Airbnb Arbitrage: How to Get Started

hey what's going on guys this is daniel one-half of the Kwak brothers and we got my friend sam the other half of the Kwak brothers that's right baby and today we're going to talk about Airbnb rental arbitrage yeah baby hey what's going on guys it's the Kwak brothers it's daniel and she and Chi right yeah it's not sam right it's chi right which is like the Airbnb version of sam right almost I would say right but today we're talking about uh the method of Airbnb rental arbitration yep yep yeah Airbnb arbitrage is super cool in case you guys aren't familiar it's when you rent a property from up from a landlord and then you put it on airbnb to make a profit so for example if you rent a property for three grand everything you make after that is your profit that's arbitrage right and i i love that you know because you don't you don't need to own the property right you don't need to own any real estate you don't you don't have to have a whole lot of capital to start right and it's a very minimal way of of building some great cash flow right but let's go before we go ahead and dive into the nitty gritty of certain things guys don't forget to subscribe to our youtube channel click like and also share it as well if you have friends that are interested in this topic all right we got that over with let's go ahead and start with question number one so you already kind of answered what is airbnb rental arbitration right and so first question would be number one cheat how do we find stuff like this how do we find these opportunities super easy the most important thing that you need to do when you start your arbitrage business is to find out what you can earn first right so you find what you can earn then you find out how much it costs you to to obtain a property that can earn that amount so the first thing you would do is go to this site called airdna.co okay put in your zip code or wherever you want to start your airbnb property and then scroll through it's going to show you a map with all the listing currently on airbnb and just highlight your cursor over those listings and it'll tell you two things one it'll tell you what these properties are charging per night and two it'll show you how often they're booked so the occupancy rate once you have these two parts you can figure out approximately how much the property generates per month with that number you can now go to zillow for example and figure out how much it costs to rent that property so you put two and two together if people are making say eight thousand dollars a month with the property and it cost them say three thousand dollars to rent it then there is roughly about five thousand dollars of profit don't forget to subtract your utilities and your cleaning fees yeah which is typically how much of your gross income would you say sure so so the the rule of thumb i use is not 100 accurate but i just use it quickly to forecast is 10 percent of rent for utilities and 20 percent of rent for cleanings so back to our example if the property is three grand then 300 would be utility 600 would be cleaning so your total all-in price would be 3 900. if you make 8 grand that's 4 100 of profit yeah and that's pure cash flow pure cash flow 100 like you know like there's i can't think of anything else that makes this much cash flow this quickly because if i really wanted to i can go out there right now and go jump on zillow and lease a property in chicago right now probably in the next hour right and then have all the properties have all the furniture shipped and started airbnb and it'll take us one day to start airbnb imagine having to close a real estate transaction in one day it's not possible yeah but with there be with rental arbitrage you can it's it's fast it's executable right you know so yeah so we kind of covered step number one which is you know hey you want to go on zillow you want to see what the rents are you know you want to find the data in terms of how how much you'd be able to make right on airbnb for that market and you want to kind of see what the most bang for your buck let's move on to step number two right what is step number two is it approaching the landlord with this idea yeah so after you find the property that you want the next thing you have to do is make sure the landlord is comfortable with your idea be transparent be open and be on the same page a lot of a lot of times i hear these horror stories and in fact i i was once part of a horror story because i didn't know that it was against protocol to put their property on airbnb without letting them know without it without putting it on contract right without consent so what ends up happening is that they if you don't let your landlords know of course they'll be upset not everybody's into the idea of having multiple people use their property right but as long as you let them know ahead of time and they're okay with the idea there's nothing wrong with it 100 legal uh whether it be local or on airbnb's terms of service the last thing you need to do is research your local regulations if your local regulation supports airbnb or if there's no laws at all means it's okay for you to do it avoid cities with an all-out ban you know i'll give you i'll give you an example like like hawaii has an all-out ban new york city has an all-out fan but most other most other cities have supportive law so they they want to support you when you start your airbnb the only thing they're asking for is a transient rental tax usually falls about uh 10 to 12 you know very similar to the hotel tax but once you have that covered you're