1000%+ ROI Airbnb Arbitrage Deal Using a Nasty Trick

Summary

In this video, the host shares an exceptional Airbnb investment strategy that yielded over 1000% ROI. By renting properties instead of owning, utilizing a furniture rental service, and negotiating for free rent, the host details a low-cost startup approach. The video explains the costs, revenues, and profit margins, emphasizing the benefits of taking calculated risks for high returns. It also explores the decision-making process between renting and buying furniture for Airbnb properties.

Takeaways

• 💰 The speaker has an Airbnb investment with an impressive ROI of over 1000%.
• 🏠 The properties are rentals, not owned by the speaker, with a monthly rent of approximately $1100 per apartment.
• 📈 The revenue for one of the properties in July was over $2700, highlighting a significant profit margin.
• 🛋️ The furniture for the Airbnb was rented instead of purchased, with a setup cost of $537 and additional purchases amounting to $381.
• 💡 The speaker negotiated with the landlord for a security deposit and 10 weeks of free rent, starting payments from the 11th week.
• 🔑 The total startup cost for one unit, including furniture rental, was $1281.79.
• 📊 Operating expenses for the unit were calculated to be around $1872 per month, considering rent, furniture rental, supplies, and utilities.
• 📈 The net profit for one year, after accounting for free rent and other costs, was over $13,000 with a startup cost of $1281.
• 🚪 The speaker negotiated and set up 11 similar units in the same building, leading to a total annual profit of around $144,000.
• 🔑 The total startup cost for all 11 units was $14,102, demonstrating a scalable business model.
• 🤔 The speaker contemplates the strategy of renting versus buying furniture, weighing the benefits of lower startup costs against the potential for higher profits with owned furniture.

Q & A

What is the average ROI percentage that Forbes suggests for a good investment portfolio?

According to the script, Forbes suggests that a good return on investment for a portfolio is seven percent.

What ROI percentage does Bigger Pockets recommend for real estate investments?

Bigger Pockets recommends a good return on investment in the real estate market to be 15 percent.

What ROI percentage range does Mash advisor suggest for an Airbnb investment?

Mash advisor suggests that a good return on investment for an Airbnb is between eight to twelve percent.

What is the claim made by the speaker about their Airbnb investment ROI?

The speaker claims to have an Airbnb investment that is making over one thousand percent ROI.

What was the monthly rent the speaker paid for the properties mentioned in the script?

The speaker paid about eleven hundred dollars per apartment as monthly rent for the properties.

What was the total revenue generated by one of the Airbnb units in July according to the script?

The total revenue generated by one of the Airbnb units in July was twenty-seven hundred dollars and change.

What was the total startup cost for setting up one Airbnb unit as described in the script?

The total startup cost for setting up one Airbnb unit was 1281.79 dollars, which included furniture setup, supplemental furniture, and supplies, as well as a security deposit.

What is the significance of the 10 weeks of free rent negotiated by the speaker?

The 10 weeks of free rent is significant because it greatly reduces the total operating costs for the year, making the investment more profitable.

What is the speaker's strategy for the furniture in the Airbnb units?

The speaker's strategy is to rent the furniture instead of buying it, which reduces the initial startup costs and increases the ROI.

What is the estimated net profit for one year for one Airbnb unit, excluding the 10 weeks of free rent?

The estimated net profit for one year for one Airbnb unit, excluding the 10 weeks of free rent, is thirteen thousand one hundred and forty-six dollars.

How does the speaker plan to expand the deal to increase profits?

The speaker plans to expand the deal by negotiating and setting up 11 doors in the same building, which would lead to a total annual profit of around 144 thousand dollars.

What is the speaker's view on the importance of getting free rent in an Airbnb deal?

The speaker views getting free rent as one of the most important aspects of an Airbnb deal, as it significantly reduces costs and increases profitability.

What is the speaker's plan regarding the Rent to Own Furniture company mentioned in the script?

