This Tiny Home Airbnb Makes $550K Per Year... Here's How

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Not any more it doesnt

👍︎︎ 1 👤︎︎ u/woodmanfarms 📅︎︎ Nov 15 2022 🗫︎ replies
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imagine buying a piece of land for 140k and then cash flowing 550 000 off of it in your very first year does that sound like I don't know a superpower or perhaps it sounds like a little bit of fiction I thought the same thing except I happen to know a guy out in Waco Texas who did exactly that so I figured let's go out here and ask him ourselves huh I own a bunch of airbnbs and we'd make a couple six figures off of them but they don't look anything like this place I gotta be totally honest and so I want to figure out all the tips and tricks that actually lead to this being a million dollar a year property there's details all around from the toothpick set up like this to the coffee mugs to the little chocolate chip cookie that I already ate so I can't show you but I want you to take it away too because what if we all get everybody better experiences but we also make more money do it he turned a literal plot of dirt into an Airbnb hotel that's now booked out 95 percent of the time no big deal and so I figured Isaac why didn't you tell me all of your secrets so I could share them with my closest friends on YouTube [Music] five years old you decided to buy a property for 140k this here property then you turn in a short-term rental made about a million bucks a year all within the first year does that sound about right yep and then you did this extra thing that also sounds ridiculous which is that you automated the whole property and so essentially you don't have to be here all day slaving away you kind of look at your phone in a couple different things and boom people come in and check in yep and before this you would never run an Airbnb right you didn't go to college nope and you were an accountant that's right so naturally he wouldn't build a multi-million dollar Airbnb kind of astounding tell me why this I was collecting ideas for the modern Scandinavian Vibe I used to live in the Pacific Northwest and there's a lot more of this kind of architecture there and when I moved back I really saw an opportunity here to bring that same vibe to Central Texas [Music] Isaac how long did this take you to do nine and a half months from closing the purchase docs to opening the doors when you first had this place it was basically like an overrun jungle that looked something like this you picked this place out of all of them on Zillow and saw this talk to me about like that first day you showed up you got your 140k down that you got your dad and some brothers to invest in with you right I think I've always had some ability to be able to see potential the amount of trees that we had these gorgeous live oak trees these are just the flagship tree of Texas I just had that feeling when I saw this place I must have had like 72 dump trucks here it's 200 dump trucks 200. he does my kind of math this is contrary math I was the superintendent and did some of the stuff myself I was designing I was coordinating with subcontractors ordering materials thinking ahead I hired friends with excavators skid steers we brought like 200 loads of dirt in for the roadways we had to cut all the utilities in because it was just raw land but a septic system and there was a lot of groundwork so let's talk cash because this probably costs something when we closed on it I was like we're not waiting around for financing we'll get that part figured out we're on a timeline here we were able to immediately start work and some cash I had saved up four months later I actually got a construction loan approved so total construction loan was like 1.4 million nailed it so you basically are only in for a couple hundred K between you and your family and then whatever your line of credit is so it's not a multi-multi-million dollar Endeavor yeah 150k of cash and another 700 ish in the line of credit and the rest was a just short-term construction I love it this is one of those really important things to understand that it doesn't have to be Millions from you it doesn't even have to be hundreds of thousands of dollars from you key to actually running some of these businesses is understanding how to get OPM other people's money and leverage which is debt in an intelligent way this guy knows a thing or seven about that do you want to know the one key to business that's just really one thing whether you're an Airbnb whether you're in finance or anything else that you do and that's making your customer have magical moments those little milliseconds where they feel surprised delighted confused overwhelmed by your product set in a good way that's really important with Airbnb because what does that mean it means they tell other people about it that means you get free referrals which means you don't have to do paid ads which is a whole different game so Isaac has a really cool idea for this that he's turning into a magical moment in his Airbnb so we created this Commons area that has pergola and a fire pit and a dock and kayaking and swings after we opened the idea kind of just flashed off like a light bulb in my mind we should do a pool there are these container pools that take shipping containers and this is going to be a 20 foot by eight foot black so it matches the aesthetic of the cabins and so we poured this concrete right here and on Tuesday we're going to drop a container pool in right here it's got a big 10 foot glass window that overlooks the lake here then we'll have another thing we can add to the experience for people to come enjoy first of all who isn't into like those zero Edge plunge pools and then you get to have it in a shipping container which probably doesn't cost you hundreds of thousands of dollars how much does this thing cost it's about fifty thousand okay so we got 50k in cost we're gonna sink into this what do you think your Roi is how do you decide whether to spend on something like that and another part we just added I didn't mention is hot tub so we just added a hot tub to each cabin those were about 10 grand each tubs about 50 000 each so that's a total ad of about 120 000 and I upped the nightly rates to buy like a hundred dollars a night zero impact so far in our pace of booking right now that means we're