AirBnb with NO MONEY Down! Podcast

Is there a way to get into real estate investing with no money down? Ken and Danille talk with Jorge Contreras about his experience with renting long-term properties and then offering them up on Airbnb. How do you get started? And what advice does Jorge have for beginners?

AirBnb with NO MONEY Down! Podcast Transcription

Speaker 1:           Welcome to the real estate strategies podcast, where we host in depth conversations on everything real estate with the industry’s biggest movers and shakers. I’m your host, Ken McElroy joined by my co-host Danille. Let’s get right into this episode. [00:00:30] Hey, everybody’s Ken. I’m here with Danille. Hello and Jorge Contreras. Welcome.

Speaker 2:           Thank you for having me pleasure

Speaker 1:           To be here. Yeah, I’m excited about this topic. Uh, so Jorge’s a real estate investor first. That’s why he’s on the channel. <laugh> uh, also an Airbnb coach and he mirrored the two together and he’s had a lot of success. Got a big social media following and teaches a lot of people how to do it correctly. I’m sure you have lots of good stories.

Speaker 2:           [00:01:00] Yes. Lots of good

Speaker 1:           Stories. So let’s, let’s jump right in. Like, so how did you get involved in this business?

Speaker 2:           Yeah, so I first started, uh, I used to be a professional dancer. I used to teach Pacha. You were, I

Speaker 1:           Need to Sensu do I need lessons? You guys, Ken needs.

Speaker 2:           I can give you guys a Beata lesson. This

Speaker 1:           Podcast, when

Speaker 3:           We first started dating and we danced the first time I need a drama mean, cuz he kept going.

Speaker 1:           She said I, yeah, I was making her dizzy.

Speaker 2:           Oh man,

Speaker 1:           I’m that bad?

Speaker 2:           So I like dropped out of community college, quit my job at B of a, in 2008, I was doing like loans, [00:01:30] all that stuff. And I became a prof professional dancer, but the problem is, you know, I was still like, I felt like it was my nine to five cuz I was still like trading time for money and I just didn’t have any leverage. Like I always needed to be there and I was just really overworked and I was teaching like 12, 14 hours a day. Got to the point where I herniated a disc in my L five S one. Okay. And over a three year period I had to get back surgery and the doctor said it was a 50, 50 chance I would ever walk again. Oh geez. Wow. So that like [00:02:00] was a lot of motivation to think of other ways, something

Speaker 1:           Different. You were dancing rent at that

Speaker 2:           Point, right? Pretty much. Yeah. I needed my body to make money and I didn’t like the idea of like one day being in my forties, fifties, married kids. And like, I just wouldn’t be able to live a sustainable life or be around for my kids and for my wife. So I figured how, how can I make passive income? I think a

Speaker 1:           Lot of people are at that moment. Yeah. Right. Like isn’t that true?

Speaker 2:           Yeah. Like a lot of people who are struggling nine, five, like they did everything. Right. And now they’re like, there’s gotta be

Speaker 1:           A, I worked hard and I’m just barely [00:02:30] keeping up. But for you, you had maybe the back injury, it sounds like, looks like you’re good now.

Speaker 2:           Yeah. I’m good. Now a

Speaker 1:           Hundred percent blessing right. Made you really kind of came to a crossroads.

Speaker 2:           And so I started going on Facebook typing things about real estate investing. All of a sudden, I see this event hosted by Les brown. Yeah, of course. And he was doing this huge convention legend

Speaker 1:           By the way, guys, following that was

Speaker 2:           Free. Came to this convention. They were selling like 10 different types of uh, courses. And when I saw that they were hosting a real estate education at, with uh, [00:03:00] rich dad, poor dad, I signed up, went to the three day training, signed up for like their highest level master course that was in 2015. And then within like two years became financially free. Oh good. And um, in 2017 I discovered before from 2012 to 2017, I was purchasing and doing long term tenants and then 20 16, 1 of my dance students introduced me to Airbnbs and she was talking about how she was making three and a half X, which she was making from long term. I was like, are you kidding me? Like, what’s this Airbnb thing. So [00:03:30] at the beginning of 2017, I had a couple leases that were ending. And so I transitioned four of my existing units, all two ones, about 700 square feet around downtown LA and orange county and Riverside county. And I went from making basically 1500 per unit to 3,500 per unit. So I went from making six K to about AK and that helped pay for my monthly expenses. Of course. And I let go of the dance business. Wow. And they went in on Airbnb.

Speaker 1:           So. Wow. So, so you, okay. So let’s just unpack that. So you start off, you went [00:04:00] to some seminars and learned how to do it. Yes. Cause I think a lot of people skipped that part. <laugh> you know what I mean? Yes. They do. Like, they’re like, oh, I’ll get some money. I’ll raise some money. I’ll just go here. But you, uh, very wisely went out and got some education. And then you said you were looking just for the passive income, like the, the rules outta rich dad port, right? Yes, exactly. Yeah. Yeah. Which was a lot of people do. Uh, but then Airbnb, so 2016 Airbnb was just kind coming up.

Speaker 2:           Right? Yeah. Just coming up. It’s it’s

Speaker 1:           Odd to say that cuz it’s only five, [00:04:30] six years ago. Yeah. But Airbnb was kind of new then. Yeah. Right. I mean, it’d been around for a little while

Speaker 3:           It’d been around, but I think it wasn’t um, in the mainstream, right. People weren’t always

Speaker 1:           Using it yet. It’s a pretty new company I guess is kind of the point and, and um, and then, uh, so, but very different business. One’s kind of a lock and leave, go out and put your own money out, go raise some money to now this is Airbnb, that’s an operating day to day business. Right. So yes, absolutely. Can you talk about the [00:05:00] differences there?

Speaker 2:           Yeah. So with, with Airbnb, obviously there’s a lot of turnaround. So we do about probably four to eight cleanings per month on each property. And uh, but you know, we’ve, we’ve delegated all the operations, right? You got somebody to clean somebody to do maintenance from time to time somebody to do communications. So we have like virtual assistance in Mexico and the Philippines that do all the communications, we share the access to the calendar with the cleaner. So they know when to clean. And then we just create like a little slack group with the whole team and they communicate with each other. So we’re able to kind of work more on the [00:05:30] business, not in the business. And we have 18 properties in our portfolio, half we own. Oh wow. And half we sublease. Nice. So we’ll talk about the arbitrage model too. Yeah. And I got a manager in house that basically runs the entire business and then I could just focus on my one thing, which is coaching and helping people create financial freedom. Nice

Speaker 1:           Job. Okay. So 18 management contracts, right? Essent.

