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In this episode, David interviews Brian Page the founder of the BNB Formula. David and Brian talk about the several advantages of short term rentals. Brian wrote a book which can be found at Brianpagebook.com . He also has a course that he sells. Check it out at BNBFormula.com
Don’t forget it always starts with buying right.
You MAKE your money when you BUY, you get PAID when you SELL
So today we are going to have a conversation with Brian about AirBnB properties. So realizing that no one at the time was teaching how to build and scale on AirBnB businesses, Brian created a training called ‘The BnB formula’. We are going to talk about that today, guys.
His master class is now the world’s best selling BnB training, where he has taught thousands of people from 38 countries, and I am sure that is growing, how to build six to seven figure AirBnB businesses, with several of his students now doing over one million dollars in bookings annually.
Brian has worked with some of the biggest heavy weights out there like [00:02:16.09 – inaudible] Lopez, Mike Dillard, Kevin Harrington, Dean [00:02:25.23 – inaudible], and Grand Cardone, and has been featured in Forbes Entrepreneur and Inc Magazine. He is passionate about helping people create new sources of income, and become financially free. Welcome to the show Brian Page. How are you doing, buddy?
Brian: David, good to be here, thanks for having me on the show, I appreciate it.
David: Awesome, thanks for coming on, man. So let’s talk about some AirBnB’s, let’s do it.
Brian: I love talking about it.
David: Cool, cool, cool. Tell us a little bit about how you got started in real estate first and foremost before we jump in. I want to get a little bit of background on you.
Brian: Sure, I graduated from college, worked a traditional job in the hospitality industry. I hated what I was doing. I knew that I wasn’t going to go down the traditional road, so I started researching what I could get into. I started looking at stock, stock investing, trading options and all that kind of stuff. I looked at real estate, and I thought real estate would probably be the best model for me, it didn’t look too difficult.
Brian: So I jumped in with both feet, learning how to flip houses. This was around 2001, ended up flipping over 100 properties, renovating and flipping, and building a whole portfolio of properties, got into construction, did wholesale deals, you name it, I did it all. Did well up until I didn’t, up until the big crash. That was kind of– for many years– now I have recently got back into buying and renovating properties again.
David: Okay, so at the time of the crash, what was the reason that– that was your demise? I am just kind of curious. If you were fine and flipping properties, were you just held with a lot of properties that suddenly lost value? Or did you have a ton of rental properties that were over leveraged at higher prices they were then worth? What was the ultimate cause that the crash effected you so much?
Brian: That is an astute question, because not a lot of people ask that. It’s not that I was getting into flipping or had projects going on that I couldn’t sell, it was because I was getting into the speculative side of the market. I was building multi million dollar beach homes at the time. I had a lot of properties on the coast, and was not building them with any particular buyer in mind, it was only on spec. When the market turned, of course the very first part of the market to get hammered was the vacation properties, second homes, that kind of thing. I could not sell any of my inventory, and I had all my cash tied up in this properties. They essentially dragged everything else down and that’s how I lost everything. I didn’t go bankrupt but I might as well of been.
The lesson here is if you are a developer or a speculator, you need to be very careful, because they tend to go out of business faster than anybody else. So now I have learned– I am back into buying properties, building a portfolio, that kind of stuff. The speculation is not something I care to do again.
David: Right, me neither, man. I am with you on that. Good answer, that makes sense. So now that you are– you have gotten through that hurdle, so you’re back, you’re doing rehabs again. Are you building homes? Or renovating homes?
Brian: No, my primary business is AirBnB. The thing I teach is how to use other people’s properties which we will get into. But, I also believe in buying properties, paying them off and building equity and all that kind of stuff. I am not buying, renovating and turning properties into AirBnB units, but I am not selling them, I am not flipping them.
David: Do you have any long term rentals? Or is it all short term?
Brian: It’s all short term.
David: All short term.
Brian: I don’t do any long term, I never will again probably. The numbers are too good. So that’s what I’m doing now. Partnering on a lot of properties, still doing a lot of leases, and controlling properties I don’t own, that is a majority of my properties that I do. Of course teaching is a whole other business, I educate people and teach them how to do the exact same thing. I have multiple companies and multiple businesses, but I am still now involved in the nitty gritty, and the renovations, the single family homes as well.
David: Sure okay cool. Well Brian, let’s jump in, man. Why– sorry, how do you make money on AirBnB without owning a property? Let’s start with that question. I think a lot of people are wondering, how they can get into doing AirBnB’s if they don’t own something, right? Most people think they have to own a property to be able to rent it out via either long term or short term, doesn’t really matter, right? But you’re here to tell us today that you don’t even have to own the property. So tell us how that works.
