in 2014 I invested just under $4,000 into a real-estate play. This is my first and
only real estate investment ever and without any outside investment no extra
money no debt no financing the loans that investment that play is currently
worth over 20 million dollars I'm gonna talk to you about how it's worth over
& why it's worth over 20 million dollars. How I got there and if you're currently
a subscriber who's built a business like it this will help you valuate your own
business and plan to maybe do some fundraising, for example, if you wanted to
get outside investors. If you're new to this channel I'm gonna give you
something for free at the end of this video. NO I'm not gonna try to sell you a
course or a webinar. I'm actually gonna give you a whole course for !!free!! because
I believe you don't need one (a course) to start your Airbnb business. Alright, so my name
is Sean Rakidzich this is Airbnb Automated and let me give you some
numbers.
All right welcome back Airbnb family so first let's thank Steve MacKinnon for
sharing this Forbes article with us in our Facebook group the Hosts of Air B&B
Automated you're a boss Steve this has inspired this whole talk and it
hopefully this will provide a lot of value to people in the YouTube space now
before I get into the numbers I want to ask all of you to like this video
because their subscribers around the world who will not see this video
because they don't get notifications for every video but if you like this video
it'll increase the chances of them getting notified it helps that algorithm
per se so thank you in advance for helping this video survive and move by
just simply liking and leave a comment say hi maybe yeah and if you have an
Airbnb business that like in the comments I want you to help us prove
that Airbnb is awesome in the comments tell people how many apartments or the
houses you have just so people who are watching this know that this isn't bogus
with that said let me first prove to you that I'm an Airbnb host I think that's
important I just claimed to be an Airbnb host and I'm going to tell you right now
that we make over two million dollars a year right off the Airbnb platform let
me first give you one of our gmail accounts that shows some deposits from
Airbnb like daily deposits let me show you my performance tab for one of my
other accounts that shows that Airbnb hosts in my competitive market typically
charge 113 a night but we're collecting like 145 a night so we outperform the
average Airbnb host des letting you know that we are a little bit special let me
show you one of our listings calendars that it's just jammed full month over
month and we make over $9,000 one of our high months we hit about $12,000 in cash
flow and our rents are 2400 a month we have 70 units and we can profit up to
$9,000 a month with one of them that's gigantic I think that might be
the best-performing arbitrage I've ever seen by the way if you guys have one
that makes more than nine thousand dollars per month profit like tell me in
the comments right now because I would love to shoot your space and put you on
this channel if you guys are crushing it that much because you deserve an atta
boy so with that said Sean's an Airbnb host I've been doing it since 2014 how
did I start with less than $4,000 well it was an accident I have a sales
company and I relocated somebody from Michigan to stay in a high-rise that I
was staying in when they moved in I got the first two months of rent free
it's called the front end lease concession and in about a year this is
gonna happen actually in Houston right now there are places giving away 12
weeks free there are apartments right now giving you front end 8 to 12 weeks
free you could do it the same way I did because when when apartments are hurting
for occupancy they do these front end deals they'll even give you like a
thousand bucks on a gift card right now - super cool so right now the time for
arbitrage it's now it's great and over the next year or two as the recession
just starts gutting people people are gonna be giving away the farm to get
people to move in like for a fact one good fact 14% of Dallas's real estate
for apartments is under construction right now which means in the next 12
months the available real estate will jump by 14% and all these all these
apartment owners they'll be struggling to fill them up so they will wheel and
they will deal because unless Dallas include leg increases its rentable
population by 14% it sounds like they're over building doesn't it yeah it does so
how I did it for under $4,000 was a front end lease concession that four
thousand dollars went into furnishings now in 2014 it was super easy I was
making fifteen hundred to two thousand dollars a month on this little studio
apartment and I reinvested got a second one I ended up putting my own home on it
because I started traveling and so next thing you know I have three apartments
making about six thousand dollars a month on the Airbnb now we didn't take
it seriously until 2017 when the Superbowl hit and we decided to jump up
to ten units to make a lot of money on the Superbowl we profited fifteen grand
in a weekend Thank You mr. Superbowl for bringing people love you and from there
we just kept it going and we just kept reinvesting our profits in the growth
and now we're where we are we're adding 21 apartments this month seven of them
are relocations we're moving units to different buildings so we're growing by
net 14 units all right so now let's look at the numbers here this article Forbes
says that Sandra's 3,500 apartments and is worth 1 point 1 billion dollars I
decided I was gonna play with this and see if we could come up with a ballpark
valuation per rented apartment right so they take an apartment they furnish it
they put it out there and people rent it all right now lyric is worth 240 million
and they have 500 apartments so if we take 1.1 billion divided by 3500 units
the the total valuation per unit like looking at that number alone
is 312,000 but we did that with lyric to 240 million divided by 500 it's like way
high it's like 450 or 480 thousand right I'll do the math and post it so there's
