In this episode, we have the special honors of speaking with John Bianchi. John is the owner of Jaunt Stays where he manages 10 properties, 7 are rental arbitrage and 3 are co-host units located in Chicago and Scottsdale.
John talks about his entrepreneurial journey where he was hitting obstacles but still able to overcome those. He also talks about the risks involved in doing short term renting and shares some tips on how to avoid those.
Video Transcript
00:00:01
I’ve seen too many and talked to too many people who have signed on a lease in a location and a, a unit size that would never make them money, no matter how hard they tried and how well they did, you have to understand that some areas are better as an annual Rental, and some areas are better as an Airbnb. You need to understand that and do not sign a lease unless you understand that
00:00:20
This Ison number five two of short term rental success stories podcast. Are you an investor that’s looking to have your home professionally managed, go to cohost it.com for more information, welcome back to short term rental success stories. I’m your host, Julian Sage. This is a show where I talk to hosts about their journeys and starting and growing the short term rental business. My goal is that you’ll be able to walk away with practical information. Now how up you become a better host and learn how to scale your business. Like any exceptional host. We all strive for five star reviews. So please going over to iTunes and let us know what you enjoy. This really helps support the show. If you haven’t done so already going over to our Facebook group, the host nation to connect with the community.
00:00:59
Hey, what is going on? Host nation? I am super excited to be back again with you you this week. Thank you so much to everybody that joined Jon and I last week as we held our first live training on the 10 steps, every host needs, if we’re gonna be scaling a business on Airbnb using Rental arbitrage and cohost thing, it was really, really powerful. It was so awesome to be able to cover the 10 steps. And from everybody that we heard that attended, they got so much value from that training, cuz really what we’re doing is we’re compressing everything that you need to know about Airbnb. Like this is something that I wish that I knew when I first started and we compress that into 10 steps and covered that. And then also gave everybody a checklist that they need that they can follow to build their own Vacation Rental machines.
00:01:39
So if you’re looking to start automate and scale, that is a training that you need to be able to go to. But because of how powerful that training was, we really wanna do this more often. So what we’re gonna be doing is we’re gonna be hosting this live training next week again, and we’re gonna be doing these trainings live as of now in anticipation of the VRM Formula, which is Jon and I’s program, where we go over the 10 steps more in depth. So we cover everything and give you all the tool. And checklists, we have really cool bonuses that, you know, the people that were attending our training, they’re like, oh my gosh, these bonuses are crazy because we give everything that we use in our own business. So again, if you do wanna join that training, go to Short Term, Sage dot com slash early Birtch.
00:02:18
This is gonna be only for the early Birtch people that we’re gonna be doing this training live. We might do it live a few of times in the future, but right now is where you can talk to Jon and I have your questions answered, cover anything that we covered in the training or ask any questions that you might have about the program. So really, really awesome. Again, go to Short Term, Sage dot com slash early Birtch to find out when the next live training will be. And this episode is really perfect timing because in this episode I have a special of speaking with Jon Bianchi. Jon is a property manager that has around 10 properties right now, seven of them being Rental arbitrage, three cohosting and majority of his units being in Chicago and Scottsdale Arizona. Jon is also the founder of a new startup called point analytics where it’s a short Rental tool to be able to help you analyze markets.
00:03:04
It’s pretty unique and I’ve gotten a, a look at it. I think John’s on to something and I’m excited to see where this tool turns out and in John’s story, he shares his experience of getting into the Rental arbitrage space and the importance of analyzing and coming up with an numbers. I think that this was a really great episode because John walks us through his progress of, you know, finding out about Rental arbitrage, trying to come up with the numbers and literally picking up his life and moving to new locations based off of what he thought was gonna be a good market. Sometimes the numbers are not enough though, and it’s not until you really dive into the localities that you’re able to find if this is a profitable market or not. So in this episode, John talks about his entrepreneurial journey about him hitting obstacles that he had to overcome.
00:03:47
And he also talks about the risks involved in doing short rentals and shares some tips on how to avoid those. If you are going through market research in your journey, and you’re trying to find out where are those specific locations and what are the things that you should be looking for and how to work with investors? This is a really powerful episode. Of course, if you like my show notes for this episode, go to Short Term Sage dot com slash STR five two, or if you like my show notes sent directly to your inbox every week, then go to Short Term Sage dot com slash show notes with all that being said onto this week’s conversation. Hey, what is going on host nation and welcome to another episode of short term rental success stories in this. So I have this special, special honor speaking with Jon Bianchi. Jon, would you please introduce yourself to the host nation and let them know who you are and what inspired you to get into short-term rentals?
00:04:30
How’s it going? Everybody? My name’s Jon Bian. I’m a owner of Jon stays. I actually got into the Airbnb community because I read a lot of articles about people who were making an killing on Airbnb, literally Google searched and read articles over and over again about all these different people who figured out how they could make all this additional money on Airbnb. I thought it was a super cool way to make money sort of, you know, be able to very scalable. There was, there was a lot of not too much work for everything that was coming through, right in comparison to other businesses that you can grow. So plus Airbnb is such a dominant platform that it, that it brings in the marketing side for you, right? So you don’t have to do too much on that end anyway. So it seemed like a really great business model. Some good people were doing it as well. And, and I decided that this was something I wanted to go for.
00:05:18
So would you mind telling a little bit about how you got started into this business? You said that you were reading about some other people that were making money, but where were you before this, that led you into getting into Airbnb?
00:05:31
So before this, I was a financial advisor, had my own financial advisor practice. I, I, I did that for about three and a half years. Got to the point where I was, you know, partnered with a, an investor. I was managing 10 million. He was managing 90 million, to be honest, you know, it, it was a pretty good setup, had my name on the door, the whole, the whole shebang. But I just did not like the day to day, like whatsoever. And I, and I thought about my life, you know, 20 years from now. And I, and I would’ve totally regretted it. Jeff Bezos always talks about future regret optimization. So you’re, you’re optimizing your life to not have that future regret. Right. And so I guess that was kind of in the back of my head as, as time was going and in being in the financial world, you know, you have to learn all the numbers and all the, how everything works.
00:06:13
And I, and I’m reading these articles, learning about all these, what these P other people are doing. And I start running the numbers on it, right. To see like what was actually possible. And then I started understanding like, there’s a good amount, there’s a good gap here where, you know, if you have a home, you can actually make a good amount of money on an annual basis from home by home. Right. And so I was like, this is, you know, if you have, if you have a good amount of these, you’re doing pretty well. Right. So I actually, from that, I decided to then go and open up a, a home. And the first one I actually opened up was in Detroit, right. On Woodward, the biggest mistake I ever made by the way. So if I could, can I explain how bad, why that was such a bad mistake go for?
00:06:52
Is that okay? Go for it. Okay. So didn’t tell the, the condo association or the apartment Associa and that I was going to be doing it because at that point I knew next to nothing. And I was just like, oh, they find out, you know, like, let’s go for it. I was working with somebody else at the time we had a whole conversation. We were like, should we do it? And he goes, let’s do it. And I was like, all right, let’s go for it. Right. So we, anyways, we set it all up one month in, we get an eviction letter, you know, time, time to get out. Luckily, I, I had met somebody who does corporate rentals, so they ended up renting it out corporately for the rest of the year, but I had no idea how to do that. So we were paying them to do that.
