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Airbnb Business in 2022 MAKES YOU CASH - The Ultimate Hacks Of Short-Term Rental

Airbnb have ruined the hotel industry and should be held responsible. Well, the hotel industry as we knew it in the past. 

But the question here:

  • Is that a bad thing or is it actually a long overdue good change for the travel industry as a whole and most importantly to our community? 
  • How do we adapt to the overall changing travel and hospitality industries and how do we make money by taking the advantage of the changing landscape in the short term rental markets? 

The truth is Airbnb and the short-term rental market have changed the travel world forever, and taking advantage of this opportunity can change your real estate portfolio as well. 

If you've stayed in an Airbnb in the past, you may have sat there and wondered what would that business model look like as the owner and investor? 

Today, we are going to explore the fast paced, fun, exciting, and also risky investment model of buying and renting out short term rental. 

How does, Airbnb investment, short-term rentals work?

So let's start at the beginning. Let's say you're in a successful career, but you are looking around for passive income opportunities. Now, just about at the top of every passive income list is real estate investment. On one end of the spectrum, you can buy the property and handle everything that entails. On the other end of the spectrum, you can invest in something passively like a fund or a REITs  or something where you're investing with the professionals that do this full time and will cut you in on the profits they are making. This is similar to the same income fund model where we manage everything from top to bottom and cut investors in on the income we generate from these assets. 

That said, the number one thing to ask yourself is how involved do you want to be and how much time do you have to actually do so if you do want to run the acquisitions, the operations, the marketing, the day to day management, etc, and especially if you're someone who's partial to the single-family residence space, then Airbnbs is a niche that you should definitely consider because they have some major unique advantages from investors just starting out all the way to advanced investors who are looking to take a niche and scale it to the moon. But let's start with the basics of this asset class. 

What's the difference between a traditional single family home that's rented out to a tenant versus an Airbnb or short-term rental model? 

The first note is that a traditional leasing model typically has lease lengths around the year mark. Sometimes that can be extended to two years. Very rarely you'll see like three to five years, but usually it's about one to two years for a single family home, for a normal traditional lease. 

Now, Airbnbs or short-term rentals are exactly what they sound like. They are short-term leases anywhere from a day to maybe even a week or even maybe month to month in extreme or less common scenarios. Most of the time they're one day or maybe several days for the occupant to actually stay on that property. So it's very short compared to a one-year lease. 

Now because these rental lengths are typically short, this allows the landlord to do something interesting and have many tenants in that property throughout the year leasing for one to several days. So why would a landlord ever go through the headache of managing all these different people in and out of a property? 

Well, because just like most things that carry a much bigger headache, there's also a greater reward. These short term rentals typically have a higher price per day than their single-family long-term lease counterparts. So because the landlord is getting more money per day for that rental to be filled, the goal then is what the landlord wants occupancy as many days of the year as possible to maximize this higher rate and therefore maximize their returns. So that is the basic outline of short term rentals versus long term rentals. 

Let's dive into some of the details that make this investment niche very interesting for both landlords and occupants. 

The first note applies to the owners and the travelers, and that is saving money. Consider the situation from a traveler's perspective. They're going to a city, they're evaluating their game plan, Where are they gonna stay? What are they gonna do and what do they need for their trip? When looking at lodging, this gets interesting because evaluating hotels, which you'll typically find is that they're much more expensive than their Airbnb competitors. 

So from just a cost perspective, you can look at it from the traveler's point of view and say, Look, I can save a few bucks if this is a work trip or even a leisurely trip or trip visiting some family. It's always nice to save money and there's always a big crowd of people that will be attracted to anything that can save them money in the process. But interestingly, this also benefits the owner of Airbnb. 

In the case of most short-term rental owners, they can charge above what they would get from a long-term single-family lease, but also can beat hotels at the pricing as well, so they make more money per day, or they make more and the traveler saves more. So it's a win-win in perfect scenarios. 

Additionally, the flexibility in stay lengths greatly benefits the travelers and the property owner as well. 

I have a question for you.

Have you ever stayed in a hotel for let's say a week? Maybe? What about two weeks? What about four weeks? What about a month? 

