Making $250,000 in ONE YEAR from ONE AIRBNB

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James Svetec 0:00
What's up guys, it's James here. And in today's video, I'm going to be recapping almost a full year of performance with one of our Airbnb properties north of Toronto. It's a cottage property that if you're familiar with this channel, you're probably familiar with this property I've talked about in a couple of different videos. And it's a property that we bought just over a year ago, did some renovation work to furnish it up and list it on Airbnb. So it's on been on Airbnb now for 11 full months. At the time of this recording, it is the middle of May and 2022. And we launched the property in June of 2021. So we've got just about 10 and a half, 11 months here that we've had the property live for. So I want to do a sort of one year update on how the property has performed. And as you probably have seen from the video, title and thumbnail, it's done quite well, this one property has generated almost a quarter million dollars in return for us in one single year. And it's a property that we bought for $520,000. So I'm going to walk through the actual numbers behind that deal. And if you're interested in learning more about how you can find deals like this, how you can actually invest in short term rental properties and get massively outsized returns, and fantastic cash flow, then make sure you check out the link in the description down below, there is a link to a free training that we're holding, teaching you exactly how step by step to invest in short term rental properties, my business and investing partner Riley and I have just had a lot of success on the in the short term rental investing space. And we really want to be able to share that with other people, because we're seeing this huge opportunity for people who want to be able to replace their nine to five income by investing in short term rental properties, or just invest in an asset class that,

frankly, gets really, really strong cash on cash returns just about better than pretty well, any other investment vehicle out there. So again, if you're interested in that the link is in the description down below. Let's jump over to my computer here. And let's walk through some of the numbers. So as you can see here, this property, this is basically our year to date numbers, right up until the end of April, we haven't done our sort of accounting or reconciliation of the month of May yet because we're still in the midst of it. And so you can see the numbers are a little bit crazy. So our gross booking revenue through Airbnb was $131,000. That's before, before ending on the cleaning fees. And then outside of that we also collected $2,100 In, in just direct booking outside of Airbnb. And then we also had $18,000 in cleaning fees that we collected. Now one thing to note with this property is that because we are listing the property ourselves and managing ourselves, we don't care whether the cleaning fees come in as cleaning fees or as booking revenue. At the end of the day, we just basically set a cleaning fee that was in line with a very competitive for the area. And then we basically just pay our cleaners, what we pay our cleaners, and we optimize our prices. So we're not really concerned, you'll notice that this number is quite a bit lower than the actual expense for cleaning fees. But we know that we're aware of that, it's just that for us, because all the money goes to the same place, it doesn't really matter. Now, that being said, if you are working with a management company, where they're going to take the cleaning fees and pay it to the cleaning team, then your cleaning fee collected is going to be a larger amount because the cleaning fee is going to be higher. In this case, we said our cleaning fee lower, because again, all the money goes to the same place anyway. So you can see that basically, we've got a grand total in 11 months of $151,000 in total bookings. So that averages out, sorry, I have to update this formula, actually, it's been about 11 months. So that averages out to about $13,000 per month that we've collected. Some of these ones are going to be I'm just going to update these on the fly here as well, just because I want to make sure that they're accurate for the actual monthly expense are the monthly totals. So let's just break those down here. And you'll see that's kind of the breakdown monthly of those numbers. So that's our revenue. But obviously, we don't get to keep unfortunately, all of that revenue, there are expenses associated with the business. And so the breakdown for that is basically going to be typically you'd have management fees, which for us are zero because we manage the property ourselves, cleaning fees, which we have we This again is just a different section for cleaning fees for if you had a management company that you're paying them out to. In our case, we have a direct cleaning expense, which I'll get to in a moment. And then our additional expenses, which are going to be for things like maintenance yard supplies, add on software, accounting, legal, all that different stuff. Now, it's worth noting that we probably have about $5,000 additional in here because we've got enough supplies stocked up for about another full year at the property. We'd like to buy our property supplies in bulk and store them at the property so that we're not constantly making different orders. And so there's actually about $5,000 of additional expenses in here. More than what we in reality paid for the year. because we've got supplies a lot that are set to last for a long, long time into the future. And then we've got our cleaning expenses, which