Speaker 2:           Essentially half of them we own. Okay. And the other half we sublease.

Speaker 1:           Got it. Got it, got it. That’s a lot of work, right? Yeah. You probably have people moving in and out [00:06:00] all the daily, weekly, right? Yes. Okay. So, so you have to create, this is a whole different scenario. Yes. Cause you know, she’s got the one offs, right?

Speaker 3:           Yeah. And they, you know, it’s a once a year loose renewal kind of

Speaker 1:           Thing. Yeah. Yeah. This is like a whole, whole different animal. So now how did you staff that up? You, I, you, you mentioned some virtual assistance. This is pretty good. This is, we just had somebody on yeah. About virtual assistance and, and he’s got um, a whole real estate business running through that. Can you talk a little bit about why you [00:06:30] did that? Cuz cuz overhead and labor is a big, big cost, right?

Speaker 2:           Yeah, definitely. So a few years ago I read a book called emo revisited by Michael. Yeah. Michael Gerber. And he talks about the three levels of entrepreneur, right. Technician, which is basically wearing all the hats yourself. Robert Kiosaki always talks about the self-employed quadrant if I want done. Right. I gotta do it myself. And they’re still trading time for money, just like in the nine to five. And then the second level is the manager where now you’re managing the technicians who operate the business. Yeah. Which in this case, cleaner maintenance communication. And then [00:07:00] divisionary also known as the entrepreneur communicates with the manager who manages the technicians. Now you’re working on the business, not in the business. And so when I read that book, I was like, man, I gotta stop being a manager. I gotta become an entrepreneur. Yeah. A visionary. And so I kept wondering like, how do I delegate?

Speaker 2:           How do I delegate? And as I was building my education business, uh, you know, in one of the courses, this guy talked about hiring a social media manager, this website called online jobs.ph Filipino workers. And the rest is history. I hired a VA. This [00:07:30] VA was already managing 30 other short term rentals. So they already had experience. Like I started learning things from them. And so they do all the communications. I mean, it’s virtual. We like never meet the guest in person. They don’t want to meet you. They just want to have the experience. Yeah. And so they, they pretty much handle all the communications and we’ve been able to automate the operations.

Speaker 1:           So you don’t get on the phone with anybody.

Speaker 2:           Oh zero.

Speaker 1:           That’s awesome. So you have nine that you own nine that you manage and you’ve outsourced all of that.

Speaker 2:           Yeah.

Speaker 3:           To, so let’s talk about the nine that you sub lease. So exactly. What does that mean? What [00:08:00] does that look

Speaker 2:           Like? Yeah. So I always tell people when they’re like, there’s really two strategies that I look at, right. The first is to invest for cash flow. And this is a really good strategy for people that are getting started like nine to fivers who want to replace their nine to five. They want to get into their first deal. It’s their first rodeo. They don’t have the capital to put 15, 20% down. Plus closing cost furniture appliances a course applies. So the great, the best way to start there is subleasing, right. Is where they rent a property. They pay the first month, the deposit, just like in [00:08:30] a normal lease. They get permission to operate the property as a short term rental in writing. Right? Cuz all lease agreements say no subleasing, but we simply talk to them about the business model, why this is actually a better opportunity.

Speaker 2:           And so then imagine you’re renting a property for 2000 a month. If you’re charging 200 a night at 10 days, you break. Even at 20 days, you double and at 30 days you triple and there’s a lot of pricing, automation, softwares like beyond pricing. They look, they look at airlines, hotels and events and they basically adjust based on supply and demand. And they [00:09:00] only charge like 1%. So this is how we are able to maximize, um, you know, the revenue. And so this strategy allows people to get started in strictly invest for cash flow. Obviously they don’t get appreciation, no depreciation, no mortgage paid down, but they get the cash flow. They get to replace their nine to five. Once they have like three to five of those and they’re really accelerating their capital, then I tell ’em now start buying property so you can get the appreciation and create wealth.

Speaker 1:           That’s a really good strategy.

Speaker 3:           Okay. So if somebody’s gonna let you sublease their property for [00:09:30] one, how hard is it to find people? Yeah, that will do that. Is that yeah.

Speaker 2:           Uh, yeah, it’s challenging. Right? I feel like you have to be really good at sales mm-hmm <affirmative> or we like to refer to it as enrollment. Right. Even getting on this podcast. Right. My team reached out. They have to pitch me and enrolling you guys into giving me an opportunity to come on here. And I feel like it’s, it’s a, it’s a communication skill. Right? And so I feel like the, the people that create the most amount of financial abundance in their life are really great communicators mm-hmm <affirmative>. And so we teach our students how to [00:10:00] become great communicators, especially if they’re introverts. I’m like, you’re probably not making as much financial abundance as you could. Cuz you’re not good at communicating or overcoming objections or presenting opportunities win-win situations. So we really trained them a lot in communication. Um, and just teaching them like how to pitch.

Speaker 2:           So we give them scripts, templates, contracts, presentations, recordings of me speaking to landlords on last night, last night’s coaching call. I was calling landlords during the call. And even though I got a know for the one that I called, I kept trying to isolate the objection [00:10:30] and the students were so excited. They’re like, wow, the way you just didn’t take no for an answer, you were persistent. You didn’t take it personal. Like you get, you just kept trying to find a, you know, a way. And I feel like that’s powerful because once you, you know, um, acquire this skill, you can use it for the rest of your life in anything that you get involved in. Yeah.