00:07:27
And at the end of the year, we ended up making $800. Mind you, we made, we ended up losing money because of how much cost for the furniture and everything. So terrible, terrible sake. Also looking back on it with the amount of research that I didn’t do to open up that wouldn’t have made us money regardless. Right. But at the same time, so I opened up that one and then I, about a month later opened up another one that was in gross point, which is like 20 minutes away from downtown Detroit, a wealthier neighborhood, same idea, two bedroom, one bath. Would’ve never made me money over the full years, terrible decision. I, I didn’t really look into it. However, those two gave me a lot of experience allowed me to get to the next step. So should I go into the, the next step there?
00:08:05
What that did? OK. Just keep going. Tell story. OK. Yeah. So, so like I said, so open up that one, Detroit open up that one at gross point. And at that, at this point, you know, still a financial advisor. I, I was going back and forth. I actually had to like leave the office multiple times just to go help there, things like that. So, so I’m going back and forth. I know I’m kind of headed on my way out of the, the, that business, but I wanted to, before I could leave there, I had to make sure that I was secured enough financially, to be able to cover all my bills and continue to grow the business. Right. So that was the, the, the, the idea and the homes that I had didn’t gimme that ability that, but what I did was I put together an entire business plan called it, my accountant friend, who put together financial projections of how well a business this business could do.
00:08:49
If you started to scale it, then I used air DNA to research every single possible location. Then I put together an entire business plan. And then I went and started talking to investors and I had two separate groups of investors that were willing to lend me, or, or, sorry, not even lend, give me the money to own a portion of the company to go scale it. And so one was looking at giving me around 400,000 and then the other one was looking at giving 250. I ended up going with the people who were given 250,000, because I knew them in a, in a different way. We, you know, you, you got, you gotta click with the people that are giving you money, right? So, so we, we got along a lot better and it just made sense to go with these guys. And so I, I, I got the money from them.
00:09:32
We secured the locations that we were gonna go to. And, and so I, I left the business behind, like I sold off my portion of the business, back to my business partner and, and scraped my name off the door and took, essentially took off and I was ready to, to go and open mall. The funny thing is, is that we actually went down to Florida because we thought Florida was the best place to be. And if you look at the number, you’re just basing it off of the data and the numbers, it is a great location to be. However, this is the, the next lesson that I learned, which is regulation comes first regulation. You gotta understand regulation. Then look at the numbers, right. If you’re not looking at regulation, you’re gonna, you’re just screwing yourself. So I literally packed up my entire life and drove down to Florida, got down to Florida. And I was in this the absolute best, best city. I can’t remember the name of it right now, but anyways, it was the best. It was best city. It’s like number one beach in the world, right?
01:10:26
CS Sarasota.
01:10:28
Yes. CSTA key CS.
01:10:30
Yeah. I grew up in Sarasota. So CS, so and grounds
01:10:34
Then, you know. Okay. Okay. Yeah. So I get down there and, and then when I start talking to people and going around find turns out there’s a zoning law that doesn’t allow you to do Airbnb pretty well anywhere, unless you’re right. Like, I always like to explain it this way, if this was the entire city and county and everything, my, the nail of my pinky figure is the only place where you’re allowed to do Airbnb. Full-time everything else is illegal. Turns out almost every city along the east coast of Florida operates the exact same way. So if you’re not purchasing, then you can’t do it. And the thing is, is that Florida’s been a, a travel destination forever anyways. So I spent a month driving from city to city to city. So I went, I did, I did CSTA key. Then whichever’s just north of that.
01:11:17
And then I ended up in, in Tampa and the St. Petersburg, and then it was Clearwater had this whole grand plan for Clearwater. I still can’t believe I did this all in one month. I think about it. So, and in Clearwater, and then it got to the point, I was like, no, nothing. Like, there’s nothing here. The next thing would’ve been had to go all down to for Lauderdale. My, my ex-girlfriend lived there, so I didn’t wanna do that. So I was like, we’re not, we’re not going there anyways. But I was like, so the next thing was, was Miami. And so then I, I, I drove all over to Miami and then I, I tried figuring out Miami as well, like south, you know, the, the numbers are amazing there, but it’s really only for south beach. Right. And then even when you’re in south beach, like it’s next to impossible in south beach anyways, the best places, if you’re in Florida, by the way, west Palm, Hollywood, Fort Lauderdale, those places allow it. That was actually where I stopped and gave up, which is, it’s funny how, you know, everyone talks about when you’re like, when you give up, you’re usually about like two, two inches away from success. I literally went all the way around Florida and stopped at Hollywood where Fort Lauderdale allows it and is very, very successful. And west Palm is the same thing. And I stopped right before and drove all the way back because I was like, it’s not working. So anyways, that, that thing is true. So
01:12:32
Just the kind of recap your, your story is you had this financial business, you were, you, you were doing well with it, but you, you saw that, that your, your room that you’re renting out was making a whole lot of money. You decided to basically, you know, scale this up by picking up a unit, but you found out, you know, regulations was, was a little bit troubling. And then you, you were able to acquire a good lump sum of money from some investors that were going to get into this Rental arbitrage space, but then you decided, so you decided leave the job. Then you just went on another tour around Florida trying to find the perfect locations because you were utilizing this data and the data, if you’re just looking at the data it’s showing, it’s, you know, hot hotspots, you know, Florida, Miami, all these things, but what people don’t realize is it just numbers itself. Isn’t, doesn’t dictate if you’re gonna be able to have a profitable business. So you decided head up back north. So what, what was kind of the next step in your, your progression
01:13:36
Recruiting? Okay. So, you know, I, I talked to these investors and, and secured this money, and then all of a sudden, after a month I realized, I, I didn’t know, one of the most important things. Right. And so felt that was, that was tough. Right. That was real tough, but it, it really drove me into this Mo mode of like, I need to find a, a solution. And I only had so much time, otherwise this isn’t gonna, I, you know, it’s not gonna work. And I just gave up my entire business that it took me a while, quite a bit to grow. So, so what I did was I just went back to the numbers. And then when I went back to the numbers, I also went back to, I U I tried to find good locations, but then I also looked for what areas allowed.
01:14:16
Right. So, so then I went because I essentially would go anywhere in the United States, that’s the way I was operating. I was like, I’m gonna go anywhere. It doesn’t matter. Right. So what I did was I started reading the regulation for all of the different major cities where it’s, you know, most profitable and Chicago was actually one of the places that had put regulation in place, but there was still room to, so that, that’s the thing. So people like the other best option, would’ve been San Diego, which sounds like a way better option than Chicago. If you think about it. However, the reason I didn’t wanna go for it was because I didn’t have any regulation in place. So I didn’t wanna go all the way down to San Diego, put all of this money into these investors, money, into all these homes. And then they pass a, a law and it all gets changed.
