hey what's going on guys this is daniel one-half of the Kwak brothers and we
got my friend sam the other half of the Kwak
brothers that's right baby and today we're going to talk about Airbnb
rental arbitrage yeah baby
hey what's going on guys it's the Kwak brothers it's daniel and she
and Chi right yeah it's not sam right it's
chi right which is like the Airbnb version of sam right almost
I would say right but today we're talking about uh the method
of Airbnb rental arbitration yep yep yeah Airbnb arbitrage is super cool
in case you guys aren't familiar it's when you rent a property
from up from a landlord and then you put it on airbnb
to make a profit so for example if you rent a property for
three grand everything you make after that is your profit that's arbitrage
right and i i love that you know because you don't you don't need to own the
property right you don't need to own any real
estate you don't you don't have to have a whole lot of capital to start
right and it's a very minimal way of of building some great cash flow
right but let's go before we go ahead and dive into the nitty gritty of
certain things guys don't forget to subscribe to our
youtube channel click like and also share it as well if you
have friends that are interested in this topic
all right we got that over with let's go ahead and start with question number one
so you already kind of answered what is airbnb rental arbitration right
and so first question would be number one cheat how do we find
stuff like this how do we find these opportunities super easy the
most important thing that you need to do when you start your arbitrage business
is to find out what you can earn first right
so you find what you can earn then you find out how much it costs you
to to obtain a property that can earn that amount
so the first thing you would do is go to this site called airdna.co
okay put in your zip code or wherever you want to start your airbnb
property and then scroll through it's going to show you a map with all the
listing currently on airbnb and just highlight your cursor over
those listings and it'll tell you two things one it'll tell you what these
properties are charging per night and two it'll show you how often they're
booked so the occupancy rate once you have
these two parts you can figure out approximately how
much the property generates per month with that number you can now go to
zillow for example and figure out how much it costs to rent
that property so you put two and two together if
people are making say eight thousand dollars a month with the
property and it cost them say three thousand dollars to rent it
then there is roughly about five thousand dollars of profit
don't forget to subtract your utilities and your cleaning fees
yeah which is typically how much of your gross income would you say sure so
so the the rule of thumb i use is not 100 accurate but i just use it quickly
to forecast is 10 percent of rent for utilities and 20 percent of rent for
cleanings so back to our example if the property
is three grand then 300 would be utility 600 would be
cleaning so your total all-in price would be 3 900.
if you make 8 grand that's 4 100 of profit yeah and that's pure cash flow
pure cash flow 100 like you know like there's i can't think
of anything else that makes this much cash flow this quickly because
if i really wanted to i can go out there right now and go
jump on zillow and lease a property in chicago right now probably in the next
hour right and then have all the properties have
all the furniture shipped and started airbnb and it'll take us one
day to start airbnb imagine having to close a real estate
transaction in one day it's not possible yeah but with there be with rental
arbitrage you can it's it's fast it's executable right you know
so yeah so we kind of covered step number
one which is you know hey you want to go on zillow you want to see what the rents
are you know you want to find the data in
terms of how how much you'd be able to make
right on airbnb for that market and you want to kind of see what the most bang
for your buck let's move on to step number two right
what is step number two is it approaching the landlord with this idea
yeah so after you find the property that you want
the next thing you have to do is make sure the landlord is comfortable with
your idea be transparent be open and be on the same
page a lot of a lot of times i hear these
horror stories and in fact i i was once part of a horror story
because i didn't know that it was against protocol to put their
property on airbnb without letting them know without
it without putting it on contract right without consent
so what ends up happening is that they if you don't let your landlords know
of course they'll be upset not everybody's into the idea of
having multiple people use their property right but as long as you let
them know ahead of time and they're okay with the idea
there's nothing wrong with it 100 legal uh
whether it be local or on airbnb's terms of service
the last thing you need to do is research your local regulations
if your local regulation supports airbnb or if there's no laws at all
means it's okay for you to do it avoid cities with an
all-out ban you know i'll give you i'll give you an example like like hawaii has
an all-out ban new york city has an all-out fan but
most other most other cities have supportive law so they they want to
support you when you start your airbnb the only