Speaker 3:           Yeah. Absolutely. I think, you know, sales is one of the most valuable gifts that you can

Speaker 1:           Have. They don’t teach it anywhere. Exactly. It drives me nuts. Right. You have to go look for it or read about it or watch YouTube or all

Speaker 2:           These different things. So to answer your question, like [00:11:00] it, it is challenging, right? It’s not like you call a landlord and they say, yes, you might get a yes, like 20, 30% of the time. But whether you’re flipping wholesaling, acquiring doing multi-family syndication, like yeah, it’s all the same. Yeah. It’s all the same. It’s all a sales game. It’s all a numbers game. And that’s what I tell people is like a hundred percent of the people that never do their first deal. Never do their second deal. So just get your foot in the door, be persistent once you get that first one, it’s not even about how much money you make, but it’s about who you become in the process because now it became real. You did it now just rinse and repeat

Speaker 1:           What I like about [00:11:30] this is, um, you don’t really need anything at this point. Right? You just need to get one lease. Yeah. And then, then you monetize that. Yeah. Right. So, so I think a lot of times people get caught up in the money. Yes. Right. They say they use oftentimes use it as an excuse. Yeah. I don’t have the money. I can’t start. I can’t buy anything. This is different. This is literally, if you can convince an owner to rent their place. Yeah. You’re in business, right? Yes.

Speaker 3:           [00:12:00] Now. And do you, for the maintenance stuff, if somebody lets you do a short term rental, do you handle that? Because obviously you’re gonna have more maintenance,

Speaker 2:           More issues. We, we have like on call, usually two maintenance people that are available. Right. Mm-hmm <affirmative> just like any handyman and yeah. If anything happens, if there’s a small leak or any repairs, we want to handle it the same day between the window of 10 and three, which is check out and the new guests checking in that way, we can provide a, you know, five star experience for the next guest. So we’ll handle it. If it’s something that the guests created, like any damage, we’ll obviously [00:12:30] charge them just like a hotel would. And if it has something to do with just the properties where and tear, then the owner would be responsible,

Speaker 3:           But that’s a benefit to the owner. I mean, as a landlord, you know, if I didn’t get called for all the little stuff that happens, that would be nice, you know? Yeah.

Speaker 1:           Have to worry about. You’re always, you’re always stressing about that stuff.

Speaker 3:           Oh, it’s just annoying. You know? So

Speaker 1:           It happens all the time and, and, and uh, what, you know, invariably human behavior is, you know, some people are really squeaky. <laugh> other people <laugh> others, a little more [00:13:00] calm, you know? But, uh, it, it sounds like you gotta have systems. So let’s talk about, um, uh, <affirmative> uh, you know, the, the coaching and the yeah. Cause I think this is a really cool thing. I mean, you obviously did it, um, differently, you know, you started with the, uh, the, the nine and, and, and learned the business and now you’re actually growing your own business and teaching other people. So let’s talk about that. And so what gave you the idea to, to, you know, to move to that, that, that next level, [00:13:30] cuz you basically removed, in my opinion, you removed the, I need the money excuse,

Speaker 2:           Right? Yeah. Or I need a lot of money cuz it’s just a, you know, first month deposit some furniture and then boom up.

Speaker 1:           And, but even then can, you can get that from somebody, right?

Speaker 2:           Yeah, exactly. You can get it from a credit card balance transfer <laugh>

Speaker 1:           There’s so many things like, so when you bring it down to rent only, uh, it’s a very, very different scenario than, than a down payment and credit and getting debt and buying something and closing and all that. Right. Yes. [00:14:00] And of course all the other things stacked on top of the furniture. And um, so, so let’s talk about how you transitioned over to the, the student coaching. Yeah. Side of things.

Speaker 2:           Yeah, definitely. So I would say that, um, let’s see, I believe it was 2019 when like my net worth, officially hit like a million. And I remember I came home one day and I told my wife, I was like, Hey, like we’re millionaires and she’s not a numbers person. So she’s like, how much is that? Like, I was like explaining to her. So we went out, we celebrated, went to a nice restaurant, but [00:14:30] then after about three days, like I didn’t feel like a million bucks before. I just felt like a sense of emptiness. And that’s where I felt like this calling like go and share this information with other people. Like I felt like if I just kept creating wealth for myself, like, like it didn’t feel like adding more millions is gonna like add more happiness or like I was making a difference. And so really teaching other people, like when I hear people going from full-time to part-time where the husband quits or the wife quits and they can spend more time with each other, they can volunteer for their kids’ soccer program. Like whatever it is like that is like so [00:15:00] fulfilling. And I feel like when my body leaves this earth, like that’s, what’s gonna be left behind was the, the impact that dent, the, the impact that I left in other people’s lives.

Speaker 1:           Yeah. That’s cool. And uh, let’s make no mistake. This is still all around passive income. Yeah. The only difference is how much you have. Yeah. Or how many excuses you have, right. Yeah. Because, uh, I tell you what, I always find people get hung up on that, on the money part. Yeah. And they, I feel like [00:15:30] they use it as a crutch. Yes. A lot. And so you you’re now, so walk me through when you get a new student, uh, are you’re basically just walking them through the fears like you were talking about of the phone call, right?

Speaker 2:           Yeah. Yeah. It’s probably the biggest thing. Right. When it comes to starting, like most of our students probably 95% are coming into like, subleases, that’s like the shiny opportunity. There are like subleases arbitrage, right. Being able to, you know, create financial freedom fast. But yeah, we do like a lot of mindset. So like we have, uh, six coaching calls a week, [00:16:00] Monday through Saturday and we have coaches like people that started as students, once they created six figure, multiple six figure businesses, they became coaches. So Mondays is like a mindset coaching call only. And I remember I heard one time from a mentor, like sell them what they want, but give them what they need. And so people come just to create, you know, financial freedom, but we give them so much more because it’s really personal development who they become in the process, all the mindset.

Speaker 2:           So we do a lot of mindset work on those Monday coaching costs to make sure that we can help them attract abundance. [00:16:30] Right. Cause like Jim, Ron says, success is not something that you chase. It’s something you attract by who you become. And so I think he also said that if we took all the money in the world and divided it equally within five years, all that money would be right to where it was to where it was. Yeah. And so it’s, you know, if you give a million dollars to a poor person, you know, within a year they’re gonna be more broke and more poor than they ever were before. So it’s really the mindset. Yeah. That’s the most important thing.