gonna pay off in about eight months oh my gosh so cash on cash return how get your money back for putting your cash down on something typically when I look for an investment it's got to be three to five years now uh interesting in Airbnb land that you could have something returned that quickly do you typically look for a specific cash on cash return when you're doing big ads like that like you need it back in a year or uh I don't actually drill down too hard I've been playing around with like pay-per-click with social media organic is my big push because I actually want an organic following collecting emails I'm developing a really robust automation with tons of of emails to to leverage what we have there the other way I look at it is we're building a moat as Warren Buffett would say so even in a recession if we do have to lower our rates we've got amenities and nobody else has and some of these things like the pool it's an economy of scale every one of the guests at the seven cabins can use it we're not having to multiply that time several different units well I get concerned I own a bunch of these bad boys if a recession happens they're going to get hammered but you have some takes on which ones are not going to get hammered which ones are those yeah anything that's actually designed cohesively and uniquely in a market that you're in in the Pacific Northwest this is going to be a lot more common in Waco or Central Texas that's a lot more charming and unique I think experiences actually providing activities amenities a dock there's kayaking there's paddle boarding actually I think a recession who knows time's going to tell but is potentially going to benefit us because within two hours of like 15 million people and in a recession a lot of those people that would be going overseas for their trip are going to be taking a shorter staycation so we just have to educate them on who we are and what we are and how unique it is and they're going to come they already are but I think we're going to see more and more of that yeah I think you're right you know I was looking up the numbers there was anywhere from three to seven acts more local travel during recessions and so if we take that idea of you have something here that is three things it's accessible from a price point perspective it's not crazy but it's experiential in that there's this cohesive element you talked about you you feel like ah this is a Live Oak Property when you come here third is it's uh it's local enough to a big metropolitan area because I mean Waco does not seem like a massive tourist destination but like I like the idea of hanging out here with my fam and like beating Isaac yeah can we all just let out a giant sigh at the fact that the tax season is over with for businesses there's like this secret that maybe you don't know about running a business which is if you buy a business most of those businesses have no books they don't actually have P L's they don't actually file taxes correctly half the time it is a mess but there's a solution to that that I found and now I try to make all of our portfolio companies use it and their name is bench so anyway the coffee talk is that these guys automate the bookkeeping p l tax filing process and they do it all online and they make it super easy and they give you this nice clean p l and you don't have to pay a bajillion dollars so thanks bench hey let's talk about shared spaces and communal spaces I feel like in a world in which we're increasingly on these things Non-Stop and not engaging like this with other humans creating moments for people to connect sort of asynchronously and without you having some like you know glorified happy hour or something is really unique so what did this cost for you to put it together and how did you think about creating this space What are some trip tricks and tips you have there yeah so we're originally actually going to put a cabin right here in the Commons area but we sort of sacrificed that idea with the when we thought about the amenities that could be a communal space for everyone it cost us about 50 to 55 000 for the Landscaping the pergola Etc the dock we wanted to incorporate as much as possible families I would say are our target audience though we can host a huge Spectrum I just thought of like okay what are things we can incorporate swings we could have a hammock for Dad to sit and read in we could have kayaks for the teenagers to paddle around in we could have cornhole we'd have a picnic table we'd have the campfire to move towards at Twilight and whatnot so we really packed a lot into the space on a pretty low budget and I've been shocked at how many people utilize it and other families and individuals overlapping and coming together random strangers becoming really great friends here group event so you do group events here but you do them in a way that's kind of low maintenance for you so talk us through how you do that why you do that you could probably charge 10x the premium but you've decided to do a certain way what's the deal I'm keeping the whole operations and management overhead as low as possible to make this as automated as possible and so we essentially have no overhead except a random maintenance check and Landscaping we we allow group events we have a listing on our website where you can essentially buy out the whole property so all seven cabins and then this just sort of comes as a bonus and so we've had weddings here corporate offsides several family reunions and I've I've really been shocked at how how much interest there is for the whole place you try to keep this reasonably priced that's not something a lot of business owners say right they're like I'd like to increase prices continuously what's your thought process behind that I think it's relative because I've definitely heard complaints so you're so overpriced so you have to find the happy medium of who you're trying to please you can't please everyone that's the first thing I wanted to be affordable for middle class families to come out and at a really elevated experience that frankly some of these people have never even had and therefore build a super loyal organic ecosystem of guests that just comes back and back and back and like you said earlier they become your greatest marketing mouthpieces so we've had people since opening seven or eight months ago that have come back