What It’s REALLY Like to Run an Airbnb

I never thought we would own a vacation rental property — especially one in Hawaii. Becoming a real estate mogul was never our plan and yet here we find ourselves with not just one, but two properties in a different time zone that we are managing from afar. There are TWO Kutcher Condos in Maui and today I want to walk you through why we made the decision to invest (once again), what our plan is for the future, how it’s been renting our property out, tips for running a great rental property, the numbers, and why we love real estate.

Two years ago, a dream came true. I had a vision of Drew and I spending a month in one place (other than where we lived) resting and stepping away from work. It was the first time in my business that I took a true sabbatical and a year earlier we had fallen in love with Maui. Instead of going somewhere new, we wanted to go back because we had done all the tourist-y things that were the must-haves and we just wanted to live there and relax. We booked a studio apartment and planned our getaway. The place was absolutely NOTHING fancy but it was perfect for the month. We were smitten with Maui.

If you want to hear the story of flying our parents out and searching for a condo of our own, you gotta tune in!

OUR FIRST STEPS

Like any investment, I sat down and ran the numbers. I calculated the expenses, added on taxes, looked at comparable properties and their rates and occupancy. I also posted to my audience and hinted that IF we did it, would people be willing to rent it? Of course, we got hundreds of comments of excited people who would definitely want to rent out our space. I also estimated the amount of money we’d have to put in to update it, change out furniture, get it painted, etc.

When we ran the numbers, we knew that it would take about 8 years to be truly profitable, but we were in a situation where we could pay cash for the actual property which took a lot of the fear out of it.

THINGS TO CONSIDER BEFORE BUYING A RENTAL PROPERTY

LOCATION: Is it in a place that people visit, are there successful rentals in the area, is it a desirable location, would rentals be seasonal? Is it a place you want to visit?

TYPE OF PROPERTY: Is it a condo? Are their HOA fees? Who does property maintenance? Is it a stand alone home? What are the taxes?

BUDGET: What are you willing to spend? How long will it take to earn the investment back? Is it worth spending more to get a bigger space?

WORK: How much work needs to be done before you can rent it? What work will increase the amount you can charge as a rental? How long will it take to complete work? When can work be performed?

TENANTS: Do you want short term or long term rentals? How will you screen people? How will you protect the space?

RATES: What will you charge? What are comparable rentals listed at? What is the occupancy rate? What are high seasons and low seasons?

MARKETING: How will you market the space? Will you use Airbnb, VRBO? Create a separate booking system? Do you have any audiences you can leverage?

LEGAL: We also had to learn about Hawaiian laws, like the fact that we had to have a property manager on the island, find cleaners, and work with the HOA to ensure everything was transferred over to us. Overall we used referrals from our amazing realtor and then found a manager who was willing to work with us in the way that we saw best for the property.

WHEN IT CAME TO RENTING IT OUT WE HAD A FEW OPTIONS

We could have a rental management company do everything for us, so they would manage bookings, communicate with guests, and be on call for any needs. They would take a cut of our income as payment. Or, we could have the actual condo building manage it and they act almost like a hotel and book out rooms based on requests and availability. Again, they take a cut out of the profits as payment.

We wanted to manage the booking and communicate with our guests to give them a great experience, so our management handles scheduling the cleaners, managing any maintenance, and serves as our person on-island who is on call.

The option we chose gave us the highest profit margins while also giving us peace of mind and less to coordinate on our end. We lucked out with our property manager because we really like him and love to see him when we visit, and we think we’re pretty easy to work with! Drew was willing to take on the majority of the bookings so he logs into Airbnb daily, sends out all communication to guests, has a spreadsheet based on time of arrival, departure, and when the condo will be cleaned and flipped, and then he serves as a point person as people plan their trips. I also love to chime in with recommendations and say “hey” to our guests since so many of them are followers and fans!

We also created an entire website for our condo and a separate Instagram handle. The website serves not only as a place for people to check out our space but also shares our favorite things about Maui — adventures, restaurants, beaches, and activities. We wanted to have one landing page for when people ask us for our recommendations and it was fun to put it all in one spot with a beautifully branded website. Because duh, it’s me.

DESIGNING THE SPACE LEAD TO SOME SURPRISES

It’s really hard to find things that ship to the island so you’re confined to certain sites and anything on island. Shipping was a little sketchy too, since we couldn’t have things land at our condo when we weren’t there, so we had to ship everything to our manager (which was hilarious) and then get it to our unit and up the stairs.

Nothing is done to code in Hawaii so we had some interesting discoveries with plumbing, electrical, and the angles in our building. Contractors were entirely unreliable which added to the stress and budget of our upgrades.

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