Eye on the Prize: Cashflow Projection for your Airbnb

Airbnb is this shiny “it girl” for a quick start-up business. People with previously no real estate experience are diving head first into this head first as a way to earn extra income. Some of us, like my family, have made in the six digits with our two-bedroom flat with only a kitchenette, an amazing location, and a whole lotta work over the last few years.

Despite owning 9 properties, we actually only run an Airbnb in our own home. Could we make more money in our other homes if we Airbnb’d them. Probably. Then why don’t we? Airbnb is a lot of work to do it right – guest turn overs, cleaning, quality checking the space, making sure tenants are respectful and genrally keeping an eye on every tiny detail. We feel, at this point in our life, we can only be the best hosts by being attached to our Airbnb. This isn’t the case for all people, but our motivation is not only monetary. We are in LOVE with meeting people from all over the world, sharing our home and especially our community with people who otherwise would not have had access to this part of our City. Just like the Money BOSS would tell you, your sole motivation cannot be money. Any business based on this will actually fail.

Just like any small business, your Airbnb actually has a lot of hurdles to overcome to be the cash flow king you are hoping for. I assure you that one cannot simply list their space on Airbnb and then watch their money tree grow in the back yard. In fact, 9 out of every 10 small businesses will fail within the first five years because they fail to adequately plan for their financial peaks and valleys.

And just like any business plan, I recommend that you spend the time to make a cashflow spreadsheet to make sure your prize for all your hard work is worth it. To understand how much money (liquidity) you actually need to start and stay afloat until your Airbnb ramps up. 

I created this awesome spreadsheet (along with my personal Airbnb Start-Up Shopping List), to help you understand both the profit and costs to start in this Airbnb game.  How long does it take to actually make money off all your hard work. You don’t need to be a number’s wizard to accomplish this task. Simply download the spreadsheet and you can enter in your details anywhere you see blue text.  

In my shopping list, you will see I recommend spending the money on quality items for your Airbnb. Spend money on linens, towels, mattresses and small appliances – your up front cost will last longer and help with your cash flow over the long term.

Done right, with proper planning, financing and most importantly location, Airbnb can be an amazing source of either supplemental or full-time income.

Happy Hosting,

Michelle, AKA, Real Estate B.O.S.S.