01:14:55
And the, they did pass a law a year later from the day that I made that decision. However, 60,000 people signed a petition to have it turned over and it got turned over and they still don’t have anything right now. However, so, but anyway, so Chicago was the safer, smarter with other people money be to make. And so then I just learned about Chicago left right. And center, and tried to understand absolutely everything that I could using the numbers data, cuz like I said, I didn’t do that for the first two homes, but to, to raise money, I really needed to do that. And so I got re more and more and more and more into it. And, and so I understood what were the good area, but we’re not the good areas where I could put money and we’re doing Rental arbitrage model at this point.
01:15:35
Right? So when you’re doing Rental arbitrage model, your expenses are X through the entire year. You have to make more than that. You know? And so I had to make sure that I was getting these right locations. So I put a lot of research into it before we could ever. So anyways, I ended up going to Chicago within the first eight days that I was there. I secured three locations, all in a general, same sort of general area that I still have now to stay except for one actually, because we got rid of that. So, but so the first month I got there or so first eight days had three within a month and a half, all three of those were set up. We, I ended up getting another one during that same time period. So we had four within a month and a half by the end of the summer, we had five all Rental arbitrage again.
01:16:22
And then by October we opened up two more locations and this is another huge lesson that I learned Rental arbitrage and Airbnb, you need to understand cash flow and seasonality better than anything ever, ever. You just need to understand. You should always have what’s my absolute worst month. Those are my expenses. Not nothing, not media month, not, you know, best month, just absolute worst. And I mentioned that because we used the money. So the money that we used to open up those first five locations generated so much money in, in four months that we were able to open up another two locations just from the money that was earned. Right? So it’s like, that’s that, you know, we’re, we’re on a high we’re like, this is amazing, right? Let’s just keep hop these things open. And then we actually drained the account so low that when the winter came, I had to go to the investors and say, we’re short. Like for four months, the, the down season in, in Chicago is four months, right? The up season is it’s strong six, even two down four. So for four months I had each at the end of each month, I had to get about 10,000 or more from the investors to, to float us through the it back to that, that, that summer,
01:17:36
You know, that, that, that’s pretty, that’s pretty interesting, Jon and I, I love how, how numbers driven you are. You know, like cuz when, when you’re, when you’re talking about investors and money, it having those, those numbers, having those figures is so important. So like, you know, with, with us, we have, we have this thing, we call the turnkey arbitrage program and you know, the same, same deal. You have those high seasons during those, those like six or eight months, then you have those two more neutral months. And then you also have those, those slow months. People don’t realize that it’s not green all year round. You know? And when you’re talking with investors and you, oh this is a profitable business. You also have to tell them, you could be breaking even, or you could be losing money. You might have to pull some money out of your pocket to be able to keep the business afloat. And a lot of people are just thinking when they start and maybe they’re starting at the tail end of like that high season. And they’re just like, man making all this money I’m doing really good. And now I’m not doing anything what’s what’s wrong.
01:18:28
Right? Yeah. Big time.
01:18:31
So you had these investors and you, you, you had, you took the cashflow that you were using pick up more units, but now you have all these units and you also have a slow season. That’s that’s coming up. How, how did you get through that
01:18:43
Lot of stress? A lot of stress, but a lot of act I’m gonna, I’m gonna shout Danny with optimized. My Airbnb saved, absolutely saved my, I think it saved my business because his book there that he has, which is $25 and has made me thousands. It teaches you every single last thing that you can do to bring in more people to, to optimize your listing, to, you know, change the, this, change that. And it’s like this it’s like search engine optimization for Google for, for Airbnb. And then if you can understand all these different things, then it, it, it helps you stay afloat. You know what I mean? It helps you keep those things coming in. And he even says it the best, the winter separates the, the good host from the bad host or the, you know what I mean? Like that’s somebody says and it’s it hundred percent is true.
01:19:33
Right. And so, and the thing is it’s, it’s funny cuz like nowadays we we’re so strict with our optimizing our revenue. Like it’s, it’s very consistent. We have a such a strong process to go about it. But before I read that book, we’ve been operating for like half a year without ever even touching those numbers or, or trying to make sense of it. Right. And so to get through the winter, I really had to learn every trick that there was to this business and, and make sure that I was implementing them. And then on top of that track when every single dollar was gonna be coming out and when every dollar was gonna come in and, and project, what dollars were gonna come in at that time period. And when we got to a certain time, it’s like, okay, we need this amount, right? Like this is, this is the amount we need.
02:20:19
Luckily we got one of my favorite texts from the investors was at the, around between Christmas and new year’s because of those because of Christmas and new year’s there, there was a jump that I wasn’t expecting. Right. And so I was expect thing to have to ask them for about, you know, another 10, like another 10 grand come through. Right. And I, I didn’t end up meeting it and they’re like, that’s the best, this is the best text that I’ve received all the best Christmas gift you gave me anyways. So, so, but it was just a matter of, of, I think you said it best. So just understanding the numbers will not make you a successful host, understanding the numbers will help you select the right home right. In the right area. However, you also need no regulation first. Then you get the right home. Then you learn how to do the, run the business. Right. And optimize it and make sure that everything is a well oiled machine and come and through. And then once you understand that part there, it’s like, you’re, you’re pretty well set. Right? Like other than, you know, bookkeeping you’re, you’re just, you’re, you’re good to go. Like you’ve almost said every everything actually, maybe I’ll run into something that I dunno yet.
02:21:20
So, so you were scaling up these units in the Chicago area and you were playing within the regulations, which is also a pretty, a smart move. We’ve talked to some other hosts that play within Chicago and is, is, you know, a lot of people say, Chicago, you know, it’s, it’s regulated. I can’t do the business here. How are people able to make money? But the, the, the smart hosts are able to play within the regulations, you know, and to keep things afloat. But you decided to expand operations a little bit. Do you mind telling about, and what you had going on when you decided to move?
02:21:52
Are you referring to Scottsdale? Yeah, yeah, yeah. Yeah. The Scottsdale decision was actually not until like a year 20. So it was, it was like the following summer that we had made it. So we had been open for a little over a year and, and it was, it, the, the idea being was, you know, so the regulation does hold you back in Chicago, right. Then the seasonality also holds you back and Scottsdale Arizona, like, so Arizona, the state state allows Airbnb through the entire state. And so I was like that, you know, that’s a great spot to go. So I started doing all the research there. Scottsdale is like one of the most profitable layers you can be and ran all the numbers, trying to figure out best spot was. And the other nice part about it is it’s the exact opposite season of Chicago.
