Buying VS. Renting VS. Managing On Airbnb (Which is better?)

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What's up guys, it's James here and in today's video, I'm going to talk about buying versus renting versus managing for a percentage management fee when it comes to making money on Airbnb, I'm going to break down the advantages and the pros and cons of each different approach. And I'm going to give you my recommendation for where you should start depending on where you're at right now. So stay tuned all through this video if you want to learn which strategy is going to be the best for you. So that you can figure out how to best earn an income managing properties on Airbnb, whether that's by managing other people's properties, buying your own properties, or renting the properties and doing what's called rental arbitrage. I'll break down all that in this video. So make sure you stick around right till the very end.

Now before we jump right into it, I do want to talk about some free trainings that I've got a link down below. Now for any of you who are interested in managing other people's properties on Airbnb. Now I'm going to talk to you about who might be the best fit for that. But just know that if you find through this video that that is the right fit for you. We've got a free training link in the description down below, it's going to show you exactly how to get started. And we're going to give you some free tools and resources that you can use to help you get your business started and off the ground successfully. Even with absolutely no experience.

Now, this is going to be a really great model for some of you. So just know that there's a free training link description down below. So it's a right fit for you, you'll want to make sure you register and grab a seat in that training before it's too late. Now for any of you who are interested in buying properties, and you find out through this video that buying a property and investing in a short term rental property is the direction that you want to go, I would highly, highly recommend that you reach out to me just make sure that you either drop a comment below this video and let me know that you're interested in getting in touch or go to the about section on my YouTube channel here and find my email and send me an email.

Because in the coming months, I am going to be working along with a real estate expert in this space, we're going to be working with a very small, tight knit intimate group of students, it's really not going to be for everyone. But it will be for a small group of people who are interested in really building a portfolio managing properties that they actually own investing into properties for short term rental, being working hand in hand with small tight knit group people to really show them how to find the right deals, how to structure the deals properly, how to get the properties up and running and how to do everything in the right way to absolutely maximize their ROI.

So they can get returns over 200%. In some cases, like for example, what I'm doing with my property here that I just invested in recently. So again, just know that if that is the direction that you end up seeing is the right direction for you to go, then you'll want to make sure you reach out and get in touch if you think you'd like to get some help with that. So all that being said, let's dive into the pros and cons of each different approach. Now the easiest place to start is with rental arbitrage. And the reason that I say that's the easiest place to start is because it just isn't the right fit. For most people, there's only a small group of people who I'd really recommend rental arbitrage for, and that is people that already have a business managing other people's properties on Airbnb. Now the reason for this is simple.

Most properties that you come across that you could do rental arbitrage with meaning that you would rent the property for a fixed monthly rental rate, you'd pay to furnish the property. And then you'd flip it on to Airbnb. Now the way you profit with that as you bring in more money on Airbnb, though you pay out each month in rent. Now, that can be a good approach for some properties. But the reality is that 95% of properties are not going to make sense under that model, because you're going to have to pay first and last month's rent, plus pay a chunk of money to furnish the property. So you're going to be out a chunk of money in cash and just upfront capital that you're putting into getting that property started.

Now most of the time, you'd rather put that money into buying a property or save up and have it go towards paying for a property you can buy. Or you would rather take that same property and do it under a management fee model operate under a management fee model, because you'll earn the same amount of money in most cases where we just a little bit less, but you won't have any of the upfront capital expense, meaning you're not actually putting any of your own money into getting that property on board. So you have zero risk, zero cash flow issues, and you got to earn as much money.

So the reason that I recommend rental arbitrage to some people still is because if you already have an operational management company, meaning you're already managing people under that percentage management fee model that I'm going to talk about in a minute here, then that can be a great opportunity. It's a great gateway to get into rental arbitrage. Because in doing so you are going to come across those 5% of properties that do exist out there where you can double and even triple the amount of money that you're paying in rent And in bring that in through Airbnb.

Now in those cases, it actually can make a lot of sense, we've had a handful of properties, not a whole lot come across our table that we have picked up and manage under that rental arbitrage model, because we were able to consistently earn three to $5,000 per month in profit from that one single property. Now, when you have a deal that good, it's hard to say no to, and that is only gonna happen in rare circumstances. But if you happen to already be in the space, and you see one of those real unicorn properties come across your desk, that's a great way to get into it.

Now Next, I want to talk about the management fee model, this is going to be the best fit for most people, because I know most people watching this video are not going to have 10s of 1000s of dollars that they're looking to invest into a property, most of you I would imagine, are just getting started the same way that I was where you don't have a little or no money by myself, I was actually in debt when I first got started. And you don't have a whole bunch of capital to invest into either renting or buying or furnishing any properties for short term rental.