The speaker plans to do a series of videos on the Rent to Own Furniture company and another company that offers furniture setup, to explore and share more about these options.

Outlines

00:00

💰 Exceptional ROI on an Airbnb Investment

The speaker shares their success story of an Airbnb investment that yielded an impressive return on investment (ROI) of over 1000%. They describe a unique deal in Austin, where they rented properties from a landlord, setting up the units with furniture and supplies for a total start-up cost of $1281.79. The ongoing costs, including rent, furniture rental, and utilities, were calculated to be around $1872 per month. Despite the low operating costs, the revenue generated was $2700 per month, leading to a net profit of $13,146 for the year, after accounting for 10 weeks of free rent. The video promises to delve into the specifics of this deal and how others can potentially replicate such success.

05:01

🏠 Scaling Airbnb Profits with Rent-to-Own Furniture Strategy

The speaker expands on their Airbnb investment strategy by revealing that they negotiated 11 similar units in the same building, projecting a total annual profit of $144,000 with an initial cost of $14,102. They compare this approach to the traditional method of buying furniture upfront, which would have reduced the startup costs but also the potential profit. The video discusses the benefits of renting furniture, such as lower initial investment and higher potential returns, despite the higher risk involved. The speaker also emphasizes the importance of seizing time-sensitive deals, like the one described, which offered 10 weeks of free rent, significantly boosting the ROI. They conclude by mentioning future videos that will explore different furniture rental and setup options, including a Rent-to-Own Furniture company.

Keywords

💡ROI (Return on Investment)

ROI is a financial metric used to measure the profitability of an investment. It is defined as the gain or loss made on an investment relative to the amount of money invested. In the video, the speaker contrasts the typical ROI percentages for various investments, such as the 7% for a portfolio according to Forbes, 15% for real estate as per Bigger Pockets, and 8-12% for Airbnb according to Mash advisor, with the exceptional ROI of over 1000% that they achieved with their Airbnb investment.

💡Airbnb

Airbnb is a platform that allows individuals to rent out their properties to travelers. In the context of the video, the speaker discusses their success with an Airbnb investment, highlighting the high ROI they achieved by renting properties and managing them as short-term rentals on the Airbnb platform.

💡Rental Property

A rental property refers to a real estate asset that is owned by one party but leased to another for a specified period. In the video, the speaker mentions that they do not own the properties but rent them from a landlord, and then manage these properties as Airbnb rentals.

💡Furniture Rental

Furniture rental is a service where furniture is provided to a property for a certain period, often used in short-term rentals. The speaker in the video describes a strategy of renting furniture for their Airbnb units instead of purchasing it, which reduces the initial investment cost but increases ongoing expenses.

💡Smart Lock

A smart lock is a lock that uses technology to control access to a property without traditional keys. The speaker mentions using a smart lock in their properties, which is a way to enhance security and manage access for Airbnb guests.

💡Gentrification

Gentrification refers to the process of renovating and improving a house or district so that it conforms to middle-class taste. The video describes a neighborhood that is undergoing gentrification, which is attracting the speaker's investment due to the potential for property value increase and rental demand.

💡Operating Costs

Operating costs are the costs associated with the day-to-day running of a business, excluding initial capital costs. In the script, the speaker details the ongoing costs for their Airbnb units, including rent, furniture rental, supplies, utilities, and housekeeping.

💡Housekeeping

Housekeeping in the context of the video refers to the cleaning and maintenance services provided for the Airbnb units between guest stays. The speaker mentions hiring housekeepers and the associated monthly cost for this service.

💡Arbitrage

Arbitrage in real estate or the context of the video, refers to the practice of acquiring properties at a lower cost and renting them out at a higher price to make a profit. The speaker discusses the concept of rental arbitrage as a strategy for achieving high ROI in their Airbnb business.

💡Free Rent

Free rent is a period during which a tenant does not have to pay rent, often used as an incentive by landlords. In the video, the speaker emphasizes the importance of negotiating free rent as part of the deal, which significantly reduces the initial costs and enhances the ROI.

