What’s up guys, in today’s video we’re gonna be talking about the three most common fears that I see holding would be short term rental investors back from getting started, preventing them from actually getting their first property and getting into the market. I want to talk about these fears. And I want to share my thoughts on these fears, because I really want to help you guys here on the channel to invest successfully in short term rental properties. The number one most common fear that I always hear prospective investors talking about is the fear of losing money. And this manifests in a few different ways. Sometimes investors are afraid of losing money, because they think that the market is going to keep dropping, or the market is going to drop further and they’re afraid of buying too high. Other times, investors are afraid of buying when interest rates are as high as they are, and they think they’re going to be losing or wasting money paying the interest on a property. Or other times people are just unsure about the market. And they feel like short term rental investing is too risky, and they’re going to lose money because of that. So let’s actually dive into each one of these different elements of the fear of losing money. Now, if you’re one of those people that’s afraid that the market is going to drop that prices are going to keep going lower. I say to you look at the data. If you actually look at the data, then in any scenario conceivable if you long term buy and hold a property, you are going to come out ahead and even if you bought at the absolute peak, you’re still going to come out ahead of someone who waited to try to time the market. Because the reality is, while you’re sitting there fearful that the market might drop further, other people have invested into that market that is dropping, even if your assumption is correct, and you are some kind of savant and you can perfectly time the market, you’re wasting time with your money on the sidelines, and wasting money on potential returns that you could have been getting otherwise, I’ll give you a perfect example. I bought a property for $580,000 a couple of years ago, and that property is now worth less than what I bought it for I bought when the market was higher before the interest rates had climbed as high as they have now. And so because of that that property has gone down in value since I first acquired it. But the thing is, in the time that I’ve owned that property, every single month, I’ve been building equity in that property, I’m paying down principal on the mortgage, and anyone who is sitting on the sidelines just have their money in the bank, that money is just been rotting away to inflation, they haven’t actually been using that money to produce any equity, any additional value. I’ve also been earning cash flow on that property every single year that property cash flows me 30 to $60,000. going to sell that property for a loss. Because why would I? That’s the thing that most people just need to realise about rising and falling house prices is it’s all imaginary until you actually sell the property, it doesn’t matter to me that the property value has dropped over the last couple of years since I own the property, because I’m not selling the property. So I’m not actually realising that loss. I’ve owned this property, it’s cashloaned for me. It’s actually making me money. So I don’t have to sell it, the only time you have to sell it is if the property is losing money. And with short term rental investing, you are investing for cash flow, they’re incredibly good at producing cash flow. And so it’s very unlikely if you do it the right way, you’re ever going to be put in a position where you actually have to sell the property. So I’m holding on to this cash cow that’s generating 30, 40 $50,000 a year for me in positive cash flow while I wait for the market to come back up. And guess what I’m going to do then. I’m still going to hold the property. I’m not even going to sell it even when the property value goes back up. Because again, it’s still going to be producing cash flow for me. I’m not investing in the property because of the it might my assumptions or projections or speculations about where the property value is going to go long term. Frankly, I do don’t know, you know, if we look at history, it’s very likely over a long term period, that the value of the property is going to go up over a 10, 20, 30 year period. But even if it doesn’t, I still own an income producing asset, something that’s making money for me. Because that way, I don’t have to go to work to make money for myself. So that is one of the biggest misconceptions I see is that people are worried about the price is dropping, well, it’s actually gonna cost you a lot more to be sitting on the sidelines because of the opportunity cost that you’re missing out on. And I didn’t even touch on all the tax benefits that come with owning a property. Because I do have earned income, I can use that property to offset some of that earned taxable income. And I can then pay less in taxes, which again, just puts more money into my pocket at the end of every single year. So to any of you who are afraid of property values falling, I say, good chances they will, maybe they will, maybe they won’t. But regardless, you’re going to be better off buying a property and actually getting your money working for you, then you are going to be having your money sitting on the sidelines. Now, for any of you investors out there who are worried about interest rates, whether they’re going to go up or they’re going to go down, it’s really largely the same thing. The price of properties has a whole lot to do, there’s a very strong correlation between the price of properties and the rate of interest that banks are charging. When interest rates go up, property values tend to go down. Case in point, the property that I bought a couple of years ago, it’s not intrinsically worth less than it was when I bought it, it’s not able to produce less income for me, the only reason that the value of that property has gone down is because interest rates have been climbing, it’s more expensive on a month to month basis to carry a property. And so fewer people are buying those properties. And so prices go down. Now, what happens when interest rates go down? Property values go up? So let me ask you, would you rather buy a property at a high interest rate and a low purchase price knowing that in a couple of years, you can refinance the property, you can lock in at a lower rate, or would you rather pay a higher amount for buying a property and get a low interest rate and know that you’ll never be able to negotiate down a lower purchase price in the future, that’s again, something that a lot of people fail to consider. If you bought a property a couple of years ago, you got to take advantage of these really low interest rates. But it also meant you’re paying more for the