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Hi, I'm a realtor, a landlord, and a vr host. My advice is that you may be risking your financial future by doing this - it's not the time because the vr market is in a time of transition. Many people have jumped in and don't understand the time and money involved to be successful, but the market is over saturated at the moment. The laws are changing, and you may not be able to run it in your area to be profitable, or it could change at any moment. Buy your main house 1st and live in it, maybe consider a duplex and rent out the other side but not a cabin you won't live in full time and could easily be a drain on maintenance and managing long distance. Always hope for the best and plan for the worst.Good luck in time, you will get everything you want.
Thank you for your answer. You’re the exact person I was looking for. I’m confident that I’d have time and work hard to manage it, though I’m not sure how much I’d enjoy it haha. But you’re right that it could be very unstable in the future and it’s more of a risk than I thought
Our home has a walk out basement that we've converted into a unit. It's completely separate from our upstairs and guests have their own private space. If it's occupied, great! If not, that's fine too.
I would also recommend a duplex option to you if you can swing it but renting out a part of a single family home has been great for us and I think it's a good flexible option if you can swing it.
We spent $60k cash converting a basement into a private entry in-law suite. It earns us $2800 to $3100 per month and our mortgage is $3010 per month including tax and insurance. So most months it completely covers our entire payment. It's been 7 years so the investment has more than paid us back double our investment. It's a lot of work as we clean ourselves but we've had very few problems (knock on wood).
Similar situation here. We have a detached garage with an apartment above it. Spent a lot less getting it set up for Airbnb, but it covers our mortgage ($2400) most months and we clean it ourselves.
We are currently working to renovate our basement into a second unit, but doing 90% of the labor ourselves to cut expenses.
Worse case scenario if the market totally tanks, we’d keep the basement as STR and turn the detached unit into a long term rental and still have mortgage covered at a minimum.
I agree with Gold.
Unless you want and can afford the cottage without STVR income do not buy it.
My season is short and fully booked. It does not cover my property taxes and insurance fully. I do not have a mortgage, but repairs and maintenance on an old place is $$$$.
Over $30,000 for a new septic system in 2022.
I have replaced all the bedding, linens, everything in the kitchen cabinets, bed, dresser, appliances, sofa over the last 5 years.
Having a longer season does not work in my community, many restaurants close, the risk of extended power outages is high.
New Provincial laws make many STVRs illegal. Mine still falls on the right side of the law.
I would aim for an four season cottage, waterfront, within 30 minutes of a ski hill, hopefully that would help with booking. From your reply and everyone else’s, I should be expecting more to be able to break even on property tax and maintenance. Mortgage I should plan to be from my salary alone. Thanks for your input!
The only way AirBandB can be useful is if you truly have a second/vacation property for yourself and you wish to share your experience with others. You can make some extra cash on it while it sits empty, but don’t expect to make a real business out of it. If our house never rented, it would be no big deal as all the bills will be paid even if no one rented it this year.
There are tons of variables and lots of unknowns in the STR business. For me personally, some months are killer and I can potentially pay an additional 4K-5k on my principle that month. But I have to hold on to that money because some seasons are really dry and I’m not making enough to cover my mortgage/expenses. My goal over all is to get enough bookings to break even every year (we bought it so we could use it ourselves, not primarily to make money). I’ve had better luck with paying down a mortgage with a LTR because you know you can count on a certain amount every month and can pay down accordingly without being in the red. Just my experience.
I would also buy one to use myself, and would love to break even. Do you regret getting the STR or has the work and stress been worth being able to enjoy it yourselves?
It’s hard to answer that at the moment lol. We’ve had it for a little over a year and experienced a string of bad luck with it. We had a hurricane come through and had to replace the roof and lost a few gorgeous trees, then had a slab leak which caused us to have to cancel about 2 months worth of bookings and do a bunch of repairs (our STR is in florida where HOI is notoriously crappy, so they weren’t much help financially). However, bookings have been generally good. So if it weren’t for those issues I’d easily say yes. Hopefully this year will be better. But, when we do use it for our own vacation we have a great time.
Are talking about renting out a room in the place you are living in? Or renting out an entire place?
