Our prices range drastically property to property and time of year and day of week. I usually do a lot of research before acquiring the property to know about what the avg daily rate will be. You can also look at very like kind properties on Airbnb or Vrbo to see what they’re charging and that should help.
We own all ours at the moment. Many people do arbitrage though and do very well! We do some of the maintenance work for the ones we live close to but we try to outsource majority of it
@@melefante6 Nice! Thanks for the reply. Really looking into real estate but my fears keep holding me back! Did want to start in wholesaling but not sure what route to take
@@oscarmonreal2538 anytime! Keep learning and eventually just have to take the leap of faith. It is certainly nerve wracking at first but to be honest most of what we learned was through doing and the actual process :)
Nope. We put 15% down as an investment loan on one of them and also on another one we are currently in contract for. One we put down 20%. And the other we put down 10% as a secondary home loan since we plan to use it some for personal use. All 30 loans to maximize our cash flow
Two of them we bought furnished and the other two empty. Turn key properties (furnished and basically rent ready) will be more competitive with other investors and likely be sold at a premium. The benefit is basically financing the furniture into the mortgage vs spending out of pocket. We acquired through conventional loans. One secondary home loan 10% down and the other investment loans 15-20% down
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet
Here is a video on the step by step process on buying a place: ua-cam.com/video/ap2K00DJL3M/v-deo.html Finding the perfect location/market for Airbnb properties: ua-cam.com/video/iJd-JkGhOK4/v-deo.html Let me know if there is anything not covered, that you'd like covered in future videos :)
Nope! You may consider LLCs as your personal assets grow. LLCs just protect your personal assets from each other. So if someone sued you at one of your rentals and your insurance didn't cover the liability, they cannot reach outside that LLC and touch your other properties or your personal assets. But to answer your question, no - you don't need a business or LLC to get started at all.
@@bradenpahanish5208 you’d likely want to look for a place in a hot short term rental market and look on the listing to see if it comes fully furnished. You can actually negotiate furniture to be included in the purchase in your contract with the seller if they agree to it too
So we have a home that has tons of equity in it, but love the home and don’t want to sell for the equity. Would you recommend a home equity line of credit to utilize the equity in our home to buy a first rental property??
I would suggest evaluating a cash out refinance. We did a cash out refi to purchase one of our recent Airbnb’s. It’s smart, in my opinion, to look at the return on equity and like you mentioned consider repurposing that equity into a new investment :) that’s my perspective at least
@@steveallayev5962 yes I’m sure you can find a good deal that produces high ROI. It all comes down to the numbers and making sure you evaluate the property accurately and conservatively. NYC is expensive so it just depends what your budget is and willingness to also evaluate other markets
There are different strategies to apply that can be $0 to a lot of money to start and anywhere in between. Personally we save up for a down payment for a buy and hold. We saved up 15% down, plus closing costs and about $30k for furniture for a 4 BR house
With the current surge in prices for homes in say Gatlinburg, do you still think you could make a good and fairly profitable STR there? Thats where I have been looking. Will you continue to look in that area for properties that are less sought after value add properties to make it work?
Yes absolutely. I am avoiding “turn key” properties as they are bid on by too many investors at the moment but still good deals to be found. As long as your cash on cash return % is at or above expectations I say it’s a good investment
We have not segmented them off into LLCs yet. We will likely do that in the near future. For STRs its critical you have STR specific umbrella insurance plan. This covers you from a liability perspective
@@kingnaira8648 you could do other strategies to start with little or no money! - Rebtal arbitrage - Cohosting on Airbnb - Partner with another person - Wholesaling and flipping
I'm not familiar with that market. What areas are popular for tourist destinations? I like the fact that Chicago has so many people that also want to get OUT of the city, especially right now and can work remote or just to relax outside the city. Have you peaked at Airdna at all? Their numbers are a good baseline, but take them with a grain of salt because they are averages... Also you could check Airbnb and VRBO and just find properties in the area that have a lot of reviews and see about how much they charge on each day of the week and throughout the year, how often they're booked out. You should be able to get a good ballpark of occupancy rate (total nights per year) x avg nightly rate and see roughly how much you could bring in revenue wise.
Hi Michael great video! Did you buy the furniture for the home or purchase the homes furnished? If you bought the furniture and renovated the apartment how much did this cost?
We bought one that was empty and had to furnish. The next we bought furnished and turn key. The most recent one we bought furnished but did a cosmetic rehab and only used about half the furniture the sellers left and bought new furniture for the remainder. It ranges.. I usually budget for $3-5k per number of bedrooms the house has. It will vary slightly on the sq footage and number of additional spaces the place has. Game room, outdoor patios, etc
I’d love to know more about how exactly you you went about buying you properties and how much money you’d estimate somebody would need saved up to start doing this, thanks!
