Nine steps to set up your first Airbnb arbitrage rental

0:00 so I'm going to share with you nine simple steps to start your first 2500 a month Airbnb using Airbnb Arbitrage in just 84 days now 84 days sounds very specific but let me tell you why this is coming from experience helping hundreds of people kick-starting the Airbnb Journey some folks even race ahead by Sharon Jose who signed their first lease to the Airbnb in just 40 days or Dustin who juggled a 9-5 job and still managed to do it in just 31 days we have Brian who's a software engineer who signed his first ever release on day 13. we have countless other stories exactly like this so with that being said let's dive right into it but before I start showing you all the steps I want you to understand what Airbnb Arbitrage is so Airbnb Arbitrage is like traditional Airbnb but without the heavy investment of buying properties instead you're going to manage properties owned by others so you're going to sign a sublease contract and manage their property furnish it and then you're gonna add some other bells and whistles and then you're gonna finally launch it on Airbnb but you're probably thinking to yourself why wouldn't the landlords just do it themselves so here's a good way to think about it so imagine your boss doing your job they don't have the time or they lack the specific skills to do it so that's the same thing with landlords they don't want to spend the time running airbnbs or they like the know-how to set up but consistently profitable Airbnb and as someone who owns 40 rental units I can tell you this is absolutely true and besides we're not just listing their property as is we're doing a home makeover and most landlers don't know how to do that or they just don't know where to start and that's exactly where we step in and here's how you make a profit Airbnb pays you out you pay the rental landlord and all the

1:17 other expenses and then the rest is all profit to you before we start Airbnb I tried to various other real estate models like traditional rentals house hacking Burr it's just a living facilities wholesaling flipping you name it but out of all these other real estate models Airbnb won out and I like it because it's scalable without needing a massive initial investment and then once it's set up it only requires about an hour of my time per week so what I wanted was a business I replaced my salary without eating up all my time but Airbnb was that golden ticket [Music] so here's my first property that I subleased and launched on Airbnb so my rate was 4 100 per month and with additional monthly expenses it rounded out to about forty nine hundred eighty eight dollars a month the property generates 440 per day on average coupled with a 60 plus percent occupancy rate it's all making steady cash flow of over five thousand dollars per month so I ran all the numbers and I was right the first month we launched we did fifteen thousand dollars in Revenue nine thousand dollars which was clear profit so with that being said here are the nine steps to start your Airbnb Journey so step number one is the business setup the first thing that you're gonna need to do is set up an LLC now this is an optional step but I highly recommend that you do this because this is going to protect your personal assets from your business assets this costs anywhere from five hundred dollars to a thousand bucks depending on where you are and you can also create an LLC online through a service like LegalZoom or you can even hire a real estate lawyer to do this for you now if you want to do this yourself

2:33 here's a five-step process the first step is choose a unique name for your LLC then step number two is to file the articles of your organization to officially establish your business the step number three is create an operating agreement that outlies your llc's procedures that number four is to obtain an EI n or an employer identification number from the IRS this is going to be for tax purposes it's completely free it can be done online and the step number five is to set up a business bank account to separate your personal and business finances the biggest I'm going to typically ask you for your EIN a copy of your articles of organization and some form of business licensing or permit which varies by state now this might all sound complicated but don't worry there are plenty of online resources and copy and paste type lists to help you get all these steps done with these so step number two is the market hunt so first you need to identify potential markets start with places that draw tourists consistently now big cities like La New York and Miami can be pricey and also have more Airbnb restrictions so instead of going directly into those cities I like to target areas around those areas you want to make sure that you check if airbnbs are allowed and if you need a permit so for example Richmond Virginia is filled with museums and churches and is about a two-hour drive from Virginia Beach you'll want to find 10 promising locations similar to this one on Google Maps so here's an example of a property listed for rent in Richmond that's a good candidate for an Airbnb I'm going to be using as an example throughout this entire video now step number three is market analysis so you're going to analyze your chosen markets and use air DNA to check your competitors numbers so the golden rule is that the revenue is 2.25 X the monthly rent then it's gonna

