Posted on by locho55

Airbnb, Can it work for us?

I listened to a great podcast on how to make airbnb a reality. Choose FI episode 133. Zeona shared her experiences starting an airbnb empire in Boulder CO then St. Louis MO. First things first, what does the airbnb market look like in Pittsburgh? What are the opportunities?

I live in a single family home in a neighborhood of Pittsburgh called Highland Park, we still in city limits, but not in the thick of it.  We live very close to the city zoo. My husband and I converted and renovated our current home from a triplex back into a single family home (strongly questioning my judgement there now, ha). It’s not unfathomable and would be fairly easy to convert the basement back into an apartment space. We also have a guest bedroom, which would be more invasive, but could also work for an air bnb. We could also consider buying a property. I would like to look at all three of these options to see if any are viable.

Our beautiful city! This is a view from Mount Washington looking down on the point. During the French and Indian War a fort sat at the confluence of the Monongahela and Allegheny Rivers.

A little background, Pittsburgh is a city of neighborhoods and most key destinations are in the heart of these neighborhoods. The downtown area is coming back, but the heart is still in key neighborhoods like Lawrenceville, Shadyside, Squirrelhill, Bloomfield, Strip District, and the Northshore. We are also a proud college town with the University of Pittsburgh and Carnegie Mellon keeping things young and exciting.

Lets take a look at current airbnb listings or surrounding area, other key locations (why are people coming here?), and what makes a good bnb and also a bad?

What I found was surprisingly feasible, see how I got there below.

First step: Airbnb recon in our area

Check out this link for the airbnb estimate: https://www.airbnb.com/b/financials

Just type in your city and situation. Here is what came up for my 3 possible scenarios:

Next I looked up specific airbnbs in my area and created an info table. It took a little time… but give an engineer a chance to use an excel sheet

Quick at the Overall Pittsburgh market:

Big draws are the convention center, sports events and college events.

Looking at the prices close to these venues are roughly as such:

  • Close to convention center (and downtown): $75
  • Close to Sports arenas: $65
  • Close to Colleges: $40 (Less desirable area)

All and all, not a whole lot of variability. There really isn’t a particular hot-spot to invest in. It seems as long as you are within city limits, it’s all very similar.

Reasons for good ratings and bad

Reasons for good ratings

  1. Clean!
  2. Nice hosts
  3. Good location

Reasons for bad ratings

  1. Expectations set too high. It’s important to be realistic about your listing.
  2. Bad beds… pull out couches can come back to bite you 
  3. Hard to park

In conclusion

It would appear that the market is there. We are only looking for additional income, so even making half of what other properties. The average rate for my area is $59, with an estimated monthly income of $1531. The mortgage on our house is $736, so if numbers like that are possible, it would make sense for us to consider. It should also be noted that airbnb takes between 3 and 5% of the booking. Option 1 seems like the best option if we were to pursue airbnb.

Option 1: Convert the basement back into a single apartment

  • Expect around $1500 per month
  • Separate entrance, windows bring in natural light, kitchen, bed and bath
  • Minimal risk, updating the basement will only help our home’s value. It will cost approximately $5K to update
  • The downfall is losing the space that we currently use for wine making and our workshop
  • This option is a good one if we wanted to go try out the air bnb path

Option 2: Guest bedroom is  rented as a separate space

  • Expect around $500 per month
  • Not optimal bathroom set-up
  • More invasive into our lives, but least amount of work
  • Minimal investment, but might consider switching the guest and mast bedroom to make the bathroom situation clearer

Option 3: Buy a property nearby for airbnb

  • Expect closer to $2,000
  • Housing prices are very high right now, the lowest we can get in our area is $220,000 which is about $1200 per month. Most of these houses require substantial work and frankly I think the housing is currently overpriced
  • While technically the math might work out, it would be a lot of work and the risk is a little higher
  • I think this is too much to take on right now