All Forum Posts by: Joe Kim

Hi - I’m thinking of turning some rental properties into Air BNB’s. I know Air BNB is very management intensive so I was wondering if anyone has used an Air BNB Management service? If so, what was the cost and how did you like it?

Thanks you!

Chris,

If you are just starting off, it's not hard to manage Airbnb units yourself until it gets beyond 3 units.

Before I explain. The HUGE time committment is the initial setup and furnishing of the homes. Management is much easier, but still takes some work and skill (obviously).

Honestly, I work a 60hr+ week job and when I got STARTED less than a 1year ago I was able to easily managed 2 units of Airbnb locally without hardly noticing at the start (I'm now at 6 total). Bookings come in waves so it's usually a few messages here and there. Also, if you create good systems, lots of things can be automated like having a wifi lock (I use lockstate or now called remotelock) that is keyless entry lock with wifi connection that automatically sends the code to the your guest upon confirmation on Airbnb.

the key is finding a good cleaner which is the your #1 contractor critical to your business.

If you have a local SF bay area Airbnb, there is a bay area startup called "getproperly" that is a cleaning calendar app plus a convenient way to find cleaners in the area that are specific to STR (Short term rentals).

Once you get beyond a certain number and/or you get a lot of bookings, you may want to hire a "cohost" first. If you pay a PM 15-20% of your gross revenue, that's a HUGE hit on your bottom line.

My friend who has an out of state STR/Airbnb has trained his cleaner to become a cohost at extremely competitive price at less than half what you would you pay a PM company. Like most things if you bootstrap it yourself, you can save a ton of money.

I personally have three cohosts managing my out of state Airbnb that I personally trained myself. Also, the guru of Airbnb J. Martin uses filipino VAs managing his large portfolio (at a fraction of the cost of hiring a PM company). I personally manage my local airbnbs but now at 3, I'm starting to feel the need to find a local cohost and ultimately looking for a partner.

4 Votes

Originally posted by @Jason Lewis:

Hey BP community,

I want to get started in real estate but have limited funds. I’ve seen & have researched whole saling but, honestly, i don’t think I have the sales prowess or stomach for it.

Can anyone offer any advice on other strategies for getting stared in real estate with $10k-20k?

Thanks

Two words: Rental Arbitrage.

Imagine having 2,3,4 rentals without owning them but maximizing cash flow. ($1000/month net per property or more)

It's combining Airbnb/furnished rentals with something called rental arbitrage.

Step 1. learn as much about how Airbnb/STR (Short term furnished rentals) work.

Step 2. See if properties in the area you are interested - do they make money? Airbnb.com (best source, go to the site and see what people are charging)

Step 3. Calculate your returns. NOI (net operating income). Use a online calculator -http://www.propertyprofitscalculator.com/

Step 4. Find properties on craigslist or Zillow, etc. start finding properties that would make sense

Step 5. Take a good course to walk you through the steps. I took BNBformula by Brian Page but Al Williamson's course is very good too.

Step 6. Find a mentor online or in your local area. Be a resource to them and learn as much as possible or start by being a "cohost" to help manage other people's properties to learn the business.

Step 7. Just get started. (check out my posts on Airbnb and search on BP for other airbnb related posts).

3 Votes

Originally posted by @Joseph M.:

@Joe Kim

Congrats , quite the accomplishment especially working so many hours full time.

Thank you! Honestly it was not easy and lot of work went into making it happen

The rental arbitrage in the Bay Area rentals is interesting . Did you have to pay above market rent to the landlord ?

In a short answer, No. I dont have to pay ABOVE market rate. The people (landlords/owners) who are opposed to it will say "NO" to you at any price. So don't even offer a higher rent. Just move on. I have offered a double deposit (which gets applied at the time of renewal so that it's not a waste)

How many landlords did you have to speak to before finding one to accept the arrangement ?

My acceptance rate is around 10%. But I think that's particularly high. I am very selective and I try to meet the owners face to face before telling them what I'm doing. I try to build trust. When you start, your acceptance rate will likely be lower than 10% unless you are in a market that has a lot of vacancy. I'm in the SF bay area for the rental arbitrage where the rents fly off the shelf, rental market is hot and difficult because it's so easy to find tenants.

