Biggest Airbnb Investing RISK to Avoid

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What's up guys, it's James here. And in today's video, I'm going to be talking about the number one risk with Airbnb investing and how you can make sure that you don't fall victim to it. So before we dive into that, I do just want to remind you guys that in the description down below, there's a link to a free training completely free meaning no cost to you. It's a training on exactly how to succeed investing with short term rental properties. I highly recommend if you are interested in investing in short term rental properties, building cash flow, building wealth, getting great return on your investment, that you check out that link and then check out that training. It's something I put together of all the things that I wish I had known when I first started getting first got started investing in short term rental properties. And I wanted to put that together so that you guys would have that and not make any mistakes along the way, not fall victim to these risks and these challenges that I'm going to be talking about in this video. So if you want to get started on the right path, you want to avoid mistakes, and you want to really just drastically cut down your timeline to success with investing in short term rental properties, make sure you click the link in description down below, put in your details, register yourself for that training and watch that training seriously watch the training, we're going to get sent you some free tools that will help you to make sure you're making the best possible investment because hey, I know that building wealth and building cash flow, especially passive cash flow is tough. And that ultimately is what sets you up for the future sets you up to be able to quit your full time job, everything else. And I don't want that to take you longer than it has to I don't want you to make mistakes along the way that set you back years and take that you know that potential out of your future. So make sure you don't make those mistakes, make sure you learn from my mistakes. Instead, learn from everything that we have to offer, check out the free training that's linked in description down below. That's all I'm gonna say about that. Now let's talk about the single biggest risk when it comes to investing in short term rental properties. And that is like you may have guessed, the property not performing well. And this ultimately can come in a few different ways it can be because you bought the wrong property, you didn't analyze it properly, it could be that you're not optimizing your listing the right way, it could be that you're not using the right pricing strategy. Ultimately, the big risk is it the property just doesn't cash flow, right. And so there's a few things that you really need to do as an investor to make sure you never end up in that situation. Because a lot of people think that the biggest risk with real estate investing is another crash like we had in 2008 or whatnot. But the reality is that crash doesn't matter if you're investing the right way. Let's think about it, right? If you had invested in properties in 2005, right, and then the property values crashed in 2008. Well, if that property you had bought was cash flowing? Well, who cares? Right? Think about it, who actually cares if the property value crashed? Sure, would it have been nicer for the property value to go up? Absolutely, no one's arguing that. But in a sinking boat, if you've got the plug to plug the hole, then you're still doing great, you might be in the middle of a storm, but you've got a plug for the hole. And so you can stay afloat, and you can just ride out that storm. And that's what happened to a lot of people in 2008, when they lost millions is it they didn't have the plug to plug the hole on their boat. So not only are they in the middle of the storm, but they're in a sinking ship. Now, that's not where you want to be. And cash flow is ultimately the plug to the whole. Let me explain. If you have a property that you buy for, let's say $500,000. To keep numbers simple. Well, if that property has a cash on cash return, meaning that the money the property brings in every year is greater than the money that goes out every month, and it's a positive value. So let's say that that $500,000 property, you've got a $2,000 mortgage, let's say, and let's say that you've got a another, let's say 1000 $1,500 A month worth worth of miscellaneous expenses. So it costs you $3,500 A month you carry that property, well then just owning that property costs you $3,500 a month to keep owning that property and not sell it. Well. If your cash flow is bringing in more than $3,500 a month on that property. Let's say it's bring in $4,000 a month in a worst case scenario, then you're never going to be forced to sell the property, right? You just make $500 every single month that you hold the property. Now, would you rather be earning $1,000 $2,000 $3,000? Absolutely. And I'm going to show you in the training down below exactly how to do that. And you should be able to do that no problem. But what you don't want is to be bring in $2,000 a month total on that $3,500 A month debt, and then suddenly it's costing you $1,500 a month to hold on to that property. Now that might be all well and good. You might be protected if the property goes from $500,000 in value to a million right doesn't really matter. They cost you $1,500 a month to carry the property because you made half a million dollars on appreciation. That's great. But what happens when the market doesn't appreciate in double the value of your property over the next few years? What is it for property value drops down to $400,000. Well, if you have cash flow coming in, then you just hold on to the