Beginner’s Guide to Airbnb Investing (2023)

Beginners Guide to Airbnb Investing

Here’s how not to lose your shirt investing in Airbnb right now! So many got caught up in the Airbnb craze, and now they’re in the AirbnBust. I outline the three things you HAVE to do to not lose everything with a bad Airbnb deal right now.

“You’re crazy to invest right now,” they say.

I love Warren Buffet. And Warren Buffet always says, “Be fearful when others are greedy, and be greedy when others are fearful.”

Did you notice the last two years? The market was nuts. Homes were closing for 150% over asking. Everyone was talking about investing in Airbnb.

This last property I bought was the 9th offer I’d made. I had to walk away from a lot of deals because everyone was buying emotionally.

It definitely requires discipline, but I’d rather that than be on the “AirbnBust” side of things.

Now did you notice the last six months? Others are fearful. They’re scared of the decrease in travel demand, international travel, and rising interest rates.

It’s the perfect time to buy. 

So how do you invest the smart way right now?

I’ve got three tips for you in today’s video.

First, we discuss cash flow. I also share my exact targets and why.

Second, the tip involves another Buffetism I love. I show you how to not have to go back into your pocket when an investment goes bad.

Third, I talk about the power buyers have right now, and how YOU can take advantage. 

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Expand Transcript

What’s up guys? In today’s video, I’m gonna be talking about my top three tips for beginner Airbnb and short term rental investors. These are the three things you absolutely have to do if you want to succeed investing in short term rentals. And I want to share as well before we dive right into it that for any of you guys who are thinking, hey, this guy’s crazy to be saying that you should be investing in short term rentals right now, I want to remind you, as Warren Buffett always says, you want to be fearful when others are greedy and be greedy when others are fearful. Now, that’s largely how I’ve been investing my money over the last number of years is that over the last two years, everyone was great. There was so much greed in the market, you saw it price in a row for 150% over asking, it was just insane. And everyone was talking about Airbnb. And so I was pretty fearful, right? Like I literally analyse properties, dozens of properties before I was going to offer on single one of them on the most recent property I purchased. I submitted eight offers before I bought this one property locked up. And those offers, you know, I got them accepted, I had some negotiations. And ultimately, there was just so much mud in the water, so many people that were going in buying emotionally and I had to walk away from eight different deals. And that was really tough. Like it requires a lot of discipline. But at the end of the day, I would rather do that than be greedy with all these other people and be in the Airbnb bust category that people are talking about where they’re just losing their shirts right now because they bought bad deals. And so what you want to do is back that not when you want to be fearful now is when you want to be greedy when everyone else is fearful. That’s when you want to strike and be buying the deals because everyone else is scared. Everyone’s scared of inflation of high interest rates of decrease in travel demand of open an opening up the borders so people can travel internationally. There’s all these reasons that people are fearful. And so that is a great opportunity to buy. If you want to learn how to do it right. We have tonnes of videos on this channel and we’ve got links in description for trainings that you can check out. So you can do this the right way. But I kid you not now is probably one of the best times ever to invest in short term rental properties. So in this video, I want to give you three top tips for how to do that successfully. My first step is to invest for cash flow. You don’t want to kill yourself. There are tonnes of great opportunities to grow your money through equity and appreciation. And yes, you will grow your money through equity and appreciation with Airbnb and short term rentals. But more than anything, the big advantage that short term rentals have going for them is cashflow, they cashflow incredibly well. So you want to be investing for cash flow and you want to be analysing for cash flow. If you want, again, more detail on exactly how to analyse properties, we’ve got other videos that are completely free on this channel here, you can download our analysis spreadsheet completely free in the link in the description down below. And what you want to be looking for at this point is a 15% or greater cash on cash return. Meaning if you put in $100,000 into a deal, let’s say you should be cash flowing after all your expenses, all your operating costs, all your carrying costs at least $15,000 per year on that property, not in a moderate scenario, that’s not best case scenario. That’s what you’re aiming for in a moderate scenario. Ideally, you want 20% or greater 15% is still pretty solid, though. And then what you wanted to look at as well. Tip number two is to protect the downside, make sure that in a worst case scenario, you’re going to cashflow at least at breakeven, because if you’re cash flowing negative, that means that you have to spend money out of your own pocket to carry the cost of owning the property. So things like the mortgage utilities, insurance, that sort of thing. And so if you’re doing that, and you’re covering it out of your own pocket each month, then that means that in that worst case scenario, you may not be able to afford to keep that property, let’s say that you lose your income or that it just becomes too much for you to cover this property as well. Well, then what will happen is that you might be forced to sell the property. That’s what I’m doing a lot of people back in 2008. And if you need to sell the property, and the price of the property is less, it’s worth less than what you bought it for. That’s when you’re in a really tight spot where you could really wreck yourself financially. And so what you want to do is make sure you’re protecting the downside. Honestly, that’s even more important than optimising the upside is to mitigate the downside. So what you want to do is make sure you, you go back and you run a worst case scenario analysis to make sure that even in a worst case scenario that probably doesn’t perform well. If it goes back to 2018 2019 numbers, and it’s not crazy, like it wasn’t 2020 2021, that you’re still going to be at least at breakeven in terms of cashflow. There’s a lot of people right now that are losing money every month on their property. And they’re justifying it right now saying, well, it’s still a vacation property, it’s still a cool property to own this and that and the other thing, or I’m still building money through equity, but ultimately none of that stuff matters. If you can’t afford to keep on taking money out of your own pocket every month to carry the property, it’s not going to matter. So you need to make sure that you protect your downside analyse the cash flow in a worst case scenario as well. Now my third and final tip is that you need to buy right right now is a really good opportunity where sellers are way more motivated than buyers are sellers know that if they don’t sell their property to this buyer. Well, it might not go for another 3060 90 days and a lot of them are in that former boat where they can’t afford to keep the property anymore because they bought got it wrong. So just realise that as a buyer, you right now have a lot of leverage going in your favour. And so you want to negotiate and make sure that you buy the property right, make sure you get a really good deal on it. Because right now there’s lots of opportunities, you don’t need to worry about getting the exact property that you want, there’s going to be another deal that will, will come if this one doesn’t work out, there will be another one in short order, because there’s lots of inventory right now, and lots of sellers that need to sell their properties. So you want to make sure you get a good deal, negotiate, try to bring the price down, try to get more favourable terms do what you need to do to get a really good deal on the property. Obviously, some areas are still competitive, but for the most part, things are a lot cooler, a lot more cooled off than they were six months, 12 months 24 months ago. So you want to take advantage of that and you want to buy a good property where you’ve got some built in equity into the deal. So you’ve got additional cushion and additional profit. So those are my top three tips for beginner investors. If you want to learn more about specifically how to invest successfully in short term rentals, we’ve got links in description down below for training on that got tonnes of other videos on this channel here about that. So make sure you hit that subscribe button as well hit that subscribe button to stay up to date with the two new videos we post every single week on this channel. Hit this like button if you enjoyed the video, drop me a comment to let me know what you think. And aside from that, I hope you enjoyed the video and I’ll see you in the next one.

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