This is all wrong. Misinformation on purpose. 1) you didn't include insurance and property taxes on the monthly payments, 2) you grossly undermined the monthly expenses when running an airbnb for a house that costs $500k, cleaning fees, utilities (keep in mind, gas, electrical, water, and high speed internet are very expensive nowadays), and maintenance costs, for a $500k house is waaaay above $1500 a month; 3) you OVERESTIMATED AVERAGE OCCUPANCY RATES IN 2024, you only wished it was 75%, it is not. Maybe 4-5 years ago yes it was 75% NOT NOW. Occupancy rates differ a lot depending on your location but 2024 average is between 47%-52% at urban areas. AND SURPRISE!!!! You forgot the TAXES that you have to pay on your net income. You still gotta pay 15.3% for medicare and SS; plus 12% or more, depending on your numbers, for your income tax, and if you live in a state income tax, you gotta pay more 10% on that. Total in taxes? You could potentially be paying 27.3% only in taxes. So the reality is, AIRBNB IS NOT A PROFITABLE BUSINESS ANYMORE. You are a winner if you are breaking even and after all the work and stress in dealing with guests (you have to be available 24/7, 365 days), which means that you are coming out on the negative regardless if you are thinking "oh this is a great property and I'm capitalizing on the equity" nope, the business model simply does not work anymore. You are waaaay better off renting long term, just get informed correctly on your state's housing rules and you will make $200-$300 cash flow without all the headache and extra hours answering guests. Oh - 5) you OVERSTATED the vacancy rates for LTR, if you rent for 1 year and renew the contract you do not have to worry about vacancies, and if you have to find new tenants, it's pretty common to rent again right away due to high population and low numbers of housing inventory, so I'm not sure where you got your $200/month in vacancies. This is all bullshit, I don't know you, but I could easily guess you are in the business of selling courses on how to get rick with Airbnb.
This is all wrong. Misinformation on purpose. 1) you didn't include insurance and property taxes on the monthly payments, 2) you grossly undermined the monthly expenses when running an airbnb for a house that costs $500k, cleaning fees, utilities (keep in mind, gas, electrical, water, and high speed internet are very expensive nowadays), and maintenance costs, for a $500k house is waaaay above $1500 a month; 3) you OVERESTIMATED AVERAGE OCCUPANCY RATES IN 2024, you only wished it was 75%, it is not. Maybe 4-5 years ago yes it was 75% NOT NOW. Occupancy rates differ a lot depending on your location but 2024 average is between 47%-52% at urban areas. AND SURPRISE!!!! You forgot the TAXES that you have to pay on your net income. You still gotta pay 15.3% for medicare and SS; plus 12% or more, depending on your numbers, for your income tax, and if you live in a state income tax, you gotta pay more 10% on that. Total in taxes? You could potentially be paying 27.3% only in taxes. So the reality is, AIRBNB IS NOT A PROFITABLE BUSINESS ANYMORE. You are a winner if you are breaking even and after all the work and stress in dealing with guests (you have to be available 24/7, 365 days), which means that you are coming out on the negative regardless if you are thinking "oh this is a great property and I'm capitalizing on the equity" nope, the business model simply does not work anymore. You are waaaay better off renting long term, just get informed correctly on your state's housing rules and you will make $200-$300 cash flow without all the headache and extra hours answering guests. Oh - 5) you OVERSTATED the vacancy rates for LTR, if you rent for 1 year and renew the contract you do not have to worry about vacancies, and if you have to find new tenants, it's pretty common to rent again right away due to high population and low numbers of housing inventory, so I'm not sure where you got your $200/month in vacancies. This is all bullshit, I don't know you, but I could easily guess you are in the business of selling courses on how to get rick with Airbnb.
Nailed it
That was informative. Thanks
U forget the insurance and tax cost bro which is will end you u in losing around 10k
Nice! Thank you so much for the break down. I'm a new investor that needs this information. Sub'd too.
comment
This is just wrong. Who is buying 500k house to rent 3.5k? lol, maybe 5k per month sounds more exact