I would love to see a version of this video where you factor in how much youve made on videos about the airbnb bc im sure that makes the profit unbelievable!
This is a very good reveal. I have done this in Texas with similar results. I’m glad that you showed the actual cash out of your pocket to start this project. To do it right and relatively financially stress free one needs a pocket full of money. You adequately demonstrated this.
Tip: If you added a rooftop solar pool heater for about $8K installed, it might save you $1K a month in electric. After paying for itself in 8 months, it may save you $12K per year.
@@jimwhitehead1532 Problem comes when - Solar water tank is at Max temp - Water is Not being used. u can circulate all you want ! No way to turn off the Sun from shining on the panels.
@@OcRefrig Some use a Watts recirculation valve and pump kit ,that uses the cold water lines in the house as a heat sink to prevent overheating. For technical details, call a solar company, as I am not an installer.
Shelby,buy some solar panels and offset your electricity charges, initially some investment is needed,the power bill savings will pay for the panels in 5 years and last at least 25 years. Gives you power independence too, and environmentally friendly to. You will massively reduce your electricity bill! Much love shel ✌️❤️🇬🇧
From someone who runs 5 airbnbs. Theres a lot of pros to look forward to 1) you're just getting started, once your reviews come in, you get superhost, you become more credible and people book more often for more $$$. Your 3K net / month is grossly underestimated. I would project 7-10K net by november 2) charge more for pool heating. Im assuming its gas heated based on that bill, also get a pool cover during peak winter and put in the rules to have the pool covered. It keeps the heat from escaping the pool hence less time needed to heat. This cut my heating bill in half 3) Electricity seems kind of high especially for spring season, we sure those windows are dual pane? 4) yes, the renno and furniture costs are really really high but whats done is done, key thing is #1 5) If you havent yet get beyond pricing, its dynamic pricing and it can adjust your rates automatically. One thing i noticed i got more of was weekday bookings and longer term bookings once i activated it, it only costs 1% of booking 6) Its gorgeous, yes you went a little overboard but im assuming you're ARV is over 1M now so consider your renno costs already covered. Keep doing you, its going to be the best investment you ever made!
Long time watcher, first time commenter here. This was probably the BEST video I've ever seen about Airbnb rentals on UA-cam. Love the transparency and the breakdown of all the costs/profits. This definitely gives me a lot to think about as I plan on diving into the short term rental market soon. Thanks Shelby!
When you project 6-12 years of cash flow, you need to factor in estimated costs for repairs and additional remodeling, I suspect that short-term renters might be "hard" on your decor, Plus every house needs constant repairs. Good luck!!
That's why it is a range. 6 if everything is good. 12 if cost is more. But also no one knows if the market gets competitive and the price might need to be lowered.
I’d suggest getting used furniture off of marketplace etc for rentals. It’s never worth spending so much on something that will potentially be overused and destroyed and you can get plenty of fairly new pieces for the fraction of the price.
All depends on what area and what your hoping to get per night. Her nightly cost is roughly 650 a night. If I'm paying that I'd expect nicer furniture in the house. It's hard to find pieces that flow all used.
@@Lisac9011 whatever new furniture she bought will look used after a year tops. You can get pretty decent pieces off outlets or marketplace. You just don't invest into new furniture and kitchen appliences for a rental. Unless it's Ikea.
@@onlinecomment and I'd completely agree if they weren't charging over 400$ a night... if I stay at a nicer hotel I expect nicer things. I'd not I'd stay at a cheap motel. Same as a air bnb. She will be getting her money back by being able to charge more. Plus if anything gets damaged they have coverage for it. No real loss
@@Lisac9011 you are paying for location. There are houses in the area that cost 2K per night.. she's charging $600 for a house that can fit 10 people on the floor, potentially. It's not that much.. whatever they camage, they never repay full cost of 30K furniture. Trust me as a homeowner - you don't want to invest excess into rental property...
I think you could also factor in how much you made off of UA-cam videos that documented the house renovation process. It’s outside of the Airbnb realm but renovating a house gave you weeks of awesome content to share.
Do I think it was a good investment? Well, buying and keeping land in CA is ALWAYS a good investment. You can do so much with it...you can rent it w/ long lease or short term rent it or AirBnB it or use it as family vacation home. My husband and I were told that once you buy a house in CA don't sell it (unless buying another housein CA) because land is so valuable here. Great vlog!
You might just consider selling the house for a huge profit and then going into more rental projects with what you have learned for higher profits. That being said it’s a beautiful home and I wouldn’t want to let go of it lol it’s so pretty! Also I want to install that gate for my house it’s so modern and cool! 😍😍
if she sold this house now she would probably lose between 100k-200k. she bought it for around 800k and put 500k into the remodel. with rising interest rates and selling fees she would be pretty underwater as she spent way too much money on the remodel and furniture. in her recent videos she states that she is getting 1 booking a month on airbnb and losing money during the summer. this house was a horrible investment after the renovations she did. if interest rates keep going up it only going to decrease the value of this home. not to mention people are not booking airbnbs like they were due to all the insane fees.
Rates are nearing the top but will stay higher for longer to wring out the high inflation that fed chief Jerome Powell caused. But this is now a much nicer property because of what Shelby has accomplished. There will always be lazy wealthy people willing to pay for this instant image kind of lifestyle. You rock Shelby
it wouldn't be a huge profit - if the house is a 1 million (maybe) 892k invested in capital cost and price of the home - so after realtor fees 5% or $50k profit would be around $58k split between two people - not a huge profit
Please do the same for the Joshua Tree property!!! This was a great video. I was just as curious as everyone else... I love videos like this bc as a newer home owner and I have in ground pool too... I like to learn things like this..
