Hey, what’s up guys, it’s James here and in today’s video, I’m going to be reacting to a video from Graham Stefan that he posted about a month ago on his channel that’s titled why I’ll never rent on Airbnb. Now if anyone here doesn’t know who Graham Stefan is, I’ll be very very surprised. You’ve probably know of him but if you don’t, he is probably the top like the number one personal finance YouTuber here on the platform. He talks about all things personal finance, and he’s got a background he got started with buying long term rental properties, just your typical single family homes. He’s a realtor in I believe California. He now lives in Las Vegas he does all kinds of different investing real estate, stocks, all kinds of different stuff. And so he’s a pretty good guy to to learn from my opinion. Obviously learning from anyone about personal finance, you have to you know, get your different sorts of information. You have to do your own due diligence, but it’ll be interesting to see what Graham has to say with his real estate background coming from long term rentals. Why he says he’ll never rent on Airbnb. So without further ado, let’s just jump into it and I’m going to share my thoughts as we go through this video with Graham.

METRO Police cracking down on Airbnb and short term rental properties

1:19
and the people who invested their money in it hoping for some passive income aren’t getting it more than 4000 Airbnb ease and short term rentals consumed disappear from Atlanta, the short term vacation rental market is

1:32
so far this girl’s my favourite passing. I think that’s funny.

1:38
What’s a gramme? It’s guys here and it’s no surprise the housing market is falling. For the first time in more than a decade, prices are down year over year, rents are dropping at the fastest pace that we’ve seen since 2016. And the latest reports are showing that Airbnb could actually be the next domino to fall. This is what’s being called the Airbnb bust, which is about to have a significant effect across not only those who operate Airbnb, but also the entire market as more and more short term landlords permanently go out of business. So that’s why we got to break down exactly what’s going on why the air b&b Bust could be a brutal warning throughout the entire housing market. And then what you could do about this to make money or I guess not lose money on today’s episode of always be careful of falling iguanas if you’re doing yoga in Florida, although before we start to you,

2:25
okay, so right off the bat is just basically addressing zoning, it’s been in the headlines quite a bit recently, which is this whole air b&b Bust thing, where yeah, there are a bunch of people that over the last couple of years when Airbnb bookings were booming, because no one could travel internationally, a bunch of us bought in, and they were kind of opportunistic investors that didn’t do their due diligence, we’ve seen a few of them that I’ve reviewed on the channel like Shelby church is another YouTuber. So people did that. And then when things did slow back down to normal, not slow, it’s not like things are actually an Airbnb bust. And it’s like a big Doomsday, but things just returned back to normal. But a lot of people that were opportunistic, didn’t do their due diligence, didn’t realise that was going to happen, and now they can’t afford to hold on to their properties. So that’s just poor investing decisions. It’s really just gambling. We’ve been over that a bunch on the channel, if you’ve watched my other videos, you will know exactly what’s going on what I’m referring to there. So he’s just referring to that and the impact that’s having on the housing market cetera, like that all makes perfectly good sense.

3:28
Visual, if you appreciate all the information and research that goes into making a video like this, it would help out tremendously if you are being busted that like button.

3:37
I mean, while he’s on the topic, since you’re here, if you want to just Air B and bust my like button as well. That would be amazing. Feel free to hit the subscribe button as well comment whatever you want, it’s up to you

3:51
or subscribe to the YouTube algorithm. It does help out tremendously and it’s thank you for doing that. Here’s a picture of a Blue Lobster

3:58
so there you go, there you go. You got a Blue Lobster out of it subscribe like anyway, let’s carry

4:03
on thank you guys so much and also big thank you to Grammarly for spot okay, we’re

4:07
not gonna make him money we’re not making money for Grammarly here I don’t get sponsorship money from sorry I skipped too far okay, I thought that was gonna that was gonna launch into a big Grammarly ad I apologies I apologise there let’s go this will explain

4:22
a lot All of this began in 2007 went to San Francisco residents were looking to raise some money

4:28
okay, so this is an Airbnb explanation we don’t need that if you’re on this channel good chances are you know exactly what Airbnb is. He’s talking about the rise of Airbnb and he’s just going to talk about that so that he can kind of use that as a as a framework for then talking about what’s happening now so you’re pretty well caught up.

