What is everybody doing on Airbnb that's making so much money.
We're going to talk about what Airbnb is.
But more importantly, what is an Airbnb business?
We're going to give you a few more terms
and definitions, because by the end of this video,
you're going to understand that there's more than one business model in the Airbnb
space so you can choose how you want to get started if this is for you.
So my name is Sean Rakidzich.
This is Airbnb automated.
And let's jump right in.
Alright, welcome back, Airbnb family.
So first of what is Airbnb?
A lot of people think that they know,
but simply Airbnb is not what you think it is.
It's not some hotel chain.
It's not some big Empire.
Airbnb is a software that is it.
It is a peer to peer OnDemand software not
much different than Uber or Wag or south or all these other apps that Uber eats.
You order some food to your house.
Basically, it's connecting service
providers with people who want that service.
And in this case, we're talking about travel accommodations.
So what Airbnb is done, though,
is they've created a movement where by lower lowering the barrier where a lot
of people can put their home on Airbnb and people can find it on Airbnb and then
pay that person and then they can stay there.
So that leads to the new economy, the Airbnb sharing economy.
So what is an Airbnb business?
Well, essentially, an Airbnb business is
more of a layman's term for something that's existed for a long time.
It's a short term rental business or
vacation business or a furnished accommodations business.
Or you could even say a corporate housing company.
All these companies and titles are pretty
much the same, which is that they will well put furniture in a home or furniture
in a space and then somebody will live there any number of dates with Airbnb.
It can be as short as one day where with corporate housing companies,
typically, people would stay three months or longer.
And so an Airbnb business is taking
advantage of Airbnb specifically as a technology as one of the many
technologies that you can use the market at home by putting furniture in a space
and then listing it for rent per se by any number of days.
Now, there's a few things that you need
to understand here, because that's not enough, right?
That wasn't enough to get started.
I you put furniture in a home and put it up for sale or put it up for rent.
Now, there's a few different types of business models that circulate
that evolve or orbit around short term rentals.
Well, what is specifically a short term rental?
See, a short term rental varies state to state.
In Philadelphia, a short term renter is someone who stays shorter than 90 days.
In Texas, it's somebody who stays shorter than 30.
In California, I think it's shorter than 28.
So a short term rental is a space could be
a hotel, for example, is a short term rental or a home that's
been furnished to supply what people need to stay.
And you are allowing people to stay short term.
And that state to state city.
The city will vary in length where a long
term rental is typically an unfurnished home that you sign a typical Leason,
and you live there for six months a year, two years.
So that's the difference.
Short term rental is simply designed and allocated for daily or weekly use.
Now, there's a very simple way to get started.
If you have a home that you own homeowners, this is really where Airbnb
really started out was renting out a spare room or renting out your living room.
Now, the owners, Brian Chesky,
and his two buddies in San Francisco when they first started this business,
they were trying to rent out an air mattress on their living room floor.
And that's what the name Airbnb is for is air bed and breakfast.
Air standing for air mattress is that interesting?
So homeowners can list their entire space
without much trouble at all because they own the home.
So that's one way to run an Airbnb business.
You could also rent out private rooms.
So if you rent a two bedroom apartment
somewhere like in New York, you can Airbnb if you live in this space.
Right? So if you are a tenant of your home,
you can rent out a spare room so you can make money in an Airbnb business as
a renter who is now, in a way, subletting one of the rooms out that's one way.
Now, my favorite business model for Airbnb is called rental arbitrage.
Essentially, what that is is you don't own a home, you find somebody else who owns
a home or you find an apartment complex who has many, many rooms.
And you convince that owner or the property management that represents
ownership to allow you to lease those properties, you become the renter.
But you then market that property after
you furnish it and you find other people to stay short term.
So you're signing a longterm lease
for a lower rate than you're collecting by the night.
Right? So a 1500 a month lease to break even,
you need to collect $50 a day to break even on a 500 a month lease.
But if you're charging $150 a day, that's a $100 margin per night.
Simply put.
Now, rental arbitrage is my favorite because we've managed to scale it.
We have almost 60 properties right now.
Actually, we signed three more leases today, so we are over 60 properties.
Now we're adding about 30 more.
It's pretty scrappy.
Now, there's new regulations.
Now is the perfect time to talk about how
La, starting November 1, is changing the regulations.
Now with cities that don't allow you to do something like rental arbitrage.
But you want to create a scalable Airbnb
business and you don't want to have to buy a lot of homes.
You can do something called cohosting.
What is cohosting?
Well, cohosting is essentially where you
find an owner of a property, and you just facilitate their ability
to put their own home and to manage their own home on Airbnb.
So you have a landlord who has a property, and instead of them putting a regular
tenant in there, you work with them side by side.
You guide them on furnishing the home, making the space look good.
And then you handle all the guest interactions.
The check ins, the checkouts, managing the cleaners who clean the home.
And you're like the operating partner of the business model.
And if a city says that every person can have one Airbnb that they have to own,
and you're a cohost, you can partner with 20 different business
or homeowners, and you can have 20 Airbnbs in your portfolio.
As a cohost, where there's 20 different owners, one for each home,
that's a way to bypass kind of the city regulations in a legit way.
If you want to build an Airbnb business in a city, they won't let you.
Now, there's only about 8% of cities that are kind of like anti Airbnb fully.
That still leaves over 90% of the market, which is kind of nice, isn't it?
So with that said, that's Airbnb in a nutshell, that's an Airbnb business.
Short term rentals, corporate housing.
And, of course, my favorite rental arbitrage.
If you want to learn more about rental arbitrage, we've got two years worth
of content on this channel, so I invite you to watch as much as you please.
Again, my name is Sean.
Thank you for watching Airbnb automated and I'll see you on the other side.