If you said yes to any of those, but especially the month question, then you'll know exactly what I'm about to say, which is staying in a hotel for that period of time will drive you insane. Truthfully, it's a nightmare. 

In my lifetime, I've had to do this actually several times and from my experience, I'll say this, if I'm in a city for more than a few days, I'm looking for an Airbnb for sure because of the benefit and that comfort and peace of feeling like I'm in a second home relieve the stress of that trip significantly and, let's face it, just the fact that you don't have to see a thousand people when you come home at the end of the day is a huge de-stressor all on its own, which actually leads into the next point, which is that short-term rentals are the introvert and the busy person's dream. Why? Because of the rise of self-check-in and checkout options throughout the rental market.

The reality is you pretty much don't have to meet or discuss with anyone unless you want to. What that means is you don't have to check in at the front desk, you don't have to check out at the front desk and go through all your different things in your billing and your options. 

There's no room service or housekeeping that will bother you in the middle of the day and you don't have to hear your neighbors talk loudly or play a bunch of music in the middle of the night. Instead, you can enjoy less stress and just be kind of a solo zone to yourself or the small group you're staying. 

With all that to be said, let's touch base on something I mentioned earlier, which is that the potential for profit is higher for the investor as well, but it's not free money and it will take three things to be successful in the short-term rentals:

  1. You must do your market research. 
  2. You must build out the systems needed to manage a short-term rental or short-term rental portfolio. 
  3. You gotta have to hustle throughout this process, especially in the beginning stages. 

These three items coming together are going to determine the success that you have with your investment journey in the niche of Airbnbs. 

So let's jump into those three items and more details so you can get an idea of specifically what steps to take to be successful. 

First market research, let's talk about market research. You need to complete it in order to check that box and be confident you can make some money. For this first item, the two things you're looking for are does the condition of the market allow the landlord to make a huge premium above what a standard long-term lease would claim? and the second piece of market research is, does the market allow the landlord to rent the property out for many days during the month and the year? 

If you're doing this correctly, you're gonna be answering questions like, Is this market cyclical with short-term rental, or like a beach house or a winter cabin? How many days a month could you lease it out? What are your minimum days rented per month to break even? and then what's the minimum that you would need to make sense of the investment for your return on investment? 

If you can answer these questions effectively and the market's showing you that there's a big opportunity above what a long-term rental rate would look like, then this is a recipe for big success in short-term rentals in that market. 

Next, let's talk about systems with your short-term rental business. If you've watched a lot of my content, you might be sick of hearing me say this, but the reality is that systems scale businesses. So if you want success on a long-term scale, you must identify what the total list of tasks is on a daily basis with that business. You must drill down on what goes into each task in detail, and then also what the larger systems are that are made up of what tasks, you gotta build out what the operations look like. 

Documenting and organizing this is the only way that you can scale this business to maybe have multiple properties under your wing or where you have a staff that takes care of the majority of the operations on your behalf and you can focus on other things making this an actual passive investment instead of just a second job. 

Finally, the last item is you must be willing to hustle on this, especially in the beginning. 

You gotta remember that your mortgage is due every month, and you must be making the payment. To keep it simple, the more you rent the short-term rental out, the more money you will make, which means the speed will always be a priority in the business and will determine how successful you can be if you have excellent marketing, rapid lightning, fast turnaround of units as soon as somebody gets out so that that unit's available for the next person immediately. 

Quick turnarounds by leads to book and get them set up with anything and everything that they need and are constantly checking rates of your competitors to make sure that you're keeping a competitive price and you're not too high or too low, then the reality is you're going to be competitive in your market and probably beat the majority of your competitors who might not be as on the ball as you are. 

But again, to circle back to systems, you could have the systemized and other people could be doing this on a full-time basis with the exact system that you outlined. Always something to keep in mind, but no matter how good your systems are, it all starts with you and it takes your hustle and your clarity of systems and your clarity of tasking to put the whole thing together out of the gates. 

Another amazing benefit to the landlord and the traveler is that the advertising channels are extremely clear and established. What does that mean? 

It means there are really only a few websites in the short-term rental space, and if you want to find a place to stay or you wanna market, those are the places there are really only a few. This makes it easier for landlords to show what they have available and easier for travelers to find something during the dates of their trip. 

