Owning a home is an integral part of the American Dream. Unfortunately, it could turn into a nightmare once you start thinking about paying a mortgage. That’s where house hacking, in particular Airbnb house hacking, can come into play.
Saving enough money for the down payment is tough enough. With the average amount of monthly mortgage payments exceeding $1,100, many potential homeowners are watching the dream slip away.
Airbnb house hacking is an easy way to cut monthly mortgage payments or cover them entirely. It can also help save money for new real estate investments while building equity.
Let’s take a closer look at what house hacking is and how to do it through Airbnb in the Washington DC area.
What is House Hacking?
House hacking involves buying a large property, living in one part of it, and renting out the rest. The money you earn by renting can go toward covering monthly mortgage payments. Let’s do a little number crunching.
- Triplex price – $1,500,000
- 5% down payment – $75,000
- Loan at 4% interest rate and 30 years – $7,800 monthly
Paying $7,800 per month can sound excessive. However, if you rent the two parts of your triplex through Airbnb, you can have that covered.
Depending on the neighborhood your property is located in and its condition, you may get as much as $ 4,000 per month per unit. By renting out both, you can pay the mortgage and still have a couple of hundred bucks left for other needs.
Meanwhile, you are living in your dream home for free, building equity, and gaining valuable landlord skills.
Which Property is Suitable for Airbnb House Hacking?
The big advantage of house hacking through Airbnb is that you can do it with virtually any property. The most popular options are:
- Multi-family properties (duplex, triplex, quadruplex) – ideally, each unit should have a separate entrance.
- House with multiple bedrooms – you can rent out each bedroom to a new tenant.
- Zoned basement – a house with a basement that has a separate entrance, kitchen, and bathroom.
- Affordable dwelling unit (ADU) – a separate fully functional (electricity, plumbing) housing unit built in your yard.
- Multi-bedroom apartments – you can rent out each room in the apartment to Airbnb travelers.
Choosing a Property for Airbnb House Hacking
Since the competition among rental properties on Airbnb can be high, you need to make sure that your house is highly suitable for rent. Before buying rental property in Washington DC to use for Airbnb house hacking, consider the following points:
Before you buy a dream house designated for hacking, you need to figure out who your potential tenants are. Are they families with children? Are they business travelers? Tourists? While families with children are likely to look for long-term rent, tourists would pay more for a short-term stay.
Depending on your ideal “tenant persona”, you can choose the location. At the very least, it should have access to public transportation. For tourists, you need proximity to attractions while for families with children, you need a property next to a good public school.
The better condition your property is in, the more money you can charge for it. If you are buying a house, which is in poor condition, be ready to lower the rent amount or invest in renovations.
Thankfully, short-term rentals don’t usually take a serious toll on the property’s condition. So you can avoid frequent renovations.
3. Potential Earnings
Before Airbnb house hacking, consider the potential earnings. The platform offers a simple tool to help you get an estimate of how much you can earn.
Remember, if you are aiming for tourists, you won’t be renting out your property 365 days a year. Most likely, there will be days when it will stay empty.
If you want to have success renting out your property on Airbnb, you need to find a home that stands out. You would have to check out what’s available in Washington DC right now and look for a property that can offer something extra.
Is everyone in your chosen neighborhood focusing on tourists? Consider a property suitable for business travelers. Is the majority of properties aimed at wealthy tenants? Find a property suitable for people with a low budget.
5. Maintenance and Other Expenses.
House hacking with Airbnb entails thorough maintenance. Consider such costs as taxes, insurance, and upkeep to figure out how much of the rent you have left to cover the mortgage or invest in other properties.
Depending on how much time you have to manage the property, you may want to look for a property manager.
The Benefits of Airbnb House Hacking
Besides the obvious benefit of earning money, house hacking with Airbnb can have numerous advantages:
You can choose the time you want to rent your property out for and the amount you want to be paid. Anytime you have guests coming over from another state or just need some peace and quiet, you can deactivate the listing and have the house all to yourself.
Meanwhile, if you find a new job or have family issues, you can always move out and rent out the rest of the property.
2. Timely Payments
Renting via Airbnb guarantees timely payments. You don’t have to worry about the tenant failing to pay on time as you would with traditional renting. All financial transactions are done through Airbnb so you always have guarantees.
3. Tax Breaks
Short-term rental property owners can take advantage of substantial tax breaks. For example, you can deduct 100% of furniture and equipment. Or you can write off the guest fee (on Airbnb, it can be up to 20% of the rental amount).
Airbnb House Hacking Made Easy
House hacking through Airbnb is an excellent way to build equity, develop landlord skills for further real estate investment, and live in the home of your dreams. Airbnb makes short-term rentals easy by providing different services and extensive information related to your options.
Meanwhile, living next to your tenants allows you to stay in full control and react to problems timely.
If you decide to participate in house hacking through Airbnb in Washington DC and need assistance with property management, please contact us at any convenient time.