How To Negotiate Airbnb Arbitrage Leases
Summary
TLDRThis video script outlines strategies for growing a rental arbitrage portfolio during the slow season of December to February. The speaker shares negotiation tactics that have enabled rapid business growth, focusing on securing concessions like lower security deposits and free rent periods to optimize cash flow and investment returns. By leveraging market cyclicality and effective negotiation, the speaker aims to expand their portfolio significantly, emphasizing the importance of seizing current opportunities in the rental market.
Takeaways
- 📈 The slow rental season from December to February is the best time to grow a rental arbitrage portfolio due to increased concessions and lower competition.
- 🔍 Negotiation is key to securing the best deals, including lower security deposits and reduced upfront capital, which can significantly impact cash flow and returns.
- 🏢 Building owners are more willing to offer concessions during the slow season, which can include free months, reduced security deposits, and no last month's rent.
- 💰 The speaker leveraged a large vacancy to negotiate a two-month free concession, saving a significant amount of upfront capital for furniture and other expenses.
- 🤝 Finding a middle ground in negotiations is crucial; the speaker often starts with a higher ask than expected to meet in the middle with the property owner.
- 💼 The speaker emphasizes the importance of not paying last month's rent, as they plan to renew contracts indefinitely with quality tenants.
- 💡 The speaker uses the slow season to expand the business aggressively, taking advantage of market conditions to secure more units at favorable terms.
- 🌐 The speaker suggests using business credit and leveraging credit card offers to rapidly scale the business during the slow season.
- 🚀 The ability to negotiate effectively and secure concessions can lead to a rapid expansion of the rental arbitrage business, as demonstrated by the speaker's growth plans.
- 💡 The speaker highlights the importance of timing, suggesting that the current market conditions provide an unprecedented opportunity for starting and growing a rental arbitrage company.
- 🌞 The speaker contrasts the hard work during the slow season with the ability to enjoy life during the high season, as profits accumulate without additional investment.
Q & A
Why are December, January, and February considered the best months to grow a rental Arbitrage portfolio?
-These months are typically the slow season for the rental market, which provides an opportunity for rental Arbitrage businesses to negotiate better deals and secure more units with concessions.
What is the importance of negotiating lower security deposits and upfront capital in rental Arbitrage?
-Negotiating lower security deposits and upfront capital is crucial to maximize cash flow and return on investment, allowing for quicker expansion of the portfolio without tying up too much capital.
How did the speaker leverage the vacancy situation at an apartment complex to negotiate a deal?
-The speaker called the building before meeting with the property manager to find out the number of vacant units, which provided leverage to negotiate a deal for two months free rent.
What is the typical request for security deposits in the rental market, and how did the speaker negotiate it down?
-Typically, buildings ask for the first month, last month, and security deposit. The speaker started by asking for no security deposit and negotiated it down to as low as $350 in some cases.
Why does the speaker never pay the last month's rent in their rental Arbitrage business?
-The speaker never pays the last month's rent because they plan to always renew the lease with the building, making the payment of the last month's rent unnecessary.
How does the timing of concessions affect the cash flow and return on investment in rental Arbitrage?
-Starting concessions at the beginning of the lease allows for immediate savings and quicker return on investment, as it reduces the initial outlay of cash.
What is the potential profit for the speaker from 20 apartments with negotiated concessions over the next 60 days?
-With the negotiated concessions and assuming an average monthly income of $3,000 per apartment, the speaker could profit between $26,000 to $27,000 per month for the next 60 days.
How does the speaker plan to use the savings from concessions to expand their business during the slow season?
-The speaker plans to use the savings to pay off furniture costs and business credit cards quickly, then reinvest the profits to acquire more apartments and scale the business during the slow season.
What is the speaker's strategy for scaling their business during the high season?
-During the high season, the speaker focuses on enjoying life and letting profits accumulate without spending, using the saved capital to expand the business rapidly during the slow season.
What is the speaker's current goal in terms of expanding their rental Arbitrage portfolio?
-The speaker aims to increase their portfolio to a minimum of 250 units by the end of the winter season, leveraging concessions and negotiations to speed up the process.
How does the speaker ensure that both parties in a negotiation feel they have gained a fair deal?
-The speaker aims for a 'sweet spot' in negotiations where both parties feel they have made some concessions, ensuring a deal that is acceptable but not overly favorable to either side.
Outlines
📈 Maximizing Rental Arbitrage During Slow Seasons
The speaker discusses the optimal time for expanding a rental arbitrage portfolio, which are the slow months of December, January, and February. They share personal negotiation experiences that have allowed them to rapidly grow their business while maximizing cash flow and minimizing upfront capital. The speaker emphasizes the cyclical nature of the rental market and the importance of leveraging this knowledge to negotiate better terms, such as reduced security deposits and rent concessions. They provide a detailed account of how they secured a deal for 20 apartments with significant concessions, including two months free rent, by leveraging the property's vacancy rate. The summary also touches on the strategy of negotiating lower or no last month's rent and the benefits of these concessions in terms of cash flow and return on investment.