property, I can’t go back now and get a lower price on that property. But if I buy right now, where the markets out with higher interest rates and lower purchase prices, I lock in that lower purchase price, no one can take that away from me. And meanwhile, those interest rates are going to come down over time, and I’m gonna be able to lock in at a lower rate down the road. So it’s actually a better time to buy when everyone else is fearful. And market rates are lower for property and interest rates are a bit higher. The other thing to consider is that I would never advise that anyone buy a property regardless of the interest rate that isn’t going to cashflow. And generally for short term rental properties, you want to be cash flowing a cash on cash return of 15 to 20%. Again, we talked about exactly what that term means. And everything in the free training is linked in the description down below and show you how to do all that how to find the right properties, everything you need. And so, regardless of whether interest rates are high or interest rates are low, it really shouldn’t impact the overall plan you have for growing your portfolio more so just the analysis you do as long as you’re factoring those numbers into your analysis and making sure the property is still cashflow well at a higher interest rate, then you’re going to be good to go. And you can take advantage of much lower prices. And also, frankly, just a lot less competition. Right now, there’s a lot fewer bidding wars, there’s way fewer people that you’re competing with. So you can generally see property sitting on the market for a lot longer. And you can come and get them for a really, really great deal. Like Warren Buffett always says you want to be greedy when others are fearful and be fearful when others are greedy. Right now there’s a lot of fear in the market. And so this is honestly one of the best buying opportunities that we’ve seen in years and years and years Now, for any of you guys that are worried about losing money because the property just isn’t going to perform predictably the you don’t know how well a short term rental is going to do. You think well with a long term rental I can rent it month to month and I get that guaranteed secure income, to those of you I say do you really? With a long term rental, yeah, we’ve seen it. We’ve all heard the headlines seeing the news stories about people failing to pay their rent, needing to go through evictions, having all this headache having the tenants destroy and ransack the property. And the reality is, that happens a lot more frequently, and is a lot more costly with a long term rental than with a short term rental. With a short term rental property, you have real control over your property, if someone is staying in there, and you don’t want them in there, you can actually just kick them out, they’re trespassing with landlord tenant laws being what they are. In most places in North America, it’s a lot more difficult to evict someone and get someone out of their property if they’re a long term tenant. So you’re not really guaranteed that income the way you think you are with long term rental. And I also want to say that with short term rental, it is quite easy to predict how well a property is going to do. The reality is the data is out there, we have access to data that tells us every single short term rental property all over the entire world exactly how much they earn on short term rental. And we can see that data for the last five years in most cases, and see exactly what their occupancy rates are, what their nightly rates are, what the properties actually look like, what their total revenue is, like, all these different metrics. And so we can use all of that data to forecast what our property is going to perform like before we ever have to put an offer in or purchase that property. So the reality is that there’s not really much that’s unpredictable these days with short term rentals, I can pretty much predict how well a property is going to perform within about 30 minutes of running some quick analysis on it. As long as you know what you’re doing which again, we have trainings linked in the description down below that are completely free. We’re even going to give you our analysis spreadsheet COMPLETELY FREE when you sign up for the training on how to invest in short term rental properties. And if you know how to use tools like that, then the whole process becomes a lot less guesswork and a lot more predictable. another fear that I see come up all the time is people being afraid that regulations are going to come in and screw them over in a given area. And again, if we look at that, as investors, it’s really, really important to do our due diligence, number one, and to have good contingency plans, number two. So how do we do our due diligence around regulations? Well, it’s as simple as knowing what to look for, and knowing how to read the actual regulations, and see what’s what, because a lot of people, they just watch news headlines, and they see what’s going on. They hear other people complaining, and they never take the time to actually just read the regulation. And so oftentimes, when you read the regulation, you can figure out really, really clearly exactly how you can operate within the regulations. And you can also find out if there are no regulations, you’re going to really just learn a lot by actually reading the dang document. So that’s always the first step is just understanding exactly where regulations are at and seeing if there are potential opportunities, for example, one of the coaches and BNB Inner Circle that works with us, they actually have a property in a location where in order to have a short term rental, operating legally, it needs to be a bed and breakfast. So they went and looked up what the requirements are for bed and breakfast. And turns out, it’s pretty simple to meet those requirements. So they actually got the property classified as a proper bed and breakfast. Now they can operate legally. And the great thing is, there’s a lot less competition up there because so few people are willing to just do that actual research and figure out what the requirements are. Now, the next thing you want to do is you want to project what the regulations are going to look like in the future. Obviously, no one has a crystal ball. But it’s pretty easy generally, to figure out where regulations are gonna go, because you just have to look at the incentive structures that are in place. For example, I’ve talked about this in other videos, if you’re investing in a market where the economy locally there doesn’t require short term rental properties. It doesn’t depend on them at all. And it’s politically unpopular for short term rentals to be in that area, then good chances are sometime down the road, there’s going to be some regulations coming up that are going to be unfavourable for short term rental investors. in