good to go yeah now obviously a lot of people will probably be asking well chi where where would i go to find out about these regulations and things that i should foresee yeah super easy so your local city hall will definitely have all the answers just call them up and and they'll tell you or if you're you know if you're too lazy to go to city hall like i am i just asked my good friend google yeah that's google's a great guy you know i'm sorry it's 20 20. great person right both female and male step number three let's say they agree the landlord said you know what she you're solving my problem because i've been trying to rent this thing out for months and i can't find a good tenant right and they're more comfortable with you let's talk about furnishing so once you kind of get that agreement right what's step number three is it furnishing the place what do you do yeah 100 so it depends on what you end up renting right so what the cool thing about airbnb is that you can rent or put any type of property onto their site and rent it out to people you know whether it be a tent or a yacht or an rv but typically in the arbitrage space it's either a home or an apartment if you have either a home owner apartment the next step is to furnish it right um i would suggest that you avoid things like craigslist or let go you know there's a lot of paid courses out there that suggest these things which blows my mind because there's absolutely no way you can scale your business doing that imagine trying to coordinate you know a craigslist meeting for one chair and then another one for a sofa and another one for for a dining table and they're all at three different parts of of your city i mean how much work is that you just have to carry everything loaded you know and negotiate what if they flake right that craigslist you know it's just not reliable so what you do is you create your shopping list and have it ready and just have everything delivered to the property you know this way you can scale you know that that list is repeatable it's profitable it's proven and you can scale really really really quickly yeah and i'm actually really glad you brought that up because well you know at the end of the day with airbnb you're providing an experience for your guests you know and they're sitting and laying down in some dingy old couch that's got stains or something like that's not a good experience you know it it depends on the look that you're going for you know some people go for the eclectic look but i just like a nice clean polished look yeah absolutely and you know and most most people would just based on your experience depending on the size of the unit right or the property what's a good rule of thumb you know in terms of furnishings yeah so so for me in the san francisco bay area it typically cost me between twenty to twenty five thousand dollars to start one airbnb property and out of that twenty to twenty five thousand dollars usually around eight thousand dollars of that is my first month's rent and security deposit so it's about ten thousand to properly start up a good airbnb with decent furniture and all your linens and towels and and all your replenishables like shampoo and which would you say that's probably for like you know a four bedroom house a three bedroom house or is that for like a studio apartment um that's that's for a larger property so i no longer do with smaller properties just because in my model it works better with a larger property so i used to get a lot of smaller properties and they are profitable and they're easy to run but i just don't have enough cleaning staff or i don't want to manage that many cleaners to have them go to every individual you know little studio so for me it's all about automation i'd rather make a little bit less money and just have a super smooth sailing system that's right so before we go on to the next step i want to get a little bit more specifics i'm sure there's a lot of people who are detail-oriented who are thinking about this so you mentioned stuff like you want to have shampoo conditioner dish soap what are some other things that a lot of people don't foresee that for you as a host you know it's a it's a demand right it's a necessity to have in the unit it's not it's not a material thing is just reliable staff members right most people fail in this business because they can't find reliable cleaners so i think that's probably one of the key components of starting a successful airbnb business is just having reliable staff because there's a lot of turnover right so yeah you definitely reliable cleaning staff is is very key so last step here so we got you know we got the property we got the area landlord agrees right we furnished the unit now it's time to put it on the platform right it's time to put it on airbnb what are some helpful tips that you would give to people in terms of getting exposure to your listing uh in terms of you know how it is how it's presented pictures obviously is a big thing what are some helpful tips in terms of putting it on airbnb yeah so if you guys go on airbnb right now or even tinder you know use just make sure that you just just observe on observe the photos that you see you're more than likely going to connect with somebody with a high quality photo right so if you're not a photographer don't use a camera and try to take your own photos for you know for your airbnb property because at the end of the day your listing is really online dating and whether or not someone books your property or swipes left or right it's up to your photo you're telling your story based off of your photo so hire