three if not four times already shows a sense of the Loyalty that we're building I love that so you get pretty chummy with influencers and partner with them for this property said influencer that's basically grown your social media in a big way and led to a ton of bookings most people are not thinking about that for their airbnbs they don't even have their own Instagram what's the thought and break me through that crazy story about the first one you partnered with and how much you got from it so it all started because we got suspended on Airbnb like a couple weeks after we opened which I thought was the worst thing that ever happened ended up being one of the best things that ever happened because it really was a reality check of we're at the direction of our marketing was going and not being Reliant overly reliant on one platform so I just started calling all my friends didn't know anything about social media at all he started posting high quality content somebody said hey you should talk to these travel bloggers in Dallas so I gave him a call and they said yeah we'll post it tonight for 950 bucks we'll post a giveaway essentially the rules are you follow my account and you follow his accounts and you'll be entered and for a I think it was a two night stay so I paid him 950 bucks gave a two night stay away and from the first giveaway I got about forty thousand dollars of direct bookings and like 5 000 Instagram followers from zero and when that happened that was like a Eureka moment for me I was like we have struck gold on riverheaded so then it was actually pretty easy from there I just like started following the crumb trail of all the influencers I could work with there were some hits and misses but for the most part I started figuring out who it was that I was I was going after and yeah we grew from zero to 50 000 in seven months and no big deal and we can earned like 400 000 of direct bookings just from social media Instagram as the funnel what ah Isaac okay I need to talk to these influencers because what a killer strategy he gave them 950 bucks they basically 10xed their return and More in 24 hours not to mention the fact that they probably grew their followers and sand them with his it's a brilliant strategy nobody's using it except this guy and don't let the smile and the blonde hair and the Very you know American looking-ness for you this guy's smart I didn't tell Cody about the real diets that I had uh I had like probably 10 or maybe 15 percent of the influencers I reached out to fooled me and their following was actually fake and I didn't do enough due diligence basically just checking their posts and seeing how much engagement there was so most of them I didn't actually have to pay but I wasted a few free night stays on them the other part that's really cool cool is you don't have a property manager I pay my property manager 25 of everything that I earn in my airbnbs but you do it all in-house in a super automated way walk me through what that looks like yeah it's pretty cool so there's about six or seven softwares that we've stacked together from the property management software like the Hub and that coordinates calendars between platforms so Airbnb your direct booking engine verbo all the different OTAs and then it also automates messaging so you can come up with a pretty sophisticated sequences for everything from the reservation creation to check-in instructions to check out ask for a review so I really fine-tuned those over the months since we've been open and eliminated a ton of unnecessary human input there and then we have a pricing software so it uses Ai and some parameters that you set to maximize occupancy and revenue together that's done really well for us we're like 95 occupancy that's huge by the way just so you guys know that's a lot you're one of like my favorite type of entrepreneurs the very driven but lazily efficient type of entrepreneurs it's got some big money energy in this thermostat basically this is automated so he never has to worry about should the temperature be up should it be down am I wasting electricity he has everything on a system that holds saves energy also makes the experience really really cool and it's not just thermostats foreign it's also lights like these bad boys which are all on a Time control system that he has perfectly completed basically because he slept here and would feel what would it feel like to be a guest and wouldn't it be lovely if they just dimmed in the evening so we dimmed up smart everything inside that you're interacting with that talks to the property management software so it knows when reservations are it plugs unique codes into the messages to get in the doors that only work for the reservation it adjusts the temperature to my pre-selected range saves energy in the off time the lighting only comes on from the certain hours which is programmed around Sunset to such and such so it's really really efficient what you have to be aware of though is that it's illusion to say you can fully automate your property but it's about finding the balance between personnel and software and I would say our ratio is like 80 software 20 Personnel so we split that between two key people we've got a guest Communications manager and I pay her 200 bucks a week and all she does is just monitor incoming and outgoing messages and sometimes she has to get involved if there's a unique question that we don't have addressed in our automations and then the maintenance manager so he's just here every day eyes on the property boots on the ground if I'm in Europe he's here to see whatever's going on and coordinates Landscaping contractors Etc so it's totally hands-off for me when you see a sign like this oddly humans have this thing in our minds where we associate with First Impressions a feeling of luxury a feeling of cheapness a feeling of validity and I never thought that signs would be that important for something like an Airbnb but you did and so what's the story behind even the details you do in the signs these small details like you said that a lot of people would brush past and sort of raise their eyebrows and said why are you spending so much on signs but sure enough I've received hundreds of comments the sign is just beautiful and it's so cohesive and minimalist I think there's a quote from Steve Jobs when he was designing the iPhone about the