Airbnb entrepreneur Sean Rakidzich says it’s entirely possible. He’s been running his Airbnb business for seven years now. He’s got more than a hundred properties listed with ’em, doesn’t own a single one, still makes seven figures a year. How? Simple, Sean says. You take advantage of the value gap between real estate (some landlord needs a tenant for his vacant apartment) and hospitality (four friends are gonna be in Austin, Texas next month and they wanna stay someplace cool downtown).
NEXT: How This Compares To Airbnb Rental Arbitrage
“As I grew my Airbnb portfolio, I focused on finding buildings that I could get rent from at a nice price that I liked, compared to what I thought market rents were,” Sean says. “And then I’d get the landlord to give me rent for free on the front-end in exchange for a longer lease or a fast move in or other forms of influence. Which helped me pay for furniture. And then I put it on Airbnb at a huge margin and then that cash flow came back and I had more cash to reinvest.”
“And I snowballed my Airbnb business off of the concept of low rents, high nightly rates, and free up-front lease concessions to be able to fund my furniture purchases,” he continues. “So now I’ve got over one hundred apartments on Airbnb, and I’m paying rent on all of them, but because they’re fully furnished and have utilities, they make these huge markups. Now I think this is where a lot of people get tripped up. We are using real estate, yes. An apartment or a house. But.”
“Just because it is the same product, the same literal square footage that you would use in a real estate business, like a long-term landlord seeking a long-term tenant, the product is no longer the same. We are now taking real estate and moving it into a real estate-adjacent industry. And a lot of real estate investors get too focused on where they want to make their money, which slows down how much they can make, right? They wanna build equity in a property.”
“So they take out a mortgage and buy it and put a tenant in there. But, the problem with this model is once you get to scale, once you get to four, five, six properties, those twenty-percent-down mortgages become really cost constrictive for the business. And this is where the millionaire mindset comes in. If I’m gonna invest money into a business, I wanna get the greatest return as fast as possible. Airbnb rental arbitrage [not owning the properties] achieves that.”
So here’s the bird’s-eye view. You’ve got Airbnb, Vrbo, Booking.com, right? These are called online travel agencies. You can put a piece of property that is typically reserved for long-term-only use, and as long as you get permission from the landlord and you’re in a city where the regulations are friendly enough? You could put that property on the short-term rental market. And you’ll get business through Airbnb and the other sites directly, but you can also do your own marketing and pour fuel on the fire.
When you do it right, you need very little cash to get started. You can start making money fairly fast and the margins are good and plump. Building an Airbnb business without owning any houses or apartment units has allowed Sean to become a self-made millionaire. The strategy isn’t perfect though. It’s competitive. You’re at the mercy of Airbnb, who could ban you without warning. And there’s that whole part where you have to sell a landlord on why they should let you list their property on Airbnb, which is quite the challenge.
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