a professional to take care of it and let them do their job you know let them put your best face forward and this all goes back to the furniture as well because again if you have craigslist or let go you have a property that looks like a garage sale whereas if you have uh if you do you spend a little time to plan you'll have a really solid design you'll have the right color scheme and everything to really have the property to have its own personality you know and you want to be able to present that with the audience yeah and design is huge you know and especially when you're talking about families traveling you know it's such an emotional decision you know a lot of times when you make a decision on where you want to stay it's like oh my gosh that place looks cool that place looks awesome you know that's that's everything you know so we've kind of covered the whole basis in terms of starting out what's step one all the way to hey we're putting this thing on a platform like airbnb what would you say after doing all that some important key things for our audience to consider in managing the unit hire help definitely hire a lot of help like for me i'm terrible at responding to emails and texts so the first person i hired was my inquiry manager right an assistant to just answer everything for me i didn't hesitate so just it's up to you personally because my inquiry manager has no problem doing that you know she can handle 500 properties all on her own but wow it's just like for me i can't handle even one like i'm just like that guy that can never properly text or respond uh through email it all plays down to what your strengths are and what your weaknesses are yeah and so you hired an inquiry i'm sure you also hired cleaners yeah tons of cleaners you hired a maintenance guy right because i'm sure things happen right so here's here's uh one pro tip i like to work with immigrants just because you know not not to say that us americans are anything wrong with us it's just naturally i found that they tend to work a lot harder because they have more on the line they gave up a previous life to come start a brand new one here so they tend to be more willing to contribute and to work to make sure that they don't lose their job with you you know because they have families to feed and they made a conscious decision to move their entire livelihood from way where they were comfortable to come to america to start a better life right so they're always putting their best foot forward you know what that makes a whole lot of sense because you know we're working together and i'm an immigrant so you know you're you're practicing what you're preaching right now man yeah i mean so you know we talked about you know somebody who takes care of your inquiries cleaner maintenance guys you know all all immigrants of course right is there any other uh person on your team that you feel like that you you've got a lot of value from um that's that's pretty much it you know higher i mean like the rest of it just falls in place naturally if you're starting a bunch of property one area you can end up working with the same photographer same movers things like that like all that all that is pretty easy to figure out but um the most important part of this is you know hire the right cleaning people hire a great inquiry manager and it'll relieve you of probably like 90 of all your tasks yeah and speaking of which what's a good way to hire the right person it's all up to you you know it's all up to your gut feeling and interviewing the right person if they feel good to you you know and you connect with them you feel like you can communicate well then that's the person for you like there's there's a million different ways um say for example for cleaners you know you guys can try craigslist but there's you know there's a million other ways you know i can go on forever yeah and you know one of my favorite ways to acquire even for my real estate team my contractors and attorneys you know the best way has been referrals you know i go to somebody i trust somebody i have a good relationship with already say hey do you know a good cleaner do you know a good contractor so that's been a good way that i've found people and i'm sure you've gotten a lot of referrals as well yeah tons tons so after i hired my first cleaner they referred more and more cleaners as we expanded you know so referrals 100 a very good legitimate way so in terms of rental arbitrage you know what any last words to our audience and viewers before we close this video out 100 go for it do your research first make sure you're making at least 2 000 of net profit after all expenses are paid and then don't hesitate it's predictable it's repeatable just go for it absolutely and thanks for being with us and thank you guys for watching don't forget to subscribe uh like this video and share it with all your friends thank you guys so much i'll see you guys in the next one oh wait don't forget chi at the b b university that's right that's right we can't forget that

Channel: The Kwak Brothers

Views: 38,575

Rating: 4.959084 out of 5

Keywords: Airbnb Arbitrage, how to start an airbnb business, Airbnb Business, airbnb, airbnb without owning, airbnb without owning a property, The Kwak Brothers, Chi Ta, airbnb someone elses property, airbnb course, airbnb getting started, airbnb business for beginners, airbnb arbitrage for beginners, airbnb arbitrage 2020, airbnb arbitrage pitch, starting an airbnb business, how to airbnb, airbnb automated, airbnb host, rental arbitrage

Id: aLHCGtgyqLQ

Length: 15min 36sec (936 seconds)

Published: Mon Mar 02 2020