Airbnb House Hacking: How To Make a Profitable Investment

For newbies in real estate circles, the idea of house hacking often seems quite far-fetched. But have you realized that you can actually make some real money through house hacking, even if you`re living in a single-family unit? A smart way to start out on your real estate investment is through an Airbnb house hack.

Here’s the catch: you can live for free while your Airbnb renters pay the running costs for your housing expenses and mortgage. If you live in a single family, for instance, all you need to do is rent out the spare bedrooms in the house by listing them on Airbnb. But before you do that, there are a few pro tips you want to know. You may already be familiar with the idea, but perhaps you`re still asking “Should I Airbnb my spare bedroom?”, then this Airbnb house hacking guide is for you.

Is House Hacking With Airbnb Worth It?

Yes, it is. However, you should be ready to sacrifice your comfort for a while. Ideally, you will need to put some energy into the process before the gains start pouring in. By and large, house hacking with Airbnb is a good real estate investment.

The basic idea of house hacking, in general, is to use the rental income you receive from others to offset all or part of your housing expenses and even make a profit from it. So, yes — if done right — one of the best ways to get into a profitable real estate business is by house hacking with Airbnb. In fact, a House hack with Airbnb is recommended if you’re struggling to meet up with payments on your rent or mortgage, especially if you own a property in a prime location.

While it is possible to start house hacking with the spare bedrooms in your single-family space, Airbnb house hacks are more profitable with multi-family homes in a short term rent location. That way, you get to make more money in a shorter time. And if you’re just starting out, you might probably want to begin with a duplex, as triplexes and fourplexes are way more expensive on the property market. For a successful Airbnb house hack, here are important points you want to keep in mind:

Find a property with an affordable down payment and low interest rate
Your property should be in a good location (some locations get more bookings than others)
The rental income should cover the housing costs, including the mortgage payment.

The idea behind house hacking is so you can make money. Therefore, if you don’t already own a property that you can remodel to rent out, you should be on the lookout for affordable properties — preferably, below-market-value income kind of property. Here are some expert tips to guide you.

1. Find a Profitable Neighborhood for Airbnb Investment

When it comes to Airbnb house hacks or real estate investments in general, location is of the essence. The property you want to buy should not just be affordable, but it must also be in a good location if you’re going to make decent money. Note that this determines the price of the property, the Airbnb occupancy rate, and, of course, the Airbnb rental income.

Keep in mind also, that not all cities in the US, for instance, allow short-term rental house hacks or even Airbnb rentals. So be sure that you’re not going to be on the wrong side of the law or flouting the policies guiding Airbnb rentals in your location. In some cities, Airbnb rentals are prohibited, in other cities, non-owner occupied properties are not allowed on Airbnb. In fact, the number of guests allowed on a property varies from one place to another.

This is where you need to do some real work. Otherwise, you may be making a blind unprofitable investment. Check out your city’s regulations and acquaint yourself with Airbnb laws as well.

2. Find a Profitable Multi-Family Investment Property

Multi-family homes are best for Airbnb or short-term rental house hacks for many reasons. At the core of every house hack, is the intent to make money. Your next best step is to invest in a profitable multi-family property. To succeed in house hacking with Airbnb, you should avoid luxurious or exorbitantly-priced properties.

Well, even if you want to start with a bang, it is still advisable to go for investment properties that you can afford without taking out a heavy mortgage. The ideal Airbnb house hacking investment should yield enough income to offset your mortgage payment and other housing expenses.

3. Seek Out a Favorable Investment Financing Option?

Financing is very important, and should probably also be a determining criterion for the kind of investment property that you purchase. A mortgage with an affordable down payment and low-interest rates is your best bet.

To get this, most lenders will want to make sure that your liquidity for a down payment is satisfactory. Therefore, you’ll need to save up or raise enough funds for a down payment. Additionally, your credit score should be good and your debt-income ratio has to be low. You can speak with a real estate investment advisor to know which financing options are most favourable for you.

4. Explore Different Types of Airbnb House Hacks

House hacking with Airbnb allows you the opportunity to list your property under different kinds of categories, ranging from one-room rentals to blocks of apartments that can accommodate a whole family. Examples include:

Room rental Airbnb
Multi-family rental Airbnb
Whole floor rental Airbnb (1st floor or basement in a single family house)
ADU (accessory dwelling unit) rental Airbnb: with this, you won’t have to worry about co-existing with your guests and sharing the amenities in the house.
Mother-in-law suite rental Airbnb: this is perfect for short-term rental house hacks.

5. Airbnb Tips for Running Your Rental

Now that you’ve finally made an investment purchase and you’re ready to start making some income through house hacking, you want to ensure that you’re fully booked every time.

To achieve this, you have to be a super host, wowing your visitors with a delightful experience every time. Here are some perks do the trick for you:

Install a welcome message: As insignificant as this sounds, it may be the little difference that earns you one more positive review.
Use attractive or millennial furnishings: Something like a sofa bed would be great.
Cleanliness: Strive to achieve 24 hours cleanliness. For this, you most likely would need to hire professional cleaning services.
Link your rental property description with major events in the city. This way, you get noticed faster and easily.
Wifi: Many guests are looking forward to enjoying free WiFi networks. If you’re going to install one, be careful to avoid getting hacked. Try keeping your router in an enclosed space.
Read your reviews and make adjustments where necessary: You can also spy on the competition for ideas on how to do things better.

In Conclusion

Making profits with Airbnb house hacks is very much achievable. When done right, it won’t be long before you start reaping the benefits. In fact, you can refinance and purchase another property once you’ve paid off your first mortgage, or even after building enough equity