Speaker 1:           I just, uh, I actually just read this morning, there was a kid that won 15 million in the lottery. Um, he netted like nine [00:17:00] and chain still a lot, but uh, the whole story was about how he basically spent it all. Yeah. And now he’s, uh, back to working where he was before he started. And this is a common reoccurring thing. And, and so I’m glad you brought this up because I think that, you know, one of the principles in riched dad portent, cuz there’s many, is that the rich don’t work for money. Yeah. And, and I think that people don’t realize that it doesn’t matter. I see this with professional [00:17:30] athletes all the time and I see this with people that get big bonuses, they oftentimes, they don’t know what to do with it, you know, and they ascend, but their behaviors don’t change. Yeah. And then they eventually lose it all or turn it over to somebody. They don’t know what to ask. And that’s kind of the whole point of this channel in my opinion is to right. Yeah. Is just to try to empower people, uh, you know, through sales and through, through, um, investing.

Speaker 3:           And it’s not even about making a [00:18:00] lot of money, you know, uh, we know a lot of people that do wholesaling that do Airbnb, that when they started, they didn’t have T nickles to rub together. Yeah. And now, you know, they’re millionaires or they’re on their way to be millionaires. And you know, so when we get comments all the time on our YouTube channel about must be nice to have so much money, must be nice to be a landlord. You know, it’s that kind of mentality that really it’s, it’s gonna keep you where you are for the rest of your life, you know, instead of hating on it, try to become it is what we always try to [00:18:30] teach.

Speaker 1:           Agreed. That’s so true. So let’s, um, let’s talk a little bit about the numbers, you know, just high level, so sure. When you, when you get a, how many, how many students do you have now

Speaker 2:           Active? There’s probably about a thousand students in our community, but we’ve had over 3000 students.

Speaker 1:           That’s a lot. Yeah. That’s, that’s,

Speaker 2:           It’s been four years that we’ve been, we started the company. Wow.

Speaker 1:           Wow. Wow. That’s awesome. Congratulations on, on that. And uh, you do six calls a week,

Speaker 2:           Six coaching calls. I do one and then the other five, my team delivers.

Speaker 1:           That’s awesome. So let’s talk about the numbers. [00:19:00] Like what did what’s success from your standpoint? Yeah. What’s success from their standpoint.

Speaker 2:           Yeah. Typically what we look for is a $2,000 a month of profit. So we give them access to like the softwares, like mash Pfizer air DNA. And we could look at the occupancy and revenue of existing properties in the area that they want to launch similar to like using the MLS for like comps. So if I see that there’s a three, two in a particular area, you know, grossing say 7,000 a month and that’s been the average for 12 months and I can [00:19:30] rent a property for half or less than half. Then it’s already been proven that I know I can make double. So whatever we pay and rent, our goal is to double or more. Right. And so 2000 is really like that sweet

Speaker 1:           Spot for one property,

Speaker 2:           For one property,

Speaker 1:           Three bedroom property.

Speaker 2:           Yes. Again, but you know, like, just to like, if you did this in the Midwest, you might not get those types numbers. Right. So like all my properties are in California, but we have students like all over the us, like in every major city. And if they’re in an area where there’s [00:20:00] like a low population, you know, less than 30 active Airbnbs, which you can see through the softwares and we’re like, Hey, that’s probably not a good area. You want to go where there’s more tourism more just like when you’re looking for apartments, right. Looking for job, you know, where are people where’s the migration like, you know, is economy growing there. And so we have like similar metrics that we look at. And so if you could be in an area where there’s a large population, a lot of tourism, beaches, convention centers, downtowns theme parks, and you could see that you could double triple that. That’s how we kind [00:20:30] of look to be able to get those margins. So 2000 is really that sweet spot.

Speaker 1:           That makes a ton of sense. So, so probably one of the biggest things is location,

Speaker 2:           Location, location, location, right. <laugh> for everything, right?

Speaker 1:           Yeah. Cuz I, I find that interesting, you know, it’s a little bit different than my market. Yeah. You know, but uh, you know, the more, the long term multi-family market, but yours is really competing against the tourism yeah.

Speaker 2:           Tourism, hotels, right.

Speaker 1:           Absolutely hotels. So, so that’s part of your coachings. Yeah. You know, where are you gonna be [00:21:00] and what are you gonna do? Um, what are some of the, uh, kind of the hottest areas that you see? I mean sure. People are moving all over the place. Right? Yeah. Work from home of course is one thing, but also they’re just flat out moving. So, uh, and, and we’re seeing certain areas, bulge and other areas not. Yeah. So, um, what are you seeing now? Well, you got a thousand students and what are they seeing?

Speaker 2:           Yeah. So it’s usually like the big states, right? Like California, Texas, Arizona, Florida. [00:21:30] Like these are some of probably like the four best states I would say. Um, so we do like a lot of marketing in those areas to bring in students. And this is where, you know, yes. Rents could be 3000, 4,000, 5,000, but those are the properties doing eight, 15 K a month. Mm-hmm <affirmative> um, so it’s some of those bigger states with a lot of a big population, a lot of tourism. I mean, Arizona’s like really hot. One of our head coaches lives here and they’ve got like 15 Airbnbs here that they’re either own sub leach or managing for other people. So this is uh, [00:22:00] a gold mine here.

Speaker 1:           Yeah. Oh, I know. We, we actually have friends, excuse me. We actually have good friends that are, it’s so hot that they’re actually moving out of their own home. I,

Speaker 2:           Yeah.

Speaker 1:           They’re, you know, they have beautiful homes and they’re like going and renting something else and they’re making so much money. Yeah. Hundred

Speaker 2:           Someone, nine. It’s crazy.

Speaker 3:           It’s hard to, it’s crazy. Go to it.

Speaker 2:           You know, it’s crazy. Yeah. Cuz they can go somewhere else, live for free and still cash a little, couple thousand a month. <laugh>

Speaker 3:           But something interesting that you said was the, the [00:22:30] subleasing aspect because you know, I was just over there last night and we were chatting and the Airbnb property that are not HOA are selling so expensive. Oh yeah. Because people know what they can make on ’em. So, you know, they’re trying to strategize how to buy another one and if it makes sense with higher interest rates and all this stuff, but then to think about sub lacing and how people would do that is a different way to look at it.

