Airbnb Investing – Turn Key Vs Furnish & List Vs Renovate & List

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What's up guys, it's James here and in today's video, we're going to be breaking down comparing and contrasting the three different property types that you can invest in when it comes to short term rental, namely a turnkey property, a furnish and list property, or a fixer upper property. So I'm going to break down dissect what each one of those is how they differ, so that you can hopefully determine which one is best suited to your investing goals. Now, before we jump into that, I just want to remind you, there's a link in the description down below to our free training that myself and my business partner Riley put together to help you learn how to invest successfully in short term rental properties. So in this training, I'm going to share with you our three kind of core foundational pillars to success investing in short term rental properties. My background is as the author of Arey for Dummies, having worked with Rich Dad, Poor Dad, their group helping to teach them about investing in short term rental properties and all about the ins and outs of short term rental properties. I've got a background in managing short term rental properties. And I've been in this space for over six years now and been coaching and training over 600 people. So I know a lot when it comes to short term rental properties, I've got quite a lot of experience. So you can benefit from that by checking out the link in the description down below to totally free training that's gonna walk you through all that, we're also going to give you a free projection analysis tool that you can use to analyze deals for short term rentals. So I highly recommend you check that out. Now, let's dive right into it. And let's start talking about the differences and sort of the pros and cons of the three different types of properties. Let's start off though, by identifying what they exactly are. So a turnkey property is going to be a property that as the name suggests, all you need to do is turn the key and it's ready to go. So this is generally going to be a property that is already operational as a short term rental property, meaning it is fully furnished, it's already got the listing set up, it's already operational and ready to go. So it's very, very easy to get it up and running goods already up and running. A furnish enlist property is going to be a property that is nicely renovated doesn't need anything more than maybe a little bit of minor cosmetic work, and then furnishing and decorating the property listing on Airbnb. So it requires more work, because obviously, choosing your furniture and amenities and decoration for a property is a bit more work. But there's no map major renovation work to be done. Whereas a fixer upper property is then going to be the highest amount of work invested and time invested into getting it up and running. Because that's going to be a property that needs relatively substantial renovation. And this can range from just updating some bathrooms and a kitchen to maybe changing some wall colors. Do you know doing a full on gut and renovation job the kind of the limit to this, it goes quite far. So you can put a lot of work in those renovations, but that's going to be a fixer upper property that requires those renovations, and then of course, furnishing, decorating and listing the property as a short term rental. Alright, so obviously, with any one of these three different property types, you're still going to need to fully understand how to operate a short term rental and do so profitably. And you still need to make sure that you have to know how to be able to analyze a property and find the right one. So there's still quite a bit of experience and knowledge that you need in order to operate one of these successfully. But there is obviously more knowledge and expertise required, the further along the path that you go. So if you have a turnkey property, assuming that it is set up properly, then you obviously require less knowledge, less understanding of short term rentals in order to get it up and running. Because you don't have to figure out how to best renovate it, what amenities to add, how to furnish it, how to decorate it, how to create the listing, so all that stuff is sort of taken care of for you. Now, that being said, if it's if the property isn't optimized properly, then you would still benefit greatly from knowing that sort of stuff so that you can make improvements to the property. Now the furnish and less property it is again, more simple, because you just need to know how to furnish and decorate the property, which is again, another bit of a learning curve, but you definitely require the most experience and the most knowledge when you're doing a fixer upper property, especially when you're actually buying the property that is a fixer upper. Generally this is gonna be a property that hasn't been super well maintained over the years. And so the range of this is obviously pretty vast, you could end up with a property that has been well maintained but just hasn't been updated. Or you could go into a property that really has substantial renovations and hasn't been well maintained. Either way, you really need to be knowledgeable about how to inspect a properly, a property properly how to read a home inspection report, make sure that you do all the proper digging to make sure you're not going to run into unexpected costs. Now with any renovation, you're likely to run into some unexpected costs.