💡Rent to Own

Rent to own is a financial arrangement where a renter pays a portion of the rent toward the eventual purchase of the property. The speaker describes using a rent-to-own furniture company to acquire furniture for their Airbnb units, which allowed for a lower initial investment and higher potential profits.

Highlights

An Airbnb investment is making over 1000% ROI, which is exceptionally high compared to the typical ROI of 7% in general investments or 15% in real estate.

The speaker describes a risky move that resulted in a highly profitable Airbnb deal, different from the usual strategies taught on the channel.

The properties discussed are rentals, not owned by the speaker, which clarifies a potential point of confusion for the audience.

Monthly rent paid for each apartment is $1100, with July's revenue reaching over $2700, showcasing a significant profit margin.

The total startup cost for setting up one unit was $1281.79, including furniture setup, supplemental furniture, and a security deposit.

A unique aspect of this deal is renting furniture instead of buying it, which is a new approach for the speaker.

Ongoing costs for one unit include rent, furniture rental, supplies, utilities, and housekeeping, totaling approximately $1872 per month.

The operating cost for the year, considering 10 weeks of free rent, is adjusted to $19,409 after a $2750 deduction.

Annual revenues are just over $32,000, leading to a net profit of $13,146 after startup costs, equating to a 1033% ROI.

The strategy was scaled to 11 doors in the same building, potentially yielding a total annual profit of $144,000.

The total cost to start all 11 units was $14,102, demonstrating a high return with a relatively low initial investment.

A comparison is made between the rent-to-own furniture model and buying furniture upfront, showing different ROI outcomes.

The rent-to-own model offers a higher risk but also a higher potential ROI and total profit, which is a significant departure from previous advice.

The speaker emphasizes the importance of seizing time-sensitive deals, especially when free rent is offered by landlords.

A series of future videos will explore the rent-to-own furniture model and other related strategies in more detail.

The video concludes by reinforcing the potential profitability of renting furniture for Airbnb, even though it's an unconventional approach.

