Investment property can be a tremendous source of residual income. Is it better to sign a lease with a long term renter, or should you think about your property as short term lodging offered through services like Airbnb? Questions worth digging into.
On this episode of the Uncommon Life Project Podcast, hosts Phillip Ramsey and Bryan Dewhurst talk
with Brett Appleton about going from dabbling to all-in on using investment properties for short term lodging with Airbnb.
Brett Appleton and his wife own 3 properties listed with Airbnb. They went from experimenting with this concept as a newly engaged couple, to purchasing three properties, with plans to expand this as a major source of residual income. Brett talks about what it takes to balance great customer service skills with the ability to confront challenges when they arise, and avoid scammers and other unscrupulous people.
There are pros and cons, and this kind of investment is not for everyone. But the cash flow can be quite healthy with a bit more upfront cost to furnish and maintain. We walk through the numbers with Brett, and they show a lot of upside.
What You Will Learn in this Episode:
- How to look for the best financing for property purchases
- How Airbnb can be a great introduction to income property ownership
- What you need to know about having strangers constantly in and out of your property
- The upfront costs of providing short term lodging vs. a long term rental
- What to do when lodgers don’t respect your property
- Getting and giving good reviews for short term lodging
- Delivering great customer service from reservation to check-out and beyond
- The tremendous upside of short term lodging cash flow
- Best practices in furnishing a short term lodging property
- Why it is crucial that your spouse is on board with the idea of dedicating a property to short term lodging. This is not a “set it and forget it” source of income.
Golden Nuggets“I thought having roommates would be a great way to keep housing costs down. My new bride didn’t think that sounded like a great idea. Buying properties for short term lodging was something we could both get on board with.” – Brett Appleton Click To Tweet “Airbnb takes care of all the processing. For me, that’s a great thing. I don’t take credit cards, I don’t take deposits – they handle all that for a percentage, and I just get paid.” – Brett Appleton Click To Tweet “Furnishing costs can really add up. We buy brand new beds and linens, but the rest we buy second-hand. You can easily spend 20K furnishing a place if you’re not careful. We can do it for around $5,000.” – Brett Appleton Click To Tweet “We get creative. Sometimes we actually rent out the house we live in most of the time, and live at one of our other properties.” - Brett Appleton Click To Tweet “To start out, we had 2 mortgages on each property, but the cash flow allows us to pay it down quickly. It makes great sense in our situation.” – Brett Appleton Click To Tweet “You have to be careful. If a potential lodger ask to pay by check, we steer clear of that. If they want to visit the property ahead of time, that’s a red flag too.” – Brett Appleton Click To Tweet “The rate of return for us has been much greater than if we would have one tenant on a year-long lease. We definitely want to expand what we are doing with short term lodging.” – Brett Appleton Click To Tweet “If something goes wrong, if someone stains the carpet or breaks something, we can process a claim with Airbnb. That keeps things from getting ugly.” – Brett Appleton Click To Tweet