So you do want to build a contingency in there and then obviously you're just going to have more experience that will be required if you're doing a renovation because you need to know how to hire and train contractors or make sure they're doing a good job just manage them properly. So experience wise, you need the least for a turnkey property and the most for a renovation project a fixer upper. Now for the amount of time being invested obviously the same I think happens, the same concept applies where the least amount of time is going to be invested into operating and managing and launching a turnkey property versus a fixer upper property is gonna obviously be on the other end of the time spectrum with a furnishing list being right in between. Now, the advantage to buying cars so far really just talked about it takes more expertise, more knowledge and more time to do a fair a fixer upper property. So why would you do it? Well, let's talk a little bit about those advantages. So the advantage to a fixer upper property is that you're generally going to get a much better deal, typically, you're not going to get a really great value for a short term rental property that is already up and running an operation on is turnkey, you can still get really good returns on your investment, you're just not going to be getting a killer deal. Because it's a pretty desirable property to buy. Most people who are investing in short term rentals will be eager to grab a short term rental that is already up and running and generating profit. So there's a lot more competition in that space, as opposed to a furnish and less property where you can get a quite a good deal on the property. Because other people might not be looking at it for its potential as a short term rental. So people don't realize there's potential there's a short term rental, you can get a good deal. And obviously, the best possible deal would be the least the least desirable, or at least competitive property, which would be a fixer upper. Simply put, there's just not a lot of people out there relative to the number of people that are looking to for a turnkey property who are looking to actually go and take on a renovation project. So because of that you have less competition, you're more likely to get a better deal on the property better value. And so the other big benefit is that you're going to actually be able to force appreciation through only the fixer upper property, you're not really going to be able to force any appreciation any increase in value in the property by just furnishing it. And obviously a turnkey property, you can't do that either, you can't actually increase the value of it, force any appreciation. Whereas with a fixer upper property, you can put money into strategic renovations that the market deems desirable, and then force the appreciation of the property. That means that number one, you're going to be earning some additional returns on that property by going through and doing the renovation, so your time is rewarded. But it also means that you can oftentimes do a cash out refinance and pull a lot of your equity out of that deal, so that you then don't have any cash in the deal, and you're going and then deploying that cash into the next property. So growing your portfolio without needing to constantly be taking money out of your income to save up for that downpayment. renovation costs is a lot more feasible with fixer upper property. So from a scalability perspective, it does work out a lot nicer. Now, the other big benefit is it because you're generally getting a better deal on the property. And after the renovation, you're kind of getting a more expensive property than what you actually end up paying for it, you're generally going to have better returns on your investment. That being said, it can be more cash intensive to buy a property and then renovate it. So depending on your refinance structure, depending on how much cash you end up having in the deal, that can impact your cash on cash return. But generally speaking, a property that you are doing a fixer upper project on, you're gonna get a little bit higher returns on that. And you're certainly going to make more money overall, not as a percentage necessarily, though, that is oftentimes the case. But in a gross amount, absolutely. As long as you play your cards right and buy the right property in either one scenario. So to me, what it really comes down to is that to buy a fixer upper property is just more time and more expertise needed. But you obviously get rewarded for that time and expertise in return from your investment, whereas you're going to be a lot more hands off with a turnkey property. Now that being said, you can also set up systems, it just takes again, more time to do this, to have the renovations taken care of to
have people in place to do that. And so if you are looking to scale really rapidly and scale to a larger portfolio, then definitely a combination of these and not ruling any one category out is really advantageous. If you are just looking to passively invest your money and you want to be as hands off as possible, you're not so much focused on growth, then ultimately turnkey can be a really good option. And I would also really strongly consider a furnish and list property because you can get a better deal on a property like that. And then you cannot turn key and a lot of situations. So hopefully this video was helpful in helping you determine which type of property is going to be best for you when you start investing in short term rental properties. If you want to learn more about the exact step by step process for how to invest successfully in short term rental properties, generate massive cash flow and build long term wealth. And I highly recommend you check out the link in the description down below to check out that free training. Again, that training is totally free. So our gift to you. So you can check that out just register sign up you'll be able to access it immediately. And then you'll also get access to our analyzing spreadsheet so you can actually analyze properties and see which ones in your area or whatever you want to invest in are the best deals out there, pay a great property and make a great investment. I hope this video has been valuable to you it has been then make sure you hit the like button. Make sure you also subscribe to stay up to date with the two new videos we post every single week. And I hope you have a great rest of your day. I'll see you next video.