All Forum Posts by: Fakaradin Floyd

Quote from @Michael Baum:

Congrats @Fakaradin Floyd! Thanks for updating all of us on your progress.

Glad to see that arbitrage is working out for you. Do you plan on taking some of that profit and dumping it into a fund to buy another property?

Yes! That's the goal, I'm waiting for this tax year to end to get a view on how tax may affect me (I save about 16% of my revenue) for profit once I have a good idea on how to go about my earnings after taxes I plan to create a HYSA for my future property to own.

The whole point of arbritage is kind of
1. An experiment to see if it would work

2. Low start up costs

3. To gain the experience I need and to see how the hospitality world works for me

I plan to continue airbnb arbritage for a bit until I can own my own property in the area but that will be some time from now as the average home price in the area is 600k+ I'd need to save atleast 15% (10% for down payment 5% for closing costs).

Hi everyone it has now been 5 - 6 Months since my journey started and I just want to say wow it has indeed been a journey. 

One thing I can say is, even among most of the naysayers to Airbnb Arbitrage with the right research and gumbo you will succeed or at least have a great story to tell your friends haha. 

In the 6th month, I can say I made some mistakes, when first starting I spent a bit too much money to start the Airbnb, as this was my first deal I paid a little too much for rent for the type of airbnb it is. Luckily for me, I used real-time research and have been able to make a 20%-30% profit almost every month. 

One thing I can say once I got the system going the business got alot easier, after I automated almost everything I have had the pleasure of rarely going to my airbnb and I am booked 92% of the time, not only did my research pay off I am reaching the numbers I expected and more. I was even able to travel to a country I always dreamed of traveling to since I was a child whilst maintaining my airbnb from across the world (Japan). 

As the slow months come I remembered to update you guys, things are going swell, my bookings are slowing down in occupancy but it is outperforming the local airbnbs near by thus far occupancy-wise. I am still learning and it is my first property so I have my own things I'd like to learn more of such as learning the airbnb system, appearing on first page majority of the time, increasing my occupancy to 95% all year round, and researching direct booking. 

Updates

I have two BIG updates, I actually just closed on a home not for airbnb but for myself in an area I have been trying to buy for a year but investors have been bidding on houses like crazy in the area. Luckily I was able to get an offer in for an "affordable" price so now I am a 24 year old home owner!!! This is a huge accomplishment for me because I come from Bronx,NY and never lived in a home my whole life, I am the first of my family to own a home!! Not only did I close on a home I just onboarded another property for Airbnb arbitrage the same day!! It needs a bit more work than the current Airbnb I have but I am extremely excited to start the Airbnb up and see where things go since I've learned from my mistakes I feel like I will be doing a lot better for this property also, I can say this was an amazing opportunity and I am extremely excited for my journey and plan for bigger things. My goal this year was to get a home and start a profitable Airbnb business and I've reached it! I still have a lot of to learn but I am doing great so far. 

Present
I am currently a super host and my current Airbnb has over 30 reviews that are all 5 stars! 
I've linked my Airbnb below and would love to get some feedback would love to get some advice and your thoughts! Happy holidays everyone!

airbnb.com/h/sereneoldtownsantuary

Thank you,
@Nicholas L.
@Michael Baum
@Josh Uhlenkamp

@Sarah Kensinger
@Marcus R.
@Dave Stokley
@Lisa Marie
@Dan H.
@Cody L.
@Ika Sargeant
@Don Konipol
@Richard Elvin
@John McKee

 
@Lisa Marie

Thank you Lisa!

I don't mind sharing the link via a private message!

The house is a town home near the hub of Alexandria VA so rent is pretty high for the area. I am paying a bit over market rent for the high season but I'm fine with this because of the proof of concept of the Airbnbs that are near me in the neighborhood also it is my first Airbnb Arbitrage property beggers can't be choosers haha.

The average LTR for the area for a 2 bedroom ranges anywhere from 2400-3400 (in the summer) the town I'm in is an extremely sought after place to visit also it is very close to D.C so rent tends to be on the higher side.