Brian: I call it property hacking. It really is a pretty cool hack. The way I do it is totally ethical, totally above board, we are not taking advantage of home owners, and we are not sneaking around doing this. We are letting the owners know what we are doing. The reason I did it this way was because after the real estate crash, for several years I wasn’t doing anything at all related to real estate, and I wanted to get back in creating cash flow. I was working a traditional job, I was tired of that, I didn’t want to be employed by someone else. So I was looking to create cash flow, and I knew AirBnB would make money, because I was making a lot of money with my little second bedroom on the apartment that I rented. So it was kind of a chance encounter on a plane with a wealthy Angel investor that he looked at my little tiny side hustle business and said, hey won’t don’t you control a bunch if properties. You don’t have to own them, you only have to control them. I was like, woah how do I do that? He said, simple, leases or you can partner with the owner. That’s what I started doing. I went out and rented a little one bedroom apartment, put it on AirBnB. I made triple what I was making in rent the very first month, then I did that again and again. Leasing a whole bunch of properties, then eventually I got smarter and thought, well what if I can partner with an owner? I don’t even have to sign a lease. I started partnering with owners, where we share the revenue. Essentially that’s what I do, I teach people how to do the exact same thing. You can control a property through the lease with an agreement that it is going to be a , and create incredible cash flow without ever having to come up with a down payment or buy anything.
Now of course if you’re listening and you are an investor, I am sure a lot of people in your audience are investors, that’s great. Just use properties you already own. This opens the door to everybody to start making cash flow even if they don’t own anything.
David: Okay very good. So before we jumped on this show, we had talked for a minute, and you had mentioned– work less and have more, that’s your philosophy. Can you explain a little bit more to our audience about what you mean by that?
Brian: Sure, little bit controversial, but I am anti-hustle your face off, and anti work all the time. I think there is a time and a place for that sometime. But, I think that if you define wealth as just money, just net worth, just income, then you are missing half the picture. The other thing you need to be wealthy in is time. If you are making a gazillion dollars a year and you don’t have any time to see your family, or do anything that you enjoy, or take care of your health, or take time off or whatever it is, you are not really wealthy in my mind. You have to have money plus time. Time is finite, money is infinite. There is really money everywhere. I was just talking to Gregg [00:09:36.21 – inaudible] last hour, interviewing him for my podcast. He said, look time is way more valuable than money, and it is because there is only so much of it. I think people need to value their time, and start looking for ways that they can make a lot more money per hour, maybe with no time involved, and that is what real estate can do for you, and there are many ways to do that. So passive or semi-passive income, and that is what I teach with AirBnB is to remove yourself from the process, because I don’t want anybody to run their little hotel so to speak, I want them to outsource all that, so they can create cash flow. That is the name of the game; instead of trading your time for money, you need to start building assets, borrowing assets, or leveraging assets to create income.
David: Okay, and I love it, I love it. So if you don’t mind me asking, how many AirBnB’s do you have currently?
Brian: I’ve got a dozen, I’ve got 12.
Brian: Some of my students actually have surpassed me in the number of listings. I have students who have way more listings than that.
David: Do you own any of these at the current time?
Brian: I do own some of them, yes I own some of them, and I am in the process of buying several right now, not quite yet ready because I am in the process of renovating a 1500 square foot house right now, another one that is ready to be renovated right afterward when I am done with that, crew is about ready to move to the next house. So I am renovating, I am doing that. I am also partnered on some big high end homes, multi million dollar homes. So we have properties in [00:11:11.29 – inaudible] Arizona, we have a whole portfolio that we are looking at picking up in Florida, 18 homes in Florida, all multi million dollar homes, they are all going to be short term rentals. So I am not looking to buy them, I am looking to control them through long term leases. So I am doing that as well, so I have all kinds of different things going on there. Yeah, so I am still actively involved, I am still doing that. My students, the really exciting part is, I have students who have just out earned me. They have just gone gang busters with that I teach. That has been great for them. So I have been able to see a lot of people who had no experience get to six figures or almost crack seven figures. I have three students who are about to do that, a million dollars in bookings in AirBnB. That’s tremendous for people who have no experience in real estate, most of them have no real estate experience. That’s what I’m really excited about.
David: Awesome. Let’s take a step back real quick, Brian. You had mentioned that the first one you had done was– at a single bedroom, like a one bedroom?
Brian: It was a one bedroom apartment behind somebody’s house. It was a little separate entrance apartment.
Brian: I approached the lady, she had a ‘For rent’ sign in the front yard. I just said, I got this crazy idea; I want to lease your place but I don’t want to live in it, hear me out, and I just kind of explained it to her. Took her a while to agree to do it. But, she did finally agree. I went in there and furnished it really cheaply, and actually made back my money on the furnishings in the first month, then every month there after, then making about $1800 to $2200 net, somewhere in there. So that kind of fried my brain a little bit, because when I owned a bunch if real estate units, I didn’t make more than $200-300 on a single family house by the time I rented it, paid the insurance, taxes and all that stuff.