02:22:36
Right. So, you know, we, we only have one location down there right now, realistically, we’re going to end up increasing that number. Right. Because, because they are perfect opposite, opposite season. So like right now, like this month, February, like we’re gonna be, we’re gonna lose like 10 to 15,000 fish dollars. Right. But the one home that we have in Scottsdale is gonna make like seven, $8,000 net. Right. So that, that money’s gonna go directly, you know, to help offset that. And that’s just one, right. So if we have multiple, it’ll be, it’ll actually help us level our cash as we, as we grow. So it was a, it is a decision that made sense. When, when he looked at the numbers, when he looked at the regulation, I, I opened it up. I was in Chicago and I made phone calls to random people down in Scottsdale to open the home up. I, I started, I never went there until like a month and a half ago. And we opened it up in, in like August. And so I hadn’t gone there until like December. And so, but I just made, anyways, I made, I made random phone. I made phone calls, connected with a handyman, a realtor, a, a cleaning company, a photographer just and said like, I need you to do this. I need you to do this. I need you. And they, and they all did it. And so, yeah.
02:23:49
So you, you were, you were able to, you said you picked up three. How many properties did you pick up in Scottsdale initially?
02:23:56
Initially two.
02:23:56
Initially two. And you did all remotely just by utilizing other teams.
02:24:02
Don’t recommend that by the way
02:24:04
And why not?
02:24:05
From my ex, so, okay. Wait with my experience now, I guess, I guess I could go for it right off the bat. It was, it, it, it didn’t help. So the one home went well. Okay. So the one, one home went well, however, like the, the initial marketing of it was not nearly as high as the standards that I wanted to be. So it was really difficult to communicate to the people, setting things up. Exactly. Like, like the little things, right? Like the, where certain plants should go and why those plants go there and like, you know, the, all that kind stuff, and then explain to the photographer, like how to get this absolute best photo shoot. Right. And I, I put together like a, a, a slide, a presentation that says how to shoot every single room. And I’ve got like 40 of these slides and it’s perfectly laid out, but it just still didn’t come through properly.
02:24:48
Right. So anyways, but, but that first home was, it was, it was pretty good. Like, it, it wasn’t, it wasn’t terrible how it worked out the second home, actually. So this is a, like a warning to people when it comes to Rental arbitrage. So I’m gonna throw warning out there. The Rental arbitrage model, the, the profit margins are somewhere around 15 to 20% home by home basis. So when you grow, when you’re sitting at a certain number, right of homes, one bad home can, can really hurt almost the entire business, where if you continue to get past, you know, grow and grow and grow, you have so many homes that one home won’t affect the majority, right. It’ll affect, you know, you’re cashflow in some of them, but it’s not gonna affect the entire business. That’s, that’s true for any business, right? If you actually listen to podcasts with what’s that grocery store that everyone loves the whole, whole foods.
02:25:39
He, he said, when he was building whole foods, every single store he opened from the first few years, put he put the entire business in, in jeopardy, right? Because if, if one of those stores failed, his entire business is gonna fall apart. And that’s just how business works when you take all these expenses, right. If it all comes crashing down. So the reason I’m explaining all this is because the second home that we got in Scottsdale, the realtor told me there was five bedrooms when there was actually four, the, the landlord was a, had some drug issue. And that led to him not and money issues. And so he didn’t take care of any of the lawn. He never took care of the pool. So guests would show up and the pool was green. Right. And so they, then they would just request their money back.
02:26:20
We started in the, the slower season. And then also we just had the, the way that the home was set, once again, the photographer, right. Didn’t set the home up didn’t force shoot properly. So we didn’t have the right marketing. We didn’t have somebody taking care of the landlord, taking care of the things that he was supposed to take care of. The, the home was different than we, our num like, cuz I was projecting a five bedroom compared to a four bedroom way different, right. There’s there’s huge numbers difference there. And, and so that hurt us cuz we took on a rent that was higher than it should have been anyways that, so, so that, and, and then the regulation ended up changing before we got into the high season. So the, the neighbors all changed the regulation for that home. It wasn’t an HOA area. It was in a, an area that was a CCNR. They changed the regulation before we could hit the peak season to make all money back that we had lost. And so we had just lost it. That’s it. We had no way of, of getting it back. So it was that’s risk. We take though. Right. So that’s,
02:27:14
You know, that, that, that, that’s pretty, that’s pretty wild. That, that whole story. And one of the things that really kind of stuck out was that whole CCNR. Do, do you mind, how, how, how does that, how does that even work? Because Scottsdale, you know, a lot of people and I love what you said about the, the counter seasons, that that’s one of the strategies that professional, you know, professional Rental arbitrage hosts that they try to implement, you know, is you have all of your, you know, follow your properties are in Chicago and then it’s in the slow season, you know, you’re gonna be hurting during that time. So counter that with, you know, locations that are, you know, counter to that. So that that’s really smart of you, but with the whole regulation thing about the CCNR that, that kind of throws a wrench in, in things. Can you kinda explain what that is? And is that something that host should be concerned about and how do you prevent something like that from happening?
02:28:05
Yeah. So, okay. Now mind you, I know what I know from it, but I don’t know everything. So I’ll give the, the, my understanding. Okay. Little disclaimer. So in Arizona, the entire state’s allowed to do Airbnb. It, everyone knows that. Well, everyone should know, as an, as an Airbnb host are going to an area that has an HOA, right? Because almost, unless the HOA says you’re allowed to do it, then run to there. Okay. But if they, but they almost say don’t no one’s allowed to do short Rental. So everyone stays away from there. However, groupings of homes still have a sort of agreement, I guess you could say for neighborhoods, at least that’s what it is in Scottsdale. They have this, this, this agreement within certain homes. So this was 63 or 68 homes within this area. They all had this different. It, it, it’s not like a, it’s not HOA.
02:28:58
It’s just like, it it’s a little bit different. It’s kinda like, you know, put your garbage out on Tuesdays. Right. Don’t let your, so it’s those kind of things. But it, in there, there’s something called a C and a N D R. Right. And, and that you can change to not allow short term rentals within those 68 homes. And so essentially becomes like an HOA where they’re saying you can’t do it. And then they can find you through the city for every time you, so they can, they can now essentially shut you down overnight. Right. Because once you start getting those fines, like you can’t cover the bills. Like that’s just, that’s what happens. So we, we never got the fine, but we, we shut down before then, obviously right now. So, so anyway, so that is, that’s, that’s my understanding of CCNR there, there, I, I think they would even like, so if I, if you take that logic right.
02:29:50
Of like, that’s just how it is for there. That that’s most likely the same case for every city. I’m assuming. Right. That they, there is some sort of neighborhood agreement it when you buy a home. Right. And so I’m assuming that that is something that everybody should sort of understand and know could be a possibility. The thing is, it’s like one person, so one person has to rally the troops, essentially get a majority vote on, on it. And then they have to all sign off on it. Right. So you really need like a, somebody who was who’s in, in the neighborhood who goes door to door knocking to make this. It’s not like cuz with hos there’s, there’s like a few people who are in charge, they have their meetings, they make decisions and they, they let everyone know what’s happening and, and everyone disagrees, then they can do it. But anyways, so it’s a little bit different. It’s more rare because you really gotta, someone’s really gotta push for it.
