so Graham Stephen just posted a video the biggest problem with running your
home on Airbnb he also encouraged anybody who disagrees to leave a message
in the comments so from a guy who makes over a million dollars per year on
Airbnb this is my message in your comments let's jump right in okay so
welcome back Airbnb family so for those of you don't know me my name is Sean I'm
a professional rental arbitrage Airbnb host I'm going to do this video without
cuts you see how he keeps cutting its because he took two weeks writing a script
on how you shouldn't be on Airbnb but this is simple math and I'm an Airbnb
professional I'm about to rail this guy's so many of you don't understand
the true potential of using the Airbnb platform or other similar platforms when
doing something called rental arbitrage almost none of you really understand
what rental arbitrage is its new and it's here to stay so let me talk to you
about my first few properties my first properties were by accident I picked up
a lease because I was relocating a salesperson for another business that I
owned I'm a consultant for newspapers I help them stay alive when relocating
that salesperson part of a relocation package I got an apartment and this
high-rise in Houston I ended up needing to rent the space out because I signed a
year-long lease and he didn't need it that long I thought I was screwed I was
sweating because I had this rent right so what I did is I converted it on
Airbnb after losing money for a couple months trying to find alternative ways
and so I ended up with three properties in that building right and those three
properties my rent was just under six thousand dollars per month my revenue
was just over twelve thousand dollars per month and I did my own cleaning so I
kept all my own cleaning fees so I was netting about six thousand dollars per
month on my first three properties right so now it's scale like three and a half
years later I have almost 50 properties I had a cleaning team in all the cities
I do business in three cities on this by the way we're gonna talk about that and
I have managers who manage my property and I'm autumn ated I spent a month in
Thailand last month and I made $140,000 in cash flow on my rental like I said
leases and have $140,000 in cash flow so I went to a an investor or like an
investment banker like just a just a couple weeks ago and asked him about
potentially you know getting a loan to buy a property because I'm all high on
the hog and this is when I first took a look at what the cost of debt is for
this kind of stuff and this is where the the mortgage is dead in 2019 for a
little while at least because rates are going now so an investment property you
need to invest fifteen to twenty thousand fifteen to twenty percent on a
property and let's say you want to buy an eight Union and then eight unit is
six hundred thousand dollars well that 20% is one hundred twenty thousand
dollars what cost me five to eight thousand dollars per unit that I picked
up on Airbnb which means I can pick up roughly twenty properties for that one
hundred twenty thousand dollars that includes furnishing first month's rent
everything I'm in okay guys so with that I am going to net income after all my
expenses eighteen thousand twenty thousand dollars after paying my team on
on those on those units right what are you gonna cash flow on an eight unit
property right you're gonna what is the rent gonna be 1200 to 1600 dollars per
unit maybe eighteen hundred dollars if there's some two bedrooms and we haven't
talked about my buy profit on a two-bedroom or larger so let's just say
that these are one digits I am going to net income take-home passively because
my team more than you're going to revenue on that eight unit right so even
when capturing equity and reinvesting the property and getting some
appreciation and the fact that you have an asset after thirty years you're still
losing big time if I took that same principle payment that you guys are
making into your loan and that goes towards your equity and just reinvested
that money back in my Airbnb business which is what I'm doing by the way i
spool up so many properties so fast that by the time you even catch up enough to
buy your second property i'm five times bigger than you are
that's exactly how I got to where I am this is the fact of the matter so let's
talk about the liabilities that you mentioned in your video here you're
talking about how people get illegal spaces well with rental arbitrage you're
not going to get illegal spaces you need permission to rent and then rillette on
Airbnb so you need an investor or landlord that says hey I would really
like you to pay rent here and then do your business and I know some of you
guys are thinking about this you own a home and you thought you're gonna get a
tenant and it was gonna be easy but three months in you're still you still
have a for rent sign in your lawn and no tenant and you want to stab your real
estate agent because they sold you on a lot right you're getting $0 back from
your home and you're paying your mortgage right your upside down and that
sucks I feel for you so I show up on your doorstep and say hi my name's Shawn
I will rent from you for years in the years you'll never need another tenant
I'm gonna keep this place in for sale condition because I have to constantly
sell your space to a new guest every week you're gonna love it and they do
they love it so much that when they go to buy another property they're saying
hey Sean I'm gonna pick up an eighth unit property or 16 unit property would
you rent here like yeah they're like will will your pre lease so I can get a
loan I'm like absolutely sign the lease I've got five or six units at the 16
unit property the prospective landlord goes to the bank it says hey I'm
pre-leased with this much money per month and the bank will let the
underwriter use that document to achieve their goals so now I'm the I'm the
investors best friend I love you Graham followers this guy people who are
watching his videos you would use somebody like me when you can't get your
places filled because I can add a profit I'll take that risk and now you're using
me to pick up more property that's wonderful another thing you are not
letting people throw parties in the rental arbitrage world because that
relationship like let's say Graham was my landlord here he would not want me
throwing a party or letting people throw parties because that would be bad on his
building so I effectively screen out people I don't think are good for my
Airbnb business right I am making sure that my business is effective then
another thing he says is it's a daily grind well in a way it is until you find
a way to automate it like any other business you as a landlord you still
need a property manager you might have to evict somebody and God forbid you
have to evict somebody I am doing that with an old sales employee right now
