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November 29, 2021 November 4, 2021 by James Svetec
Why Airbnbs are MASSIVE Cash Cows
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This video shares some in-depth insider information. Learn about the (simplified) bigger picture of how big time investors think, and why you're better off acting NOW if you want in the Airbnb game.
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If you're new to real estate investing, it can seem overwhelming.
There's a lot going on in the background that can explain why things the way they are. But when you're new, it's hard to see the bigger picture.
Today's video goes over just that.
In almost all cases, it's important to stay focused. Focused on YOUR investing style and YOUR type and YOUR system.
But today, I want to go into why Airbnbs are massive cash cows.
I'll explain how institutional investors (fancy term for really big, rich investors) affect what you do.
I share why short term rentals are the best type of real estate investment.
I briefly touch on return on investment and what makes investing in Airbnbs so lucrative.
Then I go into the bigger picture. I talk about what big time, big money investors (called institutional investors) want when they invest.
We keep zooming in until we get to smaller investors. We touch on how long term investors think when they see a large house.
Then I share what I'm thinking when I see a large house and how much it can make.
Finally I tell you exactly why this won't last long and why you should start TODAY.
VIDEO TRANSCRIPT:
What's up guys, it's James here and in today's video, I'm going to be talking about why Airbnb are such massive cash cows. This is a really interesting topic I'm going to share with you obviously a lot of investors, a lot of people that have looked at investing in short term rentals are aware that the cash flow from them is unmatched. It's absolutely insane, you can get a property that's going to cashflow 234 times as much as it would as a long term rental if you put it on short term rental. And I'm going to break down why I'm going to talk to you in this video about why there are such incredible returns right now that you can get on short term rentals. And as a bit of a spoiler, I'm also going to share about why it's not going to be that way forever. So now really is a fantastic time to get into short term rentals before the returns start to disappear. So again, that's what I'm gonna be talking about today's video. Now, I do want to remind you that in the description down below, there's a link to a free training, I highly, highly, highly recommend that you check that free training out, it's gonna give you all the steps that you need in order to successfully invest in short term rentals and leverages incredible asset class before it's too late. It's a free training, I put it together recently, and I'd love for you to check it out. I've gotten great feedback. So far, people were really loving the training and sharing that to great insightful training about how to invest in short term rentals, I realized that there's just not a lot of people out there that are teaching people this stuff. And so I want to help bridge that gap for people and help them get started investing in short term rentals is over the last five, six years now I've had the privilege of being able to work with hundreds of different in fact, 1000s of different Airbnb hosts and hundreds of different property managers for short term rentals. I've invested in short term rentals myself, and I've worked with people helping them to invest in short term rentals. So I've got a lot of really great insights that I want to share. And I packed them into this incredible training link in description down below, it's going to walk you through all the critical components to being a successful short term rental investor. So again, I highly recommend that you check that out. We're going to take it offline for good pretty soon. So I highly recommend that you check that out before it's too late. Now, that being said, let's talk a little bit more about what the topic of today's video is, which is why our Airbnb is such a great cash cow. And I think this kind of goes without saying for most people that have started looking into short term rentals, most people that get into short term rentals get into it because they realize, well, they just cashflow and perform way better than any other form real estate investing. And ultimately, that is fantastic because of two things. Number one, it means that you can replace your income or supplement your income much more effectively with short term rentals than with any other form of real estate investing. So for anyone out there that's looking to supplement their income for retirement, build up a nice safety net or just really loves the additional cash flow coming in and filling up their bank account. Well, in short term rentals are kind of a no brainer. The other really great thing is that although you can earn ROI on a real estate investment in a few different ways, whether it's appreciation, equity or cash flow, cash flow is the one and only type of a return that you actually get cash, you actually get money in your bank account that you can access right away, which is great because it means that you can use that to live off of you can use pay for expenses. And you can also use that to reinvest right away into other properties and growing your portfolio. So it just makes it a lot easier to compound your money and compound your growth versus earning money from let's say, equity or appreciation and need to do a whole cash out refinance or sell the property to actually realize any of that profit and then be able to reinvest it. So cash is king, as they say. Now without going too much deeper into that let's talk about actually why Airbnbs are such cash cows and why you can still get deals that cashflow incredibly well, we're talking 1000 2000 $3,000 a month. Well, the reason really comes down to who you're buying against who you're bidding against who the competition is of you look at your traditional multifamily real estate, let's say a duplex a triplex or four Plex, or if we get into starting to get larger now we're certainly getting to the big multifamily complexes, you're competing with different groups of buyers, what happens is that the larger scale investors that you're competing against, and the top level being institutional investors, the lower your returns get. The reason for that is because the larger the investor, the smaller return they're happy or comfortable getting if you have a small scale investor, they want bigger growth. If you have a large scale investor, they tend to be more on the side of stable and consistent smaller growth, which is why for larger, more stable asset classes that those bigger investors are getting into they tend to be willing to pay more for the property which lowers the overall return meaning that you going and trying to find a you know long term rental 10 unit building that's going to cashflow you know incredible numbers and get you an insane ROI. It's just not going to happen because there's someone else out there that's willing to pay more for that property and take a lower return on investment. So that's ultimately kind of oversimplification of what's going on as far as the competition is concerned with who you're buying against when you're buying real estate. Now at the very bottom of the totem pole is single family homes single family homes are purchased by you.
