Lease + Cashflow w/ Airbnb

[Adam Tafel]

Investment Info:

Large multi-family (5+ units) other investment in Saint Paul.

Cash invested: $10,000

I rent small 1-2 bedroom apartments in A neighborhoods throughout St. Paul. Acquired through networking, cold-calling, and referrals, I sign a standard residential lease with subletting permitted. Medium-term stays, my yearly average is 11 nights, median is 30.

What made you interested in investing in this type of deal?

Started by renting out a friends condo on Grand Ave for extra cash. I didn't know much about Airbnb or real estate at the time, just took some pictures and made the profile. Within a few hours a medical worker booked the place for triple her rent for 3 months! "Wow, I need more of these". So I got more of these.

How did you find this deal and how did you negotiate it?

I now work pretty exclusively with a small circle of owners. A few years ago I was calling people and running all over town to make a deal, now I get to turn down business pretty frequently. I used to offer over asking price for a unit, I no longer feel the need to. I take better care of my apartments than the average tenant, and keep an eye on the property for the owner.

How did you finance this deal?

Its a pretty low-cost system. Each apartment takes about $1200 to furnish, $99 for pictures. After the initial startup cost its rent, electric (never heat), internet, and linen services.

What was the outcome?

I pay an average of $1100/mo for my apartments, and can usually net about 80%. Some months I'll sit back and collect the cash, some months I put in a fair amount of effort. Yearly average is probably around 4 hours per month per unit. Currently running four-1bdrms and one-2bdrm. At my max I had 10 separate units, and my life was a complete nightmare. Not worth it, at all.

Lessons learned? Challenges?

DIY is dead, outsource instead. For a few years I did everything myself. Laundry, cleaning, check-ins, everything. I made a decent amount of money, but I was running myself ragged. Whats the point of owning your own business if you do everything yourself for a modest amount of money? I would have been better off getting hired as a property manager, for similar pay and none of the liability. Over the years I've created systems that help my run the business from my phone and computer.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

My friends! You guys know who you are. I really couldn't have built this business without them. I won't name any names, as none of them are real estate professionals. I'll pay a friend $25/hour to do pretty much anything, and trust me, I have. Cleaning, moving, random jobs, you name it. These days I don't have to call in favors very often, but I've always got someone who's got my back. I try to pay it forward whenever possible, and I've bought a LOT of people dinner over the years.