Top 5 things to consider when buying an Airbnb

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What's up guys, it is James here and in today's video, we're gonna be talking about the top five. And we're gonna hit five things that you should consider my top five tips, things you should consider when you're investing in short term rental properties, more commonly known as Airbnb or vacation rentals. So for those of you don't know, I've been managing consulting on investing in short term rental properties for just over six years now, I wrote the book area for dummies. So I've got quite a bit of experience when it comes to short term rentals. And so in this video, I really just want to share with you a couple of things that you should really take into consideration before you start investing in properties for Airbnb. Now, if you're new to the channel, and you don't already know down in the description, there are some free trainings, free resources for you to take advantage of, they are training that I put together that you can use completely free, there's no cost to them whatsoever. So I highly recommend that you check them out, depending on what your goals are, there is a free training that's really, really new that we've just put together on how to actually invest successfully into properties for short term rental. So if you are interested in actually buying and building a portfolio of short term rental properties that you actually own, then I highly recommend you check out that free training there. And it's also going to give you a free tool to be able to analyze these properties. Now if you're more interested in managing other people's properties for Airbnb without having to invest into down payments, buying, renting or anything like that not have to buy furniture, like a business that you can really get started without investing any of your own money and actually manage other people's properties on Airbnb and build a six figure income during that. That's how I first got started. that free training is also linked in the description down below. And we're also going to give you some free tools to help you actually get started on that path as well. And then lastly, if you're a host on Airbnb, then there's a free training link down below. If you're already hosting, you just want to improve your hosting make it more streamlined and more profitable. We've got a free training for that as well. So all that said, let's get started with some tips, some guidelines, some things that you should consider before you start investing in properties for short term rental. Number one drumroll please is going to be I think it's worth considering that most people don't analyze properties the right way. And that the number one mistake I see people making is not analyzing properties properly. So the one thing you do need to consider is how much is this property actually going to make in both a best case scenario and a worst case scenario. So I've got other videos on this channel that walk through my entire process for analyzing properties, a whole step by step system, again, the training is linked down below is going to walk through that and also give you some tools to do that. That's by and large, the number one biggest mistake I see people making. And I know I've got this crystal ball where I can see into the future. And I can see that a lot of investors are going to lose a lot of money, when times are not as good as they are right now. Because right now a lot of properties are still doing well. Even with the pandemic, you know, everything going on the world, there's still properties that make a lot of sense, and you can't really go wrong with but when and if things do start to change economically speaking, you want to have backup plans in place, you don't want to be reliant on the gravy train keeping going. So you want to kind of take into consideration different scenarios, look at different what ifs, what am I going to do make sure you're never going to be in a place where you are forced to sell your property because it costs money to carry it. I see a lot of operators, a lot of investors that have properties that do not meet that test do not meet that criteria. So that's the number one thing you need to consider is how much money is is going to bring in not just in the best case scenario, but also in the worst case scenario. Now that ties into Thing Number two, I tip number two that I'd recommend you consider is that seasonality impacts cash flow, but not profitability. So that's one thing that I also see investors making the mistake of is they look at certain markets, and they look and they go well, there's a high season and low season. And I just don't know if the property is going to make sense in the low season. Well, in most areas that are like that the high season, you make so much money, that it actually still makes sense. Even if the property sits relatively vacant, in the low season, your annual return is still going to be really significant. So, you know, seasonality is something you do have to consider from a cash flow perspective, just making sure that you kind of squirreled away your cash in the summertime, or in the high season so that you can cover all your expenses in the low season. But it doesn't impact your overall profitability, right? It just means that the income is coming in at different times throughout the year, but doesn't actually change the amount of income coming in throughout the year. And that ties in very nicely to the third thing I'd recommend considering is that a lot of people also view short term rentals as being very risky and volatile, when in reality, the revenue just fluctuates from month to month in a very predictable way that's based on seasonality. So that's something I always recommend that people can that people will remember and kind of keep in their head is that it's not this big mystery box. If you use the right tools and you have the right data to run your analysis, you can actually predict with relative
certainty how much a property is going to bring in on an annualized basis. So we can use tools like air DNA to look at that information, we can go and look at comps in the area, and figure out how much a property is going to bring in, we can look at how that that demand has increased or decreased over the last, you know, three, four years. So you can really figure out pretty effectively and pretty accurately how much a property is going to bring in. It's so it's not, it's not that it's volatile, it's not that it's risky, it's not, that's unpredictable, it's just that unlike a long term rental, that's going to bring the exact same amount of money every single month, it's either gonna be this much, or it's gonna be zero, but it's vacant, we're, you know, it's it's gonna vary, but it's not unpredictable, it varies in a highly predictable way. So those are the top three things that I recommend, you can see are my top three tips, and they're all revolving around the financial aspect. And a lot of the things that I find are kind of muddying the water for a lot of people that are looking to get into this space, I think a lot of is just due to lack of