The idea and dream for an Airbnb started from talking to my friend Wendy Doris (@FlippinWendy) about her Comfy Cactus vacation rental. I spent a month or so asking every person about Airbnb, vacation rental, long-term leases and tried to absorb as much information as I could about the process and the market for vacation rental here in Phoenix.
Tanya and I have been in the Tempe area for a little over 2 1/2 years now, so we are just learning about the international draw that this place has. After learning this I knew that there was an opportunity to capitalize on this dream and at the same time give myself an outlet to have full creative control over a project.
The first part was finding a location that was centralized between the airport, ballparks, hiking, Scottsdale and was in the mix of local restaurants. I found that we have been drawn to an area right around our the first property we redesigned in Phoenix (Roanoke). I am talking about a little pocket on the Phoenix / Scottsdale border between Camelback Mountain and Papago Park. Our search kept bringing us back to this same area, I'm sure a lot of it had to do with the comfortable feeling of actually being familiar with that area. It also helped that we were finding outdated condos for $136-140 / sqft. That puts us at roughly $115k-$120k for a 850-900 sqft condo with 2 bedrooms, so you can sleep 6 with a sofa sleeper. All the other options I was finding were $140-150k before the remodel and our goal was to be in and staged for less then $150k. They said it couldn't be done, well I guess they never met trailer park grown Joe Ballard from a long line of garage salers and dumpster divers! Haha! Challenge accepted.
Post renovation the bookings came fast! I mean it was unbelievable, my phone was constantly blowing up. I give the credit to 3 things: Location - Design - and probably under-priced rates. The reason I undercut myself was that I did the math as far as the yearly goal we had was concerned. We wanted to end the year with $10k profit after our expenses. We broke even for the year in April which put us on pace to easily hit our goal. Then... We learned about HOAs. This is the one thing that I keep beating myself up over, but I just have to let it go and be more diligent on my end as opposed to taking peoples word. Without getting into to many details and airing all my dirty laundry out, I'll just say that we seemed to be singled out (since there are 10-12 active short term vacation rental in the community). After long discussions we decided to see if we could exit the property and still hit our goal for the year. Would it have been nice to keep this property that we built up and had all the processes in place and dialed? YES! But Tanya and I looked at the value of our time and the things we are striving for together and chose to list the property. It looks as though the property will give us the return we had initially hoped for when it closes later this month.
The things I learned through this process:
Always have an exit strategy!
Do your due diligence! Don't rely on a real estate agent, lawyer or anyone else. you are ultimately responsible.
Slow down! Value your time and relationships, scaling something too fast can get you into trouble.
Have fun! I was sooo scared of the ombre wall and it wasn't until a few people told me how fun it was that I let it buck.
RYN! RUN YOUR NUMBERS! We get emails, texts, calls daily for potential properties. They all have this ARV (After Repair Value) attached to them. As well as Rehab Estimate. These numbers come from the people that are trying to sell you the house. Now I'm not saying that they are out to get you, but I am saying that it is in there best interest to have a low Rehab Estimate and a high ARV so that they can show you a high potential profit number. That is why I say run your numbers! You can pay a reliable real estate agent to run comps, some will even do it for free. that will get you a good idea of the ARV. The Rehab Estimate is best to get from your General Contractor. (This is why we developed Flip Margin) Click here to download