4:43
In one Bloomberg reported that Airbnb was spending millions of dollars making nightmares go away before detailing some of the ways they can crime, vandalism, damage and assault. Of course bareness any company that does as much daily business as Airbnb is going to have regular outliers. After all, in 2019, they were getting 2 million bookings per day. So even if 1/10 of 1% of customers had a type of issue that 730,000 complaints every single year,

5:12
yeah, just just think about that. That is crazy. I always like to remind people have that, because they’re, they’re worried because they hear about issues on Airbnb, that they’re going to have a bunch of issues. But the thing I was like to remind them is like Airbnb is such a massive company, they take so many reservations, that sure you hear about issues, but that still like like Graham just said, if they had, I think he just said that if there’s, if there’s 1/10 of 1% of the reservations, they take have an issue, that would be 730,000 issues that they would have per year. So there’s plenty enough issues to fill up all the news headlines, but that doesn’t change the fact that out of 100 reservations, you’re still not even going to have one single issue. So literally means that out of 1000 reservations, you’ll have one issue, right? And so as an investor, as a property manager as a host, who cares, right? It’s like one issue that comes up every three years if you’re fully booked at that rate. So it’s like, it’s just not nearly as big of a concern as it as it. It’s not nearly as big of a concern as people make it out. To be honest, people think it is. So it’s, I think that’s a really, really good perspective. Because I always try to tell people that and it’s just like, if you look at the numbers, it’s just insane how few issues there actually are on Airbnb,

6:41
even though you’d have a 99.9% chance of everything being fine. Well, though, on a broader scale, some of these issues are more prevalent than others, with one of them being referred to as the Airbnb effect. This occurs when inventory gets taken off the market for these short term rentals, increasing the price for everybody else. In this case, it was bound to that a 1% increase in Airbnb listings leads to

7:03
Yeah, so this is this is telling me that I’ll never understand, like a 1% increase in Airbnb listings leads to a 0.018% increase in rents, and a 0.026% increase in house prices. And so if you actually look at the numbers on that, like, in certain cities, they love to blame short term rentals for rising housing costs. But just think about this, like take a let’s say that you’re paying like top top dollar for your property you’re paying, you’re paying more rent than most people can even fathom and you’re paying $10,000 per month in rent, that 0.018% increase is, there we go is $1.80, it’s $1.80, that your rent would go up, I may have done the math wrong, maybe it’s maybe it’s $18. It’s like, who cares. It’s such a small insignificant increase. But like, even if the if there is an increase of 100%, you still would like barely feel that even based on these on these numbers. So the reality is like, it just doesn’t really matter. But that’s not what politicians like to like to talk about. So that’s a whole other issue. Like, the thing is, people will talk about this. And that’s why I always recommend to people, if you are going to invest in short term rental properties, just realise that even though these are the numbers, and even though we can look at it mathematically and show that Airbnb isn’t what’s causing rising housing prices in places like Toronto, New York, LA, whatever, politicians are going to want to look there so that they can go, Hey, I fixed something, right, they’re gonna want to go and restrict short term rentals, because that’s a really easy, easy thing that they can do that allows them to put their stamp of I actually did something and I tried to make the problem better on that issue and get reelected. So because of that, if you are investing into one of those, like metro areas, just be aware that that’s what’s going on. That’s where the incentives are flowing. So it’s a lot more likely in a market like that they regulate on short term rentals, it’s going to be less favourable to short term rentals. So that’s why I personally if I’m investing in those types of areas, like to have long term rentals as a viable backup plan for the property. And otherwise, I like to invest in markets where those kind of political factors aren’t at play. And so that will be like markets where there isn’t a big housing shortage, where their local economy depends heavily on short term rentals, that sort of thing, because then you’re less likely to get regulated against when it comes to short term rentals.

