Investing in Properties for Short Term Rental

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What's up guys, it's James here and in today's video, I want to talk to you about an exciting new adventure that I'm on as a short term rental investor. So for years now, I've been managing people's property, other people's property on Airbnb. And I've even taught or 500 students now how to manage other people's properties on Airbnb, and another over 400 students how to manage their own properties effectively and more successfully on Airbnb. And now I'm officially joining the party as an actual property owner with my first short term rental investment property. And I'm really excited to be able to share that and share that whole journey along with you.

So first of all, if you are interested in more of this type of comment, be sure to like this video and give it a thumbs up. And let me know in the comments down below what more you want to learn. If you're at all interested in owning your own property for short term rental investing in short term rental properties, then let me know I'm going to be doing more content on this channel about exactly this topic and walk you through how I was able to project a 278% return on my investment in year one, I'm going to talk about and break down all the numbers, the investment, the property itself, why I bought where I did, what all I'm doing to the property and how I'm setting the property up to be exceptionally successful.

So again, if you want to learn more about that, just let me know in the comments down below any specific questions you have, or anything else that you want to learn about this process. Or if you're interested in working with me, to help you invest in short term rentals, I am actually working with a coach who is obviously fantastic with helping people how to invest in properties. And I'm gonna be partnering up with him and potentially working with a couple students very closely in a very, very intimate setting, helping them to actually buy their first short term rental investment properties.

So if that's something you're interested in, then let me know in the comment section down below, or go to the about section on my channel and reach out to me by email, if that's something that would be of interest to you. With all that being said, again, I just want to remind everyone as well. Before we dive into this video, we're going to talk a little bit more about the property and give you some more details about what I bought, why I bought it and what we're going to be doing with the property, I just want to remind you as well that there are some links in the description down below, that will give you some free training on how to get started in a couple of different ways.

One of those links is going to be showing you how to get started managing other people's properties like I have done and build yourself a six figure business a full time income managing other people's properties on Airbnb. Now, obviously, to buy this property, I had to put up the downpayment, I had to furnish the place, there's some renovations we're doing. So it's a pretty substantial amount of money that I'm putting into this property. When I got started, though, I didn't have that money to get started with. So I got started by managing other people's properties.

And I learned how to do it in a way that didn't require me to rent any properties, I didn't have to buy anything, did not have to furnish any properties, nothing. So I was actually able to do it without any money out of my own pocket. And so in this video, in the training down below, that's linked in the description, I'm going to show you how to do exactly that way, using that exact same strategy, all the different tools and resources and all the strategies and tactics that I learned along the way. I'm gonna show you how to do exactly that. And I was able to build the business to six figures in income in just under 12 months.

So if you want to learn how to do that you want to build your own business have real freedom over your time and get started get your feet wet with Airbnb and short term rentals, there's no better way to do it, just check out the link in description down below. So with all that being said, I also just want to say there's another free training link description down below for any of you who maybe have properties that you have invested in and want to perform better with them on Airbnb. But if anyone is interested in actually learning how to invest strategically into short term rentals that can be used for both your own leisure and as fantastic investment vehicles, then just reach out to me directly, but by my email or let me know in the comment section down below and we can get in touch.

And otherwise, let's just get into some more of the details. So the property that I bought is a property in cottage country that I actually managed to snatch up for just under $100,000 under asking price. Now that was an absolutely incredible find. Because right now in the cottage country where I'm located up in Canada, properties are going typically for about $100 or $100,000. That is over asking price. Now the reason that we were able to get such a great deal on this property is because there was a pretty substantial amount of work that needed to be done to the property, meaning to replace the septic along with doing some other renovations to the property.

And a lot of people that are buying short term rentals that are buying vacation homes or cottages. They're not wanting to do any work to them. So we have a huge boom in the cottage country market right now. Because a lot of people with everything going on the world. They want to have a place that they can escape to outside of the city. I've talked about this in other videos where cottage country and areas around national parks tend to be doing exceptionally well last year and this year because People want to get out of the city, they want to get into more space, they want to be able to get out of town. And because a lot of people now are working remotely, they have the luxury of being able to do so.

So a lot of those people, though, want to buy properties that are ready for them to move into, they don't want to have to do work, they don't want to have to do any renovation. Myself. On the other hand, I actually wanted a property that I could do some renovation on. So that way, after about a year, I could do a refinance on the property and pull out my initial downpayment. So within a year from now, I actually should have all my money back pulled out of the property, so I won't actually have any of my own cash invested into the property, and it's still gonna be generating income every single month paying on the mortgage, and we project that gross income, it should be able to bring in between 50 and $70,000 per year.

Now, obviously, that's not going to be net, we have expenses coming out of that, we're going to have our cleaning fees, we're going to likely have a manager that I will put in place so that we can get it off of our shoulders. And I don't have to be doing it myself. But I might manage it myself, I'm going to manage it myself for at least the first year. And if I enjoy it, I don't want to hand it off to someone that I might just keep doing it myself. But regardless, we are going to have cleaners going in there. So there is going to be that cleaning fee, which over the course of a year is going to be roughly 10 to $12,000. We're also going to have all of our other typical expenses for the actual property itself.

So things like yard maintenance, General repair and maintenance reserve, that's going to happen, you've got your property tax, you've got your utilities, you've got your actual mortgage payment. So when it's all said and done, this property is going to cash flow, the cash flow is going to be relatively it's going to range anywhere from probably about $2,000 a year on the very, very low end up to about $22,000 a year. Now the reason that range is so high is because I don't really know at the end of the day how well this property is going to do.