In your calculations, I see expenses like pool heater, but... I don't see anything for routine maintenance, wear and tear...and unexpected repairs. When you are talking about years, you have to consider things breaking down: not just little things (toaster ovens, coffee maker, lights, etc.), but major things too (AC, water heater, fridge, oven, dishwasher, washer, dryer, etc.). This is easy to "budget" for. First calculate your estimated yearly routine maintenance costs for each item. Be as inclusive as possible. Then, take the average/expected life of everything in the home and divide it by the estimated replacement cost. This is your annual "replacement" cost. You might not have to replace something is year, but somewhere down the line, you will have to. If your AC is 5 years old and has an annual (routine) maintenance cost of $200, an expected lifespan of 15 years, and a replacement cost of $5k (with installation and disposal of old unit...always be as inclusive as possible)... Then you need to deduct the $200/yr. for maintenance and $500/yr. for replacement against your future earnings. The same for everything else in the house... If your roof is 10-years old with an expected lifespan of 20 years and a replacement cost of $30k...you need to budget at least $3k per year for the roof. As you can see, expenses will quickly start adding up, but this is important to calculate for. Now, take your estimated earnings and also deduct the yearly maintenance/repair costs and deduct your annual replacement cost for everything in the house/property in addition to the other expenses (mortgage, property tax, insurance, utilities, etc.). What you have left is your long-term annual profit. Figure this against your initial investment and you get your annualized profit margin. Did you still beat the 10.5% annualized stock market gain? The reason this is important is because of taxes. If you can deduct the depreciation/future expenses from your current income, you can save on taxes. Lastly, I would warn people to also consider other things when it comes to risk (with rental properties). You should be ready and able to reserve money for bad renters who break something...or trash the place. Remember that you are building equity in the property. Down the road you can use that equity and the income from the property to buy and develop another property. Rinse and repeat to build a portfolio of rentals. This is how to end up retiring with steady income. Remember, though, this is NOT passive income. This is a real estate rental BUSINESS. It is rental income and that means you have to keep on your toes and actively manage things to keep your profit margins up. Passive income...is like dividends on dividend stocks. There is no work involved after you've put your money into the stock. You just sit back as dividend checks are deposited into your account. Oh, a lot of people have been mentioning solar as a way to reduce some cost, but I wonder how much of a benefit that might actually give. Didn't CA pass, or is looking to pass, a solar tax that penalizes solar panel users? It might still be worth it...or maybe not. A better option is passive solar heating. This is where pool water is circulated in heating panels that are exposed to direct sunlight. This heated water is returned to the pool. That is less expensive than solar panels but does have additional maintenance and repair expenses associated with it.
Shelby, this ia actually a better investment than you think it is. The reason is that after the mortgage is fully paid off, you own the house free and clear! It will be worth A LOT when and if you choose to sell it later. The tenants paid the mortgage, as the saying goes. (unless we have a catastrophic collapse into multi-decade depression like some think, but that is very unlikely, just as it is for CA to fall into the sea from an earthquake). Once the mortgage is paid off, you're putting that much more into your pocket every month. Of course you'll have to renovate it again many years from now to keep it up to current style, and for wear from guests using it. But the benefit far outweighs those costs, IMO.
Hey Rachel 👋 I’m thinking about making a video on this. Let me know if that’d be helpful. P.S. If you have any questions about starting & growing your Airbnb business lmk.
We have been on AirBnB for 4 weeks now with our downtown Asheville, NC condo. Already really pleased with the rental activity levels. We do give up 25% of rental income to our Super Host who takes care of everything, pure turn key, which is nice. I can’t believe how easy this was.
It is also possible to produce superior performance provided you do something different from the majority. However, most of us tend to pay more attention to the shiniest position in the market than to the cost of proper diversification.
The cryptocurrency market is seeing one of its worst selloffs since 2020, sparking panic among investors and raising questions about why crypto prices have been increasingly sensitive to gyrations in the stock market.
Hey @Evan Donahue 👋 I’m thinking about making a video on this. Let me know if that’d be helpful. P.S. If you have any questions about starting & growing your Airbnb business lmk.
When the market goes down then it's buying opportunity. If the market goes up then you are making money. If you stay invested and ignore the market's ups and downs, you'll make a lot of money in the long run; however, a severe market correction causes a lot of margin calls and sell-offs, driving the market even lower. currently, I'm up 13% in my diversified portfolio. As crazy as it sounds some still make enormous returns from this seemingly unknown market. gotta be greedy when others are fearful
exactly what I'm personally planning on doing now the market is down, but I have no idea about stocks to buy or what assets that would yield the highest potential and so on. Your portfolio is freaking awesome, you seem to be doing well yourself. how do you select stocks you invest in?
@@dannyvera8475 I have my portfolio very well-diversified, though I did it using trad signals from a US regulated broker *PRISCILLA DIANE AIVAZIAN* financial analyst and CNBC contributor and it's been a huge relief. Good earnings and little to no engagement at all on my part. Her stock picks are top-notch, I don't worry about market trends anymore because she's quite the genius in trading and portfolio diversification
@@dannyvera8475 Yeah but I don't give out funds here, It stays right in my account. My account only mirrors her trades in real-time that's ideal for this system. Copy trading is 100% secured and very transparent to work with her, you don't have to send any funds over. you have control over your funds and can opt-out anytime you want just like in Etoro. Check out her name online and get in touch if you need help with this insane market. It's only a recommendation though
I'm MUCH more interested in buying stocks now that they are cheap. You can't just sit on cash waiting for the market to drop 10% before you start buying. The best strategy is to start buying in slowly and then gradually increase the pace of buying as the prices continue to drop. Cash isn't king at all in this era
Shelby, thank you for this video! It was definitely a great investment. One thing you need to factor in your numbers is the number of personal stays. By staying there, you are saving on hotel costs so you need to add that to the calculations.
Your videos are super understandable and your presentation excellent. Most resources give vague instructions without making the newbie understand how things really work. Retired and I have a couple dividend stocks, I am going to sit back and observe how this all plays out, adding more at a time.
The best strategy to use in trading STOCKS, NFT'S and CRYPTO is to trade with a professional who understands the market quite well, that way maximum profit is guaranteed. Because i have learnt along the way of my investment that research and analysis are important, note that experience is more needed than luck when it comes to the crypto market.
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
Investing in crypto as a newbie was very difficult due to lack of experience which resulted in losing my funds.....but Sir Arjun B Jagat restored my hope
Success depends on the actions or steps you take to achieve it. Show me a man without investment and I'll tell you how long it takes to go bankrupt. Investing creates a safe heaven for the future.
Most people with vacation homes that rent them out and also use them are pretty happy with any profit. The value of the house after renovation and then yearly appreciation will be the big pay day when you eventually sell it for over $2 million.
really appreciate your willingness to share your numbers honestly. I'm setting up a new construction 3 bed 2 bath in Florida, and I'm seeing similar costs without having to renovate. About 60K to get it furnished, landscaped and ready.