9:41
Oh point 01 8% increase in rents and a point zero to 6% increase in house prices. As a result, many cities have begun to ban Airbnb entirely or choose to regulate it. For example, Los Angeles no longer allows Airbnb to operate the property falls under rent control. Las Vegas is about to remove all air BMP listings with the exception of 2800, they get approved by a lottery system, Atlanta applied an 8% occupancy tax as a substitute for hotels, New York requires that hosts be living in the property full time. And this is only a fraction.

10:13
So again, just look like those are. That’s LA, that’s Las Vegas, that’s New York. These are the big metro areas where it’s politically a good decision for certain politicians to go and restrict short term rental properties. So just be aware of that, when you’re investing it’s part of the due diligence you want to do is look into the regulations. And I always for like, literally look back months and months, months and even years on this channel. And you’ll see that I always talked about not just looking at what the regulations are right now. But actually formulating a hypothesis based on data based on looking at other examples to see where the regulations are going to be in the future, if you’re going to be planting your flag and investing long term in that area. So it’s a really great point. And I think that Bram honestly addressed it really well. Yeah, of what’s happening

10:58
in what’s being called the Airbnb bust. See, since the inception of short term rentals, homeowners, landlords, investors and entrepreneurs have used this as a reliable way of making money. After all, why rent your home to a long term tenant when you can make four times more money renting and short term on Airbnb, fundamentally, Airbnb makes sense on so many levels, because theoretically, a tenant would be able to rent a property for cheap.

11:21
Yeah, I mean, this is like kind of case in point for why Airbnb and short term rental investing makes so much sense and why property management for it is in so much demand is because like, it just makes a lot of financial sense. Yes, it is more work, but you get rewarded for that. So if you’re a typical investor, that’s why there’s a lot of reason for you to want property management because they want the greater returns, but they don’t want the initial work. If you’re an investor. It’s why it makes a lot of sense to invest in short term rentals, because you can cash lease things like crazy. And instead of taking 15 years to go and save up enough money and get enough access to credit to buy like 15 properties, so that you can actually replace your income from cash flow, you can honestly replace your income from cash flow with one or two short term rental properties. So you can stop having to rely on your nine to five for your income after like one or two years as opposed to 15. It’s just a total total no brainer. If as an investor, your priority is cash flow. So yeah, absolutely. Case in point represent what

12:23
it would cost at a hotel and landlords get to make more money in a process for the hassle of managing a higher turnover. But as I’m sure you’re all aware, anytime there’s a good money making opportunity, everyone else is going to jump on it. And

12:35
so this is exactly again, what happened over the last two years, because the money making opportunity went from like great to outlandish. Like I’ve shown the numbers on a property that I bought two years ago, I bought it for $520,000, put some work into it. And then brought in $150,000, in bookings in its first year, like the cash on cash return on that thing was through the absolute roof. And so absolutely, that happened, like lots of people flooded in started buying properties. There was a stint of like six months where I put in bids on, I think probably like 10 properties and got outbid on every single one people paying outrageous prices for these things. Because they they just were they had no idea what they were doing. So yes, this absolutely happened. Lots will flooded. Did it mean that there were no good deals out there? And he had no, I actually bought a property in the middle of that pandemonium and got a really great deal. And it’s breaching and great ROI. It’s just the you had to be more disciplined at that time. Because good deals were hard to come by, you had to make sure you knew when it wasn’t a good deal when the price went too high. Now we’re kind of the opposite of that were those people that got those really horrible deals because they just paid too much for the property. They’re now exiting, they’re getting out of those properties. And so there’s lots of great buying opportunities right now. So that’s just you know, the nature of what happens. It’s kind of the cycle that things go through.

13:56
That’s what started to happen. All of a sudden, people began renting and subleasing properties in a process known as Airbnb arbitrage where they guaranteed the landlord a fixed rate, and then they would profit the difference from what the home actually generates.