are basically just the cost of our cleaners going over. And that includes things like laundry, sundry expenses, so dish soap products, all of that kind of stuff as well. And so that came out to $29,725, we pay our cleaners, I think it's about $450. To clean this property, it's a six bedroom property, two bathrooms, and our cleaners are absolutely fantastic. So we pay them a premium, because we want to be as hands off as possible. Certainly, we could go and drive that down a bit by having less expensive cleaners. But we really like working with our cleaners, we really love the fact that we can just be completely hands off. And to us that's worth the the additional expense. And so the other thing is going to be carrying cost, that's going to be our cost of our mortgage taxes, insurance, utilities, internet, all those costs of actually carrying the property. And then you'll see down here, we also have a section for capital expenses. So anytime that we do capital improvements or upgrades to the program, which we have done a few of throughout the year, those are going to go into those capital expenses, they're classified a bit differently, because obviously, those aren't going to be a sort of disappearing investment that actually adds value to the property with renovations, we're doing things like that. And so our total operating expenses not taken into account, the capital expenses came out to just over $82,000 for the year, leaving a net operating cash flow of $69,000. So we've made about $70,000. So far your date, realistically, like I mentioned, that's closer to about $75,000. Because we obviously have have some additional expenses baked into here for the supplies that we sort of stocked up on. And then we've got one more one month to go. And it is a pretty good month, the month of May. So we're probably going to be on the higher end probably closer to about seven to $8,000 in net operating cash flow from that month. So by the end of the year, once things are all said and done, we're going to end up at around the 82 to $85,000 Mark sort of thing. And then we're going to have basically our capital expenses are taken out on top of that. And if you take out those the actual net cash that we were left with in our bank account, after paying for everything, including the capital upgrades, the property was $56,000, so far this year, and again, that's about $5,000 Higher, if you take into account the stock up on supplies, and then we're probably going to be having about another seven or so $1,000 added on to that from the month of May. So obviously that did really, really well, if you just look at the operating cash flow and look at sort of what we would do to do to calculate your cash on cash return, we're looking at a fantastic cash on cash return here, our net cash flow, if we hadn't done the capital upgrades, we're looking at about $80,000 for the year just over. So that's obviously fantastic, especially considering that we bought this property for 5% down. So that was really awesome. And so yeah, I mean, ultimately, the numbers worked out really, really well. And this is gonna be a really great source of passive cash flow for us going forward. I know for a lot of people I share with them just how easy it is and just how possible and doable it is to actually replace your full time income. Now let me ask you, like, how much are you making in full time income, and how much would you need to make in order to quit your job if that's your goal, right? For a lot of people, that number is right around 70 to $80,000 a year that they would want to have coming in in order to justify quitting their nine to five and actually doing something that they enjoy. And it's a lot more passive and they don't have to go and you know, work every single day nine to five even they don't want to not have time to spend with family, things like that. So there's so much potential here in short term rentals. And I love them for exactly that reason. And it really D risks the investment because with this much cash flow coming in, we can literally afford to carry the mortgage on the property for years to come just off of one year's worth of cash flow. So it really D risks the investment. There's really no risk of us having to sell or being forced to sell. But you're probably wondering, Well, James, you know, you said at the beginning this video, it said in the thumbnail and in the title that you're looking at about a quarter million this is only $80,000 What the heck happened. And so that's the really cool thing about investing is that you actually make a return in a few different ways. You make a return from your cashflow, yes, but you also make a return from the appreciation of the property. And that's going to happen in one of two ways or both. Either natural appreciation just prices going up which obviously with inflation being what it is prices of real estate go up pretty substantially keeping up with that. And then the other one is going to be forced appreciation, meaning that if you do strategic renovations to the property, and you force the value of the property up, that's going to give you an increase in the value of the property as well. And then the third and final way that you make a return with your real estate investing is by the equity build up from paying down principal on the mortgage. So our carrying costs our mortgage was about 2020 $400 a a month and a portion of that went to interest but a portion of that also went to our to our principal and so we gained some equity in the property that way as well by paying down the principal on the mortgage. And so that ends up being about 10 to $20,000 a year and additional additional equity we have in