Today’s REI Classroom Lesson
Today, Duncan Wierman chats with us about how Airbnb can be a profitable alternative to your standard exit strategies of flipping or rental to a long-term tenant.
REI Classroom Summary
With short-term rentals, your guests are mostly those that are vacationing or on a corporate trip. These guests prepay in full and the rent is normally 2-3x higher when compared to normal rent rates.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now let’s meet today’s expert host.
Duncan: Hello everyone. My name’s Duncan Wierman from duncanwierman.com and I will be the host today of REI Classroom. I’m going to be talking to you on several topics on Airbnb, but for the topic right now we’re going to be Airbnb, the alternative to flipping houses.
Male: This REI Classroom real estate lesson is sponsored by theinvestormachine.com, FlipNerd’s private investor coaching program and your blueprint to investing success.
Duncan: I know many of you as real estate investors and actually it’s quite the rage right now watching all these TV shows on how to fix and flip houses, and that’s great making that profit. But, I tell you what, you can make that profit more over and over again each year by getting involved in Airbnb. It’s getting a lot harder to find deals to flip, especially in California where I have a large Airbnb business.
Gone are the days of making $100,000 on the flip. Now the profits are actually getting closer to only $30,000. That’s not bad, but it’s just another job. And there’s a whole lot of competition out there, too. Another downside to flipping is that once you’re done you need to go out and find another one. You start to burn out and get tired.
You want passive steady rental income. I hate tenants because you have to deal with all those issues. Again, I’m getting back to Airbnb. This is what’s known as actually short-term rentals. It could be for the vacation traveler or it could be for the corporate traveler. This is the newest, highest and better use for real estate. By taking a property and simply furnishing it, you can rent it out to short-term guests and begin to see a much, much higher return than you can get from a long-term tenant. Typically rents are two to three times higher if not more.
Let me tell you about my friend John. He owns a 2-bedroom house in Rosemead and the long-term tenants were paying him $1,200 a month until one day they stopped. The eviction process began, and I can tell you he was not happy about it. They did a lot of damage to the house. This was all before they moved out.
After six months of lost rent and repairs and tens of thousands of dollars, John decided to turn it into a vacation rental instead. I can tell you what. It’s the best decision he ever made. It’s the best decision I ever made. Vacationing guests pay for their stay in full in advance. The property’s retained in clean and pristine condition at all times.
John now is able to go on his property whenever he likes, and it even provides a place for his family and friends to stay when they come to town for a visit. The best part, his rent checks average $3,000 per month. That’s working on a 50% occupancy rate. This is absolutely insane. It’s great money. Now you have the best of both worlds. You get a steady higher than market passive rent and you’re no longer subject to tenant law and terrible tenants. To John, me introducing him to Airbnb, I’m his new hero.
Maybe it’s time for you to explore the concept of short-term rentals a little bit more. Why don’t you check us out on doubleyourrentalincome.com and get a free ebook and see what we’re doing that will make your life easier, better and richer. Thank you for joining in for today.
Mike: Are you looking to change your life through real estate investing? If you’re interested in either getting started or taking your business to the next level, please check out FlipNerd’s private program at theinvestormachine.com. This is the most robust real estate investor coaching, networking and Mastermind on the planet and designed for your success.
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