14:08
And that was like I’ve said this for years on this channel, that rental arbitrage. So horrible business model. It’s incredibly risky. This is exactly why as well, it’s because like, a lot of the time these people rented the place. And then they couldn’t make as much on Airbnb as they’d hoped for so they didn’t have enough to cover the rent. And then now they don’t even own the home. Like it’s not like they actually have equity. They’ve got nothing else to fall back on. They’re literally just losing money hand over fist

14:34
Splunk as a former real estate agent, I saw so many people doing this from 2012 through 2018. They will buy homes and popular tourist destinations or rent properties for one to three years that they could then sublet on Airbnb, they would hire a management team that would build it out and then they would scale up insanely quickly. But naturally, anything that’s good is eventually going to get abused. And that’s what we started to see. First we had people renting out illegal structures on Airbnb for a profit then we People tried to circumvent HOA regulations by renting out their condo. And then you had people renting out their homes on Airbnb from massive parties until that was also banned.

15:09
Yeah. And like this has happened over the law. This has been like a decade long thing, this kind of all this stuff has happened. And like, yeah, of course, there’s some people that were just stupid about it, honestly. And just like, tried to circumvent the rules, like, get away the regulations. And like, the nice thing is like, like you mentioned here, Airbnb has like been reacting to this and actually put structures in place. So that for example, right now, there’s so many fewer parties that happen on Airbnb as a platform than there were, say, five years ago, 10 years ago, because everything has just been improved so much from where it used to be. The list

15:44
goes on. Now, keep in mind, I say all of this as someone who’s actually pro Airbnb, it’s a great service. And I think homeowners have a right to operate the property in the manner that they see fit. But at the same time, we also have to be realistic and understand that inevitably, people will push the boundaries of what they’re able to do. And that’s where the airbeam Bust comes in. Although before we go into that when it comes to topics like this,

16:06
all right, I can feel it common, it’s gonna be a sponsorship. I just know it. So we’re gonna skip over that. Yeah, there it is Grammarly. But in the meantime, while you’re waiting for this, what I would love for you to do is just hit that like button, feel free to hit the subscribe button as well. And you know, just hanging out. I’m just skipping, skipping along here. I’m gonna hit play, but just make sure you hit that like button and the subscribe button. While we’re here. Let’s get back into it

16:30
a lot of money. Lately, the business has been drying up. For instance, Business Insider detailed one couple that was making as much as $7,000 a month in revenue. But as of this past fall bookings dropped, his homes are empty more often than not to end his monthly revenue sank to $3,000. This isn’t just a one off situation either. Bookings are down across the board as competition and more inventory is driving prices lower. Even last year, short term rental vacancies began to spike with many property owners unable to cover their overhead expenses.

17:00
Yeah, like I can attest to this firsthand, we literally have a property that like that property that did 150k In its first year, it sets it to 100 $220,000. This year, that’s a huge drop from where it was at. But the difference is that we didn’t buy that property based on what we expected, like the 150 blew us out of the water, we were like ecstatic that hit that number. But we bought it running the numbers on it doing 80 to 100. And knowing that was incredibly solid, and the return on investment was still going to be amazing. At 80 to $100,000 a year in bookings. The fact that did 150 was incredible. And the fact that it’s doing 120 Now is still incredible. But the problem is people bought in and but what had come in bought that exact same property a year later, and they would have paid hundreds of 1000s of dollars more for it and justify that because they would have been projecting it would keep doing $150,000 a year, which it absolutely wouldn’t. And so it’s just a matter of actually knowing how to run the numbers and do proper due diligence, because I see too many people that just take a best guess. And the reality is like we saw a really big boom in Airbnb bookings over the last couple of years, because people literally were not allowed to travel internationally. So bookings for staycation type properties, like local destinations, they skyrocketed. Everyone took their Europe travel budget, and allocated into short term rentals that were an hour or two away from their home. And so yeah, like that had a huge, huge boom effect. And it just means that if you are going to invest, you need to be able to run historical data, run historical numbers and make sure you’re getting great property that’s still gonna perform well, even now things have cooled back down to about normal. Well, I mean, we’re still doing better than normal, but we’re at about normal. And so again, it’s all about proper due diligence, I’ll be the first one to tell you, there are tonnes of bad deals out there that you absolutely shouldn’t buy. And that’s why I think that like so many people, we can help by showing them how to do that proper due diligence, where to find the best deals where the best markets are for investing, because buying the wrong deal with real estate investing can be a multi 10s of 1000s of dollar mistake. So you don’t want to make that mistake. But I’ll also say there are some incredible investment opportunities literally in the last week. We’ve had like three of our members go firm actually lock up incredible deals, they’re gonna cashflow like crazy. It’s just about knowing where to look what to look for and knowing how to run your numbers and do the right due diligence. Again, if you’re interested in learning more about how to work with this, how to do any of that. All that stuff is linked in description down below. But let’s jump in back to them. Let’s jump back in. Guys just want to take a quick break here to say that for those of you watching, who want to build cashflow, and long term wealth by purchasing Airbnb and short term rental properties, there’s a link in the description right down below for a free training that will walk you through my exact strategy for investing successfully. In Airbnb, now, if you’re not ready to actually buy properties, and you want to get started managing other people’s properties on Airbnb the same way I got started and build a full time income managing other people’s properties, there’s actually another free training linked in the description down below as well, there’ll be a really great fit for you. So whether you want to invest in short term rental properties and actually build amazing cash flow and long term wealth by acquiring the assets, buying the properties themselves, or you’re looking to earn a full time income, managing other people’s properties on Airbnb, we’ve got some awesome trainings that are linked in the description down below, that will definitely help you out. When you sign up for the trainings, we’re also going to send you a few other tools and resources completely for free just to help you get started. Again, the links to sign up are in the description down below. And both trainings and all the tools are completely free. So make sure to register for the trainings, links in the description down below.

