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EXECUTION Building An AirBNB Empire In Chicago

Discussion in 'Progress/Execution Threads' started by Sully1994, May 12, 2018.

  1. Sully1994
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    Sully1994 Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Was inspired to start this thread by @IceCreamKid.

    I am going to be renting out apartments in the Chicago area and turning them into AirBnb rentals. (And yes, I'm going to obtain explicit permission from the land lords to do so lol)

    In this thread I will be documenting my process. Whether this turns out to be a success or a giant failure, everyone here will get to witness my journey. I will try to be as detailed as possible to keep this thread high value.

    Any advice from those with experience in this area would be greatly appreciated!

    I will be coming back to update this thread once I have conducted more research.

    For now here are my preliminary thoughts-

    Initial barriers:

    I talked to my brother who owns 6 homes in Detroit. He told me that I would need to find landlords that would give me explicit permission to sublease the property. Since they are assuming all of the risk, he said he wouldn't be surprised if many of them would refuse to do it unless they saw a big cut of the profits.

    keys to profitability: Constant Occupation. Low Expenses.
    • I looked at some studio Air B&B apartments in my area, and many of them are booked MONTHS in advance. This is a good sign. I'm not going to speculate on profit margins yet, because there's too many variables I have yet to calculate. I'll come back to this.
    • Mandatory expenses for each apartment = rent, utilities, renters insurance, and AirBNB payment processing fees. The place will also need a bed, sheets, pillows, towels and toilet paper for the bathroom, and perhaps a set of silverware and plates for the kitchen.
    • Optional expenses: Amenities like cable, wifi, etc. Overall, i'm not totally sure how decked out these places should be to constantly attract people. Should these apartments be filled with decorations ( giving it a "home" feel, or should they be basically empty like a hotel? Is a TV necessary? These are all questions I will have to answer.
    As for picking apartment sizes to rent out, I'm not sure if it would be better to go with a studio, or Go with a 2, 3, or 4 bedroom place.

    The question that needs to be answered is this:

    When traveling, is it more common to do so alone ( studio) with a spouse ( studio) with a friend (two bed room) or with your friends ( 3 or 4 bedroom).

    I have a feeling the answer depends on the jurisdiction of the rental. Certain places in the city most likely attract different types of people. e.g. friends going on a roadtrip vs. the traveling businessman.

    I'll need to do some research and get better insight on this- with data on my part of the city if possible.

    Well, this is going to be interesting.
     
  2. Ginotocino
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    Ginotocino New Contributor

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    Hey @Sully1994
    I will be starting the same thing in the next 2-3 months! I'm creating my business plan for it. I know one guy who did it and he is traveling the world. The business seems like it is very scalable and I'm thinking it's a good path to the Fast Lane. Someone can correct me if I'm wrong.

    There is this website called AirDNA.co (not .com) that helps with analytics for Airbnb. This might help you.
     
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  3. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    The answer is yes, you will definitely need Wifi, basic cable, a nice TV and decent furniture. Else you will get some poor reviews. It should NOT feel like a hotel, but a nice home.

    You will need a cleaner to clean and replenish things like soap and shampoo in between renters. You also need to figure out how you are going to launder the towels and sheets if the apartments don't have a washer and dryer.

    Not sure if this is fastlane. To me it's pretty risky in that you could establish a nice income and your landlord can just decide not to renew your lease.
     
  4. ZCP
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    ZCP Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Maybe you pitch it as 'rent to own' to the landlord and they get a cut of the 'above market rate' rent.......

    Or be an Airbnb management company.....
     
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  5. JAVB
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    JAVB Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    I own 9 houses in Central Florida and rent them long term. I've thought about airbnbing them, but when I run the numbers and factor in the management hours, long term makes more sense to me and my preferences.

    Your situation is different. You don't own the houses, so you would be taking a cut for the service of subletting ... That is interesting.

    The main concern I have from your project is the numbers... I didn't see them in your post... It would be helpful to analize them.

    How much would you rent for?
    How much would you have to invest to make them Airbnb ready?
    Then, what is the minimum occupancy rate to break even?
    How long to recover the initial furniture investment ?

    A little Excel analysis with projection would help us all understand your journey better. Good luck and thanks for sharing that here!

    Sent from my Pixel 2 XL using Tapatalk
     
  6. KLaw
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    KLaw Silver Contributor Speedway Pass

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    Not sure I agree with your risk assessment. As long as you are providing the landlord with easy money, the risk is minimal.
     
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  7. JAJT
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    JAJT Ha Ha! Business Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Nonsense.

    It's only minimal IF you find a landlord who is lazy and indifferent.

    All it would take for this idea to go south is a landlord to turn around and decide his ambitious tenant is making too much and increases rents significantly, or decides they want to get into AirBnB themselves and kicks out the renter.

    The only "no risk" part of this equation is for the landlord who can have someone else run market validation while they wait to decide whether or not they want a piece for themselves.
     
  8. biophase
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    biophase Legendary Contributor I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    No, you are providing the landlord with increased wear and tear on his furniture and appliances and an unstable tenant in his property. How is the landlord getting easy money? He's not getting any benefit unless he is charging the tenant more for rent. If it were me and I had to allow it, I would want a percentage of the Airbnb income right off the top.
     
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  9. Determined2012
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    Determined2012 Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    @Sully1994 what part of town are you looking for?

    Hyde Park Chicago is a good spot for you. A lot of travelers and business people come to the area because of the ever expanding University of Chicago Hospital, and the University of Chicago college campus. Not to mention Harper Court brings in a ton of new traffic.

    The Hyatt Place hotel there is always booked at $100+ a night.

    Another good reason to pick this area is that there are a TON of studios, a lot that have been recently updated which might suit your needs. With a studio you wouldn't need tons of furniture, a futon couch would suffice....

    I believe there is a certain formula people who do this use to decide numbers. I know why guy only does rentals for $1,000 or less... And he mainly gets his units by the airport.

    Good luck, and can't wait to read your updates!
     
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  10. Kelly86
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    Kelly86 New Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Very interested to hear how you’re getting on with this idea Sully as I’ve thought about doing something like this before. Any updates?
     

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