I have 6 short-term rental properties. People think real estate is passive income, but I disagree.

Gibson spends roughly 50 hours a week running her hospitality business.

This as-told-to essay is based on a transcribed conversation with Kerri Gibson, 48, based in Orford, Quebec, about her short-term rental business, Chalets Hygge. The following has been edited for length and clarity.

I’m a CPA by training and spent roughly two decades working primarily in tax and accounting technology.

It was a high-paced, high-stress career, and in 2017, when I was on the brink of burnout, I decided to resign.

During my time off, my partner and I decided to buy a house in our neighborhood and flip it. We’d previously renovated our home and really enjoyed it, and we talked about doing it again.

While renovating it, we found we had a knack for architecture and design. A friend advised me to keep the house because it was in an area zoned for short-term rentals.

We started renting out the house on Airbnb. We became passionate about buying and renovating properties and turned this investment into a full-time venture for both of us.

As owners and operators of our short-term rental business, we put a lot of work into creating a good experience for our guests. Some people consider getting into real estate as a source of passive income, but I wouldn’t say it’s passive at all.

I transitioned into full-time real estate first. My partner joined me years later.

We closed on our first short-term rental property in December 2017. The price was 129,000 Canadian dollars. We used savings to make a 20% downpayment and secured the rest with a mortgage.

We paid for renovations, which took 11 months, out of pocket, too. It was really torn up, so cost us around CA75,000. This included a contractor who taught me a lot about things like laying tile and grouting. My partner, Philippe, also helped on evenings and weekends when he wasn’t working.

I was so burned out from my old job. I found working with my hands on the house very fulfilling.

In June 2018, we bought a second house for short-term rental opportunities while renovating the first one. I was nervous, but Philippe convinced me, saying the price was good and it was low-risk because we could always resell it. It was in much better shape than the first one, so it was ready for renting in two months.

It cost around CA188,000. We used savings to make a 20% down payment and mortgaged the rest. We did the renovations ourselves and paid for the furniture out of pocket.

Philippe and I decided I’d pursue the real estate full-time, and we’d live off his income until he joined me.

Philippe left his job and joined Gibson full-time at the business in 2020. 

Philippe took a job in Vancouver, so we moved away in May 2018. We also turned the property we were living in into a short-term rental. By March 2019, we had three rental properties generating income, but we were investing all the money coming back into renovations.

That March, we bought a third property for CA129,500 with a 20% downpayment and mortgage. It took nine months to renovate, and I worked with a contractor because it needed a lot of work.

We moved back to Quebec in August 2019 and bought another condo in Montreal. We funded the downpayment through an equity release in the form of a mortgage on our personal home turned short-term rental.

In October 2019, we bought another house. It was CA220,000 with a 20% downpayment, which we financed using income from the other rental properties and personal savings.

Then, in July 2020, we purchased a neighboring property. However, because our bank had a limit on the number of short-term rental properties you could take out personal loans for, we borrowed money from family to pay the full price of CA277,000 for it.

We paid them back after selling our condo in Montreal and still have mortgages on five out of six short-term rentals. We now live in another house we bought and renovated in Orford.

We’ve been trying to rely less on third-party booking platforms like Airbnb

We lived on Philippe’s salary until 2020. For the first couple of years renting out properties, we ran at a loss due to the cost of getting started and reinvesting money back into buying properties.

Upfront expenses of investment properties are significant. But the time it takes to be cash flowing is shrinking now we have formula that helps us execute faster.

I was able to build income and wealth for our future, while Philippe’s salary more than covered our daily expenses. He left his job in the legal software space in February 2020, and his severance package covered our living expenses for a while.

When the COVID-19 pandemic hit, it disrupted our business, and we had to flip all our properties into monthly rentals to comply with government regulations. After COVID, the market exploded because everyone wanted to get away.

Guests loved us and were referring their friends, and we were featured in some media outlets.

At that point, I realized that if we could keep occupancy up, we could live off of our six properties.

I focused on our direct booking strategy. Third-party online travel agencies like Airbnb and Expedia hold too many cards — they decide whether you’re on page one or page 25 of their website and how to handle complaints. I worked hard to build our social media presence and website.

I pay for a property management software called Lodgify, which allows me to see every reservation across the different OTAs and our website and what days are open on our calendar.

In 2019, I’d say all of our bookings were coming from OTAs like Airbnb, but in 2023, my calculations suggest that out of the CA340,000 we made in revenue, roughly 70% came from direct bookings.

Having a hospitality business is a full-time job, not a ‘passive’ income stream.

Real estate has historically been thought of as passive income, running short-term rentals is not passive.

Providing the necessary level of hospitality is more of a full-time job. We’re owner-operators who put a lot of work into the guest experience.

We’re available seven days a week. I work 50 hours a week doing marketing, bookkeeping, and maintenance. We also have an operations manager who handles day-to-day cleaning and inventory. Depending on the season, there’ll also be two to three part-time cleaners.

We love what we do and find it so fulfilling, so the good far outweighs the stress.

The hospitality industry is flexible, and I do think there are ways people can do this in addition to another job, but I worry about the quality of service provided.

You hear horror stories about people arriving at properties that aren’t clean or where things are broken, and it has a negative impact on the industry.

Side-hustling with short-term rentals needs to be done in a way that honors the industry.

Even those who say they work four hours a day from a beach on their real estate business will have had to put a lot of work into their support and team structure to be successful.