20:55
And remember a somewhat viral story a few months ago, where an Airbnb manager was stunned that more than half of his homes were empty over Superbowl weekend when he had to reduce prices by more than 60% just to get some of them rent.

21:08
Again, again, like this, I talked about all the dominance channels, it’s so important to make sure you have a proper pricing strategy. Because if his property if have this property stayed vacant for Superbowl weekend, that just means he was not on top of his pricing strategy means he like waited till the very last minute to slash prices he was holding out and like people make this mistake all the time is that they know that a weekend is going to be good, but they overestimate how good it’s going to be. And it’s that their price is way, way too high. So you got to be watching that you got to have a good pricing strategy.

21:38
You know, I know nobody has any sympathy for someone who’s only renting your home for $300 a night. But you have to wonder why is this happening? Could it be the greedy hotel industry or the politicians who want to limit short term rentals or Jerome Powell? Because you raised rates and caused a recession? Nope. Instead, it comes down to the simple fact that there is way too much supply. In fact,

22:01
I actually think it’s a combination of those things. Like it depends on what part of it you’re looking at. The reality is like the the increase in supply, the additional supply of short term rentals or any dip in demand because people can now travel internationally, that impacts the 50 percentile hosts, the hosts that are properties that are average there, okay? It really impacts them, the the properties that are like really crushing it super optimised, like dialled and they’re the top performing properties, they don’t really feel the impact of that as much. And then as far as like, why are people exiting Airbnb that has a lot to do with interest rates going up as well, like just prop in proper due diligence? I think it’s it’s just a combination of all these things. They all have different impacts. And like, yes, the additional supply does have an impact. But I literally just did a video about how that like breaking down how that actually doesn’t really impact top performers much, because there’s still enough demand that those top performers will get booked. But a lot of people will think that what happens in when there’s a decrease in demand or an increase in supply is everyone gets a few less bookings. And that’s not true. The people that get a few less bookings or way less bookings are the ones that are not super desirable. But the properties, they’re stunning, they’re beautiful, they’re well priced, they’ve got a great listing, they still get just as many bookings, they just take those away from the other bookings that aren’t optimised as well. So you just got to make sure that your property is optimised and again, like that’s something that we always work with people on

23:27
air DNA found that from February 2017, through January of 2023, Airbnb and VRBO listings in Phoenix more than quadrupled, growing to 21,000, from five.