Hey Amanda 👋 I’m thinking about making a video on this. Let me know if that’d be helpful. P.S. If you have any questions about starting & growing your Airbnb business lmk.
Shelby, have you ever thought about putting in solar just for the pool heat? To offset that cost completely? I’m just wondering if you ever thought about it. It might save you some money in the long run.
Hey Shelb. Great video. Love the transparency. This is exactly what I was hoping for when you started this journey. Minor nitpic, you weren't comparing apples to apples when you did cash on cash vs market returns. The former is more akin to yield, vs the latter being total return. That means you're undercounting your racket clubs returns cause the house itself apreciates. That said, excellent work 👏
You also did not include the likely appreciation of the home over the next few years. I'm sure it will add at least 5-10% of the value of the home! Cha ching!!💲💲
Would you consider the additional equity you have now in the house because it's a nicer house part of covering the 458,000? If it came down to it you could sell the house and make a profit correct?
Amazing video Shelby! Very cool to see the numbers broken down and such a big passion project come to life! Also, you made a profit by making videos about this throughout the two years. The house has also appreciated in value, by a lot. And also would you have to pay taxes in the 36,000 profit?
If you went solar could you have a electric pool heater , electric water heater. Also you can use your roof to heat the water. You would pump the water to pipes onto the roof ,where the sun would heat water in the pipe
Love the video Shelby! Another thing to mention for your subscribers, your home is appreciating in value! Also being that you put in some major renovations, the home value is much higher than $750k You could take that equity and do a cash-out refinance and use that cash to buy another airbnb! I’m sure you knew this (I learn a ton from you!) but thought your subscribers might like to know this as well :)
That is what I thought as well. The full ROI of this project can only be determined when the house is sold again. It could very well be that all this renter stuff was just busywork compared to where they really will make the money.
@@Bonanzoo 2 years don't matter on an investment property - that's a primary residence you are talking about - any sale of the property would be taxed (fed and state) + tax recapture
Definitely an amazing investment! Thank you for the transparency, it's super cool to get such great insight that some real estate "gurus" would charge for their "courses". I think one overlooked factor (at least as far as the proposition in this video is concerned) is the appreciation value of the property itself (even without all the renovation improvements). Your house is most certainly pushing $1M if you were to put it on the market today so the fact that you splurged on some furniture or quality of life things is not a big deal in the long run. Can't wait for the Joshua Tree project to begin! Let the Church Sisters real estate empire reign supreme! 🏡
Your numbers are super similar to a remodel / Airbnb I just did in Destin. $1.2m place, about $450k into the house (with down payment and remodel, furniture, etc) Aside from your cash flow profit - you need to take into account the “overall” ROI, which factors in the tax benefits. Your numbers will turn out much better if you have a great CPA!
Wow! Ok I agree this was a good investment, but having just finished a massive renovation myself, my back hurts looking at all you’ve done lol. Good job. It’s beautiful. And great video. Thanks for sharing.
12.8 years is fast to break even, you can speed this up by selling products with the holiday property, perhaps you do this already, wine and liquor service for arrival,, or arrival pack with kids toys, selling small pool toys for guests, fun and food deals bbq pack, cocktail pack, fruit and veggie, all upsell and items guest do not have to take with them
Shelby it was so kind of you to share this information. My biggest fear is dealing with contractors. Can you make a video on your experience with the Contractore and why the renovation took 14 months? If you already have, can you direct me to the title of the video?
Shelby - can you do an update year after jaw surgery video?? I’m being told I need to get it done and I’m stressing. Would love to see an update, hear about if you still have numbness, if you regret/are glad you went through with it, etc. Your videos give me so much peace!
I used to own several vacation rentals until my commercial broker friend turned me onto multi family properties. I own several in Arizona and I really don’t have to do anything. I pay a property management company 6% to do everything. The only thing I have is to login to the management portal once a month to review the maintenance and rent roll data. I also visit my properties a few time a year to make sure they are looking good. I’m getting ready to buy a 3rd property when I can find one. Just like the real estate market is booming, so is the apartment market. With more and more people renting the harder it gets to find affordable places.
I THINK ITS A BEAUTIFULL HOUSE WHERE YOU GET TO RENT IT OUT AND ALSO ENJOY YOURSELEVES, YOU GUYS DID AMAZEING ON THE RENOVATION AND IT LOOKS AWSOME XXXX
Well you guys bought at the right time! Even with all of the renovation cost, it would be way more now. And before Blackrock comes in to buy up everything to, via the WEF.
Very interesting!! Do you all have a pool cover? Those are an easy way to cut back on pool heating expenses. Would def recommend 🏊♀️ ! Love your videos!
I love this video, it was great to understand the initial investments for a rental house! However, I think we also need to add a perspective on the "return" of the initial investment... because, at the end of the day, you have a house!! If something goes wrong you can live in it, or sell it, you don't necessarily need to have all that initial investment returned by the AirBNB bookings to make this a great decision.
Love these videos Shelby! You’re such a unique channel with great transparency. This is a love project and something you will enjoy when you retire one day.
Is there a free or discounted solar program in Palm Springs? That could maybe help offset electric. Maybe next house throw in a little more ikea stuff. Most people won’t necessarily notice. Used woodworking setup is fun maybe just coffee/side tables. Sometimes just a big sanded log makes nice side tables and stools and saves $. looks classy. Anyways, love the house you’re super cute and I’m sure you’re gonna keep doing awesome
I have some investment in holiday house and i get just financial problems. But what i want to say, you should buy something exotic and invest less as possible, so that is the key.
You have to factor in how much equity you’ll make on the house in 6/7 years, or even in 12! That house will appreciate in value and you have to factor that in. Really curious to see if you sold the house in 6-7 years, how much it would have appreciated and how much you would make on top of your calculations here. That’s really why property is so valuable in the long run. You will get that whole cost spent on purchasing the house back someday. So basically your $130K+ per year in revenue is *still* money in your pocket, plus whatever equity it appreciates. You’re smart to buy up more properties in high potential areas because if you sell that place for $1 Million in 6 years, you can factor in another $250K of profit which is an additional $42K on average per year if you divide that by 6. Or look at the equity earned in the property year by year and add that to your total profit. For ex: “If I sold this property in 2023, I’d make 30K in equity. If I sold it in 2024 I’d make 60K in equity.” And add that to your annual totals for the 6-7 years, and I’ll bet you realistically make that investment back even faster. There’s other stuff to consider like inflation so you could also adjust your final numbers to fit inflation if you wanted a more accurate number. Thanks for the great content!