🌞 Capitalizing on Seasonality for Business Growth
In this paragraph, the speaker describes the strategic approach to the seasonal nature of the rental arbitrage business. They explain how they use the slow months to expand their portfolio aggressively through negotiations and hard work, while enjoying the profits and traveling during the high season. The speaker is currently in the process of negotiating for 120 new apartments, focusing on securing the best possible terms to speed up the return on investment for furniture and other costs. They highlight the importance of concessions in expediting the payback period for initial investments and the potential for rapid business growth during the slow season. The speaker concludes by encouraging viewers to follow their journey on social media for insights into the industry and to seize the current opportunity to start or grow a rental arbitrage company.
Mindmap
Keywords
💡Rental Arbitrage
💡Negotiation Examples
💡Cash Return
💡Concessions
💡Security Deposit
💡Leverage
💡Vacancy
💡Seasonality
💡Expansion
💡Investment Return
💡Business Credit Card
Highlights
Best times to grow a rental Arbitrage portfolio are December, January, and February due to market slowdown.
Negotiation examples shared to demonstrate rapid business skill development in rental Arbitrage.
The importance of understanding market cyclicality in both Airbnb and rental Arbitrage for strategic planning.
Successful negotiation for 20 apartments with one month free concessions due to high vacancy.
Leveraging knowledge of vacant units to negotiate better terms with property managers.
The strategy of asking for more than desired in negotiations to find middle ground.
Negotiating lower security deposits to minimize upfront capital.
Avoiding last month's rent by planning for indefinite tenancy with quality tenants.
Saving significant upfront costs through concessions, especially during slow market periods.
The impact of concessions on cash flow and return on investment in rental Arbitrage.
Scaling business rapidly by leveraging concessions and credit during the winter months.
Using profits from summer operations to fund winter expansion and furniture costs.
Current negotiations for 120 new apartments with a focus on maximizing concessions and favorable terms.
The goal of expanding to 250 rental Arbitrage units by the end of winter.
The financial benefits of securing concessions in reducing the time to return capital on furniture investments.
The art of negotiation where both parties walk away with a slightly unfavorable agreement, indicating a balanced deal.
The current market conditions as the best in two years for starting and growing a rental Arbitrage company.
Engagement with the audience through social media for behind-the-scenes insights into a seven-figure Airbnb operator's life.
Transcripts
as a rental market itself slows down
over the next few months December
January and February are the best times
of the entire year to grow your rental
Arbitrage portfolio I'm going to go over
a few negotiation examples that I've
done over the last year that's allowed
me to skill this business so fast and
such lightning speed and making sure
that my cash and cash return is the
highest it can possibly be with
concessions lower security deposits and
negotiating to make sure the least
amount of upfront capital is used every
business has its own season and a lot of
markets are cyclical Airbnb short-term
travel and Rental Arbitrage are no
different for the majority of markets
their slow season is December January
and February just like in the
multi-family space the slowest rental
period is also December January and
February since both Industries are at a
disadvantage over the next three months
you have to find the symbiotic
relationship on how you can both work
together to fill their vacancy and to
secure your units last December I
pitched an apartment complex for 20
Apartments because of how much vacancy
they had they offered me one month free
concessions just by calling the building
prior to that meeting with the property
manager I was able to ask a leasing
agent exactly how many vacant units are
in the building then I know exactly how
much leverage I have to play with what I
wanted was at least two months free so I
decided to ask for three now when I'm
asking for three months free that
doesn't necessarily mean I'm gonna get
it in negotiations and sales you always
have to find some Middle Ground between
two parties now let's see the building
denied my offer of three months and
decided to give me two months to meet in
the middle the next thing I would have
to solve as security deposit the three
things a building usually asks for is
your first month last month in security
for this example let's say the average
rents are two thousand dollars if I were
to pay a first month last minute
Security on that two thousand dollar
apartment I would be out of pocket six
thousand dollars in cash not including
Furniture now the next thing I have to
ask for is a lower security deposit I
always start by saying I don't want to
pay a single Dollar in a security
deposit why because we never plan to
leave will you give me the best tenants
in your entire life we will always be
renewing with you so that security
deposit is tied up indefinitely now of
course for insurance reasons you can't
ever get away with no security deposit
majority of the time the building is
going to require something there have
been buildings where I've negotiated
security deposit of five thousand
dollars all the way down to 500. this
building in particular I negotiated all
the way down to 350. now the last thing
you want to negotiate is your last
month's rent I never in my entire life
of running this entire business have
