Top 3 Airbnb Investing Mistakes To Avoid

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What's up guys, it's James here and in today's video, I'm going to talk to you about the three biggest mistakes that I see people making when it comes to investing in short term rentals. So that hopefully you can avoid making these mistakes yourself and invest successfully in short term rental properties. Now, if you want access to our free training on exactly how to invest successfully in short term rentals, where we go through all of the three main pillars for how to do so successfully give you some tools, we're actually going to be a free analysis spreadsheet, a whole bunch of other stuff, and an opportunity to speak directly with my business and investing partner Riley, than just check out the link in the description down below, you'll be able to sign up for free training, get those free tools get that free strategy call with Riley to help you put together a plan or a roadmap towards your short term rental investing goals. All that is for free in the link in the description down below. So let's start off with mistake number one that I see investors making when it comes to buying short term rental properties. And this is improper analysis. So I see it time and time again. And I've talked about a bunch of different videos in this channel. And I've got videos on this channel as well. They talked about the specifics of how to analyze properties for short term rental, and actually walk through and give examples of it all that so that is really you know, my one of my missions on this channel is to help people to analyze deals better when it comes to short term rental investing. Because time and time again, I see people making careless mistakes with the right tools and the right knowledge they really really quickly and easily avoid. And so the really kind of fundamental component to this is that when you're investing in short term rental properties, you want to take a very data driven approach, I see a lot of people getting emotional. And whenever you're mixing emotional decision making and with investing, that tends to yield some unfavorable results. So what you want to do is get your hands on a really good spreadsheet. Again, there's a link in the description down below where you can grab ours. That's the one that I actually use for every single deal that we analyze. And then once you do that, you're going to want to make sure that you go to a site like err DNA, get a statistically relevant sample size. This is a really significant sample size of data in your area. And again, we have other videos on the channel that show you exactly how to do that step by step and really run the numbers and run both a worst case scenario, a moderate scenario. And if you'd like to a best case scenario as well for how the property will perform as a short term rental. Now what you're going to be looking for when you do this is to make sure that in a worst case scenario, the property is always going to cashflow positive, if the property doesn't cashflow positive, in your worst case scenario, then it's going to be a lot more risky to get involved with that property because you risk having the property actually cost you money out of pocket to hold on to Now things get tough and things don't don't go well for you financially, then your worst case scenario is that you'd be forced to sell that property because you can't afford to hold on to it. That's not a position anyone wants to be in. Because if you're being forced to sell the property, the market might not be in a good place to sell it at you might be selling it for a loss. That's what happened to a lot of people in 2008. And that's really one thing that we want to avoid. So I always like to make sure that in a worst case scenario, the property is always going to cashflow positive, and that in the best case scenario, or the more moderate scenario, I'm getting, you know, 20 to 30%, or more as a cash on cash return. That's obviously exceptionally high when we're looking at real estate investing, but short term rentals have the advantage of cabling incredibly well. So that's number one. Mistake number one is improper analysis. Mistake number two that I see people making is once they actually have the property, they've got it renovated, furnish whatever it might be, I mean, got it ready to list, and this is failing to get professional photography. That's the second mistake. And I see it happening time and time and time again, people go in with their iPhone 13. And they think that they can do a great job getting the photos themselves. And honestly, sometimes they can do a good job, they can do even a great job, but they can't do a phenomenal job, you will never be able to get the same quality of photos yourself. Unless you are a professional photographer, as a professional photographer would. There's a reason that you're going to hire professional for different things. It's because they do this day in day out, they know all the tricks. And my advice isn't just to go and hire any professional photographer but actually look for someone in your area that has experienced shooting short term rental properties. Because that little distinction there is going to make a big difference. It's quite different to shoot an Airbnb or short term rental property versus Shooting property for the MLS for realtor because the property is actually furnish it staged when you're when you're listing it as a short term rental. And the goal is not to show off the property but show off the space and helping us to envision themselves in the space. And you see that sometimes with high end real estate but with more kind of average real estate photography, it's really just about showing the actual bones of the structure, the actual home itself not so much helping us to really paint a picture and envision themselves in the space. So short term rental photographer will be a great option if not look for a real estate photographer but give them very specific guidelines