How do the restrictions in Palm Springs limit you? In another video, Daniel from Mango Street, mentioned you can only rent the property what 32 times a year? This place is so lovely Shelby!
Hey @Chili Cheesecake Films 👋 I’m thinking about making a video on this. Let me know if that’d be helpful. P.S. If you have any questions about starting & growing your Airbnb business lmk.
great video, daunting project and brave follow-through. No idea how even the typical American would get $430k in startup funds for what now seems to be a $1M AirBnB. Will be good to see the updated break-even date and yearly cash-on-cash return at that projected date. (allowing for a few months of reputation building and a year of metrics).
Hey @gonrico 👋 I’m thinking about making a video on this. Let me know if that’d be helpful. P.S. If you have any questions about starting & growing your Airbnb business lmk.
Yes, it IS a good investment for you and Monica!! No doubt the "crash course" in flipping, even though you aren't flipping it, cost a lot, but you learned a WHOLE lot of what to do, what you NEED and what you might leave out on the next one. Glad it's up and running now and doing what it's meant to, make money! Soon you'll have some "regulars" who love the place and come back each year or more! My limited experience (bought 1 house, still own it, don't rent it out) is that 18% on the management fee? Maybe that's the norm in Palm Springs? Seems high. On the place...yeah, you went above and beyond with it. It's so awesome on the design/layout...but maybe too much (frame tv? yeah). Thanks very much for such a detailed view! Look forward to seeing your next project and video!!
Don't you have to pay taxes for the rental income? Also, I really appreciated this video and the transparency. I've always steered clear of real estate because of the all the headaches, mainly the long term commitment of the investment.
Probably we should also take in account the time required to manage a short term rental, it's like running an actual business. Wouldn't be better to explore alternatives like REITs or dividend stocks if the main goal is to avoid headaches and hassle?
@@letsjazzitup Yes, AirBnB handles rental taxes during the rental itself, but not income taxes from any profits. You know the California Franchise Tax Board wants their 16%...or whatever silly number they charge now. I don't miss overpaying them. LOL
I’m going to start Airbnbing my guest house (private bedroom, bathroom, patio with view) so excited to start turning a profit on our home. Then saving for the next.
I love watching your commentary videos as well because you do such a good job at also including pictures and other B roll (I learned that term from watching your videos 😆) Love the videos .. I always enjoy your content
I'm sure you have made more in unrecognized gains! Your house after the renovations and market appreciation is worth at least 1.2 to 1.3 million! That would mean your already making a profit!!!
Have you thought about refinancing your mortgage to get back your down-payment? After all the renos and upgrades your appraisal value should be way higher than your mortgage.
I feel like your mortgage payment also counts as you’re paying down what you owe in principal as well, your property has more money you could take our…?
I would love to see a version of this video where you factor in how much youve made on videos about the airbnb bc im sure that makes the profit unbelievable!
YES! And how much the house has appreciated.
YES
That’s a really good point.
@@Ggggc14 in Iced Coffee Hour podcast she said that the house now costs 1.2 or 1.4 million dollars
and iF She Sold it tomorrow, Would it Be Profitable or Would she take a Loss ?
This is a very good reveal. I have done this in Texas with similar results. I’m glad that you showed the actual cash out of your pocket to start this project. To do it right and relatively financially stress free one needs a pocket full of money. You adequately demonstrated this.
Tip: If you added a rooftop solar pool heater for about $8K installed, it might save you $1K a month in electric. After paying for itself in 8 months, it may save you $12K per year.
Very True - Solar Water Heating Gets Smoking Hot 🔥 ! i Had it once on My Dads House , it Gets so Hot it Boiled the Water in the panels.
@@OcRefrig That is why it should come complete with thermostat and electronic controlled pump.
@@jimwhitehead1532 Problem comes when - Solar water tank is at Max temp - Water is Not being used. u can circulate all you want !
No way to turn off the Sun from shining on the panels.
@@OcRefrig Some use a Watts recirculation valve and pump kit ,that uses the cold water lines in the house as a heat sink to prevent overheating. For technical details, call a solar company, as I am not an installer.
@@jimwhitehead1532 appreciate the info. 👍
I don’t know if you know just how HELPFUL it is to have someome be so transparent about these numbers 🏆🏆🏆
Facts
I love how transparent you are in all of your videos 🙌🏻
MUAHAHAHAH
I am so glad to see women who do well and earn money. Go girl!
Shelby,buy some solar panels and offset your electricity charges, initially some investment is needed,the power bill savings will pay for the panels in 5 years and last at least 25 years. Gives you power independence too, and environmentally friendly to. You will massively reduce your electricity bill! Much love shel ✌️❤️🇬🇧
We don't have a pool, but with the solar panels that came with our house when we bought it makes our electric bill $15-$25/month!
You can market it as a "Green" house also!
so comprehensive, gives you a great idea of what the costs look like to own an AirBnb short term rental!!
Shelby is the kind of person one should have as a best friend 😃. She is so deliberate, knowledgeable and pro active.
From someone who runs 5 airbnbs. Theres a lot of pros to look forward to
1) you're just getting started, once your reviews come in, you get superhost, you become more credible and people book more often for more $$$. Your 3K net / month is grossly underestimated. I would project 7-10K net by november
2) charge more for pool heating. Im assuming its gas heated based on that bill, also get a pool cover during peak winter and put in the rules to have the pool covered. It keeps the heat from escaping the pool hence less time needed to heat. This cut my heating bill in half
3) Electricity seems kind of high especially for spring season, we sure those windows are dual pane?
4) yes, the renno and furniture costs are really really high but whats done is done, key thing is #1
5) If you havent yet get beyond pricing, its dynamic pricing and it can adjust your rates automatically. One thing i noticed i got more of was weekday bookings and longer term bookings once i activated it, it only costs 1% of booking
6) Its gorgeous, yes you went a little overboard but im assuming you're ARV is over 1M now so consider your renno costs already covered.
Keep doing you, its going to be the best investment you ever made!