Toronto, there’s no real need for short term rental properties. There’s lots of hotels that would rather have them be gone. it’s not primarily that their economy is dependent on tourism. There’s lots of other things stimulating the economy. And there’s a rent crisis, you know, rent prices are too high. And it’s politically very popular for politicians to go, “Hey, let’s point the finger of blame at short term rentals. And let’s try to ban them.” Now, I’m not making any political commentary on whether that’s right or wrong. I’m just calling a spade a spade. In contrast, if we look at other markets that are more rural, for example, like the cottage markets surrounding Toronto, well, those local economies don’t really have much of a rent crisis around them. There’s not a lot of hotel companies out there, hardly any, in fact, and so if they were to get rid of short term rentals, that would get rid of a lot of tourism. And there’s also just not a lot of big hotel companies trying to get rid of competition up there. And so if they were to regulate unfavourably again, short term rentals, it would actually be pretty detrimental to their local economy. So it doesn’t take a psychic to see that it’s very, very likely that any regulations that do pass in the future in those types of markets are going to stay relatively favourable to Airbnb and short term rentals. So that’s step one is just actually looking at what so and looking at what’s likely going to happen so that you can have an accurate view of where things are headed. Like I said, though, it’s always important to have a backup plan and contingency plan. That’s the second part of this. And so that’s why in any investment property that we get into we always want to look at different exit plans. We want to look at can this property operate as a mid term rental if we need to make that transition down the road? Can it still cashflow positive as a midterm rental, make sure that it’s covering all of its own expenses. So that again, no matter if the property value goes up, down sideways, whatever happens, we can always just hold on to the property because at least it’s not costing us money every month to carry. And ideally, it’s going to be cashflow positive, even in a worst case scenario. Same thing, you can look at long term rental can we cashflow positive with a long term rental if we have to use that as a backup plan. And then the other way that we can have an exit plan is obviously just through selling the property. So this is a really good backup plan for any properties where you’re doing strategic value, add renovations, they’re going to force appreciation on the property. So you know that even if there is a correction and property values go down, you’re still going to be able to sell that property for more than what you actually owe on it, and you’re still going to be able to come out ahead on selling that property. Now, the third and final most common fears that I hear coming up with potential short term rental investors is the fear of just making mistakes in general. It’s no secret that real estate is expensive, it’s high value. And so there’s a lot of potential to be making mistakes along the way, that for example, if you overpay for a property that might be 10, 20 $30,000 out of your pocket that you could have avoided paying if you had to just not overpaid and knowing that you had more negotiation room, or maybe you don’t find the right mortgage broker or don’t really understand the different options you have at your disposal for
financing. And so you end up paying a higher rate than needed to that could equate to again, 10s of 1000s of dollars over the lifetime of your ownership of the property that you could have otherwise, just put right into your pocket. Or maybe you get the property up and running. And you just don’t understand how to optimise pricing. And so you end up leaving 1000s If not, again, 10s of 1000s of dollars in potential bookings on the table that you could have just captured had you known how to do things the right way. And there’s a number of other areas where people can make mistakes as well, when it comes to furnishing the property, renovations, all these different things, there’s lots of mistakes that you can make. And so I see a lot of people just afraid of getting started, because they’re afraid of making mistakes. And to that I say, quite frankly, shameless plug, work with a coach like me, or a mentorship group, that’s going to be able to really hold your hand and make sure you avoid those pitfalls. Because just like anything worth doing, there are potential mistakes you can make. And just like anything else out there, you’re not reinventing the wheel, there’s no need to if you can align yourself and work with someone that can help you to avoid those potential pitfalls along the way, because they’ve done it time and time and time again, successfully. And they’ve already made and learn from those mistakes themselves, do it, it’s obviously going to be well worth your investment in working with that person. Because the amount that you’re going to save and the extra amount that you’re going to make by avoiding those mistakes and doing things right the first time. With real estate investing, we’re going to talk easily hundreds of 1000s of dollars that you’re going to add to your portfolio, and you’re gonna add your wealth to your cash flow, all of that just by working with a coach and avoiding those mistakes. Because again, this is a game we’re playing with big numbers, and we’re playing a long term game. So obviously I’m biassed, but I highly recommend that anyone that gets started and hasn’t done this before themselves that they do it with a coach or a mentor or professional help for the first time so that you can just make way more money than you’re going to pay in coaching fees just by getting the help avoiding those mistakes. If you want to work with us, if you want to get that coaching from us, just check out one of the free trainings in the link down below in the description. And those are going to walk you through and if you do want to take it a step further and actually work with us one on one and get our support. It’s going to show you exactly how to do that in that training video as well. So I hope to work with some of you guys out to talk to some of you guys. I hope this video was helpful for you. Last but not least, if you liked the video, please give it a thumbs up if it’s helpful for you if it helped to contextualize some of those fears that you have and maybe that helped you to overcome some of those fears. Make sure you like the video, make sure you comment down below to let me know your thoughts. And also, of course, make sure you subscribe to the channel. We post two new videos every single week here on the channel. So just make sure you hit that subscribe button to stay up to date with all those. Thank you so much for watching. I’ll see you in the next video.