When I first bought the State St project back in December 2015, I wanted to experiment with AirBnB. I heard people were getting 2x or even 4x of rent compared to traditional long term rental. However, experimenting something new with real estate is always risky. What if I spent all those money renovating the house and it doesn't work? How much more capital I had to invest to convert it back into a long term rental? What was the risk to reward ratio? and How could I quickly recover from the loss? These were all the questions popping up back then.
My guts feeling told me that I wanted to maximize the revenue driven from short term rental, but at the same time, I could fall back on long term rental if the location or the project was not suitable.
Facts about the project
Layout:
-Front House @ 2B/1B 1100 SF
-Back House @ 1B/1B 800SF
Backyard allowed 6 side by side parkings
3 min to Downtown Los Angeles - where all the bars and restaurants are
7 min walk to Metro Station (2 stop to Downtown LA)
Original condition when I first bought the project
I decided to renovate the front house first into 3 separate AirBnB suites and worked on the back house later. It was a painful 12 months process as I spent at least 3 months to spec out the materials, interviewed at least 10 different contractors, switched 2 contractors along the way. My first contractor even told me to start work without permit and we got busted by the city. We have to submit a new drawing to the city and wait for the permit before starting any work again. Finally, I turned the front house into a 3B/3B layout, and I kept the back house as 1B/1B for myself.
I was able to find a good reliable cleaner who could come between 11-3 during the day and a super host recommended by AirBnB who could took over the property while I worked full time at a tech company. I decided to list both of them on AirBnB instead of moving into the back house.
We listed the front house in Feb of 2017 and the back house in May of 2017. The ramp up period was fun. I got notification every now and then with $200-$500 bookings. Once the property reached full capacity, I was averaging about $6000+ a month.
The following year I started adjusting the average daily rates since we achieved super host status and 4.8 out of 5 star regularly. We grossed $9,000+ a month consistently after maximizing average daily rate and hitting 90% occupancy rate. I hired a full time staff internalize the property management and took on a few other properties from friends and family to manage. The extra 10k came from managing other properties.
Here's the link to access to more photos:
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