Why Airbnb Management is STILL a Great Business Model in 2020

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What's up everyone? Its James here and in today's video, I want to talk to you about why I believe that Airbnb management is still a really, really great business model, even in 2020, even with all the craziness going on right now.

So I know a lot of you're probably thinking, James, you are absolutely insane for saying that tourism as an all time low. How could Airbnb management, possibly be still a strong business model to start up in today's climate in today's environment, everything that's going on in the world right now.

And I want to start off by saying like in this video, what I'm going to address is number one, why I feel that Airbnb management is still a good opportunity, why I think that it's actually a really great business model for starting up right now in light of everything that's going on and why it's one of the most resilient and you know, sort of disaster proof business models out there that you could possibly imagine.

The other thing I want to talk about is why if you're going to start a business right now, Airbnb management is probably one of the strongest contenders in my opinion for business to start writing.

Now and then I also want to share with you my predictions my thoughts on where the industry overall where Airbnb, short term rentals, every management, all that where it's headed in six months, 12 months, 18 months once we recover out of everything that's going on right now.

So to start off with, why do I feel that Airbnb management is such a great opportunity right now? And why is it so disaster proof in my opinion? Well, one thing is that when you look at the Airbnb management business model, and you look at, you know, what's going on in the world right now, we've got just imagine having a business model where the entire industry that you're in is that it historical all time low.

Imagine being in a business, you know, tourism industry, it's reliant on travel, and travel is at literal zero. Like imagine that the borders are shut down, like the world that we're living in right now. And you're in a tourism ministry business and you're not losing money.

Sure, you're losing potential revenue, but because you have such a low overhead costs, and a low startup costs to begin with, you're still not actually losing money. In most cases, if you're running your business properly, if you're lean, obviously, you can let things let expenses get out of hand and you can run your business irresponsibly, and you can still lose money.

But for most people doing Airbnb management, and I'm not talking about rental arbitrage, I'm not talking about renting a property and flipping it onto Airbnb. That's a business model that I've talked about in other videos that I think is a risky business model to say the least. But if we're talking Airbnb management, you're earning a percentage of the overall revenue on the property.

So the whole business model is designed in such a way that you can't lose money, you can't ever have negative revenue, you can have losses, you can only have zero revenue. And so the only way that you would ever have losses is if your overhead expenses were excessively high, and then your revenue were zero, and right now your revenue is zero.

Now, compare this to just another common business model, if you think about not a common one for most people just starting to starting up businesses, but a common business model that we're all familiar with the model of a gym. A gym is another business that has a that has currently got revenues that are flatline, there's zero in most cases a gym has zero revenue, similar to Airbnb and Airbnb managers.

Now the difference is then every manager maybe has a couple hundred dollars worth of overhead, right? You've got a lower software expense, really, that's about it. Like you don't have a lot of overhead because you're go for this doing the maintenance taking care of any of that they're not working.

So they're not being paid. They're just, you know, not getting contract work. They're typically not set up as a full time employee on the business anyway, or even a part time one. They're just getting work whenever it's needed. If it's not needed, they're not doing the work.

And then you've got your cleaning companies that you're working with or your cleaning staff and they're not getting any work right now. So they're not getting compensated so you're not losing any money on that. And then the only other overhead you really have is your guests communication, which you can obviously not you don't need guest communication going on right now because there aren't bookings coming in.

And then you've got your software expenses, which typically are going to range they're going to be variable and with your business so depending on the scale of your business, you might have a maximum of about $1,000 a month in overhead there.

Now that would be on a business that's generating on a, you know, an average environment about $10,000 a month when everything is going well, we've got about $1,000 a month in overhead that you're carrying through the recession through you know, this difficult time right now.

And largely you can also scale that back given that it's not really needed right now with everything going on. So you can cut that down to only a couple hundred dollars a month.

Now a gym if you imagine a gym that's you know, a sort of a similar level, they've got their they've got their startup costs that they had to just get the gym start up that's going to be tens of thousands of dollars PLUS loans if they're not if they didn't put a couple hundred thousand dollars into it to begin with.

And they've got loans on their property on their equipment and so they're paying back those loans, which is easily going to be a couple hundred or a couple thousand dollars a month just to keep those keep those loans paid off.

And then they've got any other costs associated with their business. They've got their bookkeeping their you know they've got their their admin expenses, they've got their software expenses on top of all that, to, you know, very drastically different businesses.

They both have zero revenue right now. Yes. But one is just, you know, that's going to create financial ruin for the business owner, whereas Another one is going to be very little sweat. Yes, it's not great. I'm not saying that, you know, Airbnb managers right now are just raking in the dough.

But they're certainly a lot better off than a lot of other businesses and business owners that are being hit just as hard by everything that's going on right now. Now, why do I think that if you're going into business right now, you ought to really seriously consider starting up an Airbnb management business?

Well, that's pretty simple. And there are very few businesses that you can start out that are going to be able to generate recurring monthly income without a whole bunch of overhead expense. And without a whole bunch of startup expense.

Show me a bunch of other businesses that you can start up where you can generate recurring monthly income, and you're not going to have a bunch of startup expense. You're not going to have to put out any money to get the business started.

And you're going to you're not going to have a whole bunch of overhead expenses like a gym would anything like that, you know, it's a really great business model because you can get clients right now.

And you can have them long term and I've talked about in other videos how to actually get clients right now with all the craziness with everything that's going on right now. And I firmly believe that you cannot have seen for my own clients that I work with that you can actually still pick up properties right now.

And the cool thing about the opportunity right now is that everyone's sleeping. Everyone right now is scared to act is scared to get into this. No one sees it at face value. And when you first think about things, okay, well Airbnb because that's where I want to go. That's wrong. Are you putting my time and RG is into a tourism business right now.