So in that case, the best way to get started is managing other people's properties under a percentage management fee agreement, it's called the mF m the management fee model. And the way this works is that you are going to manage the property take care of getting bookings, for the listing, take care of organizing the cleaners, scheduling them, all that sort of stuff, you'll take care of that in exchange for a percentage of the overall revenue of the property.

So the property brings in $5,000 a month, let's say, then you are going to get 20% of that meaning $1,000 in management fees. And that goes to you in order to provide you with profit. Now, the great thing about this model is that you don't have to pay any money up front, we actually show you how to do is inside the free train link down below, we show you how to do it in a way where you actually earn several 100, if not several $1,000 just onboarding the property.

So right out of the gate, before you even have your first booking, you already are making a great little return on your time, you're already making a great little couple 100 or a couple $1,000 for bringing on that property on board under management. So that's going to be a really great model for anyone getting started, who doesn't want to put any of their own capital at risk. And they want to get some experience with the minimal amount of risk. Again, for anyone that's interested in that we actually have a full in depth training linked in description down below, it's completely free.

And in that training, when you register and you sign up and join that training, I'm actually going to give you some tools completely free that are going to help you to build your business. These are tools that I developed and running my business over several years, that have helped me to be able to predict which properties are going to be the biggest winners and be able to bring those properties on under management. So again, if that is something that you're interested in, and you want to learn more than get, make sure you get yourself a spot inside that free training before it's too late. Because that free training is saying we're going to be running for a limited time.

And you want to make sure you get yourself a seat in there before it's too late. So go ahead and click the link in the description down below to register and save yourself a spot inside that training. Now, the last method that I want to talk about is buying properties, this is going to be a great a fantastic model for some people. Now for a lot of people, it's not going to make sense quite yet. If that's the case, you might want to get started managing properties, and then get into actually buying them exactly like I did.

And like a number of my students have done as well. buying properties, though, is a really great model. If you have some money that you want to invest, but you don't want to get a small five to 8% return the way that you typically would by just investing into the stock market. Now granted, investing in properties is always going to be a little bit more active than just passively putting your money into the stock market. So that is a consideration. If you're looking for something that you have to put absolutely zero effort into then investing in a low cost index fund or certain stocks can be a great way to go. If you're happy to be a little bit more active with your investment and you want to drastically increase your returns, you know, talking about like a 200 or 300% return on your investment.

If you play your cards right and have the right strategy find the right property, then investing in short term rentals can be a really perfect fit for you. In addition to yielding a very, really, really strong ROI. They can also yield you a great cash on cash return mean that you're not actually spending any money at a pocket to operate the property each year. They can provide a great asset to you to go and actually use as a vacation rental that can be a really really cool and unique aspect specific to investing in short term rental properties. And they can just be a really fun asset to own and manage.

So I'd highly recommend going that route if you have some money that you're looking to invest into actually buying properties. Now there are ways to structure your deal creatively. So you can do this with very, very little little money up front out of your own pocket. There's a lot of ways to get money cheap right now, you can get very low interest rate mortgages and very low interest rate loans for things like a renovation. And obviously, if you're familiar with real estate investing at all, you might have heard of the Brr strategy with the burst strategy, as most people call it, you can actually buy a property and then renovate it to increase the value of that property.

And then once you get the property reappraise and refinance, you can actually pull a lot of your initial investment in the property out again, if you want to learn more about that strategy, then just get in touch or let me know in the comment section down below, and I can get in touch with you. And we can talk more about it. But that's a really great real estate investing strategy for us, that will allow you to actually invest some money in but then within about a year, pull that money back out of the property without actually selling the property. So it's a really, really great strategy to make sure that now you're making a yearly return on your investment, but your investment is actually pulled out.

So you can take that capital and go and use it elsewhere, you can invest into buying another property, do the same thing, and then build up your portfolio that way, this way, you're going to have a long term portfolio of assets that you're building up without having to deploy a whole bunch of your working capital all at once. So again, this is a really great strategy for some people that have some money set aside that they're looking to invest, and they're okay putting a little bit more time and being a little bit more active with their investments when compared to, you know, your traditional investing into index funds to the stock market. So I hope this has been a good video to help you get an overview of the three different major methods of earning a return from Airbnb rentals.

Now, there's obviously a couple of different strategies that are a better fit or worse fit for different people, depending on where you're at right now. I personally have experienced with all three and I can see the merits to all three of them depending on where you're at. So you're interested again, there's all kinds of great resources, you can check them out in the description down below. Or if you want to work with me in that in that small tight knit group there to actually start investing in properties for short term rental, then just reach out and let me know.

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