Building a Guesthouse: My Income Nest in the Guatemalan Sun
In 2012, I bought my first house in northern Guatemala. It was a run-down, 500-square-foot, one bedroom house. But it was situated on the shores of a beautiful lake, and my dream was to turn it into a little guesthouse. After a decade of traveling, I wanted a place to settle down.
The place needed a complete makeover. There was no electricity; the bathroom consisted of a pit toilet outside; and when it was time to shower, you jumped in the lake. Things needed to change.
I assembled a team of local workers to help transform the place. The kitchen was modernized, and part of the rotting thatch roof was removed and replaced by transparent roofing to let the sun in.
Now the thatched house featured two simple bedrooms that shared a bathroom. I rented it a few times to families with kids while I was away, but it was obviously too small to call it a guesthouse. So I proceeded to build another unit. New buildings are easier in that you can design them exactly the way you like. My construction project kept going till it was very functional for up to three families, and it looked quite nice, thank you very much! It cost me a pretty penny, too.
After adding a whole bunch of amenities, the $50,000 price tag now stood at $130,000 at the end of the construction process.
But I had ideas on how to make it pay. I knew what tourists wanted: a comfy bed with good cotton sheets, fluffy towels in the bathroom, and sharp knives and non-stick pans in the kitchen. And Wi-Fi. We don’t have a landline in the jungle, but I found a way to get an internet connection through a 3G USB dongle. Clean rooms, no insects – at least, not larger than cockroaches and scorpions. (Kidding, of course!) And because I am remote, getting groceries is hard. So while my rooms are expensive, I charge very reasonable rates for meals, so you don’t feel like I took advantage of your isolation.
Clean rooms, no insects – at least, not larger than cockroaches and scorpions. (Kidding, of course!) And because I am remote, getting groceries is hard. So while my rooms are expensive, I charge very reasonable rates for meals, so you don’t feel like I took advantage of your isolation.
My nicer rooms are $60 to $80 a night, depending on the season. The basic rooms are $35 to $40 a night (for a minimum three nights), and you can rent the whole house for up to eight people for $150 to $200 a night. You can find basic $15 to $30 rooms nearby, but you don’t get your own private beach in a pristine location, or the kind of privacy that my place affords.
On a $35 night, my housekeeper charges $8 to get the place ready and $8 to clean up afterwards. Another $7 in utilities, soap, internet, cooking gas… and I only have $12 in my pocket. For $12, I open my house, risk having you break something, and spend at least one hour of my time emailing you back and forth.
I’m not even making minimum wage, let alone making rent for my place.
Hence the three nights minimum, and the higher price for the better rooms.
At the moment, my $130,000 house generates around $1,500 a month. But my income is very variable. I can make $3,000 around Christmas and Easter, and have $500 months during the rainy season. Good thing I don’t owe the bank anything. My only fixed cost is a gardener-handyman who takes care of the guesthouse, my own house, and one other piece of land that I own. So one-third of his salary is for the guesthouse. Meanwhile, the housekeeper only comes when there are guests.
While a 10 percent or higher return is pretty good for real estate, once you consider the time I spend on the guesthouse as a property manager, and the higher rate of wear and tear compared to long-term rentals, it’s not so juicy. But it’s still a great way to offset my living costs.
The guesthouse amply covers my utilities, food, and staff when I am around.
So far, it’s been smooth going. I use Airbnb, which charges the guests, keeps the money until they check in, and then pays you. They have insurance in case guests break something, and they are pretty responsive to customer issues. Running the guest house is a fun hobby that happens to be lucrative. Airbnb makes things very easy when you get started, unlike other formal sites such as Booking or Expedia.
While the additional income is awesome, I must say that I didn’t build my guesthouse just to turn it into an Airbnb accommodation. It was my dream to have a guesthouse, and I made it a reality. For the most part, I invested all that money in order to live well myself… with an eye on long-term property appreciation.