My five biggest mistakes while running my Airbnb business.
Let me save you the time, the heartache, the money learned from me and all the dumb
stuff I did my first five years is an Airbnb host.
My name is Sean Rakidzich.
This is Airbnb automated and let's get to hosting.
Alright, welcome back Airbnb family.
So first of all, before we get started, like the video, you know that the YouTube
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So I've made a lot of mistakes.
A lot of small ones, I think because there are no bad mistakes.
Let me also say that as long as you learn from them and you grow, you fail forward.
Mistakes can be good because the first person to make a mistake is the first
person to learn and then you have an advantage.
You have this knowledge, equity above and beyond all the other
Airbnb hosts in the world that are too afraid to make mistakes.
Right? So first off, embrace mistakes.
You're gonna make some. I've made a ton.
I welcome them as a daily part of my growth process.
But let me give you my five big ones
because there's actually a ton to learn here and you'd be surprised exactly how
much things can unravel over the little bits.
I'll even try to do this in chronological order.
Mistake number one comes from my very first building in 2014.
I lived at that building.
I ended up picking up a couple because I shipped in a guy and he worked
for my media company part of his relocation package.
I signed a one year lease and had him as attendant for two months.
And that's really how I got started is I needed to find something to do with these
properties for the ten months that I was on the lease for fun.
So where the mistake? Come in.
I set these up not with the intention of being Airbnb properties.
So first off, I didn't have party prevention figured out.
I didn't even think a party was possible.
I had no clue that locals would book and like throw a Ranger.
So inside of one studio and this is like
a 520 square foot studio, 60 people crammed into one studio
and threw a massive party there's like packets of what's that stuff?
Kool Aid and then something called 20 grand, which is like a mix of cognac
and vodka and all sorts of bottles and sticky stuff all over the place
and concierge at this high rise did not call me to tell me that a party was being
thrown and that 60 people were going up to this unit.
They just decided to report it to management later.
I was out of the loop.
So there's a few things that went wrong here.
But overall, the big mistake is I did not
plan to prevent parties, and here's what I've learned.
Here's what you can do to prevent some parties.
Number one, get a noise monitoring system.
Point makes a great one.
They also do like motion detection, humidity and temperature control.
So there's extra things that does,
aside from just listening in to make sure that everything is at a decibel level or
lower, and it sends you a push notification if somebody's being too loud.
It also lets you know if the Heat's on too
high or if it's too cold, like somebody's blasting the AC.
There's added benefits to the Point system discount code is Sean 25.
It's actually the cheapest way to get a point system.
Sir, I think Airbnb might actually give
you one even vice per Airbnb host for cheaper.
I know that's kind of odd for me to tell
you, because I actually make a small Commission if you buy with my son 25
discount code, but there is an option for a cheaper point right now.
Airbnb is offering you the option of,
like, noise aware point or another one that I actually don't know much about.
But so if you want to buy multiple, use my code if you want to only buy one,
go to Airbnb party prevention blog that they just released.
Not only do you want to have anti noise,
like software or hardware, you want to know the building,
and if I could have told my concierge to call me at the first time sign
of trouble, I would have in advance, I would have traded almost anything
to have had the foresight to know somebody who's about the thorough party,
because this party actually is what cost me my leases at this building.
They non renewed me because this was so bad.
And so if I could add that Concierge call me, then I could have prevented it.
So first off, the noise aware like our point, the noise monitoring system would
have allowed me to know a party was happening.
And even if Concierge didn't call me,
I would have known, and I would have, like, came to.
But if I didn't have it,
Concierge would have called me if I only had, like, made friends with them.
Third, I didn't have anti party language
in my Airbnb profile and let me actually show you on the screen right now what I
write my prebooking message as because I really think that this is one of my best
and most favorite ways to prevent parties is just a simple prebooking message.
So copy that.
Paste it in yours, and that will actually help you prevent parties as well.
Mistake number two was right before the Super Bowl.
I had a two bedroom apartment that I
picked up again, not for the purpose of Airbnb because of my media company.
I'm shipping in sales guys, and I turned that one into an Airbnb later
after it was like a boarding house for my sales guys.