Brian: To make ten times that is shocking to me, and I don’t even own it and I have no real cost into it. I had first month’s rent, deposit and some furnishings, but that’s only a few thousand bucks. That kind of shifted everything for me. Wow this is cool, and I started looking for more; condos, houses, town houses, that kind of stuff.
David: I am under the impression that the AirBnB model works really well for three, four, five bedroom plus properties. Do you disagree with that in terms of properties with one bedroom or two bedroom? The reason that I say this before you answer, is that A, you can’t charge as much for a smaller place, B, they are way more saturated in the market having one or two bedrooms versus these places that people may want to rent out to have a baby shower, or a party, or something along that line, or a business meeting with their company, something along those lines. Does it matter on the size of the unit, the number of beds?
Brian: It somewhat matters, but everything is hyper local, real estate is always local. It is kind of like saying I believe flipping single family homes is better than flipping any kind of property. If you are in New York for example, in Manhattan, there are no single family homes to flip, you are going to flipping condos, flipping a totally different kind of property. So the short answer is no, it is highly lucrative to do studios and one bedrooms because they cost so little to rent. That is like anything, if you are in a big city, in a major metropolitan area, the cost to get a one bedroom is significantly less to get a three bedroom house or a four bedroom house on the edge of the city. You are still going to make $2, 3, 4 x, or whatever your cost is if you turn it into a short term rental. So yeah, will you make more with a single family? Yes, but you are also spending a lot more, you are committing to a much larger monthly payment. You are committing to furnishing a much larger property, it is not easy to furnish a three bedroom house and do it right, and have it look amazing and stage it correctly. It is very easy to stage a little studio. I always tell people to start small, start with what is comfortable to you. If you are an experience real estate investor, and you have a whole bunch of single families or are used to doing that great. I have one student that does luxury properties for a living, and decided his first property should be a 3 million dollar house and he did, and he did fine, he felt comfortable with the nine thousand dollar a month mortgage. That does make really good money on AirBnB, so that’s fine. So the short answer is– as far as saturation I don’t see that at all, because there are a million people a month, sorry not a month, per week, a million people per week that are signing up to use AirBnB for the first time, very first time. Over 50 million people a year signing up to use it, and there are not 50 million hosts signing up, not even close. The demand is still exceeding the supply of properties, and there is huge opportunity.
David: How long do you think that will continue?
Brian: I don’t know, that’s hard to say. AirBnB is– and home sharing is– people are aware of it now, but still most people don’t use it. The latest surveys show that while the awareness is high, the actual usage is very low. So if you asked ten of your friends, do you actually use AirBnB, most of them would say no, even though they know what it is. So most people are still using hotels, most people are still traveling the traditional way. So I think there is still plenty of opportunity anywhere really. I have seen that all the time, people are always starting out with me for the very first time, within 30-60 days they are doing it, they are making money. I don’t have a crystal ball– but the opportunity is there for sure right now for people that want to jump in. It’s not long term, you are not buying the property, you are not buying it– like in the bubble, you are buying something at the top of the bubble, then could lose a tremendous amount of equity or value when the market collapses. You are either leasing or– not even leasing at all, you are doing a month to month agreement. There is no risk, worst that can happen is you shut down the AirBnB within 30 days.
David: Yeah, just move out your stuff.
Brian: Virtually no risk. I don’t know of any real estate play where you can have no credit involved, no money down, which is when you partner with an owner, and no long term commitment. I have done it with bad credit, and I show people how to do it with bad credit. When you partner with an owner, you are not going to run a credit report if I am offering you a service of listing your property on AirBnB, that is never going to come into the conversation.
Brian: All kinds of opportunity for really anybody to get into this.
David: Interesting, interesting. Okay, what would be my earning potential if I were just to list a room on AirBnB?
Brian: A room? That’s hard to say. I don’t really teach listing rooms, I mean it’s fine to do to make some money. I only teach stand along properties.
Brian: But a room you could easily house hack your own apartment or house. By house hacking I mean make enough to live for free. It’s very easy to pay your mortgage with one room in most places. But, how much you make totally depends on where you live. I have students that are in small towns in middle America, and they can actually– let’s say they are paying $500 a month for their apartment which sounds really low, but that’s what people can pay in these small markets in the middle of nowhere, versus someone who is living in LA, and they are paying $3000 a month for a one or two bedroom there, and they are renting out one of the rooms.
Brian: It is all just relative.
David: All kind of depends.
Brian: Like selling a house, flipping a house, what can you make on it, all depends what the market is, and what the house is worth when it’s fixed.
