Investing in Airbnb Rentals with Andrew Keene

In this episode, Bill talks to Andrew Keene, CEO of Alpha Shark Trading. Andrew started trading in Chicago before quickly deciding to jump out on his own and start a company. Today, he’s not only a contributor to CNBC and the author of three books, he’s also a successful AirBNB host. Listen as Andrew shares how his experience in trading helped him to become a leading AirBNB host and short term rental master.

Time Stamped Show Notes:

  • 00:07 – Bill introduces Andrew Keene
  • 01:25 – Andrew has been a trader for a long time
  • 01:36 – There’s always an alternative investment
  • 01:49 – Andrew bought a place in San Diego
    • 02:03 – “San Diego is very profitable”
  • 02:30 – The return on investment for $350,000 is 35%
  • 03:10 – There’s a petition in San Diego to ban short-term rentals
  • 03:50 – Andrew is comparing a lot of smaller units
    • 03:55 – If you put a one-bedroom and two-bedroom unit in AirBNB, the price is relatively the same
  • 04:25 – “Chicago is a little bit difficult because you’re going to kill it in three months”
  • 04:37 – Andrew’s cash flow from his San Diego property
  • 04:57 – 80% of the people on AirBNB are just trying to get an extra income—that’s it.
  • 05:02 – One of the biggest problem with AirBNB is this—it’s under almost constant litigation
  • 05:16 – 20% of the AirBNB hosts are “Super Hosts
    • 05:43 – Andrew has yet to become a Super Host, but he is trying
  • 05:54 – Advantages of being a “Super Host”
    • 06:08 – AirBNB will promote you
  • 06:27 – Andrew is starting a fund
    • 06:37 – Andrew has a personal account from trading
  • 06:57 – The big thing is litigation
  • 07:05 – AirBNB is currently suing San Francisco, where they started
  • 07:17 – Cities like New York are a little risky
  • 07:28 – People are now after a premium for a house because you can AirBNB it—it’s inflating the cost for 1st time homebuyers, particularly urban home buyers
    • 07:34 – If AirBNB gets shut down, you can still sell your unit at its original price
  • 08:00 – ROI is still there in long-term rentals
  • 08:06 – Premium for AirBNB is new and fresh and people don’t know about it
  • 08:11 – There’s an AirBNB conference in San Francisco next month AirBNBopen.com
    • 08:24 – There will be about 6,000 hosts from around the world
  • 08:30 – “There’s a whole ecosystem around AirBNB now like there’s an ecosystem around Uber”
  • 09:10 – Andrew is treating AirBNB rentals as a long-term investment
  • 09:35 – Andrew doesn’t believe in the stock market as a long-term investment
  • 10:37 – Bill discussing Adam’s take, from the last episode, on property management and AirBNB rentals
  • 11:06 – Bill’s team is currently working on the pitfalls of AirBNB
  • 11:30 – How do you become a hotelier and a real estate investor at the same time
  • 12:00 – Andrew puts only a percentage of his net worth to AirBNB and not 100%
  • 12:30 – There are guests who stay longer than 3-days and make a copy of the key so they can go back at the property
    • 12:38 – Electronic key is an option for keyless entry
    • 12:53 – Nest
  • 13:00 – Apps coming out for AirBNB
    • 13:05 – Cleaning services app
  • 14:10 – Do you think AirBNB will go away?
    • 14:19 – “No. They are fighting and they have enough capital to have huge legal fees”
  • 15:05 – There are hosts denying guests
    • 15:30 – Charge the cleaning fee and service fee
  • 15:45 – Instant booking is getting popular
  • 16:35 – Andrew has never rejected a guest
  • 16:40 – Andrew is using ReVestor and is impressed with it
  • 17:17 – How ReVestor help with the negative stuff
    • 18:09 – “Think about the worst case scenario”
  • 18:20 – Books that Andrew recommends
  • 18:48 – Andrew’s occupancy rate is 92-95%
  • 19:00 – Andrew’s cash flow is $20,000 of $70,000
  • 19:59 – Connect with Andrew through his email

3 Key Points:

  1. Nothing in life is not guaranteed, and it sure as heck won’t be easy.
  2. There’s a whole ecosystem around AirBNB, just like there’s an ecosystem around Uber—that creates long-term stability.
  3. There’s always an alternative to traditional investments.

Revestor will run the average daily/monthly rental rates and average occupancy rates over live listings / homes-for-sale and will show you the properties with the most profit potential. View properties by the highest cap rate and cash flow. The platform will then allow you to adjust the numbers accordingly on each listing (see an example of this in action at the 17:30 mark of the video). Sign up for a free account here.

Resources Mentioned:

Credits

Interview w/ George You: Rental Property Management

In this episode, Bill talks to George You, owner of several successful property management companies that have offerings in both the short-term and long-term markets across several areas including Big Bear, Mission Beach, and Cabo San Lucas. Listen as George shares his strategy for keeping both investors and customers happy, and how he has mastered the art of spotting properties ripe with potential.