3:51 cash flow meanwhile start exploring Zillow and keep finding more winning properties so for this Richmond property they have a competitor doing 3.75 X they're red and revenue I'm Gonna Leave a calculation here on the screen on how I got to that number and by the way if you're finding this video helpful please give it a like I know every YouTuber ever says this but I need some validation from strangers I don't know okay so please do that for me it'll help greatly step number four is the property hunt area browse local property markets on platforms like realtor.com and Zillow so I personally like to look for 20 suitable properties that have something unique about them I like to look for high vaulted ceilings things that are newly updated pools near lakes and canals Etc so if you're on Zillow there's a cool little trick that you can do you can see how long our properties have been vacant for they just have to scroll down to price and tax history so if the property's been listed for a long period of time this is going to give you more leverage to better negotiate your position when pitching them Airbnb Arbitrage so here you can use air DNA to analyze the competitors around the properties you pick so here's what you're going to want to look for the yearly Revenue the seasonality charts and also the historical of a new day these are just a few data points that you want to start to gather this will give you an idea of the competition and it's also going to help you understand what works in a particular area and you can even go into the Airbnb listings and check what amenities they're offering so some stuff that you want to start looking at is their Decor style the unique features that make their property stand out they're going to want to use that as inspiration when Furnishing your own Airbnb step number five is to pitch the landlords so before I get into that I bought a story that's going to give

5:07 you the perfect idea of what to do and what not to do when pitching a landlord a while back I had a rental that was sitting empty and a guy approached me and didn't even greet me properly and just started looking around the house there were zero or four no connection nothing and then they started explaining very vaguely on what he was planning to do and it was clear that he wasn't even sure himself so rule number one folks be friendly and build a connection and rule number two is be confident about what you're offering and if you don't have the confidence how do you get that confidence an answer is simple just practice repeat out loud what you're going to say until it feels like second nature and yes this guy was pitching me air BB Arbitrage a few years ago and what did I say to him the answer was that big fat no and it's not because I oppose the business model it's because I didn't trust the guy that was going to be off operating and if you pitch it correctly you're not just going to be asking for a favor you're going to be offering them a deal that can refuse and you want to make sure that you Hammer these points in they're going to get rent plus 100 bonus each month the property is going to get way less wear and tear the property is going to get professionally cleaned at least three times per week and they're gonna get free property management who would say no to that and this especially works well if their property has been sitting vacant for a while but what if they say that dreaded two-letter word and they say no after you run the numbers and see that it has profit potential you can offer them 100 200 even 300 depending on if the numbers make sense trust me it works like a charm I've used this time and time again to close deals I'm going to go over an example of how you should talk to landlords so you know how it goes even though this is from my script you shouldn't read a word for word instead of practices so you're familiar

6:24 with the key points but put it into your own words your goals that sound professional and confident not like you're reading off a piece of paper so here's how the conversation should go my name is Preston I sell your property at one two three fake Street on the listing is this still available for rent great I saw it's listed for about two thousand dollars a month right then you want to complement their property and establish report mention the property size and specific features to show that you've done your homework at our engine and after that you're going to lay down your proposal confidently so the key Point here initially is to build a rapport and then you're gonna start to pitch your model bottle where I would lease your property and then furnish it nicely for my vacation housing company I want to manage everything you're going to give guaranteed plus 100 bonus every month how does that sound so after you don't explain to them how it all works they may object or ask for more information be prepared to handle these objections you're gonna tell them how you're going to be better than other traditional tenants and remember guys don't take this personally rejection is a part of the process there's gonna be some landlords that aren't going to be interested and that's completely okay the more calls you make the more likely you're going to be able to find a landlord willing to work with you so there's actually a snippet from an actual call I had with the landlord who's willing to sign a deal with me hi I'm looking for Bob yeah this is him great my name is Preston and I saw your property at 1509 Walnut Street is that still available for rent yeah it is great so I saw that you're renting it for 3850 is that right yeah that's that's correct

7:44 awesome so looking at your pictures here on Zillow looks really beautiful and I'm really interested in it and it also looks like it's pretty spacious uh two bedroom two bath at around 12 000 or 1250 square feet yeah great so just a little bit of background on me I'm a real estate investor and I operate a corporate housing company and you know I would like to see if it would be a good fit for one another as I differ from a traditional tenant that you're that I'm sure you're used to and this Arrangement has worked out extremely well with other landlords and you know I'm really confident that I'll be one of the most valuable tenants you've ever had yeah so we we don't really allow any sublets just because like you said I only do just traditional tenants right so I don't have any experience with corporate housing I don't know if I really want to get into that just because it's it's unknown unknown area for me so you know no that's totally understandable um if you don't mind you know let me just kind of tell you a little bit about what my company does and then from there you know again I want to create a win-win and then you know we can decide if it makes sense to move forward is that is that sound all right yeah sure sure great so what my company does uh again we rent places like yours anywhere on a

