Here Are The 3 Stages Your Short Term Rental Business Has To Go Through While Building Your Real Estate Empire
So you've considered getting involved in real estate investing before, and you may have found yourself saying:
“I don't know what to do.”
“I don’t have enough money.”
“There’s not enough time in the day.”
“Where on Earth am I going to get the credit to buy this property?”
Well, what I've found to be the best real estate investing avenue is a strategy known as short-term rentals. You may be familiar with sites like Airbnb, HomeAway, VRBO, etc… but those are just the marketplaces.
I want to talk to you about the strategy. Why it works, and most importantly, the three phases your business will go through in order for you to begin to build a very strong, sustainable, and profitable real estate portfolio.
So what is a short-term rental? Very simply, a short-term rental is just a simple repackaging of time.
For example, as a traditional landlord, we would rent one location to one customer for a period of 12 months using one document. If you are willing to be a little bit more efficient with the time you can charge a premium.
For example, you might be familiar with going to a wholesale store like Costco where you can buy 24 bottles of water all at once for one price. However, if you've ever looked at a vending machine, the same concept is it's the same 24 bottles of water. But because the vending machine operator placed it in a very convenient place for you, the water is cold and it is served individually, they charge a premium and from that premium they make their profit. Again, it's the same water, it's just repackaged and delivered with more convenience.
This is the exact same strategy that you can use when it comes to leveraging real estate in a short-term rental space. Instead of leasing to one customer for 12 months, you had multiple customers from anywhere between one day up to six months. When you're doing that you have the ability to charge a premium because you're going to provide more convenient things like the internet, electricity, and making sure that there's furniture.
Now let’s dive into the phases of your short term rental business
What you're really learning is simply how to run a business. One of the biggest things that I have watched real estate investors completely forget is the fact that they are still running a business.
Here's the challenge: when you say you want to get involved in real estate investing, there are so many things to learn that it can become very challenging to do all at once. Plus, you have the added pressure of just saving up tens of thousands of dollars for that initial down payment that took a lot of time and effort.
For me, I was looking at getting involved in short-term rentals because I had done the apartment buildings, houses, cell phone towers, all those things. I wanted to try something new and was going to do what I normally do – buy another house.
The challenge was to buy the particular house in the neighborhood that I was looking at, plus the rehab was going to cost up to $100,000 and I was going to have one house.
I started to do the math and I began to realize that instead of going to buy one house, I could probably find a cheaper way to control multiple locations and turn those into short-term rentals.
So the challenge was to figure out how to find the location, then making sure that I could evaluate the lease properly, then finding the right equipment to put in as we move in, take photos properly, market, then we could begin operations.
This is where it gets actually exciting, because now that you know how to find the right place, put the right furniture in it, serve the right person, clean, etc… you have to ask yourself this following question:
“If I had 15 cleanings in one day, how would I do it if I needed to buy 100 sets of bed linens?”
What we begin to talk about is a whole bunch of systems – and systems are what set you free. In order to be able to deal with today's economic environment, we have to own or control the means of production. He or she who either owns a system, or invests in systems, wins. Period.
The challenge is building a well-running system with the right people without breaking the bank.
You now have enough short-term rentals running that are giving you free cash flow on a monthly basis, so you begin to plan your next real estate purchases.
For example, let's say there’s $100,000 available to be able to purchase one house and do some renovations. But let's take that same $100,000 and invest in 8 different short-term rental locations that you can control.
Now you're in a situation in which that collection that you just acquired has the ability to keep spinning off another $100,000 every 10 to 12 months.
I don't know how long it took you to save up that initial down payment, but what I do know is this if you only have one source of income, that can take a long time before you build any sizable real estate portfolio that you would actually like to own, control, and hopefully one day retire from.
To learn more about building your real estate empire through short term rentals…
Access the FREE Short Term Rental Blueprint video course: https://cashflowdiary.com/blueprint
Subscribe to the Cashflow Diary YouTube channel: https://www.youtube.com/cashflowdiary
Listen to the Cashflow Diary podcast on Apple Podcasts: https://podcasts.apple.com/us/podcast/cashflow-diary/id623140540
Listen to the Cashflow Diary podcast on Spotify: https://open.spotify.com/show/3iJetWgP5D7lGQ03gsX6yt?si=XjUp-iA6QoO