Passive Airbnb is a blog to show a specific type of an arbitrage and how to build wealth from passive Airbnb income.
In this case, you are renting a property out at a lower price and leasing it out via Airbnb at a higher price.
For example, you lease a 1-bedroom apartment at $1,000 dollars a month and rent out the same 1-bedroom for $2,000 dollars a month on Airbnb. Your net profit is $1k a month.
When I tell people about my business, they often get confused for two reasons.
- Assume that I bought all of the properties.
- And they overestimate how much work it would take to start a business just like mine.
Typically, if you wanted to invest in rental properties, you better have at least 20% to invest in a down payment. To make the math simple, you see a multi-family unit on sale for $500,000 dollars in a desirable rental area, you would need $100k in your bank in order to qualify for a $400,000 dollars mortgage.
That’s not all!
Once you put down your $100,000 investment, you will still have to pay for mortgage payments, property taxes, insurance, and maintenance fees.
That sounds like a lot of work for just one property. What if you want to have multiple units?
As you can see, this method does not scale very well. Instead, you can put that initial $100k into multiple units that will generate multiple income streams and spread your risks more evenly across your units.
It is much better than investing in rental properties.
The principle of Airbnb rental arbitrage is not only simple and easy to implement, it is also a much better way of making money through rental income. If you go the traditional route, you would be investing a huge sum of money as down payment.
Passive Airbnb is what I call the NEW and SMART passive income.
What is different about this blog?
The other most popular Airbnb blogs show you tips and tricks on how to run an existing Airbnb property. They do not show you how to create one from scratch.
My goal is a simple one.
It is to show you my process of creating a 6-figure income and what it takes to achieve that. I have spent thousands of dollars on courses and perfecting it along the way to create this blog.
Passive Airbnb is the blog that I created to serve my readers!
It is to help you to generate a passive income stream without having a large sum of capital.
If you are interested to know more about me, you can read it here.
What is Airbnb?
Airbnb is an online marketplace for people to rent out their spare bedrooms in a house or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or even hotel rooms.
The company was founded in 2007 and have been around for a while now. They are not going away anytime soon.
It is very easy to sign up using your social media profile. The whole process will take less than 30 seconds. After you sign up, be sure to complete your account before booking a reservation.
How Does an Airbnb Business Work?
The first step is to become an Airbnb host and register your property by submitting photos and descriptions of the space for rent. Once a property is listed with Airbnb it can be viewed by travelers looking for accommodation in the host area. Guests can search the Airbnb listings using a variety of criteria such as:
- dates of availability
- number of rooms, bedrooms, and washrooms
- amenities such as breakfast, hot tub, pets allowed, etc.
- host language
- facilities such as parking, air conditioning, etc.
Before booking a chosen accommodation through Airbnb the guest can contact the host directly for further information via the Airbnb messaging service.
As well as browser access, Airbnb has mobile apps for Apple IOS and Android devices.
For security purposes, hosts must provide acceptable identification to Airbnb. To build a trusted community, travelers can post reviews of accommodations (and hosts can review guests). Reviews are not anonymous.
For guest peace of mind, Airbnb provides a secure payment platform and payments to hosts are withheld until 24 hours after guest arrival. Airbnb has a 24-hour guest hotline in case any issues are encountered during the rental period.
The host sets the price for the lodging and Airbnb charges the following fees:
- Host: 3 percent payment transaction fee
- Guest: 6-12 percent booking fee
Hosts may require a security deposit and may also charge a cleaning fee.
Depending on the jurisdiction, Airbnb may apply state, provincial, or city taxes to guest bookings.
Is Passive Airbnb Legal?
This all sounds good. But is this all legal? I don’t want to get into trouble with the law…
Before you decide to start an Airbnb business, make sure you are legally allowed to become an Airbnb host in your jurisdiction, and you are prepared to follow local laws and regulations!
Local laws regarding the hosting of paying guests can vary greatly depending on your city/state or provincial laws—in some locations they have prohibited altogether while in others they are subject to an occupancy tax. For more information see the Airbnb Legal and Regulatory Issues and Responsible Hosting web pages.