David: Very interesting. Excuse me, how do you work around a city’s restrictions? This has become something I think is becoming more and more of a barrier to entry may be– a good way to word that. So I live in St Louis, I’m in middle America, the Mid West. Just recently we have had some legislation that has increased the amount of taxes for short term rentals. Let’s talk a little bit about some of the restrictions, or just some of the legislation that may be affecting this business.
Brian: Okay, well the bigger picture first before I answer that is that AirBnB is a disruptor, it’s a massive disruptor just like Uber is upending the taxi industry, and essentially making it irrelevant. Uber and Lift and these kind of companies. Well AirBnB has come in and disrupted not only the real estate injury, it has disrupted the hotel industry which is a very powerful industry in most large cities. So you see some pushing back, some grass roots pushing back, which I don’t really think it’s individuals, I think it’s hotels. They are very threatened by this. So hotels are very powerful, they have a lot of politicians that they are linked to, a lot of money that they give to cities. AirBnB is trying to compete with that, and AirBnB has started working in cities like Chicago and turn the rules on their head essentially to get approved short term rentals. They are doing that by collecting money and giving it to the cities, it is all about money. So they show cities like Chicago, hey if you let us do home sharing, this is how much revenue we are bringing in. So AirBnB is starting to collect taxes for the hosts. So when you are on AirBnB, a lot of cities now, AirBnB will collect the taxes, then pay it to the city. Occupancy taxes, hotel taxes, that kind of stuff.
Your question about restrictions, yes there are restrictions, there are some cities where you can’t really do this at all, and some cities are very difficult like New York city, San Francisco, some of the larger cities, Atlanta. What we had to do, I had to spend a lot of time and money with a research firm to find out what’s going on, what’s happening across the whole globe, and what’s happening in the US. We researched 2000 cities. So every town above 30’000 people population we put on a list, on a spreadsheet. We classified them by– is home sharing allowed or not allowed? What we found was 9 out of 10 towns and cities over 30’000 people allow home share, 10% do not. So 1 in 10 that it’s not going to be allowed where you live. What was interesting was that I was finding some of my students or a lot of my students actually lived in those restricted cities like San Francisco and New York. I was like, how in the world are they doing this? I started reaching out to them. I said, how are you doing this? Some of them said, I am doing it despite the rules, they don’t enforce the rules here, a lot of cities don’t enforce the rules. But, I found there is a larger segment of students that were doing this simply around the restricted areas. Atlanta is a perfect example. Atlanta is a small city, it’s not that bit if a footprint, but Atlanta metro area is huge, and is made up of millions of people. So the people who live in Atlanta, they are not doing it in Atlanta downtown where it’s not allowed, they are doing it in all the towns surrounding all the different metro areas.
David: Got it.
Brian: So I liken it to this; if you are in real estate, and you are going to buy a residential house, you can’t turn that into a coffee shop, it is not zoned for that.
Brian: You also can’t go live in an office complex because it’s not zoned for that. Same with short term rentals, there are zones where you can’t do it. It doesn’t mean the opportunity is not there, just like– got to get in the car and drive for 30 minutes or whatever to the next town and do it there.
Brian: There are towns– there are some great towns to do this all over the country, and those are the towns you want to focus on. So I just tell people, look within an hour radius maximum or where you live, set up the listing, then automate it like I teach, you are not going to have to go to the property at all. I don’t go to my properties, I have electronic locks on them, I have nest cameras, I can see who is coming and going. I am not even there, I am not the person cleaning the property, my cleaners go in there. I don’t need to have a place nearby me. Now I have properties in multiple States. So go where the opportunity is, and a vast majority of places, 90% of places are open, so– that’s my answer.
David: Alright, I like it, good answer, good answer, Brian. How do you get an owner to put their property on AirBnB? How does that work?
Brian: Okay, so it’s all about pitching to the owners correctly. I do talk about this in depth, actually at the end I will explain how people can get my audio book. In my audio book I explain my story, so I won’t go into that right now. But, essentially when I started meeting with owners face to face, I met with hundreds of owners face to face. I found a lot of them were like, no.
David: You are just talking about the owners of a property that are not AirBnB, just owners.
Brian: Just people that have a property for rent, so they have it on Zillow, or they have it on the local paper, a sign in the yard ‘For rent’.
Brian: They are looking for a long term tenant. Now, I have to somehow shift their mindset to allow me to rent it. So what I’ve found–.
David: Even though you are renting from them, you are going to be essentially sub-leasing, right? Isn’t that the terminology?
Brian: No, I am not sub-leasing. Sub-leasing is where someone else signs a document saying they are going to pay the rent, and if they don’t pay it I pay it.
David: I am so glad that I screwed that up–.
Brian: You didn’t screw it up.
David: I didn’t know the difference there.
Brian: Everybody thinks this.