kind of education, understanding. But you know, once people start to get an understanding of this stuff, that's when I see the light bulb go off, and they go, Wow, this is what you've been talking about. This is why there's so much demand. Now for short term rentals, investing. This is why investors are flocking to this area, because as soon as we can kind of decode these things that seemed mysterious, then it's like, okay, everything makes sense. And it lines up. Now the other things that I'd recommend, number four, I would recommend that you keep in mind thing that you want to consider my tip to you is that operating a short term rental is obviously quite different from operating a long term rental. And then it requires some different skill sets. But it doesn't have to be super hands on. So there's kind of two things that I like to remind people here, I'm going to tie them into one because I've got one other one that I really want to touch on. So what I see people people looking at as they go, Well, you know, I'm just going to jump into this, and I'm sure it's going to be easy is the one kind of group of people and to them, I want to remind them that it's not just like managing a long term rental, there's, it's more hospitality, like this is a lot more like running a hotel than it is similar to running a long term rental property, you got to furnish the property and you're gonna have expenses with that you have to do your guests communication, or someone has to do the gas communication, someone's got to adjust the prices. So there's a lot more involved in it. And I see this kind of impacting people all throughout the business, when they don't take this into consideration. Either, it just becomes really overwhelming for them. Or they're, you know, they're skimpy, and they don't want to spend money where it makes sense to where it's like a total no brainer to. So that's one thing to keep in mind. But then the other group of people I see out there oftentimes are the ones that are kind of thinking, Well, you know, having an Airbnb or short term rental, that's a full time job, that's not passive income, that's not even close to passive income. So I don't even want to touch that it's just way too much work. And those people, I would say, you just need to find the right deal. Because if you find the right deal, then there's going to be enough margin that you can hire a professional property manager, and you don't even have to, but if you want to be completely hands off and really just not touch the thing, then just hire a property manager. And it's a lot easier to hire a good property manager for a short term rental than it is for long term rental, because the upside for a property manager is a lot higher, you know, they're not just making 50 or $100 a month on your unit, they're making you know, 800 to 1000. So you are paying for that. But as long as you can still make a really strong return on your investment, while accounting for the cost of a property manager. Why not? Right makes a lot of sense. But the other option as well as you can do it yourself. And you can learn how to set systems up to make it highly passive. So again, that does require investment of time upfront to create those systems to set them up, get everything running smoothly. But then once they are set up, you can spend just you know 2030 minutes a month going over your financials and not much more beyond not actually managing the property. So again, if you want all the systems and tools and strategies for how to do that, then I highly recommend you check out the link down below in the description, that free training, we're actually gonna walk through that this is coming from my background of actually having run a short term rental management company. So I've got some really great insights to share. It's really tools and systems to share. Again, all that is inside of that free training. A last thing that I the biggest tip that I have for people that are offering short term rentals or they're looking to get into short term rentals is that you do not want to just set it and forget it with your pricing. This is the one thing you really want to remember is that by optimizing your pricing, you can literally like that's one of the highest returns you'll ever get on the time that you invest, is by just optimizing your pricing. If you optimize your pricing, it literally takes maybe 10 to 15 minutes per week, not a lot of time adds up to about an hour a month. And you can get 1020 30 $40,000 a year more from your property just by optimizing prices. You know for one great example a property that recently invested in that I broken down this channel I've talked about in depth in this channel. We thought that that property would bring in in a best case scenario about 100 to $120,000 in a year. Now turned out this was a runaway year with everything going on with lockdowns and restrictions and everything and so
We ended up we're trending towards about $150,000, we're going to bring in with that property. So that $30,000, if we had just set it and forget it with our pricing and not touched it, that we would have been leaving that $30,000 On the table where the property would have gotten booked up for less, and we wouldn't have captured that additional revenue. Because we saw those signs. Because we're in there monitoring and analyzing our pricing and optimizing it, we were able to bring in $30,000 worth of additional booking revenue on in one year on that property off of an hour a month. So that's 12 hours of input, and you get $30,000 of output. Right, that's, that's a pretty substantial difference in terms of how much that property is bringing in and what you're getting paid for your time. So optimizing pricing is one thing that is really really high leverage in the kind of investing strategy or the business of short term rentals. So those are my main tips. I've got a ton more. So if you're interested, check out the rest of the videos on this channel. We dig into all this stuff in greater detail and greater depth. If you're interested, make sure you check out the free trainings are linked down below. I put those together, you know trying to steal my years and years of experience. So whatever path you're on, whether you're hosting your own space on Airbnb, whether you are looking to manage other people's properties on Airbnb and build that into a full time income, or whether you want to start investing and building a portfolio of properties for Airbnb, there is a training down there below that is going to fit you so make sure you take advantage of it it's completely free. So grab it while it's there before it's gone. And last if you liked this video, if you got value from it then obviously give it a like hit that thumbs up button. It really helps me out to grow the channel get more traction here reach more people because I want more people to know about how amazing short term rentals are as a vehicle for financial freedom. So all that being said, the last thing I'm going to ask from you is that you subscribe to the channel if you haven't already. And with all that out of the way. I'll see you in the next video. Have a great day.