“Rentalpreneur” Talks about the Great Possibilities of Airbnbs
Guest Speaker: Rachel Prince
Featured in INC. Magazine, the Indy Star and on the Ron LeGrand Mentor podcast, Rachel Prince has been called the “maven” of Airbnb short-term renting. She is the author of “Airbnb Mentality: Harnessing a Winning 5-Star Attitude & Five Bonus Steps to Ultimate Airbnb Success” and creator of BUYBNB, the online Airbnb real estate investing course. From a renter struggling to pay her rent, to owning several BNB homes and running a six-figure short term rental property management company, Rachel is all about optimizing assets. In 2017, she relocated her Airbnb real estate business to the Indianapolis market with FC Tucker real estate, carving her niche in the Midwest BNB world.
What you’ll learn in this episode:
*Airbnb was the way Rachel got into real estate investing, giving her the down payment to buy her first house. She was renting a place in Denver and began renting out one of the rooms in her little house and “started making so much money that I would leave and go camping and make $700 and be able to pay my rent in one weekend.” She started coaching friends and family members on how to do it. It was at a time when cannabis became legal in Denver so there were a lot of people flocking there. That was her launching pad into many other platforms.
*When there was a crackdown on Airbnbs in Denver, Rachel moved to Indianapolis where she established a reputation os the “maven” of Airbnb real estate investing. She started a property management company in six months and soon established an online Airbnb real estate investing course. She now coaches people all over the country how to do it themselves.
*Rachel belies that Airbnb is one of the most ingenious creations of the digital world, because “once you’ve set up and input your information and put photos of your house online, you are literally open to a world of potential customers, millions of them, millions of travelers.” She doesn’t call it passive income, but it’s income utilizing an unused asset in your house. Within a few hours of publishing, you could have a booking and make money.
*There are some key differences between Airbnb and the vacation rental business Verbo. With Airbnb, “we’re talking about a culture, a lifestyle. We’re targeting a certain type of traveler who has a sense of belonging to this subculture. They’re accountable by reviews. It’s more like a social network. Whereas Verbo, HomeAway and Expedia have absolutely no culture. You barely know who’s coming into your home.” She adds that while those services are devoted to luxury hotel type rentals, Airbnb is more like renting out your room.
*Airbnb is getting more competitive, with really nice, up to date rooms. You have to follow their guidelines and reveal information about yourself. People want to know who’s coming into their homes. Both sides review each other. Airbnb has a broader appeal than the traditional services/platforms.
*You can have an apartment building or an asset like land for camping or RVs. It can be a popular place or off the beaten path and still generate income. Airbnbs generally thrive where hotels are not located.
*Rachel has a property management company where she runs everything for her clients so that they can make passive income. The government still sees it as active income because it’s Airbnb income. The clients who do Airbnb want active income, which means that even if it’s run by a property management company, they’re going to have a business income that’s coming from that house. They’ll pay taxes on it like a normal business. If they do long term rentals, they can get deductions and write off expenses. When you get your property managed, you lose that. But then you have to worry about other problems like water heaters. I teach people how to set up property management. Even as a property management manager, it’s important to have automation in place.
*Rachel has never done long term property management on a large scale, but from running 30 short term rentals, she believes she has more experience than someone who runs 100 long term because she’s hosted over 3000 guests over the last few years. Doing short term rentals jumpstarts the experience level. When you’re dependent on good reviews, you get things done fast.
*To find a management company specializing in Airbnb, first check to see if it’s legal where you live. Rachel also advises to build one in-house; she’s the expert in helping set that up. These days, people are finding 10-20 unit apartment building and condos and creating licensed Airbnb hotels out of them. She suggests not starting with all 35 units, so to speak. They should start with a test pilot or maybe 5, 10 or 15 units. Someone should live on-site, who can double as a handyman. Once you have an onsite manager for the establishment, everything will be more efficient.
*The optimal size for a small apartment that becomes an Airbnb hotel is 10-12 units. Currently, Rachel runs a seven unit in downtown Indianapolis, with rooftop penthouses and luxury units. The place earns $30,000 a month for six units. Average buildings can generate from $10-15,000 a month. You need to check your local legislation to see what the restrictions are. You need bulk to make a deal work. You can Google a city or county building in your area and call to find out if permitting for short term rentals is legal.
*There are various apps to help you determine how much your apartment could fetch as an Airbnb – including Air DNA and Clik2Flip. It’s tricky with apartments because it could mean one apartment or all of them in a building. It’s good to bring in a professional to call in the professionals. In Rachel’s course, she gives away a pro forma that’s designed to help if you’re buying a place with loan vs. cash. It’s good to have a general understanding of what the market’s doing. Look on Airbnb, run your comps, incorporate these many factors and that will go a long way to determining your viability.
*Rachel says her Airbnbs and homes are her investments, aka her “401k plan.” She teaches people how to invest in real estate. She says, “That’s where I think the gold is and building that asset.” She discusses the positives and negatives of traditional subletting. “If you find the right rental and the right rate and the price is low enough, then you Airbnb that leasing and it could work in your favor,” she adds.
*Rachel considers herself a “rental-preneur” because she’s an entrepreneur at heart. She’s always interested in what people are renting, whether it’s an RV, co-share workspace, and how she can work with them on that.
*Her main hubspot is www.rentalpreneur.com. She also has a podcast, some YouTube videos and some books about getting into Airbnb, as well as her online course called buyBNB.
*One of the gifts Rachel gives is a “furnishing check list.” She explains: “Let’s say you have a building where you want to convert one or two units. You’re going to be able to see what it is to price it out. So what furniture is needed? This is very precise, everything down the mattress protectors and colander. It will tell you the pricing average for the things you’re going to need to furnish your unit. On this list, she gives recommendations for some of her favorite products, such as the eco bee, slag door or Keurig coffeemaker. “I also disclose things like if you’re going to buy a comforter, you’re also going to buy a coverlette to cover that comforter which works better than a duvet,” she says. “Tricks of the trade.”
*The most important thing to research before you buy an Airbnb property is if it’s legal in your area. Rachel sees a lot of people, including friends, who are stuck and not doing anything when they should be investing in such things. “We’ve all been in a place like that,” she says. “I came from a place where I didn’t have my health, I was on food stamps. I didn’t know what I wanted to do, or how I was gonna do it. It’s important to start with the little dream in the back of your mind, envision yourself having that dream and what that feels like and then go with the baby steps to get there. I started with absolutely zero and then accumulated by saving and doing all these things I go over in my course buyBNB. We can’t just sit. Nobody’s going to come to us. We are the creators of our own reality. So we need to take those baby steps and follow our dreams to create them. And I believe each of us can.”
Resources:
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