And then I gave it to a friend who needed to get out of a bad situation.
I let them rent it with a roommate.
I had to evict that person and they left that place trashed.
So much for friends. Right.
But the problem here was I just accepted it for the state that it was
in, and I did not spend four or five days like revamping it.
I spent like a quick day trying to clean
the walls, trying to clean the carpet, try to rearrange the furniture,
and just get some extra things in there to quickly get it ready.
I cut so many corners with that two
bedroom apartment that it immediately got bad reviews.
And this is the one apartment that cost me my super host status first.
So at this time, I had, like, eight or nine listings, and I was super host.
And then this one listing was so poorly managed and run because of how I took this
dilapidated post eviction property and just forced it onto the market.
I did not get could reviews at all.
And that cost me my super host status.
So if I could go back and change that,
I would have not rushed to put that property up, I would have.
Instead I put a lot of love into it.
I would have professionally had the carpet clean.
I'd have the whole place repainted, fix all the holes in the wall,
touched everything up, and actually bought new furniture.
I lost money. That's the only apartment that I've ever
lost money on for multiple months in a row.
And so my rent was over two.
2400, and there was a two bedroom that can
sleep five people because there's a Queen in each bedroom and then sofa.
So after months and months of losing
money, I decided to finally shut that listing down.
I spent a week like redoing all the furniture.
I redid the bedrooms.
I moved two Queens into each bedroom, so there because it was four Queens.
And then I made a sleep or sofa so this place could sleep ten.
So I went from sleeping five to sleeping ten, and I revamped the place.
I made the bedrooms look good.
Living room still needed some work, but I was a new host,
and obviously I'm doing much better now, but I made that place much better
condition, took better photos and I put it back on the market,
and I started to profit about $800,000 a month with those changes.
So if I had just initially when that listing was brand new,
had shut it down for a week after I evicted this girl, and I could have just
got everything done more quickly than or got everything done more appropriately.
I wouldn't have lost money for five months.
I would have actually made money.
So the amount of money I lost compared
to what I could have gained was twelve0 plus dollars in difference in revenue.
I would have made an Airbnb just by doing it better, and I would probably have still
had super as status for a much longer period of time.
So don't cut corners.
Don't race to put a listing up.
If you've got a property that you have adopted, that's like a troubled property,
it's just better to get it all out of the way.
I just do all the heavy work, do the stuff that sucks up front.
And that way you're not trying to fix
menial problems or clean things that are hard to clean in between guests.
Because once we were live and had guests
in there, it was impossible to try to change anything.
Now you may remember this video that I've
already done based on mistake number three, I picked up a high rise in Dallas,
where I was speaking to one agent of the property,
and they gave me assurances that everything was good handshake deal.
There's a two or three month long delay getting it set up.
By the time we got that deal done, that original person was gone from the office.
We set up the leases.
We activated the leases after getting
a hand it off to another member of management.
And then, low and behold, we find out that there's a noncompete
clause because there's already another company called Lyric,
who you might see in the news now who picked up property there as well.
And they wrote like, an exclusivity agreement into their deal.
So the first off, the property manager was not aware of what the lease agent,
number one had told me, and he wasn't there to back me up.
So now I've got to try to resell
the property manager on letting me run my business.
While there's an exclusivity agreement for a company just like mine
in the building, it was doomed to die from the start.
Our leases lasted like three weeks, and then they asked me to dissolve
my eight leases at that high rise because of the variables at play and the fact
that one of my tenants got into a fight with an employee of the building.
And this was 4 July, the year that I expanded into Dallas.
So this was fun, fun.
And so what I ended up having to do is I was in a situation where I had to move
eight apartments into another building within just a few days because they wanted
to aggressively take back these leases and dissolve them.
And they gave me a very short period of time to do so.
So
there's a cascade of mistakes in this.
First off, I did not resell the building, right?
I did not go back and start from scratch.
When the one guy that we started negotiating with left,
we did not go back and try to sell the building from scratch.
And I remember having a conversation with my real estate agent.
I'm like, you know what?
