How to Own An Airbnb for FREE

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What's up guys, it's James here. And in today's video, we're going to talk about how you can own an Airbnb for free. I'm not talking about managing, I'm not talking about arbitrage, I'm talking about actually owning a property that is a highly profitable cash flowing Airbnb and own it for free, meaning that you own it without having any money tied up in that property. Again, I know this sounds really too good to be true. I know that sounds pretty incredible. But I'm going to break it all down, I'm going to show you the numbers behind it. And we're actually going to flash the numbers up on the screen here so you guys can keep up. And it all will make good sense.

So before we dive into all that, I do want to just let you guys know that if you click the link down in the description below, there's a link there to schedule a 15 minute chat with me. Now if you want to schedule a 15 minute chat with me to talk more about the strategy I'm going to talk about in this video, or just in general how to invest in properties for Airbnb, then I highly recommend that you click that link that's down below in the description to schedule a 15 minute chat with me. And we can talk more about how to make that happen for you how to get your first property or your next property for short term rental.

I am going to work with a really small group of people and really intimate setting over the next 612 months here, showing them how to invest profitably into short term rental properties into Airbnb s. So if that's something that you want to do, if you want to learn more about it, but I highly, highly, highly recommend that you check out the link in the description below. You click it, don't just look at it, click it schedule a call with me and I'd love to talk with you one on one, it'll actually be a call with me. So just want to let you know that's available. Make sure you do that if it's something you're interested in investing in Airbnb properties. Now with all that said, let's jump into the numbers.

So how do you own a property without paying for it without having money in the deal? Well, the math actually works and it's through something called the burst strategy brrrr. It stands for buy renovate, rent, refinance, repeat. Okay, so I'll break down all that in more detail. Don't worry if that was just gibberish for you. Okay. So basically, the way that the model works is in, in essence, you're buying a property, you are buying a property, there's a fixer upper, it needs work. And you're buying it for a relatively low price because it needs work. And then you're going into renovating the property.

And by renovating the property using strategic renovations, we know I'm not talking about adding your favorite color to the walls, I'm talking about strategic renovations that are going to increase the value of the property. And then by increasing the value of the property, you can then go get the property reappraised and you can refinance the property, which means getting a more your mortgage refinance on the property so that you can stay at an 80% loan to value again, if this is just gibberish, don't worry, I'm going to break all the numbers down.

But it allows you to basically pull all your initial investment that you would have spent on your initial downpayment, and on your renovation cost, you can pull all that out of the property, so that now you have $0 tied up in the property, and you still own a nice, beautifully renovated property. And in this case, I'm using it for Airbnb and that Airbnb is generating $100,000 gross over the course of the year. And with the mortgage, it's an all the cost and everything else then it's netting both $40,000 for the year. So now you can own a $40,000 a year source of income for free. So pretty incredible.

Now normally the income wouldn't be that high just because simply simply the cashflow numbers on Airbnb are broken, for lack of a better way to put it. They're real cash cows. So the numbers on a cash flow basis look a lot better on an Airbnb short term rental than they do on a long term rental or other different types of rentals, which is why I've chosen that as a vehicle for investing. So again, if you want to learn more about the specific strategy, we use how to do all this, then just check out the link in description below. But let's break down some numbers and give you a real example here.

Now I'm not gonna use exact numbers just because it does get a little bit complicated. If we're dealing with like exact dollars and cents, it's going to get a little bit too confusing, but I'll give you a rough idea. So let's say you buy a property for $500,000. And let's say the bank is going to make you say an 80% loan to value that means that they're only going to loan you 80% of the value of the property. So in other words, you have to pay 20% hence a 20% down payment. So really simple. All that means if you're putting a 20% down payment on property, it means you have an 80% loan to value ratio loan to value the property is 80%. Okay, still with me? Good.

So that means that you bought this property for $500,000 and you put in $100,000. That means that your loan, your mortgage is $400,000 80%. Okay, so now that means that you owe $400,000 on this property That's all you owe on this property, no matter what the value in the future ends up being, all you owe on it is $400,000. So it's important to remember that. Now let's say you do a renovation. So, initially, you spent $100,000, you put $100,000 into this property, in order for the downpayment to go through, then you put an additional $80,000 into the property for renovation.

Now, bear in mind, all these numbers are based on a $500,000 property. So you can do this with much less money up front. There's ways you can get creative about financing the downpayment and the loan, knowing that you are gonna be able to pull it back out and repay that very quickly within six to 12 months. Typically, there's all kinds of different ways to structure how you're actually paying this money initially into the downpayment and renovation costs. So little sidebar there. Let's get back on numbers. So you spent $80,000 renovating the property, meaning now you've got $180,000 into the property 100,000 for the downpayment, and $80,000, for the renovation.

Now, you know, a couple months have gone by, you've completed your renovation, and you go and get the property reappraised. And it re appraises at $725,000. So now by doing these strategic renovations, you've taken this $500,000 property and turn it into a $725,000 property through renovating strategically, you know, updating things like the kitchen, the bathroom, the flooring, things that actually make the property worth more, we're not talking about doing things that just you like, like adding a purple bedroom, we're talking about things that generally just overall increase the value of the property, the strategic renovations you can do.

Again, for all the more detail on exactly what renovations do all that stuff, you know, just go ahead and click the link down below to schedule a time to chat with me. And we can go through all that in more detail. So you spend your $80,000 and writing it renovating the property. And you now get it reappraised and it's worth $725,000. Now remember what I said earlier, you only owe $400,000 on this property, you owe $400,000 on a property that is worth $725,000. That means that your loan is way less than 80% of the value of the property. Now remember, the bank will allow you to have a loan that is equal to 80% of the value of the property.

Now that your property is worth far more, your loan is actually only about 55% of the value of the property. So the bank, when you go to refinance, they'll let you pull out that additional cash so that your loan is bigger your mortgage, and your loan is now equal to 80% of the new value of the property. So if you refinance the property at a $725,000 appraised value, that means that the bank will allow you to have a loan of 80% of that amount, which is $580,000.

Now remember, your current loan is $400,000. And the bank says will will allow you to have a loan of $580,000. That means that that difference of $180,000, you get to take out in cash, that means that you actually get $180,000 back now in this case, that was exactly how much you spent on the down payment and the renovation costs. So that means that you get your $180,000 back. Pretty crazy, right? That means that now you own this $725,000 property that cash flows for you substantial money in this case, you know, we're looking at close to in my particular investment and Airbnb, we're looking at close to $45,000 a year in annual just cash flow profit from the property.

And we have no money into the property, no money sunk into the property because he pulled it all out through a cash out refinance. Now, again, there are pieces that I skipped over here, like the down payment closing costs, you've got your closing costs, your lawyer fees, things like that. There's other elements to it, there is more nuance to it. But that is honestly at a high level how it works. So I just want to make this simple, make the numbers simple, so that you really easy to follow along with.

But if you want more detail on the exact step by step process for how to do this, you want to start using this strategy to invest in Airbnb yourself, then just go ahead and click the link down below in the description. And you can schedule a quick 15 minute chat with me, it'll be with me personally. And I can walk you through how we do this and talk to you more about our recent deals and how we might be able to help you to get the same kind of results on your next investment or your first investment in an Airbnb property.

So again, I hope you got value from this video, check out the link in the description down below. If you want to set up a quick chat with me and we can talk more like I said I will be I will be working with a select small group of students over the next six to 12 months here helping them to invest in short term rentals. So if you're interested in that, click the link down below in the description. If you like this video, if you got value from it, then click that like button, give this video quick Thumbs up, take your time. Click, click LIKE button, click that like button, it really does help me out tremendously.

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