You can try an alternative root of increasing volume by just calling and letting them know what you planned to do before making the trip. I’m not sure which method is better. One friend said, he called 300 people before he got his first YES. But now, people are bringing him deals!

Do you offer to handle maintenance issues as an incentive ?

Yes, I offer to fix any minor repairs under $150. But I have done way more expensive repairs myself because I need things fixed ASAP.

This seems to make sense in areas like Bay Area or L.A where are high and you’d be looking at well over $100k just on a downpayment for a property .

ABSOLUTELY the best way to do it – Rental Arbitrage in expensive markets in the coastal areas, metropolitan, etc. Very few of us have $200,000 in downpayments in our bank accounts and let alone do it more than once. I can do at least 10 properties with rental arbitrage if I had the time.

3 Votes

Originally posted by @Account Closed:

Im not a hater but your initial numbers were AWFUL.

What are we supposed to think when a guy only gives gross numbers......................

Im wondering why your AIRBNB calendars do look BAD. Occupancy wise.

@Gigi newton I'm not sure what you are referring to when you say "initial numbers were awful"

The reality is that your initial math was just plain wrong.

I just started from scratch in 2018 (dec/2017). When you start from scratch, you start at 0 properties, then 1, then 2, etc.. I didn't get to property #6 until October!

it's plain and clear that your math was completely wrong when you divided the total gross for the year of $200,000 divided by 6 properties when I've been growing the number of properties throughout the year. IF started in 2018 with ALL 6 properties then you have something to substantiate your claim. I had one property in december/2017 and off I went to add more as I went along the year.

Otherwise, I would check your math. I had only 2 properties for the 1st quarter of 2018, only 3 by the half of the year, and ONLY recently did I add properties #4,5 and October #6 property.

So can you please share something more substantial than empty words?

Isn't there a word for people who's only objective is to speak nonsense on forums?

Did you not read my post on my NOI numbers you were asking at over $4000+ in 1 month on one property (rental arbitrage) or my 10X from traditional rental cash flow at $600/month to now $5500/month with STR in Indianapolis?

Do you want me to send you my Quickbooks once my bookkeeper is done?

Curious why so quick to throw darts at people's post. Am I harming you or offending you?

0 Votes

Originally posted by @Account Closed:

@Joe Kim congrats on building your business. People are “hating” because gross rents do not impress anyone. Bottom line net (and impact to lifestyle) is what gets us excited.

When you're on the STR level of @J. Martin who gets to travel the world 365 days a year, you will find that the BP “hate” turns into jealousy.

what?? You are comparing me with @j. Martin...the master of STR/Airbnb who has been doing this for many years (5 years) ? I just fricken started in 2018!! I'm a newbie compared to J. Martin. I know him from a far. FB friends, went to his annual REI conference in Oakland for the last 2 times (none this year), I've met him at his meetups as well.

So yes, I know the famous J. Martin.

J. Martin's the man responsible for introducing me to STR/Airbnb when I went to his conference and met people like @Al Williamson and Kimberly Smith (master of corporate rentals). Thank you J. Martin!!! Greatly appreciate all you do.

it's a tough crowd. it's like comparing Huwei(J kim) to Apple (J. Martin).

One last time. Why talk about gross rents? it reflects the growth of a company. Amazon has not been profitable but their astronomic rise in growth.

Hey, I have STR in 3 different markets SF bay area, Indy, Atlanta. I got J. Martin beat on that account.

If you want to talk about running a Airbnb business far way, OUT of STATE. just PM or send me a message.

4 Votes

Originally posted by @Paul T.:

@Joe KimInterested in seeing your numbers for Atlanta and Indy . I am trying to break into a tertiary market, but I still need to analyze the numbers. I don't know if it will really work if I rent at market price then run STR on top of it. Might have to just buy with large down payment to make the numbers work. Only seeing gross rent about 2X of LTR rent.