Transcripts

if you ask Forbes they will tell you

that a good return on an Investment

Portfolio is seven percent if you ask

Bigger Pockets a good return on

investment in the real estate market is

15 and then if you ask Mash advisor what

a good return on investment is for an

Airbnb they tell you eight to twelve

percent well I'm here to tell you that I

have an Airbnb investment that's making

over one thousand percent ROI and I want

to tell you all about it in this video I

am kind of proud of this and it was a

total risky move I have done something I

have never done before and so I'm going

to tell you about my deal and what I did

that's kind of different than anything

I've ever taught before on this channel

and how you could potentially make the

same awesome money on your own deal Sean

Rocky teach Airbnb guy that's what I do

let's jump in now if you recall I did a

video in Austin way back in the day

maybe some months ago about a type of

Smart Lock that I use so I like these

safely smart locks but I went down there

to check out the properties and take a

video so that way I can of course tell

you about what we're up to well this is

that special deal that is making over a

thousand percent ROI and it's actually

kind of mind I was like I wonder how

these Austin properties are doing so of

course I went into our system and took a

look at our revenues and it's pretty

nuts let me first give you the vitals on

the properties these are rental

properties okay so I don't own these

properties so some of you guys might be

confused two minutes in but by the end

of the video I will fix any confusion in

case you don't know kind of what I'm up

to I rent these properties from a

landlord and my rents are about eleven

hundred dollars per apartment that's

what I pay my revenue for July was

twenty seven hundred dollars and change

these are the base stats what it costs

to start this unit is the part that

really starts to get super cool and so

let me break down the Holocaust when I

started this unit the one that made 2

700 bucks the furniture setup cost I

paid a company to come and Stage deliver

do it all so our company didn't even do

it we used a contractor that contractor

charges about 537 now we bought more

stuff because that contractor didn't buy

everything that an Airbnb needs and so

we went we actually bought more stuff

which you can actually see on my Tick

Tock videos we went and we cruised

around went to at home and went to other

places like Marshall's Home Goods and

bought a bunch of things and that was

about 381 dollars worth of stuff to get

that lease activated we negotiated with

the landlord that we give them a

security deposit and we get the first 10

weeks of rent for free and we'd start

paying rent on the 11th week so we

basically gave the landlord 200 to start

this lease we are renting this furniture

instead of buying it and that's that's

the new thing here our furniture rental

costs for this unit is three hundred and

twelve dollars and change our total

startup cost was furniture delivery

setup supplemental furniture and

supplies that we got for the unit and

then security deposit that's a total

cost of

1281.79 and that's what it cost to start

this unit our ongoing costs which factor

into our final like end of life cost for

this our ongoing costs are 1100 for rent

the rental for the furniture the 312

dollars and change supplies and

utilities this is a small apartment so

we're talking the toilet paper stuff

like that cleaning the cleaning supplies

um if we don't factor that into

housekeeping but we're actually

factoring that into housekeeping so in

this case supplies are like only 20

bucks for like guest side consumables

like coffee and things and then

utilities for internet and electricity

is about 140 because it's such a small

unit it doesn't use much electricity at

all now our housekeeping cost per month

is about 300 we hire our own

housekeepers pay them by the hour this

woman that we have running this building

she's paid a salary she paid a weekly

salary so her average per month for this

unit is 300 bucks now that makes our

operating expenses for this unit

1872 dollars and some change and that's

our total expenses now I will say that

1800 and change is a pretty low

operating cost for most units excluding

the fact that we're running the

furniture we have a lot of Apartments

where our rents are eighteen hundred

dollars just for the rent and then

everything else on top of that like in

Philadelphia a lot of our two bedroom

properties are 1800 1900 2100 a month so

this is by far a super cheap listing

compared to things and this is in Austin

as well the same place that Tesla is

moving a lot of other companies are

moving it's growing so quick and these

we found in a neighborhood that's

getting gentrified you could say there's

a lot of like like flipping and

remodeling and refurbishing so this is

definitely a not pretty building that

the landlord decided to do a Remodeling

and we negotiated these doors on the

back of the remodel so that's how this

came to be so that 872 dollars is pretty

darn cheap including the fact that we're

renting the furniture this is like

almost a walk away cheap deal compared

to our revenues 2 700 a month that makes

our revenues for the year just over

thirty two thousand dollars if you

factor in that we got 10 weeks of rent

for free that actually affects our

year-long total operating costs because

we'll have to deduct 2 750 bucks off of

the rent for the whole year because we

got 10 weeks of rent for free it took us

about 10 days to set up and get going so

we got going less than 14 days and this

finalizes the math our cost for the year

before deducting the 10 weeks of rent

for free is 22 159 and change minus the

27.15 free rents our cost for the year

is nineteen thousand four hundred and

nine dollars and change and then our

revenues thirty two thousand five

hundred fifty six dollars pretty wild so

that leaves us a net profit a thirteen

thousand one hundred and forty six

dollars over our startup costs of one

