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When your spouse goes on vacation, leaving you at home alone, you might jump at the chance to put whatever you want on the TV or leave dirty dishes sitting in the sink for a few more days than you normally would. But when Darrel Maxam’s wife, Patrice, went on a week-and-a-half-long trip, he didn’t just sit around. He took the last $16,000 he had saved up and turned a 16-by-16-foot shed into a getaway retreat. “Electrical, plumbing, tiling—I did all the work,” he says.
At the time, the couple already had one tiny Airbnb unit on their woodsy plot in Atlanta, which had proven to be a success (within a week of listing it, three months of weekends were booked). Still, Patrice was skeptical that they could make a living from building and managing unique rentals. “But when she came back and saw we had two places generating $2,500 a month, her brow started to raise,” recalls Darrel.
Darrel’s love for building began in New Haven, Connecticut (his family moved there from Jamaica when he was 6 years old). “One of my fondest memories is driving by the Yale School of Architecture,” he says. After securing a marketing and visual arts degree, serving in Afghanistan, getting his master’s in construction management, and later an MBA, Darrel and his family moved to Georgia and bought a piece of land. With a personal loan of $65,000, they built their first Airbnb on the property to help pay their mortgage and paid said loan off in just 18 months, only to reinvest their earnings inmore rentals. Today the couple own seven Airbnbs, most of them tiny homes or treehouses, four of which are Airbnb Plus listings—including that barn he secretly flipped when he could have been bingeing Netflix. Ahead, the superhost shares his tips for success.
For every rental they build, Darrel and Patrice start by figuring out how fast they want to be able to pay off the construction expenses. For example, they spent $120,000 on building their treehouse, not counting Darrel’s labor, and decided they wanted to have it paid off in a year and a half (similar to their first Airbnb). “Those numbers come out to charging guests $400 on average per night,” he explains. “That’s the secret sauce.”
The Hook for Guests
His advice for any novice rental owners: Design from the heart. “If you loved the flower power era in the ’70s, don’t be scared to put that in the listing,” he says. “People are dying for different.” Guests have already decided against staying in a regular hotel, so use that to your advantage and give them a novel experience (like a tiny house, shed, or Airstream).
Darrel also differentiates his spaces (and saves money in the process) by repurposing reclaimed materials from Habitat for Humanity or construction sites in the Atlanta area. “I’ll go to a contractor and say, Hey, all this is going to the dumpster, mind if I pick through it?” he says. It can be anything from 150-year-old planks of wood that have been painted over a million times or boards that can be preserved using the Japanese process shou sugi ban.
The Superhost Power Move
If you’re interested in having multiple listings, Darrel recommends building them all in close proximity. All of his are located on 2.5 acres, with 600-plus massive oak trees providing privacy from the street and each house from the next. “Things break,” he notes. In other words, it’s not such a pain to fix a leak in one house and thentouch up some paint in another listing late at night. Darrel also relies on local handymen so he doesn’t get up-charged for travel. “If you accumulate a $300-limit service fee because they have to drive far, it negates your earnings for the weekend,” he explains.
The Day in the Life
Darrel considers July 12, 2019, the moment retirement began (it was the day he quit his full-time corporate job and invested in managing his rentals full-time). He was 35 years old and had five listings then. “I’m able to get up in the morning and cook pancakes for my daughters when they don’t want to go to day care,” he says. “It’s allowed me and my family to slow down and enjoy one another.”
In popular tourist destinations or areas with high demand for unique accommodations, tiny homes can be profitable due to higher nightly rates and occupancy. However, it's essential to consider: Operating costs like maintenance, utilities, and cleaning.
Informing your mortgage company about using your property for short-term rentals like Airbnb is necessary. Short-term rentals can affect the terms of your mortgage payment and may have tax implications.
Airbnb rentals can be a successful way to generate rental income and use this to pay off your mortgage, which is a good financial move. Here are a few tips to help you maximize the income you receive from your Airbnb property.
Because there are so many more listings now, Airbnb hosts say they are watching their bookings plummet. The flood of new hosts has meant fewer can earn good money. “Now, the markets are completely oversaturated,” says Melody Wright, founder of mortgage strategy and technology company Huringa.
Villa: Villas are often associated with luxury and exclusivity. They can generate higher monthly rental income, especially in sought-after vacation destinations.
Being environmentally and budget-friendly, tiny houses appeal to a variety of travelers, so a lot of people are taking advantage of the STR market by listing their tiny homes on sites like Airbnb, Vrbo, and Booking.com. To help you get started on Airbnb, here are some tips on managing your tiny house short-term rental.
Airbnb doesn't allow properties to be rented out for more than 90 nights per year. If your limit for bookings is reached, Airbnb will automatically close your property until the end of the calendar year.
Is running an Airbnb considered a business? Yes, it's a commercial activity because it involves renting out a short-term rental property regularly and getting income from it. So Airbnb hosts are considered self-employed business owners.
If you offer accommodations as a company or sole proprietor in the offline world, then your hosting activities on Airbnb will most likely also constitute a business activity. You also typically act as a professional if you regularly host on Airbnb over a longer period of time in order to make a profit.
Property taxes and mortgage interest - as in, the money you pay in interest to the bank for your mortgage - can be a huge burden for property owners, but thankfully they count as tax deductions for Airbnb hosts.
Renters: If you are renting your primary residence, you need to provide an affidavit signed by yourself and the property owner/landlord that approves you to host short-term rentals. The affidavit must be dated, notarized and include the name, address, phone number, email for yourself and your property owner/landlord.
“Over the past few months, supply has increased to catch up to and even overtake demand growth, pushing occupancy down as bookings are spread across more properties.” This is due in part to the number of wealthier homebuyers who purchased a second home since the start of the pandemic.
The exponential growth of Airbnb, combined with building restrictions that have severely limited the growth of housing supply, have led to the widespread perception that short-term rentals must be swallowing housing units at the expense of local residents, who now face higher rents.
This means that a tiny home can be rented for between $800 and $1000+ per month. If you handle your tiny house rental property effectively, it will be worthwhile. Because tiny homes are inexpensive and easy to build and maintain, you can purchase or build more than one of them to increase your revenue.
Bottom Line. Tiny homes offer an affordable entry into real estate investment, but their potential for appreciation is contingent on several factors. As such, they are best considered as part of a diversified investment strategy.
Before renting out your tiny house on Airbnb, it's important to prepare it for guests by cleaning and decorating the interior of the home as well as creating a list of amenities provided with rental agreement. Establishing an airbnb rental rate is also necessary before listing your tiny house on their platform.
Can you make money on tiny homes? As with any rental property, it is possible to make good money on tiny homes. However, this all depends on how you manage your finances. If you have a good mortgage on the property and have conducted all of the proper predictive analytics, you may be able to make a profit.
Hobby: Web surfing, Skiing, role-playing games, Sketching, Polo, Sewing, Genealogy
Introduction: My name is Maia Crooks Jr, I am a homely, joyous, shiny, successful, hilarious, thoughtful, joyous person who loves writing and wants to share my knowledge and understanding with you.
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