Long time watcher, first time commenter here. This was probably the BEST video I've ever seen about Airbnb rentals on UA-cam. Love the transparency and the breakdown of all the costs/profits. This definitely gives me a lot to think about as I plan on diving into the short term rental market soon. Thanks Shelby!
When you project 6-12 years of cash flow, you need to factor in estimated costs for repairs and additional remodeling, I suspect that short-term renters might be "hard" on your decor, Plus every house needs constant repairs. Good luck!!
About the constant repair. That is not really true. Ive had my place for 2 years and only have had to replace 1 lamp.
That's why it is a range. 6 if everything is good. 12 if cost is more. But also no one knows if the market gets competitive and the price might need to be lowered.
I’d suggest getting used furniture off of marketplace etc for rentals. It’s never worth spending so much on something that will potentially be overused and destroyed and you can get plenty of fairly new pieces for the fraction of the price.
All depends on what area and what your hoping to get per night. Her nightly cost is roughly 650 a night. If I'm paying that I'd expect nicer furniture in the house. It's hard to find pieces that flow all used.
@@Lisac9011 whatever new furniture she bought will look used after a year tops. You can get pretty decent pieces off outlets or marketplace. You just don't invest into new furniture and kitchen appliences for a rental. Unless it's Ikea.
@@onlinecomment and I'd completely agree if they weren't charging over 400$ a night... if I stay at a nicer hotel I expect nicer things. I'd not I'd stay at a cheap motel. Same as a air bnb. She will be getting her money back by being able to charge more. Plus if anything gets damaged they have coverage for it. No real loss
@@Lisac9011 you are paying for location. There are houses in the area that cost 2K per night.. she's charging $600 for a house that can fit 10 people on the floor, potentially. It's not that much.. whatever they camage, they never repay full cost of 30K furniture. Trust me as a homeowner - you don't want to invest excess into rental property...
I think you could also factor in how much you made off of UA-cam videos that documented the house renovation process. It’s outside of the Airbnb realm but renovating a house gave you weeks of awesome content to share.
Do I think it was a good investment? Well, buying and keeping land in CA is ALWAYS a good investment. You can do so much with it...you can rent it w/ long lease or short term rent it or AirBnB it or use it as family vacation home. My husband and I were told that once you buy a house in CA don't sell it (unless buying another housein CA) because land is so valuable here. Great vlog!
You might just consider selling the house for a huge profit and then going into more rental projects with what you have learned for higher profits. That being said it’s a beautiful home and I wouldn’t want to let go of it lol it’s so pretty! Also I want to install that gate for my house it’s so modern and cool! 😍😍
if she sold this house now she would probably lose between 100k-200k. she bought it for around 800k and put 500k into the remodel. with rising interest rates and selling fees she would be pretty underwater as she spent way too much money on the remodel and furniture. in her recent videos she states that she is getting 1 booking a month on airbnb and losing money during the summer. this house was a horrible investment after the renovations she did. if interest rates keep going up it only going to decrease the value of this home. not to mention people are not booking airbnbs like they were due to all the insane fees.
Rates are nearing the top but will stay higher for longer to wring out the high inflation that fed chief Jerome Powell caused. But this is now a much nicer property because of what Shelby has accomplished. There will always be lazy wealthy people willing to pay for this instant image kind of lifestyle. You rock Shelby
Never even thought about how much goes into a project like this. Thanks for the video, Shelby
You did a fantastic job on this property, your return is solid, home will continue to appreciate in value too
I am renovating my house for a vacation rental now. This series was super helpful!
Always appreciate your transparency!
Considering the the current Palm Springs real estate market, I wonder how tempting it is to just flip the place for a HUGE profit?
Probably tempting, but unless you flip it into a 1031 exchange and buy more investment properties, you will pay Uber taxes.
it wouldn't be a huge profit - if the house is a 1 million (maybe) 892k invested in capital cost and price of the home - so after realtor fees 5% or $50k profit would be around $58k split between two people - not a huge profit
Please do the same for the Joshua Tree property!!! This was a great video. I was just as curious as everyone else... I love videos like this bc as a newer home owner and I have in ground pool too... I like to learn things like this..
In your calculations, I see expenses like pool heater, but...
I don't see anything for routine maintenance, wear and tear...and unexpected repairs.
When you are talking about years, you have to consider things breaking down: not just little things (toaster ovens, coffee maker, lights, etc.), but major things too (AC, water heater, fridge, oven, dishwasher, washer, dryer, etc.).
This is easy to "budget" for.
First calculate your estimated yearly routine maintenance costs for each item. Be as inclusive as possible.
Then, take the average/expected life of everything in the home and divide it by the estimated replacement cost.
This is your annual "replacement" cost. You might not have to replace something is year, but somewhere down the line, you will have to.
If your AC is 5 years old and has an annual (routine) maintenance cost of $200, an expected lifespan of 15 years, and a replacement cost of $5k (with installation and disposal of old unit...always be as inclusive as possible)...
Then you need to deduct the $200/yr. for maintenance and $500/yr. for replacement against your future earnings.
The same for everything else in the house...
If your roof is 10-years old with an expected lifespan of 20 years and a replacement cost of $30k...you need to budget at least $3k per year for the roof.
As you can see, expenses will quickly start adding up, but this is important to calculate for.
Now, take your estimated earnings and also deduct the yearly maintenance/repair costs and deduct your annual replacement cost for everything in the house/property in addition to the other expenses (mortgage, property tax, insurance, utilities, etc.).
What you have left is your long-term annual profit.
Figure this against your initial investment and you get your annualized profit margin.
Did you still beat the 10.5% annualized stock market gain?
The reason this is important is because of taxes. If you can deduct the depreciation/future expenses from your current income, you can save on taxes.
Lastly, I would warn people to also consider other things when it comes to risk (with rental properties).
You should be ready and able to reserve money for bad renters who break something...or trash the place.
Remember that you are building equity in the property. Down the road you can use that equity and the income from the property to buy and develop another property. Rinse and repeat to build a portfolio of rentals. This is how to end up retiring with steady income. Remember, though, this is NOT passive income. This is a real estate rental BUSINESS. It is rental income and that means you have to keep on your toes and actively manage things to keep your profit margins up.
Passive income...is like dividends on dividend stocks. There is no work involved after you've put your money into the stock. You just sit back as dividend checks are deposited into your account.
