Are Airbnbs a Good Passive Investment?
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This video will share with you not only MY definition on “passive investment” (and why most people get this wrong, but also two ways of HOW you can get passively invest in Airbnbs.
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With my first Airbnb purchase, it definitely was not passive. Real estate investing is very, very hard to make “passive” where you’re just sitting on a beach all the time.
BUT I’ve got good news. You can for sure leverage the time of you and others. You can spend time on what really matters – at home, on real estate, or even your current job if you want to stay there.
Okay, so it depends on your definition of passive income.
But in this video I share with you the two ways you can set up your short term rental passive investing journey.
First, I go over the solution for those of you who like to build systems and keep a real finger on the pulse of your business.
Some investors like to understand the nuts and bolts of what they’re doing. If that’s you, I share how you can invest in Airbnbs for maximum ROI and little week-to-week maintenance.
Second, I go over the best way to be as hands-off as possible with Airbnb short term rental investing. Yes, you can manage and keep tabs on your investment and you only need to check your email.
No matter which type of investor you want to be, I’ve got the answers for you in this video.
What's up guys? It's James here and in today's video I'm going to answer the question are Airbnb a good passive investment? I get asked quite often by people you know, James, our Airbnb is really a passive investment, can they really be considered passive? Is there really any way to make it so that I'm managing my property, I have a property on Airbnb. And it's not just a full time job. You know, oftentimes, I show people how much revenue I'm able to bring in on a property on Airbnb, like our most recent Airbnb investment that brought in just under $90,000, in its first three months of being up and live, that we're currently booked at. And that's a property that we bought for $520,000. So to buy a place for $520,000, and have it bring in $90,000, and finish the year, likely around 100 to $120,000. In total bookings. That's pretty incredible. And so naturally, a lot of people wonder, you know, can that really be passive? So in today's video, I'm going to work on answering that question and shedding some light onto that question. Now, I do want to remind you guys that we actually have access now to a brand new free training linked in the description down below. I just put this together recently, and it basically covers all the different crucial components that you're going to need to successfully invest in short term rental properties. I've taken everything that I've learned about real estate investing, as well as my investing partner, Riley, and everything about Airbnbs. And managing these properties, and how to make them successful investments and distill it down to a quick training that I think is gonna be really valuable for you where we really break it down to really the kind of three critical components that it takes to be successful investing in short term rental properties. So if you've been thinking about buying a vacation home that you want to have as a short term rental, if you think of buying multiple vacation homes, you want to build a portfolio, short term rental properties, or if you're an existing real estate investor, and you want to add short term rentals to your portfolio, or even convert an existing property in your portfolio over to short term rental, whatever it may be, if you're interested in investing in short term rentals, you're gonna want to check out this training, it's not one that you're going to want to miss. So just click the link in the description down below. And check that out. Like I said, it's completely free. So you'll want to check it out before it's taken down, because it's not going to be up forever. Now, all that being said, let's talk about the passive side of Airbnb and whether or not it can actually really be passive. And I talked about this in a q&a video that I did recently. And ultimately, the answer is that it really depends. It depends on your definition of passive. So I think a lot of people get have a misconception about what it is to have passive income. And I want to make sure that I'm not giving false expectations. So to start off with, I think a lot of people have this idea of passive income, where they're basically just sitting on a beach sipping mai Tai's, and the money is rolling in and filling up their bank account, and they do nothing for it, they just sort of get rich quick, right. And I've never seen that be true of anything aside from maybe index fund investing. But the reality is, even if you're going and picking stocks, that's not a passive investment by any means. Because in order to pick the right stocks, and be an informed investor who's making the right investment decisions, you have to research these companies, you have to read all their letters to shareholders, you have to really understand what's going on. That's a whole awful lot of work. The only form of passive income that I've really seen by that definition of sort of really, very passive is maybe just index fund investing, because anything else and you're still doing a tremendous amount of work, you're still in tremendous amount of research, certainly no form of real estate investing would ever be considered passive, if that's your definition of passive, because at the end of the day, you have to find properties, you have to close on them, set them up, you know, get them up and running. And it's not passive. However, if your definition of passive is a bit different, and you're looking at passive more through a lens of hey, can I set this thing up? And not have it be a full time job? Can I manage my property in, you know, maybe an hour, two hours a week and not have to be constantly checking in on things, then in that case, yes, short term rentals can absolutely be passive. There's two ways to achieve this. And one is a lot easier than the other. But the easier one comes with a cost. The first way is the more challenging way, which is to actually set the systems up to have your portfolio managed in house mean managing everything yourself, but not actually doing any of the management yourself personally. So what I mean by this is having a cleaning team that manages the cleaning, having a guest munication team that manages the guest communication, having a maintenance person that takes care of maintenance and