For the leak, drywall replacement and so on I offered to pay partially I was not legally bound but I had a booking and needed it fixed fast but I didn't pay much about 20% of the fix for the drywall. Which wasn't much the drywall just needed to be fixed fast after the leak. I did this to build rapport I did not need to do this since my landlord in my lease is responsible for all repairs that are not caused directly by me or my guests.

My projected Occupancy rate during this high season July - September is around 81%- 93% this is more on the conservative side mainly because everyone near me are super hosts but the houses that have exactly same amenities, architecture and so on do on average a 95%-97% occupancy rate but they are super hosts have airbnb plus and so on so it'll take me some time to get there but I'll catch up soon. My projected ADR is around 175-190 on the conservative end but I plan to increase this in the coming months because I also host on VRBO and as we know guests tend to pay more on VRBO. I only have 1 month of proof of concept so I need at minimum 3 months to get a better estimation. 

For a 2 bedroom my projected ongoing is around 13-15k (not counting the rent) at the end of the year because this is my first Airbnb Arbitrage I have and will make mistakes expense wise, the start up costs also is not factored because furnishing and starting everything from scratch obviously will skew the ongoing expenses which would add another 5-8k but I played it smart and have most of the funding charged to buisness credit cards with 0% APR for 12-18 months such that I save money and can take the year in paying back also with sign on bonuses which will save me up to 1.2k or more.

If and when I hit my conservative projections my profit should be around 16,300-22000 by the end of the year this is after rent, expenses, cleaning fees and so on.  I estimated these numbers based off the data from the STRs directly right next to me. This is not counting VRBO, Direct bookings (I am in the process of making my own site that I already have the domain for) and so on. 

My numbers for my first month is a bit skewed because some bookings was on VRBO and some were discounted for my first month so I'll have better numbers in 3 months time.

But it is my first month well barely my first month so most of these estimations are based on airbnbs near me that do well at worst I will make 12k in profit which for a first year is not bad for me personally. Luckily I am in a prime location and have a unique house.

I am still optimizing my airbnb, I need more professional pictures, I need to get Superhost/Primier host status, I need to find a way to atleast be in the first 3 pages in the Airbnb search consistently (which I am currently but it fluctuates), and so on. Which I'm doing really well for a first month but we will see what happens during the low season which I'm currently actually getting bookings for already. But again these are estimations I will need 3 months - 6 months to really get better numbers.

Also I am in the talks with another landlord for another airbnb arbritage opportunity where my real estate agent and I plan to negotiate with today only 7 minutes from my first airbnb. 

Quote from @John Underwood:

Quote from @Cody L.:

Quote from @John Underwood:

How long is your lease with the owner?

What happens at the end of the lease if the owner realizes that they can just take the property back and do what you are doing?

 I have tons of my units leased by people who do airbnb.  We don't take them back.  Why?  We don't want to do what they do.  We want our rent check every month.  Airbnb is not our business.  My guess is it's not the business of this little old lady he's renting from.  She's not trying to be an airbnb operator.  She just wants a monthly rent check.

 I agree. There are no guarantees other than this 12 month lease. People even break leases all the time.

The lady could decide to manage her self, she could get hit by a bus and her Heirs realize the STR person is making too much money off their property. Some one could offer her a better deal with profit sharing. These are just a few things that could happen.

The Arbitrage person is not the owner of the property therefore has limited control over possible outcomes that may or may not happen.

These are just the facts.

 @John Underwood 

I hear you John, I am not disagreeing with you honestly I just wanted to showcase my accomplishments thus far, I am not thinking in the case of what can happen and thinking of the cases of what I can keep in control of. 

You bringing up an owner can break the lease, someone could die and the family takes over, she can get a better deal profit sharing. These are what-ifs and usually lead to anxiety for a lot of people. These risks can happen to anybody no matter the type of investment they make like your investment house can blow up and insurance doesn't accept your claim, you could get hit by a bus, and boom no money, and so on. 

It's not really a fact of the world but a risk a real risk correct but its a what if, and if I laid in bed after successfully setting up an Airbnb arbitrage and so far have success and just think about what if this or what if that, it'll only slow me down. 

