for perspective clients. I use more conservative numbers for projections. I dont want to over promise. The chart i show is Actual data. I do make the argument even with my property management fee you make significant more dollars than you would with long term tenants.

The last analysis i did for a client in Pilsen (a trendy neighborhood in Chicago) i projected a 35% to 40% ROI above rent on their initial investment of $12K (for Furniture

[Todd Dexheimer]

Cool, I need to look into it. I have an apartment near downtown Minneapolis, right by the vikings stadium that I have thought about doing Airbnb out of. I would kill it during the superbowl this february, but not sure what the rest of the year would look like. It cash flows really well right now, so it's hard to ruin a good thing

[Jason Bindra]

Idea may be anecdotal.

I consistently rent this home up in Michigan. In the winter months, the owner is open to short term monthly rentals at reduced prices(closer to monthly rents than transient) as long as property is empty before spring/summer.

[Nathan Gesner]

The graph provided deducts the cost of cleaning and utilities. Have you also deducted the AirBnB fees? What about Chicago's 4.5% Hotel Accommodation Tax or 4% Shared Housing Surcharge? Have you measured how much time you work on each rental and included your time as an expense?

If this is your net after deducting all those expenses then you are clearly doing very well. If not then I would say you are still doing better, but the margins are much thinner.

Thanks again for sharing an update with us!

[Syed Lateef]

@Nathan Gesner Yes- Airbnb Fees and taxes are not included in my view. The data shows is my payout. What i received in my account. 

Thanks! The only thing is not including is the Property Management fee as i manage my own. But like you said it would just make the margin thinner but still worth while.

[Nathan Gesner]

Then those are pretty impressive numbers!

[Sergey Spisovskiy]

@Syed Lateef  

Hey, really appreciate your insight! I have been looking into multi unit buildings in Chicago for about a year now and here's my hang up - with what buildings are trading at (I'm searching in Wicker Park, West town, West loop-ish) the opportunity to make a killing off offering STR units are impressive if you STR most or all of your units, however, if Chicago limits you to one unit per building you're back to making marginal returns.

I've recently purchased an airBNB SFR in southbend, IN and am doing a flip in the meantime but I'd love to hear your perspective on the long-term viability of your model.

[Syed Lateef]

@Sergey Spisovskiy I am in the same market to buy a multifamily as you. A 3 to 4 flat in those neighborhoods and more (logan, irving park, etc). I look everyday for the new ones that come out on the market.The prices are too high to make sense. 

Yes, i can make anything cash-flow with Airbnb, but i buy assuming long term tenants. I need levers to pull if something like the law you mentioned gets implemented.

I honestly dont know the longevity of my model. In the meantime i will capitalize on it as much as i can.

I llike that your also doing Airbnb in Southbend. I would be open to do Airbnb all around the country. You can manage most of the work remotely

[Syed Lateef]

@Account Closed those are amazing numbers as well. I would love to have Airbnb's in Hawaii haha

Yes it is work.

[Jerry N.]

We have been paying attention to the short term rental rules in Chicago because we are considering that with a unit in our next building. Our take is the below ordinance is in effect and you can't run a STR like airbnb in a multi-unit unless you are an owner occupant (4 units or less) or limits the number (5 units or more). The airbnb site requires the registration number in Chicago.

Am I interpreting this wrong, has Chicago not started enforcement, or is this a gray area? We are not looking for legal advice (LOL) , just to understand how others view this. We would love to find a compliant way around these apparent limits.

https://www.cityofchicago.org/content/dam/city/dep...

4-14-060 Rental Requirement and restrictions.

(f) Listing and rental in buildings with five or more dwelling units – Prohibited. It shall be unlawful for any shared housing host to list on any platform or to rent any shared housing unit that is located in a building containing five or more dwelling units, when more than six dwelling units in the building, or one-quarter of the total dwelling units in the building, whichever is less, are or will be used as shared housing units or vacation rentals, in any combination, if the dwelling unit identified in the registration application is registered as a shared housing unit.

[Jeremy W.]

Originally posted by @Ted Kuhlmann:

Hey Syed, do you have a recommendation for a Airbnb property management company by any chance? I don't and would love to have something under my belt for future reference. Thanks man

 Hi Ted,

Yes! Chicago Airbnb Consulting (www.chicagoairbnbconsulting.com) is great! Their model is based off of a vacation-rental system in Colorado that has been around for years. They just recently transitioned into Chicago thanks to some long-time real estate professionals who liked the model. 

Their "consulting/management fee" is lower fee than any other firm and they have more experience than any other firm around!

Cheers -

Jeremy

[Jeremy W.]

Originally posted by @Sergey Spisovskiy:

@Syed Lateef  

Hey, really appreciate your insight! I have been looking into multi unit buildings in Chicago for about a year now and here's my hang up - with what buildings are trading at (I'm searching in Wicker Park, West town, West loop-ish) the opportunity to make a killing off offering STR units are impressive if you STR most or all of your units, however, if Chicago limits you to one unit per building you're back to making marginal returns.

I've recently purchased an airBNB SFR in southbend, IN and am doing a flip in the meantime but I'd love to hear your perspective on the long-term viability of your model.

 Hi @Sergey Chicago limits you to one unit per building if you do not live in the building. You can send in a notice to the commissioner who can then overrule the current Chicago short-term ordinance laws and allow you to rent out the whole building. This is risky, unless you have political ties with the city, but has been done (as in Syed's case). 

[William Gibbs]

Congrats on the impressive returns. As others have mentioned a property management company can not only free you from managing your property but also explode nightly rates and occupancy rates. I own a Domain Homesharing Management and that’s exactly what we do. We’d be humbled to to talk about our success with properties like yours. 

Cheers,

William Gibbs