having systems in place so that all of those team members can communicate between one another and you're not the bottleneck. You're not the one actually jockeying everything and managing everything. Now it's great if you can have all those team members in place, and you're and you have decent communication between them. A lot of times that can reduce your time spent managing the property substantially certainly far less than if you're actually doing all that stuff yourself. But if you don't have the right systems and workflows set up, then it's still going to be pretty time consuming to even just manage all the interactions between that you know schedule your cleaners, organized maintenance, all that sort of thing. So the ideal setup is the most passive require some work upfront to build the right systems and structure, but ultimately it means that you can manage one property in as little as maybe 30 minutes to say, an hour per week. And a whole portfolio really doesn't add any marginal additional time. So you can still, again, manage your property portfolio of, let's say, five or 10 properties, and about that same hour, maybe two hours per week. So you get some economies of scale as you're not communicating with 10 different cleaning teams in most scenarios. So that is option number one, it just requires the right systems, the right strategies, and some time up front. So I want to be clear that again, that requires time upfront, but absolutely, it's passive long term. Now another great thing about actually owning properties and investing properties on short term rental is that you get a second option that is far more passive. And that's to hire a property manager. Now, you can obviously do this for long term rentals as well, short term rentals, it's a little bit more challenging to do. But ultimately, it means that you can be completely hands off, you're not even managing the system ongoingly, you just have a couple emails back and forth with the property manager every month. And that's all you need to do, the property manager is going to take care of everything. Now, as an outcome, that's fantastic. But getting there is a little bit trickier. In order to get a great property manager that you're actually going to have that passive have an experience with and still make a really good return, you need to make sure that you pick the right property manager, and any great property manager is going to come with a cost generally around 20% of your gross revenues. Now, the nice thing about that is a professional property manager who's worth their weight is actually going to help improve the performance of your listing more so than what you would likely be able to do on your own. And that means that then you're going to be able to actually have them sort of pay for themselves. In some cases, they actually can fully pay for themselves. In some cases, they can actually help you to make more money than what you would have without them. And that means that it's completely passive for you. And it means that you can potentially be earning more money than you're earning right now. But if you weigh that as an option against optimizing the property, yourself, taking the time to learn the strategies to be able to really perform well, then ultimately, that is going to be a cost that you're paying for the convenience of not having to manage the property at all yourself, there's a couple different options. And ultimately, it comes down to knowing what to look for and finding the right solution for your situation. Depending on your goals and your unique situation, you might want to choose any number of one of the variety of different options available to you. So that's really what it comes down to, though is having the right systems and choosing the right path to go down. But as a base level, yes, absolutely short term rental investing can be very passive, I think a lot of people get turned off by the idea of short term rental investing, because they think it's going to be a whole lot of work. And it absolutely can be if you don't have the right systems, you're not organized, you're not detailed, you don't have the right processes in place. But if you take the time early on to set those things up, it can be very, very passive and extremely lucrative. I would argue that even if you factor in the additional time you need to spend setting those things up those structures up, you're going to get a better return on your money on your time, as well as investing in short term rentals than long term rentals. Long term rentals may not take as much to set up, but you're gonna have to get five or six of them to make the same amount of return as you would from one or two of them as a short term rental. So it means that ultimately, you're just going to be investing your time elsewhere with long term rentals and not getting the same amount of return. That's why I absolutely love short term rentals. And I can tell you from experience that once you do have those systems set up and have the ability to scale then it becomes really glorious because each additional property you're taking on is taking up very, very little additional bandwidth and you keep on scaling up your returns pretty exponentially. So again, if you're interested in investing in short term rentals, if you want to learn exactly how to do that, and you want to learn more about the systems and strategies and tools and resources that we use in our investing, to be able to make it passive then I highly recommend you check out the link in the description down below and check out that free training it's gonna be really helpful we're going to walk through some of the different tools that I use in my investing portfolio. And I'm going to give some some things to you for free I'm going to give you some great advice so I highly recommend checking it out again just click the link in the description down below and register for the free training before it's too late. Now all that being said if you did like this video if you got value from it please take a quick second to give it a thumbs up hit that like button and also if you are watching this video and you're not subscribed to the channel yet make sure you hit that subscribe button make sure you hit it subscribe to the channel so you can stay up to date because I post two new videos every single week about all things Airbnb investing Airbnb property management, really just all things Airbnb. So if you want to stay up to date with those two new videos every single week, then make sure you press that subscribe button and keep up to date with the channel and until then I will see you in the next video.Expand