3 Critical Components to Success Investing in Airbnbs
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In today’s video I give you a brief intro to the 3 major keys to success investing in Airbnbs. My business partner Riley and I thought about what makes success in short term rentals, and we’re sharing them with you now.
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My business partner Riley and I recently sat down to discuss investing. Specifically, if we took all of our years of knowledge in the space, what are the THREE crucial components to success?
For anyone looking to invest in short term rentals, this video is for you.
In the first part of the video, I go over how we can analyze properties and why it’s so important to our outcomes.
I share what to focus on and what’s a nice-to-have.
Next, we talk about maximizing performance. If you’re starting a short term rental business, you’re almost guaranteed to leave money on the table.
It is so easy to do. These thousands of dollars compound into millions of dollars later.
That’s why we need to talk about it now, before you even get started.
Finally, we talk about systems. The operations aspect of any short term rental business is make-or-break.
If you’re trying to do it all yourself, you’re doing it wrong. Unless you just absolutely love being a host, for investors, it’s all about return.
We talk about putting on our investor hat when we build out the systems for our short term rental investing business.
I do admit in the video that it’s possible to create very dialed-in systems. But I also tell you just how many properties you can expect to reach before maxing out if you’re trying to do it all yourself.
Watch the video and lean on our years of investing and management experience.
What's up guys, it's James here and in today's video, I'm going to talk to you about three absolutely critical components to successfully investing in short term rental properties, I want to break down the three most important things you absolutely need to be good at you to really master if you want to grow successful short term rental portfolio, and I've worked with students to help them grow portfolios that are going to replace their full time income. So you really can with just a few properties, bringing enough cash flow to replace a traditional nine to five. But if you want to do that, you want to do it the right way you want to get there as quickly as possible, you've got to have these three critical components in place before you get started. Now before we jump into it, I do want to let you guys know that I just recently put together a brand new free training linked in the description down below, that walks through all three of these key components in much more detail, there's only so much that I can go into in a YouTube video like this. So if you want that more detailed and thorough breakdown of these three critical components, then I highly recommend that you check out the link in the description there that free training video register for it, it's completely free. And you can really dive in. And we're going to show you through a bunch of different tools we use, and all three of these components in more detail. So all that being said, let's go ahead and dive in. Let's talk about these three critical components. Starting with number one, which is proper analysis. Now I recently did a full video where I talked about the biggest mistakes that people make with their analysis. So you can check that out as well. But really what you need, it's so critical that you do proper analysis, because when you're looking at making any kind of investment, whatever it is stocks, bonds, mutual funds, ETFs real estate, anything else, you need to know what it is you're getting into, and you need to be able to vet and verify that it is actually a really good deal. Otherwise, you're just gambling, you're not investing. And so in order to do that, you need to know how to look at properties and project accurately not, you know, this hypothetical pie in the sky by the idea of what it might do. But really accurately project what a property is going to do. As a short term rental, how much it's actually going to make, you also have to be able to figure out exactly how much the expenses are going to be each month, and figure out what you're actually going to make in monthly cash flow. Now there are a couple different ways that you earn a return on your investment from investing in real estate being cash flow, equity and appreciation. And you should be able to calculate all three of those and have the right analysis tools to calculate all three. But I would say the most important one is your cash on cash return your actual cash flows, because that's what actually pays the bill, your equity and your appreciation are not gonna be paying the bills. So you got to make sure that you run those numbers diligently on your cash basis. So that's number one is you need to be able to analyze properties effectively. But it doesn't stop there. Once you analyze the property, it's up to you to then do everything you can to maximize and optimize the performance of that property. That's a really critical component. If you don't do that, it's very, very easy with short term rentals, especially to leave money on the table. With longer term rentals, it's a lot easier to optimize performance, you just get it rented, you just do some light research on what the average rate is for a two bedroom, let's say in the area, and you just go ahead and put your listing at market or slightly above or below market rate. And then you go ahead and run with it. Whereas a short term rental, you're constantly tweaking and optimizing or having someone else tweak and optimize your property for you in terms of the pricing to get the occupancy dialed in. And there's also a lot of things you can do to your property to really ramp up the performance of it. And this doesn't isn't limited to just renovation work, this can be different amenities you could add that could drive more traffic to your listing and drive more bookings to your listing. So you need to know what you're doing. Because again, this is something where you can easily leave 1000s of dollars on the table every single year. If you're just underperforming with your listing from where you could be. Now a couple $1,000 a year might not seem like a whole lot. But at the end of the day, that's additional cash flow that you could have supplementing your income. And it's also money that you can keep using to compound to buy more real estate properties. So over the long term, a couple $1,000 a year really adds up and he factor in compounding now we're looking at hundreds of 1000s of dollars, if not millions of dollars. At the end of your actual investing career when you actually go into retirement that nest egg can be substantially bigger. So that's number two is you need to know how to optimize the performance, these properties and really make sure that they squeeze every single dollar they
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can out of them. Now, the third thing the third crucial component here to really master when it comes to investing in short term rentals is your operations you need to make sure that you have the right systems in place to have this property singing have it nice and nice and running like a well oiled machine without it being another full time job and a half for you. I talk to a lot of short term rental investors who are saying well I've got three, four or five properties and I'm maxed out that's all I can handle. You know, there's just so much to do. Every day, and that ultimately is because they're still a business operator, not a business owner or an investor, they're still the one actually managing a lot of the day to day. So you need to have the right systems and strategies in place to get everything off of your plate. When it comes to the day to day operations. You as an investor, if you put on your real estate investing hat, your time is best spent on those high leverage activities, the ones that make you a massive amount of money, like finding great deals and making them happen. And growing your portfolio is ultimately where you're going to get the most reward for your time. So that's where you want to be spending your time as it relates to your real estate investing. You don't want to be spending your time doing cleanings, you don't want to be spending time managing cleaners even or taking care of maintenance, things like that. You want to spend your time on either high leverage activities, or things that you actually just want to be doing like spending more time with your family going on a vacation hanging out whatever it might be, that you don't want to let yourself get sucked into those day to day operations that ultimately are not making you a lot of money. So that's number three is you need to have the systems in place to either give your management over to someone else who's going to do a fantastic job, or make sure that you have the systems and structure set up so that management can happen in house but not be done by you not take up more than an hour two per week for portfolio properties yours. Those are the three critical components. Now, like I mentioned, again, there's only so much I can cram into a short YouTube video like this. So if you want full detailed breakdown on how to achieve all three of these different critical components, how to make sure you really master them, and to succeed as a short term rental investor, then you'll want to check out the link in the description down below and check out that free training that we just put together on how to make an incredible ROI investing in vacation homes and short term rentals. Again, there's a link in the description down below so make sure you check that out. And if you like this video, if you got value from it if you thought it was insightful if it opened your eyes to anything, or if you just like me like my face want to support me then just go ahead and click the like button. It does not take long only takes a second and a half, maybe even less if you can click it really quickly hit that like button. It really does help me out a lot with this channel. It tells YouTube that I'm doing a good job and it helps me to grow the channel and reach more people with this. So just be sure to hit that like button. I really really do appreciate it. If you're new to the channel and you haven't done so yet. Make sure you hit this subscribe button as well so you can stay up to date with the channel I do post two new videos every single week on the channel. So make sure that you subscribe so you can stay up to date and I'll see you in the next one.