I really feel uncomfortable about this deal.
I even told them that. I remember that.
I'm like, I just Idon't know I don't feel good about this deal.
I don't think it's gonna go well, but I'm like, you know what?
Screw it.
I've been doing so well and everything's gone my favor.
Why not take the risk?
And so I did not trust my gut and start
from scratch with the building and try to hold their hand through the deal again
and find another what we call it an internal champion.
An internal champion in a sale is where
somebody inside the organization you're trying to sell is the one that kind of,
like, vouches for you and helps you get your sale done in bigger organizations.
It's important to find somebody inside
of that company who likes you and wants to deal to go through, because otherwise,
you're just on the outside with no friends.
And so I needed to kind of get a new
internal champion, and I didn't skip the step.
I just signed the leases and kind of went off with thought.
Well, we talked to this other guy, and then that other guy wasn't around,
so like, well, we have no clue what's going on.
It became a big mess.
So mistake number three is again. I cut corners.
I got overly optimistic.
I moved in on a property I didn't look
both ways before crossing the street, and I got hit by a big truck on that one.
And this actually leads me to a fourth mistake.
See, what happened is when I had to move out of that property.
I had all this furniture, right?
I had eight couches that were exactly the same couch and all these King size
beds and just everything was uniform for the building.
I then had to try to move out all
of that furniture and then force fit it into a new property that is a completely
different style, completely different floor plans, sizes.
Instead of just having, like, eight Studios, I had,
like, four, one bedrooms and two, two bedrooms or something like that.
Right. So I had eight bedrooms total.
But I had six total apartments, and the layouts were completely different.
The fixtures were different.
Everything was different.
And so basically, by shoving all this furniture that was
mismatched into this new building, everything just looked like, out of place.
The design that I had envisioned
for the high rise did not work in the mid rise 2 miles away.
So we went through months of just having, like, a poor layout.
Everything looked kind of Baron because a studio takes much less effort to furnish.
Right?
You put a bed, you put a couch, a coffee table small, like Dinette said,
and Wilmot the TV, and you can fill up a studio super fast.
And that bed really helps make that space fill up.
Well, with a one bedroom, you put that bed in a separate room.
What do you have in the living room?
You've got a couch and a coffee table and a wallmounted TV.
And that's it. Now you've got a problem.
That place will look so bearing nobody will want to stay there.
So we had to pretty much invest,
like an extra $1,500 per apartment to get them even up to normal,
even if there's some sort of suitable standard,
because the bedrooms needed extra stuff and the living rooms needed a lot of love.
So the problem here was is just by migrating one set of furniture to a new
building, I pretty much adopted underperforming listings,
just like in Houston with that two bedroom that cost me super host.
We had a flurry of gas go, well, these apartments are just underwhelming.
Right. And so we got a bunch of Mediocre reviews
because we kind of took it for what it was and just let it be bad.
So don't settle for mediocre.
Really, like, think ahead when you design your spaces, because if you have a Baron
looking apartment, like an empty, almost like a College,
like a College mail wood first, the apartment you're not going to do.
Well, Erin is so competitive now that a well designed space in professional
photography is probably the biggest deal ever.
Mistake number five.
You've seen a video for this also, this is when I got sued.
All right, so let's talk about that.
I picked up a building in Philadelphia.
I negotiated twelve apartments on one floor from this guy.
I think his name is Oren,
and I think I can probably start talking about this now.
We've been keeping this under wraps because it's a legal process here.
So there's a gentleman named Ron.
We negotiated twelve leases at a certain
rent rate, and then we were going to get the second month for free.
And then the first month of year two and year three.
And then the last month year of three
free, four free months in a three year lease.
And we take lease number one.
Lease number one is perfect.
It doesn't prohibit us from doing our business.
He gave me the lease concession where we
agreed to have that second month of rent free.
Everything looked good on lease number one.
We sign that lease, we move in, we have all of our furniture gets shipped
to or all the main stuff get shipped to, like, lease number one.
And so that one becomes like a storage
unit as we start to pick up the rest of the leases.
