Airbnb Arbitrage Minnesota

[Jack Morey]

Hello!

Anyone out there have any luck with airbnb arbitrage in the cities? If so what are some areas that you found work well, looking to do it with 2 or 3 apartments while I save for a house.

[Clint Bradley]

I haven't but i love the idea of building that cash flow up and then buying.  Good luck

[Kyle Sheker]

I haven't either but think it's an interesting idea for building up to buying. I'd recommend a tool like https://www.airdna.co/ to research areas. On the free version, you can see what people are charging, but with a paid version, you can see how many nights per month a unit is being rented. It could help you narrow in on areas with more nights per month. You could also use Airbnb to check what people are charging per night and click their calendars to guesstimate how many nights per month. Hopefully that could help you zero in on an area. 

[James Hamling]

@Jack Morey I am having some fantastic experiences with STR-A Strategy (short-term-rental Arbitrage) and first most important thing I can say to any and all is, it's not half as simple or easy as these "gurus" promoting it for YT views/program sales promote. Although I feel like this should be common sense by now, it's just a known, or should be, I mean really how many times must people repeat this cycle before they get-it right.

I work in a NON-marketed strategy to STR-A though, as my strategy is as an enabler-facilitator too the operators of STR-A Strategy. To summarize it, I provide the properties, some direction, oversight. I work in win-win system for this. As mentioned, it always sounds simple on a summary and in the actual operation it's much more detailed and nuanced, and the Devil is in the details.

Myth#1 is that a person can accurately assess markets/properties via "free" accounts or details, no you can't. Simply read the fine print on air-dna account, it specifically states they nerf the data and provide EXAMPLE data/content not to be used for actual real world assessment just an EXAMPLE of what there data looks like. 

Myth#2, that you can accurately assess a market/property from just 1 tool. Air-dna is just 1 tool out there, and I would argue no longer the best, especially when reviewing cost per performance. It has some great aspects but also some short comings. On average I find a person needs to utilize no less than 3 tool sets and than market data analysis on top of this. 

Myth #3, that what you find in analysis is what you will get in performance, for any longevity. Remember, these analysis tool sets for STR analysis are, in all my use and review, exclusive to current conditions and historical, with 0 analysis on future forecasting or impactors. Whats happening matters. Say coming changes in regulations, new infrastructure, city planning, zoning, all kinds of items can impact what the future may hold and I see far too many putting blinders on and just going from what ___ tool says today holds and assume it will stand true for all time. This leads to a key sign I look for in a good operator to integrate and facilitate, multiple monetization strategies.

I have many other tips I could lend, IDK, maybe I should jump on the band wagon and also write a book, call it "REALITY CHECK in STR-A Investing" lol. I see a lot of similarities with this strategy and back when house flipping became trendy, and all the promoters were out selling how easy it could be and persons were flooding to "break in" and than finding confusion as to the details and intricacies. STR-A is not cheap, that's a major first point, who ever says that is flat out lying. Furnishing a property is not cheap, securing a property is not cheap, marketing and advertising is not cheap. Yes, there is the "possibility" of getting a place, little to no money out of pocket, furnished and doing everything on the cheap, just like in theory a person can buy a home and flip it for $0.00 out of pocket also, but equally we are talking an extremely rare low probability of such making non-viable as a business model.

A VERY key point I can not stress enough is doing Short Term Rentals is NOT REI, it is hospitality, your getting into being a hospitality operator and if you can't do that well, you will fail 100%. There is nothing passive about it, NOTHING. A person can build and employ systems to mitigate the activities but make no mistake that is not passive, it's is active via systems. What I and my investors do, providing properties in partnership with proven quality operators, THAT'S passive but even than, not 100%.

It's a business, treat it as such, give it the respect and love it needs and deserves and success may come. Act as if it's a lotto ticket, or get-rich-easy, and watch it devour your capital in a blink. 

[Jack Morey]

Hi James, thanks a lot for the information, very helpful!

[James Hamling]

Quote from @Jack Morey:

Hi James, thanks a lot for the information, very helpful!

I notice you mentioned apartments, huge mistake if doing STR-A, apartments are the worst. yes, some do well there, but it's got a lot of added complexities and fact is doing STR-A there is just better ways to do it.

If want to keep $ outlay low, think "TOWNHOME" not apartment. There is a massive difference between HOA and Condo Association, gigantic difference. As a Host-partner for STR-A a key item is TIME, you need a longevity of performance of at minimum 3yrs, because you still have that big up-front cost from furnishing, marketing etc. right. Condo Associations are not conducive for such, as they can change on a dime, lot's of personalities to navigate etc., no thanks. A HOA, we can see how it's set, ideally ran by one of the big organizations and with that, very stable. Also, rentals are common in HOA's, so lower chance of negative impact from such.

Still, a SFR unit is best but generally a bit more $ outlay not just on securing but also furnishing as more = more.

And keep in mind, over average budget for hosting partner to launch a new STR is $25k-$35k. No, $5k won't cut it. It's not all the big furniture that costs so much, it's the ocean of little things that rapidly add up. ALSO, if new at it you WILL need to do paid advertising, that's a fact I hear few to none speak of. Your competing with known well reviewed operators, they will always get the organic over the new, so you must use paid marketing to get the fire going.