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The Golden Rule of Airbnb Investing

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In this video I break down my Golden Rule of Airbnb Investing. Well, it’s kind of two rules, really. But I answer what you absolutely MUST account for during analysis, and how I do it.


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The Oracle of Omaha. Consistently one of the wealthiest people on the planet for decades.

Warren Buffett famously has two rules of investing. Rule number one is don’t lose money. His rule number two is refer to rule number one.

In today’s video I first outline why this is so critical using numbers. If you’re an investor or want to be an investor, I believe this video should be required education.

Unfortunately, many investors only see the possible money they can be making. But they don’t protect what they’ve already earned. I share some math as to why this matters.

Next, I share some mindsets you need to adopt. Adopt them, like, yesterday.

Because it’s big picture here. In the video we talk about how to look at this big picture in terms of your retirement and your wealth and your legacy.

Then we dive into 2008 and how that happened. 

I share the one thing that is the cushion for this downside, and why short term rentals are the solution to this problem.

Finally I outline the two questions I ask myself during ever downside analysis on a property. I never want to put myself in a situation where I could lose money. Ask yourself these questions and avoid it for your own portfolio, too.


Hey, what's up guys, it's James here. And in today's video, we're going to be talking about the number one most important rule, the golden rule for investing in short term rental properties. The rule which if you do not follow it, I promise you, you will not have a fun time. So I want to talk more about that. Before I do, I just want to remind you guys that as always, there's a link in the description down below for a limited time right now, we are offering a free training that teaches you exactly how step by step to invest successfully in short term rental property. So if you haven't already checked that out, I highly recommend you check that out, it's not gonna be around forever, and the training is completely free, just click the link in the description down below, register, grab your shoulder spot before it runs out. And we're also going to throw in a free analysis spreadsheet that's going to help you to analyze deals because we want you to succeed, we don't want you to make mistakes, we want you to be successful with your short term rental investing. And so in order to do that, make sure you click the link down below to register for that free training. Now, that being said, let's talk about the golden rule and it is cashflow it is do not lose money. Now, someone you may know and Warren Buffett once said that the two most important rules for all investing are rule number one, do not lose money. And rule number two refer to rule number one. Now I took that to heart and what I realized the more I started investing, the more I started growing my wealth was that there's actually a reason behind that it wasn't just some cheeky comment, that's just pointing out the obvious, it's that every time you lose money, you then have to gain disproportionately more in order just to get to back to break even. Now I'll give you an example. If you have $100, and you lose 10% of it, that means you've lost $10, tear down to $90. Now from $90, if you then gain 10%, you'd think that you'd be back to $100, right? Wrong, you would be up $9, which is 10% of 90, and you back to $99. So now, to compensate for a 10% loss, you have to get greater than a 10% gain, just to get back to square one just to get back to break even. And so that is why when it comes to building your wealth, when it comes to investing, the most important thing, bar none is to never lose money, you never want to lose money. Because anytime that you lose money, it's gonna really, really slow things down for you, because it's gonna take a disproportionately longer timeframe, just to get back to square one. And so when you're looking at the compounding effect kicking in, it really means that it can be five years, 10 years, 20 years less before you start actually building substantial wealth and getting the compounding interest kicking in in your favor and really working for you. And so if you want to succeed, you want to be able to quit your nine to five, you know, replace your income from short term rental cash flow. If you want to build a substantial nest egg for your retirement. If you want to build something to pass along to your family to your children, then you really want to prioritize not losing money. That's why for us whenever we're investing, the number one priority is not Hey, what is the return on investment? What is the upside on this? It's a what is the downside on this, we never want to be in a position where we could potentially lose money if we could, we're just not going to do the deal, no matter how juicy The upside is. And so the way to do that, and the way to best protect yourself from losing money in real estate is having cashflow. If you remember back in 2008, that's probably one of the biggest losses experienced in real estate investing by the masses in North America. And the reason that happened was because interest rates went up. And people could not afford to hold on to properties that had been gone down in value. And so, but a boom, you've got a recipe for disaster, right? Imagine, just think imagine you bought a property for $500,000. And then all of a sudden it's worth $400,000. The last thing that you would ever want to do is sell that property because if you sell that property, you have to realize this $100,000 loss. And so the only other thing that you can do is hold on to it. And if it's cashflow positive, great. If it's cash flowing negative though, if your expenses go up, or if your cash flow is lower, and suddenly it's going to cost you money every single month just to hold on to that property because someone's got to pay the mortgage, the utility bill everything else. And so if you can no longer afford to hold on to that property, what are you forced to do? You are forced to sell it and what does that mean? It means you're forced to realize $100,000 loss and by the way leading up to that loss you were just losing money as well because every single month it was costing you money to carry that property. And so that is exactly what happened in 2008. That's when people lost their homes. That's when people you know lost literally millions of dollars overnight. In real estate is because They didn't have the cash flow to be able to hold on to those properties and weather the storm, anyone who did own real estate and saw a decline in value, but had the cash flow coming in to be able to carry and hold on to that property was able to weather the storm. And then they were able to