While Airbnb is without a doubt the largest short-term rental marketplace, there are also several other options like VR BO, Homestay, and Booking.com. 

Anytime you can bring simplicity, speed, and clarity to both sides of the transaction you are in for a winning combination and yes, you heard me say clarity. Why do I bring that up? Because just a reminder that when you book a room with a hotel, you don't actually know what room you're getting with that hotel. So what does that mean? 

That means you might get a view of a giant parking structure or you might get a view of the beach, you might get a floor you didn't want. So the advantage of a short-term rental is you get the clarity of knowing exactly where it is, exactly what the view is, and exactly what the locations and features are of your rooms. 

The last and most interesting point we're gonna cover together on short-term rentals is that creativity can thrive yes, financially. 

Now, while it's true that many markets are getting saturated with short-term rentals, there is a huge opportunity to maximize your value, and that is by maximizing how attractive your property is to renters. By being creative, we all know that we live in a photo-ready world, so properties that are creative and photo-ready, something that you can take pictures of and throw on social media and get a lot of attention as a unique beautiful picture and memory, these properties are going for a premium. 

It's not uncommon to see these properties go for much more than their boring competitors, even if they're of the same size, and in the same location. I would go so far as to say that travelers would prefer going in something that's very aesthetically beautiful and creative, even if it's in a worse area than something that's boring and standard and cookie cutter, that's in a better area. 

People want creative pictures and they want attractive environments, so give the people what they want and they will pay you more for it. So get creative. The cool part about the whole short-term rental market is that there's a softer and cool side as well, that what you're giving people that stay there is an amazing experience and a backdrop in which they can make lifetime memories. For me, I travel a lot for work and sometimes this includes bigger groups or situations where it's gonna require a lot of chill and downtime for meetings. 

Recently, I had a mastermind with a really successful group of entrepreneurs and we wanted to meet up somewhere in the country with a once-in-a-lifetime experience, but also have some downtime to chill, to relax, and also something a bit isolated where we could all hang out together and not be split up throughout the trip. Finding this event and finding these travel arrangements was very difficult and we were looking for a needle in a haystack. Think about it, you're trying to plan something to experience a once-in-a-lifetime event, but also have something where it's enough downtime and quiet time for us to sit down and do a mastermind where we talk about best practices in our businesses, in our lives, in our families, etc. It's tough to put all those things together. So how did we solve this and check all the boxes simultaneously and create an amazing trip? 

By leveraging a fantastic Airbnb that we found and timing it during a massive event, we ended up choosing New Orleans, Louisiana during the tail end of Mardi gra. 

Now, if you've never been to Mardi gra, you might have seen pictures and, it's pretty much insane.

Overall, an entire portion of the city is almost completely shut down. People are partying 24/7. It is chaotic. It's crazy. There is so much going on. The fact that none of us had been there made it something that we all had to see together just because it's an experience you can't live without seeing if you're an American. If we went the standard route, we would've had a group of eight entrepreneurs and we would've ended up running somewhere between four and eight rooms during the peak period for New Orleans, which is during Mardi gra, if you thought dealing with annoying neighbors in hotels was bad, imagine a thousand x crowd size with essentially 100% of your neighbors being noisy and drunk, and then also having the blessing of overpaying for that experience. 

Instead of signing up for all this malarkey, we opted for a short-term rental that was within walking distance to Bourbon Street, but when we wanted to get out of the circus, it was only a few minute's walks to be completely away from everything in a nice secluded area that was quiet and less chaotic. We ended up finding a rental unit with eight separate bedrooms exactly what we needed. It also had a gigantic pool, a gigantic backyard, and super sexy, cool vibes throughout the whole house. The design was amazing and it really created a unique experience to enjoy time with the group without distractions or headaches. Not only that, we were having such a good time and having such high-value discussions. We ended up saying, You know what? Let's just throw our own kind of little small event at the house that's still chill, but still has a lot of fun also. 

We hired a private chef. We hired a private bartender, and we even hired a private band all in this amazing house because we had this space to do it, and the group that wanted to stay in and both enjoy the best things of New Orleans but also get time to vibe and learn from each other. 