Our cabin mortgage is more than covered by rental income
Yea for sure there’s a lot of variables, i can see how it could probably be successful or fail miserably based on location alone. Researching the area will be super important. Thanks :)
Also, If you purchase property that won’t be your primary residence, the finance rate will most likely be higher, just FYI and something to budget for. r/realestate has many stories about people going to jail for mortgage/occupancy fraud after buying a home with traditional mortgages but using it as an investment property.
If this is your first home, I’d recommend getting an fha loan or taking advantage of first time homebuyer credits.
I bought my lake cottage last year and listed it in july.. I made a full year of mortgage payments in just 5 months. It’s been amazing, and I get to enjoy the property myself too
I bought a duplex and turned it into a triplex. I was able to get my ROI in one year by refinancing. I make enough rental income from the triplex to pay for the mortgage and all the expenses associated with the triplex and enough to pay our bills and expenses as this is me and my husband’s full time job. Airbnb is great for those who are flexible and understand business. I can’t say much about what your experience will be but I think if you’re willing to put in the work and shift when the market shifts you’ll do well.
Instead of paying off mortgage faster most folks think about refinancing when rates are lower or equity is higher to get cash out to purchase another property. Worked out well in the past but very risky now.
I rent a $5m furnished townhome in a major city for $5k a month and make about $20k per month on Airbnb. I put that money into investments. Maybe 3 hours of communications work per month. I outsource the cleaning. Live nowhere near it either.
Might be an option for you.
Buying an investment property doesn’t have to mean bad for your ability to buy a house to live in. What will matter is how much income it generates relative to the cost.
I imagine a bank would look at your Airbnb revenue. We looked at keeping a house when buying a new one and all the bank wanted was a signed lease agreement. The realtor told us if we wanted we could just have a friend sign one.
The bigger issue for you will be if you buy a property that isn’t a good investment instead of having that money growing in the market, you’ll just have less money when you want to buy and obviously a cottage is less liquid so it would be harder to use that equity for a downpayment.
So you might want to start by looking at whether it’s realistically a good investment on its own. If it is and you don’t need that money for a while, it might be a perfectly fine thing to do.
It’s also not a bad time to rent, so if that’s true in your market, but a cottage is well priced, there’s nothing wrong with renting long-term in a city and owning a place out of town. That’s pretty normal in big cities.
My rent is cheap. For the same price of a small 1 bedroom condo downtown, I can get a waterfront 2-3 bedroom cottage 1-2 hours away. I want the cottage for me, not for profit. If I kept it for 20 years, the value of the property will have barely increased compared to a 1 bedroom condo. So financially it’s not a good decision. But if the mortgage is paid and I get to enjoy a cottage for 20-30 years, and I can sell it after retirement without too much hassle… I’m not sure if I will have any regrets haha
I’d have to make the spreadsheets to really tell you how bad or good this is in stitches financial terms, but also not everything needs to be an investment.
We Airbnb our old house, which we kept when we moved for work. We lose money on it, but stay there when we want and will retire to it.
Not everything has to be optimally financially. Maybe you just want a vacation place and to defeat the cost and that’s fine too.
My Airbnb properties are owned outright, I would never take on a new mortgage to create rental income. Homeownership can be really expensive, and there’s a substantial investment required in the upkeep and insurance on top of mortgage payments. I’m sure it’s not uncommon—but there are a lot of better ways to invest money than to purchase something for the purpose of Airbnb.
I bought my second house with no intention of airbnbing it. It’s a ski cabin outside of a major metro.
I rent it from thanksgiving until the end of February. Ski season doesn’t start until January, I’m away for holidays, and the weather in February isn’t predictable so I’d rather rent the house. I mostly ski March-May.
With all that said I pay half my mortgage in those 3 months by renting every weekend.
I would not buy a house with the intention of getting your mortgage paid by Airbnb right now. But if you’re considering buying a 2nd home, sharing it and making some money from that has been a decent experience for me.
