If you read our recent post detailing our exact AirBnb earnings from 2020, you saw that our short-term rental business stayed strong. But, man, was it a weird, and sometimes terrifying, year…
From drunken kleptomaniacs… to vocal lovers turned vocal haters over night… to really bad crackhead wannabe thieves… there weren’t that many dull moments.
Then there was that moment one morning at 6:30AM when my wife and I woke up to absolutely terrifying and violent screaming coming from our basement…
The feedback I get most often from my posts: “I love that you use real numbers and aren’t shy sharing your personal successes (or failures).”
Well, in that spirit, let’s look at exactly how one of our properties performed in dreaded 2020.
As a quick background, we love having our properties be short-term rentals (like AirBnb). We do have long-term renters in some of our properties, but AirBnb is just so much more profitable (you’ll see later in this post) that we always try to do short-term instead of long-term rentals where possible.
First off, we aren’t travel bloggers… we aren’t sponsored… no one is getting paid for this article and no one gave us anything for free.
… and no, we didn’t do a timeshare tour with some free vacation package…!
(though, true story, my wife and I did THREE of those in one day once in Vegas to get all our show tickets for the week paid for — Vegas during the day is hot and miserable anyway)
But for this Costa Rica trip, candidly, we paid for everything.
Let’s face it, traveling through Costa Rica for free is pretty much…
Math — it makes making money way easier.
Recently, we covered a number of key metrics you should know when it comes to buying real estate: Return on Equity, Cash on Cash Return, IRR, and more (it wouldn’t hurt to give these a quick re-read to refresh your memory).
Today, we’ll focus on the only two I actually ever use: RoE and IRR.
We’ll dive into WHEN and HOW to use each of those metrics. The will help ensure:
One of my favorite videos is of golfer JC Anderson explaining how to hit a golf ball. Here it is for reference.
His explanation is insanely complicated! Fortunately, he’s joking.
Unfortunately, when you want to learn anything about real estate investing — like what metrics to track, how to maximize the value of your real estate properties and portfolio, etc — most of what you read on the internet sounds just as complicated… and the authors aren’t joking.
People then don’t understand what they read, latch onto the wrong metrics, and end up using them totally wrong, dooming their investments…
I can’t tell you the number of people I’ve talked with who think their real estate investments are doing great… but they’re actually junk.
They’re focused on the wrong metrics!
With any type of investing — real estate, stocks, savings accounts, etc — in order to know how well your investment is actually doing you need to be tracking some sort of return on investment (ROI) metric. Usually, this is some percentage telling you how well your investment did for that year.
For example, if you invested $100,000 and made $5,000 that year then you made a 5% return…
Sometimes I drive my wife nuts.
I take too long to explain things, I open the fridge and freezer doors at the same time, sometimes my home office smells like… umm… what my dad’s home office always smelled like growing up (dang it!).
Or when I use this phrase: “it’s just a math problem.”
Whenever my wife and I talk about money or investing, I always just shrug and say, “it’s just a math problem”… because it always is: inputs, outputs, variables, solver functions, risk profiles, etc.
It’s just math, and math is why I will never pay off a…
People ask all the time:
Like discussing salaries, you can’t help one another without sharing real data. So, I’ll just give you real numbers — it’s easier that way.
Super fast background.
My wife and I have a goal of buying a property once a year. We use different rental strategies: some properties are for short-term rentals (like AirBnb), and others are for long-term rentals that come with a lease or contract.
My wife and I own a couple of properties in both the US and South America. We’re not a big business, just middle-class investors like many of you. Some of our properties use a short-term rental strategy (like AirBnb) while others target long-term renters. Right now, both strategies are taking a hit — but a very different hit — due to the COVID-19 pandemic.
September 2019 through February 2020 saw the lowest unemployment rate (3.5%) in the US since 1968. The economy was great, property prices up, market demand was strong. I was prepping for another lucrative AirBnb summer.