something fishy here right if this won't make sense this doesn't work so I
realize though that air B&B just invested like 160 million into lyric
like halfway through the year this is kind of fresh so they have cash on hand
that's that's got to be the explanation so I'm like alright so if part of their
valuation is based on their operating portfolio and then the rest of that 240
million is based on how much cash they actually have in their bank account that
would make perfect sense so what did I do
I subtracted 80 million from lyric instead of valuating them at 240 million
I put them at 160 million for their portfolio and 80 million for their cash
right so take that 160 million divide that by 500 and you now have three
hundred and twenty thousand dollars per operating apartment that is operating as
a short-term rental or hotel that's way closer to Saunders 312 right so now we
take that 320 we multiply our seventy active units by 320 we're worth twenty
two point four million dollars so even if that number is slightly generous and
you wanted to shave off a couple million like you wanted to shave off ten percent
which would actually make our portfolio worth less than 300 thousand per unit
we're still worth more than 20 million dollars and that doesn't even include my
cash on hand isn't awesome that's super cool right so if you are an Airbnb
operator and you have a bunch of rentals the key here to remember here is this
valuation is based on the fact that that business can be sold right these
companies are large enough that you take a piece out like the CEO or the CFO and
you replace them they're interchangeable because they're so big
my business is large enough that if I exited the company and they replaced me
if I sold my business and they replaced me with the CEO that knew what he was
doing in real estate or hospitality or something this business would do just
fine without me it's to that point I am NOT needed I'm a master delegator now
and I am pretty much just the CEO for the sake of growth and at any point if I
ever did sell the company they would just remove me and they would be fine
you want to get your business to the bit you want to get your business to that
point if you want to justify this phase of valuation right if you are an
operator that is needed in your Airbnb business
like you you manage all your housekeepers you managed your
maintenance staff and you do everything else if you get removed from the
business as if it were all implode when you disappear you can't fetch that kind
of valuation so if you want to go for a round of fundraising the reason why
these numbers matter is it's based on what you can convince somebody to give
you money based off of so let me give you a fun example we work they have a
huge backer soft bank soft baked soft Bank convinced the world that we work
was worth 45 billion dollars by buying shares back from we work at an inflated
value right South Bank I think was trying to make us like a a sly move but
now after they released their s-1 filings and they also found out that
Adam Newman like the CEO was doing a little like shady stuff like self
dealing and like leasing to himself and all these other things that just are
kind of unethical and not sustainable their valuation is dropped somewhere
like 10 to 12 billion in things that I've read recently so that valuation is
highly speculative when they're when you're in the private sector and when
you're negotiating with investors see Softbank is willing to put billions and
billions of dollars in the we work for the chance to make money on an exit and
that's what your investors would want to so at this point if I was going to take
my business to investors and try to sell people on giving me money for my
business I would advertise my valuation at like 30 million or more because what
I would try to say is that we've built it to this valuation without any outside
capital we bootstrapped it the whole way and imagine what we could do if we just
had that extra firepower so that's my point you want to sell your business to
investors in a certain light that gives them confidence in what you've built if
you ever want to go for a fundraising round you need to have your ducks in a
row you need to have a pitch deck you need to have everything figured out and
in this case I know where my value stands and that's what I would do if I
went to you know if I decided to go for fund raising but I'm not and the reason
why I'm not is because I want to build this business for the sake of the
YouTube channel just as big as I can build it without any outside capital
because it'd be fun and that maintains the integrity of this relationship
because I told you I built it for four grand without any outside and money and
I'm gonna continue to do that so if you're new to this channel here's your
free course I'm gonna link it in a card and I'm gonna put it at the end it's
also in the description this free course called and what's that
Airbnb automated course free for YouTube YouTube version and so this is over 70
videos of how I built this business over the course of two years
it's everything that anybody would ever want to sell you in a course they they
can't sell you a course anymore because they can't add value to your life beyond
the free course that I'm giving you right now and no there's no back end so
I will be selling Airbnb education products and if you ever want one cool
but I'm not gonna stuff it down your throat you may never need one there's
thousands of people on this channel who have built their Airbnb businesses for
free right here on YouTube and this is a roll call all of you are still watching
this video who've been subscribed for a couple
years I'm humble brag in the comments I know tons of you are making tons of
money some of you guys are nearing a hundred units yourselves and you guys
are doing a great job and I'm so proud of all of you so for those of you who
are new welcome to Airbnb automated watch some more videos learn about
Airbnb arbitrage and a you know level up level up with us welcome to the movement
thank you and I'll see you on the other side