Why it is ESSENTIAL that you track the profitability of each Airbnb property (even if you file a schedule c)

Did you know that there are benefits to tracking the profitability of each of your rental properties outside taxes?

Let’s imagine a world where five of your rentals generate a total of $50,000 of net income (revenue - expenses). What if I told you that you lost money this year?

Well, that would be a ridiculous statement and you would ask me to clarify. I would agree and oblige. One of your five rental properties lost money this year.

Although you made a total of $50,000, let’s see check the net income for each property.

Property 1 made: $20,000

Property 2 made: $9,000

Property 3 made: $17,000

Property 4 LOST: $2,000

Property 5 made: $6,000

Although you made $50,000, you didn’t realize that you actually lost $2,000 on property 4. Your total net income didn’t give you enough information to identify this issue.

Now that you know this information, there are many questions that need to be answered.

Why did properties 1 & 3 make so much money compared to the other properties? Is it because those are the two rentals that are downtown? Is it because the property offers different amenities?

Why did Property 2 lose money? Is this a temporary problem? Are my nightly rates too low? Should I sell this property and buy another property near 1 & 3?

When you only track your total net income, you could be hiding a money pit that is holding you back. Since you should be tracking the overall profitability of your business, you should at least keep a finger on the pulse of each property in your portfolio. If it is starting to get lost in the shuffle, maybe you should hire a bookkeeper to help you maintain the books for each property, so then you have the information you need to make sound business decisions.