We have just hit 1 year hosting our property on Airbnb. And we aren’t too satisfied with the results. So this post will serve as a warning: if you’re going to run an Airbnb go all in! And we’ll also talk through some ways we could’ve improved and where we are going next.
Here’s the thing: there’s a possibility that we could’ve gotten enough right to max out our potential and there really isn’t a market for our property. But I refuse to believe that. There is always something we can do to improve.
What went wrong? Once we get more experience we’ll know for sure, but I have some theories for what might’ve happened. Some of them may be reaching, but we won’t know until the next property!
Half-Assed Our Property
I would like to think that we did a pretty good job setting up our property. But there were definitely a couple things missing at first. And each item may seem small at first, but added together I think we could’ve done a much better job setting things up.
One that stands out in the pictures now that we’ve added more is the nightstands. There’s nothing on them! It made it look like we threw them together and let the guests decide what to put on them. We’ve since added lamps with charging ports to each of them. A simple yet impactful change.
Another one came AFTER we received a 4 star review. The guest mentioned our property wasn’t ‘homey’ enough. Which hurt because that’s what we were going for. It wasn’t our intention to be bare bones, I just really prefer minimalistic vibes.
Not quite this photo, but once we took a look around we noticed we could make some changes. So we bought some more wall art, some shelves, and just general decorations. We think we did a pretty decent job after that review. Felt more ‘homey’ without being cluttered.
Priced Too High in Off-Season
Now this may play into the previous point somewhat, but it would seem there is quite an off-season for short term rentals in Port St Lucie. And we saw that with the projections that we ran while weighing whether we thought it’d be a good idea.
What we originally saw was break even for about 4 months (around May-Aug), with about 8 months of varying profits. Some of those profits were projected to be pretty substantial, which is why we ended up pulling the trigger.
Now let’s assume the lull wasn’t because of our property not being up to par. All other things being equal, guests will search based on price. And when hotel prices are low, it takes away some of our potential audience. So we had a smaller audience to begin with, then have price pressure from hotels, and what did we do? We kept our minimum nightly price high and paid for it.
Now here’s the thing: we love PriceLabs. We think it does an awesome job at moving prices. The problem we ran into was since we set our minimum nightly price too high, it wasn’t fully able to adjust prices as it would had we given it free reign. I was definitely biased while looking at the original prices. I don’t have any screenshots but they were around $75 per night during the slow season. I couldn’t believe it, so I moved the minimum price up to $110 per night. And we had the results we did. There were some days that I changed to lower than $100 a night to get some last minute guests.
Now for some real-time numbers so you can see where I think we messed up. Our breakeven point is roughly $2300 per month give or take some electricity fluctuations. So that means at $110 per night, we need roughly 21 nights to breakeven. Given that our first two and a half months were nearly fully booked at much higher prices, we thought the off-season would mean breaking even. And that’s where (I think) we made the biggest mistake.
Lets use $75 a night as an example of a different outcome. Let’s say $75 a night puts us competitively in the top results, and gives us a result of 25 nights booked. That’s $1875 per month, or $425 under our breakeven point. Which sucks. However, what sucked more was keeping things high at $110 and getting about 1-2 bookings a month over the span of May-October. We average roughly XXXX per month, which means I had to come out of pocket an average of XXXX every month. Much worse than losing $425 per month in the off-season. The big months would definitely have covered those losses and ended the year with a positive gain. As I’m writing this in late November, we’d need almost five figure months in revenue to make up for what we’ve paid out over the past few months.
| Real Numbers ($2300 breakeven) | Potential Mitigation Numbers |
| $110 per night | $75 per night |
| 3 nights booked | 25 nights booked |
| $330 revenue | $1875 revenue |
| -$1970 loss per month | -$425 loss per month |
Not Comparing the Right Properties
When we first started, we were very eager to get going. We also had a very good opportunity in that my brother had just purchased a rental property in the middle of town. Since we knew him, it was easier to get him to hear us out about how we would pay him on time every month, keep things spotless, etc. We would also give him a portion of our profits if we reached a certain threshold.
Since we took the ‘easy route’ on that aspect, I think we ended up making the numbers work in theory a little more than what they probably were. Now that’s not to say that the estimating tools are perfect and we had 100% of the error; only time will tell. However, we found properties that seemed to be performing really well and thought we could mimic them. We ignored the fact that they might’ve been larger (3 bedroom instead of 2), had pools or hot tubs, and were better set up to provide other amenities. It also didn’t have a fenced in yard for full privacy. So there were some pretty big things that we ignored when comparing initial properties that could’ve been the reason for our lower revenue. For example, maybe a pool is a dealbreaker when visiting sunny south florida.
Our advice to you in this aspect is to compare similar properties, and to build your property up to the level (or past) of amenities offered by your competition. You’d hate to spend all this money setting up your property only to still fall short because you didn’t add a game room or something similar. Take detailed notes of what your competition has available and beat them.
Not Giving a Reason to Stay Home
This plays off of the last point, but is important enough to mention separately. We didn’t really give our guests a reason to stay home. Have you ever stayed in an Airbnb where you just never want to leave? Where it’s a struggle to go out and explore the city because there are just too many things to do at the property? We didn’t set ours up like that at all.
We shot for at least a little bit better than a hotel room. We had a workspace, a family area with board games, and comfortable beds. Which you could say reached our goal.
But no one is dying to stay inside of their hotel room. And it was the same with our property. When you look at the leading listings, they go above and beyond what you’d expect from a hotel room. They’re making properties that are staycations in themselves.
So in our next property we’re going above and beyond our competition. A game room, pool, home bar, beautiful private backyard amenities, maybe even all of the above.
Why We Are Moving
You may be thinking “wouldn’t it be best to try out these theories to confirm?” And truthfully, you’re probably right. But there’s a couple things going on here:
- Brittney (my fiance) and I are getting married in early 2024, so having this potentially large expense doesn’t really mesh well with an already tight budget. We’re trying to keep credit card debt to a minimum and we’re going to be traveling following our wedding. All of these are excuses, but I want to stay focused on us for a bit.
- My brother owns this house (we rent it from him. Rental arbitrage but with personal ties), and he’s looking to sell it within the near future. So we’ve worked out a deal to let us finish out our year and then get things moving out.
- In general, we weren’t fans of having to deal with an off-season in the first place. Or at least as big of an off-season as we experienced.
So we’re packing up shop and moving elsewhere. We’ll try our new theories in a new property, which admittedly won’t give us an apples to apples comparison. But it will be good enough for us to keep chugging along until we crack the code of hosting a successful Airbnb property.