Whether you’re looking to get started immediately or within the next few years, there’s a lot of education involved in investing. Specifically, short term rental investing, which is like real estate investing on steroids.

This sort of education is really great to get now while you can. You want to be ready to take action!

First, I answer the question: what’s a good Airbnb cap rate?

For this answer, I say things some investors might not like. But I also share some of the key metrics I follow when investing.

Next, I answer a VERY common one: What market should I invest in?

Rather than just point at a map, I ask some questions to consider. The right answer isn’t the same for everybody.

With those answers in hand, you’ll know where to start.

Third: Is Super Host status important?

The number of people that stress over this one! Here I talk about my thoughts on handling reviews, good and bad.

I also tell you why I’m excited for negative reviews.

Finally, I get many different versions of the question: What should I do with ____ guests?

When a guest has an issue or question during their stay, new managers or owners always wonder the right thing to do. Because these questions are all over the place, I instead share my framework for how I deal with these guests.

I also give two very specific examples of what I’d do for common complaints and why.

If you like videos like this, be sure to hit like!

VIDEO TRANSCRIPT:

What's up guys, it's James here and in today's video, I'm going to be answering some of your guys's most common questions as Airbnb and short term rental investors. I've got a few of them on my phone here. And so I'm going to be answering some of the most common questions that I get asked about investing in short term rentals. Now before we dive into that, I do want to remind you guys that there's a free training link in the description down below. It's a brand new free train that I just recently put together, talking about all the tips and strategies, you need the three crucial components to successfully investing in short term rental properties. So if you've been looking to if you've been interested in thinking about investing in Airbnb is in short term rental properties, and you want to access some of the incredible cash flow and incredible returns that come with short term rental investing. And I highly recommend you check out the link in the description down below. And check out that free training. Now that out of the way, let's go ahead and jump into these questions here. So to start with a pretty common one that I get a pretty standard one in a lot of different forms of real estate investing is what's a good Airbnb cap rate. Now for those of you don't know, cap rate is basically your noi divided by your purchase price, your net operating income divided by your purchase price. So it's kind of a benchmark that people use to determine, like, what is the return on investment without factoring in any of the individual expenses that one property might have versus another because you know, people are going to get different mortgage rates, people are going to put different percentages down. So we're comparing cash on cash or things like that, it really depends on the investor, right depends on how much you're putting down what the percentage rate is on your interest for your mortgage. So those kinds of things just really kind of influenced what those returns are going to look like. Whereas cap rate is a lot less substantial, it's a lot less impact or not at all impacted, I should say, by the person that's buying the property. Now, that being said, my answer this is not one that a lot of people are gonna like it's that honestly, cap rate is really not an important metric to look at, it's good to look at to kind of analyze a market overall, if you're looking at doing more kind of zoomed out macro analysis on different real estate investments. But really just not a useful metric. If you're someone that's actually looking to invest into a property for short term rental, what you really want to be looking at, and I'll tell you how I do my analysis is I like to look at number one, when I'm just kind of browsing properties and looking at a high level is, I want to make sure that I can generate really conservatively, at least $10,000 a year per $100,000, that I'm investing in the property, that's gross, right. So if I do basically take the purchase price divided by 10, that's how much I want to make sure that I can make on total gross revenue for the property in a worst worst worst case scenario, really, I want to be doubling that. But as a worst case scenario, I want to make sure that if everything goes really poorly, that I'm gonna at least have the purchase price divided by 10. In terms of just annual cash flow, or annual revenue, I should say, for the property. So if I'm buying a $500,000 property, I want to make sure that I believe it can even in a worst case scenario bring in $50,000 a year once I've met that criteria, and I also have a number of criteria for things I'm looking for in terms of the type of property the size, and that's all based on what properties I know in my market that I'm investing in are going to perform the best and have the most potential for me to improve their performance. once it passes that initial filter. That's when I dive into a much more detailed analysis way, way more detailed, where I run all the numbers, a lot more granularly and really run some accurate worst case, more average, and then best case scenario projections. And that's where I'm looking for honestly, the number I care the most about is the cash on cash return. Because all the other ways that I'm getting ROI, you know, appreciation, equity, those are great, but they're not going to pay the bills. So I need to make sure the cash on cash is strong, because that's what's going to pay the bills. And that's going to put more money in the bank account that I can then use right away to go in whether it's buy stuff or whether I want to invest in more properties, which is what I mainly do with the money personally. So that's really what I can use that for I can sure I can pull out some equity or I can access some of that appreciation if I do a refinance down the road. But that's a lot more involved in the process than just going into my bank account and pulling the money out. So cash on cash is the number I look at the most. And then before that I look at a more high level view. But cap rate just honestly isn't an important metric to look at. It's just not that relevant. And then where should I invest? That's another question I get asked really, really often in camp a lot. What markets should I invest in? And that depends on a number of different factors. Number one, you want to look at what markets do you want to invest in. I personally recommend one of the great things about investing in short term rentals is the ability to then use the property as a vacation home as well. So it's cool to be able to own properties in awesome locations that you can actually get away to that's one thing if you want to actually own properties in different places. That should be a driving force and in terms of where you buy now the thing is like let's say okay, you're just looking for the app. maximum return on your investment, well, then you really you can, you know, go in different places, but you have to decide, is there a specific type of property that you want because if you want a specific type of property, then in that case, you would have to decide, okay, I'm going to focus on this specific area if I want to maximize returns, and probably the best