hello YouTube this is richard founder of short-term rental secrets.com and
Airbnb super host today's video is what you should think about when buying your
first Airbnb home now obviously this applies to all short-term rentals and
different platforms like the RBO home away booking com and so on but let's get
started let me just say you don't have to have the money or even the commitment
to go out and buy a place to get started on the Airbnb you can do with the
sleeper sofa in your living room you can do with the spare bedroom it doesn't
really matter but let's just assume that you're having a lot of fun with it
you're making money you're like the side gig and you want to get more involved
and you want to buy a rental property here are the things that I look for
proximity is really important you're going to be hands-on you're going to be
involved you're going to want to make sure that the maintenance and the care
of the property is to your standards so I think proximity is really important to
where you currently live so by way of example if you live in an urban area
like Chicago I would recommend the very first place to be in or around Chicago
and the suburbs just so that you can like drive there and take care of stuff
but if you live in a more touristy area it doesn't have to be in your exact
community I would probably pick a place that's within driving distance maybe 40
minutes or less maybe an hour or less whatever you're comfortable with but
that gets that increased demand and is going to generate more revenue so let me
just say these are just suggestions you don't have to follow this script like
line by line but we want to get your first property successful and cash
flowing so you have some money you're having real good time with it and maybe
you want to get a second or third property for me now that I'm doing my 15
year plan I'm intentionally looking for some of the things that I'm advising
against like I'm picking places that I want to go to and the fact that it's
hard to get to is kind of cool but I'm experienced and I have that
infrastructure and it's something that I want to do as part of a portfolio but
for your first one let's just keep it really simple let's get some cash in
your pocket and let's grow and get the second and third under way so let's
remember that in real estate location location location is the only thing that
you really care about so let's try and figure out where people are actually
already going and why they're going there think about business reason think
about travel and tourism amusement parks the beach these are areas where people
are already going and you just want to capture some portion of it this isn't
the time for you to take like the best home in an unknown neighborhood and try
and get it discovered because your very first rental property so you want
to make sure that it's cash flowing let me give you an example if there's a
beach community that everybody goes to and it's you know called two hours
outside of a city you want to try and buy a home as close or within that beach
community as possible don't pick a less expensive place like
Midway and hope that other people see the value and want to travel an hour to
the beach try and get as close to the beach as possible even if it's smaller
but you want to get in on the demand that already exists as opposed to
creating the demand the third thing I want to talk about is perhaps a little
bit scary to you but I want to reassure you it shouldn't be scary it should be
embraced and it's a critical part of like thinking about where you're going
to buy your Airbnb property and that's the law now the law is constantly
changing and it's going to continue to change but I believe firmly that over
time the law is going to reflect the greater good and the greater demand and
Airbnb and short term rentals are here to stay and becoming more and more
important every single day and so while the law might be scary think of it as
your friend if you know what the law is then you can actually embrace it and
adhere to it and operate legally so it's a good thing now when you're thinking
about your property especially your very first one you want to be really caught
up to what the laws are I recommend you use a Google search and just put air B&B
laws in the name of your community or the city or whatever and then to take it
one step further go ahead and create a Google Alert
with that town and the same search because it'll give you updates every
single day and buying a property isn't an overnight thing it could take you
three months six months heck even a year to be clear this isn't illegal because
we're breaking a law and we're bad people or anything like that there's a
lot of constituencies that are worried about it like the Hotel and Lodging
people the taxation bureau what we see happening is hosts are becoming better
screening guests better less parties less of those nightmare scenarios and
then it really just becomes a financial thing like how much taxes do you pay and
how many nights can you do it and it just needs to be some civility brought
to it where it was the Wild West as always happens in like disruption over
time it transitions into a more normal in common and the laws help do that and
so you want to find a place where there's a lot of opportunity the laws
already being you know communicated and
channeled and in fact one of the things that I look for when I buy a property is
do they collect taxes on Airbnb rentals if they do that's fantastic because the
communities embraced it and they need it for things like schools and road repair
and so on so like that's actually a net benefit so the next thing I want to talk
about is finances I understand that this might be first and foremost in your
consideration and it is in mine too but I wanted to cover those other items