David: Everybody thinks that. So I am not leasing it then doing micro sub-leases, instead I am leasing it with an agreement that I am going to be renting it short term, right?
Brian: You are leasing and you’re hosting– sounds like semantics but it’s not. It’s kind of like– because somebody said to me, Brian people are paying you to stay there, of course you’re renting it. You pay to stay at a hotel, are you renting the hotel room? No you’re not. You don’t have any right to that hotel room. Same way when guests stay in an AirBnB, they don’t have any right to the property, they are not responsible for paying the rent, they are only paying me, and I have to turn around and pay the rent. I have to explain that to others–.
David: That’s a good answer.
Brian: Guess what? You’re not going to evict. You don’t evict guests. You evict tenants. There are no evictions because they have no right to the property. They can’t go to the police and say, well I have a lease you can’t come in this property; it doesn’t work that way. So it’s different. But even if it was considered sub-leasing, it doesn’t matter because really what it comes down to is getting the owner on board with what you’re trying to do. So if the owner wants to argue with me that it’s sub-leasing, that’s fine. Here is what I want to do, I want to rent the place from you, I will sign a lease right now, I will pay a deposit right now, I will pay my rent on time, I will maintain the property, I will take care of it. The only difference is that I am not going to live in it, I am going to let guests stay here. What i’ve found is that the owners only have seven or eight main objections to doing this. I had to come up with answers to all these objections in order to get a yes. Now, I can get yes’s all the time because I know how to answer these people’s questions. So owners are concerned with just a couple of things. I know this because I am an owner and I have a lot of properties with long term tenants. Owners are concerned with, are you going to pay the rent? On time without any hassle? Are you going to respect the property and not damage the property? That’s basically it, other than that what else could they care about?
David: I own 53 rental properties right now. If somebody wanted to come to me and do this, I wouldn’t really care, all I would care about is that I would get my rent, I get it on time, and that they are keeping the property maintained.
Brian: You may be concerned with liability, because liability is a concern. So what I’ve found is there are ways to combat this, every single one has a simple answer. So for liability for example, well I tell the owner, did you know AirBnB gives us a one million dollar coverage for any damaged that were to happen to the property? One million automatically.
David: Is that per booking?
Brian: Yeah per booking, one million dollar coverage. But, I go above and beyond that, I actually get an insurance policy for short term rentals. There are companies that do this now. It only costs a little bit per month, I pay for it, and I make you, David, let’s say you are the owner, I may you the beneficiary. I don’t get any benefit for it, I am going to pay your insurance policy. So now you are insured personally on your normal insurance police, you are insured by AirBnB, and you are insured by me. When was the last time a tenant offered to insure your property and pay the cost?
David: Never, that’s never happened.
Brian: On top of that, you are coming to come back and say, well I like that, but what about maintenance? That is going to be a lot of wear and tear on the property, all these people coming and going. I say, okay what if I cover all the minor maintenance under a hundred bucks? Would that help? Sure. So I am going to maintain the property, I am not going to call you about clogged toilets or any little stuff. I will just take care of it. Essentially– the other thing they say is, what if they wear out my property? I explain to you, well do you understand that every time a guest leaves I bring a professional cleaning company in? We clean this place top to bottom, it has to be spotless, it has to look perfect to be ready for the next guest. So your property will be cleaner than it has ever been, and maintained to the highest standards to ever have been maintained. That’s what owners tell me after I have been leasing for them for a few months, they are like, oh my gosh my property has never looked so good. I welcome them in, come on in, any time there is a vacancy, come on in and see the property. It goes on and on, and you start explaining to them that guests treat a property differently than a tenant does. A tenant looks at a property and says, this is my property, my space and they can do crazy things like put a satellite dish on the roof, or paint one of the bedrooms a weird color, or have their dog destroy the backyard. None of those things happen with a guest that is coming in for two nights, that is flying in, none of that stuff happens, and they don’t treat the property that way. It is very different. So I go through all this, I explain it all to them, I tell them how the guests already have their credit card on file with AirBnB, I already took a deposit from them by putting a hold on their credit card, I know who they are, they have reviews. This isn’t just somebody coming in and paying cash.
Brian: Once I explain all that to them, not every owner will say yes. I don’t care, I don’t care if 8 out of 10 say no, because it doesn’t take me one weekend to go see ten rental properties. If I talk to ten people I know I will get a few people that will say yes. That’s what I do. I sign them up and go for it. The worst case scenario is they say no they are still not interested. I say, David, how about this, you are asking $1000 a month for your unit, what if I can make you $1500 a month on that unit? Would you be interested? No extra work, you are not going to be involved. You say, yeah tell me how. Alright, we are going to take that property, I am going to put it on AirBnB, I will do all the work. If it brings in say, $3000 a month, which I think it will, you are going to make 1500 and I will make whatever is left after all the expenses. You will always be guaranteed your $1000, you will never make less than that.
