Mike Minutes Mastermind 06/19/2023 - Airbnb Education

What's up, everybody? Hope you're having a fantastic Monday. Now, today we're doing something a little different. Before we do something a little different, I need to get the shareable link and put it in the Facebook group. But I opened up my questions thing and there's just one question. It was about Airbnb, so I was gonna screenshot it. I was gonna put it on the Facebook group like I usually do. And there's just one question. But I figured I'd make a quick video and go over everything I've learned about Airbnb and talk specifically about that today. Because there's just one question about it. So let me share my question. Present. Share question. Mastermind. Doom. All right, Dustin asks. I know this topic is that is at the very top of your mind. I think you're joking. Okay, how is the Airbnb in Mount Vernon doing? What do you dislike the most about having Airbnb and what would you say that are things to look out for when looking at buying one? Okay, this is fun. Let me just delete this out.

Great. All right, let's talk about Airbnb. What I've learned well, do differently, etc. Okay, so first thing is you got to compare what you're making on a short term rental, that is Airbnb, vrbo, whatever you want to call it, versus just getting a long term tenant. Because the amount of work on a short term rental is exponentially higher than a long term rental. The short term rental is usually less than 28 days. This is gonna be an Airbnb. There's way more work involved because you have to clean between every single one. They have questions, they have problems getting there. They have a whole bunch of stuff that happens. Bad.

Toilet paper runs out, the light bulb doesn't work, the remote control doesn't work. All this stuff and you can systematize it as much as you possibly can. But people are people. And also your cleaners are people. Right? Because if you're not cleaning it, you don't have direct control of cleaning. They make mistakes because they're humans. And so they forget to make the bed, they forget to put the chocolates on the bed like I told them to do. All that. That just happens as is with, you know, everyone making mistakes as humans forget to edge or forget to blow things off. It just happens. So with long term tenants, though, typically assuming that you do a good screening process and get a good tenant inside, you literally never have to talk to them. So, like, for example, that's a perfect property because I have a long term tenant that pays, I want to say $2,800 a month. I think $2,800 a month in the house and then the Airbnb on the same property, the house literally have never heard a single thing from them ever. They take care of it, they're happy. Obviously I don't manage the property, so potentially there's like little things but like there's never been big issues. And I know from Android perspective it's way easier because like they're a good tenant and they respect the property and they wanted to be there for a long time. It's really, really easy. Now for a short term rental, you're going to have 1 in 10 tenants, 1 in 10 guests. They're just a pain in the butt and they ask a lot of questions. Not necessarily a bad guest, but like just ask a lot of questions, want to know a bunch of stuff, want to know how certain things are done and just like, oh my goodness, like just chill out. A lot of it. You can automate, so you've got to make sure you have automated messages when it, when they sign up, when they register, when they create a ticket or when they make a booking. Before their visit, during their visit, after their visit. All of that needs to be automated messages so you are not texting them one on one. I would say 95% of my communication is done automatically. In terms of the automations built inside of Airbnb, there's a really, really good book I've recommended to a lot of people. If you're thinking about doing Airbnbs, we'll listen to this one book and you should be good to go or you should be like leagues ahead. I should say that here, let me see. I just sent someone recently so I should be able to. It's coming, it's coming, it's coming. Boom. Let me see here. Let's see if I can get the screenshot of it.

This is it. Optimize your Airbnb. This is the one I recommend. It's very good. He kind of pitches like a bit of a product that like does more in depth analysis on your Airb. You don't need it. You're doing one or two or three, you know, like 10 or 15. Probably want to get some extra software to lay on top of it that optimizes pricing and all the rest of it. But what I have learned, way more work than, than long term rental. Totally fine. You've got to do a risk analysis and you guys like the pros and cons so if I can rent that Airbnb, for example, for.

Like right now, I'm running a thing for 150 a night. I forget. Let's just call it a hundred dollars profit to me, okay? After training property management, after playing cleaners, let's just call it a hundred dollars a night. So $3,000 if it's fully booked. Guess what? It doesn't always get fully booked. So let's call it 2500 then. The real question is, what's the difference between that number and I would otherwise make on a long term rental and the Delta there is really what the difference is. I'm going from long term rental to Airbnb. And the question is, is it worth the headache? Because if you're only making extra three or $400 a month going from long term rental to short term rental, it's probably not worth the squeeze. The juice is not worth the squeeze. And so you really got to compare. Not like, oh my word, I can get $3,000 a month for this tiny Airbnb. Yeah, you're right. But after all your costs and after paying the cleaners and after all your communication with the customers, is it worth going from 1500 to 3000? That's the question. And so that's really, really got to figure out. So we have the cleaners are on the Airbnb app, so they can see the bookings as they come in. They're able to.

You know, see when new guests are showing up and then they automatically go in there and clean based. It's like a set amount. I think it's $50 per time. I forget it's $50 per time to clean the whole place. I think it's 75 if they do like the hot tub or something else. I forget. But Liz takes care of all that. But the set amount for every visit, I charge a cleaning fee that covers that. And then I charge way more like $80 more if they have a pet. Because a pet literally quadruples the cleaning time. And sometimes you can literally 10x the cleaning time if you have a bad pet. So I've had it before. I walked into a place, this is way back when we first got started. For the first month I did some cleaning. I just kind of make sure everything was, you know, systems were nailed down and walked in and I knew this was going to take us six to eight hours to clean this one bedroom apartment that had been stayed in for like two or three nights. A dog, because everything was covered in dog hair. Everything like cakes and cakes like vacuum cleaners worth of dog hair in the mats, on the.