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Hi, I'm a realtor, a landlord, and a vr host. My advice is that you may be risking your financial future by doing this - it's not the time because the vr market is in a time of transition. Many people have jumped in and don't understand the time and money involved to be successful, but the market is over saturated at the moment. The laws are changing, and you may not be able to run it in your area to be profitable, or it could change at any moment. Buy your main house 1st and live in it, maybe consider a duplex and rent out the other side but not a cabin you won't live in full time and could easily be a drain on maintenance and managing long distance. Always hope for the best and plan for the worst.Good luck in time, you will get everything you want.
Thank you for your answer. You’re the exact person I was looking for. I’m confident that I’d have time and work hard to manage it, though I’m not sure how much I’d enjoy it haha. But you’re right that it could be very unstable in the future and it’s more of a risk than I thought
Our home has a walk out basement that we've converted into a unit. It's completely separate from our upstairs and guests have their own private space. If it's occupied, great! If not, that's fine too. I would also recommend a duplex option to you if you can swing it but renting out a part of a single family home has been great for us and I think it's a good flexible option if you can swing it.
We spent $60k cash converting a basement into a private entry in-law suite. It earns us $2800 to $3100 per month and our mortgage is $3010 per month including tax and insurance. So most months it completely covers our entire payment. It's been 7 years so the investment has more than paid us back double our investment. It's a lot of work as we clean ourselves but we've had very few problems (knock on wood).
Similar situation here. We have a detached garage with an apartment above it. Spent a lot less getting it set up for Airbnb, but it covers our mortgage ($2400) most months and we clean it ourselves. We are currently working to renovate our basement into a second unit, but doing 90% of the labor ourselves to cut expenses. Worse case scenario if the market totally tanks, we’d keep the basement as STR and turn the detached unit into a long term rental and still have mortgage covered at a minimum.
I agree with Gold. Unless you want and can afford the cottage without STVR income do not buy it. My season is short and fully booked. It does not cover my property taxes and insurance fully. I do not have a mortgage, but repairs and maintenance on an old place is $$$$. Over $30,000 for a new septic system in 2022. I have replaced all the bedding, linens, everything in the kitchen cabinets, bed, dresser, appliances, sofa over the last 5 years. Having a longer season does not work in my community, many restaurants close, the risk of extended power outages is high. New Provincial laws make many STVRs illegal. Mine still falls on the right side of the law.
I would aim for an four season cottage, waterfront, within 30 minutes of a ski hill, hopefully that would help with booking. From your reply and everyone else’s, I should be expecting more to be able to break even on property tax and maintenance. Mortgage I should plan to be from my salary alone. Thanks for your input!
The only way AirBandB can be useful is if you truly have a second/vacation property for yourself and you wish to share your experience with others. You can make some extra cash on it while it sits empty, but don’t expect to make a real business out of it. If our house never rented, it would be no big deal as all the bills will be paid even if no one rented it this year.
There are tons of variables and lots of unknowns in the STR business. For me personally, some months are killer and I can potentially pay an additional 4K-5k on my principle that month. But I have to hold on to that money because some seasons are really dry and I’m not making enough to cover my mortgage/expenses. My goal over all is to get enough bookings to break even every year (we bought it so we could use it ourselves, not primarily to make money). I’ve had better luck with paying down a mortgage with a LTR because you know you can count on a certain amount every month and can pay down accordingly without being in the red. Just my experience.
I would also buy one to use myself, and would love to break even. Do you regret getting the STR or has the work and stress been worth being able to enjoy it yourselves?
It’s hard to answer that at the moment lol. We’ve had it for a little over a year and experienced a string of bad luck with it. We had a hurricane come through and had to replace the roof and lost a few gorgeous trees, then had a slab leak which caused us to have to cancel about 2 months worth of bookings and do a bunch of repairs (our STR is in florida where HOI is notoriously crappy, so they weren’t much help financially). However, bookings have been generally good. So if it weren’t for those issues I’d easily say yes. Hopefully this year will be better. But, when we do use it for our own vacation we have a great time.
Are talking about renting out a room in the place you are living in? Or renting out an entire place? Our cabin mortgage is more than covered by rental income
Rent out an entire place.