And so when other people are fearful, as Warren Buffett says, that's the time to get greedy. That's the time to go in there. People have never been and never will be more fearful of getting into tourism right now getting into Airbnb management.

So there's a huge opportunity because there's this huge, wide open ocean there's still a whole bunch of opportunity to be hot, but there's only a couple people fishing there, there's only a couple people that are actually taking action going out and leveraging and taking advantage of those opportunities, they're there.

So your competition is going to be virtually nothing. And your startup cost is going to be next to nothing. So you don't have to put a bunch of money at risk when, right now you might be in a situation where you want to hold on to your cash, you want to, you know, save your money, and you're not going to have a whole bunch of monthly overhead.

Right? Getting yourself into that opportunity is obviously a really interesting, really opportunistic thing to start looking into. So that's why in my opinion, is actually a really, really good contender for events to start up, given everything that's going on right now. Now, that's only sort of the tip of the iceberg.

Because the other reason that I think that and that I've seen that is because of what my predictions are about where things are going to go over the next 612 18 months as we kind of roll out of everything that's going on right now, all this craziness. You know, what I see happening is that there is going to be a pretty big upswing more than likely

Now obviously, I can't predict the future but more than likely, there is going to be a big upswing again, in tourism, people are going to want to travel again and beyond that people are going to need to travel you know, you don't you don't want to forget that there's a ton of tourism a ton of travel that happens as a result of business, right?

Like there are there are companies sending employees all over the world for all kinds of different reasons. Large that's been halted, there is going to be a backlog of need for people to go and travel for business.

And I think there also is going to be a pretty big backlog of desire for people to travel after they get out of quarantine. You're locking human beings up in cages in their homes for months on end, naturally, people are going to want to go out and explore travel.

You know, I myself even just right now I want a vacation, but it doesn't really make sense for me to take a vacation right now take holiday time and break up, you know, my month, when what am I going to do? I'm going to sit at home.

And so there's going to be a bunch of people I would imagine once quarantine ends that are going to start taking those vacation days and are going to start actually going back out and traveling.

Now with that being said those people are still not going to be very excited about going and staying in a hotel where there's hundreds of other people who are from all over the world. You know, God knows what what they've been doing, you know what kind of screening is happening with them all that stuff, right?

There's still going to be in my opinion, I think there will be an aversion to going in large crowded areas when you want to go and stay somewhere. So a hotel is going to be in my opinion a lot less desirable to an Airbnb.

The other thing to consider is that it's very likely that we're going to be in some pretty tight pretty tough economic times coming out of this and so a lot of people are going to be kind of crunching their their pocketbooks they're going to be more conservative with their money and they're gonna want to get better value in their travel. That means leaving hotels in favor of more affordable Airbnb ease.

The other thing that I think is a big opportunities that if you look at Airbnb is platform right now. They've made a bunch of different changes over the last couple weeks here very, very quickly. They're innovating so quickly, and they've adapted their platform so quickly to make it a really great place actually to go and find furnished longer term rentals.

Airbnb has realized that the majority of all bookings going on right now are for longer term stays longer than a month. And so they've adapted they've changed in the feature some of the settings on their website so that it caters more to that.

That opens up a whole new opportunity because now once Airbnb starts normalize again once things go back to normal, Airbnb has already made those changes. They've already mobilized there and innovated in that way.

So there's this whole big untapped opportunity that people are missing out on, which is that those furnished mid to long term stays, typically those are going to be corporate stays in a normal environment, you're going to get corporate stays, you're going to get traveling nurses, you're going to get people traveling for business, you're gonna get people like me who just like to travel from place to place for months and months at a time.

And now suddenly Airbnb is a much easier platform to use for that type of travel. And that's because Airbnb has innovated, they've adapted to the what's happening, and yes, that has a huge use case right now but also is going to have a use case once all this is over.

So there's gonna be more of an opportunity in Airbnb in general, more property owners are going to come onto the platform because those people that typically would have had corporate housing, and they would have done the more traditional way of going through agents, more clunky, not so user friendly way.

They're going to realize that, hey, Airbnb is an opportunity to achieve the same result with a whole lot less effort and we can get a way better return we can have a better user experience, we can cater to a whole different market, Get More Bookings, etc, etc, the opportunities there are virtually endless.

And so with all that said, there really is a strong case to be made. I think it's worth considering for yourself, you know, look into this yourself, go and dig around. Leave me some thoughts in the comments below.

You know, share with me what you think after looking into this, because from my perspective, if you can, you know, remove the emotion or remove the fear from it right now is probably the best time ever to get started managing properties on Airbnb.

Now, the one caveat to this that I will leave you with is that you need to have a long term perspective. You're going to be doing this if you're doing this and you're starting a business, any business right now. Not just Airbnb, really any business right now.

And you're thinking that you're going to make some quick money, you're going to, you know, start start getting some quick cash coming in your eyes, in my opinion, you're looking at it from the totally wrong perspective.

You want to look at your business from a long term trajectory right now is a good opportunity. If you think long term and you want to be greedy when others are fearful. I think that's a great strategy. And I think that if you are able to be patient with it, and you look long term in the business, then it makes a lot of sense.

If you're just looking to get in, make some quick cash and get out. I quite frankly, don't think that any business is going to be a good fit for you. Because for any business to be really truly successful, you need to focus on delivering value, you need to focus on your customers first and foremost.

And if you're just concerned about making money for yourself and just turning a quick buck, that's the opposite of caring about your clients. So if you're ready to be patient, and you're ready to take a long term approach to it, then Airbnb could be a really, really great business to start off right now.

So again, leave me your thoughts in the comments below. If you disagree, I'd love to hear about it. If you have already other things to add, do you want to start a discussion, just post a comment in the comment section below.

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