thing they're asking for is a transient rental tax
usually falls about uh 10 to 12 you know very similar to the hotel tax
but once you have that covered you're good to go yeah now obviously a lot of
people will probably be asking well chi where
where would i go to find out about these regulations and things that i should
foresee yeah super easy so your local city hall
will definitely have all the answers just call them up and
and they'll tell you or if you're you know if you're too lazy to go to city
hall like i am i just asked my good friend google
yeah that's google's a great guy you know i'm sorry
it's 20 20. great person right both female and male
step number three let's say they agree the landlord said you know what she
you're solving my problem because i've been trying to rent this thing out for
months and i can't find a good tenant right and they're more comfortable with
you let's talk about furnishing so once you
kind of get that agreement right what's step number three is it
furnishing the place what do you do yeah 100 so it depends on what you end
up renting right so what the cool thing about airbnb is that
you can rent or put any type of property onto their site and
rent it out to people you know whether it be a tent or a yacht
or an rv but typically in the arbitrage space it's either a home or an apartment
if you have either a home owner apartment the next step is to furnish it
right um i would suggest that you avoid things
like craigslist or let go you know there's a lot of paid
courses out there that suggest these things which
blows my mind because there's absolutely no way
you can scale your business doing that imagine trying to coordinate
you know a craigslist meeting for one chair and then another one for a
sofa and another one for for a dining table and they're all at
three different parts of of your city i mean how much work is
that you just have to carry everything loaded
you know and negotiate what if they flake right
that craigslist you know it's just not reliable so
what you do is you create your shopping list and have it ready
and just have everything delivered to the property you know
this way you can scale you know that that list is
repeatable it's profitable it's proven and you can scale really really really
quickly yeah and i'm actually really glad you
brought that up because well you know at the end of the day with airbnb
you're providing an experience for your guests you know and they're sitting and
laying down in some dingy old couch that's got stains or
something like that's not a good experience
you know it it depends on the look that you're going for
you know some people go for the eclectic look but i just like a nice clean
polished look yeah absolutely and you know and most
most people would just based on your experience depending on the size of the
unit right or the property what's a good rule
of thumb you know in terms of furnishings yeah so so for
me in the san francisco bay area it
typically cost me between twenty to twenty five thousand dollars
to start one airbnb property and out of that twenty to twenty five
thousand dollars usually around eight thousand dollars of
that is my first month's rent and security deposit so it's about ten
thousand to properly start up a good airbnb with decent furniture and all
your linens and towels and and all your replenishables like
shampoo and which would you say that's probably
for like you know a four bedroom house a three bedroom house or is that for like
a studio apartment um that's that's for a larger property
so i no longer do with smaller properties just because
in my model it works better with a larger property so i used to get a lot
of smaller properties and they are profitable and they're easy
to run but i just don't have enough cleaning staff
or i don't want to manage that many cleaners to
have them go to every individual you know little studio
so for me it's all about automation i'd rather make a little bit less money
and just have a super smooth sailing system that's right so before we go on
to the next step i want to get a little bit more specifics i'm sure there's a
lot of people who are detail-oriented who are thinking
about this so you mentioned stuff like you want to have shampoo conditioner
dish soap what are some other things that a lot of people
don't foresee that for you as a host you know it's a it's a demand right it's
a necessity to have in the unit it's not it's not a material thing is
just reliable staff members right most people
fail in this business because they can't find reliable cleaners so
i think that's probably one of the key components of starting a successful
airbnb business is just having reliable staff
because there's a lot of turnover right so yeah you definitely reliable cleaning
staff is is very key so last step here so we got you know
we got the property we got the area landlord agrees
right we furnished the unit now it's time to put it on the platform
right it's time to put it on airbnb what are some helpful tips that you would
give to people in terms of getting exposure to your
listing uh in terms of you know how it is how it's
presented pictures obviously is a big thing
what are some helpful tips in terms of putting it on airbnb yeah so
if you guys go on airbnb right now or even tinder
you know use just make sure that you just
just observe on observe the photos that you see you're more than
