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Airbnb Business Financial Model: How to Successfully Start an Airbnb with Financial Forecasting - YouTube
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[Applause]
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hey if you're thinking about starting an
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airbnb business and you want to run some
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numbers to figure out what's it going to
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take to start up how much money could
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you make how much money could you lose
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and just really all the numbers behind
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what goes into
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starting and operating an airbnb
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business then this video is for you
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we have developed a financial projection
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template built specifically for airbnb
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businesses
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and uh we're going to walk you through
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how to use it here today my name is adam
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hooksema and i'm the co-founder of
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projectionhub we've helped thousands of
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entrepreneurs create financial
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projections for potential investors
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lenders or just for internal planning
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and so
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really excited about this airbnb
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template and you can find a link to the
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template in the
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description of the video below and now
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we're just going to dive in and show you
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how it works
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so the first thing you need to know
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about this template is that any cell
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that's highlighted in blue is an
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assumption that you can change without
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breaking something in the template
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so i'm just going to walk through the
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assumptions that we have put in here um
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and and show you the results
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so we've got adam's airbnb empire here
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and we are assuming that we're gonna
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have to put in a personal investment of
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150 000 here to to get started
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and that is going to be
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used to
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purchase help purchase property as well
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as
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outfit it with
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furniture and and just have working
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capital for the business so um
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so you put in your initial investment
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here
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there's a
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table here where you can put in fixed
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assets other than the rental properties
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themselves so
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what i put in here is just the furniture
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that i would expect that
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we may have to buy for each additional
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airbnb unit that we that we purchase and
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this could be furniture and appliances
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as well so you know washer and dryer and
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refrigerator that you may need as well
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okay so here's where we're going to put
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in the properties and so what we've done
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here is we've got property one is a
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single unit airbnb
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we're saying that there's one property
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we've purchased it instead of lease it
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so we purchased it where purchase
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purchase price is 300 000 and that's the
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purchase price plus the renovation so
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if you are purchasing a property and
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then renovating it
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to list it on airbnb i will go ahead and
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put the full
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purchase plus renovation price here
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and
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you'll see that i put a useful life of
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30 years in salvage cost per property of
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300 000 so i'm basically what i'm doing
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here is just assuming that there's no
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depreciation
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hopefully the value of the property goes
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up
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if we depreciate the property
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you know it's going to kind of throw off
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the projections you're going to show
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a net loss even though
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depreciation is a non-cash expense and
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so i just put it as the same the same
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dollar amount so that depreciation
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doesn't really throw us off
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now um we're saying that we've purchased
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this in month one
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and that we're able to get a loan
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for 210 000 to finance the property so
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you know based on our research
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looks like if you're able to get a loan
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to purchase a investment property you're
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going to have to put in probably 30
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percent so up here in the equation here
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you can see that we're taking the
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purchase price here
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times 0.7 so 70 percent that's what
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you're going to be able to finance
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probably and this can vary depending on
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you know your credit score and your
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situation in your personal financial
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situation but that's what we're assuming
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here
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we're assuming an interest rate of five
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percent and um
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a 30-year
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30-year mortgage 360 payment so
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um
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and then what we've done here is we're
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saying that okay our second property
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property number two is going to be a
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multi-unit property
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for 500 000
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we're buying and we're going to buy that
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in month 11.
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and we're going to again finance 70 of
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that
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and then our property number three we're
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going to buy a large unit airbnb for 500
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000.
