- Zev Forrest runs 10 Airbnb properties in Southern California with his wife, Melissa.
- They got their start by renting out his mother's home and trying out the experience.
- Here's how they scaled up, as told to writer Robin Madell.
This as-told-to essay is based on a conversation with Zev Forrest, a 30-year-old Airbnb superhost and a cofounder of Host Life in El Segundo, California. Forrest runs several Airbnbs with his wife, Melissa Forrest, 33. Insider has verified their business' 2021 profit and 2022 sales revenue to date with documentation. The following has been edited for length and clarity.
My wife and I run an Airbnb business together. We're superhosts and have taught hundreds of students how to get the same title.
The process has many ups and downs, but we love the business and the opportunities it's created for us. We've figured out how to run a team and handle customer service. And we've learned about not only short-term rentals but also the business side of things, like forming an LLC and bookkeeping.
Our total earnings for 2021, including direct bookings, were about $407,000, and our total profit was about $183,000. We make on average about $35,000 in gross revenue a month and have 10 properties, all in Southern California. We own two of them and sublease eight of them via the rental-arbitrage model, a business model that focuses on leveraging other people's properties through sublease agreements and renting those properties on platforms like Airbnb, Vrbo, or HomeAway. Rental-arbitrage hosts rent properties from the long-term-rental market and resell them on the short-term marketplace.
We were originally interested in the business to make some extra cash on the side
We were both real-estate agents working 7 a.m. to 7 p.m. We attended a free workshop to see how renting worked and started by applying what we learned to my mom's one-bedroom, one-bath property.
My mom had a long-term tenant in an accessory dwelling unit in her home, and we persuaded her to turn it into an Airbnb, as she really needed more income. Once she made the switch, she started collecting at least twice the rent she was collecting from her long-term tenant. She was cleaning the unit as well, so she was able to collect that extra income that renters paid her, too.
After helping my mom manage her property and getting some experience through that, we decided to purchase our first single-family home in April 2018.
We created two Airbnbs out of that first property. We made an attached studio accessory dwelling unit with a private entrance on the side of the home, with the main part of the home serving as the other listing.
It wasn't a complete turnkey property, so we had to invest in some cosmetics to get it ready. This included painting the house on the inside and outside, cleaning up the landscaping, and furnishing it.
After great success with our first listing, we were hungry to get another
Our goal was to scale our business to where at least one of us could quit our day job. But too little time had passed for us to save up enough cash for another down payment, and the bank wasn't going to approve us for another home so soon after purchasing our first.
We knew there had to be another way to make this business work for us. We came across the right mentors, who showed us that buying wasn't the only option.
We secured our second property in November 2019 via rental arbitrage. The home had a separate converted garage studio unit, so we were able to create two Airbnb listings with our second property as well. We found so much success with this model we started looking for more properties to sublease. Melissa was the first one to quit her job, in January 2019, and I quit mine in March 2020.
We slowed expansion in 2020
At the start of 2020, we had four properties. The next property we secured was a two-bedroom apartment in January 2021. In May 2021, we got our next property: a one-bedroom apartment. In August, we secured a three-bedroom single-family home with an ocean view. Our most recently acquired property is a one-bedroom apartment we got in March. We have three more properties in the works to add to our portfolio this summer.
The properties we got were turnkey, so we needed only to furnish the units. We learned over time that the better the design and quality of furniture, the better guests we attract and the more we can charge.
We're taxed on the local level through the city Transient Occupancy Tax — which is 12% per booking in California — and on our LLC, which we started in June 2019, at the federal and state level.
The less obvious expenses are minimal
These include the streaming services we provide to guests and deep cleanings. People think about just cleaning their homes after each guest checks out, but every so often, you need to have the home deep cleaned — at least once a quarter.
We started hiring immediately when we went live with our first listing, so another expense is giving employee bonuses — we have three to four cleaners, two communication managers, two handypeople, and a gardener. You want to make sure your team is well taken care of, as this will trickle down into your brand.
The most challenging thing is the short-term-rental ordinances in each city. This has created a big hurdle in our growth, and we're now looking to expand out of state. We need to navigate carefully and fully understand each city's ordinance before adding properties to our portfolio.
This is also something that's completely out of our control. Even if we have properties in cities that allow short-term rentals, the ordinance can always change.
Like many entrepreneurs, we learned a lot through our mistakes
Our first weakness was a lack of experience: We didn't know which red flags to look for and would accept any reservation that came our way, thinking we couldn't pass up the opportunity to earn money. Imagine a landlord not doing an application process for their properties and letting the first person who comes to tour lease their property. Everyone needs to be vetted for the sake of our business, the community, and our home.
We quickly learned how to vet guests and spot bad actors. Melissa and I sat down and analyzed the patterns that all of our bad guests shared. With this information, we could create a screening framework that allowed us to see when a bad guest was inquiring to stay at our property. Some of the red flags in our screening include guests who haven't had their identity verified on the platform, bad grammar in a guest's request to book, and guests asking for discounts beyond what we've offered.
Your listing description and house rules are basically your contract with your guests. Anything that's not in there can be held against you, so you need to make sure your guests know what type of property it is and what to expect from your service or listing.
We also initially had problems from not having full control of the home remotely. At first, we had keypad locks on the property so that the guests were able to do self-check-in. The problem with our first locks was that we couldn't troubleshoot them from anywhere in the world, and they didn't warn us when the battery was low. We then switched to locks that we could change the code of, lock and unlock, and see the battery percentage remaining from anywhere in the world.
At first, we didn't think of the small details that make the guest's stay more comfortable, such as which items were needed for a fully stocked kitchen and products that would be used in the bathrooms. This extended to not knowing how to set up our inventory. Through experience, we now know how many items to always have on hand and which items are most commonly stained, broken, misplaced, or used up.
When we started, we also would look for cheap used furniture online, but this took longer and wasn't reliable. Plus, if the items had any issues, we couldn't return them and would have to find replacements on the same resale sites. We now buy from retailers so that we know what to expect, have reliability, know a delivery date, and have the option to return it.
We didn't know enough about hiring the right people
At first, we would hire anyone with a pulse, but because we now know what a professional job versus an amateur job looks like once its completed, we know how to interview candidates.
Our previous approach affected the guest experience, whether in the communication or the cleanliness of the home. Now that we have experience, we know how to hire and train the right people who will represent our brand and elevate the guest experience.
Axel Springer, Insider Inc.'s parent company, is an investor in Airbnb.