property, you just keep making money every single month, month over month on autopilot, while the property value sits at whatever the property value sits out. And then if and when you decide to sell, you'll do it when it's actually profitable to do so. So the property value drops to $400,000. You just wait, you just sit and you wait until the property value comes back up and it reaches 500 Again, or 600 or 700 in the long term. And until then, you're just profiting money every single month, month after month after month. Whereas if you're in the worst scenario, where you're actually losing $1,500, month after month, there's only so many months that you can go losing that money before you are forced to sell the property. Right, you can only afford to lose so much money. So let's say that you buy that $500,000 property, let's say that it costs you $3,500 a month to carry that property. And let's say that it only brings in $2,000 a month, well, how long are you going to lose $1,500 a month for before you decide to sell the property. If the value goes down to $400,000. And then you're forced to sell, let's say you lose your job, and you can't afford to pay that $1,500 out of pocket every month to carry the property, well, then you have to sell the property. But doing so means that you're gonna encounter $100,000 loss. Now, that can be devastating. That is what happened to a lot of people in 2008. And that is exactly what you want to avoid. And the only way that you can do that and make sure that you're never going to run into that scenario is by having good cash flow. Cash flow is ultimately what prevents you from needing to sell the property. And when you don't need to sell something, you're in the best position possible to sell something, just think about it. If you never have to sell the property, then why sell if it's going to be at a loss you wouldn't write you would just hold on to that property, wait for it to be able to be sold at a profit and then sell it at a profit if you even want to. But chances are you probably wouldn't want to because it's a money printer, it's a money machine. If you owned a money machine, why would you ever sell it? Who cares what the money machine is worth? It's a money machine. It doesn't matter if Joe down the road wants to pay you, you know more money or less money for the money machine, you've got a money machine, why on earth would you sell it, you'll just hold it right. And so that is ultimately the golden rule when it comes to investing in any real estate really anything, it's just to protect your downside, make sure that you're never going to be forced. So when you're investing real estate, cash flow is your main protection there. Now that is how a lot of you have lost a lot of money in the last real estate crash and how a lot of people will lose a lot of money in the coming real estate crashes, they're going to happen values aren't going to keep going up and up and up forever. I don't know when it's going to happen better than anyone else does. Nobody knows. But we can all be prepared for it when it happens by just making the right decisions early on. And so if you want to make more of those great decisions, if you want to protect yourself, make sure that you're getting the right property, that you're analyzing it properly, that you're going to have really good cash flow, and that you're optimizing the property so it performs well, and it meets those projections and even exceeds them, then I highly recommend that you check out the link in description down below. That is ultimately going to give you a whole bunch of more tools in your tool bag to make sure that you are protected from the worst case scenario that your investment is safe and stable. And that you're never going to be in a position where you're losing money or selling at a loss. And so if you want access to that it's free. It's in the link in the description down below, we're going to give you an analysis spreadsheet to help you analyze deals and make sense of the numbers. So you can actually look at the cash on cash return and see exactly what it is almost down to the dollar. So if you want that, again, that's gonna be free for you as well. Once you sign up for the training, it's linked in the description down below. I really hope that this video helps you guys out its own watches this and makes a better investing decision because of it. I hope you guys check out the free translate in the description below because I'd love to help you succeed with short term rental investing. And so if you got value from this video, if you enjoyed it, if you thought it was helpful, if you can see how this is going to help for you to avoid the mistake that so many investors have made and that has cost them literally millions, then make sure you hit that like button, make sure you give it a thumbs up, it really really helps me I really appreciate it. So if you could take a quick second, just hit that like button. I really appreciate that. And also if you have any questions, comments, thoughts, anything you want, share with me, let me know in the comment section down below. If you watch this channel, if you watch this video, and you haven't yet subscribed to the channel, then I am devastated. And I'd like to know why. And I would like for you to make this right by subscribing to the channel because I post two new videos every single week. And I'd love for you to be subscribed and be a part of our family here part of our group. We post new videos every single week, like I said, and my goal is just to bring you as much value as possible. So if you could just subscribe to the channel and stay up to date. I would love to have you on board. And last but not least, I hope you have a fantastic rest of your day and I'll see you in the next video.