Airbnb House Hacking in Washington DC

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Airbnb House Hacking in Washington DC 1

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.
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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:

1. Location

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.

2. Condition

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.

4. Competition

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:

1. Flexibility

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.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

Owner Portal Reports
  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

Enhanced Rent Roll Report
  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

Unit Comparison Report
  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

Income Statement by Month Report
  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

Owner Portal Documents
  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

Responses will show up in the conversation ticket:

Portal Conversation Response Screenshot
  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Owner Portal Comment

Each conversation will be logged in its entirety:

Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.