9:02 two to four year lease and then we beautifully furnish the property and then rent it out to people on a short-term basis so you can think you know our clients range from traveling nurses to families traveling for vacation we even have business professionals and I always make sure that I pay the rent on time I know that's really important to you obviously and then we also ensure that the properties kept in great condition and again like you know I understand that your goal is to maximize your returns and also you know make sure that your property's left in great condition right right yeah I mean again like I've never uh strayed from the traditional way of um renting and you know I'm doing fine just on my own and so I guess that's that's where I'm at I just feel like I I don't need any like I'm doing fine right now right no totally understand um and you know really you know one of the main differences between you know a traditional tenant versus myself is that you know the traditional tenants really are living in the property so they're in there day in and day out and I'm sure you've noticed on you know each turnover there's a lot of wear and tear on their entire unit and you know there's you know if once a year you're gonna have to

10:20 take a month or two it's kind of like you're doing yourself to you know make sure that everything is you know up to speed so that you can re-rent it I have an amazing team of professional cleaners that come in you know anywhere from two to three times per week and their job is to make sure that you know check for any damages any maintenance that needs to be done and so the properties are you know generally going to be kept in much better condition than what you find in a traditional tenant um and obviously we're going to eliminate a lot of the turnover costs and also the vacancy um just because we're going to be signing anywhere from a two to four year lease right so with these cleaners and other people managing you know I I just don't want to be Pat adding my keys to a bunch of different people that's just a little sketchy to me yeah yeah so you know what we do on all our properties is we install Smart locks so we can access those and control literally from anywhere and this ensures that we never lose the keys and it's going to be much safer for your property as well okay smart locks right yep exactly and you know you know again you know if this makes sense we would love to you know get a corporately signed here with you within the next you know couple weeks and again I'll be the

11:38 best tenant you've ever had but again I want to make sure that I'm answering any questions that you have yeah I just still I'm not sure like you know why don't you just do this with your own property you know why are you reaching out to me to do this no that's that's a great question I'm actually looking at purchasing properties to run my business as well um but for right now I offer this model to other landlords because I found that it's a win-win situation for both myself and also the landlords um you know kind of like I mentioned with the the tenant situation of them really being in and out landlords actually really love me just because you know they come in after you know we leave and they see that their property is in great condition if not even better than what they found it um so again there's a lot of you know win-win's not it's not just for me it's but it's also for you as well right and I don't know man I'm just a little hesitant because you know when I go through my process I meet all the tenants you know I I don't want I don't I don't know if I can trust you right because I don't know you and so I don't know I don't want some some untrustworthy people that would be coming into my house and I don't want parties and you know so that that's just another thing that will make my job even harder than it is is you know how how can I trust these people that you're bringing

12:55 in so yeah no that's that's a completely valid concern and honestly that's one of our biggest concerns as well right so every single guest that we choose goes through a very careful vetting process uh just because you know we're putting thousands of dollars of our own money into the property so we have a lot of skin in the game and and we you know make sure that we install security cameras on in the front of the account in front of the property to just make sure that only the guests that reserve the place are occupying it and again I want to make sure that you know you have a peace of mind so you never have to deal with any of these tenants that's all on us and you know we have a really strong track record of you know never having you know these parties or damages that occur and even in a worst case scenario uh you know we have a strict no party policy and we also have um you know our million dollar coverage so if anything were to happen then your you know your property is obviously covered and then we also you know install you know noiseware noiseaware uh tools inside the house so if a decibel level reaches a certain amount and you know is disturbing the neighbors then we can address that issue right away um so you know very valid concern um and it's just of a big just as big of

14:13 a concern for us as well so we make sure that you know we have your bases covered on our end gotcha man yeah I mean that's still still not sure you know it is something that's a little different for me I would have to sit on it um but yeah I just I'm not I'm not too sure right now I'll have to look into it more yeah you know and another thing that we can do honestly just because I really think this is a great property so I would have to crunch some numbers but you know I could probably you know pay you a little bit more in rent each month because obviously you know I'm sure you're concerned about your return as well um so I mean if I were to pay you you know you know about 100 bucks a month extra per month is that something that you'd be interested in 100 bucks a month yeah I think I think that's something that I would be interested in so if you if you could do 100 extra a month then I I'd be open to doing okay yeah perfect again I'll have to crush the numbers and you know we can kind of discuss it a little bit more um sure in a little bit but uh so when when would you be available for us to sign the lease um I can be available here within the next week or so yeah so this Saturday I'm I'm pretty free if you