Oh, a lot of people have been mentioning solar as a way to reduce some cost, but I wonder how much of a benefit that might actually give.
Didn't CA pass, or is looking to pass, a solar tax that penalizes solar panel users? It might still be worth it...or maybe not.
A better option is passive solar heating. This is where pool water is circulated in heating panels that are exposed to direct sunlight. This heated water is returned to the pool. That is less expensive than solar panels but does have additional maintenance and repair expenses associated with it.
All the appreciation makes it even better. you can always leverage that equity to scale!!
THIS! 🙌🙌
True!!
Factor in the travel to get to and from during those 14 months. Loved watching this entire series!
Shelby, this ia actually a better investment than you think it is. The reason is that after the mortgage is fully paid off, you own the house free and clear! It will be worth A LOT when and if you choose to sell it later. The tenants paid the mortgage, as the saying goes. (unless we have a catastrophic collapse into multi-decade depression like some think, but that is very unlikely, just as it is for CA to fall into the sea from an earthquake). Once the mortgage is paid off, you're putting that much more into your pocket every month. Of course you'll have to renovate it again many years from now to keep it up to current style, and for wear from guests using it. But the benefit far outweighs those costs, IMO.
First wow what an amazing insight! AND I love the editing on this video! Great fonts and extra photos etc. So helpful!
Hey Rachel 👋 I’m thinking about making a video on this. Let me know if that’d be helpful.
P.S. If you have any questions about starting & growing your Airbnb business lmk.
We have been on AirBnB for 4 weeks now with our downtown Asheville, NC condo. Already really pleased with the rental activity levels. We do give up 25% of rental income to our Super Host who takes care of everything, pure turn key, which is nice. I can’t believe how easy this was.
How did you find your Airbnb manager?
Love to see a young person who knows the importance of investing. Good on you Shelby!
Pretty eye opening to hear all the expenses. Thank you for being so transparent with your investments!!
Putting our time and effort in activities and investments that will yield a profitable return in the future is what we should be aiming for
Investing in stocks is a good idea, a good trading system would puts you through many days of success.
It is also possible to produce superior performance provided you do something different from the majority. However, most of us tend to pay more attention to the shiniest position in the market than to the cost of proper diversification.
The cryptocurrency market is seeing one of its worst selloffs since 2020, sparking panic among investors and raising questions about why crypto prices have been increasingly sensitive to gyrations in the stock market.
@Gadafy Moses That's impressive. Are you giving him your money or it stays in your trading account? how does it works
@Gadafy Moses Please 🙏, how do I get Nura Reiner Carvalho? i would love to trade with him
This is so cool. Thanks for being so transparent. Currently flipping a house so this content is very appropriate. You’re one of my faves!
Hey @Evan Donahue 👋 I’m thinking about making a video on this. Let me know if that’d be helpful.
P.S. If you have any questions about starting & growing your Airbnb business lmk.
The cost was too much 😆 I bet you're relieved the renovation is done now. Now it's just getting people to book it!
When the market goes down then it's buying opportunity. If the market goes up then you are making money. If you stay invested and ignore the market's ups and downs, you'll make a lot of money in the long run; however, a severe market correction causes a lot of margin calls and sell-offs, driving the market even lower. currently, I'm up 13% in my diversified portfolio. As crazy as it sounds some still make enormous returns from this seemingly unknown market. gotta be greedy when others are fearful
exactly what I'm personally planning on doing now the market is down, but I have no idea about stocks to buy or what assets that would yield the highest potential and so on. Your portfolio is freaking awesome, you seem to be doing well yourself. how do you select stocks you invest in?
@@dannyvera8475 I have my portfolio very well-diversified, though I did it using trad signals from a US regulated broker *PRISCILLA DIANE AIVAZIAN* financial analyst and CNBC contributor and it's been a huge relief. Good earnings and little to no engagement at all on my part. Her stock picks are top-notch, I don't worry about market trends anymore because she's quite the genius in trading and portfolio diversification
@@danieljamal3709 Do you mean copying her trades as it's been done in Etoro? Do you just give out your funds or copy them manually?
@@dannyvera8475 Yeah but I don't give out funds here, It stays right in my account. My account only mirrors her trades in real-time that's ideal for this system. Copy trading is 100% secured and very transparent to work with her, you don't have to send any funds over. you have control over your funds and can opt-out anytime you want just like in Etoro. Check out her name online and get in touch if you need help with this insane market. It's only a recommendation though
I'm MUCH more interested in buying stocks now that they are cheap. You can't just sit on cash waiting for the market to drop 10% before you start buying. The best strategy is to start buying in slowly and then gradually increase the pace of buying as the prices continue to drop. Cash isn't king at all in this era
The upside is that's profit only, the value of the home is going up and you'll own it free and clear that will add 3k a month to your profit margin
Shelby, thank you for this video! It was definitely a great investment. One thing you need to factor in your numbers is the number of personal stays. By staying there, you are saving on hotel costs so you need to add that to the calculations.
Your videos are super understandable and your presentation excellent. Most resources give vague instructions without making the newbie understand how things really work. Retired and I have a couple dividend stocks, I am going to sit back and observe how this all plays out, adding more at a time.
The best strategy to use in trading STOCKS, NFT'S and CRYPTO is to trade with a professional who understands the market quite well, that way maximum profit is guaranteed. Because i have learnt along the way of my investment that research and analysis are important, note that experience is more needed than luck when it comes to the crypto market.
Most time having knowledge or insight about a particular activity can as well be a pleasing exercise. I can boldly say that forex and crypto trading is one of the profitable money exchange services that elevates investors and their financial status.
Investing in crypto as a newbie was very difficult due to lack of experience which resulted in losing my funds.....but Sir Arjun B Jagat restored my hope
Success depends on the actions or steps you take to achieve it. Show me a man without investment and I'll tell you how long it takes to go bankrupt. Investing creates a safe heaven for the future.
Investing is a primary decision to be made for the future. If you see this and you don't have an investment, plan to have one
Most people with vacation homes that rent them out and also use them are pretty happy with any profit. The value of the house after renovation and then yearly appreciation will be the big pay day when you eventually sell it for over $2 million.
really appreciate your willingness to share your numbers honestly. I'm setting up a new construction 3 bed 2 bath in Florida, and I'm seeing similar costs without having to renovate. About 60K to get it furnished, landscaped and ready.