Did you know that Airbnb in 2015 had close to $1 billion dollars in revenue? And they are poised to reach profitability in 2017 and is considered a Tech Unicorn. Currently, there are over 200+ million users actively using Airbnb and making reservations. There are over 3+ million Listings on Airbnb. They are absolutely killing the hotel industry.
The short answer is yes. It is legal, but it is wise to explore city laws to see what kind of limitations that you may have.
For example, San Francisco has a maximal cap of 90 days per host. But the city of San Diego doesn’t.
Travelers Prefer Airbnb Rentals
One of the great things about running an Airbnb business is that travelers prefer Airbnb to hotels, motels, or hostels for many reasons:
- Cost: An Airbnb rental is typically much cheaper than a comparable hotel room. Depending on the location, in some cases, an entire house can be rented via Airbnb for the cost of a single hotel suite.
- Living Locally: According to statistics one of the main attractions of an Airbnb stay is to “live like a local”. Rather than renting a generic hotel room, most Airbnb guests prefer to stay in a neighborhood and experience the destination the way locals do.
- Privacy: Airbnb users are not constantly surrounded by hotel guests and staff.
- Peace and Quiet: Airbnb rentals are typically more secluded and don’t suffer from noisy hotel activity such as early morning guest departures, maid service, young children, and traffic.
- See What You Are Getting in Advance: Unlike a hotel where at best you may see an image of a similar room on their website with Airbnb you get detailed photos and descriptions of the actual premises.
- Diversity: Airbnb has an enormous diversity of available accommodations, from boathouses and yachts to lighthouses and castles.
- The Comforts of Home: Rather than generic hotel rooms Airbnb listings have the homey feel of an actual living space (some even have resident pets). Kitchens allow guests who wish to save money on dining out or have dietary problems to prepare their own food.
- Space for Family or Friends: With Airbnb, you can save a lot of money by renting an entire house/apartment/condo for family and friends rather than multiple hotel rooms.
How much have I made from Passive Airbnb?
There are probably a ton of different blogs showing you how to run a vacation rental business.
Have you stopped to think if these so-called “gurus” have actually done any of it? In order to differentiate myself from others, I am going to show you some real numbers from my Airbnb account.
Now, it is not my intention to impress you, but rather it is to let you know that I am a real person, who’s been doing this for less than 6 months.
What is my takeaway for you?
If I can do this, then I’m sure you can as well. Okay, Sam.
Can you please shut up and show me some numbers?
You are right. Numbers do not lie… Let me start by showing you my very first month and my very last month, which is the month of August.
I listed my first unit on Airbnb on the 6th of February. February is the shortest month and 6 days into the month gave me a working calendar of 22 days.
$2,923 for 22 days of passive income? I don’t think that’s too shabby. 🙂
The month of August was my best month yet! You are probably wondering why the significant increase.
This is because I now have two different rental units both pulling in around 5.5k per month on average.
Be your own boss and work at your own pace.
The best part of this business is that you can work at your own pace. My goal was to start 2 units every quarter. Well, it is sufficed to say that I didn’t meet that goal and I am completely okay with that because I get to dictate my progress.
That was an important realization. I was my own boss and no one was there to tell me what to do!
Becoming an owner of a business is still something I am getting used to.
I chose this business because it is a lifestyle business that gave me less stress and more freedom. A business that allows me to pursue my other interests because I was able to free up my time.
In that short 6 months, I pursued my love of travel, writing and digital marketing. I traveled a lot and wrote a bunch. In fact, I decided as a personal experiment to publish an Ebook on Amazon( you can check out here).
There is no point in learning something if you do not put it in practice. You can spend most of your time learning to dribble a basketball, but if you do not actually go out and start dribbling a basketball, then what is the point in learning?
This is a business model that will potentially make you thousands of dollars per month. And even enough money to quit your day job.
What do you hope to gain from this?
Next Steps for Passive Airbnb
I will be writing my next post on helping you to set the right expectations and realistic goals. As you have probably read, I was over-setting my goals in the beginning.
You do not need a perfect plan… take small steps each day.
To your sucess!