Speaker 1:           Let’s talk about the time, like, like, uh, you know, cause most, most people are working and they’re trying to figure out like, you know, maybe they’re working 50, [00:23:00] 60 hours. Yes. Can, can they still do

Speaker 2:           This? Yeah. So where it takes the most amount of time is in the actual launching to get furniture, appliances, decor, supplies, pictures for like a property of that size. Like it would easily take like five days with like two or three people like working on it. Okay. A lot of assembling it’s a lot of time. So when people are just getting started, uh, for the most part, they launch it themselves. But for example, when we got here, uh, to the Phoenix airport, there’s a guy that walked up to me, he was like, Hey, are you the Airbnb guy? <laugh> and I was like, I guess I [00:23:30] am. That’s awesome. Right. And uh, he was telling me how he wants to get into Airbnb. And he currently he’s a dentist. He’s like, yeah. You know, I, I got the income, I’ve got the down payment I want to buy.

Speaker 2:           He’s like, do you think I should manage my property? So at this time I wanted to learn like, well, how, how valuable is your time? So I’m like, do you have employees or are you a solar per he’s like, yeah, I got 11 dentists. I said, well, listen, your time is probably very valuable in your business. Right. So I would hire out a manager that could literally launch the whole thing for you. And that’s what I do every time I, I focus on the acquisition, [00:24:00] whether it’s a purchase, a sublease. And then I hire somebody that literally puts a, a, a Excel list of all the, uh, furniture, appliances decor. They order it, they coordinate everything going in from Amazon. They oversee the team. That’s setting up everything physically, all the way to creating the listing on Airbnb, coordinating the pictures, like literally start to finish. Like some, most of the time I look at the property, but we have some that we’ve never even seen. We’ve just done everything virtually by hiring somebody in those cities. So depending on how much time they’re [00:24:30] how much, you know, the value of their time will dictate whether they do it themselves or if they hire somebody to launch it. Yeah.

Speaker 1:           And by the way, guys, there’s so much work in that list. Like

Speaker 2:           It’s a lot of work,

Speaker 1:           You know? Like, like you gotta remember, like, you know, from 2016 to now, like you’ve probably refined this list figured out. Yeah. A lot of times people don’t appreciate, you know, the launch and all the work cause that launch can in your words could be five days. It’s a lot of work, but in somebody else that decides, ah, I don’t need to pay that. It, it could be over 30, right?

Speaker 2:           [00:25:00] Oh yeah. It’s, it’s, it’s definitely a lot of work. But the great thing is once you remember that commercial set it and forget it. Like once you launch it and you automate the operations, the way I described earlier, I mean, like I, I’m probably like less than 30 minutes a week cuz I just like to kind of, you know, go in there, what’s going on. But obviously I have a manager who handles the whole thing. Uh, otherwise people could spend a couple hours a week, but it’s off from their phone. So I always say it gives you location freedom. You could live anywhere in the world. And as long as you have a responsible cleaner, that is on call and you’re working [00:25:30] with them directly. Boom. Yeah.

Speaker 3:           But I also think that, you know, for one, if it takes somebody 30 days to do what you could hire a company to do in five, you’re losing all that

Speaker 2:           Revenue. Yeah. 25 days. Right. If, if it could book at 300 at night, that’s 7,500 point.

Speaker 1:           Yeah. People don’t look at the opportunity lost. Right.

Speaker 3:           And they wait and they also assume, well, I’ll get it done. Oh this thing came up. Okay, well I’m gonna get it done. And you know, you don’t know when it’s gonna be done and because you are new, you can’t book anybody till it’s done. Cuz you don’t know when you’re gonna be done with it. Yeah. But [00:26:00] then secondly is, you know, not, uh, our good friends, but I know other people that launched an Airbnb and they just said, oh, we’re just gonna do it ourselves. It’s my no big deal. Whatever. So their ladies were the first day they decided, you know, that place wasn’t clean enough. Mm-hmm <affirmative>, you know, they, so the cleaners they hired, weren’t good. They left the towels that they normally use there. So they said, these look used, they aren’t fluffy da da. So my point is they had to refund these women a lot of their initial, um, what they paid in order to not get a [00:26:30] bad review because they don’t have any reviews. They don’t want a bad review. And in my mind, it’s like hire a company that knows what tells to get that knows what sheets to get. That knows how to make the bed like a professional hotel, not, you know, just throwing some sheets on a bed because we had Jack on who manages Airbnbs locally in Scottsdale. And he said, the bed is the number one thing. If somebody feels like the bed isn’t clean. Yep. You’re gonna get a bad review. They might lean.

Speaker 1:           Would you

Speaker 2:           Agree with that? Oh yes. Like I I’ve been to like even hotels where there was a hair on the bed and I was like, that’s disgusting. [00:27:00] <laugh> yeah. You know, so yeah. Cleaning is like the absolute, most porn part of the Airbnb

Speaker 3:           Business. And it’s funny cuz I stayed in one bad Airbnb one time and this was horrible, like broken window, whatever. But it was like, I only needed to be there one night. We were in Idaho. I’m like, you know what, it’s fine. I need to sleep here one night I get into the bed and there was a stain of some kind on the bed and I was like, oh my God, I can’t stay here. And I called him. I’m like, I gotta get outta here. So when he said that it was funny because I was like, that was me. Cause I was like, I can deal with trash in the, you know, in the trash can. Mm-hmm <affirmative> I can even deal with the broken window, [00:27:30] but I need a clean bed. <laugh> yeah. And so I think it’s important to really not take these things on yourself because a bad review can think your whole, absolutely Airbnb, especially if you don’t

Speaker 2:           Have, especially at the beginning.

Speaker 1:           Yep. And I was gonna ask a little bit about that. Um, let’s talk about reviews and occupancy. Yeah. Because there and rate there’s a direct correlation between all of those things. And I think a lot of times people that are inexperienced, you know, are oblivious to that. Like how important all those things are, how do you manage occupancy [00:28:00] rates and reviews because that kind of attracts right? Yeah. More

Speaker 2:           Occupancy. Yeah. So let’s start with the rate. Typically what we do is we take the desired revenue, which is double whatever we rent or double whatever the mortgage is. So if the mortgage or rent is three grand and our goal is to make six grand, we’ll divide that by 20 days we wanna be able to double our numbers at a 66% occupancy. So that there’s enough space to be able to triple mm-hmm <affirmative> right. Um, on the review side, I’ve [00:28:30] learned that it’s not so much when things don’t go exactly as a guest, want it to, but it’s like, how long does it take you to fix it? So let’s say that the guests show up and they put in the code into the keyless entry and the battery died and it’s not wired and now they can’t get in, but they call you and then you send someone and someone’s there in like eight minutes or 10 minutes.

