Dear hosts, finally the new La Casita Airbnb in Puerto Rico is live and booked. Oh yeah, The Bright Casita in San Juan, Puerto Rico, already has guests. I’m doing laundry and cleaning is happening. Today’s episode is all about the Lessons Learned From Building the New Airbnb La Casita.
One of the reasons I wanted to share this episode before the end of the year is this: if you’re holding back from listing your space because you think you have to hang the last picture frame for everything to be picture-perfect, please don’t. Of course, there are some essentials that you need to have in place before you start. A comfortable bed, quality towels, great communications, good photos. But you can start before you’re reached the level of perfection. I want you to make money.
Here’s the current situation at La Casita: We have no art on the walls, no decorative pillows on the sofa, no area rugs, but we’re booked and making money.
Often we hold ourselves back, waiting for perfection, in the meantime, time passes by, and we lose money.
In Lessons Learned from Building the New Airbnb La Casita, I’m going to talk about:
- The market research we did before we spent one cent.
- The money we spent
- Our mindset
Small Empire:
If you’re a long-time listener you know that my empire is small, six-figures a year with one home in Brooklyn, NY. You might ask why I didn’t want to expand my empire, and that has to do with the lifestyle that I want.
My Airbnb is also my home. I’m one of the original hosts from back in 2010 who hosts in my home and lives with guests. I have helped clients build their own vacation rentals and also manage a Property Management company with their clients. I know what it takes to get calls from guests in the middle of the night.
La Casita in Puerto Rico:
Now I’m living between New York and Puerto Rico. Javier, my boyfriend, has a property with another house on top of it. A casita his dad lived in until he passed. Javier didn’t want to deal with long term tenants or bad experiences, so the casita was closed. Then I came into his life and we thought, well, we can do Airbnb and just see if it will work out.
You’re welcome to check out La Casita
This is a neighborhood that has some homes in different stages of disarray; some are abandoned (or just look like it), others are for sale. It’s a neighborhood in transition. Not hip, not happening, not in a tourist area, not by the beach. How can we market it? Will it work? How will that location rating be? Of course, I worry.
Market Research:
Before we decided to spend a dime, I used Airbnb and Airdna to do market research. Airdna provides vacation rental data. I interviewed Scott, the founder of Airdna, on Episode 30: How to Use Airdna Data to Improve Your Airbnb.
Airdna shows the amenities that the other listings offer, as well as the ratings, the rental activity, and rental settings.
The rental activity is the number of days a property is available as well as the number of days it has been booked. Remember, some properties are only available two weeks a year, but they’re still listed, They might have the entire calendar blocked.
The rental settings show the cancellation policy other listings are using and also the minimum nights. In my case, 66% of the available listings had a 1-night minimum. I usually offer a 2-night minimum. The one-night option isn’t something I offer in NY, but it was going to be something I had to consider here in Puerto Rico.
Some of the information I wanted to check was:
- If anyone else was doing Airbnb in this neighborhood.
- Calendar: How booked were they?
- Price: How much were they charging?
- Reviews: What were the guests saying?
- Amenities: What amenities were they offering?
Here’s What I Learned:
There is a market since there are about 30 Airbnbs in just our neighborhood alone. One person has three houses… so I thought if one person has decided to invest in more than one property, it means the market is there. But what is the price range?
Show Me the Money:
It’s low, less than $65 a night. I’m used to New York prices. So what’s my price strategy? What do we need? What needs to be our return on investment? Will we make money?
Because we live in the downstairs house, we don’t need to make a lot. In addition, a long term tenant will be about $500 a month, so if we make more than $700 (because I’m including utilities, taxes and our time), we’re golden.
Look, for me an empty space costs money. Javier doesn’t think that way. He just doesn’t want the headache of dealing with people. I get it, but I have been hosting for almost 10 years. I’m ok with guests. I’m more than happy to take on that headache as long as it doesn’t turn into a migraine.
Nightly Rate:
Now, how do I calculate pricing? Simple, 700 divided by 30 is 24 (yes I’m rounding up). The average rate for what other hosts are offering is $45 a night. Let’s say we only book 20 nights a month, that’s 66% occupancy and that provides about $900 a month.
I need to get reviews first, so our current rate is lower than my target rate of $45. My intention is to go up as high as $75 during the next high season, November 2020. Because I want to be grossing $1,500-2,000 a month from La Casita. Javier thinks we will get about $900. I’ll let you know who wins.
Set Me Apart:
Look, just because other folks are at a certain rate, it doesn’t mean you have to stay at theirs. Think, “What can we offer that’s better?” and “What kind of unique experience can we give guests without breaking the bank?”