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we're going to buy that in month 23 so
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the end of year 2
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finance 70 again
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and then just as an example so property
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number four let's say okay you can't
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you can't keep buying properties you're
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running out of down payment here and so
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you want to but you want to keep growing
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the
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empire here so you could lease a
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property from somebody else that you
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would then operate as an airbnb and so
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you have the ability to
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to either purchase properties to operate
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or lease them
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and so if you if you select lease then
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it it's going to kind of
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black out the
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uh this section the purchase price
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property and the the other sections are
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irrelevant
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so we're saying that we lease this
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property in month 35
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and
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we are paying fourteen hundred dollars
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per month in rent
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to lease that property
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all right so now based on those
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assumptions and we're going to come to
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our input revenue tab
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and so this is going to pipe in those
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four properties for you into this table
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and then you can select here what month
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you're going to be able to start renting
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it out so basically what you what we did
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here is we just took the month that we
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purchased it
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and we added two months to it so we're
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saying in two months after we purchase
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or lease a property that's when we can
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start
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listing it and actually generating
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income so saying month three of the
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projection
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that's when we start
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renting
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and there's only one unit
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available in that first property to rent
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and we are
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assuming
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monthly rent
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the potential for monthly rent is 4 200
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and i would suggest that you use
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airdna.com to get an idea of the
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[Music]
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rent potential of the properties that
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you're looking at so it's a really cool
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website you can go there and you type in
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a
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particular city for example you type in
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a city and it will show you the average
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a number of data points but it'll show
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you the average
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rent per month
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the average nightly rent that people are
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generating and it also show you
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seasonality so you can see
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how that changes with time as well as
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you'll be able to see the average
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vacancy rate
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for properties like yours
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in your city so lots of great data you
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can go there and then
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fill out these assumptions based on what
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you learn from air dna so i'm assuming
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that
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we're our first property is going to be
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bank it 25 of the time which means it's
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going to be used 75 percent of the time
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which may be pretty aggressive
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but
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let's say we're really going to get
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aggressive with this business and so
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we want to we want to list it
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to be used and so
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you can see then your monthly revenue
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per property based on those assumptions
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and you'll be able to enter in a
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utilities cost per month an insurance
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cost maintenance cost property taxes and
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any other costs per month that you have
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associated with that specific property
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and
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you'll be able to come up with your
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total cost per month
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now jumping over to our
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input other expenses so here we can put
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in other fixed expenses or variable
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expenses that we have in the business
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that aren't necessarily tied directly to
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a particular property
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or if you have
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expenses like cleaning expense where
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it's not necessarily specific to
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any individual property it's just every
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unit is going to need to be cleaned and
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so
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we have here an assumption of a
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per unit
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cleaning cost of 250
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per month
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a per unit
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or here per property so you can do per
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property or per unit so if you have a
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multi-unit
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property each unit's going to need to be
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cleaned but that property only has one
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lawn right and so
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you can
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do expenses on a
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fixed
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basis a per property a per unit or a
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percentage of revenue basis so a lot of
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flexibility here
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again same thing with like internet
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and security those may be per property
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expenses instead of per unit you can put
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those expenses in here
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then here we can say okay once this
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airbnb empire gets up to a certain level
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maybe we need to
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hire a
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property manager part-time maybe you're
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doing that yourself in the early days
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as you're building up the business but
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here we show a part-time property
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manager making twenty thousand dollars a
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year just as a part-time job um
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starting in month 49 so the end or the
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beginning of
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the fifth year
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we're gonna we're gonna hire this
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property manager
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so once we enter in all of those
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assumptions we're able to see
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our profit and loss
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at a glance and a number of useful data
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points of property and per unit data
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use of startup funds startup capital
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required and you can see look you're
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you're losing money you have a net loss
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in
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in
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year one
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as you build up um
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and you you know you can see over time i
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mean you've got a significant amount of
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dollars invested into the business and
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you know
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we're we're still not uh
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just raking in net income here
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but um
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you know i think a big thing for a lot
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of airbnb
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owners is the question of whether the
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property also increases in value as well
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and so that's probably where the big
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returns come for folks is you know if
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you can
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generate a profit by operating the
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airbnb business as well as owning and
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holding that real estate paying off the
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debt service on that real estate while
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you operate the airbnb
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and then you know
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increasing the equity value of the
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property over time that's really where
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the
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the
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the return on investment is probably
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going to come from so
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you know of course you can operate the
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business uh you know maybe more
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efficiently or
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more profitably than the assumptions
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that we've put in here but i think our
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assumptions you know are relatively um
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aggressive already and so just be aware
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you know go through and before you
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put down 150 000 down payment on on your
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new airbnb property
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make sure that these numbers work out
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know what you're getting yourself into
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if you have any questions
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please don't hesitate to comment in the
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comment section of the video below
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or reach out to us if you need help
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filling out the template support at
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projectionhome.com
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