Speaker 2:           They’re like, okay, cool. Like someone got here, they handled it. It’s when you take two hours to get there. Yeah. Got it. And they’re tired. So a lot of reviews, it’s just about really creating solutions, responsible as fast as possible. So one of like our KPIs [00:29:00] for our communication coordinators is responding within three minutes to all inquiries. And that’s why we usually for you usually will hire somebody in Mexico for like a 12 hour shift and then the other 12 hour somebody in the Philippines. So when it’s daytime there, it’s nighttime here and we can provide like 24 hour customer service

Speaker 1:           Mean for you. Yeah. It’s well thought through those are really important things. Um, because, uh, as you know, you don’t have a good review. I mean, we, we do it when we look at Airbnb as where we’re going, you, you know, if something has a [00:29:30] low number we just pass.

Speaker 2:           Yeah. Right. Yeah. Personally, if they’re not super hosts, I don’t even look at the properties. They got this filter where you could be like, oh, super host properties. And that means, yeah,

Speaker 1:           I’m gonna ask you that. How does that, I mean, I see that too. Yeah. There’s different ratings. Right? So you just focus on super host. Is that it? And is that what you’re trying to, for

Speaker 2:           The most part? Yeah. Cuz when you’re to become a super host, you have to have a 4.8 rating or more and you have to have 10 bookings. Um, with that average within a three month period. So every quarter Airbnb decides if you’re a super host or [00:30:00] if you’re not or if you continue to be. And so I believe like if I owned Airbnb and you wanted to stay at an Airbnb, I’m gonna say, Hey Ken, Daniel, I want you to stay at the best properties. The, this, these groups of people here, they’re all super hosts. That means they have the, the best responses, the best cleaning, the best everything. And so one of the ways to get on the first page, uh, and to get more visibility is to become a super host. Cuz those are the ones that are being promoted and advertised the most.

Speaker 3:           So. And why I like super host too, cause I’ve learned a thing or two about, this [00:30:30] is my parents book a lot to come out to Phoenix every year they stay like a month or two and people cancel. ’em like they’ll book an Airbnb. Yeah. And then two months before a week before they just cancel their to them. Mm-hmm <affirmative> so what I found out is with super host, you can’t do that. So if you start to cancel as a super host and you could probably elaborate on that. Yeah. You lose your super host status. So, and I think a lot of it is they were trying to illegally do Airbnbs and that got caught and had to cancel and things like that. So now I just tell my parents just book the super host because if you’re gonna be [00:31:00] staying for a month yeah. Like in, because my parents book early and it’s like, they’re, they won’t cancel you unless something crazy happens because they’ll lose your status.

Speaker 2:           Right. Exactly. Yeah. They want you to have like quick responses, no cancellations, things like that in order to maintain, you know, your super host status.

Speaker 1:           So let’s talk a little bit about management. Okay. So now we’ve got the sublease, we’ve figured out the numbers and they’re in Florida, right? Yep. And they’re one of your students now that’s the whole next level is, you know, cuz I always tell people like you can buy at and you [00:31:30] can set it all up, but if you can’t manage it well, and I know we talked a little bit about this on the review side, but what do you, you know, it’s a very fragmented industry, like the cleaners and the maintenance people and you know, all the things that go in this it’s I wouldn’t call it really well organized yet. Mm-hmm <affirmative> it might be at some point. Yeah. So how do you, how do you manage all that? Having all these different scenarios in, in, in each of these different locations?

Speaker 2:           Yeah. So what we do is, um, a lot of people use, [00:32:00] you know, slack for business communications with your teams and I like it cuz you’re gonna have like a workplace, right? So you might say, Hey, the, you know, um, MC Leroy’s, you know, Airbnbs or short term rentals and under your workspace, you create a channel for each property. Okay. So you got, you know, one, um, whatever the name of the street, usually whatever the street name is, that’s what we named the property. Um, so say you have 10 properties. That means you got 10 channels and inside of each channel, you have the cleaner maintenance communications and like the manager I see. And they communicate with each other. [00:32:30] So like one of the things that we have our cleaning staff do is when they arrive to the property before they clean, they need to do like a little inspection.

Speaker 2:           They walk around. Are there any repairs? Are there any leaks? And if there is immediately lets the handyman know, so they can go over there and take care of it and be ready for the same day, um, guest. And um, and then after they clean it, we have them take pictures and then submit ’em on the slack group. So this way for accountability, we know cuz again, cleaning is the absolute, most important part of the business. And so we wanna make sure that it, you know, they’re creating a five star experience [00:33:00] each and every time. So that’s kind of how we communicate with each one. Like I said, we give access, um, the calendar access to the cleaner and now they know when to clean. Like I had this situation one time where I had a five day, uh, 5:00 PM cutoff for same day booking still do.

Speaker 2:           And somebody booked it like at four 30 and at the time I only had four Airbnbs back in 2017. And uh, I forgot to tell my cleaner, like I didn’t even notice that somebody booked it last minute. They checked in, checked out the next day at 10 in the morning, the new guests checked in at like 3:00 PM and they’re like, what’s going [00:33:30] on here? It’s dirty. Like the beds are undone. And so every time there’s a, a situation I ask myself like, how do I prevent this? Yeah. And I was like, why don’t I just give them access to the calendar? And now they know when to clean and I never have to communicate good for you cleaning schedule. Like they see what I see, you know? That’s cool.

Speaker 3:           So what if, when things kind of go sideways, right? Like a tenant has a party, uh, something like that. What, what, what’s the protocol for

Speaker 2:           That? Yeah. So if a tenant has a party, obviously we wanna like nip it in the butt. Like there’s [00:34:00] a lot of things that we do. A lot of it is really like preventative, which I’ll talk about in a second. But yeah, if somebody throws a party, um, we’ll text them or call them or if we have to send somebody over there, uh, it’s very rare when we ha I think in like five years hosted hosting thousands, we probably have to send the cops like two times to like kick somebody out because in our booking agreement, which essentially the contract, it says, no parties, no event, no events, quiet hours, 10:00 PM to 8:00 AM. Um, we also have cameras like in the front and the back. Sometimes we put noise sensors [00:34:30] in the property, but it’s just about nip in the butt and basically getting them out of the property.