the property. And then we've got the $80,000 that we had from the cash flow. And then the numbers broke down like this. So like I mentioned, we purchased the property for $520,000, then we did about another $60,000 worth of renovation work. And then there was another $20,000 as an addition to that for our furniture and our amenities like the hot tub in the sauna. But that obviously doesn't actually go towards the capital improvements on the property, it's not actually increasing the value of the property. So we're just looking at renovations, we're looking at $60,000 worth of renovations that we did to the property, making the total investment in this property $580,000 between the purchase price and the renovation. Now that's sort of what we have sunk into that deal. Now, we obviously didn't pay cash for this property. So I'm not saying that's how much cash we have in it. But that is what we have between the purchase price and the renovation. Now we actually just got a reappraised and did a cash out refinance. Meaning that we were able to take our our equity stake in the property from 5% up to 20%, while also pulling out a bunch of cash because the property appreciated so much. So we actually got it reappraised at $730,000, which is $150,000 worth of appreciation. Now,

I'm not gonna lie a part of that is just because the market is appreciating a lot right now. And I'm not trying to say that that's going to happen, that's going to stay that way forever. I don't know what the market is going to do long term. I just know what the market did this year. And I know that we don't have to care about what the market does long term, because we've got so much buffer in here now. And because we're never going to have to sell this property it cash flows $80,000 a year, we don't have to sell it ever. And so we don't really care if we you know, the property value goes up or down. Now, in this case, it was really nice, because you're planning on doing that cash out refinance anyway, because a portion of this $150,000 gain in appreciation on the property was due to the renovation work that we did, we knew that we did strategic renovations to force that appreciation. Now, obviously, not all of it was due to that some of it was just due to the natural appreciation of the market. And so we got $150,000 Were the appreciation on the property, another $80,000 in cash flow, and that adds up to $230,000 in total return from year one. Now in addition to that, we also have like I said, 10 $20,000 worth of equity build up from paying down principal on the mortgage. So that basically brings our total to about quarter million dollars in total return in year one. Now, those numbers are pretty crazy. Honestly, me even you know, getting prepared for this video and looking these numbers, I could not believe that we made a quarter million dollar total return on this property in just one year. And with you know, our capital investment was so so small, with the property only being a $520,000 property that we were able to get four or 5% down. So that is really the power of real estate investing. And that is the power of short term rental investing. Now I do again, just really want to reiterate and emphasize that this number here is a little bit of fairy dust, right? It's a bit of a food Gazi. It's a bit, you know, just out there because ultimately property values are going to fluctuate. And so although it's fantastic that we were able to reap the rewards of that and refinance the property when the property's value was so high and interest rates on our mortgage were fantastic. Like that worked out really well. But the really cool thing that I love about short term rentals is that we weren't banking on that we weren't depending on that, if that hadn't if the property how to reappraised at $520,000, it wouldn't have made a big deal, right? So if the property value didn't go up substantially, who cares? It just wouldn't really matter to us, frankly, because the property cash flows so incredibly well. And that's ultimately what I always tell people is that when you're investing, you want to look at the worst case scenario, not the best case scenario. And in the worst case scenario, if you have cash flow, then you never are going to be in a position where you are forced to sell the property. And so that really does afford you a lot of luxury, a lot of protection with your investment. Now again, if you guys are interested in learning more about how to invest successfully in short term rentals, get some properties like this for yourself, then make sure you check out the link in the description down below for a free training that's going to teach you exactly how to invest successfully in short term rental properties. We're also going to give you our free analysis tool, it's going to be yours completely free. That is a tool that we use to now to analyze deals and find deals like this and make sure that we know our numbers going into it. So again, the link is in description down below to check out that free training and get your hands on that free analysis spreadsheet. I hope to see you inside and you'll also have an opportunity to even set up a free one on one strategy session with our team if you're interested in working directly with us to learn more about how to invest successfully in short term rentals. I hope you gain value from this video. I hope it was helpful to you and valuable to you to be able to see exactly how well these numbers do these properties do You know, hopefully this was great let me know in the comment section down below and give me a like on this video if you did enjoy it. Otherwise Have a great rest of your day and I'll see you in the next video.