23:39
So again, that just means that like, there’s still if if the numbers were great for 5000, it means that at 21,000, for the 1000 or 2000 of those initial 5k that were incredible, they’re stunning and really well done, they’re still going to be getting the lion’s share of the bookings. It’s those extra 15 16,000 properties that got added. They’re gonna get way fewer bookings if they haven’t optimised their properties. If they haven’t optimised their photos. If they did, then they’re going to make it difficult for the the half of the original 5000 that had been just like resting on their laurels, not doing a good job. So again, it’s not that like all 21,000 properties are now suddenly going to all be like getting the same amount of demand just evenly spread about them. No, no, no, there’s going to be a few top performing properties like one, two, maybe 3000 of them that are getting, like 80 90% of the bookings. And then all the rest of them are just gonna be suffering and not getting bookings. You just have to make sure that you actually optimise your prices and know what you’re doing.

24:45
1000s This creates a vicious downward cycle where people reduce their prices to stay ahead of the competition, which then causes their competition to reduce prices even further until eventually it’s a race to the bottom.

24:57
So again, that is a fallacy. That is what most People think happens I don’t blame Graham for thinking that’s what works. And that is exactly how it works. If you’re all selling the same thing, like if you’re if you’ve got two different competing companies that are selling fidgets spinners that don’t differentiate from one another whatsoever, and then suddenly that grows to like 20 Different companies, they’re all selling fidgets spinners that are not differentiated whatsoever, then yeah, like, it’s just going to be a race to the bottom, and who’s going to who’s going to undercut them who’s gonna get the lower costs, but the thing is, short term rentals are all very, very different from one another, not just the property, but thinking about, like, as a group of eight people, you’re gonna book some properties that you wouldn’t ever book others. So there’s different pockets of demand. There’s totally different types of properties, there’s totally different qualities of properties. There’s also totally different price ranges of properties. There’s also different properties in different locations, like everything about these properties are different. And then it’s also the listings themselves, the photos are different. The listing descriptions are different. There’s so much that differentiates them that they’re each their own individual item. It’s like saying that every restaurant in a market starts to get less business because now there’s there’s a McDonald’s that opened up, well, no, if there’s a fine dining restaurant and a McDonald’s, they’re not actually competing with one another. So it doesn’t matter that the McDonald’s opened up, it doesn’t matter, the fine dining restaurants there. So you’ve just got to make sure that within the niche that you’re in, that your property is in that you’re crushing, and you’re the best in that niche. And so it’s not, it’s not really a race to the bottom, because you’re paying more for higher quality. You’re not just it’s not like you with the luxury listing, you’re competing with the guy that’s got like a shabby one bedroom place. So, okay, it’s a common fallacy. And I think this is why a lot of people are fearful about short term rentals. And they really shouldn’t be because if you look at the numbers, it does, it clearly shows this is not the case.

26:54
So that then leads us to what’s happening today, because it’s really the perfect storm. Basically, money was cheap, people had a lot of cash remote work was encouraged. And Airbnb hosts were at the right place at the right time to capitalise because of that Airbnb was posting record profits or hosts for rolling in cash. And that led to quite a lot of people following a business model that it worked previously really, really well. In this case, people were listing their homes online, they were participating in rental arbitrage, or,

27:21
you know what they say? Again, it’s just it all comes down to I really like what Warren Buffett says, don’t try to time the market. It’s about time in the market. Right? It’s not about timing the market. It’s about time in the market. So yeah, we cashed in like I’ll be the first say as well. We as short term rental investors hosts we absolutely cashed in when the pandemic hit, and everything happened there. It was incredible for a lot of our businesses. But the people that really crushed it and really did well are the people that were already in the market or already investing in not the ones that jumped on the bandwagon after the fact the people that tried to time the market and get in right at the peak of it. They’re the ones that lost their shirt. They’re the ones that did the absolute worst. So if you’re looking for a good time to get started, it’s now it’s like get started and things are still good if you get the right deal. Don’t try to wait for the next boom and try to time the market that’s literally what failed for people that’s why people got burned.