🔥 I’m with you on this David! This was a great video!
P.S. If you have any questions about starting & growing your Airbnb business lmk.
You are about the best UA-camr that really breaks things down with your real numbers!
Hey Amanda 👋 I’m thinking about making a video on this. Let me know if that’d be helpful.
P.S. If you have any questions about starting & growing your Airbnb business lmk.
that is insane, congrats on all the success!❤️i am NOT a renovator at all so i really admire what you and monica have done!
Shelby, have you ever thought about putting in solar just for the pool heat? To offset that cost completely? I’m just wondering if you ever thought about it. It might save you some money in the long run.
Hey Shelb. Great video. Love the transparency. This is exactly what I was hoping for when you started this journey. Minor nitpic, you weren't comparing apples to apples when you did cash on cash vs market returns. The former is more akin to yield, vs the latter being total return. That means you're undercounting your racket clubs returns cause the house itself apreciates.
That said, excellent work 👏
maybe also talk about how much worth the house is now compared to when you bought it
Sometimes you just have to go for what you want and trust everything will work out! I think you made a great investment!
Agree its called "good risk " I guess esp if you take yr time to plan thgs accurately!!
You also did not include the likely appreciation of the home over the next few years. I'm sure it will add at least 5-10% of the value of the home! Cha ching!!💲💲
Would you consider the additional equity you have now in the house because it's a nicer house part of covering the 458,000? If it came down to it you could sell the house and make a profit correct?
Amazing video Shelby! Very cool to see the numbers broken down and such a big passion project come to life!
Also, you made a profit by making videos about this throughout the two years.
The house has also appreciated in value, by a lot.
And also would you have to pay taxes in the 36,000 profit?
It was a good investment and the most important thing is that you're happy, learning and enjoying every second of this experience
Great to wake-up on Saturday with a new Shelby video!! Windy as heck here!!
Appreciation over time can also be factored into the investment, I'd suspect that area is going to continue to go up.
If you went solar could you have a electric pool heater , electric water heater. Also you can use your roof to heat the water. You would pump the water to pipes onto the roof ,where the sun would heat water in the pipe
Love the video Shelby!
Another thing to mention for your subscribers, your home is appreciating in value! Also being that you put in some major renovations, the home value is much higher than $750k
You could take that equity and do a cash-out refinance and use that cash to buy another airbnb!
I’m sure you knew this (I learn a ton from you!) but thought your subscribers might like to know this as well :)
But haven't you guys made back almost all of it by now just by appreciation of the property? It's worth a cool $1.1 million now.
Until they sell it's an unrealized gain.
@@brianxyz yeah, gotta hit that 2 year mark.
That is what I thought as well. The full ROI of this project can only be determined when the house is sold again. It could very well be that all this renter stuff was just busywork compared to where they really will make the money.
@@brianxyz Yeah but they can refinance to get more cash to buy another property so it still matters.
@@Bonanzoo 2 years don't matter on an investment property - that's a primary residence you are talking about - any sale of the property would be taxed (fed and state) + tax recapture
Definitely an amazing investment!
Thank you for the transparency, it's super cool to get such great insight that some real estate "gurus" would charge for their "courses".
I think one overlooked factor (at least as far as the proposition in this video is concerned) is the appreciation value of the property itself (even without all the renovation improvements).
Your house is most certainly pushing $1M if you were to put it on the market today so the fact that you splurged on some furniture or quality of life things is not a big deal in the long run.
Can't wait for the Joshua Tree project to begin! Let the Church Sisters real estate empire reign supreme! 🏡
I love that you really broke down the expenses. That’s really cool!
Your numbers are super similar to a remodel / Airbnb I just did in Destin. $1.2m place, about $450k into the house (with down payment and remodel, furniture, etc)
Aside from your cash flow profit - you need to take into account the “overall” ROI, which factors in the tax benefits. Your numbers will turn out much better if you have a great CPA!
I like seeing the TCO and ROI breakdown.
imagine all the money u made from all those amazing videos u made documenting the process! i think that's amazinggggg and u prob got so many subs too
The conversational elements you added into this video...? Some of your best yet. Very well done!
Thank you!!
Wow! Ok I agree this was a good investment, but having just finished a massive renovation myself, my back hurts looking at all you’ve done lol. Good job. It’s beautiful. And great video. Thanks for sharing.
12.8 years is fast to break even, you can speed this up by selling products with the holiday property, perhaps you do this already, wine and liquor service for arrival,, or arrival pack with kids toys, selling small pool toys for guests, fun and food deals bbq pack, cocktail pack, fruit and veggie, all upsell and items guest do not have to take with them
Shelby it was so kind of you to share this information. My biggest fear is dealing with contractors. Can you make a video on your experience with the Contractore and why the renovation took 14 months? If you already have, can you direct me to the title of the video?
Yes I could do a video on that!
Omg...Shelby calculated all that up. I was thinking who did she get to get all this together! LOL. Very impressive!
Shelby - can you do an update year after jaw surgery video?? I’m being told I need to get it done and I’m stressing. Would love to see an update, hear about if you still have numbness, if you regret/are glad you went through with it, etc. Your videos give me so much peace!
I used to own several vacation rentals until my commercial broker friend turned me onto multi family properties. I own several in Arizona and I really don’t have to do anything. I pay a property management company 6% to do everything. The only thing I have is to login to the management portal once a month to review the maintenance and rent roll data. I also visit my properties a few time a year to make sure they are looking good. I’m getting ready to buy a 3rd property when I can find one. Just like the real estate market is booming, so is the apartment market. With more and more people renting the harder it gets to find affordable places.
I THINK ITS A BEAUTIFULL HOUSE WHERE YOU GET TO RENT IT OUT AND ALSO ENJOY YOURSELEVES, YOU GUYS DID AMAZEING ON THE RENOVATION AND IT LOOKS AWSOME XXXX
good job ! a lot of math and money. your effort and your time.
I hope real estates worth it! Thank you!
Well you guys bought at the right time! Even with all of the renovation cost, it would be way more now. And before Blackrock comes in to buy up everything to, via the WEF.
Very interesting!! Do you all have a pool cover? Those are an easy way to cut back on pool heating expenses. Would def recommend 🏊♀️ ! Love your videos!
I love this video, it was great to understand the initial investments for a rental house!
