$200,000+ rents in 1 year - 10X cash flow
This is continuation of my first post 7 months ago about my love for STR (short term furnished rental) when I started with just 2 Airbnb listings
https://www.biggerpockets.com/forums/61/topics/552...
Now, I'm at 6 total Airbnb/STR and on my way to over $200,000 in gross rents in my first year!
I love the Furnished short term rental business!
To be clear, I'm talking about Airbnb, VRBO, Homeaway - rent out your furnished rental short term - 1 night, 10 days, 2 months.
December/2018 will be my 1 year anniversary of starting this adventure.
If you think you are too late to the party, you are right. Airbnb is more than 10 years old now. VRBO is even older.
But word of encouragement: I always say, " it's better to be LATE to the party, then NEVER make it to the party!!"
There is ONE word to describe why I love real estate. CONTROL.
Unlike stocks, I cannot control or stop Elon Musk from twitting or some CFO cooking the books or a new disruptive technology that completely bankrupts an icon in the business (e.g. Kodak company disrupted by digital cameras and smartphones with cameras)
However, in this business (STR is a business - not passive), you can control your destiny.
#1 Control the price at a click of button.
You can drop, raise, use a pricing app, you can utilize knowledge of local events to price your home up or down. I currently have a price peak of $1950/night on super bowl Sunday in Atlanta (Atlanta is hosting the 2019 Superbowl). I had competing bids at $1250/night so I decided to decline and raise prices. That's control!
#2 Control the marketing.
Airbnb does an AMAZING job of marketing. In fact if you have a property in the right location, right market (supply/demand ratio), then you can let Airbnb do 90% of the work of marketing for you. however, there is no barrier to market on VRBO/Homeaway, Booking.com, etc.
My favorite is Airbnb for two reasons - A) best online marketing platform. B) best technology/ease of use.
Airbnb is far from perfect but it blows away its competition.
Next level control - direct marketing outside of Airbnb (google adwords, facebook ads, direct marketing to companies). More about this later.
#3 Control your tenant.
How many of you had what seemed like a great tenant turn sour or worse turn into an eviction. Unlike the urban myth of guests who "party" and "destroy" your home, I have had over 150 bookings and not a single "bad party" or "destruction". Why? You can screen each tenant as them come. Also, more importantly you have this accountability with the guests. Not only is there a deposit, more importantly there is a air of accountability since the home will be checked IMMEDIATELY after a stay.
For those of you with long term tenants, when is the last time you looked inside your home? Usually the only chance is at the time of lease termination or eviction. That's when you can see the layers and layers of damage that has been going on for weeks, months, or worse years without you knowing at all.
#4 Control - Are there problems in STR?
Of course. There is no free lunch. Laws change, HOA regulations that can hinder your ability to run this business. However, there are two things - you can control your destiny and pivot. If the rules change that you now need to rent to 30 days minimum guests, then you can target corporate rentals (business travelers on project, traveling nurses, traveling medical personnel).
I had that exact experience. HOA regulations dictated that I stop doing less than 30 day rentals,soon after I found a 12 month corporate rental client.
#5 Control - Forced Cash flow!
Short term furnished rentals is akin to forced increase in cash flow. Similar to how multifamily apartment complex can be "forced appreciated" by renovating and increasing rents. You add value (furnish) to an undervalued property (vacant/unfurnished) and thereby 10X your cash flow!
10X cash flow covers over many mistakes and pitfalls. IF you are making 10X your typical cash flow - for example, instead of making $200/month per unit, you make net $2000/month on one single property? There is a lot of cushion there to take the punches and still keep moving. I'll be more specific about numbers and experiences in my next post.