thousand two hundred and eighty one

dollars leaving us a one thousand and

thirty percent ROI now for one Airbnb

thirteen thousand dollars for the whole

year in profit isn't really impressive

so it doesn't really end there of course

this channel it doesn't end here it's

not just that simple so yes this door

thirteen thousand dollars for the year

but when we did this deal we negotiated

11 doors at this building and set them

all up at the same time so when you do

the math on 11 Doors we're looking at

more like a 144 thousand dollars for the

year profit total on 11 Doors and our

total cost to get started was fourteen

thousand one hundred and two dollars to

get started on all 11. so our startup

cost being 14 000. here's something to

consider and this is why this is weird

I've never done this before and that's

why this math on this deal and I want

you to follow along is kind of

compelling typically to get started with

an Airbnb property of this size like a

studio or a one bedroom you're going to

spend about six thousand dollars to get

started because you've got your lease

activation costs you're going to buy all

the supplies yourself you're going to

buy all the furniture all the essentials

even down to the towels and the Linens

right so in this case if we did three

Deals and we did a Savvy Savvy job

because there was no lease activation

costs only 200 security deposits we

could potentially get three doors for

that fourteen thousand dollars now if we

got three doors for that fourteen

thousand dollars we would add fourteen

hundred dollars profit for door roughly

instead of the 1100 ish that we had in

the deal prior so sure we make 300ish

more dollars per door because we're not

paying rent on the furniture on the back

end but we only have three units instead

of 11. so our profit for three doors

leads us to forty two hundred dollars

per month for three doors and if we do

that math times 12 we're really still

only looking at about fifty thousand

dollars in profit for the year and this

is where I want to split this right down

the middle guys we have options we can

do Rent to Own Furniture super low

startup costs with higher base operating

costs 2 total life on the steel we're

gonna make 144 000 per year where if we

buy the furniture we have a cost

reduction on the back end we have a

lower operating cost which means that

we're more stable we're more safe we can

pay our liabilities more easily to the

tune of an extra 300 you know 350 and

change potentially in this case though

by buying furniture up front we lost

some actual top-end efficiency here for

the amount of cash we had to invest

we're able to make almost a hundred

thousand dollars more in profit every

single year it is higher risk and

obviously that means not only is it a

higher return on investment but um it's

just more total profit which is really

cool and again I'll say this seven

percent or fifteen percent or twelve

percent are the ROI numbers that people

are telling you that you're trying to

get per year on your investment and in

this case we're taking a hundred dollars

and turning it into a thousand dollars

and back when I first started this

channel

um back when I said you know buy your

furniture never take loans never take

debt

um we were bragging that we're making

first year Roi about

270 percent first year Roi factoring in

that we paid off the furniture as well

so we'd buy the furniture we'd pay off

the furniture and then we make 270 on

that and that's what we were working

with and that's still pretty good 250

Roi is pretty intense but in this case

because we're doing a rent to own and we

took a higher risk path we've got over a

thousand percent ROI and that's a pretty

big deal now I told one of my students

that they could do something like this

if they wanted to but because of the

extra fat in the deal the only way I

would ever consider doing Rent to Own

Furniture like I did with this deal is

to get free rent the fact that we have

10 weeks of rent for free on this deal

makes it we will do this deal any way

shape or form if a building gives us 10

weeks of rent for free that is so much

free rent that I'll take you know I'll

take furniture typical I'll rent to Own

Furniture I'll go to your mom's house

and I'll steal her furniture to get this

deal done because 10 weeks of rent for

free is like the best deal on the planet

and here's why you should consider this

is because deals are time sensitive I

talk a lot about getting free rent on

this YouTube channel if you're going to

do Arbitrage and a lot of you might not

even care about rental Arbitrage on this

YouTube channel that's okay you want to

learn about pricing strategy managing

cleaners stuff like that which of course

more of those videos will be coming so

like And subscribe to this channel if

you want to learn all about how to run

these airbnbs but on the Arbitrage side

I tell people that getting free rent is

probably one of the most important

things that you should do in a deal and

those deals are time sensitive a

landlord giving free rent is because

they are having a moment of weakness and

that moment of weakness might just be

one moment and to get that deal done if

you don't have enough cash to take 20

doors with a bunch of free rent you

might need to invoke a Rent to Own

Furniture Company like this to get the

deal done I will be doing a series of

videos on this Rent to Own Furniture

company and another company that does

the setup where you buy the furniture

and then set it up for you by the way I

think Wayfair does that also but I'm not

sure if weight fear does it at a good

deal we're going to cover all this in

future videos but um we're breaching

into some new experimental stuff and I

can tell you that renting your furniture

can still make a lot of money and that's

the whole point of this video so I hope

you liked it of course if you have any

questions you know where to find me in

the comments and as always I'll see you

on the other side

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