It was overall an amazing trip and amazing experience and one that benefited the entire group personally and professionally. But think about it, would that all have been possible in a hotel in the middle of New Orleans during Mardi Graw week? We would've all been separated. We would've paid a premium and we would've been stuck in the chaos of Mardi Gra which would've kept us from the time to maximize the experience together and learn from this amazing group of top operating professionals. 

All that to be said, while there are so many benefits to investing in the short-term rental strategy, there are some considerations and risks involved as well. 

Let's jump into some of the drawbacks. Now, just like any changing industry, there are going to be people that are aggressively against the new short-term rental market. Those people are mostly called hotels. If you're not familiar with the hospitality business, hotels make a ton of money. 

The flag hotels are usually huge chains with huge budgets. They are seeing the effect on their bottom line, and they are not just walking away from that money because those hotels and mini markets are putting pressure on cities and counties to enact rules to reign in a lot of the short-term rental markets. Not only that, short-term rentals in some cities are straight-up illegal in the cities where it is technically legal. Many of them have enacted a licensing structure where there's a limited amount of licenses to go around despite having a huge number of short-term rentals. 

This creates major uncertainty in those markets, and you as an investor need to be wary of that before going out and spending hundreds of thousands or even millions of dollars on different Airbnb projects that might have a licensing change in the near future. No matter who you are. Scaling out something that could completely fall flat in the future is not something that most people can sleep well at night knowing. 

Additionally, speaking of hotels, admittedly, hotels typically do have more amenities than short-term rentals have. Most of the time, you're not gonna get an onsite gym. You're definitely not gonna get housekeeping or room service in your short-term rental, and you're not gonna have a concierge when you're in someone else's freaking home. If this doesn't sound like your cup of tea as a traveler or you're looking for a more pampered luxury vacation, a short-term rental might not be your best option. 

The last item is something that we brought up earlier, but we need to explore the other side of it. Yes, you do have the potential in the short-term rental market to make more than the average long-term rental, but you're trading stability for that higher opportunity. The truth is that there's more security and more stability in long-term rentals. Even if tenants can default on their lease agreements, it is much less common than it is for a short-term rental to go vacant for many days at a time. If you're an investor that's looking for something that's more stable, then you need to consider that short-term rentals are gonna be more volatile. 

But I do have a suggestion at the end of this video on another investment strategy that you could balance with short-term rentals to get the benefits of both high income and high stability on a long-term basis. 

Looking at the pros and the cons of short-term rental investing. I believe the advantages far outweigh the disadvantages in this asset class, but this is only if you set the strategy up correctly and you remember the top three steps to take when starting out on this journey. 

Do you remember what the three steps are? First is market research of the market you want to be in. The second is building out the systems that you need to run this business, and the third is the willingness to hustle and get this going, especially out of the gate where it's the hardest work. If you check these three boxes and everything looks good, then short-term rentals can be a huge opportunity for you. 

The great news is that while there are more short-term rentals on the market, the opportunity is still early, and there is the ability for you to spearhead a niche that is evolving rapidly, but finding a niche that you can be a top operator in is just one piece of real estate investing, as well as all pieces of the big picture, including taxes, financing, marketing, insurance, etc. The good news is that we cover all of these topics and more at saintinvestment.com/resources. 

Our education portal is 100% free and has so much insanely good information no matter what stage of real estate investing you are at now, and the link will also be in the description below. 

Now you have an idea of how to capitalize on the Airbnb niche and boost the revenue of a single-family home above what the long-term market would bear, but it often takes several investment strategies to build a portfolio that is well-balanced and has a good asset mix. 

With that higher income you could get from your Airbnbs, the reality is you're going to need something that smooths out the ups and downs of the short-term rental market. As I mentioned earlier, we do have an investment strategy that is really well paired with Airbnbs, and that is investing in section 8 housing. We're gonna put up a link next to me to a section 8 video that goes over all the details of Section 8 and how you can benefit from the United States government literally paying rent for your tenants. 

There are very few things more stable than that if you're planning to own property on your own. The other alternative, of course, is investing in something like a fund where someone else is doing the day-to-day investing for you and if you wanna learn more about income funds, check out saintinvestment.com.

See you guys!

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