I bought my first rental property in 2014. A single-family residence in a small metro area. I put 20% down and was netting around $300/month in cash flow. Everything was great. I had wonderful tenants who paid on time. A loving husband. And we just started our small family with a newborn baby boy.
Our goal was to get to 10 single-family units. We estimated this would net us $3,000 in cash flow per month. Enough money to both work part time and have a lot of time with our family. My husband and I both worked good jobs and estimated it would take us 5 years to get to 10 units – each with 20% down. We had everything modeled out in excel. We would be financially independent by the time we were 35. The ability to retire early. The dream life. Then I found out about Airbnb.
Airbnb seemed like a dream come true. Instead of buying a dinky single-family residence that produces reliable cash flow every month, we could buy a luxury residence with the ability to cash flow several thousand dollars per month. At first, I was skeptical. There was no way a unit could produce $5,000 per month doing short-term rentals. But then I fell for it. I bought my first rental in Miami, Florida. A condo right on the beach.
In the first month of renting my condo in Miami I netted $3,000 in cash flow. I remember checking my bank account when that check hit it. We were there. $3,000/month for one unit. I felt so rich. I could quit my job and just run this small unit. But I got greedy. All I saw were dollar signs and I wanted more.
From 2015-2018 I ended up buying 10 more Airbnb rentals. Around three new rentals a year. I was netting around $30,000 in cash flows per month. With the money we were making we ended up buying a huge house in a really expensive part of town. My husband and I both got brand news leases for BMWs. We joined a country club and sent my toddler to a private school. It was the high life. We had all of the toys money could buy. But we needed more money. Lifestyle creep entered out lives. Despite making $30,000 per month, it seemed like we were living paycheck to paycheck. Then I found out about Airbnb arbitrage.
Instead of buying actual rental units, we figured out we could rent apartments/houses and then sublet them on Airbnb. This would effectively allow us to forgo the hefty 20% down payment and we could expand rapidly. It seemed riskless to us at the time. As long as we can keep the units full, we could make a tremendous amount of cash flow. From 2018-2019 we went from 10 units to 4,000.
By the end of 2019 we were netting over $10 million per month. Sure, our liabilities to hold these rental units were around $6 million per month, but we were killing it. As long as we could keep these rentals filled, we were looking to become extremely wealthy. Then 2020 happened.
I haven’t slept in a week. I’m on the verge of a nervous breakdown. Every dollar I have ever made is gone. The bills keep stacking up. Thousands of landlords have called me asking for rent. I don’t know what to do. Everything was golden when we only had 10 single-family rental units. But then we had to get greedy. I’m so overlevered. Everything spun out of control so fast. I owe $12 million dollars and if things don’t open up in a month it will be up to $18 million dollars. WHAT DO I DO?
If anyone is reading this please help. Should I fake my own death? Should I run away to Mexico? I have no idea what I should do. Please help me.
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