it's the biggest headache in the world but on my Airbnb portfolio I've never
had to worry about addicting somebody from an Airbnb I have to evict somebody
who is a sales agent of mine for not paying the rent but that's it right so
the quality people you get in long-term rent the whole world is just a mess I
don't want that and I don't want to have to go into a property and then repair
walls and pull carpet and like sanitize an entire place because somebody treated
in my space like trash for two years you think it's bad when somebody trashes
your place for a couple of days try having a bad tenant trash your place for
nine months right and then you evict them and find out the places in absolute
disarray and you have to spend five ten fifteen thousand dollars twenty thousand
dollars trying to make that space rentable again does an expense you
didn't plan on paying right wizard a risk owning property and yes I agree
with grant you should not buy an Airbnb property because the cap rate looks
attractive like everybody can agree on that because
I have shows so I have a fraud for a couple friends who bought some spaces
one may have made that mistake right he's like this kind of works on paper
but with Airbnb the numbers look awesome right so he's taken a coin flip deal and
he's using Airbnb as a way to drive at home I've got another friend who got his
face and he wanted to capture like like forced appreciation when buying this
property and then he knew that Airbnb would allow him to fill up the space if
the neighborhood couldn't get him a regular renter so he still trying to get
a regular tenant but Airbnb is his back-up plan
and that's going pretty well I have a person I'd consult for in Virginia who
picked up a home because of my channel here and his home made a hundred and
eleven thousand dollars in revenue his first year as an Airbnb host that's a
lot of money guys so with that much money - you're making above and beyond
what a normal renter would pay you you can pay for staff you can build a
business you're going to be okay I I rent properties in three different
cities here in Texas Dallas Fort Worth and Houston and all three I've been fine
for years now let's tell you a story about uber uber got kicked out of Austin
now when uber got kicked out of Austin they just usurped the city and went to
the state and says hey we've been paying you guys a ton of money to be able to do
business in your state we want to do business in Austin they made their case
and the state reinstated them in Austin and told Austin that they can't set that
rule that bans uber well the same thing happens with the state with Airbnb ever
gets kicked out of Austin or Houston or Dallas because they pay those hotel
taxes to the state directly so do you think the state doesn't want that money
they absolutely want that money and if a city ever tries to shut them down or get
too strict they just go cry to the state so if you want to be a successful Airbnb
host do Airbnb in states that Airbnb collects the rent are the taxes Florida
is one of those that's one way around that one problem now Airbnb is old
enough that cities have made up their mind on legislation so yeah like
miami-dade County has got super anti Airbnb law Seattle San Diego can make up
their mind there's laws everywhere but you don't have to host in just those
cities and his example for Santa Monica yeah okay what happens is when something
is new and people to the obvious places then it gives a
bad impression when there's no control so Airbnb host somewhere else that
wasn't so beat up where people have had time to actualize to the platform and
there are cities that are super friendly to Airbnb it's a good idea where it's
allowed you don't have to worry about this in every single case they're gonna
be cities that are gonna be friendly to Airbnb for years and years and years
maybe even forever and you know god forbid it all falls apart let's talk
about a hypothetical scenario what if Airbnb just shuts down and
you're stuck in my world I've leases right and those leases some people like
businesses will pay me like a traditional corporate housing contract
and some of them are on Airbnb if Airbnb absolutely shut down some of my
portfolio would stop making money and I would just let go of leases I would
terminate those leases I'm not stuck and alone right my credits not gonna go shot
because I bought out a lease for a few thousand dollars sorry but if you guys
default on a mortgage because you lost money in a home you own yeah you're
going dude you're going under on that and your credits all shot further I do
this through my business so after I you know cut a bunch of leases if I had to I
can negotiate business to business and they don't attack my personal credit
they don't like the negotiation process but I'm taking kind of pay them for any
reason you're insulated by an LLC lastly this whole capturing equity I already
outperform you guys like big-time as you know even your appreciation and equity
capture considered but a lot of you were like well I can sell my home later and
do a like in cunt yes you can but let's talk about selling so you sell your home
you're probably selling cuz you're trying to get out of the business right
so when you sell to get out of the business you can sell you property three
hundred four hundred fifty thousand dollars whatever I can sell my LLC as
well right you're not alone on this an exit strategy part of it
I can bundle all this property into a portfolio spool up the business have the
staff I've taken myself out of the business and I can sell that what do you
think of a person's gonna pay for a business that cash flows a hundred and
forty thousand dollars a month where my net profits can be like fifty thousand
dollars a month or better what do you think somebody's gonna pay for that
definitely more than your stupid home sorry
and I don't mean you I mean these people have been lying to you about what you
need to do to be an investor in the real estate market the the fresh be
progressive you guys are smarter than this you're watching youtube channels
like this and my real estate agent is super loyal to grant Stephen and he
should he actually showed me this video I'm not a subscriber to Graham sorry I
don't just don't follow your channel and I don't follow your method I'm an
accidental investor in real estate because I fell into something that was
just too good to get out you guys probably have questions
feel free to respond leave it in my comments engrams feel free to clap back
if you want to talk about it because I am passive just as passive as a regular
landlord is I make way more money than these regular landlords I did it way
faster I'm happy right I'm super happy with this and at the end of the day what
else do you want but to just happily make a ton of money and not have anybody
tell you what to do right so thank you for watching everything be automated and
I'll see you on the other side