During the economic downturn and hosing market collapse of 2007-2008, my wife and I decided to live very frugal to be able to save enough to invest into as many cheap rental properties as possible in the Detroit metro area where we live. It was hard, but with housing prices so low, the rewards far outweighed the risks. When else in time we would be able to but good rental properties in cash for less than a used car? I'm not kidding. Some properties we purchased for less than $5k. The best ones we purchased for between $25k to $40k. It paid off. We purchased several homes and installed long term tenants in them. The rents from these long term tenants already paid for our initial investments into these homes.
Then the prices started to raise again tripling the value of our investments. Which is great. But that also meant that we didn't like the prices any more.
Then we had to deal with several evictions. Even tenants who were paying consistently for 4 to 5 years stopped paying... Evictions are a pain in the ass. Then there's the damage when a long term tenant leaves. We've seen it all!
My wife and I also liked to travel all over the place with our children in road trips. In our minivan we've driven through 48 USA states and 10 Canadian provinces. During our road trips we usually stay at Airbnb's. In one road trip in particular we drove from Detroit, to the shores of Lake Superior in Michigan. Then entered the province of Manitoba, drove through all of those Canadian Provinces, through the beautiful Canadian Rockies then all the way to Vancouver, then South to Washington, then Oregon and then all of the Northern states stopping at Yellowstone, and Glacier National parks, and then back home. It was an awesome trip. It was my wife, my three children and even my mom. During that trip I realized that I DID NOT USE A SINGLE HOTEL for all six of us. Also during that trip, while driving the boring great plains of the provinces of Manitoba and Saskatchewan from Winnipeg to Regina my mind begins to wonder and I started to think about all of the places we stayed. ...and then it hit me!!! "I also got places. Why I haven't converted one of my rentals into an Airbnb?" Granted, Detroit Metro is not what you would think of a vacation destination. While driving, I kept thinking about the logistics and what I needed to do. I started thinking about going to the local salvation army to buy furniture, etc.. How much is my return? How much extra do I need to generate in revenue to pay for utilities and other costs that were normally paid by long term tenants, etc...
When I came back from that road trip I went to the salvation army to buy some furniture, used some extra furniture that I had at home, and started my first Airbnb unit with my cheapest smallest rental. I charged a cheap rate. I was just testing the waters. It worked. While Detroit is not a vacation destination, there was a need for temporary workers, people moving into the city because of a new job that need temporary housing while they look for a more permanent place, people visiting family for weddings and funerals, people in-between homes, contractors, people going to concerts and games, teenage hockey players traveling for games, med students doing their residency, and many more non-vacation related uses. I then proceeded to convert all of my other rentals into AirBNB's. I kept the long term tenants until they stopped paying. Once they stopped paying, I evicted them and converted the units. I only have ONE long term tenant left and she is the one who manages all of my other rentals. She takes care of the guests, the cleaning between guest, and everything else. So it worked.
The profit that I get from AirBNB after I have to pay higher expenses when compared to long term tenants is about the same. ..But I don't have to deal with evictions! That's the good part about this.
So that's the story of how I became a host.