come on the other side when property values had gotten back up to what they purchased for or above that, and then they can sell at a profit if they choose to. But frankly, why would they because they're earning cashflow passively every single month from that investment. And so that is really the golden rule of short term rental investing is to make sure that in a worst case scenario, you would never be in a cashflow, negative situation. So obviously, it's really fantastic that we can get incredible cash flow and then on a $500,000 property, we can cashflow at $90,000 a year in profit. After all the carrying costs. That's fantastic, the ROI there is undeniably incredible. But there's a big Asterix there, we want to make sure that even if we're buying that deal, that in a worst case scenario, we're never going to be losing money. If the worst case scenario on a deal of that good were that I would potentially lose money, I still wouldn't want to do it. Because you never want to put yourself in that position where you could potentially lose money, because the risk is just far too great. It's not worth the reward where you can, especially when you can get that reward without having to take that substantial risk. So one analysis that I think is really, really important for you to learn how to do and then we'll teach you how to do in the train that's linked in the description down below is like analyzing your worst case scenario. And so the way you want to do this is there's a couple different ways to look at your worst case scenario. In one scenario, you might go okay, what is the worst case scenario? If this property is still a short term rental, and it just performs? Awfully? Let's say that things get cut in half? Or let's say that it really doesn't perform well? Will it still be breaking even on cashflow? In other words, will it still be bringing enough money after the operating costs like cleaning fees, supplies expense? Will it still be bringing in enough money to pay all the carrying costs on the property mortgage taxes, insurance, utilities, that sort of thing. And so if it will still be bringing in enough to more than cover those costs, in a worst case scenario, then that's a great sign, that means that you have a very, very, very low if not no chance at all, of actually being in a cashflow, negative situation with that property. So even if the property does go down in value, it's not really relevant to you doesn't really matter because you're still going to be making money. And then the other way you can look at it say, Okay, well, you know, let's say that this property had to be transitioned over to long term rental. Let's look at that as a worst case scenario, would it cashflow as a long term rental, that's another good way to look at it and see what the potential downside is, if you could still be cashflow positive on the property as a long term rental, that is a pretty safe bet. That means that you don't have to really worry about this property being too much to cashflow on your own and having to be forced to sell it. So that's what I always look at. That's one of the most important things for me personally, when it comes to real estate investing is to really look at the downside, I think too many people go in only looking for the upside. And they just don't spend the time to properly analyze the downside. So if you want to be able to learn exactly how to analyze both the upside, and the potential downside to make sure that you're not only investing in a property that is going to yield a really great ROI, but also one that doesn't have any risk attached to it, then I highly recommend you check out the free trainings linked down below. We built our analysis spreadsheet exactly for that so we can properly accurately run the numbers. And we're going to give that analysis tool to you completely free when you register for the training. So make sure you just click the link in the description down below and sign up for that before it's too late. We're not going to be giving this stuff away for free forever, obviously. So make sure that you grab that before it's too late. Now, the other thing is that if you really are serious about investing in short term rental properties, and you want to grow and you want this to be successful, you want to replace your nine to five income or really, really scale this and be incredibly successful investing in short term rentals, then right after the free training, you're gonna get an opportunity to schedule a one on one call completely free with either myself my business and investing partner Riley or another member of our team that helps us with our short term rental investing. So if you're interested in that, that's where we're going to get on the phone with you and actually map out a game plan a step by step game plan, specifically custom tailored to you. So we're gonna look at what your goals are, what you're looking to achieve, you know what your experience is, and then kind of map out, Hey, these are the steps that you need to take in order to get there. Again, that is something that is going to be incredibly valuable to you and it's completely free. You'll be able to register for that right after the training. So I highly recommend that you do that if you're serious about short term rental investing, because we're going to be able to help you to see some potential challenges that you wouldn't be able to see on your own, you know, make some great moves, avoid some bad moves, make sure that you're not making mistakes along the way. So If you want to really speed up your timeline and really ramp up the amount of success and results you're able to achieve with your short term rental investing, then make sure you take advantage of this limited time opportunity, click the link below, register for the training, grab the free tool and grab that free strategy session. So all that being said, I do hope you got a lot of value from this video. If you did, please do me a quick favor and just hit the like button. It really helps me out tremendously with YouTube's algorithm and helping get this channel and get all of this knowledge and all this training out to more people, I really want to help more people be financially free and invest successfully in short term rental property. So if you could help me and be a small part of that, I would really really appreciate if you could just hit the like button. Also, if you are interested in more of this content, I post two videos every single week on this channel. So make sure that you hit that subscribe button to stay up to date with all the latest. If you have any thoughts, comments, questions, anything you want to chat with me about, just let me know in the comment section down below. And other than that, I just want to make sure that I say hey, have a great day. I hope you're doing fantastic. Hope you have an awesome rest of your day. And with all that said, I'll see you in the next video..


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