15:30 can do it then okay perfect yeah I'll I'll be in touch with you is is the number here listed the best way to get a contact with you yeah it's my cell okay perfect um so yeah I'll shoot you a text afterwards and then we can uh find a place to meet up and again if there's any questions that you have you have my number here as well now and so we can yeah can you send me all that um you just talked about to my email yeah definitely uh just yeah if you want to text me your email I'll shoot you over all the information here here Perfect all right thank you so much okay thank you talk to you soon so as you can see it's not that hard to close deals if you follow my Approach because unlike most people I've been on both sides of the negotiation not only do I do Airbnb Arbitrage but I'm also a landlord myself so I know exactly what they're thinking when the landlord's property has been bacon for a couple months they're desperate to get a tenant so when the deal happens they're also winning not just you so keep this mentality and I promise you you'll start closing more deals so from my experience it's going to take you about an hour per day for a couple weeks calling landlords to get your first guess step number six is getting started you're gonna need about ten thousand dollars to set up your Airbnb from scratch so here's a quick rundown you're gonna need about 500 for opening up an LLC and a hundred dollars for air DNA for your initial setup now this is going to depend on your area but let's say that their monthly red is going to be about two thousand dollars then of course we have expenses

16:46 utilities internet and so on the furniture element depends on the type of property you're going to be acquiring if you choose the right decor and Furniture it's totally realistic to set up your property that's good enough for about four thousand to six thousand dollars now if you think this is impossible that's because you're probably looking at the wrong places I'm going to talk more about this in the next step then you're going to want to pay your cleaners handyman and photographers that can range anywhere from 200 to 400 depending on your Market step number seven is to stand out from the crowd so one of the best ways to do this is by adding a theme to each room one of our properties we've added the Elvis theme and it's helped us significantly in terms of getting more bookings and you don't have to break the bank to furnish your place you can buy Great Furniture that doesn't break the bank and amenities from places like Wayfair Walmart Amazon Target Etc another way you can easily Stand Out is by offering an amenity that not many other airbnbs in your area have so for example if no one in your area has a pool table that is an easy way to stand out from your competition so let's use the Virginia property as an example so everything on this list costs about six thousand dollars so it's gonna cover everything from the furniture amenities Etc it's going to help you stand out from the competition you can take a screenshot here in a second step number eight is hiring your on-site team now cleaners are going to be the most important member of your team because clay Lewis is going to be critical for good guest reviews on Airbnb so make sure that you have a dedicated cleaner for the job now Pro tip larger cleaning companies might seem tempting but they can be way more expensive they also aren't going to be as reliable so instead aim for a solid cleaner who's available consistently now

18:02 the next person on your team is going to be the handyman this person is who you're going to rely on when any repair or maintenance issues Arise at your properties so here's some ways that I find a reliable handyman I like websites like Thumbtack and Angie's List now once you have your team in place it's all about coordination order your furniture and tie in your handyman and movers to be there upon delivery so you can coordinate all this via FaceTime move the furniture however you want to and then you want to make sure that call the cleaners to tidy up everything once everything's set up and the lastly call your photographer to come and take professional photos of the property now step number nine it's time to launch now before we do that you have to do your homework first you're going to want to look at the top performers in your area and then draw inspiration from their listings but don't just blatantly copy them in order to write a compelling description you're going to want to highlight all the amenities your property offers and don't forget to describe unique features that set your property apart you can use chat EBT to help you write a compelling listing but again remember to highlight all the amenities your property offers to pick your best photo as the main photo then your next four photos you're going to want to choose your second best third best fourth best Etc then all there is to do is to go live on your property so there you have it in no time you'll be ready to scale up on average a property can generate anywhere from 2 000 to 2500 a month in profit so that means within eight months you could be running four airbnbs hitting that ten thousand dollars a month Mark and before we wrap up this video I want to take a moment to share a deeply personal aspect of my journey that has shaped who I am today so my parents are immigrants from Korea and they work tirelessly to pursue the American dream and I watched them make sacrifices that Embrace hard work now

19:20 our relationship wasn't openly affectionate but their dedication really inspired me they wanted me to have a good education and have a high paying job but deep down I knew I wanted more my mom worked for 38 plus years and didn't take a single vacation for over 25 years and last year because I was able to fully capitalize on the Airbnb model I got her at Airbnb that pays for her retirement so she can stop working and spend most of her time with my son and I've truly never seen her happier in my entire life so I very well understand that you might not be wanting to do Airbnb be for a living you may just want to end your financial struggles help your parents out spend more quality time with your family Etc all it takes is one property at a time to change your life I'm actually going to be hosting a live Airbnb Workshop soon where I'm going to analyze properties live and go into much deeper detail and have a 30 minute q a session at the end it's absolutely free to join and if you're interested you can just check the description of this video to register also pin it as a first comment so I know I threw a lot at you just take a breath rewatch this video again and get those questions ready and again if you want to attend my free live workshop I'll personally guide you on your Airbnb Journey I'll see you there