What I did is I actually analyze this property, I have a bunch of tools that I use to analyze the property to figure out what is the absolute worst case scenario. And so in the worst case scenario, we're gonna be making about $2,000 in annual cash flow on the property. But that is the worst case scenario, I made sure to check back the numbers back to 2019 2018, and 2017. Because in 2020, there's a big boom. And so you don't want to be buying an investment property based on those inflated numbers. I wanted to make sure I could buy something that even when things return back to normal is still going to be a solid investment, also compared it to properties that were quite a bit smaller than it when I was doing this productions because I personally just wanted to be ultra conservative.

So I think that it's pretty easily feasible for us to hit $70,000 in gross income, which would bring our net after at the end of the year up quite a bit brand quite substantially over 2000. But I know that even in the worst case scenario, this property is going to more than cover its expenses and have a little bit of money left over at the end of the year. So that's a really great plus. Now the other great advantage is a really cool property and a really great location, where I'm personally going to have a great time going and getting up to whenever it's not booked out. And the property is going to be quite seasonal being in cottage country in Canada, it's going to be relatively vacant throughout the winter, there's going to be some seasonal bookings around Christmas time, it will tend to do quite well.

And again, this is all based on my in depth analysis of the property, which I can talk to you about in another video. But there are going to be periods throughout the winter where it's going to be empty for periods of time. So it'd be great for me to be able to get up there and get out of the city at that point. In the summertime. However, it should be completely booked all the way through, you know, cottage country, north of Toronto, it tends to do exceptionally well. And so this property I expect is going to be fully booked for very good rates all throughout the summer. Now we're doing a couple things to make sure this property is exceptionally attractive, and then it'll even outperform the competition and become one of the top 5%.

That's what we're always aiming for is to be in that top 5% of all properties in that market. Now the way that we're doing that is mostly by amenities, the amenities that we're adding are really thoughtful, we're thinking about who is the guest that is traveling there, and what are the amenities that we can add that are number one going to be extremely desirable, but number two are going to provide a really strong ROI. That's what you want to be thinking of when you think about buying a property, anything about furnishing a property and outfitting that property with different amenities. It's quite different than your traditional brrrr strategy where you're just going to be focusing on things that are going to help the appraisal value. Yes, you do want to help improve that appraisal value.

That's a part of what we're doing at the renovation so we can refinance and we can bring our cash out when we do that. We also want to put your money into things that are going to generate a really strong ROI when it comes to the actual short term rental bookings coming in from them. And so that's things like adding a hot tub and or a sauna, which is something that we're going to be doing adding amenities that are less expensive than that like for example some kayaks or some stand up paddleboards things for people to use in the water. And we know as well that a lot of groups come up to cottages to hang out and have a barbecue so we have a barbecue and we've got picnic tables so proper Elsa has a really nice beautiful backyard with plenty of space to use it for gatherings and for people to get together and have a lot of fun.

We're including yard games like for example, cornhole or Spikeball, you might be familiar with things that people are going to want to do outside when they're up at a cottage. For those rainy days, you've had things like video games, we've added some board games for people to play. Again, all this stuff, you really want to take the time to think about who is the type of person who's coming up to your property, who's the type of person that's actually staying there, and what are they going to enjoy. In a one bedroom studio or studio apartment downtown Toronto, adding those outdoor yard games or those board games would be kind of crazy, because the person that's coming there really only cares about having fast high speed internet, and close access to transit, things like that.

Now, there are other things you can add to a property like that, such as, for example, maybe a Netflix account, that are going to make it more desirable. But the ones that I've added to my property that's in cottage country, those aren't some of them. So we've really been thoughtful about which amenities do we want to add to this property that are going to generate a really strong ROI, and that are just going to make guests days more enjoyable. So we've gone ahead and done that. And the overall budget for all the renovations was pretty substantial.

But again, we've got a really great deal on the property, and we're actually able to get a loan for the additional amount of money so that out of my own pocket, it's a pretty minimal amount of investment. And the return on that is going to be absolutely fantastic. Like I mentioned, we're projecting on the very low conservative end to be at about 278%. Now, again, I'll do a whole other video that will break down all the details on that, but thing you have to remember is that when you're buying a property, you're actually earning a return in multiple different ways. You've got your cash on cash return that's being generated from the actual income from the property, you've also got your your appreciation return.

So each year that property is going to appreciate anywhere around 2% in value. Really cool thing about that is it that doesn't mean that you get a 2% return on your money, because of course, you didn't buy the property for cash, if you did buy the property for cash, and I just paid everything out of pocket and not had a mortgage, then of course, my appraisal appreciation would only be that 2%. But being that I have a much smaller amount of money in it, the property appreciating by 2% gives me a lot more money than just 2% gain on my initial investment. So you've got that to think about as well. There's a couple different ways that you can actually earn a return on your investment when you're buying a property and actually investing into it for something like short term rental.

Again, in future videos, I'll go more into detail about those two ways that yearning return and some other ways you're earning a return on your investment, going to break down all the financials for you if that's something you're interested in. If it is, then just let me know in the link in the description down below. Or sorry, let me know in the comment section down below. Let me know any other topics you'd like me to discuss, let me know if this in general is something that you are interested in. And just show me that you're interested by just hitting that like button.

If you're new to the channel here, which YouTube tells me most of you guys are, then click that subscribe button, make sure you subscribe to the channel so you can stay up to date. I'm gonna be posting new videos twice every single week on Tuesdays and Thursdays. And if you'd like I can actually show you the property as well. I can do some properties up there outside of my studio and I'm actually at the property in person. Again, all that is up to you guys.

I only want to film this content if you guys genuinely are interested in it. So if you are then just let me know in the comment section down below and let me know by clicking that like button so that I know to put more content out like this. I hope this has been really helpful for you. And interesting to you. I'm really excited to be going off on this journey along with you guys. So until next time, I will see you in the next video.