Ep 56: “How Much Money Can I Make with an Airbnb?” The Incredible Financial Benefits of Owning a Vacation Rental… Did You Know Monthly Cash Flow Was Just the Beginning?

Have you ever wondered how much revenue you could generate month after month with a vacation rental?

Well, what if I told you the front-end cash flow was just the beginning?

In this episode, I discuss the multiple back-end sources of revenue and wealth-creation. They are powerful and they are readily accessible for individuals just like you!

And if you’re curious about how much you could potentially earn with an Airbnb in your area, I can send you a free and pretty powerful tool to help you estimate…

Visit GinnyTownsend.com/rental to claim access to this powerful free tool!

Thanks for joining me, and until next time, continue to be up and to the right.

EPISODE TRANSCRIPTION

What’s up, Podcast Nation! Ginny Townsend here. Thanks for joining me for another episode and it’s today we’re going to talk about, actually it’s a conversation that I had with a good friend of mine yesterday. She was asking me about the benefits of owning a vacation rental. She asked how much of the top line revenue that came in actually ended up in our pocket. So from top line and bottom line what how much did we actually take home? And I thought that was a great question and as we started talking about it.

I mentioned a couple of other things like well, that’s not the only benefit that that’s just the first that’s just the front end benefit and as we started talking about the other things that I’m going to share with you here in a minute. She was she was kind of blown away. So I thought it would be if it was helpful for her. I wanted to make sure to get it out to anyone who is interested in starting a vacation rental. So, you know all of the benefits.

Front-End Benefit: Airbnb Brings in Monthly Cash-Flow

Okay. So first of all, like I mentioned the first one is the monthly take-home, which is obviously very important if I mean that’s that’s what gets people interested in a vacation rental right the ability to bring in good cash flow month after month and there are many ways to maximize this and I’m happy to talk about it and future episodes but I the point is this is just a front end and yes, it can be life changing in and of itself.

But like I said, it’s only the front end and I remember someone I wish I knew who to credit for this.

But someone a couple of years ago said that those who focus on the front end of revenue or amateurs, which is pretty harsh but it stuck with me and I have since then looked for. Okay, what’s the next money? You know, what’s the backend source of revenue for whatever project were working on.

Additional Benefit #1: Increased Net Worth

And so there are several back-end sources of revenue for owning a vacation rental such as an increase in your net worth and that might I mean obviously that’s a long-term play and there might not be a sexy factor to that. It is I think much more kind of like the bread and butter of building up some Legacy wealth building up your income portfolio having an increased net worth will help with all of that. And so how does it how does this how does owning a vacation rental increase your net worth? We’ll really honestly any any real estate rental.

Oil will do it and it’s because those who are renting from you. So your guests your short-term guests here your vacation guests are paying down your mortgage. So on like a three hundred thousand dollar mortgage and the first like you’re a couple years. I want to say it’s roughly depending on your interest rate about a $500 a month pay down of your principal. So every month when your guests are paying your mortgage, you are having an increase in net worth of $500 a month. So if you add that to a take home, so let’s say maybe your take-home is $2,500 knowing that your increase in net worth is an additional $500. Okay, you’re already at $3,000 a month. That’s not that’s not anything to snub your nose at right? Okay, so I actually I think that that’s one of the most powerful and one of the most overlooked.

Parts of having a vacation rental because as you first of all, okay, I might little tangent if you want to expand into having other properties having an increase net worth will help you to be able to get additional loans for additional properties. I mean, it’s it’s a there’s a virtuous cycle in this so even though it doesn’t have quite a sexy factor. It’s incredibly important.

Additional Benefit #2: Increased Tax Savings

So, okay. So the second additional benefit is increased tax savings and taxes are our biggest expense in life. And I feel like that is probably like a political statement. But I hope that you hear it as me being politically neutral. This is from a business perspective. Yeah, and actually as individuals taxes are our biggest expense in life between federal and state income taxes if your state has income taxes Social Security

Is Medicare taxes property taxes school taxes paying taxes cell phone bill taxes cable bill taxes utility bill taxes gasoline taxes, and those are federal state and local sales taxes and on and on and those are kind of just the ones that roll off the top of my head. We pay a significant amount of all of our money in taxes. So if we and I am not I am not saying don’t pay taxes. That’s not what I’m saying. What I’m saying is don’t pay more than you need to.

In a very ethical and legal way and so I feel like this is obvious but I’m going to say it. I’m not a tax professional and please seek out your own professional guidance as you plan for this but what I can tell you is our story and how this impacted our own taxes. And so I do love keeping records and itemizing and well, here’s what I Love Actually is setting up a simple system so that I really to keep records.

Is just it’s not time consuming. It takes moments a month just to make sure that everything has been recorded and then definitely yeah, we definitely itemized and so we especially with an Airbnb rental have been able to maximize our our tax savings every year and there are other ways. I’m not going to go into it because this is not my area of expertise, but definitely work with

Those whose this is their area of expertise is mean some people choose to have the property in a business’s name. So there are businesses have obviously their own tax advantages or if you plan to have more than one property or okay, I would obviously encourage you to approach this as a multi-year commitment, but you could even start a project or a property management company.

To manage your properties and get the tax savings from owning that business as well. But serving your properties again, this is not advice but this is just there are different ways of looking at saving on your biggest expense in life, which again is taxes. Okay. And again the goal is to just not pay more than we need to because so many people we do. Yeah, many many people pay much more than they need to and thirdly…

Additional Benefit #3: Income Diversification

This is a diversification of income and I obviously I don’t know your sources of income but let’s say there is a W-2 job in your house and maybe an independent contractor. So those are two sources of revenue. So adding a an additional source of Revenue coming from a completely different industry is powerful. I know I’ve mentioned

on previous episodes, but the average millionaire has seven sources of income and thinking of this as a source of income is powerful because if I mean a stool that has three legs is obviously going to be much more sturdy than a stool with to no one would sit on a stool with to right but think about it a stool with seven legs if any of those legs break you have six

Or five or four stool legs to stand on. So I do think diversification is again. It might not be a sexy benefit but it is a lasting it’s a real benefit to your income portfolio into your net worth and to your your ability to leave a legacy and do what you want in life in this world. So I know this is a really short episode but I

I really wanted to get this information out and let you start thinking about it. And if you have any questions or want me to dive in deeper to any of these topics, please reach out to me to DM me on Instagram. My handle is it’s Ginny Townsend. I’ll link to it in my show notes, and I’m let me know let me know if you’d like me to have someone come on and talk about any of these specific things. But these These are what I like the most.

Multiple benefits that I love about having vacation rentals again to recap it’s the monthly take-home. So it is like the cash in your pocket month after month. But again, your guests are helping you to increase your net worth by paying down your mortgages you’re having the ability to save on taxes your biggest expense in life, and then you’re adding another leg to your stool. So to speak by diversification of income sources, so I hope you found this helpful and thanks again for joining me.

And until next time continue to be up.