likely going to connect with somebody with a high quality photo right so
if you're not a photographer don't use a camera and try to take
your own photos for you know for your airbnb property because at the end of
the day your listing is really online dating
and whether or not someone books your property or swipes left or right
it's up to your photo you're telling your story
based off of your photo so hire a professional
to take care of it and let them do their job
you know let them put your best face forward
and this all goes back to the furniture as well because again if you have
craigslist or let go you have a property that looks like a garage sale
whereas if you have uh if you do you spend
a little time to plan you'll have a really solid design you'll have the
right color scheme and everything to really have the property to have its
own personality you know and you want to be able to present that
with the audience yeah and design is huge
you know and especially when you're talking about families traveling
you know it's such an emotional decision you know a lot of times when you make a
decision on where you want to stay it's like oh my gosh that place looks
cool that place looks awesome you know that's that's everything you
know so we've kind of covered the whole basis
in terms of starting out what's step one all the way to hey we're putting this
thing on a platform like airbnb what would you say after doing all that
some important key things for our audience to consider
in managing the unit hire help definitely hire
a lot of help like for me i'm terrible at responding to emails and texts
so the first person i hired was my inquiry manager right an assistant to
just answer everything for me i didn't hesitate so just it's up to you
personally because my inquiry manager has no problem doing
that you know she can handle 500 properties all on her own but wow
it's just like for me i can't handle even one like i'm
just like that guy that can never properly text or respond uh through
email it all plays down to what your strengths
are and what your weaknesses are yeah and so you hired an inquiry i'm
sure you also hired cleaners yeah tons of cleaners you hired a maintenance guy
right because i'm sure things happen right so here's
here's uh one pro tip i like to work with
immigrants just because you know not not to say that us americans are
anything wrong with us it's just naturally i found that they tend to work
a lot harder because they have more on the line they gave up a previous life
to come start a brand new one here so they tend to be more
willing to contribute and to work to make sure that they don't lose their
job with you you know because they have families to feed and they made
a conscious decision to move their entire livelihood from
way where they were comfortable to come to america to start a better life right
so they're always putting their best foot
forward you know what that makes a whole lot of sense because you know
we're working together and i'm an immigrant so you know you're you're
practicing what you're preaching right now man
yeah i mean so you know we talked about you know somebody who takes care of your
inquiries cleaner maintenance guys you know all
all immigrants of course right is there any other uh person on your
team that you feel like that you you've got a
lot of value from um that's that's pretty much it you know
higher i mean like the rest of it just falls in place
naturally if you're starting a bunch of property one area you can end up working
with the same photographer same movers things like
that like all that all that is pretty easy to figure out
but um the most important part of this is
you know hire the right cleaning people hire a great inquiry manager and
it'll relieve you of probably like 90 of all your tasks yeah and speaking of
which what's a good way to hire the right person
it's all up to you you know it's all up to your gut feeling
and interviewing the right person if they feel good to you you know
and you connect with them you feel like you can communicate well then
that's the person for you like there's there's a million different ways
um say for example for cleaners you know you guys can try craigslist
but there's you know there's a million other ways you know i can go on forever
yeah and you know one of my favorite ways to acquire even for my real estate
team my contractors and attorneys you know
the best way has been referrals you know i go to somebody i trust
somebody i have a good relationship with already say hey do you know a good
cleaner do you know a good contractor so that's been a good way that i've
found people and i'm sure you've gotten a lot of referrals as well
yeah tons tons so after i hired my first cleaner they referred more and
more cleaners as we expanded you know so referrals 100 a very good legitimate
way so in terms of rental arbitrage you know
what any last words to our audience and viewers before we close this video out
100 go for it do your research first make
sure you're making at least 2 000 of net profit after all expenses are
paid and then don't hesitate it's predictable it's
repeatable just go for it absolutely and thanks for
being with us and thank you guys for watching don't forget to subscribe
uh like this video and share it with all your friends thank you guys so much i'll
see you guys in the next one oh wait don't forget
chi at the b b university that's right that's right we can't forget that