Beatrice is my English-cottage style brick bungalow. I lived there until we bought Mildred House and we intended it be an investment property. It’s in an up-and-coming area so I wanted to hold onto it while it built value, but make money off it too. It took me a long time to work out exactly how to use it, prepare it and find renters. Finally it all worked out and it was so good. Perfect situation – renters were very happy, I was very happy. Then COVID-19 destroyed the aviation industry.
Let’s back up and talk about what options I considered for renting, the pros and cons of each, what I could have made (specific to my area of course and not counting contingency funds for house needs) and why I made the decision I did.
Airbnb would have been my top choice, but they are illegal in the city Beatrice is in. Could I have gotten away with it? Probably but Mr. Yarb is a stickler for rules and very much not on board.
PROS: Prime location and layout for an Airbnb, I could check in on it regularly, already furnished and decorated, I live & work close enough to manage it myself most of the time, minimal wear on house, good income
EXPECTED EARNINGS: $150/nt at 60% capacity = $2,700/mo – expenses = ~$1000/mo earnings
First, a quick explanation on what a crash pad is. Pilots/flight attendants have the luxury of living anywhere in the country they want because they can commute by air. So say a pilot lives in Indianapolis but is based in Atlanta. Every time he works, his trip will begin and end in base (ATL) and he is responsible for getting to ATL in time for his assigned flights. Since he makes this trip several times a month, he may choose to rent a bed in a “crash pad” so he has somewhere to stay the night before or after trips (or when on reserve). Crewmembers rent a bed by the month and are typically there 5-15 nights a month. Crash pads are usually shared by 6-12 crewmembers.
This was the original plan. The house has large rooms and tall ceilings, so I could have comfortably fit 5-6 bunk beds in the space for 10-12 renters. (In case you’re wondering what the difference between this and an Airbnb is, the crash pad renters would sign a month-by-month lease, which is allowed.)
PROS: Location is perfect, layout is great for crashpad setup, I could check in on it regularly, already furnished and decorated, I live & work close enough to manage it myself
CONS: Couldn’t earn enough with the four beds I have, high upfront cost (5-6 bunkbeds, mattresses and bedding), more wear on house, low earnings
EXPECTED EARNINGS: 12 beds = $200/mo ea at 80% capacity = $1920/mo – expenses = $420/mo earnings
4 beds = $350/mo ea at 100% capacity = $1,400/mo – expenses = $100/mo LOSS
Furnished Short-Term Rental
The film industry is big around here, so I was looking at renting as a furnished short-term rental. My goal was a 3-month contract. Since the rental period is so short, I’d continue to pay the bills in my name. To incentivize renters, I considered lumping the bills into the monthly rent which means my income would change based on the renters’ use. Alternatively, I could have passed along those costs directly with a separate payment, if I had the market to support that option. I pursued this plan, but it didn’t pan out after trying for a few months so I switched gears.
PROS: Good location and layout for roommate/family rental, known income, flexibility to re-evaluate options in three months, already furnished, could check on it regularly, live close enough to manage it
CONS: Minimum profit, less control/access, hard to find candidates, bills could be sizable cutting into earnings
EXPECTED EARNINGS: $1,850/mo bills included – expenses = ~$200-350/mo earnings
$1,750/mo passing on bills – expenses = $500/mo earnings
Traditional Year Lease Rental
I put a lot of money into this house – new roof, new windows, refinished floors, new driveway and patio, fresh paint, built-ins and lots of other updates. Trusting a long-term renter was hard for me to swallow. I considered moving forward with this option after COVID-19 hit, but it just didn’t feel right. I may end up going back to this option, but we’ll talk about that in another post.
PROS: Known income for a year, less expenses, minimal involvement
CONS: No control, worry about damage, no flexibility if I decide to sell, have to sell/move furnishings
EXPECTED EARNINGS: $1,750/mo – expenses = $500/mo earnings
Pilot Training House
Pilots in training at a nearby major airline do not get accommodations for the duration of on-site training, which is typically 30 days. The idea is that pilots would rent the house together to live in for the duration of training.
PROS: Great location/layout, trustworthy renters, I could check in on it regularly, already furnished and decorated, minimal wear on house, good earnings
CONS: Have to fill monthly (though word of mouth would have been good)
EXPECTED EARNINGS: $2,700/mo – expenses = ~$1000/mo earnings
This was the best fit. It took about two months to find renters, but I filled the whole house (rented by the bed) for the month of March. The renters were awesome and they loved the house. It was a win-win and they definitely would have passed on the house to friends in later training classes so I expected to remain full. Then COVID-19 hit and all training was cancelled. I ended up refunding the pilots half so I lost a couple hundred bucks in the end. I don’t expect this to be a viable option in the future as the aviation industry has been hit very hard.
So that’s the story of all the options we considered and where we ended up. Stay tuned for part two. (Spoiler alert: It’s where I decide to sell my beloved Beatrice.)