Those what-ifs only matter when they happen, anxious thoughts really aren't something I put an extreme amount of thought towards since the majority of the time they slow me down and result in an analysis paralysis type of scenario. You can only do so much to prevent worst-case scenarios 

Quote from @Tanner Lewis:

Quote from @Fakaradin Floyd:

Also @April Smalls do not tour an apartment complex unless you ask them before hand 

1. If they accept corporate leases first

2. If they would allow STR operations such as using certain sites such as furnishedbookin.com for example tailored towards x customer like travel nurses for example. Once you say Airbnb or VRBO they will think that you are not credible but do not lie, these places will be your landlord and you will need to write into the lease to allow STR operations at the property

Aren't traveling nurse programs considered a mid-term rental not an STR? I would make sure the lease permits STRs as well as MTRs if you decide to go that route.

 @Tanner Lewis Under the law usually its either STR or LTR

So if you're MTR it will be considered as STR depending on the state. Anything less than 6 months is usually considered STR and travel nurses usually stay in one place from 1 month to 6 months. I was just using travel nurses as an example, you can use travel nurses, families awaiting an insurance claim on their house so they need temporary lodging, travel welders and so on. 

The lease addendum only needs to say it allows STR and all accommodations needed to allow STR for the property. You do not want to make it too complex but I mean I'm not a lawyer the lawyer for your state would know best. 

Quote from @John Underwood:

How long is your lease with the owner?

What happens at the end of the lease if the owner realizes that they can just take the property back and do what you are doing?

 @John Underwood 

It's a 12-month lease, and they want me to extend it actually to a 24-month lease or longer, which I told them I'll do after a few months just so I know the property does well for the area.

A lot of landlords like to be hands-off when it comes to their properties Airbnb is a combination of customer service, property management, and so on. Which a lot of people rather not do after they buy an investment property. All my landlord has to worry about is the check that's coming in. They know I will keep the property in tip-top condition because if I don't I won't do well, but even if I do well or not they will get rent regardless.

They can take back the house if they want at the end but 12 months from now I'll be expanding and continuously working to invest in the area so if they take it back and want to do it themselves they can I won't be in a position where I'm stuck. Also, not everyone wants to do airbnb no matter how profitable it can be, the head ache is not worth it for alot of people

Also @April Smalls do not tour an apartment complex unless you ask them before hand 

1. If they accept corporate leases first

2. If they would allow STR operations such as using certain sites such as furnishedbookin.com for example tailored towards x customer like travel nurses for example. Once you say Airbnb or VRBO they will think that you are not credible but do not lie, these places will be your landlord and you will need to write into the lease to allow STR operations at the property

Quote from @Tanner Lewis:

Hi April, I suggest writing a profit split into the contract if you have not already done so. This will help to incentivize the landlord to allow you to Airbnb arbitrage. 

If not, possibly look for landlords that permit subleasing? This might be a way to comply with the LTR lease while putting it on Airbnb, but I would consult a lawyer before doing this as it would be a more "gray area" alternative. 

I am also looking into Airbnb arbitrage in this area, so if you have any helpful tips we should connect!

 @April Smalls Do not write a profit split into the contract. Tanner you give good advice, the key thing is the incentivize the landlord. But taking drastic measures such as profit sharing on top of paying rent will just make you lose out in the end. Youtube is a free resource you can find some great Airbnb hosts that have great advice on how to pitch to landlords.

I recently got my first Airbnb Arbitrage property and I will say a majority of it is networking and honestly asking people continuously. I even spent time in the city literally walking around looking for "for rent" signs and asking local people if they know any place that is renting, this resulted in meeting a lot of nice people I even met two lovely real estate agents that were walking their dogs.

To make the process easier you can even ask local super hosts in the area you want to invest in and message them one by one asking if they have advice if they would like to get coffee sometime, etc. The best people to get advice from are the people investing in the area, even better if they are arbitrage investors. I would also recommend finding real estate agents that work in the area that specifically are knowledgeable about finding properties for STR and Airbnb arbitrage just call around and ask around it never hurts to ask. Even better if you can find a mentor, you can either take two routes when finding a mentor, paying them for their help or volunteering to basically be like their intern in return for their guidance and help which I did for myself.