packaging being as important as the product and this beautiful tactile experience you could apply the same thing to the sides for your cabin dirty [Music] Isaac and I'm sure you've already seen this because you had this viral tweet happened is that you tell people that you automate a property that you make hundreds of thousands of dollars and then first they go liar no you did it and then second they go you're taking advantage you're like no I'm not I'm providing an incredible service that people are really happy about and one thing that I think really humanizes your story is you had a pretty nasty fall that led to you having to not be involved in every aspect of that and prying your little control freakans off of it what happened about three quarters of the way through the project I was I popped into one of the cabins one day to help somebody install a spiral stair and my ladder fell out from underneath me I fell like eight feet on the concrete and broke my pelvis but I found myself laying on a hospital bed for a week multiple surgeries it really shook up my perspectives and this actually helped me I think like you said make the business more efficient and really focus on the family the time away from work I think there's one thing that's really important for us to talk about anytime we talk about building businesses is building businesses is really about serving humans right and the airbnb's gotten a bad rap lately airbnb's gotten a wrap of taking away people's house is but what about giving people an escape you are in your house during Corona were there moments where you wish that a stranger might open up their house for you might create a special magical moment for you and your family and I think it's those moments we as humans as Americans have to remember together that people like this guy decide to do for all of you let's play a game of where should we put airbnbs in the world um why'd you choose Waco besides you're from here talking a little bias but also you've had a bunch of other drivers that I think are super smart so give me your framework so Waco is first and foremost very centrally located in Texas Texas is a really big state both geographically and as far as population and it's just constantly growing more and more people moving here from California New York et cetera it's not naturally the most beautiful state that's I think actually coming from a hardcore Texan so it's okay for me to say that but my idea was let's find an area that's not so pretty the land is cheaper but we're in proximity to a lot of people who want to take a staycation or a vacation and then create something that feels like its own little world we chose Waco we're two hours from about 15 million people coming here to get away from Dallas Austin San Antonio really the whole state at this point well also I think there's a couple Secrets here which is you've got a university that's a huge draw right then you've got that proximity to big cities and so you have sort of these like attractions that come to it as well let's think about where else in the world we would we or Would we not put an Airbnb I'm going to throw out some names and you tell me yes or no okay fair uh let's start with a few I think I know what he's gonna say with this one Rob Bill might be mad uh Joshua Tree no for me why overcrowded everybody's doing that it's a cool thing to do how about Smoky Mountains nope what's that like the highest concentration of airbnbs and so the pro is you always have the insurance policy of the park but the con is standing out is really hard to do because there's like 15 million others yeah plus Disney itself kind of hard to stand up to uh Fredericksburg uh first for yes love it yep I honestly Texas I'm just gonna give you a hint is very warm so most places in Texas I'm going to like yeah what about San Diego yeah I think San Diego is primed for it really nasty hotels and kind of off the beaten path a little bit but still within proximity to a bunch of people absolutely yeah if you got one in San Diego tell me oh come I want to come check it out I love San Diego but Airbnb is not the greatest how can you tell if somebody's a perfectionist voila no OCD in this establishment a couple things I thought were cool when you were talking to me about this place is you were like we bought everything online basically at first you're like all the Furnishings we like basically bought them online but I remember there was one thing that you were like we bought so many of them and they were never good do you remember what that was pillows and rugs yeah exactly so why is this that's actually really important shipping back rugs huge pain often can't do it and even but pillows are sometimes non-returnable so what was the deal and like what do you do instead where do you recommend getting those because those really tie a room together absolutely they're super important as just those finish it's like the last five percent does 80 of the work um but yeah like the pictures were super deceiving it's like there'd be these prints and textures and I was like this is exactly what we want we get it and it was print like screen printed on to shiny it was just awful so it was so bad that like I would return some of these pillows and they wouldn't even take them back they would just like say just keep them we'll give you the refund so it was obviously junk um but World Market was really great and then I actually kind of I went with CB2 West Elm Isaac should we tell them about the giveaway let's do it we are going to going to fly people out here to stay in this place for two nights for free don't sleep on this or you're not going to be sleeping here she should be on our next video make sure to subscribe it's going to be insane I don't think you're ready for it you know how and say it's going to be okay same I hope that was intimidating or not because my videographer is now laughing hysterically at me which is fine it's not like I have phds or mbas or you know I'm super serious but you should be on the next video yourself
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Channel: Codie Sanchez
Views: 745,789
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Keywords: codie sanchez, airbnb
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Length: 24min 13sec (1453 seconds)
Published: Sun Nov 13 2022
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