Couches, everything.

And so yeah, in terms of analysis, long term rental versus short term rental is the difference between the two worth the squeeze. I, I would say that if you have a property that you live on and then you're able to get an Airbnb on your resident on your property, that's usually the best bet because from a regulations perspective is going to be the easiest. Most regulation is most easy when you as the homeowner live in the house and then you have a secondary ADU or apartment or unit or bedroom that you're doing the Airbnb for. They get a little bit more.

Unhappy when you do what I was doing. And that is like having two like separate. Like you're, you're an investor basically operating at Airbnb. So I think it's a really good move because for example, if your mortgage is, let's just call it $3,000 a month and you're able to your more, that's your mortgage, you live on the property, but then you're able to get maybe fifteen hundred dollars a month from renting out a room. And you can do a room if you live really close, like a conference center or downtown. If you're doing a little bit further out, you're. You typically gonna, they're gonna typically more for like an apartment or like the full house. But don't discount the fact that when you put it up on Airbnb, you could be surprised at what you can get. I would also say if you're going to do an Airbnb, get bookings as quickly as possible. Same way we talk about like getting momentum in your longer business. The same thing you do in your Airbnb, discount the price dramatically to get a bunch of bookings. So when we first launched, I think we got eight bookings in the first 24 hours and like 20 in the first week. And the reason for that is because Airbnb is going to kind of push your new listings right off the bat and you want to book your schedule because if you same thing is true with lawn care at Augusta is like book your schedule out three or four weeks and then you can raise prices. And in this case with Airbnbs, you have a limited supply. You're not going to buy more units when you hit supply or when you hit capacity. So you're going to do is raise prices. And so I think I started like 60 to $80 a night, booked it like crazy for three, four weeks and then just jack the price up to like 110, 120 a night. And then the Airbnb that is the tiny house I think is 159 or 140. It's something like that. They have smart pricing too, so they can kind of move the pricing based upon demand. And so like weekends, for example, during the tulip festival in Mount Vernon, like 250 a night. But then during the winter I'm lucky If I get 15 nights booked in the whole month. So. So you got to balance that out too because with short term rentals you can have much more seasonality versus the the long term rentals, just the same, same amount every month. It's very easy to do projection of cash flows, et cetera. If you're ever trying to sell a property, they will not like Airbnbs. It will not take that short term rental income as income towards the property. So you will not do well for selling an investment. This is why I've had to change Victor street, that 10 unit apartment complex. We just changed it from Airbnb for the two units to back to long term rentals because no one wants to buy. Like banks don't look at that money as income even though they are generating over $6,000 a month. Just those two units which covered the mortgage. Just those two units. The problem was short term rental income is not looked at as income on a real estate deal from the bank's perspective because they want stability of cash flows because they don't have. You have no guarantee that tomorrow people are going to book on Airbnb. And there's definitely, there definitely was an Airbnb bubble in 2020 and 2021. And I think a lot of people are getting out of Airbnb restrictions is it are way more hard in a lot of these cities and even in counties now.

As well as the rental rate, the long term rental rates kind of caught up with how much you can make on Airbnb. So unless you live next to a more metropolitan area where there's consistently always people coming for conferences and events, etc. If you live in any area where there's more seasonality, like I do in Washington state where like our summer just crushes and like there's three or four months of winter where it's not as good, it really hurts that delta between long term and short term rentals. Right. So I'm a big, big fan though. If you're like trying to buy a first house and it's like, man, this is going to be a tough one. To swing the mortgage. Not a bad idea to get do an Airbnb, make an extra 1500, $2000 a month if you do it well. I know one of my family members, they have a down downstairs suite that has a separate entrance and they're able to rent that out for 100 plus a night. And you know, if you get 20, 25 nights a month booked, you're basically paying your mortgage. So it's a great deal if you do it right. And if ideally you automate them all the messaging side of things so you really don't have to communicate with them honestly very much at all. You automate the cleaning. Unless you're going to do the cleaning yourself or your spouse or something like that. That's great. That's cool. Like, if you live there, it's not hard. It literally doesn't take very long if you want to do it yourself. If it's separate from you, I'd recommend getting a clean company, making sure that they've done Airbnbs before, get them on the app, they can see where everything's happening and then they can take care of everything. So I could probably talk about this like an hour. All the different little things that we've learned, there's what to buy, what not to buy, little stuff like that. But that's the majority of it is like from a look at it from a holistic standpoint, I look at it as a really good opportunity to get into deals. Get into your first house, make the math work for you, buy a shop on a, on some property with a house that you could potentially like right out the top of the shop as an Airbnb, stuff like that. Quick question again. Do you know if Evergreen will redo videos as Google changes things up like you used to? Yes, they will. And so I'd say probably every four to six months they'll have to do a new one because everything's changed at least the past year and a half, two years has been changing very rapidly. But they will. They have committed to doing that and I do appreciate that. So if something looks weird, feel free to email them too. It's on the deals page and it'd be like, hey, could you make a new video? This part of it looks like it's old or something like that. And I'm sure they'll knock it out for us. They're going to talk to us all at conference too, on the Wednesday morning and kind of go over more stuff that Google's changing and whether you are having them do it or you're doing it yourself, be able to kind of go over some best practices they've seen working well across the system. All right, everyone, have a great day and a great Monday, a great week. We'll see you tomorrow. Take care.