03:30:39
That’s kind of scary though, because you know, if, if people just automatically know that Scottsdale is, is kind of one of those areas where you can, but then there’s little pockets. How would you even find out if you were to, you know, do this, that, that that’s something that, you know, that they’ve implemented in that one specific area
03:31:00
The landlord will know. So the landlord will know they all, all the landlords. So like our, our landlord received a letter of the mail saying like, this is the change to our CC R right. Or, or the CCNR change. I, so I don’t even know if it’s an entire thing or just a, a subsection, but anyway, so, okay. And, and I’d say just Google it, you know, try to learn a little bit more.
03:31:24
So, so, you know, you’ve really, you’ve really had Jon, your, your story is really interesting. You you’ve, you’ve, you’ve done a, you’ve been all around Florida. You’ve, you’ve done all the different regulations. So, so where did, where did you take, take the business next after the Scottsdale incident?
03:31:42
So I tried two to different things sort of around like before Scottsdale, after Scottsdale around the same sort of time, I always wanted to take the business to the next level. Right. So in my head I was like, okay, this makes sense. But it makes sense at scale. Right. And, and I understood that and I saw companies like Saunder and do I saw what they were doing? And I was like, okay, if they’re doing it, we could do it. Right. There’s gotta be a way to, to actually make this happen. Right. Like, so SA raised 300 million so far if I have the right systems in place and the data and the information, like why can’t I do the same thing. Right. And so what ended up happening was I had another person. So I started off on my own with the investors. Then I, I started working with another guy and then there was a sort of a mentor, I guess you could say that I had had from back home who, who was an older guy.
03:32:27
And he, he actually owned three different marijuana companies because in Canada it’s, it was legal. And so the, he had these three different marijuana companies that brought him a good amount of money. And, and so what he did was he was sort of our connector, right? Like he worked with us and he put us in contact with the people that you needed to make these things happen. And, and so what he wanted, wanted us to do is, was to push, right? Like, like become a Saunder well, I wanted to become like a Saunder and he, he, he saw that vision. And so he knew how to, how to make that mentality, because that’s what he had done. His entire life was like build companies up like that. And so we actually got to a point where we had a term open up 200 locations in, I think we’re gonna do Chicago and new Orleans.
03:33:08
Like that was the, the, the two areas that made the most sense. And we were going through the due diligence process of all this. Now, mind you, this isn’t like a, this isn’t exactly like a term sheets that you hear about for the San Francisco. It’s a little bit different of a term sheet, but it was, it was a, the potential to move forward. Like they, they saw the opportunity, right. It was like, okay, well, this is real, right. Because actually like a hotel in a hotel cost, a crazy amount of money to open. And it takes like 25 years to make their money back. And then they saw what our, what, how our business was structured. And they were like, you could make the money back in like two years. They’re like year two. Like they, it was just like, so mind Bogg to them.
03:33:40
They were like, how? Right. So they, they jumped on it quickly. Anyways, what ended up happening was the marijuana license got approved in Canada. So is fully recreational legal that propelled this guy’s business, like significantly, which means we had no time for us what’s to however, he just, he just, you know, three of the businesses couldn’t go for it. My, like the other guy I was working with at the same time had a change of heart and, and wanted to do a different career. He was more of a, not, not, not that this isn’t a bad way of saying it, but truly what it is like a tree hugger, right? Like that’s, that’s who he was. He was more of a hippy at heart. And like, that’s what he wanted, you know, he’s living in Thailand right now with his fiance and they’re their, their love and life.
03:34:22
Right. But, and, and so it, it was everything collapsed, let’s say. Right. So everything that we were working towards fell apart fairly, fairly quickly, like with actually within like a two week period. And, and we had put so much work in to get to this point, we stopped opening homes just so we could work on all of the operations to get ’em to the point we were working with consultants, we were working like anyway, so we did all that and it, it, it essentially fell apart. And so it, I had the decision, do I stop? I keep going. And obviously I kept going, right. Wasn’t gonna let fall apart. And I just started moving again. And actually that’s sort of around the time where, where Scottsdale stepped in a little bit actually was, was saw the opportunity. There wanted to keep opened up more locations, things like that. And I was like, let’s do something a little bit different, right. Let’s not just keep going to Chicago. And so that’s, that’s where that really played into. Yeah, go ahead.
03:35:11
I mean, you, you, you’ve had such, such an entrepreneurial journey and I think it’s really interesting though, this, this space is so new and this space is so new and there’s, there’s, you know, like, like you were saying, there there’s, there’s these established businesses, the hotel companies, and they’ve been doing this for years, but they also have, you know, an ROI and their timeframe is, is a bit longer for, for us in this space. You know, we can see these returns really, really quickly, but man, you’ve just been hitting obstacle and obstacle. Did you decide, so did you decide to keep on going the arbitrage model or did you decide to kind of divert your attention at that point,
03:35:48
Different pivot? So I thought it would be a good idea to, to, to change in the route that we had gone, one of the, actually to nail the coffin decisions for that was when Airbnb invested 160 million into lyric, which is another, Saunder another doo stay Alfred like, so, so I was like, okay, these guys are all the worst thing you can do is start a business where there’s that much competition. You know what I mean? Like everyone recommends do not get into a business where, and, and try and grow with that at that scale. It’s just cause your margins are gonna be ridiculous, right? If you ever look at like a hotel industry, their margins are like 10%, right. They’re making a lot of money, but their margins are 10%. But if you look at like Facebook, you know, those kind of businesses, they’re, their margins are insane.
03:36:29
And that’s where the, those monies are really coming in. So I decided to pivot to something that would, would be more along the lines of a, a technology type company that had the, where wasn’t really infrastructure. Like I wasn’t owning the homes, I wasn’t engine homes, but I was like, I was giving the ability for everyone to control. Right. I, I, the way I saw it was that I, I had the system style, pat. I had the operation style, pat, we had to build ’em all up to, to take on that money. And we were marketing properly. It’s like, okay, we’ve got some that’s that’s working, let’s package it and, and make it into a good system that other people can just easily implement and grow. Right. So franchise model, but not just the typical franchise, like subway type model, we were throwing the, you know, systems in the name on board.
03:37:10
It was like technology type process. And it was actually a company from China is doing something very similar to this. And I realized how they were doing it too. And, and, and I learned their business model a little bit more, a little bit better, like short term. So, and, and then essentially the idea is that you’re, you’re franchising them, right? So you’re allowing for other hosts to do everything that you do under your brand name, and you take a percentage of that. Okay. So, and, and they can list through your platform as you continue to grow. And like now it’s like, it’s like short term rentals in individual host, but standards and, and, and strong operations. Right. So no, lo our whole thing was we wanted to get rid of the idea of going to an Airbnb and not knowing what you were gonna get.
03:37:53
Right. So having to fear, getting a bad experience, having to fear that the beds weren’t gonna be made, like we wanted to create a way to get rid of that and be known for like these premium, not even just like a regular home, but well, well kept right. And so no, no longer have those bad experiences. So like, that’s what we wanted to implement and use the technology to be able to scale it properly. And what happened was like, we, I did the MVP type model and I continued to work on it, learn it, understand it. I started, you know, at one point I like CFO was working with a, a C, C, who was also were up on us there too. We, we started to move it. And we were, I was working with different franchise people who were gonna be franchisees that I was gonna learn from them and how to bring it together.