Finally a constructive response. sheesh...what is wrong with BP these days? So much mistrust and straight up hating.

The reason why I started STR in Indy (my first one that I converted from traditional rental to STR) is because I had a TERRIBLE eviction.

As the landlord you cannot control if a "good" tenant turns bad. Loses their job, beats their wife, goes to jail, gets divorced, etc.

My tenant in INDY completely trashed my relatively new duplex that was built only a few years ago.

One side of the duplex- 4bed/2.5 bath x 2 units

Purchased price $179,000

Rent $1100 per unit or $2200 total

PITI $1200/month

After PM costs, maintenance, vacancy - net cash flow is $600-700/month SOLID buy/hold.

However, this one eviction cost me $11,000 in repairs, and months of vacancy in the middle of winter and into the spring.

I was sick and tired of not having control. No matter how good you are at tenant screening (and by the way most PMs are not great), you cannot control - LIFE or its bad circumstances or tenant bad behavior. for 12 months during their stay you have NO idea what kind of damage they are doing to the home.

Now, I'm getting gross rents between $3000-5000 (peak)/month per unit. so on average around $7000/month

So let's do the ROI math. since my expense are EXACTLY the same in terms of PITI - $1200/month.

Instead of $2200/month rent for traditional rentals, I'm making $7000/month.

Instead of net cash flow of $600/month (which by the way got completely destroyed by the one eviction) vs. $5500/month.

I would say that's pretty close to 10X "forced" cash flow.

WARNING- INDY is a very competitive market for Airbnb. Already a veteran host who operated closer to downtown area shutdown his Airbnb homes since he was not making enough money. Not everyone makes money doing STR.

6 Votes

Originally posted by @Mike V.:

@Joe Kim, no hate here. Sorry if that's how you interpreted my post.. not how it was intended.

You're going to hit two road blocks with this "success story".

#1 Some people just HATE STRs because they've had bad success, bad guests, or find it too time consuming. It's a very niche area in real estate investing. It also happens to be all I do, full time professionally so I am not in that boat.

#2 You have 6 units and gross 200k. Thats awful. Especially when half are in the bay area. But, to be fair, you didn't mention that they are subleased which changes the numbers (no down payments to take into account; much lower cost of entry).

It also feels like you're not being totally forthcoming. That nice $7500 month reservation would put you at 90k gross per year for this one property so it's a one off. Don't get me wrong, its a sweet deal. I'll be MUCH more impressed when you show me the 90k for the year.

It also feels kinda preachy when you admit you're only 1 year in and I see 3-4 things that you post that are kinda nonsense. As an example, you're not 'late to the party' if you haven't started yet. I purchase new units and they're up and running from day 1 and average 90%+ occupancy. AirBnB doesn't 'blow away' vrbo. I happen to prefer VRBO for a number of reasons (better security deposit policies, more control of my house rules and enforcement, payouts 60 days in advance, no 'extenuating circumstances' last minute cancellations that override my refund policies, I can go on..)

I'm not putting you down and seriously congrats for a successful first year. Keep it going and work to improve that gross.

HI Mike,

Not sure why you think I had all 6 properties to begin the year in 2018. $200,000+ (more like $240,000 but year is not over yet) for 2018.

I started with 0 (ZERO) properties in Dec/2017. Then 2 in Jan/2018, 3rd in April/2018, 4th/5th in July/2018 and 6th now in Oct/2018

So by during the first half of the year, I only had 3 Airbnb!

Hey, I would love to see your numbers as well. It's impossible to explain every detail of your operation and more importantly it's harder to expect people who don't even do the STRs to understand.

But you are in the same business as I am. I'm literally a newbie to STR at the start of 2018 and now feeling more established and going from ZERO to 6 properties in 1 year is not a success story? I also work a day job as well at around 60 hrs a week, work weekends, nights, and even graveyard shifts.

So Mike please share your story but no reason to discount others success. Apparently a lot of people hate Airbnb/STR because they cannot make it work for them. Oh yeah, that holds true in every real estate related investing/business.