You are just like me April, what I was facing before was mainly just rejections because people are standoffish with Airbnbs in general. What I would recommend do not mention your lack of experience, focus on leading the conversation, when you give LL time to basically interview you, you leave doubt and hesitation. Come up with a pitch and make it very conversationally sound, make sure for every question you believe they'll ask have an answer for it. 

The apartment complexes that declined to work with you because of your lack of experience basically told you "Yes we accept Airbnb arbitrage we just don't believe you will do well" 
Based on your pitch. I'm still working on my pitch myself, I am green in this space as well.
You still have a chance you should follow up with them when you have a better pitch and hope you're talking to someone else other than the first person that rejected you. If they specifically say they don't allow corporate leases then just move on but if they allow corporate leases and allow STR always keep that contact.

Key incentives for Landlords are for example property always being professionally cleaned, no matter if there are tenants or not rent will always be paid, you fix issues up to a certain amount, providing, property being professionally inspected and staged, and so on so barely any wear and tear because of these professional inspections and cleanings and so on. There are a lot more and a lot of different methods please take time to research on youtube/tiktok on what key incentives you can provide to build rapport for yourself.

In Summary, research like you're obsessed, check my post that I made 2 months ago everyone on there gave some great insight on how to go about my pitch.

Hello Everyone! 

It's been 2 months since I last gave an update on my journey for Airbnb Arbitrage. 

I mentioned I'd give an update for when I make some progress in my journey.

                                                                --Context--

So I took the leap, found a mentor, called over 100 landlords/property management companies, studied and created in-depth excels for the area I planned on investing into and I landed a deal!!

I found a 2 bedroom 1 bathroom townhome that was recently updated and had been on the market for a while. After negotiation and all that I got my first Airbnb arbitrage property!!

Once everything was signed and agreed on, I went straight into staging the house checking for issues and everything along those lines. I had a few hiccups (the house had a leak and I had to get the ceiling replaced for the kitchen and so on) I made it work. My landlord gives me full control of the house and allows me to do anything I like cosmetic wise and she's such a kind soul that even told me she wants to sign a longer lease already just because she loves what I'm doing. It took alot of calling and emailing but I secured a place.

                                                     --The journey of listing--
After everything was signed and secured it was on to staging, preparing myself financially, buying required things, and so on. The first thing I needed obviously were the needed amenities plates and so on, so I already had that in the bag. What I thought I'd have a really hard time with was finding cleaners, handymen, etc. But luckily for me, I saw a cleaner cleaning the house next to me and to my surprise, I found the houses near me also are Airbnbs so I was able to get the cleaner's contact and assign her to my Airbnb and she even became sort of my mentor also where she gives me tips tricks and so on for maintaining the Airbnb. A lot of these connections are simply by me asking people, asking for help, and reaching out. Any other handymen and so on I needed I was referred to by my landlord or my mentor. 

After I got the amenities that I researched were the best for the area (I spent a lot of time looking at super hosts amenities and learning what they provide and what guests tend to highlight in their 5-star reviews) it was on to the hardest portion...STAGING. Just a little context I barely have a creative bone in my body I like to joke that my siblings took all the creativity for themselves this step personally was my hardest step. 

To start I made sure that I found a majority of my furniture from locally sourced companies such as thrift stores, Facebook marketplace, mom-and-pop shops, and so on because I felt if I'm going to do this right I want to support the local community I am investing into. After everything was staged my mentor took photos with her phone because time is of the essence so even before everything was fully furnished I listed what was there. I also have a professional photographer brother from NYC so I got him to take some photos when he came to visit. My mentor helped ALOT with advice, helping me stage she used to be a fashion designer in NYC (where I'm originally from) and is now both an Airbnb arbitrage investor and a real estate agent where she personally stages all her properties that she sells or Airbnbs. She is one of the most successful Airbnb hosts in the area so I really lucked out when networking with her (She also Airbnb arbitrages all of her properties). To be completely honest she gave me a chance mainly because I had the same birthday as one of her sons haha. 