03:38:37
And I, honest to God, I just stopped. I just, just was like, this isn’t the, where the route that I want to go to the day that I die. And once again, future regret optimization, I got deep enough into it that I was like, could I, this isn’t how I wanna go for another 20, 20 years. And I, I obviously you, you know, maybe, maybe it’s my fear of just continuing to grow and getting to that size. And, and some people will, you know, will probably assess that and be like, well, he just didn’t want to continue. And he’s using that as an excuse. And sometimes I contemplate that myself. Right. Like, but, but anyway, so I, I stopped the motors on that one. And now what we do is now we’re just continuing on the Rental arbitrage and property management side with a heavier focus on property management because of the, the cashflow property management, the profit margins, property management. We have a cleaning company in there as well. And, and, you know, we use all the data and research that we can to make sure that everything comes together.
03:39:35
What type of data at, because when we were talking before and you know, I, I, maybe we can get you on another show, one to talk more about this, this, this thing that you have currently, that should be released pretty soon, but you’re, you’re very data driven and you’re working with all these investors. You decide you’re also taking on cohost properties, but when you’re analyzing these deals, what type of information do you really need to look for? Because you, you were saying that some of the information from air DNA, like if you’re just going off of air DNA, you know, places like, you know, Florida would make sense. You know, they don’t tell you about the regulations, but you know, just off the numbers, it, it makes sense until you start going there. And then you realize that, you know, it’s not maybe exactly what you thought it was gonna be. So what, what type of information do you need if you’re gonna be partnering or working with investors or cohost clients in a property management business.
04:40:27
So if you go online, if you Google a regulation for a city, right, it’s almost always gonna be there. If you go to the city hall, you can find it. If you call up the city hall, you can, you can get that information, right. I always don’t people that step one show, all, just figure out the regulation, cuz that’s, that’s gonna hurt you. Make sure you’re not in HOA. Understand what HOA is, right? The CCNR scenario, not much you can do there. Just risk it. I would say honest to God, but when it comes to the data there, there’s really only one company that’s out there that’s any bit good at it right now, which is air DNA. Almost everyone knows, but Dnae, there’s mash Pfizer. But if you ever try using that, it’s like, it’s terrible. It’s a terrible say, it’s not very, it’s not helpful at all.
04:41:06
So, but air Dnae just gives you all the information. Okay. So they just like, here’s everything. They have a cheap version, which gives you a bunch of information that I don’t find useful whatsoever. They’re like, here’s the average daily rate. I’m like, what am I gonna do with this? Right. That doesn’t help me price my home. That doesn’t, there’s, there’s very little calculations that I can actually use to make that happen. But then the other thing too is like they, they have issues with their algorithm, which is a part that I left outta my story, but I’ll tell it real quick. I use their data to, to, to figure out Ann Arbor, which is a, a city in Michigan, you know, Michigan university. That’s, that’s where they are in Ann Arbor. And I, I, it, it air DNA’s data showed that there were a lot of homes that were doing like crazy numbers, like hundred 50,000, 200,000, which didn’t really make a lot of sense.
04:41:49
But I was like, well, maybe it’s really close to school. There were these big homes. I’m like, you know, I, I logic did to make it make sense, but after doing more research into it, what I realized was just an issue, an issue with their algorithm. There’s, there’s seven massive football games that happen every single year. Okay. And so in that city, and what happens is all these major homes that are directly beside the stadium, they just leave for the weekend and rent out the home for like four grand for the weekend, right. Five grand for the weekend. And so what happens is that they, they just have that available. And as soon as that gets booked, air DNA assumes that all these other days are, are booking out around the exact same time, but really they’re all blocked. Right. And so what happens is air DNA is saying that they’re making $150,000, but really they’re just making like four grand a weekend for seven weekends.
04:42:33
And so I actually was, was like about to sign a $7,000 lease on a, on a absolutely beautiful home that was steps away from the stadium. Like this is gonna be amazing. Like the numbers on it were amazing. Realize that the, the, the whole algorithm, everything is just completely off. Right. So you really need to like, with the data you need to, to, to look into it, right. You need to find the averages within it, track as much information as you can to sort it out. Right. And put it together and then make sure that these listings, that they’re showing you are actually doing what they’re saying to do. Right. They like go into listing and like read through the calendar. Like if it, if a, if a listing’s doing $200,000 a year and it has five reviews, it’s not doing 200,000 of dollars a year.
04:43:15
Right. Like, that’s just how it is. You have to, but like, you don’t know that unless you really, really get into the nitty gritty stuff of it. Right. So, and that took time that took practice. And I like finally figured all this out and, and, and got to that point. So, but, but if you’re, if you’re, so my advice, if you’re gonna use your DNA, they do have the Marketmind, which is, is nice and cheap. And you can, you can, you know, a hundred bucks for a city for per month and it’s, you can cancel whenever gives you all the different locations. You can break it down, just start recording that stuff and see if you can find an average, right. See if you can find something that that’s common, that, and then run the numbers backwards on it. So if the hundred thousand, what are all, what are all my expenses?
04:43:53
What am I left with right. Then there’s the other option, which is the investor investment Explorer, which gives you the entire country and gives you every single last thing that one takes a lot of work, cuz it’s just, here’s all the information it’s well put together like well, easy to navigate, but it’s just all there. Like everything is there. And so you really gotta just sort through step by step by step. And then the, the last option is the enterprise option, which, which is where they just give you a, a spreadsheet with every single listing that’s ever been purchased. We, we just got New York and has 238,000 lines, 230, 8,000 lines with every single line is an Airbnb that’s ever operated in, in New York since 2008, 238, put that in perspective, Chicago had 38,000 lines. And anyway, so we, we sort that data out and we went from actually in Chicago, went from 38,000 lines to 900.
04:44:45
And lot of those nine hundreds were the only ones that we actually ended up keeping and, and using as this is what we want the best way to explain it is the burger king logic. So back in the day, this has been a logic for like 40 years. So McDonald’s puts millions of dollars into their research to figure out what’s the absolute best corner to be on. And then they open up a store there and then burger king opens a cup up across the street, right. Because burger king knows they’re there. It’s gonna be good for us too. Right. So it should wanna do is you wanna say, okay, this guy’s done it. And this is how well he is done. We can do that. Right. Or we can do that better. So that’s, that’s my take on, on data.
04:45:22
So whenever you’re analyzing a market, you’re looking at who’s, who’s the, you know, versus regulations versus, you know, HOA, you gotta make sure that you can do this, but then next is you’re looking for the McDonald’s like, who are the people that are bringing in the money? Once you have that information, you’re going into the listing. And you’re finding, you know, is what they’re saying. Makes sense throughout the span of the year, or is it just during a particular season? Because air, air DNA is just gonna tell you, Hey, this is what it is throughout the whole, you know, throughout the whole year based off of maybe only a certain season.