David: In some scenarios they make make more than that.
Brian: You will make more than your thousand, and at any point you don’t like the arrangement, you just tell me to take a hike. I just need a 60 day notice so I can get the guests out.
Brian: So it’s a month to month agreement, is that okay? So why wouldn’t you do that, right?
David: Why wouldn’t you do that? Right, absolutely.
Brian: Do I make less? Yes, but who cares, I have a deal and now I can go find lease deals as well.
David: Love it, okay. So then tell me this though, is there certain parts of town that are going to be better for these AirBnB properties than others? What makes a good location? Everyone that is new to real estate I would think knows that– location, location, location, right? That’s the three most important things when it comes to real estate. How does the location effect the AirBnB business?
Brian: Great question. Yes it is all about location, but it isn’t just one location. So I live in a tourist town, I live in Charleston South Carolina. When I first started doing this people said, oh well no wonder it works for you; you live in Charleston North Carolina, tourist destination. So we started doing some research, this was before I had any students that were doing well, because I had just started teaching. Now I have thousands of students that are killing it in all kinds of places all of the world. What I realized is, most– a majority of people on AirBnB are not traveling for tourism. I know it sounds crazy, they are traveling for any reason people travel for, same reason people stay in hotels. Most hotels don’t cater to tourists, most hotels cater to the guy driving down the highway with his family and needs a place to stay, the guy that is on business and needs a place to stay in a big city. Same thing with the hotel industry. They cater to anybody that needs to stay short term. What I have found out after teaching this for a few years is that I have students that are in towns of six thousand people that are killing it. I’m like, how in the world are you doing AirBnB in a little town of six thousand? They said, this guy who is doing it there, a couple of different guys I spoke to, they said, well there are not hotels here, not even an option for a hotel, they have to stay in a home share.
David: Yeah they have to.
Brian: He is making money there. There are locations you need to focus on absolutely. It is all about location, but there is more than one location. So for example, if you are at a town that has a big convention center, then you could cater to convention center travelers. If you are in an area that is a tourist destination like this, and you want to be near the tourist things, but if you are just in a regular town and have a big employer like a hotel, like a hospital rather, or a big tech firm or something, you need to have your units near that. Maybe you’re in a college town, guess who is going to come to a college town? Parents, students visiting. You need to have your houses close to the campus. It’s the same thing; it goes on and on. There are like twenty different reasons people travel. So you just need to ask yourself, why would people come to this town? Where would I want to stay if I was in this town? Find the best property you can find in that area, that’s really what it is. I have students who have properties in the middle of nowhere; cabins in the woods in rural Canada. In the middle of nowhere, this guy has five cabins. Who is going to these cabins? He’s like, I don’t know, people who want to get away and get in the woods. It’s all location, but there is not one location.
David: How does AirBnB make their money?
Brian: Good question, I have never been asked that one. AirBnB charges a fee, luckily it is only 3% of what we bring in. So if you bring in $10’000 a month, you are only going to pay 3% of that to AirBnB for everything they do, which is a bargain. They are going to charge a fee on the guest side, so the guest is charged a fee as well. So they make money on both sides of the equation.
David: So the guests pay a fee at booking, but you don’t see that? So they only take 3% of what you actually get?
Brian: Of all bookings. I get to keep 97% of the money that we make on AirBnB on bookings, goes directly into my bank account daily. At the end of the month I pay the rent to the owner, the utilities and we are done.
David: Love it. In terms of that, I am glad I asked, because I didn’t know that. 97% is awesome. So they are going to take 3%. They collect all the money and pay you, so you never owe them anything, right? They just keep it?
Brian: Never handle credit cards or money.
David: So they handle all that? Okay. The guests that– pays, they don’t even know about that 3%, but that just comes off of what you receive, but then they also probably pay a little bit more in the beginning that goes to the AirBnB, right?
Brian: They pay way more on that other side, that’s where AirBnB really makes the money. People are used to that, because that’s just the way it works. You go on there and it adds it on.
Brian: Yeah that’s it, it’s all taken care of for you, you don’t have to handle any of the money. The guest is charged at the time of booking. So if they make a thousand dollar booking on a place, immediately it goes off their credit card. So if they book with you, there is no chance they are going to show up and not have the money, the money has already been removed.
David: So that’s my next question. Man, Brian, you nailed it. So when they book, they pay today? Let’s say I wanted to book two months from now. I pay today, so they hold those funds, when do you get paid?
Brian: Not until the day after you check in. The morning after you check in, because if you check in and I scammed you, there is no property there, which has happened. If there is no property there when you show up, or it’s a dump and you say, I’m not staying here, then AirBnB can handle it.
