I bought a second home. When I bought the house, I planned to use it part time and rent it out on Airbnb when not in use. I wanted to benefit from a tax write off from running the business. Ultimately, I wanted to use it as my retirement home when it was time. I learned that when you decide to rent your house or part of your house on airbnb, you don’t know what you don’t know. Here’s my experience with renting my house on Airbnb.
Temecula
I love wine. I love everything that goes with it, including walking through a vineyard. However, I didn’t want to drive to Sonoma or Napa. So, I bought a house in Temecula, which is only two hours from where I live in Los Angeles. The house was 2700 square feet in the wine country on a 3.5 acres of land.
Getting Ready to List on Airbnb
After purchasing the house, I renovated the entire house. I updated the kitchen, all the bathrooms and the floors. The 1980s look house was updated with a chic and modern grey pallet. The house had a pool so I purchased comfortable blue lounge chairs and transformed an ordinary house into an oasis and haven for people visiting Temecula for weddings and wine tasting.
Listing on Airbnb
Listing the updated house on Airbnb was easier than I anticipated. I priced it slightly lower than the market and immediately got renters. The rental started at $390 per night for a 4 bedroom, 3 bathroom, and a pool. Eventually, I was able to charge $550 per night. I planned on managing the house with an exception of employing a housekeeper to clean and launder the sheets and towels.
Challenges
Small Stuff
Some of the challenges I didn’t anticipate was small stuff due to the fact that I was 2 hours away from the house. The housekeeper put the trash out but I had to find a local person to bring the trash bins in. When it rained, I worried the pool would overflow. During the dry season, the pool needed water. I found a local helper through Nextdoor, who turned out to be a huge help. She was able to pop into the house and take care of whatever that was needed.
Homeowner's Association
The HOA had strict rules and keeping up with all their rules was a pain but I managed. I could write an entire blog on this but I won’t.
Bigger Challenges
Large Parties
The ranch, called Sycamore Sanctuary for six majestic sycamore trees lining the front of the house. They brought much needed shade during the hot summers. Due to the fact that the Sycamore Sanctuary had 4 bedrooms and 3 baths, the house invited rather large groups of people who were often attending a local wedding. This also meant that they were young patrons who drank and partied. Once I found bottle caps in the pool and broken glasses. I’m all about drinking and partying but this, not so much.
Laundry
Laundering sheets and towels took a lot of time for one washer and dryer. My housekeeper was awesome and often took those items to her house to finish laundering them and brought it back the next day. I had multiple sets of everything to make this process easier. Having a laundry service specially designed to service Airbnb users would have helped.
I read having white sheets and towels make it easy to launder so you can Chlorox everything. This didn’t turn out to be a great advice. Having all white sheets made it difficult for the housekeeper to differentiate the sheets from king, queen, and twin. The white towels didn’t make it easy for the renters to keep the same towel for themselves for 2 nights of their stay. Therefore, they used a new towel each day and used up all available towels. This meant more laundry, water, and man (woman) power.
It’s not very environmentally friendly either.
Fees
I had to register with the local county to get the Airbnb certification. The fee for this was $100 for a year. This wasn’t so bad; what I didn’t anticipate was paying 12% tax for every dollar of income I collected. Having to reconcile the paper work every quarter was not fun either. This additional tax minus the cost of running the house added up quickly. Additional fees included several thousand dollars each year just to trim all the trees.
Upkeep
Initially I bought the house to enjoy it as a retreat from the city life. This part was wonderful. I enjoyed the tranquility of the space. Sharing the Sycamore Sanctuary with friends and family gave me more joy and satisfaction than I anticipated. However, each time I went to my second home, I spent more time with the upkeep and cleaning than I thought I would.
Expenses
The mortgage on the house was about $3300. I rented it out on Airbnb from April to October during the peak of wedding season. Outside of that, there was minimal interest so I closed it down to enjoy it for my personal need. I made about $20k per year on rental. This meant I was spending about $20k per year or $1,666 per month to enjoy my stay in Temecula’s Sycamore Sanctuary. I could have certainly stayed at the best hotel once a month for less than this.