Small Scale investors mom and pop the everyday person just like URI. And so what happens is that single family homes, you're not dealing with a lot of competition for institutional investors, that's great. That means that you can typically get a better ROI. Except for one thing, the one caveat to that is it was single family homes, you really lose out on the economies of scale factor of real estate investing when it comes to multifamily. If you're buying a single family home, you're paying for one roof you're paying for, you know, one air conditioning unit one of everything, but you actually only get one, you only get one unit, right? But whereas if you're buying a four Plex, you're paying for one roof, but you're getting four different units units that you can rent out to different tenants, which is why people tend to like them is because for those reasons, those types of units tend to get a better return. So let's think about this if you get a worse return on single family homes, because you're only getting that one property, but you get a better return on multifamily homes. But unfortunately, that gets beaten up because you're you're competing against higher level buyers who are willing to pay more and take a lower return than what's the answer, well, obviously, you're not going to be able to then suddenly lower the price of those bigger units, right, the bigger multifamily units, there's no way reasonably to go out there and somehow get them really undervalued, that can be accomplished if you find the right deal. But overall in the market, there's not a lot of opportunities for that, because you're just not going to be able to eliminate the competition or distract them somehow. So the only other option would be to take that single family home where there isn't as much competition where people are looking for bigger ROI, and they're not willing to pay a higher price, but then find a way to actually generate a way better return on that yield, because ultimately, you're not going to have competition, but you are going to be paying a bit of a premium for it, because you're only buying out one unit. So you can't have multiple different, you know, tenants in that same building. So the only options are to somehow try to maximize the return on that investment, you know, get more cash out of the property, incomes, short term rental, short term rental, you kind of get the same effect as buying a multi unit property if you're buying just a larger short term rental property, because instead of people looking at it as okay, I can get to single family homes, combine them into one make that a duplex, now I can have two different tenants. And that means that instead of trying to rent this one place for $4,000 a month, I can have it split between two tenants who are each paying $2,000 a month, and that's going to be a lot more realistic. Similarly, with a single family home. If you look at a property that has six bedrooms, or eight bedrooms, or even four bedrooms, for that matter, I can sleep eight people. Now suddenly, instead of just having one person in there, you can have the cost split between eight people because people travel in groups of friends, people are traveling in large families, and they can split the cost. So that's why I personally love to invest in larger single family homes for my short term rental investing, because those in my experience tend to get the best cash flow. The other thing that's great is that buying these assets, you can generally get a much better return even if it's a smaller unit than you would on long term rental. So even smaller units can really be cash cows, you can get one bedroom studio units, even I've seen people invest in and do really, really well with it's just a matter of what you're looking for and what your portfolio is trying to be made up of. But ultimately, it's just because you're taking that asset and you're using it in a different way. Now, unfortunately, this isn't going to last forever, we're already seeing that there's a lot of buildings that are being built and they're being built exclusively for Airbnb, this is only going to grow as time goes on and become more and more of a trend, as we will realize that the returns you can get on these properties are absolutely incredible. But that means that for right now, if you can go and buy a property that's going to perform well on Airbnb, and it's not going to be subject to a lot of other competition, you know, buying in different areas, knowing what areas to look for all that sort of thing, then you can really get onto a bandwagon that's not going to be around for long, you can jump in on an opportunity at someone to the ground floor and get it on this before it's too late before all the opportunity starts to dry up. That's what we walk through in the training down below. It's a LinkedIn description, just check it out, I highly recommend it. We're going to talk to you about how to look at different markets, how to analyze them, figure out which markets are the best opportunity for you to invest in, and we're gonna show you how to do a full on In Depth property analysis gonna walk you through the tools that we use for doing that to figure out which deals make the most sense, we're gonna walk you through it so that you can go out and find deals and whatever market you're interested in buying in and get the right property for short term rental for your portfolio and your goals. Again, highly recommend checking it out and link in description down below and the training is completely free. Have you liked this video, give it a quick thumbs up and make sure you hit that subscribe button. If you want to stay up to date with the two new videos that we post every single week. Then make sure you hit that subscribe button to stay up to date with the channel and I'll see you in the next video.
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