Joe

8 Votes

Originally posted by @Account Closed:

Originally posted by @John Thedford:

how is NOI?

Very low. Heres my take.

1. 6 very nice Big properties. One must assume big expenses.

2. Prices seem awfully low. $200,000 divided by 6 = $16,666 per month. Divide that by 6 properties = $2,777 per property. Divide by 30 days =$ 93 per property per day.

3. Look at his calendars very few bookings for November and beyond. Should be at least 75% booked by now.

My take is his NOI is 2-3%.

He wants us to love his listings so he gets better coverage on AIRBNB.

Moral of story STRs are not as EZ as it sounds. Beware of those who tell you GROSS but not actual bottom line.

Gigi, I cannot address all of your misconceptions about my business but I will address your comment #2

Gigi says "2. Prices seem awfully low. $200,000 divided by 6 = $16,666 per month. Divide that by 6 properties = $2,777 per property. Divide by 30 days =$ 93 per property per day."

That's assuming I started with 6 properties on day 1. I had 2 from the start by Jan/2018. then 3rd added on April/2018. Then 4th/5th in July/2018. Finally 6th in October/2018.

So your math is incorrect. it's not $200,000/6 properties. Not all 6 properties started at the beginning. My monthly gross is now hitting close to $30,000/month. So when all 6 are running full speed next year. I should be around $360,000 gross in 2019.

Why do I keep talking about gross rents? It's easier. I have a bookkeeper now working on my books in preparation for taxes coming due in a few months!

So again, why all the mistrust? I guess people just don't trust each other like they used to.

I do agree with one of your statements. Nothing is EZ (easy) and everything takes SWEAT and TEARS as the saying goes. STR/Airbnb is NOT easy. I put in a ton of time to setup Airbnb #6. I used cohosts to setup my out of state properties (3 of them) which was a beauty.

Many people are shutting down their Airbnb because they cannot make it profitable. But I thought this discussion forum topic was "real estate success stories"

Glad to address everyone's questions but let's me cordial.

Thanks,

Joe

10 Votes

Hi BPers. Not sure why all the "hate". I thought this thread was under "real estate success story"

I've had over 168 bookings and now 100 reviews. But my mistake was not going over the numbers.

I was going to go over it in post #3 but let me briefly go over it now.

I have 3 rental arbitrage - which means I don't own these properties but I am the TENANT and I sublease the home on Airbnb. This is with the consent of the owner and written in the contract itself.

I have 3 that I own OUT of state in Atlanta and Indy. The cash flow is 5-10X what I would make as a traditional rental.

Let me give you just one example to start.

Airbnb #2 (2bed/2bath) condo - Rent $2500 - this is what I pay.

Expenses:

Rent $2500

Internet $59

Utilities variable but $100 average

Netflix/SlingTV - $50

STR insurance - $50

Total expenses: $2759

Cleaning - is not an expense but a revenue generator. If you are not already doing Airbnb. there are things you need to understand. Cleaning is paid for by the guest. I charge $225 but I pay my cleaners $100. So I make $125 extra for each stay.

They say a picture is worth a thousand words....how about thousands of $$$$$. Here is the gross rent for 1 month in August, 2018 for this 2 bed/2bath condo

@John Thedford @Account Closed

Is that enough ROI for you? $7358.42 - 2759 = $4600 NET. One property, One Month, 2bed/2ba condo that I don't even own.

Drop the Mic....walking away.

26 Votes

All Forum Posts by: Joe Kim

Joe Kim has started 54 posts and replied 322 times.

Post: Handyman close to Duluth, Georgia

Post: Air BNB Property Management Services

Post: Getting started with little to no money without whole saling

Post: $200,000+ rents in 1 year - 10X cash flow

Post: $200,000+ rents in 1 year - 10X cash flow

Post: $200,000+ rents in 1 year - 10X cash flow

Post: $200,000+ rents in 1 year - 10X cash flow

Post: $200,000+ rents in 1 year - 10X cash flow

Post: $200,000+ rents in 1 year - 10X cash flow

Post: $200,000+ rents in 1 year - 10X cash flow