28:21
They were specifically buying properties because they wanted that sweet sweet Airbnb passive income. However, just as competition was increasing, interest rates begin to rise, consumers suddenly had less money to

28:32
spend hence why you do not want to time the market. Yeah, 100%

28:36
remote work was a lot less encouraged and bookings began to fall which resulted in a quickly saturated market that begins to generate a lot less money than people initially expected.

28:47
Again, I don’t agree that it’s purely because of market saturation. I think there’s a whole bunch of factors. But for the most part, I agree with what Graham saying.

28:54
So here are my thoughts on Airbnb. And I say all of this as a former real estate agent, current real estate investor and landlord. First of all, if you’re buying a property for an investment, above all else, make sure it actually cash flows without the use of Airbnb, this is where I think most

29:09
absolutely make sure the property actually cash flows. Now again, if you’re in a market, where it is restrictive on short term rentals, or it is likely to become restrictive on short term rentals. I want to 100% agree with what Graham said the last part of it, make sure it’ll cash flow without the use of Airbnb, whether that’s mid term rentals or long term rentals. And for mid term rentals. You might still use Airbnb. But I mean without short term rentals, make sure it’s still cash flows. Because the worst place you can put yourself in a position where the property’s cash flowing negative. That’s a horrible place to be. And so for a lot of the markets that he’s talking about and that he invests in, I absolutely agree with that advice of making sure that the property cash flows without the use of short term rentals for markets where you can more reliably depend on short term rental then you still need to have a really solid backup plan, whether that’s midterm rentals, whether that’s like accounting for a potential decline in short term rental bookings, you might not really need to in certain markets depend on it cash long as a long term rental, but you need to always have some form of backup plan. Again, I won’t go dive into that in detail in this video. There’s tonnes of different ways that we put in place backup plans. But by far what Graham is saying here I fully agree with, which is that you absolutely need to make sure that you protect your downside, and the property will cashflow positive no matter what. So I fully agree with that.

30:34
Most people go wrong in a purchase. Because if you rely on Airbnb, you’re exposing yourself to so much risk in the event that something happens or prices fall.

30:43
Again, in an urban environment where you make it regulate over the market, I 1,000%. Agree with example prices

30:49
fall instead, you should always view Airbnb is just a way to supplement your income as icing on the cake. For instance, if you have a cash flowing rental property, but you can make more money renting it on Airbnb short term, go for it and write that gravy train in till there’s no more gravy.

31:05
Yeah, and actually, that’s another really, really great opportunity as well. We work with a lot of people, a lot of investors that already have long term rental properties, we actually just had a member that came on board a few weeks ago, he has a portfolio of long term rental properties. And we’re able to analyse them and see which ones already without doing much at all, like literally just furnish it, maybe add some decor, and you can be cash flowing way better as a short term rental property without even having to buy new property. So that’s a great opportunity as well, that I think a lot of long term rental investors can benefit from just to make extra cash flow, especially now with interest rates having risen and people’s cash flow being restricted. Any opportunity to make more cash flow on existing properties is a great one. So that’s another really great opportunity as well,

31:50
then in the event that something happens, or if prices fall below a point where it just doesn’t make sense to rent anymore, you’re totally fine because you still have a cash flowing property that you could rent long term. In addition to that, it’s really important to understand the reason people make so much money on Airbnb is because it’s a lot of work. I know people who run Airbnb is and it’s a full time job to make sure the house is cleaned fully stocked, and everything is ready to go for a new tenant every few days.

32:16
Yeah, absolutely. Again, I agree with this as well. Now that being said, I obviously like you can set up systems, whether it’s if you’re an investor, and you hire a property management company that can be totally hands off, you just need to make sure that the numbers work for that. Or if you’re serious about this and you’re growing to 2345 properties, then it can often make sense to essentially have that management team be internal in your own kind of real estate business. That’s what we’ve done. So it is totally hands off for me like I don’t do hardly anything that relates to these properties. But that’s because we put the legwork in initially to build that team, we’ve got guests communication, we’ve got a portfolio manager, we’ve got cleaning teams, we’ve got maintenance, and we’ve got that portfolio management role that ties it all together, manages everyone makes sure everything runs smoothly. That’s not something that will be worthwhile to set up, you just have one property, and it’s not something you set up overnight. So it does take work, it can be completely passive by either hiring a property management company or building one like, like what we’ve done sort of a mini internal one. But it does take initial work to either find that property management company, or to build your own. And if you’re finding the property management company, you also have to make sure the numbers work because they’re going to charge your percentage of revenue as well. So yeah, like it’s, it’s not something for nothing. And if it were, I wouldn’t be talking about it. Because anything that’s something for nothing. That’s just too good to be true. That’s going to disappear like that.