However, I think we also need to add a perspective on the "return" of the initial investment... because, at the end of the day, you have a house!! If something goes wrong you can live in it, or sell it, you don't necessarily need to have all that initial investment returned by the AirBNB bookings to make this a great decision.
Just noticed the art above the sofa is minuscule u guys should cop a big statement piece
Love these videos Shelby! You’re such a unique channel with great transparency. This is a love project and something you will enjoy when you retire one day.
I was thinking of doing Airbnb
Now I guess I’ll hold off on doing it, the cost was way more than I thought.
Thank you for this video
Reality check
Is there a free or discounted solar program in Palm Springs? That could maybe help offset electric. Maybe next house throw in a little more ikea stuff. Most people won’t necessarily notice. Used woodworking setup is fun maybe just coffee/side tables. Sometimes just a big sanded log makes nice side tables and stools and saves $. looks classy. Anyways, love the house you’re super cute and I’m sure you’re gonna keep doing awesome
Shelby you look so vibrant in that shade of blue!! :)
I have some investment in holiday house and i get just financial problems. But what i want to say, you should buy something exotic and invest less as possible, so that is the key.
You have to factor in how much equity you’ll make on the house in 6/7 years, or even in 12! That house will appreciate in value and you have to factor that in. Really curious to see if you sold the house in 6-7 years, how much it would have appreciated and how much you would make on top of your calculations here. That’s really why property is so valuable in the long run. You will get that whole cost spent on purchasing the house back someday. So basically your $130K+ per year in revenue is *still* money in your pocket, plus whatever equity it appreciates.
You’re smart to buy up more properties in high potential areas because if you sell that place for $1 Million in 6 years, you can factor in another $250K of profit which is an additional $42K on average per year if you divide that by 6. Or look at the equity earned in the property year by year and add that to your total profit. For ex: “If I sold this property in 2023, I’d make 30K in equity. If I sold it in 2024 I’d make 60K in equity.” And add that to your annual totals for the 6-7 years, and I’ll bet you realistically make that investment back even faster. There’s other stuff to consider like inflation so you could also adjust your final numbers to fit inflation if you wanted a more accurate number.
Thanks for the great content!
How do the restrictions in Palm Springs limit you? In another video, Daniel from Mango Street, mentioned you can only rent the property what 32 times a year? This place is so lovely Shelby!
I guess you just need to hope for those longer term rentals. Wasting one of those 32 on a two day rental would be rough.
@@LifeisaPhotoOp That's why they have four day minimum stays.
@@brianxyz They're smart
@@brianxyz makes perfect sense. It’s a beautiful property.
Your courage to be so transparent is so inspiring. Wish I had the balls :'D
Hey @Chili Cheesecake Films 👋 I’m thinking about making a video on this. Let me know if that’d be helpful.
P.S. If you have any questions about starting & growing your Airbnb business lmk.
great video, daunting project and brave follow-through. No idea how even the typical American would get $430k in startup funds for what now seems to be a $1M AirBnB.
Will be good to see the updated break-even date and yearly cash-on-cash return at that projected date. (allowing for a few months of reputation building and a year of metrics).
I know we’ve never discussed this, but you can get 250% cash on cash not just 20%
Really makes me feel better that you had a not-so-good investment and are open about it. Makes me much more willing to just risk and do it myself.
Hey @gonrico 👋 I’m thinking about making a video on this. Let me know if that’d be helpful.
P.S. If you have any questions about starting & growing your Airbnb business lmk.
Yes, it IS a good investment for you and Monica!! No doubt the "crash course" in flipping, even though you aren't flipping it, cost a lot, but you learned a WHOLE lot of what to do, what you NEED and what you might leave out on the next one. Glad it's up and running now and doing what it's meant to, make money! Soon you'll have some "regulars" who love the place and come back each year or more! My limited experience (bought 1 house, still own it, don't rent it out) is that 18% on the management fee? Maybe that's the norm in Palm Springs? Seems high. On the place...yeah, you went above and beyond with it. It's so awesome on the design/layout...but maybe too much (frame tv? yeah). Thanks very much for such a detailed view! Look forward to seeing your next project and video!!
This was a great video! Thank you so much for the detailed breakdown!
Pro tip: track your expenses in Stessa. You can connect it to your account to pull the charges automatically.
Yooooo get solar panels and Tesla batteries for that pool heater
Don't you have to pay taxes for the rental income? Also, I really appreciated this video and the transparency. I've always steered clear of real estate because of the all the headaches, mainly the long term commitment of the investment.
Probably we should also take in account the time required to manage a short term rental, it's like running an actual business. Wouldn't be better to explore alternatives like REITs or dividend stocks if the main goal is to avoid headaches and hassle?
That's the road I'm currently taking. I like the non commitment of stock trading because I can get off as fast as I got on.
Airbnb automatically takes out taxes for us
@@letsjazzitup not always. depends on state and local taxes
@@letsjazzitup Yes, AirBnB handles rental taxes during the rental itself, but not income taxes from any profits. You know the California Franchise Tax Board wants their 16%...or whatever silly number they charge now. I don't miss overpaying them. LOL
Love this video and of course your new T shirt!!! (Coming here from your blog channel)
Btw: indeed this was a great and fun investment!
another perfect video, as always shelby!
Loved this video‼️ thank you for sharing the project with us🙏🏾💯
I’m going to start Airbnbing my guest house (private bedroom, bathroom, patio with view) so excited to start turning a profit on our home. Then saving for the next.
I love watching your commentary videos as well because you do such a good job at also including pictures and other B roll (I learned that term from watching your videos 😆)
Love the videos .. I always enjoy your content
I'm sure you have made more in unrecognized gains! Your house after the renovations and market appreciation is worth at least 1.2 to 1.3 million! That would mean your already making a profit!!!
Have you thought about refinancing your mortgage to get back your down-payment?
After all the renos and upgrades your appraisal value should be way higher than your mortgage.
refinancing now would be a much higher mortgage
This video made Shelby look even more appealing. Love the numbers and the details.
I feel like your mortgage payment also counts as you’re paying down what you owe in principal as well, your property has more money you could take our…?
If you add the appreciation in the value of the house then your ROI is much higher and payback period is quicker.
You should also do another video on how you and Shelby share the cost of these renovations!
Love the angle at which you’re shooting this one in the living room!