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The $1,700 Decision
$1,700 is the amount I had to pay for the above 756 square foot two bedroom, one bathroom apartment (including utilities) in Framingham, MA. Keep in mind that Framingham, MA is 30-45 minutes outside of Boston depending on traffic’s mood that day.
Recently single and locked into an expensive lease, I had to figure out what I was going to do to continue building on my financial goals without rent draining my pockets every month.
Thoughts on My Options
Move: it’s easy to think that moving back home where I could find a similar apartment for $800-$1200 closer to the city would be the perfect situation. I’ll be closer to family/friends and saving would not be a concern. BUT I’m a firm believer in everything happens for a reason and the opportunities that have been presented to me in New England outweigh the comfort of being back in Michigan.
Move in with Another Person: Admittedly, this was ruled out from the beginning because most people already have their place set up and my apartment was fully furnished. I was NOT ready to give up my furniture if there were duplicates or have other people taking over my things.
Get a Roommate: In addition to the above issues, I’ve had roommate horror stories from non-payment, dishes littered across every inch of counter space, to roommates eating all of my precious food without asking! (everybody who knows me knows I LOVE my food!!). I simply didn’t want to risk my peace of mind for a long term roommate. I also considered month to month terms through roommate sites like Roomster and Roommates but didn’t obtain a lot of interest there.
Rent out Room on AirBnB: Living in Framingham, I did not consider AirBnB to be a viable option. Framingham is a quiet family town with not much excitement to it. My initial thought was that you have to have a luxury apartment in the heart of a big city with a lot of tourist attractions around you. Then I had a lunch meeting with a friend who told me how their AirBnB business was flourishing because of the businesses in the area and how the majority of her guests were there for work. I also learned that if I shared living arrangements with an AirBnB guest (vs. guest rents out the whole apartment), I could set my guest preferences to "same gender only." This is beneficial for individuals who may have safety concerns from the opposite sex. I personally would not have an issue with this, but I could see how others could benefit.
As one can assume…AirBnB was my choice.
Short Term Stays: The typical stay for my Framingham apartment was one and a half weeks to one and a half months. I took comfort in knowing that even if I didn’t like the guest’s personality or cleanliness, they would be gone soon.
Income Potential: When I did my initial research, I learned that a shared living space similar to mine was earning approximately $25-$50 per day or $750-$1500 month. I took a conservative approach with my apartment and listed my place out for around $30-$40 to ensure bookings. This equates to a potential income of $900-$1100 per month. Interestingly enough, I was on the frugal end of things and only provided a king size blow up mattress that cost me $60. Knowing what I know now, I would have spent the extra money to provide more comfortable living arrangements and increased my price. Refer to The Numbers section for full details.
Guest Ratings: I recall traveling to Utah with a coworker and we used AirBnB for our overnight stays. This was my first experience with AirBnB and I initially thought of it like a hotel where you don't necessarily have to put things back in place. My coworker made it VERY clear that I had to pick up after myself because he had an excellent rating and didn’t want to mess that up! Remembering this experience, made me feel comfortable that other guests would have the same mindset and it proved to be true. Most guests were very apologetic about their noise levels and any “mess” they may have left. Most of the time, the guest room looked like nobody was even there.
Cons of AirBnB?
Guest Preferences: Some guests expect five-star services for $30 a night. It’s an unfortunate truth at times and no matter what your listing states, you cannot please everybody. I’ve had a time where a guest gave me a four-star for not having a microwave oven in the apartment (then booked a few days later still knowing there was no microwave oven).
Taxes: As with all miscellaneous/other business income, the government will want their cut! How well you research your market and track your expenses, will determine if Uncle Sam hurts your margins or not. The tax impact that I incurred for my apartment will be discussed in a later article as this was my first year doing AirBnB and have not been taxed yet. To be conservative, I kept a 28 percent reserve in my savings to be ready for any tax payments that may occur.
Clearance from Landlord: As a renter, you have to get clearance from your landlord in order to do AirBnB. If you do not get clearance, you run the risk of getting kicked out of your lease and not getting a good recommendation for future apartments. Owning your own property would obviously eliminate this issue.
Below you will find approximate results of me utilizing AirBnB versus getting a roommate for my Framingham apartment. Note that I did AirBnB from January 15, 2018-November 30, 2018.
I expect with taxes/deductions included, I may have been paying the same or slightly less than with a roommate, but I have a lot more peace of mind and a very clean apartment.
Next Chapter of AirBnB — Boston
Considering how well AirBnB did in Framingham, I was excited to take this strategy to a condo in Dorchester, MA (a neighborhood in Boston) to fully embrace what it was like to be a BOSTONIAN (a goal I’ve had since moving to Boston, MA). I quickly realized how drastically different AirBnB hosting in the Boston market was compared to Framingham.
Here are some key differences:
Guest Demographic Shift: As I mentioned earlier, Framingham brought a lot of business travelers that needed a short term stay for work purposes or relocation. For Boston guests, the stays have ranged from two to ten days consistently. Guests are usually on vacation or checking out the city for potential school options. In just two months I’ve been able to meet people from across the world with different backgrounds and interest in the city.
Higher Rent: My rent instantly shot up from $1700 all-in to approximately $2200 all-in simply because I’m in the city (but not the heart of the city). Knowing I wanted to live near the city anyways, I was willing to pay more money for the life experience although my ultimate goal is to have AirBnB support my rent fully. With the higher rent, this forced me to be creative with the furnishing of my condo. Outside of the dinner table, couch, and TV set up, I was able to purchase all furniture for under $500 (yes the bed, bed-frame, and TV included). Be on the lookout for “The Frugal 2nd Hand Shopper” article coming soon!
More Competition: With the number of multi-family apartments and large homes in Boston, it becomes highly competitive and has required me to do things to set myself apart. The air mattress in the bedroom was no longer sufficient if I want to get bookings.
Higher Income Potential: The market for Boston brings in better income potential for shared spaces than Framingham which makes sense considering Boston is a tourist city and rent prices being as expensive as they are. The potential for high income for Boston comes in the summer. My unit currently grosses approximately $1200 per month. Once June hits, my expected earnings jump up to $2200 per month. I wouldn’t have believed this to be true if people weren’t already booking my condo for July at the increased rates. I expect to average approximately $1700 from this condo for the year which will put a nice dent into my rent expense! An update to how this is progressing will also come in a later article.
Take a look at my current listing and see all of the upgrades I’ve made since my first go at AirBnB.
Join the Fun
If you have ever thought about doing AirBnB but were worried about how the guest may act or treat your property, hopefully, this article gives you some insight on the ups and downs through my lens. If you have an extra bedroom or plan on selling your house, consider doing some research in your area then signing up with AirBnB if the numbers make sense for you.
You can use my referral link to get started at any time.
I enjoy how clean my apartment has been since doing AirBnB. I enjoy the interactions with new people and getting to understand different lifestyles. I also enjoy the extra money going into my pockets on a monthly basis! Doing AirBnB as a renter has really motivated me to look into owning my own property and capitalizing on the lower mortgage cost compared to the rent that is priced to make a profit for the landlord.