way to say this is, you know, if you want to have a small one bedroom apartment, then that small one bedroom apartment is probably going to do a lot better in Miami or in Toronto, than it is going to do, you know, out in the boonies. So that's a factor. But if you're open to it, then you know Miami versus the boonies, you can get some really great ROI in the boonies, you're just gonna need a different type of property to do it. So where should I invest? It really depends, it depends on who the person is. I personally am investing just outside Toronto and cottage country that does really, really well. But there's tons of different places all around North America and the whole rest of the world that do really well, you just need to know what type of property to get in a different location is super host as important is something that I get asked a lot. You know, a lot of hosts, a lot of people, they're investing in short term rental properties, they have this idea that they have to get five star reviews, they have to be super hostess. And the reality is, it's not that important. We don't have super low status right now on one of our properties. And it's doing incredibly well, the property we just launched it three months ago. So we don't have super low status yet. And we're already booked just shy of $90,000 for the year on a property that we bought for $520,000, and only been up for three months. So that's really, really incredible, not super host, it hasn't been getting all five star views. Yes, we absolutely strive to get great reviews. But every time we get a negative review, that's amazing. That's actually really valuable. A lot of hosts hate that. And they fear it, it's actually really valuable feedback, because it tells us how we can add more value to the next guest and improve the performance of the listing. So super, super valuable. And super low status. Honestly, we've done a lot of studies on it doesn't really impact your performance that much. It's great if you can get it but not worth losing a bunch of sleep over. What should I do about x guests, I bought this one down, because a lot of people reached out and asked questions, you know, what should I do in this situation? What should I do with that situation? My guess is doing this, my guess is doing that. And rather than trying to answer every individual different scenario, I thought it'd be more helpful to answer it with the framework that I use to figure out what to do in a specific scenario where, okay, the guest is asking for this, or they're saying this or they're doing this, what do I do? And ultimately, I like to look at it first and foremost, I like to just kind of put myself in their shoes and say, What would I do? What would I want? What would I expect if I were in their shoes. So this is a really good way to make sure that you're doing a good job of customer service, but not bending over backwards for just crazy unreasonable people, which you will come across from time to time. There's some people that have crazy expectations. One of the people that was asking this question is, you know, they're asking, what should I add? My guess just messaged me and said that they want a discount because it's supposed to rain this weekend, and they'd booked for this weekend? Well, you know, what would I be? If I actually look at I go, if I were in, in that guest situation? Yeah, sure, maybe I'd be upset that was about to rain. But realistically, I wouldn't be expecting any kind of a discount for that. So I think it'd be totally reasonable to just say, I'm sorry, there's nothing we can do about it. Because in that case, the guest I think, is being unreasonable if they actually expect more than that. And it'd be above and beyond to just, you know, not give them a discount, but give them a little gift or make sure there's a board game there for them or do something as sort of a token of, Hey, I'm sorry that that happened. But here's, you know, hopefully we can make the best of it for you, and enjoy this week, and maybe like a bottle of wine so they can enjoy it inside. That's what I would do, because that to me, is not something that they would expect, but it'd be going above and beyond for them and doing something really, really great for them. So either one I think is totally reasonable. But I personally would go try to go that extra mile for the guest. And then if someone is asking something where it is going to cost me a lot of money, you know, they're saying, hey, the air conditioning is broken at the property, then I'm going to go Okay, well, what would I want done in that situation, if I'm going to property in the middle of summer, the AC is broken, I want to be put up at another at another hotel another place to sleep because I'm not going to sleep in 30 degree weather. I think that's pretty crazy. If they can't get someone by and then get someone by grade, I would want them to just get someone by as quickly as possible, fix it. If they can't, I want to put up in another hotel, and I want that hotel to be paid for. And I want to be refunded. I'm just being honest. Like that's what I want. Because frankly, it's really inconvenient for me to have to then grab all my stuff pack up, go somewhere for a night, I at least want that other night to be comped or something. And I want to be refunded for the night that I'm not at this property that I wanted to be at because I'm not actually staying there. So I think that's a totally reasonable request for our expectation for our guests to have and that's what I would do for the guests in that scenario. And the big reason for that is because just you know, it's what I would want done for me and I know that it's going to cost me money like I'm gonna have to book them a hotel room or whatever for Few $100 I'm going to lose a few 100 more dollars on that you know refund that I'm going to give them but at the end of the day I'm doing the right thing that's going to really reward me long term yeah I'm going to lose a couple $100 right now and that sucks but I know that long term it's going to pay off way more than that because I'm gonna actually be able to to now you know get this property get this review really good make sure that it goes off smoothly. Now it's going to make sure that I get more bookings in the future and I'm going to make that money back long term. So I have a few more questions on here I know this video is getting quite long at this point so I'm going to cut it off here. If you want another video like this If you liked this if you have other questions you want addressed in future videos then just post in the comments let me know if you like this and you want more videos like this then make sure you hit that thumbs up to let me know so that I can see okay, this is something that you guys like and you want more content like this And again, if you have any other questions you want me to answer in future videos, just let me know in the comment section down below. And with all that said, I just want to remind you guys one last time that there is a free training down the description down below so you can check it out and learn exactly how to invest successfully in short term rental properties. So if you want to learn exact step by step, everything you need to do to be successful short term rental investor that I highly recommend checking that training out in the description down below. It's completely free to check out. So again, check that out, and I'll see you in the next video.

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Answering Common Airbnb Investing Questions

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