Taking the plunge on buying a house in New Albany, Indiana, to operate as a short-term rental (AirBnB) is both exciting and scary. We’re excited for a step toward financial freedom and independence. In the long run, wise real estate investing can make it possible to retire with more freedom when the time comes. Still, any investment carries some risk, and we’ve heard plenty of painful stories from investment property owners and short-term rental operators. We have some great guides helping us follow processes that will help minimize the risks and maximize returns, and we hope that hearing a little about our journey will encourage you on your journey.
We got started in earnest after a dinner with some friends of ours who successfully purchased four properties in the last couple of years and are profitably operating all of them as short-term rentals, and three of them were in other states. When they told us they were making 20% or more return on the cash they had invested, I almost didn’t believe them, but they are grounded, genuine people, so we took them seriously. They also shared how some amazing tax breaks were created in the Tax Cuts and Jobs Act that helped them a lot and that we could take advantage of too. We paid more money than we would have liked to the government in the last few years. Since those bonus benefits are scheduled to be gradually phased out over the next few years, we had extra motivation to give it a shot now rather than continuing to wait.
Over the next several months, we spent many hours preparing, researching, and learning before making an offer and getting it accepted. We hired our friends to coach us on how to analyze properties for short-term rental investment potential. They also helped us understand how to operate them in other states. Hannah looked at dozens of markets around the country and lots of properties in each one and eventually found this one.
Here’s how the deal came together. We knew there was strong demand in this area. Our friends operate a short-term rental in Louisville, Kentucky, which is just across the river from New Albany, Indiana. According to AirDNA data, 5-bedroom homes generate the most revenue in the New Albany market, and this one is located in walking distance from the beautiful, historic downtown area,. We put 10% down on a $399,900 purchase price, got the seller to cover closing costs, and it will probably cost about $50,000 to set up the interior design and amenities to make it really attractive to guests. We had about $40,000 we could pull from our savings and the rest from a home-equity line of credit on our primary residence.
If you’d like to hear more details about our journey or explore what’s possible for you, I’d love to talk with you. You can call or text me anytime at 909-576-0695, or you can use this link to schedule a call at a time when I’m available that also works for you.
