Dear, wise Mustachians:
About 18 months ago, in a time of financial desperation, my husband and I renovated and started renting out a tiny, basement "suite" in our home on AirBNB. I posted our listing on a June evening before going to bed, and woke up to an email inbox FULL of reservation requests. I literally screamed, it was so shocking.
The little business has been successful ever since. We enjoy pretty much 100% occupancy all year round (even the frigid winter months), have gotten almost 100 reviews (all positive), and are now one of the most successful AirBNBs in Chicago. This is all while holding down full time jobs. In a way, I feel like I've found a calling: I'm good at hosting people, making them feel comfortable and welcome. I've also enjoyed the logistics and reservation management aspects of the business too.
Our dream is to start a hostel or guest house here in Chicago (I'm researching the zoning/regulation issues now). I know there is a need for it, and I know we could run it effectively. Here's my question: how to I efficiently turn the earnings from our AirBNB (about 20K per year) into the capital we would need for a larger venture? Is there a way to guard the $ from annual taxation as we save it? Should I just be dumping it into a taxable account at Vanguard until we have enough to purchase/renovate another property?
Thank you so, so much for any thoughts you can offer.
Edited with some very rough info about projected capital needs for expansion:
I expect a new building would be in the 400K range, and that we would need to put 25% down. I would also love to amass around 100K for renovation and furnishing. So, "back of the napkin" calculation, we'd need 200K to get a good start. If we can save 20K per year with our current AirBNB earnings, and then match that with 20K of savings from other sources, it would take 5 years.