 

Time Stamped Show Notes:

  • 00:09 – Bill introduces George
  • 00:53 – Bill and George met in the Entrepreneur’s Organization
  • 01:13 – George’s vacation rentals are in Big Bear, Mission Beach, and Cabo
  • 01:20 – George works a lot with investors
    • 01:30 – “We make sure we can get the income they’re expecting on their properties”
  • 01:42 – Most of George’s long-term rental properties are in San Diego
    • 01:49 – They have 40-50 long-term rental properties and 80 short-term properties
  • 02:19 – George charges a management fee of 5-10% depending on the number of units on the long-term rental side
  • 03:05 – The advantage of having a property management company for a long-term rental property
    • 03:15 – No hassle
    • 03:25 – Be able to look at market rents constantly
  • 03:50 – Short-term rental property management fee ranges from 20-30%
  • 04:33 – 3 phases to get a good review from guests
    • 04:35 – Booking stage, arrival stage, and post-booking stage
    • 04:42 – George automates everything so guests can have a pleasant stay
    • 04:57 – George started an amenity program
      • 05:13 – Guests can enjoy one free amenity per guest per stay
    • 06:00 – Booking online is through their software or different channel partners
      • 06:15 – 50% of the guests book online and 50% still call to book
    • 06:30 – What would you say to an investor who thinks that the charge is too much for them?
      • 06:43 – Most investors don’t have a software where they can push a property out to all channel partners
    • 08:12 – Investors can actually save money by going through a property management company
    • 09:26 – George’s software recommendations for those who want to manage their own property
    • 09:54 – For investors to be successful in short-term rentals, the biggest thing is to research and talk to people who have been in the field
    • 10:43 – How to find the best ROI
      • 10:54 – Find a property that has the potential to stand-out from the usual
      • 11:54 – “The more occupancy, the higher rents you can get”
    • 12:26 – George has designers that can recommend for furnishings or be available for design consultation
    • 12:48 – Coordinate the colors of furnishing to enhance the ambiance of the place
    • 14:15 – Short-term versus long-term?—it depends on the property
    • 14:36 – In Mission Beach, George has 80 vacation rentals, 60 in Big Bear, and about 100 in Cabo
    • 15:02 – George will accept properties close to Mission Beach
      • 15:20 – Charge is 20% on short-term rentals
    • 15:37 – Team size
    • 15:50 – Get in touch with George through his email
    • 16:03 – “We offer investors customized proforma and guarantee what we’ll be able to do for them”
    • 16:27 – Revestor.com is a pre-due diligence tool for users to run the numbers and kick the tires
    • 16:47 – How do you handle a bad review?
      • 16:53 – Handle it publicly. Respond and be real
      • 17:10 – Handle it directly with the person. Reach out and ask what you can do next time to help take care of them
    • 18:10 – “Do your research, talk to the professionals and learn the business”

3 Key Points:

  1. Over correct the problem and take care of the people.
  2. Figure out a way where you can add value to the property.
  3. Never discount your price; just add value and bonuses.

Resources Mentioned:

Credits:

Show Notes provided by Mallard Creatives

Interview w/ Adam Dailey: Investing in Short-Term Rentals

In this episode, Bill talks to Adam Dailey, an entrepreneur and AirBNB investor/host. In addition to his love of entrepreneurship and AirBNB, Adam owns a beer marketing company. Listen as Adam shares his strategies for becoming a successful Airbnb host, identifying properties with true earning potential, and side-stepping those cumbersome HOA fees.

(SIDE NOTE: The audio quality is not the best but please bare with it because it is WELL worth it!)

Time Stamped Show Notes:

  • 00:09 – Bill introduces Adam Dailey
  • 00:10 – Bill and Adam met at Entrepreneur’s Organization
  • 00:20 – Adam’s background is in marketing and he now runs a beer marketing company
  • 00:30 – Adam has three properties available on AirBnb
  • 01:25 – Adam started with his place in Austin, which he rents out for South by Southwest
    • 01:40 – Adam bought and found everything he needed for the house in Home Depot
    • 02:30 – Adam’s place is good for 5-7 people
  • 02:45 – There are guests who won’t clean the place after their stay
  • 03:20 – Rent Like A Champion
  • 03:58 – Adam doesn’t use a management company
    • 04:10 – Adam wants to manage the place on his own
    • 04:20 – Adam’s son was born in one of the houses so it has a sentimental value to him
  • 05:18 – Adam’s stand regarding HOA fees
    • 05:24 – None of Adam’s properties have HOA
    • 06:00 – “There’s a way around it and as a business model, there’s a lot of people doing that”
  • 06:27 – Adam’s recommendation on people finding properties
    • 07:05 – Adam likes the downtown properties because of the businesses coming during the week
    • 07:35 – Guests would normally limit themselves between beaches and downtown
  • 08:08 – “Don’t look at the city. Look at the neighborhood and know your niche”
  • 09:10 – Ideal price per unit is $500 per night
    • 09:20 – “If you have a higher starting price, you get a higher level person as a guest”
  • 10:15 – Bill talking about Pablo who has a motel and turned it into Airbnb
  • 10:40 – When you have a hotel turned into an Airbnb, it is easier to run and control everything
  • 11:23 – Adam has a system for smaller scale properties that automates everything
  • 11:38 – Reviews are important
    • 11:56 – Adam has a welcome basket for the guests
  • 12:37 – What the host is getting will depend on how big the transaction is
    • 12:44 – In San Diego, the guest is going to pay an extra 10% of the hotel tax
  • 13:29 – Adam charges the guests whatever he charges the cleaning people
  • 13:57 – Adam will only stay in San Diego for now
  • 14:33 – Short-term rental is a good business model
  • 14:40 – Short-term and long-term rental properties rates can be seen at Revestor
  • 15:48 – “Research and be a sniper”

3 Key Points:

  1. Don’t look at the city. Look at the neighborhood and know your niche.
  2. If you have a higher starting price, you get a higher level person as guests—eliminates potential problems before they start.
  3. Research and be a sniper.

Resources Mentioned:

  • Rent Like A Champion – One episode on SharkTank that is similar with Airbnb
  • Revestor – Bill’s website where you can find short-term and long-term rental rate of properties

Credits