How My Airbnb ‘Tiny House’ Hotel Made $860K in Its First Year
- Isaac French built his “tiny hotel” — a short-term-rental listing of seven tiny houses — in 2021.
- The business has brought in $860,000 in bookings since opening in January 2022.
- French shares how he grew direct bookings and the property’s social media to find early success.
This as-told-to essay is based on a conversation with Isaac French, the 25-year-old owner of Live Oak Lake in Waco, Texas. Insider has verified Live Oak Lake’s income, costs, and valuation with documentation. The following has been edited for length and clarity
At 25 years old, I’ve already worn several entrepreneurial hats.
I’ve been an accountant, a bookkeeper, and an artist, and I’ve worked in my family’s construction business since I was young.
Last year, I built and opened a “tiny hotel” — a short-term-rental property made up of seven tiny houses — that made $860,000 in bookings.
I came up with the idea in March 2021, when I was running a cloud-based accounting business in Waco, Texas, where I grew up and now live.
My experience in construction gave me the confidence to pursue it.
To build this ‘tiny house’ hotel, I bought 5 acres of land in Waco
I paid $138,000 in cash for the land, using nearly all my savings. I then got an appraisal for the construction costs of the project and applied for an 80% construction loan to cover the materials and labor.
The bank wasn’t keen on loaning a 24-year-old that kind of money. I partnered with my dad, my two brothers, and my father-in-law, while remaining the majority shareholder. This gave the project more stability and liquidity.
The partnership also meant we could use part of a line of credit from my family’s construction business to get us over the finish line.
It took nine months to complete the build and cost $2.5 million. We opened Live Oak Lake to the public in January 2022. I knew that once we could prove the property’s income potential, it would be appraised at a much higher value and we’d be able to take out a higher mortgage. In mid-2022, four months after opening, the property was valued at $3.1 million.
We were able to do an 80% cash-out refinance on the property and received a $2.48 million loan. We used this to pay off the construction loan and line of credit.
In the first 12 months that Live Oak Lake has been open, we’ve brought in $860,000 in bookings and grown our Instagram to 70,000 followers. We’ve also received 457 five-star ratings.
Here are my tips for running a successful short-term-rental business.
Drawing customers to our website and rental listings was the first challenge, and marketing played a big role. I started growing the Live Oak Lake Instagram presence when we opened, and now we have 70,000 followers. Instagram has also been our main funnel for direct bookings which have higher profit margins for us.
Partnering with travel influencers via giveaways was an extremely effective way to grow our following.
We’ve played around a little bit with paid advertising on Google and Facebook, but our biggest success has been the organic growth from consistently posting high-quality content.
It’s all about creating reels and photos that show off the space. I manage our social-media marketing because it’s something I’m passionate about. We work with freelance videographers and photographers to create the assets.
Take advantage of direct bookings
One reason for our success is that around 60% of our bookings come directly from our Live Oak Lakes website.
We make about 10% more profit through direct bookings because we can avoid booking-site fees. We pass on 5% of this to our guests, which makes it 5% cheaper for them to book through our site. There’s an incentive for them to book via the site, and we make a higher profit.
There are many perks to having direct bookings. There’s no data wall between the guests and the host like there is on booking sites like Airbnb. When guests book directly, we can ask for their email addresses and phone numbers, which means we can market back to them directly. This has a positive impact on return bookings.
Invest in making your vacation rental an ‘experience’ that people will want to return to
We’ve put a lot of effort into the “experience” of staying at Live Oak Lake to make guests’ stays feel special. We want people to feel both lost in nature and part of a village community when staying with us.
We have hammocks, hot tubs, and a pond. We also offer kayaking and paddleboarding.
The cabins are spaced a couple of 100 yards apart from each other, so there’s privacy, but they are linked with string lights so the cabins don’t feel isolated.
The lights reflect on the pond at night, creating a charming vibe.
If you create a product that’s cohesive, intentional, and thoughtful, then your guests will be your greatest mouthpieces.
We’ve consistently heard guests say: “Oh, my goodness, we’re coming back, and we’re going to make our annual family reunion here,” or, “We’re going to bring all of our friends and rent two or three cabins.”
We’ve already hosted corporate retreats and family reunions. Now guests can rent the whole property, so we can host weddings. It’s been cool to be a part of their traditions and hear that feedback.
It creates a very durable brand for us that makes me feel confident about the future.