As of 2-3 weeks ago my Airbnb has been listed, the first week of its posting the first month was already almost fully booked out. My first guest actually was "given" to me by my mentor because she had an emergency and needed to send one of her guests somewhere and guess what I had a house almost fully staged. I am still fairly new to the space and I am still getting hiccups at my property but I did it. I actually successfully started my Airbnb arbitrage buisness so I am extremely happy in doing this.

So far my guests have all told me they love the decor and even though they've had problems at the property because the house is a bit old they all were so kind to me and left me four 5-star reviews. I already have one 5-star review on VRBO also. Obviously, it's barely been a month since I've officially become a full-fledged Airbnb host but I am extremely optimistic. As of right now I was fully booked for July and halfway booked through August and a few bookings in December. I also am getting ready to start my next Airbnb Arbitrage soon I've already found another property and am currently in the negotiation process with the landlord but fingers crossed it goes through haha!

--Conclusion and a Thank you--
Everyone's advice really helped me, Harsh or not harsh I want to say thank you to everyone. My journey has just begun but I will admit my "success" partially is because of everyone here that gave some great insight. I am no expert and I am still green in this space. Eventually, I will work myself up to buying a house and doing this process but that's when capital is consistent because who knows what'll happen in the low months haha. Right now I am happy for what I've done, technically I'm "profiting" but obviously it's still too early on to tell we'll see in 3-6 months if this endeavor was either hit or miss. Regardless of the outcome, I will not regret my choice to get into Airbnb Arbitrage.

I just wanted to make sure I did this post justice and updated everyone that spent time reading and replying to the post. If you have any questions, concerns, and so on feel free to reply I'll try to get back to everyone asap. Since my Airbnb is booked most of the time I have free time now...when I was setting it up I was there from 8 am to 8 pm every day haha so it's nice to get a little breather.

Thank you,
@Nicholas L.
@Michael Baum
@Josh Uhlenkamp

@Sarah Kensinger
@Marcus R.
@Dave Stokley
@Lisa Marie
@Dan H.
@Cody L.
@Ika Sargeant
@Don Konipol
@Richard Elvin
@John McKee

Hello everyone! 

Just a small update, I've gotten some great feedback from you all, gotten some bluntness, I've gotten some positive comments, and I've gotten some negative comments.

I've taken everyones advice and went gungho. I went actually on the street of the city I wanted to invest in and asked people just walking around about the city, what might rent, etc and found this method to be extremely beneficial I met some local real estate agents walking their dogs that gave me great recommendations and leads just because I asked them.

The real estate agent son I met the other day has called my phone and is connecting me with a landlord that I really want to get into contact with for his building who already has tenants airbnbing at his location.

I also found a Mentor (simply by asking around), which has offered to teach me all their ways, tips, tricks and so on as long as I help them stage, help them move items and so on. They even offered to let me cohost one of their properties so that I can get hands-on experience and they're also a successful real estate agent whom they offered to help negotiate for. They airbnb arbritage all their listings and have over 10+ listings in the city I want to invest in and is very successful in that regard.

I am ECSTATIC for my journey and I want to thank each and every one of you for your advice, kind words, and blunt feedback. I will likely take a break from replying to any future replies or updating the post but I wanted to update everyone just in case some people that come across this are curious/in the same predicament I am in. After I get a property and have a bit more experience I will update bigger pockets community.

I want to specifically thank @Sarah Kensinger for the great advice and positive words of encouragement resource sharing and overall in-depth reply thank you!
(I even happened to find great resources such as Josh Bianchi that posted some of his mastermind classes for free on youtube because of your recommendations) 

@Dave Stokley for the amazing blunt feedback that had me think of my approach in another format which greatly helped me talk to people for leads. 

@Lisa Marie for the extremely in-depth thought-provoking reply with amazing analogies and explanations, I felt very inspired to do more and learn more. 

Finally, I would like to thank everyone else for your replies I know I expressed gratitude in each of my replies but honestly thank you, everyone, all your replies were beneficial, obviously I am just at the tip of my endeavor but I am going to now focus all my energy using the great opportunities that have been laid out for me using the feedback everyone in this forum has shared!