How To Profit Off Real Estate Without Purchasing It Through Cohosting

What’s up, BiggerPockets? Alex Felice here with another episode of Meet the Investors. I want to introduce you to my good friend Julian Sage—an Airbnb monster.

Meet the Investor: Julian Sage

Hi, everybody! Julian Sage here, I’m the founder of CohostIt.com. I’m also an active duty member of the Coast Guard and a member of the BiggerPockets community.

I first found out about BiggerPockets when this guy, John Fedro, was talking about mobile home investing. I thought it was really cool and really unique. You didn’t have to have a lot of money to get started, which is really what I was looking for.

Still being active duty at that time, I was just trying to find a way to be able to make some money without having to spend a lot of money. So I went out and I tried finding these mobile homes. But I quickly found out after setting up the company and going through this whole process, doing all of the “business” entrepreneur stuff, and trying to get everything set up, that I really don’t like dealing with mobile homes. Dealing with people that are in these really distressed situations wasn’t something that I personally liked dealing with.

After setting up that business, I really didn’t want to pursue it. I ended up dropping real estate for a while. I tried doing a bunch of different things in entrepreneurship, just trying to get a little bit of time freedom back. BiggerPockets really opened up my mind to the possibilities that I don’t have to be tethered to the Coast Guard or tethered to the military for 20 years to make $2,000 or whatever the retirement is.

Learning About Investing & Entrepreneurship on BiggerPockets

BiggerPockets is what showed me that you can really control your future based on the actions that you’re taking today. After setting up that business and realizing it wasn’t for me, I stopped doing real estate for some time. I tried to find something that resonated with me. I created a mobile cooking app. I started a YouTube channel. I tried doing my first podcast. I tried a bunch of different things, seeing what would resonate with me.

But during that time, when I was trying to do a bunch of different things, I really felt like I was a failure because I could never get anything up and running. So I honestly said, I’m just going to quit entrepreneurship. I’m going to stay in the military, stay in the Coast Guard, get my college degree, and retire.

So, I did what most people do when they decide to settle down. My wife and I bought a house. It wasn’t until she said, “You know, why don’t we try to save some money by listing the basement online on Airbnb,” that the little entrepreneurial lightbulb went on.

I remembered BiggerPockets, and I just did what everybody does. I went online. I listened to the podcast. I think the first episode that I listened to about Airbnb was with Zeona McIntyre. When I listed my property online, it was actually able to cover my $2,000 mortgage. So, I was living mortgage-free and that’s really when it was eye-opening to me.

Managing Other People’s Airbnbs

Let’s talk about one of the properties that we actually manage in Springfield, Virginia. In the video above, I walk you through the property and show you the numbers. Be sure to watch to find out why the business model of cohosting Airbnb short-term rentals is so powerful!

It’s proof that you don’t have to own real estate to be able to profit from it. That was one of the things that I realized in the short-term rental space. There are actually two different strategies that apply to this concept: one we call cohosting, and the second we call rental arbitrage.

Cohosting

The aforementioned unit in Springfield is a cohosted unit. We’re actually able to list this property on Airbnb and we’re able to make $4,000 a month. Then, we take our management percentage. We’re able to profit on average $800 a month just for managing the property.

You might be thinking, “OK, 20%? That seems like way too much.”

Well, in actuality, the person is making 400% more than if they did this as a long-term rental. And they don’t have to do any extra work because we, the cohosts, actually do everything for them.

Rental Arbitrage

The second strategy that I want to share with you is rental arbitrage or master lease investing. In this strategy, again, we don’t own the property.

Let’s say we lease out a property from the owner. They know what business we’re going to be doing (i.e., short-term rentals on Airbnb, VRBO, etc.). We then furnish the property and lease it out. We’re able to make that $4,000 profit. So, that $4,000 profit minus the $2,400 in our expenses to get it ready, that leaves us a net profit of $1,600 for the single property.

Now, this strategy is a little bit riskier because we are assuming the chance of the place not being occupied. We would still owe the landlord $2,400, but you can see how you can quickly scale this business model.

Advice for Aspiring Investors

I’ve shared with you my story and I showed you the numbers about what is possible with Airbnb and short-term rentals. And I want to leave you with my top three pieces of advice, something that I’ve learned throughout this whole journey of entrepreneurship in real estate.

1. Find Your Niche

The first thing is you want to be able to niche down, find something that you’re passionate about. When I started doing mobile home investing, I was really niching down—but it wasn’t something that I was passionate about.

But when you do find that thing, really focus on that. If you’re going to be doing Airbnb, then focus on Airbnb. If you’re going to be doing BRRRRs, focus on BRRRRs. You want to become a master of your trade.

2. Network

The second thing that you want to do is be able to network. Connect with people within that niche, find other people who are doing something that you want to do. There are people in the Airbnb short-term rental space—you want to be able to find those people and talk with them, connect with them.

If it’s multifamily investing that you want to do, find people within that niche who are doing what you want to do and show them that this is something that you are in, that you’re willing to take the time to be able to learn it.

3. Provide Value

And the third thing is being able to provide value. If you’re going to be approaching people within that niche, within that network, then you need to be able to show them or be able to give them something.

When asking people for their time, there are lots of people that say, “You know, I’d love to be able to pick your brain.”

Well, there are lots of people, I’m sure, that would love to be able to pick my brain. But what value can you bring? Can you come on to my podcast? Can you share your experience with other people?

Having a learning platform, a way for people to be able to share their experience, is a way that you can add value to them. Or do you have some type of skill set? Can you do photography? Can you communicate well? Can you write a blog post? Can you do something that adds value for them?

I believe that Airbnb and short-term rentals are a great way for you to be able to achieve your financial goals. So, keep on hosting!

What strategies have you found to get into real estate without needing a lot of money?

Tell us how you can get started on a small budget in the comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.