For example, you know my 5-star House Manual is already created and in place at La Casita, providing valuable information about the neighborhood. All the great restaurants we love, the 24-hour pharmacy and grocery store. Information the guests need and want. In my research, we didn’t see anyone commenting on a house manual like my guests talk about my NY 5-star House Manual. I know that alone will set us apart.
My photos of La Casita are great, and I’ve added captions on them that engage with the guests. We have a private balcony so we provided a yoga mat and have a photo of it with a caption that reads “private balcony, salute the sun.” Already one guest mentioned how he wants to do yoga there, so the photo has done its job.
We are also going to add a hammock and some outdoor furniture.
Is this worth it? Yes, and financially I think we will make it.
Amenities:
During the research, the other listings offered the following amenities a kitchen, free street parking, air conditioning, internet, washer, dryer, and cable TV.
We knew we had to offer an air conditioner, but did we have to offer it in the entire house? Could we just do it in the bedroom for now? That was something we decided to do, and then once the hotter months come we’ll see. Electricity costs in Puerto Rico are expensive.
Since Hurricane Maria, Javier has installed solar panels. We run the washing machine and other equipment with them, but to run the air conditioners with solar panels is just another expensive and complicated story.Money Spent:
Javier and I decided to upgrade the bathroom because that is one of the items that guests will always comment on. Always. The Casita also needed a stove, a refrigerator, and a bed. This is on top of all the other little items. I had my essentials list printed out and so I could check things off like:
- Bathroom wastebasket
- Floor-length mirror
- Pots and pans
- Dishes
- Coffeemaker
- And much more
You can download this free list by going to the hosting journey.com slash essentials. You need the list to see if you have all these items in place and in good condition because you don’t want your guests to feel like they’re an afterthought. Remember Episode 85: The Tale of Two Airbnbs with Stephanie Schwab where she discussed her Paris Experience.
There are a lot of items, and we will not see a profit in La Casita for a while. There is a difference between being booked and making money versus making a profit.
I think it got to a point that Javier was like- “Are we still shopping?” On Cyber Monday I had all tabs open for Ikea, Amazon, Target. There is no Target here in Puerto Rico, but I bought stuff in NY and brought it back. Yeah, shopping happened and is still happening. Remember I still need art for the walls, pillows for the sofa. Argh.
Mindset:
I really don’t like shopping or design. I know lots of you love it, but it’s really not my zone of genius, and at one point I wanted to bring Wayne from New York but he wasn’t available. I haven’t selected a paint color, curtain or art for walls in over 15 years. I think more because Wayne designed my previous apartment.
A designer is key and super important; because of Wayne, I was able to sell that apartment for higher. He made it all beautiful and people wanted it with all the furniture. He does things in ways that I’m really just like… “Ok, go for it.”
Me? Nope, not a design bone in my body. I don’t want to. All I’m going to say is we have a whole bag of curtains because we couldn’t decide on them. I love to go shopping with Wayne, and all I do is say is yes and pay. That’s it. Oh, and then he makes it all pretty. I’ll get on my hands and knees and clean, but don’t make me pick colors.
So doing La Casita was a big reinforcement of my feelings about decor, and I had to plow through them and do it. I sent stuff to Wayne and tried to get a friend in Puerto Rico to go shopping with us. We will continue exchanging Pinterest and Instagram ideas. Once done it will look fantastic.
Seasonality of the Space:
One of the reasons I knew we needed to just do this now was because the high season for Puerto Rico is from November until about April. That’s when it’s cold in the states, and I wanted to take advantage of it.
We could have continued delaying, waiting for that perfect moment. But is there a perfect moment? Ever? One day Javier left for work and I just put up the listing, without even any good photos. We didn’t even have the furniture from Ikea. I was like, “That’s it, it’s live,” and a few days later we heard that great ping from Airbnb.
The most exciting thing was getting that first booking for La Casita. I felt validated, especially since this time I’m also doing it with Javier. We have both invested money; it wasn’t like last time when it was my home and I just opened it up. Then I got another inquiry and another booking. A big heavy sigh of relief.
Now we’re booked until the end of the month and we’re getting inquiries for January. I’m glad we started, even if it isn’t perfect.
What do you want to accomplish this upcoming year? Do you want to start a new Airbnb? Do you want to get your communication automated? Or update your outdated house manual?
Remember that you can have the assistance of Getting it Done in 2020 to help you plan what project is best for you to tackle and work on this coming year.
There is nothing like having a strategy and planning, but even better, executing that plan.