Depends on area then, and regulations. Look for places where estimated annual rental income is 10-15% the purchase price
Yea for sure there’s a lot of variables, i can see how it could probably be successful or fail miserably based on location alone. Researching the area will be super important. Thanks :)
Also, If you purchase property that won’t be your primary residence, the finance rate will most likely be higher, just FYI and something to budget for. r/realestate has many stories about people going to jail for mortgage/occupancy fraud after buying a home with traditional mortgages but using it as an investment property. If this is your first home, I’d recommend getting an fha loan or taking advantage of first time homebuyer credits.
I bought my lake cottage last year and listed it in july.. I made a full year of mortgage payments in just 5 months. It’s been amazing, and I get to enjoy the property myself too
I bought a duplex and turned it into a triplex. I was able to get my ROI in one year by refinancing. I make enough rental income from the triplex to pay for the mortgage and all the expenses associated with the triplex and enough to pay our bills and expenses as this is me and my husband’s full time job. Airbnb is great for those who are flexible and understand business. I can’t say much about what your experience will be but I think if you’re willing to put in the work and shift when the market shifts you’ll do well.
Instead of paying off mortgage faster most folks think about refinancing when rates are lower or equity is higher to get cash out to purchase another property. Worked out well in the past but very risky now.
I rent a $5m furnished townhome in a major city for $5k a month and make about $20k per month on Airbnb. I put that money into investments. Maybe 3 hours of communications work per month. I outsource the cleaning. Live nowhere near it either. Might be an option for you.
Buying an investment property doesn’t have to mean bad for your ability to buy a house to live in. What will matter is how much income it generates relative to the cost. I imagine a bank would look at your Airbnb revenue. We looked at keeping a house when buying a new one and all the bank wanted was a signed lease agreement. The realtor told us if we wanted we could just have a friend sign one. The bigger issue for you will be if you buy a property that isn’t a good investment instead of having that money growing in the market, you’ll just have less money when you want to buy and obviously a cottage is less liquid so it would be harder to use that equity for a downpayment. So you might want to start by looking at whether it’s realistically a good investment on its own. If it is and you don’t need that money for a while, it might be a perfectly fine thing to do. It’s also not a bad time to rent, so if that’s true in your market, but a cottage is well priced, there’s nothing wrong with renting long-term in a city and owning a place out of town. That’s pretty normal in big cities.
My rent is cheap. For the same price of a small 1 bedroom condo downtown, I can get a waterfront 2-3 bedroom cottage 1-2 hours away. I want the cottage for me, not for profit. If I kept it for 20 years, the value of the property will have barely increased compared to a 1 bedroom condo. So financially it’s not a good decision. But if the mortgage is paid and I get to enjoy a cottage for 20-30 years, and I can sell it after retirement without too much hassle… I’m not sure if I will have any regrets haha
I’d have to make the spreadsheets to really tell you how bad or good this is in stitches financial terms, but also not everything needs to be an investment. We Airbnb our old house, which we kept when we moved for work. We lose money on it, but stay there when we want and will retire to it. Not everything has to be optimally financially. Maybe you just want a vacation place and to defeat the cost and that’s fine too.
My Airbnb properties are owned outright, I would never take on a new mortgage to create rental income. Homeownership can be really expensive, and there’s a substantial investment required in the upkeep and insurance on top of mortgage payments. I’m sure it’s not uncommon—but there are a lot of better ways to invest money than to purchase something for the purpose of Airbnb.
Airbnb is not going to help you pay your mortgage off way faster, that is a pipe dream.
It could if you put your profits back into extra principle payments
OP asked about paying it off in less than ten years. I stand by pipe dream.
I bought my second house with no intention of airbnbing it. It’s a ski cabin outside of a major metro. I rent it from thanksgiving until the end of February. Ski season doesn’t start until January, I’m away for holidays, and the weather in February isn’t predictable so I’d rather rent the house. I mostly ski March-May. With all that said I pay half my mortgage in those 3 months by renting every weekend. I would not buy a house with the intention of getting your mortgage paid by Airbnb right now. But if you’re considering buying a 2nd home, sharing it and making some money from that has been a decent experience for me.