first because I think they're really important but turning to finance look
obviously you know what your finances are you know what you can afford
you know what's prudent there's all sorts of online calculators to help you
work through some of that but let's just talk about a few things to think about
like price appreciation what's happened in the market or the prices you know
really high if there are all-time highs I personally don't care so much about
that because I'm not really making the investment for price appreciation that's
a fringe benefit what I'm actually making the investment for is more cash
flow and the way to analyze that is how much is it going to cost you
what is your mortgage going to be and then what sort of rental income can you
anticipate and the best way to gauge that is two things one take a look at
Airbnb in the area how much do they command and then apply some reasonable
occupancy rate I would suggest somewhere between sixty and eighty percent is what
we see good hosts getting and make sure that that's you know seasonally adjusted
and cyclical so for instance if it's just renting during the summer realize
that you're going to have nine months of vacancy and that might not be a good
idea try and find a place that rents year-round try and find a place that
rents at least two seasons maybe it's good for summer and winter like my place
in Colorado but trying to take a look at what it's going to generate in terms of
income and assume a sixty to eighty percent occupancy rate and that'll give
you one idea the second way that I approach it is take a look at contact a
broker and ask them what a similar property would rent for and let's just
assume it rents for $1,000 a month the framework that I use generates about two
to three times that long-term rental so you can anticipate about two to three
thousand dollars a month in rental income using that example so another
consideration is infrastructure you want to make sure that property you're buying
has like services and conveniences around it because while I said earlier
that you may be willing to drive an hour to
go and check in on the place and so on to get to that like beach community if
that Beach community is really desolate or only accessible by ferry or something
that makes it really cool but really challenging realize that it's going to
be really difficult for you to get maids they're plumbers there they may not be
willing to travel an hour and if they are willing to travel an hour it's going
to cost you a lot of money so my last tip is really important it needs to fit
into your lifestyle it needs to be part of your vision in short it needs to be
part of your why and so let me give you a very personal example about 20 years
or so ago I bought a real estate property that I thought was really
interesting from a financial perspective I thought the neighborhood was
up-and-coming it wasn't exactly anywhere that I would normally go to but it was
close enough and so I looked at the numbers and I made that investment
decision and I I bought the property and turns out I was right if I had held the
property for 20 years I would have made a lot of money in terms of appreciation
but I couldn't hold the property for 20 years because it didn't fit my lifestyle
it wasn't where I wanted to go I was never in the neighborhood and every time
I went there it was a chore and it became a job and it wasn't you know it
wasn't conducive to what it was that I wanted to be doing so instead if I taken
that amount of money and bought someplace that I you know happened to be
near or around or I liked going to on the weekends like let's say I go there I
do some work and then I go for a bike ride or a walk then I would be still
holding that property and I'd actually make that appreciation more likely I'd
own it outright and it would all be like free cash flow which would be fantastic
so it's really important to understand what your why is and make sure that it's
you know attributable to it so I want to riff on this a little bit more because
it's super important I think it's helpful to everybody you really have to
understand what it is that you're doing and why you're doing it because that
gives you the persistence and the capability to like endure and persevere
and so let's just use this YouTube channel as an example I really believe
in Airbnb I really believe in my 15-year plan it's changing my life and I want to
help other people and like change other people's lives so if I have some ability
to give a little bit of tips and education I love doing it and the
feedback that we're getting now is really encouraging and rewarding and
like that's what keeps us going but by way of example you know the first five
months that we did this YouTube channel we did
100 subscribers and those were dark and lonely in quiet days and you sit there
and say like what am i doing and why but the reality of it is I believed in it so
I kept doing it and then if you take a look at the more recent results in just
the last couple of months we've gone from that zero to 100 five months to 100
to almost a thousand in what like two months in two months and I think we're
just getting started right if you take a look at some of the comments people are
suggesting we should have 10,000 subscribers and I'm sure that's to come
but however long that takes is okay because this fits my why if it didn't I
would have quit so this is really general and not applicable to you
specifically I'm sure you have tons of questions and the good news is we have a
community that's filled with expertise on our Facebook group so just come check
out the Facebook group the link is in the description below we'd love to have
you over there please like the video if you found it helpful leave comments and
feedback but most importantly if you haven't subscribed to the channel do it
Thanks so very much have a great day