In 2019, Fundhomes‘ founder Ming began his venture into a short-term vacation rental. As an illustration of his success, he bought a property in 2020 for $620,000 and was able to rent it out on Airbnb for nearly $130,000 in the past year. Here’s what he has to share about his experience and strategies.
How did you build high cash flow Airbnbs? “I bought this vacation house in south Seattle for $620,000 in December 2020, the total income in 2021 is over $130,000. Surprisingly, the cash-on-cash return is 56% and the house valuation has increased to nearly $800,000.” – Fundhomes Founder Ming Zhu
Here are the three takeaways:
1. Traffic is the king of short-term rentals.
This house is located near SeaTac Airport. It is not a popular investment area for long-term rentals or owner-occupied, but it is very good for short-term rentals. The proximity to the airport and major transportation hubs ensures the traffic and the occupancy rate.
2. Improve the cash flow.
The house originally had 4 bedrooms and 3 bathrooms with a study room, a large living room, and a dining room. We converted the dining room into a bedroom for less than 20,000 dollars because the large living room has enough space for a dining table. The study room was converted into a small bedroom and the house was eventually rented out as a 6b3b setup. Increasing the number of rooms as much as possible is the fastest and the most efficient way to improve the ROI, an extra room can easily increase the rent by 10-20%.
3. Data Analysis in advance.
Many software on the market predicts short-term rental returns, such as AirDNA. You can also check similar listings in the areas on Airbnb or other rental platforms to get a general idea of the estimated rental prices and occupancy rates. With enough data to support you, your investment decisions can be more accurate and reliable.