and exactly what shots you need to take. Make sure the property is staged and clean very nicely beforehand. Make sure you do a couple of things to add some nice touches to the property because the photos are the number one thing that's going to drive bookings for your listing you got to think about just think about it in a really basic way. What is the number one thing that guests are going to be looking at when they're deciding what listing to click through to on Airbnb when they're searching for place to stay at? Obviously the biggest thing is going to be Cover Photo, they're going to look at the cover photo and the headline and maybe the price. And that's about it. And they're going to choose which ones to click through to. So you have one opportunity with that cover photo to make a great impression. So that cover photo is super important. And then typically, what's the first thing that someone does once they actually get onto the listing page? Well, they click on the photos and they start scrolling through them. And so those photos are really your kind of make or break opportunity. If you do a great job with the photos, then you're going to invite the guests you're going to, you know, really welcome them in, they're going to want to book that place. And then they're going to go onto your description to find out the answers to a few last little questions. If they have any before booking, if you do a bad job with the photos, they're gonna prefer another listing that they're looking at, and they're just going to x out your tab. And that's going to be your opportunity missed, there's going to be a ton of money left on the table. I've researched this extensively throughout the years that I've been working with and consulting for 1000s of Airbnb hosts. So I can tell you without a shred of a doubt that having professional photos is going to make a massive ROI difference on your property, it's going to make a huge positive ROI. This is one of the reasons that I pay my photographers really well for the properties that we get photographed, I generally pay five to $600 for a photographer to come into a property. And a lot of you'll see that as being crazy. Ico has been crazy not to because I've looked at the numbers, I've looked at the difference it makes, and the difference is outstanding. So that's mistake number two, make sure you avoid it, hire professional photographer and hire a really good one. Mistake number three, the last one is now that the property is up and running. And you really have optimized listing, I see a lot of people making this mistake of leaving money on the table with their pricing, people oftentimes don't know how to price a property the right way. And they either will overprice their property because their kind of ego or their their desires to get these big nightly rates is really preventing them from getting the optimal nightly rate and getting the place actually booked up. So oftentimes, they'll shoot these sky high nightly rates and get a couple of bookings and be really happy with that. But in reality, if at a lowered a little bit, they would have been able to get a lot more bookings and a lot more revenue overall. And the other side of that is I see a lot of people that are just in panic mode, they're scared that their property is not gonna get booked. And so they underpriced their listing drastically and they're constantly booked two to three months in advance. The reality is, if you're doing that, then you're leaving a lot of money on the table because you've just underpriced your listing sure your occupancy is going to be high, but your nightly rate is also low. So the revenue overall evens out to a not so impressive number. If you have the right strategy, which again, we talked about in depth in the training that is linked in description down below. If you have the right strategy for pricing, then you can optimize that balance at all times, I'm going to have showed on this channel as well, the use of what we call our target occupancy rate tracking spreadsheet, so that we can constantly tracking where we're at relative to where we should be in any market with any different property. And so by doing that, we can constantly make small adjustments to our price to constantly optimizing that balance between our occupancy rate and our nightly rate, which is ultimately going to maximize the returns on our property. And that's how you know in another video also showed the performance in the last six and a half months of one property being live and that's its first six and a half months ever being loud brand new property Airbnb is on track to do $150,000 In its first year. And in those first six and a half months it generated $48,000 in actual profit. That's after all expenses of cleaning, carrying the property taxes, insurance, mortgage, absolutely everything. So if you really do a great job of optimizing your price, then your numbers can be outstanding. And it doesn't have to take a lot of time or take a degree in data science to do this really well. It you can do it in as little as five to 10 minutes per week. And just make some small tweaks as long as you know what you're doing and you have the right tools it's very simple and easy to do. Again, if you want access to tools like this if you want to learn the ins and outs of how to do all this and avoid these three mistakes and I highly recommend that you check out the link in the description down below to our free training we are going to give you our analysis spreadsheet completely free so like I said you can avoid that first mistake of analyzing properties improperly. You can also check out other videos on this channel that cover exactly how to use that spreadsheet. So that's gonna be yours completely free. Just sign up at the link in the description down below. All that being said I hope you got value from this I hope this video will help you to avoid some of those mistakes yourself. I hope you have great success investing in short term rentals and I'll see you in the next video.