good morning YouTube this is Richard founder of short-term rental secrets.com
and Airbnb super host I have a lot of thoughts and theories about the future
of single-family homes and apartments and what's Airbnb able versus what
isn't and the price effective at all this video is actually going to address
all that and it's prompted by one of our viewers who had a very specific question
so let's get into his question specifically and then turn to like my
global macro views on what's going on in the real estate market and what effect
Airbnb has on it so this viewer direct messaged me and in a nutshell because it
was a really long-winded question with a ton of different things but here's the
gist of it he watched all of our videos got really excited about the prospects
went out fixed up his basement and started listing it immediately he got
eight reservations he was thrilled he was enjoying Airbnb he got so enamored
and so excited about the prospect that he went out and wanted to buy a condo
and he put out a bid on a condo and it was accepted now before he's you know
put down any money and closed on it he's learned that the condo rules disallow
short-term rentals 30 days or less is not allowed 30 days or greater you know
the traditional model is allowed and so the question was what do i do do I back
out of the deal and it's gotten so much in his head that he's actually now
thinking about stopping to rent the basement that he's had success with and
he's worried about the neighbors and you know this is sort of like euphoria and
skepticism and he's like crashing and he wants to know what we should do if it
were me personally and I had no interest in living in that particular condo and I
was only doing it for the rental income and short-term rentals were disallowed
you can guess what I'm gonna say don't close on the deal walk away from the
deal you have no money down you've wasted a little bit of time this is the
perfect time to get out of the deal because the amount of money that you can
make in the long-term rental as you indicated in your message to me isn't
sufficient to close the deal I would definitely not recommend trying to you
know skirt the law or get away with it or anything that's just not repeatable
or sustainable the purchase of a real estate asset is a long-term play you
want to hold it for 10 20 30 years or longer and you're just never gonna be
able to get away with that for that long so I don't advise doing anything
that's illegal or hoping that you get away with it and as such I would
definitely get away now as it relates to your basement assuming that that's legal
and it's not clear in your message I would totally stick with it keep doing
that make some money get your hosting feet you know nice and solid get some
5-star reviews and just look for a condo or an apartment or a house or whatever
it is where you can do short-term rentals legally there's millions of them
so let's turn to my theory on Airbnb z-- impact on real estate market and let's
just be clear we're in an economic boom right now it's 2017 August of 2017 most
markets many markets are at all they're at their all-time high or maybe they've
dipped down a little bit I'm aware of that that doesn't prevent me from
looking at deals because I think that they're going higher so I'm currently
looking at a deal in Jackson Hole Wyoming I'm looking at an international
deal in Bali I'm starting to look at it some deals in Costa Rica again markets
are at all-time highs for those of you who don't know I used to be a floor
trader in the Chicago Mercantile Exchange and the Board of Trade and then
I was a big asset money manager I ran a four billion dollar portfolio and some
of the best trades I've ever made in my life are at all-time highs when I have a
very strong conviction that they're going higher so for instance this summer
and I put this on my Instagram story if you don't follow me maybe you should
I bought Bitcoin for the first time I bought it an all-time high started my
first Bitcoin exposure and about six hours later after dinner I finished it
it took tons of time tons of verification a real pain in the butt but
it's done and then I wanted to establish a position and they kept going higher
and I kept buying it higher and on one of my Instagram stories I said I just
bought the all-time high of in Bitcoin but I have high conviction that it's
going higher and so I'm happy to do it so just because something is at an
all-time high doesn't mean that you have to like stop and pause and wait for it
to go down because it may never go down but you need to have a strong conviction
as to why it may go higher so let me share with you why I think properties
that have the ability to be short-term rented go higher over the next decade
and beyond the basic premise is that there's this new hybrid buyer a guy like
me who buys a property and intends to be there for some period of time call it
two months two weeks whatever it is I'm gonna buy a property
that allows me to short-term rent it because the amount of income pays for
the mortgage and the expense and so on and therefore that property basically
pays for itself I wouldn't be able to do it if it was a 12-month lease and
therefore I'd be willing to pay less for that property but I'm willing to pay a
premium for a property that is legally allowed to be short-term rented and if
you think about this condo that this person I just recommended walk away from
you know whoever owns that condo that price may go down if there was a condo
located directly across the street that the bylaws allow short-term rentals
chances are that the viewer that we just answered the question to walks away from
the deal at the same price let's just say it's the same parity price it's a
hundred thousand dollar deal he walks away from a hundred thousand dollar deal
that disallows short-term rentals he crosses the street and he enters a deal
for the same hundred thousand dollars that does allow short-term rentals now
really simply in the law of supply and demand my theory is there will be less
demand for the house or the apartment that doesn't allow short-term rentals so
maybe they don't get a hundred thousand maybe they lower the price to ninety
nine thousand or ninety eight thousand or eventually it'll clear now if a lot
of people are crossing the street to go to this new condo complex and it's a
hundred thousand it gets bid up 100 100 and 102 103 and so my basic premise over
the long term is there will be less demand for single-family homes and
condos that disallow it and more demand for condos and apartments and
single-family homes that do allow it in fact the deals that I'm looking at I'm
only looking at deals that completely embrace it and so for those of us that
are worried about you know rules and regulations and all of that have said in
other videos and this is a perfect time to repeat it the rules and regulations
are our friends I'm only looking at deals where the rules and regulations
specifically allow it and as a consequence I know its long-term
sustainable and as a consequence I'm willing to pay more and I think it
continues to go higher so even though it may be all-time high I think it's a good
point of entry I think we're really early in this maybe the second inning
third inning out of nine and there's plenty of more room to go and in the
meantime the investments that I'm making are paying
for themselves generating free cash flow and allowing me to buy even more
properties so I hope you found this video helpful if you did please go ahead
and like it and share it with other people I want to just try and give you
my thoughts as to what I'm doing and let you know why I'm doing it and you know
I'm human I can make mistakes maybe this is the all-time high and real estate
just crashes and we never see these levels again although I doubt it
nonetheless I hope this has been helpful to the viewer that asks a question I
really appreciate it because it sparked this video that I've been meaning to
make for a long time and short sort of share my theory on economic supply and
demand and I think that that was a really good example about crossing the
street like literally like for like assets and crossing the street and what
happens one goes down one goes up if you haven't subscribed to the channel please
do
you