Well, there was a big delay,
less two through five because we're picking up them in batches of four less.
Two through five were delayed.
They're like, Well, we'll have those leases at you on the 10th
and the 10th came, and none they're like, oh, we'll get them done.
You soon. Well, the leases we're supposed to start
on the 15th, and we're supposed to have them on the 10th for review.
And so we ordered a bunch of furniture that was arriving the 15th.
And so what has happened,
essentially is it took them until the 15th to get us the leases.
And so I am sitting in the leasing office
of this building with Bob's Discount Furniture Shipping in sleeper sofa.
They're outside at the Loading dock
waiting for us to give them access into the building.
And I don't even have keys.
I can't actually unlock the front door
for these four apartments to ship the couches in.
So I'm barking up the tree at the leasing
office going, hey, I need the leases right now.
Our leases start today.
So what happens is they send me the four leases electronically.
They do a couple sneaky sneaky things.
First up, they write me in as a personal guarantor.
So instead of it just my business,
they write the business and Sean Rocky each as the responsible parties.
So they add me in as a personal guarantor without me talking to me about it.
Second, they did a new draft of the lease
for the whole entire building, and they use that mockup that building
wide lease for me instead of the lease that we first got, they used this building
wide lease that had no Airbnb language in the lease.
They put that in there. And then third,
they omitted the concession agreement where my second month of rent was free.
They did not include that in the contract.
And so because I'm under what's legally
called Duress at this moment in time, if I don't get these leases signed and get
the keys, I'm gonna lose my furniture shipment.
Then that's going to cost me thousands of dollars for the delivery fees because
we paid over a $1,000 just for the delivery of the stuff.
We'd have to also get that stuff
rescheduled, and that loss of time would have cost us money.
So just so you all know what dress is.
It's where a stronger party
in a negotiation puts a weaker party in a situation where they will lose money
if they don't make a quick decision and it does not allow them the opportunity to go
through the due diligence process in the signing of this contract.
So I was legally under Duress.
But I still made the mistake of allowing
myself to get into a position of Duress signed these extra four leases that did
not give me my second month of rent for free.
That put me as a personal guarantor
and then put in non business friendly language.
So what happens?
We move in, we get all the furniture in the guy Orin terminates.
The company that I negotiated my Airbnb agreement with brings in Gray Star as
a management company, has them try to evict me.
And this is where the lawsuit comes in.
They have, like, pretty much Gray start
going through this eviction process with me.
I tell GraySTAR no, we renegotiated this deal.
Here's my paper trail for conversations,
and then we pretty much had to take Gray Star and his billing to court.
We showed them
where the first lease was correct, and then I was arguing something called
quantum merit, which doesn't actually apply completely in this case.
But it was still arguable that the other leases because we did not renegotiate
should have still had the same agreement that we agreed upon.
And you could actually argue fraudulent inducement here because they knew that I
would not have agreed to the contracts, et cetera.
So big legal battle stuff.
But they decided to back off and we agreed
to dissolve those leases, and I've moved those leases to a new building.
But now that I'm out of the building
and I'm safe, I'm no longer worried about getting kicked out faster.
I can now pursue my legal rights to loss on that.
So I can now take a lawsuit against Oran
the building owner for lying and causing fraud and doing what he did.
So a big mistake here is you need to read your contracts.
Always look inside your lease agreements
to find out what you are and are not allowed to do, and then get it in writing.
If you have an agreement between
the building owner and you that you're going to have certain rents for free,
you're going to have certain rights that the regular tenant doesn't have.
You need to get that stuff written down because if you end up in court like me,
you don't want to have to be some catch me.
If you can smart kind of flick person
to get through it, you better have your stuff on paper.
Because if you're not game to argue
in the court of law on your rights as a tenant, you should make sure your
paperwork is good, so you don't have to play that game.
So five of many, many mistakes and more to come.
Like I said at the beginning of this
video, I think making mistakes is important.
Just don't make any big ones.
Ones that will put you out of business.
You win some or you learn some right.
Jason Mora Quote thanks for watching Airbnb Automated Remember to like
the video, share with your friends and I'll see you on the other side.