Transforming A Home into a $40k Yearly Airbnb Money Maker
One of our founders, Steph Douglass, has a lot of experience renovating properties. She started investing in real estate in 2013 currently has 8 properties in Austin; all of which she had some hand in the renovation process. And one of her most successful purchases was a small home she bought in 2016.
This little home was not pretty and needed a whole lot of work. But Steph saw the potential and knew that her hard work would pay off in the end - and boy did it ever! Now that property pays for itself, and brings in around $40k a year through Airbnb.
So how did she do it? How did she turn something most people would overlook into one of the hottest Airbnb’s in Austin’s east side? Keep reading to see her entire process, from start to finish!
Want to learn how to house hack and transform a home like Steph? Let’s set up a call to talk to a realtor on our team and get you started.
Let’s get into the specifics: this home was located in East Austin, which at the time was an up-and-coming area but still affordable. The place was a 3 bed/2 bath with a detached back garage/storage unit on .16 acres of land.
Here are the purchase numbers:
Now Steph did not tackle this all on her own. She decided to partner 50/50 with her moms on this property. They filled out proper paperwork to record this partnership because even if you are partnering with family, it’s still important to record every detail. You never know what could happen!
Her moms live in Houston, so part of the arrangement was that Steph would live in the house and do a lot of work, and they would come in occasionally to help with big projects.
It was not a cute place to start…a bit dark and closed in. Some people would see this and say HARD PASS. But Steph and her moms had a vision, something not a lot of people have! They knew they could not only make this place cute but make it cute enough for people to want to rent it.
They also saw the potential of the detached unit in back. Although it was just a garage, they saw that they could add a kitchen, bathroom, etc and make it livable! Could this be a great side house to Airbnb? A place for her to live in while renting out the house? It had so much potential, and definitely was a huge added bonus that encouraged them to make the purchase.
So let’s take a look at the renovation process:
Clearly there were major renovations done, but what parts were done by Steph and her moms and what parts did they hire out? Although these ladies are incredibly hard workers, and did SO MUCH on their own, they definitely needed a little professional help here and there.
Let’s see how it was split up here:
When it was all said and done, this place turned out ADORABLE. Definitely worth all the work. Just check out the finished product:
So, now that the place is cute, how did renting it go? Did they only do Airbnb? Did they find live in tenants to move in? Well, funny enough they house-hacked the home in a lot of ways! If you didn’t know, house-hacking is supplementing your mortgage payments by making money off the home through various ways. So let’s see the ways Steph and her moms house-hacked their finished property and how much money that brought in:
Wow! So through house hacking Steph and her moms were able to not only cover their full mortgage payments, but they were able to make an additional $1,500 dollars PER MONTH. That means they SAVED $26,400 dollars per year and MADE an extra $18,000.
So when you consider the $40k they spent on renovation, they earned that back in 2.5 years. Now is buying a fixer upper looking pretty good to you? We thought so. So we are a ways away from 2016, where is the property at now? Is it still making that much money? IT’S ACTUALLY MAKING MORE.
Wow! So that means currently (while not in the middle of a pandemic) this property brings in around $5,500 a month. Minus the $2,040 monthly mortgage payments (decreased price after removing PMI), they are earning $3,460 per month. That means they are SAVING $24,480 per year and MAKING $41,520 a year! That is about a standard job salary!
While Steph’s moms are living in the back house, they also added an additional bedroom - so now it’s a 2/1! So they are living in a cute and comfortable tiny home in one of Austin’s fasting growing neighborhoods and they are not only paying rent, but MAKING MONEY!
This story truly shows the potential of house-hacking and investing in real estate. If their current money intake remains the same, they are set to make $415,200 over the next 10 years. And this is just one of their properties.
Interested in starting your investing journey? Set up a call to chat with our team, and we can help you find the right home to hack and come up with a strategy! Interested in reading about more of our team members and their investments? Check out our about page and more stories from our blog.