David: They handle the customer service aspect of it–
Brian: They handle it, they will settle it, but if you are staying there for a week, the day after you check in, I get a deposit for the full thousand dollars or whatever you are paying me to stay there.
David: For the full duration of that stay.
Brian: I am protected as well.
David: There’s not much– one day is nothing.
Brian: No, there is–.
David: Considering it’s a business day, right?
Brian: You are not going to get paid on days where no one checks in the day before, but yeah. If you get enough listings you get paid every single day. So there is no waiting for your money. The only thing you’re waiting for is to get your first booking. If I have a lease starting on the first, and this is what? I don’t even know what the date is– the 23rd. So If I have a lease starting on the 1st, that is a little bit too close for comfort. I want to book that first month up really fast, before I have to start paying rent. If I was going to lease a place from you, I would say, I don’t want to start on the 1st, I want to start on the 15th, which gives me plenty of time to start booking that calendar out. You can start booking the place before you have the keys to the property. That’s what I do, I look at it, take photos of it, start booking it immediately.
David: You start booking it without your furniture in there then?
Brian: If it’s not furnished you have to get photos of it furnished. So one of the listings I have for example, I already had photos of it furnished the way it was furnished before. I just explain to people, it’s going to look a little different when I furnish it, but the place is ready to be booked now.
David: I love it, man. You know this very well. What about other channel providers? I know AirBnB is relatively knew, I don’t know how long it’s been around, five, six or seven years maybe. But, it’s relatively new. I am 35, whenever I was in my 20’s, early 20s’, and I was going with my family to the beach or to the mountains for a vacation, we would always look at VRBO, where does BRBO stack up to AirBnB? And I think there are a couple of other big ones like Home Away.
Brian: There are other ones.
David: You work exclusively with AirBnB? Or do you work with these other companies? How does all that tie together?
Brian: Yes, I only teach AirBnB, I do use VRBO on the very high end properties, and it is a good option for vacation rentals which we’re talking about. AirBnB is the biggest. It’s the biggest and least expensive, it charges the smallest fees.
David: The biggest and the cheapest.
Brian: The biggest and the best. It’s kind of like– can you use other platforms? Yes, the same way if you started an Amazon store you could also sell on Ebay, but why would you if Amazon is all you need? You could go to other options, but just use Amazon, you can build a massive business on Amazon. To me, unless you are not booking your calendar up, you could use other platforms. What I teach is just AirBnB, only AirBnB. So there are other platforms out there, AirBnB is just the biggest, the best and the easiest to learn. It’s all you really need to do what I teach.
David: So it’s really unnecessary then to try and have all of your properties on all these different platforms?
Brian: Oh yeah.
David: I would think it is inefficient to do that.
Brian: You could, I keep bringing this back to like wholesale and flipping. Could you flip your property by putting it on a million different websites and going to a local REIA, going here– yeah you could do all that, or you could just find one place you could unload your properties. I never sold my houses on the MLS. I always sold my flips directly to other investors. I pre-sold them, so I did them in an unusual way, but it allowed me to unload everything I ever had without having to go list them. I just found a good channel that works. It’s the same here. VRBO is good if you are doing very high end luxury, it’s great for that, but that’s not what 99% of people are going to be doing, I don’t recommend jumping into a high end market with a sophisticated multi million dollar property owner that is not going to be happy with you just experimenting with their house. That is an advanced thing, but yeah AirBnB is all you need. It’s a great question because I don’t get asked that very much.
David: Got it. I only got a couple more for you, man. Is signing a lease for AirBnB risky?
Brian: Some would say it is. I don’t think it is. It’s risky if you don’t think you’re going to make money but you will, you will make more short term than long term. How much more? I don’t know. You could make 200% of the rent, 300% of the rent, you could make 400% of the rent. It just depends–.
David: Do you think on average– from your experience, are you making at least double from a long term rental to a short term rental?
Brian: Without a doubt, double–.
David: And that’s kind of at a minimum?
Brian: At a minimum. I would say 200-300% is average for my students, you can go even higher. If you have a thousand dollar rental, then you should look to net $1000-2000 per month, which is phenomenal when you think about it. You could make $24’000 a year on a thousand dollar rental, you could. I am not saying you will, you could make $12’000 a year but it doesn’t really matter. If you a thousand dollar cash flow coming in, it’s automated, and you don’t own the property and you can set it up in 30 days. That is phenomenal, that is killer cash flow, right? You don’t have to do just one, you could do a bunch of these. Yeah– I forget where we were going with this. But yeah, you can make a multiple of whatever your rent is– oh and leases. It’s risky to some people. I always tell people if you’re not comfortable, if you’re not confident with signing a lease, I am because I have a real estate background. If you’re not comfortable, just partner up on your first deal, work with an owner one on one, make half of what you would normally make. Then, now you are like, wow I am making– I am bringing $3000 a month in bookings in this little one bedroom, I am going to get the other one bedroom that is a block away, but this time I’m going to lease it–.