Complaints
People complain. I once had a renter who complained about the spiders outside the house. She whined the house was dark and was bothered by the noise from my neighbors leaf blower. I took this personally for I spent a lot of time, money, and energy to open my house up to strangers to share. Once I got over the hurt, I fixed everything she complained about. The house is in a rural wine countries that doesn’t have street lights. Still, I added mood lights to the front and the back of the house. The lights were beautiful and made the house look 100 times better. I even wrote to my neighbors and asked them if they can have their gardener change the day from Saturday to another day. I sent them a gift for I knew this was a lot to ask. My neighbors told me to piss off.
Still, I learned a valuable lesson on listening to the customers. Concentrating on things I can change and accepting gracefully the things I cannot kept me motivated.
Advantages
Tax Write Off
Airbnb was considered a business since I was renting it out for more than 14 days. Hence, I was able to write off housekeeping, supplies, utilities, property taxes, interest on the mortgage, and my travel. Since I was a high income earner, every write off helped to decrease my overall tax bill.
Ego
Having a second house is a rich person’s game. Aside from having a primary residence, having a ranch as my second home made me proud of having it. While growing up, my family and I lived in small, ugly apartments. One of the apartments didn’t have hot running water but we had one bathroom with a tub for the six of us. Each morning, we had to heat a vat of hot water in the tub. This was in U.S., not some third world country.
Hence, I grew up dreaming of having a house so big that I couldn’t find my three siblings. The Sycamore Sanctuary definitely fulfilled my life long dream; albeit for short four years. My mother was always proud to tell her friends that she was going to her daughter’s ranch.
Airbnb Service
Their service was better than I anticipated. They insure you a million dollars for damages and charges you a small fee of 3% for the convenience of listing. Since there are 187 million users, booking was never an issue. Airbnb also mediated if a renter refuse to pay for damages. In all, I was impressed and happy with their service.
The End Game
In 2020, I lost my job when my position was eliminated. I wasn’t quite ready to retire at age 57 but welcomed it. I bought the house for $660,000, put $80,000 into renovation and sold it for $860,000 after 4 years. The house sold within 2 days of listing in the midst of the coronavirus pandemic and lockdown. I pocketed the proceeds, along with the down payment and funded my retirement. With a cushion of cash, I was able to use it to bridge my retirement until I can tap into my 403b at age 59 1/2.
Family and Friends
The best part of having an Airbnb house was sharing it with family and friends. I hosted Thanksgiving for my family with sleepovers included.
My friends and I had a wine weekend and enjoyed our long conversations in the hot tub. Other perks of having an Airbnb house was being able to let my family share it with their friends. Seeing my young adult niece and nephew enjoy the house with their friends really was priceless.
Money can buy happiness, because it can buy experience.
Lessons
Here’s what I learned from having an Airbnb house:
- If you’re buying a second house for a get away, you can certainly find a more economic way to do this than buying a second house.
- Now I spend $500 a night going to Ritz in Laguna for a weekend instead of spending $3300 per month having a second house.
- A large house invites large parties and therefore more wear and tear to your house
- HOAs and your neighbors hate the noise that your large party makes and you become the pariah of your neighbor.
- You learn to not take renters complain to heart and develop the courage to listen and improve your service even when it’s hurtful.
- I had 4.8 stars out of maximum 5 stars after learning to make improvements.
- Some say there’s nothing better than just being able to walk into your second house and have everything there for you. This is over rated.
- You can make money by renting your house on Airbnb
What I Would Do Differently
If I had to do it all again, I would:
- Buy a condo where the HOAs cover the utilities such as pool and trash service as well as up keeping of landscapes.
- Alternatively, Airbnb would be great for someone who has a guesthouse. This way, you can keep an eye on the guests and keep the noise and partying to minimum.
- Invest in an Airbnb house somewhere close; this way, you can take the laundries home and have it ready for the next renters.
- Have different color sheets for different beds
- Provide colorful towels
What I Loved
Although I held the house for a brief period of four years, here are the things I loved:
- Tranquility of the house
- Memories of spending time in the hot tub with friends and family drinking wine
- Making substantial amount of money when I sold it
One day, I do intend to buy another house in the Temecula’s wine country. Only to live there as a primary residence, not to rent it out on Airbnb.
“Fill your life with experiences. Not things. Have stories to tell, not stuff to show.” -Viren Thakare