Kelly Gibson quit her tech job in 2017 and began her real estate investing journey. Together with her partner Philip, she currently owns six short-term rental properties. For Gibson, running a hospitality business is hard work, not a “passive” side hustle.
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This essay is a transcription of a conversation I had with Kelly Gibson, 48, based in Orford, Quebec, about our short-term rental business, Chalet Hygge. It is. The following has been edited for length and clarity.
I am a certified public accountant by training and have worked primarily in the tax and accounting technology field for nearly 20 years.
It was a fast-paced and stressful career, so I decided to quit in 2017 when I was close to burnout.
While on vacation, my partner and I decided to buy and renovate a house in our neighborhood. I renovated my house before and loved it so much that I wanted to renovate it again.
During the renovation, we realized that we have a talent for architecture and design. A friend advised me to keep the house because it was in a short-term rental zone.
I started renting out my house on Airbnb. We developed a passion for buying and renovating real estate and turned this investment into a full-time business for both of us.
As owners and operators of short-term rental businesses, we have gone to great lengths to provide a positive experience for our customers. Some people think of real estate as a passive income source, but I don’t think it’s passive at all.
I first moved into real estate full time. My partner joined me a few years later.
We signed our first short-term rental property in December 2017. The price was CAD 129,000. I used my savings to make a 20% down payment and secured the rest with a mortgage.
I paid for the renovations, which took 11 months, out of my own pocket. It cost about 75,000 Canadian dollars because it was in pretty bad shape. That included a contractor who taught me a lot about things like tile laying and grouting. My partner Philip also helped out on nights and weekends when he wasn’t working.
I was very burnt out at my old job. It was very rewarding to work around the house with my hands.
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In June 2018, we purchased a second home for a short-term rental opportunity while renovating our first home. I was worried, but Philip convinced me that the price was low and I could resell it at any time, so the risk was low. It was in much better condition than the first one, so it was ready for rental in two months.
The cost was approximately CA188,000. We used our savings to make a 20% down payment and mortgaged the rest. We did the renovations ourselves and paid for the furniture out of pocket.
Philip and I decided to pursue real estate full time and live on his income until he joined me.
Philip quit his job in 2020 and joined the Gibson business full time. Votre Histoire.co
We moved in May 2018 because Philip got a job in Vancouver. I also converted the property I was living in to a short-term rental. By March 2019, we had three income-producing rental properties, but we invested all the money we got back into renovations.
That March, I bought my third property for CAD $129,500 with a 20% down payment and a mortgage. The renovation took nine months and involved a lot of labor, so we worked with a contractor.
We returned to Quebec in August 2019 and purchased another condo in Montreal. We raised the down payment through equity release in the form of a mortgage on a personal home that became a short-term rental.
I bought another house in October 2019. The down payment was C$220,000 at 20%, financed with income from other rental properties and personal savings.
Then, in July 2020, we purchased a nearby property. However, our bank had a limit on the number of short-term rental properties available for personal loans, so I borrowed money from my family to pay the full amount of CA277,000.
I paid it off after selling my condo in Montreal, but I still have mortgages on five of my six short-term rentals. We now live in another house in Orford that we purchased and renovated.
We’ve tried to rely less on third-party booking platforms like Airbnb.
We lived on Philip’s salary until 2020. During the first few years of renting the property, we lost money as we reinvested the money into start-up costs and property purchases.
The initial cost of investment property is high. But cashflow now takes less time and we have established formulas that help us execute faster.
While I was able to build income and wealth for the future, Philip’s salary more than covered our daily expenses. He quit his job in the legal software industry in February 2020, and his retirement funds covered our living expenses for a while.
When the COVID-19 pandemic hit, our business was disrupted and we had to convert all of our properties to monthly rentals to comply with government regulations. Post-corona, the market exploded because everyone wanted to escape.
Our guests loved us and referred their friends, and we were even featured in several media outlets.
At that point, I realized that if I could maintain my occupancy rate, I could live in six properties.
I focused on direct booking strategies. Third-party online travel agencies like Airbnb and Expedia hold too many cards. Whether it’s on page 1 or page 25 of the website, the company decides how complaints will be handled. I worked hard to build my social media presence and website.
I pay for a property management software called Lodgify. With it, you can see all your reservations across various OTAs and websites, as well as available days on your calendar.
In 2019, I think all bookings came from OTAs like Airbnb, but in 2023, according to my calculations, of the CA 340,000 in revenue, about 70% came from direct bookings.
Hospitality is a full-time job, not a “passive” source of income.
Real estate has historically been considered passive income, and short-term rental operations are anything but passive.
Providing the required level of hospitality is more of a full-time job. We are owner-operators and put a lot of effort into the guest experience.
We are available all year round. I work 50 hours a week in marketing, bookkeeping, and maintenance. There is also an operations manager who is responsible for daily cleaning and inventory management. Depending on the season, there are about 2 to 3 part-time cleaners.
We love what we do and feel very fulfilled, so the good far outweighs the stress.
The hospitality industry is flexible and I think there are ways to do this job in addition to another job, but I’m concerned about the quality of service provided.
You hear horror stories about people coming to properties that aren’t clean or things are broken, and that’s bad for the industry.
Side hustles through short-term rentals must be done in a way that respects the industry.
Even if you’re working 4 hours a day from the beach in your real estate business, you’ve probably had to put in a lot of effort into support and team building to be successful.
Do you have a real estate story you’d like to share with Business Insider? Email ccheong@businessinsider.com