04:45:58
So what, so, what you’re doing is you’re, you’re just looking at it across. Okay. And then, but when you’re working with an investor and you’re trying to give them hard numbers, I mean, these are people that are throwing out big numbers like this. How do you, how do you collect that information? Like how, how, how, you know, if, if you’re trying to be there, like SA what information do you need to present to someone if you’re only given, you know, kind of like this half data, and there’s this amount of data that you have to kind of manually scrape
04:46:27
You just gotta manually scrape you like that. You know what I mean? Like you gotta put in the work to, to literally scrape it. Like, that’s that, that’s what I did. I, you know, you, you have the information, the information’s all there, but you gotta take that information and compile it into something that makes sense. And you know, I’m not, I’m not, I’m not, I obviously I’ve talked a lot about it right now through my experience. I’ve been able to learn more and more about how to put these sort of things together. But I, I did it by watching, by learning from a friend who’s an accountant, right. Or watching YouTube videos, or like learning about these different things. Like what is a financial report that an investor wants to see? Like, what are they, what are they looking for? Right. What numbers matter mostly to them?
04:47:07
And how can I show that to them to make sure that they understand what, what is there? And if you’re saying like you just have half data and there’s a lot of like manual scraping that needs to go down. What if, if air DNA is the only option, we’ll talk about something later. But if air DNA is the only option, then you have to manually scrape and get to the, these, these McDonald’s is right. McDonald’s and, and then be able to take information and plug it into a financial report and break everything down for an investor. So I’m not gonna try to explain, you know, every single way to put together a financial report, because, because Google will, YouTube will do a much better job. Right. But there’s, that’s just essentially it, you just take the numbers, you work backwards and, and you know, there’s a lot of courses out there and a lot of articles that’ll just teach you what are, what’s every single expense you need to consider.
04:47:53
Right. How much? So here’s one thing that people miss the cleaning fee. Okay. So if you have an Airbnb and there’s a cleaning fee, the thing that people miss is they assume what the cleaning fee is before they even know what it is. So they’ll say like, oh, the clean fee is gonna be a thousand dollars a month. Well, no, maybe it’s not. It’s 800, maybe it’s 2000, right? Some places it’s more expensive. A clean could be $50 in one city and 150 in another city. Right? Scottsdale. It’s like $200, $225 a clean, right. That’s a lot of money that’s coming out here in Chicago for the exact same size home. It’s 125. It’s a hundred dollars difference when you’re doing eight clean a month, that’s $800 difference in revenue. Right? So you, you gotta just like figure out what, what are the actual numbers and do the research, just every line, do the research on the line, like put, put in that work. And the only way you’re ever gonna close an investor is if you put in the work, if you can sit there and show how much work you put into every single last thing, if you don’t, if you, if you didn’t do that, the investors gonna be able to see it, they’re gonna be able to understand, and they’re not gonna give you not gonna give you the money for a home. And also a, landlord’s not gonna give you his home property manage. Right. It’s simple as that. So, and that’s, that’s my take.
04:49:04
Yeah. And, and at which point did you, are you still going the arbitrage model or at which point did you say that you wanted to start focusing on the property management more?
04:49:15
It happened after the home in Scottsdale that fell apart. Because like I had mentioned, you know, one home at, at a certain size of business can really pull you, take you down. So what, so, so what we did was that, that actually we almost went broke twice. So the first time was the first winter. The second time was the second winter, right? Those slow season kill you. The first, the, the first season, the issue was that we opened up homes right before the season. We didn’t understand our cash flow. The second issue was that we had a home that tore apart our bank account, right? The rent on that home, by the way, $4,500, just the rent right now, obviously we’re, we are, we’re doing okay through the winter and things like that. But, but it, it, when that’s polling at you, right. That hurts.
05:50:01
And so, so we going through this winter, like, you know, we’re, we’re realizing like we need to increase these profit margins. And the best way to possibly do that is to use this property management model mixed in with our Rental arbitrage model. And then, and, and you combine these two and it, it just allowed like cash flows everything, right? So if you don’t have that cash flow, especially with the seasonality, like you’re gonna be screwed. So our whole plan right now is by that time we hit winter three, our home, like we’re gonna, we’re not gonna be worried at all, right? Like we’re gonna get through winter three without a single word because of how well we’re gonna push through everything. Watch every single dollar comes through and make sure our profit margins and cash significantly increase in reserves and all those things online. So, however, when you know the numbers, there are certain homes you have to do as Rental arbitrage. There are certain homes you would never want to give up and to a landlord. So I have one home as an example that makes me $50,000 on an annual basis net. Okay. That’s one home net, 50,000. So it makes $120,000 a year. And my expenses are 70,000 on it. If I did it as a property management model, I would be making 20,000 a little over 20,000. But on this, I’m making
05:51:14
20,000 is
05:51:14
Still good, but I’m gonna take the risk to double that money. Right? My risk is next to none other than the furniture I gotta get into, but it’s just, you know, it’s the same size home as some of my other lo locations, it’s just in a significantly better location. So I, I have two of those one, that’s doing 51, that’s doing 40. And I don’t want the landlords to, to switch to property management simple as that. Right. Like I just don’t want them to. So whenever I find one of those guys, I’ll set that up as property management all day long, all
05:51:39
Day long, Jon, I, I, I love it. I love, I love what you said because that’s, that’s the model that, that, that we, we utilize as well. And I, I, I encourage people because a lot of people come into space and they just think, you know, right now it’s Rental arbitrage is the, the shiny object it’s oh, Rental arbitrage. You can make all this money. You can double your, your note. You can double the lease. But what people don’t realize is like you were saying, there’s those slow seasons regulations do change. I mean, you’ve, you’ve spent the past two years running into obstacle, obstacle, obstacle, obstacle. Yeah. And, and, you know, it can impact like, what you were saying was parades principle. You know, that, that, that, you know, 80% of your, you know, that 80 20 rule where that one property could be taken up 80% of your time while the other 20% is making you, you know, most of the money, this one, you know, this one property is, is really just draining you.
05:52:27
So you decided to throw in the cohost model, just something that we teach on Vacation Rental machine, where you’re able to basically, you know, if your ROI is, let’s say, you know, you know, it’s gonna take you a, let’s say eight months to be able to get your return on investment back. If you have the cohost model in there, and you’re, you’re able to counter that, you can, you can gradually just kinda level out so you can make, basically make your ROI lot sooner. And then at that point, it’s like, it’s just all profit after that.
05:52:57
Exactly. Yeah. That’s exactly it. And I think that the, when it comes to those two models, right. What you said, sort of Rental overage is a shiny model. I think that’s because it’s an easier sale. When you have no experience, you can go to a landlord and say, I’m gonna figure it out. I’m gonna take all the risk, but you can’t go up to a, a landlord and be like, I don’t know what I’m doing. Take the risk with me. Right. You know? Right. So, so that’s, so it does actually make sense to start with the Rental arbitrage model, maybe on the, like, even if you did a one BU a one bedroom, right. That’s a, that a super small risk, but you made sure there was still like, maybe you’ll make like 2,500, 5,000 throughout the entire year, like nothing. Right. But the thing is, is that you’re gonna learn everything from that.