ever paid a last month's rent so in last
month's rent will never actually happen
because we never plan to have a last
month now let's say you got the two
months free let's say you got the low
security positive 350 and I have no last
month's rent now the actual concessions
themselves I have to make sure they
start at the front of the lease you're
not going to get this every single time
but in the winter it's a lot easier
during the summer of July and September
I actually got one month free but the
building wouldn't let the concession
start until after 12 months so
unfortunately I was in the situation
where I did not have a lot of Leverage
because it was summertime there was a
lot of leasing going on and the market
was pretty hot I had to then negotiate
and settle for that one month free but
on the 13th month now just from our
current example of these 20 apartments
on a two-month free concession no last
month and a three and a half dollar
security deposit just in the concessions
alone I saved about eighty thousand
dollars in total rent then another forty
thousand dollars in last month so now my
cash and cash return is a lot higher my
initial return on investment period is a
lot higher every single time you have
two months free up front your cash and
cash return gets returned to you very
quickly within the first 45 to 60 days
if each of those apartments on average
are gonna bring in three thousand
dollars a month so for the next 60 days
in all 20 Apartments my only expenses
are utilities and cleaning I should be
able to profit 26 to 2700 a month on all
20 apartments for the next 60 days
bringing the total time to return my
investment into the furniture a lot
quicker if I didn't have those two
months free that's why I can't stress
this enough right now multi-family is
hurting they're willing to give two
months three month concessions if you're
picking up 5 10 20 30 40 apartments at
one time the only reason and the only
reason why I've been able to expand so
quickly and so fast is because of these
concessions if I did not have these
concessions up front and all of these
leases there'd be zero percent chance of
me expanding so quickly because all my
Capital will be tied up in paying off
all this furniture because I had those
two months free the time to pay off all
the furniture took only 45 to 60 days I
would then take all that profit pay off
that business credit card and then run
the cycle again for another 20 another
30 Apartments during winter if you're
good at negotiating and you're getting
concessions and you have these two Amex
platinum credit cards you can actually
expand your business by 40 to 60
Apartments just in the next 90 days
alone now you're not going to make that
much profit over the next 90 days that's
fine because now you have this unit
secured your teams are in process the
automation's built out this is systems
are created just in time as we go into
the high season I live my life now on
the seasonality of this business during
the slow months I'm expanding I'm
grinding I'm working hard every day
negotiating flying out to buildings
getting more apartments and scaling as
fast as I can during the summer time I'm
literally vacationing traveling the
world enjoying my life and not spending
a dollar and letting all the profits
stack up and that's exactly what I did
over the last summer I saved every
single dollar that I made and now I'm
using it to expand as fast as I possibly
can I'm currently in negotiations and
negotiating with landlords and
developers on a 120 new apartments over
the next 90 to 120 days and I'm
negotiating everything from these
concessions to carry deposit terms
conditions last month's rent everything
you could possibly think of I'm making
sure I'm walking away from these deals
with the huge advantage on my shoulders
to make sure the time to return the
capital on my furniture is faster than
ever currently right now I'm at 180
rental Arbitrage units but at the end of
this winter going into March I should be
walking out with 250 at the very minimum
just a Furniture alone for those 70
units that I have planned is going to
cost me about 500 000 in cash or
Furniture alone not counting first
month's rent not counting security
deposit but with two months free three
months free one and a half months free
even my time to get all that money back
pay off those business credit cards and
make a profit is a lot faster by getting
concessions on all your deals literally
speeds up the process and saves you
three to six months of time the best
negotiations and the best deals are the
ones where both parties walk away a
little sour from the terms I'm always
asking for three months four months
sometimes even five months free majority
of the time Boons are laughing I mean
saying you're insane but they'll come
back with how about two months how about
two and a half months and that's a sweet
spot and that's exactly what I plan to
do do not let this opportunity go to
waste right now is the best time in the
last two years to start and grow a
rental Arbitrage company if you want to
film me behind the scenes on my
day-to-day life of a seven figure Airbnb
operator follow me Below on my tech talk
on Instagram where I post daily and make
sure you guys are seeing the actual ins
and outs and behind the scenes of this
industry thank you all for watching I
hope you enjoyed the video until next
time
関連動画をさらに表示
I Survived the Airbnb Bust. here's how.
Cheap Airbnb’s are better. 
I'll Select These TWO Mutual Funds for my Lifetime Investing Portfolio
DO NOT Try Mid-Term Rentals Without Watching This Video
Stock Market Crash: The Worst Mistake You Can Make (Do This Instead)
40 LAKH "WELL DIVERSIFIED PORTFOLIO" REVIEW 🔴🔴 LONG TERM PORTFOLIO STOCKS 🔴🔴 INVEST IN INDIA 🇮🇳
5.0 / 5 (0 votes)