David: — you limit your risk, but you are also going to limit your reward; I love it. For those that have that fear of– well what happens if this? Or I don’t want to sign a year lease with somebody, partnering is the way to go.
Brian: You can build a big business partnering. One of my students is out in Washington State, she is 26 years old, and she just cracked– I think she told me $500-600’000 a year in bookings. So she is netting probably 200-250. None of the properties she has, not a single one has ever been leased. She only does partnerships. She has built a big business, shes on her way she is going to make half a million after a year of doing it.
David: She only does partnerships?
Brian: She has never signed a lease.
Brian: And she has never done real estate, and she has never owned a business. She was a bar tender and a college student drop out, she basically stopped doing college just to do this. There is big business either way you want to go. But you just make more per unit when you lease it, that’s why I like leasing.
David: Yeah, I love it, man. I love it. Brian, tell us how we can learn more about you, your programs– you have a book too, right? I’m interested in learning more about the book. Tell us more about that.
Brian: It’s right behind me, it’s more a booklet, but I have this on audio book where you can listen to it, just go to BrianPageBook.com, it’s two bucks for the audio book, you get to download it and listen to it right away. It tells my story and goes through the specific numbers, for people who like specifics, it goes into each property and how I was able to stack these things and scale it. If you want to just learn more about me and what I teach, you can go to BnBFormula.com. You can see I have 600 video testimonials on there, people that are killing it. It just tells you more about what I teach.
David: Sweet! So BrianPageBook.com for the audio book, it’s like two bucks, guys, come on you can afford the two bucks.
Brian: I will give you your money back if you hate it.
David: There you go, he’s give you guys a guarantee, love it. BnBFormula.com, that is more like your coaching program, right?
Brian: Yeah, that explains a little bit more about what I do and that kind of thing. If you read the book, it will tell you– essentially if you want to watch my presentation where I go into this in depth, I kind of walk you through how it is all done. You can learn more there too, either one.
David: Let me ask you one more question before we wrap up here, Brian. If you are new to real estate investing, and you don’t know a whole lot about it, would you recommend someone go into the AirBnB model versus the long term rental model if they were wanting to do this type of thing, versus the fix and flip or the wholesaling? Let’s just assume it’s just wanting to landlord and collect income passively, right? Would you recommend everyone this model versus the long term? If so, why?
Brian: Good question, I have not been asked that one either. Okay I have done all the different kinds of things, not everything, I have done the wholesaling, I’ve done the flipping, all that kind of stuff. This is so much infinitely more easy to do than any of those things, because you don’t have to know anything about real estate to do it. Really if you know how to lease– if you have ever rented a property in your life, ever used an app on your phone, any app, you can figure out how to use AirBnB, you can figure out how to lease. Then, it’s a matter of building a system to manage. That’s really where i come in. If you want to do one property you don’t need me to do that. You do need me to learn how to scale. That’s what I teach is how to scale. Most people that have gone through my training for example and have been successful– have no real estate investing background at all, and a lot of them have no business background at all. I have teenagers that are doing several hundreds of thousands a year, I have people in their 70’s who had no retirement plan and they are doing, and they have never even heard of AirBnB before me. So it’s super uncomplicated, and it’s a fast learning curve. If you can’t get a property in 30 days or less you are not doing something right, it’s not that hard to do. That’s what I teach in the course, you have to identify and get your property in 30 days. That’s my goal for everybody. It’s super easy, way easier than real estate investing is, I still love real estate investing, but this is more like a side gig that you can leverage into something really big if you want to. We are all about side gigs these days. This is something you can do on your spare time, on the weekends, go find a property, but it on AirBnB and start building.
David: Boom! Guys you heard it directly from Brian himself, the founder of BnBFormula, he has a book at BrianPageBook.com. That’s audio right?
Brian: Audio book.
David: I am going to check that out today. If you guys are interested to learn more about how simple it can be to get into real estate with little to no money and or little to no lease experience, right? Check out Brian at BnBFormula.com. Brian, anything else you want to add, man? This has been an awesome episode.
Brian: No, Dave, you are a great interviewer, great questions. I appreciate you having me on the show, it’s been fun.
David: Hell yeah it has been. Brian, thanks again for coming on. I appreciate it. Guys, don’t forget, check out Brian’s book, BrianPageBook.com. Or, if you want more information about his actual program, he will teach you exactly what he is doing in his business and how you can do it too, check out the BnBFormula.com. Alright guys, thanks again for tuning in today’s episode of The Discount Property Investor podcast. I am your host David Dodge, and we are signing off. Until next time, guys. See you then.
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