Photo credit: Jelanie
My neighborhood is smokin' hot right now. I've mentioned this several times and even asked readers how I should respond if a developer wanted to purchase my home to tear down.
Five years ago, I was extremely fortunate to find an affordable 1,400 square foot 50s ranch house on .75 an acre of land in an up-and-coming neighborhood in East Nashville. My home was located near an abandoned nursing home, just a few blocks from a mixed use development that was having trouble keeping tenants, and down the street from an intersection that saw several shootings, particularly at a discount tobacco shop that continually attracted crime.
Fast forward to five years later…
The abandoned nursing home: a mixed-use development that includes an Italian restaurant, trendy boutiques, salons, a vegan bakery, and art galleries.
The struggling development: just announced their plan to begin phase three after adding a climbing gym, outdoor sporting goods store, and a Japanese izakaya & ramen house.
The once sketchy intersection down the street: now hosts a popular French restaurant and small specialty neighborhood grocery store.
Needless to say, it's become a popular spot in an exploding inner city neighborhood.
Last fall, John Wheatly from Need/Want posted the article, I Bought An Apartment To Rent Out On Airbnb, on the company's blog. The post revealed the details of a rental property in Las Vegas that he had been managing remotely for a year. He shared the purchase price, renovation costs, revenue, and an estimated break-even date. He also offered some tips to other prospective investors.
When Nashville Public Radio recently broke the story that Nashville is Home-Share App Airbnb's Fastest Growing Destination, my level of curiosity became all-consuming.
I began poring over other Airbnb listings in my neighborhood and one particular property caught my attention: 60s Camper and Backyard Bathhouse. This dude's place is only a mile from my property and almost completely booked solid for the next couple of months!
Here's a quick estimate of this listing's profit for the month of June:
Gross revenue: 29 days x $95 per night = $2,755.00
Less: 3% Airbnb host service fee = $82.65
Net revenue: $2,675.35
Note: A one-time $20 cleaning fee is built into this reservation. Airbnb also offers the option to add a security deposit.
Afford Anything recently had a great post, The AirBnb Experiment: How I Impulsively Started a Vacation Rental Business , where she outlined additional monthly expenses to consider:
$50 per month: utilities (including electricity, gas, water)
$40 per month: consumer disposables (refilling the sponges, soap, shampoo, etc.)
$160 per month: management* (8 hours per month at $20 per hour)
$200 per month: sales and occupancy tax (rough ballpark)
*Tracking and paying yourself for the time it takes to run the business.
Estimated June profit: $2,225.35
So, here's my (not so?) crazy idea: I wholeheartedly believe the reason the aforementioned Airbnb listing is ever-so-popular is its uniqueness. Staying at a place like that is an experience. What's the experience that I'd like to create? An East Nashville vacation in a vintage Airstream trailer! And $95 per night is still way cheaper than any decent hotel.
What are my upfront costs? Probably $20-30K. This would include the cost of purchasing, transporting, renovating, and decorating a vintage Airstream trailer for guests. Also, I need to fix up the backyard. Honestly, it's a bit of an eyesore right now.
Obviously, there are things to consider like costly repairs and cash flow during the less busy months. But once the initial investment is paid off, it seems like a reasonable side hustle! Nashville's tourism will only continue to grow, and demand for my neighborhood is exploding right along with it.
Readers: Let's have it! What do you think of my idea? Have you had any experience making money with Airbnb?