05:53:39
Right. My first two homes in Michigan that failed, I learned everything from, I learned enough to be able to raise $250,000, right? Like, so like, you know, the homes failed. I learned so much to be able to do that. So if you, you could take a, the tiny, like a studio, just in a good area, put barely any money into it. Learn every single last thing over like a three month period, and then go to a landlord and be like, look at, this is what I know. Like, along with, you know, listening to podcasts, like your machine podcasts, where they go through, you know, how to do the, learn, how to do that while doing it at the same time, then you can go to a landlord and be like, I’ve already got this one. We’re doing it this way. Here’s the data. This is what we’re doing. This is how we’re gonna put this together. Let’s take the request together. And then if the numbers make sense, the landlord’s gonna be like, yeah, let’s go.
05:54:17
You know, if you’re, if you’re trying to level out your arbitrage and your cohost, how do, how do you know when you come up to a deal? If, if this is something that you should be taking on yourself, or if you should be, you know, working with the landlord or, or investors to be able to turn this into a cohost property.
05:54:36
So it actually, so from my experience, it’s gonna depend on the way that the referral comes to you and the way that you approach somebody. Okay. So, perfect example is I, you know, I had a, a landlord come to me for the, because I was promoting the property management side and his property, I would take on as Rental arbitrage, but I came to him with the property management. And when you do that, you gotta show him all the numbers. You gotta, you gotta show him every single last thing. So he sees it. Right. So when he sees it, if he goes, well, I’m obviously gonna take it, right? Like, this is one of those homes where it’s gonna make a good amount of. So he is like, he’s obviously gonna take on that risk. I’m okay with it. You know what I mean? Because cuz it is, you know, we’re, we’re still making good money.
05:55:13
So it is what it is. But there’s another example. A home actually just, just went for rent directly beside one of my other homes that I had the very first home that I got it’s nicer, but it has one less bath bath, but it’s significantly nicer. It’s like completely redone. And the rent is $300 cheaper than what I’m paying on the other one. And I, so I’m looking at this, I’m like, well, that’s a that’s, that’s like, it’s like a 30, I would say about 30 to 35,000 a year, property profit, all Rental arbitrage model. So I’m actually, I’ve approached that landlord. So as Rental and reached out to him and said, this is what I, I wanna do. Can we, can we talk about it? Right. And so he’s been approached before by some idiot because the information he had was ridiculous. So we’re gonna, I’m gonna try and walk him through that and like make sense of it. And if it, if it makes sense, then we’ll, we’ll go the charge model. Right. So it’s just matter of the way that the, they come through. Like if a referral comes through the, like, here’s the, this guy’s gonna show you how much property you can do. You gotta go property management. Right. So anyways,
05:56:14
I love it. And I love, I love what you said. You have to, you have to, you know, walk the landlord through because a lot of people might be coming into the space and they say, I wanna turn your property into an Airbnb and make money off of it. And then it just ruins it for that landlord. They’re like jaded, whenever a new person comes up to them, they’re like, no, this is a legit business. Like yeah. You know, I, I think, I think that’s really great, Jon, that happened, Jon, that, that, that is so cool. And definitely, you know, I, I know you’re very data driven and you know, we were talking before this show about some of the stuff that you have going on. So you you’re, you’re from all of this research and all this stuff that you’ve been doing, you you’ve kind of been coming up with some, some tools to be able to utilize that you can provide to property, property manager or to landlords or to your property investors if you are taking on clients.
05:57:05
So I, I think it’s really cool. I definitely, maybe we can get you on another show where we kind of walk through your tool and see, see how that works. Because some of the stuff that you were saying was like air DNA, you know, it’s, it’s, it’s something that, you know, all of us, you know, professionals that when we are looking at this data, you, you can’t just take everything as, as it is. And I think your story of how you got started and where you are now really shows that it, you know, you can’t just base off the numbers. There’s other factors that come into the play. And there’s also things that you should be presenting to property investors. If you are taking on management, you know, if you’re working with an investor and you’re saying it’s gonna be green all year, but in actuality, it’s, it’s actually, or in certain seasons or you don’t take a deep dive into the numbers, into the listings.
05:57:49
There’s a lot of things that, that come into place. So this is an exciting time for a lot of new people that are coming into the space. There’s a lot of new tools and a lot of new things. So I would definitely like to get you on to maybe share about, you know, some of the, some of the next moves that are coming into the space, because, you know, if, if you know, these things actually do turn out, like what, what you say that they are. I mean, that, that, that saves us a lot and also allows for us to be able to grow our businesses as professional hosts. What’s, what’s the best way that anybody can reach you. If they, if they wanna know where’s the best location that they should be investigated. Cause you seem to know
05:58:28
You can send money to my Venmo. And then I can tell you
05:58:31
Bitcoin only please.
05:58:32
Yeah, yeah, no, you know, I’ll give my, I’ll give my email because I like, I like when people actually reach out to me, if you have, if you have a question, if you, you need some advice or you want, you wanna figure something out, I’ll you please do. Right. So, so I like, I do like to talk to people I’ve done this one other time and I did that and I had a lot of people reach out to me and it was, it was very insightful. And, and I, I found that there was a lot of good connections there. So if you wanna reach out to me, my email is John
05:58:59
I’ll I’ll, I’ll include it in the show notes.
05:59:01
Perfect. Okay. Okay, cool. So you’ll include it. Reach out to me, I’ll respond and, and give you as much information as I possibly can and, and help you out wherever I can. But if, if I already give one line of advice, you make sure that you understand your numbers from the data through and through before ever signing a lease. I’ve seen too many and talked to too many people who have signed on a lease in a, in a location, in a, a unit size that would never make them money, no matter how hard they tried and how well they did. You just, you have to understand that some areas are better as an annual Rental, and some areas are better as an Airbnb. You need understand that and do not sign a lease unless you understand that. Okay. That’s my, that’s my line of advice. Everything else comes around it, but that’s, that’s biggest thing. Okay. Otherwise you’re not gonna make money. So.
05:59:52
All right. Thank, thank you so much, Jon. This, this has been just a, a, a really impactful episode. We have so much information for people that are coming into the space. You know, it’s not, it’s not all, you know, gold and, you know, cash just coming out of your ears. I mean, there, there are those seasons. And like you were saying, John, you know, with those properties that are profitable, you know, you’re making like $1,800 net is what you’re saying per per listing. And you have, you know, seven arbitrage listings, three, three cohost listings. So, you know, there’s, there’s a lot of money there, but like you were saying throughout this episode, there’s, there’s those high seasons, there’s those low slow seasons. You have to learn how to be able to take your cash and use it and safeguard it so that you can expand and that you can also protect yourself so much. Good information definitely recommend for those of you that are getting into that Rental arbitrage or cohosting space. Take a listen to this episode again, and really, you know, let this sink in because these are the risks that are involved in this business. So if you want to grow and scale a profitable Vacation Rental machine, then you definitely want to, he, he John’s tips in this episode, but thank you so much, Jon. And until next time, host nation, keep on hosting.
06:01:02
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