Speaker 2:           But that’s really like uncommon. Some of the things that we do to prevent is again, um, we do have a, a two night minimum that usually helps a lot of people that want to throw parties that want to book just a Saturday or just <laugh>, you know, or just a Friday. And then the other thing that we look at is, Hey, does this person have any reviews? Like how long have they been on Airbnb? Uh, what have other guests said about them? So if it’s a brand new profile from the same city [00:35:00] and they want a book, like on a weekend, like we start digging for information, like, Hey Danielle, like what brings you to the area? Like what, what brings? And if they say like, oh, I’m here for like a conference. My team’s like, oh, what conference? That sounds interesting. Oh, limit list.

Speaker 2:           Cool. Let me look it up. Are you really going to a limitless conference? Right. Just to make sure that the story makes sense, because it’s typically people like, it’s not like someone’s coming from California to Arizona to throw a party. It’s usually people in the same city. And if we feel like, Hey, this is a little weird. I think they might want to throw a party. We’ll let ’em know. Hey, [00:35:30] by the way the neighborhood across the street is LAPD. They’re super strict and we really just try to scare them, you know? Yeah. Uh, so we, we do a lot of things in order to try to prevent. So every once in a while you have a bad apple, just like anything there’s ups and downs, these pro

Speaker 1:           Tips. Yeah. Pro tips right here.

Speaker 2:           Yeah.

Speaker 1:           I mean, I mean, this is how, I mean, I’m sure you didn’t know this when you started,

Speaker 2:           Right? Oh, no. Yeah. You learned through trial and error. <laugh> yeah.

Speaker 1:           I was gonna ask about renters because you know, and those are some really good ideas by the way, uh, if they come from the [00:36:00] same city and yeah. And uh, one night, Saturday, like those are all obvious after you say ’em, but not so obvious, uh, as you get into the business. So I was gonna ask like, what are some other secrets, Airbnb secrets. Like, no, I, without giving away too much, I know you got a secret sauce.

Speaker 2:           No, I got a really good one. And I feel like some people are talking about the economy and a potential, this potential, that, and what, you know, what would happen to tourism. And so one of the things that we’ve done right, is by focusing on the right properties and the right location with the, with the amount, the right amount of bedrooms, bathroom, square footage, amenities, [00:36:30] location, we really try to make our properties, the most marketable properties in the area. And by doing so, we attract a lot of nurses who book for weeks and months at a time there’s government bookings. Like I’ve had the government’s book, um, families who are on like political asylum and they pay like 45 days, two months, three months, top dollar, no discounts. They just book it right now. I have a family staying at one of our properties that got booked through an insurance company, a relocation company.

Speaker 2:           And they paid $37,000 [00:37:00] for four months. Right. It’s an average of 9,500 a month. My mortgage on that one is 2,800. So I got a 3.5 with the mortgage is, and there’s no cleaning. There’s nothing to do. It’s 122 days bookings. Right. So yeah, insurance, uh, corporate bookings nurses. And by making your properties the most marketable, the best properties in the area they book through Airbnb, you don’t have to do any marketing. I don’t do any ads. I don’t contact these companies. They just book through the Airbnb platform. [00:37:30] So this is a little bit of like a recession proof strategy. Yeah. Where you’re not just relying on tourism, cuz they much rather stay in a home. You know, a lot of our properties have pools, Jacuzzi’s game rooms. We want to be able to create a staycation experience where they have a great, a great experience in the home without needing to leave the home. And when you do that, you attract all these types of bookings.

Speaker 1:           Yeah. I think there’s a lot of people don’t realize that there’s a whole niche industry of, of like traveling nurses. Yeah. Or people that have a water damage in their home or a fire [00:38:00] and there’s contractors in there and there’s, and they don’t wanna live in a hotel. Yeah. Like right. It’s a lot of people. And uh, so you’re providing a very, very good service cuz we actually have that on the apartment side, depending on how, how much it is. But to your point, then they have to set it all up. Yep. And do all those things, uh, just to save a little bit and it’s all paid for, then you’re basically accommodating them. Right? Yeah. Absolutely. And you have a, and you have a stream of income.

Speaker 3:           So how do you deal with [00:38:30] HOAs?

Speaker 1:           So I’ve heard different strategies on this, the question. Yeah. Jack,

Speaker 3:           Who we had on had said they don’t deal with any properties that even have an HOA. So which your

Speaker 2:           Kinda, yeah. Personally, I’m, I’m not a fan of HOA. I always say HOA are like little communist countries <laugh> within and they just make up their own rules. Because even if the city says, yes, you can get a permit. The HOA can say, no, we don’t allow them. So personally we, we don’t even look at HOA. The only HOA friendly state that I’ve seen and that some is like Florida. Mm-hmm, [00:39:00] <affirmative> almost anywhere outside of there. We, if, if our students mention the word HOA were like, just run in the other direction, make sure there’s no HOA period. And you know, I’ve heard other people say, well, oh, I’m gonna do it behind their back. And I’m like, look, you’re not gonna be able to build a sustainable, scalable business. If you’re, it’s just gonna matter. It’s just gonna be a matter of when not, if you know, it’s gonna be short lived.

Speaker 2:           So if it’s HOA, we stay away. We only work with single family, especially for our students that purchase. I always say, look in HOA community, you can do an AU. You [00:39:30] can add units, you can add square footage. For the most part, they want you to, you know, the exterior pain needs to be all the same. Like even one of my buddies who lives in a HOA, he changed his lock to a keyless entry and they made him change it. Like it needs to be in uniform. Yeah. So we, we do not focus anything with the HOA we don’t look at.

Speaker 3:           And I always tell people, you know, neighbors chat and people chat. Yeah. They notice the luggage and they notice it coming and going. And you do have those people that just watch all day long, you know?

Speaker 1:           Well, you had that, remember that lady was knocking outta your tenant door.

Speaker 3:           Like yeah. Yeah. But [00:40:00] when I first

Speaker 1:           Let me see your lease.