33:40
You also have to be extremely diligent on your photos, description and reviews. You can’t just put a lockbox on the front door and hire a cleaning person and expect to run a successful business.

33:49
Yes, absolutely. I’m glad you mentioned that as well. It’s not

33:53
how it works. Of course, on the flip side, if you use Airbnb responsibly, if you comply with local regulations, you bought a property that already cash flows, and you could make more money renting it short term, then I’m all for it. And if you could make additional income, great job, although keep in mind that as with anything that’s profitable, more people will eventually drive down your margins. And we haven’t quite seen the bottom in terms of just how far this will fall.

34:16
Again, like I don’t actually agree with that. Because again, everything I said about like McDonald’s high end restaurant, like you’re not going to get your margins driven down as more people come in, what’s going to happen is that if more people come in, that are competing with you specifically, which really you should be setting yourself apart from the competition. There’s tonnes of ways to do that, then you just have to make sure that you beat that small amount of competition and the reality is the vast majority of hosts and property owners and etc. on Airbnb, don’t know what they’re doing. They’re just not good at it. They’re not here watching videos like this. They’re not listening to training. They’re actually putting the work in to be great. It’s amateur city and so being the best out of that small group is really not that hard. Again, just like you said, It takes work. It’s not something for nothing. But it’s not really something where like the bottom is going to fall out. I’ve been in this for a decade now almost, and the bottom isn’t falling out. It’s just that now you can’t, like literally before used to be able to do absolutely nothing like just post a place. And because there was so little competition, if you posted a picture from like, a crappy picture from your old 2000s smartphone, like it would still get booked, like you could put a freaking tent on Airbnb and it would get booked. Now you actually have to know what you’re doing. And so it’s just like, you just have to be at the top of your game, you’re just not gonna be at the top of your game, you just have to actually put the work in to be good at the game.

35:39
I personally believe that we’ll continue to see a lot more listings on Airbnb, as long term landlords get desperate and aren’t able to get the price that they need to to pay their overhead costs.

35:48
And again, like that is going to happen. We’re seeing that happen. Right now we’re already working with people that are doing that they’re switching from long term rental over to short term rental, because they’re not getting the cash flow they need from long term rentals. But again, remember, the vast majority of those desperate long term rental landlords, they have no clue what it takes to manage your property successfully and effectively on Airbnb and short term rental. So they’re just delaying the inevitable for most of them. They’re not actually putting in the work to do a good job of it. And so there’s some of the worst hosts on the platform. Overall, they’re not competition. So I think that’s worth pointing out as well.

36:25
For example, rents are falling nationwide. And if they can’t afford to eat the cost, then Airbnb is an additional option that’s worth looking into. This is also happening at the same time that local regulations are making it more difficult to list and rent. That’s why I absolutely believe that we are in the middle of an Airbnb bust will inefficient market operators are going out of business in a way this could be a great opportunity to stand up.

36:48
Yeah, just literally be an efficient market operator. This is what he’s about to say

36:52
in the crowd, especially if you have a very compelling description about the property as our spa, he’s

36:57
about to go into an app for grammerly here but yes, absolutely. It is a really, really great opportunity for you to stand out from the crowd here and just actually do a really great job listing like that is he nailed it as a great place to wrap up the video while he goes into his adverb? Grammarly. I’m gonna ask you one last time to please hit the like button hit the subscribe button. Share your thoughts and questions and concerns everything, everything at all just put it in the comment section down below. I hope you enjoyed this video. Again, thank you so much for watching, and I’ll see you in the next one.