Speaker 3:           When I first moved my tenant into my unit, as a long term tenant, I had a former member of the HOA, not even current, a former member knock on the door, request a lease to make sure that it was year and you know, so I had to get involved in all that cuz it freaked her out, but they’re crazy and they will be crazy. And so if you’re trying to do something illegal, then they’re, you’re gonna get busted. Yeah. And it’s gonna be a waste your time and money putting all the furniture in and all the rentals in and all the not

Speaker 1:           Worth it piece. Yeah. So, um, [00:40:30] before we wrap up, I, I wanna, you touched on something I thought was very interesting. You’ve now figured out that single family, not necessarily condos, um, through, I think you, you said three bedroom, two bath, certain square footage. Yeah. What are some other parameters that, you know, you look for like has to be in this box yeah. From a acquisition, whether it’s a lease absolutely. Or a, or a purchase.

Speaker 2:           So I got four and the fifth one is more of a bonus. So the first one is a 3, 2 1100 square feet or more. Okay. Second thing, especially on the subleasing side, it must be renovated. Like [00:41:00] it must be turnkey and gray condition. Otherwise you’re gonna get partial. You be giving partial refunds all the time. Yep. Obviously if you’re buying it, then you can decide to renovate it and you know, have some equity and all that. The third one is having parking for two vehicles or more. Okay. That’s good. And number four is like AC and heat and the fifth is more of a bonus and that if, if it has appliances already, which some rentals do and maybe 10% of the time we find that some of the rentals are already furnished. Like one of our students literally just acquired a sublease here, uh, in, uh, [00:41:30] Phoenix, uh, like three days ago. And it’s completely furnished. She’s just gonna add a little bit of decor, pictures and boom, which obviously she’ll get a better ROI. But those are like the five things that we look

Speaker 1:           For ones are really good. And then I notice, uh, like on some of the ones that I I’ve been to, they have like cameras exterior. Um, so do you do all that too from a

Speaker 2:           Security standpoint? Yes. We always add a camera in the front and one in the back. Absolutely. All the time. Yeah. And our, our manager monitors these cameras and if he sees anything or hears anything through the cameras, then he [00:42:00] can like nip it in the butt. Yeah. So this is also how we create peace of mind for the landlords and yeah. Letting them know that we’re running a tight ship and it’s in our best interest to protect the property, make sure they get paid on time every month with the auto pay and make sure we maintain a great relationship with the neighbors.

Speaker 1:           And are there certain other things like spas and pools and you know, like various play volleyball or something, are, are those are those have gotta add to the month are the, the nightly, right?

Speaker 2:           Yeah. I mean the amenities are very important. Like honestly, the more amenities you have the better, [00:42:30] like during the, um, the, the pandemic as I like to call. Yeah. <laugh> uh, a lot of the people that did struggle with shortterm rentals are people that had like Airbnbs where people were only staying there because it was close to the downtown. So if the downtown was shut down, then why would somebody stay there? But if your property had amenities and you could literally have an experience in the home without needing to leave the home, those actually did pretty well. And so that’s why I said, we focus, a lot of properties have pools, Jacuzzi’s game rooms, a pool table, fusball large games like connect four Jenga, [00:43:00] things like that. And so we had families from the same city who were, um, living in apartments who wanted to like enjoy the house for a weekend and they would book it with their kids. So I kept telling people like, yeah, there’s, there was a decrease in people traveling by plane, but it created an increase of people traveling by car, people that were sick and tired of being stuck at home. Even I stayed at an Airbnbs in 2020, like nearby just cuz at the time we didn’t have a pool and we wanted to just get out of the house.

Speaker 1:           I think that’s gonna come up more. Like I just booked my son and his girlfriend [00:43:30] to, uh, you know, for where we’re gonna be in the summer. And coach was 1100 each, right. It’s like a two hour flight. It’s like $2,200 for the two of them. And, and you know, we’re hearing this a lot more on the plane travel the, the gas of course, you know, I, I, I I’ve seen at least it’s, it’s very high in California. Um, I would imagine this is a business that’s gonna continue to, to roll pretty well for you,

Speaker 2:           Right? Yeah. Yeah. We believe so. Um, it’s only growing like even [00:44:00] last year or a couple months ago, Brian ske, the CEO of Airbnb made a comment that we need like a minimum of a million more, um, like host just to keep up with the demand and people are sometimes worried like, oh, where is it saturated? And personally, I haven’t seen an area like as long as you can still double whatever your rent or mortgage is. That’s really how that matters.

Speaker 3:           Yeah. I know when my parents rent in, uh, Scottsdale, they have to book it out like yeah. Six or eight months in advance in order to get a place for the month.

Speaker 1:           Well, that’s what we had to do in, in correlate, correlate Idaho. [00:44:30] We booked a year out. Wow. Yeah. Yeah. It’s, you know, I, these little towns that that blow up in the summer, you know, in a good way. Um, you have to like, there’s just so many people going there, right? Mm-hmm <affirmative> yeah. Those are the busy seasons on both areas, but, yep. Yeah. Well, awesome. This has been really, really cool. How do people get ahold of you?

Speaker 2:           Instagram podcast? YouTube, the Jorge, and that’s the Jor.

Speaker 1:           Okay, good. Good. So we’ll stick that on the links here, right? Jerry and, uh, I really appreciate, [00:45:00] uh, you guys, what one flying out from LA. Yeah, I appreciate it was a pleasure and your team here. It’s awesome to see them. And, uh, it sounds like you got a great business and more importantly, teaching other people how to become financially free. Like, like you struggled with yeah. Early on. Absolutely. Yeah. So thanks. Thank you for having me.

Speaker 2:           I appreciate the opportunity. Thank you.

Speaker 1:           Danille yeah, sure. Good luck to you. Thank

Speaker 2:           You.

Speaker 1:           Thank you for listening to this episode of the real estate strategies podcast. If you liked what you heard, please give us a [00:45:30] five star review on iTunes and let us know what you thought of today’s episode. Want to take the next step as a real estate investor. Join our free community and gain access to dozens of beginner courses, blogs, weekly, insider updates, and much more. Visit Ken macrow.com/podcast. Thank you. And we’ll see you next week.

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