Sure! Each investment is different. Some come fully furnished and turn key while others need to be furnished and maybe even some rehab work which is additional money out of pocket. I use AirDNA a lot for market research and then individual market data. It’s a direct data pull from Airbnb and Vrbo. Then you can work with lenders to see why you qualify for and what type of loan works best and necessary down payment, etc.
Do you have videos on how you purchased your properties and what method you used to rehab any of them? Did you take out a loan to furnish them? Did you only use personal savings for each home? We have 1 long term rental and are under contract with our 2nd but I would love to learn more about financing an airBnB especially how you go about funding the furniture etc. thank you for the information you have provided so far.
Michael Elefante so im lucky enough that i will be getting 50k cash from deployment next year and my fiance will be getting 50-60k as well. we will want to buy our own nicer mobile home and a couple acres... should we finance all that and use the cash to buy a mountain rental?
@@dawsonhancock8164 with interest rates being so low right now, it’s almost free money when you finance over a long period of time considering time value of money and inflation. So it may make sense to invest in a rental for example that can cash flow and pay for your other living expenses :)
I got a large amount of money from a law suit and I’m a maintenance man so I can do all my own maintenance. How much would I need to invest in a property?
Super excited about these opportunities you have available. Seen your Friday giveaway on TikTok. This definitely something that I want to pursue with the help from you to have Financial freedom.
I own my house out right. Completely debt free. What are your thoughts on taking equity out to purchase an investment property. And if so how much? Should i buy the investment property outright or just a down payment?
I am not a licensed financial advisor of any kind (always want to mention that) but based on my experience, especially with how low interest rates are, tapping into your equity could enable you to invest and achieve a much higher return on that equity that you currently get today. You can do a cash out refinance (tax free event) or a HELOC. I'd just compare the two options and if you decide to proceed, pick the one that makes the most financial sense :)
Personally I would not buy cash because int rates are so low. With inflation skyrocketing over 6% this past year, a 4 or 5% int rate on a loan right now is essentially free money. So for me I'm leveraging. You'll also get a much higher cash on cash return taking on debt instead of buying cash. But some people want to be 100% debt free under all circumstances, so it's just what you're comfortable with and your goals
Michael...Thanks for the down and dirty and real talk...My wife and I have also picked up two STR properties since Nov 2019 and are looking for our third right now. One in the Smokies and one in Branson. A quick question for you is do you use a dynamic pricing tool or enemy method to structure you pricing on your STRs? Again, great content and looking forward to looking at your other stuff. All the best Paul
Thanks, Paul! And congrats to you guys! We use price labs as our dynamic pricing tool. When evaluating markets and individual properties we look on AirDNA quite a bit and then look at similar properties in that area to really get an understanding of the prices they’re booking at each day of the week and each month throughout the year
@@melefante6 Thanks for the quick reply...I'll have to get on and check out Pricelabs and compare that to how we've been setting our pricing. Again thanks and I'm sure we'll be in touch!
I found this video EXTREMELY helpful!!!! I’m fed up with just dreaming and not having the financial freedom that I always knew I wanted. I’ve been reading real estate books and now like you said it’s time to put things into action.
I'm interested in knowing how much you are able to rent each cabin with 4 to 5 bookings since it doesn't look right for an over 6k revenue. After researching Airbnb rentals in Nashville I'm only seeing $60 per night for max rents. Please explain how you are getting more in rents. Also are you including the state taxes you have to pay for short term rentals?
It completely depends on location, amenities, emotional appeal, and mainly how many people does it accommodate. Our larger nashville property we accommodate 12 guests and cater towards bachelorette parties. Our weekend pricing ranges from $400-1,000/night depending on time of year and demand. Right now is very slow season for nashville and lack of travel still due to covid
This is a VERY well made video. Your explanations make these things much easier to understand. I appreciate the breakdown of your properties and sharing this info. I’m seriously inspired to get into short term rental properties like this! (PS: I found you on TikTok - crazy how social media brings us together)
I appreciate that so much! Thanks for the positive feedback. Social media is crazy. Gets casted in a negative light often but has tremendous upside like you mentioned :)
How did you decide where to buy your properties? Did you research where there weren't many airbnb's? Or did you mostly do it on surrounding attractions or activities? I feel like location would be one of the most important aspects of deciding what property to buy. Thanks so much!
Great question! Location is definitely crucial. We are in locations with high demand for tourism. The markets are both fairly saturated with rentals but there is still strong enough tourism for most people to do very well and if you furnish the property in a way to make it stand out from the others, you will do exceptionally well. AirDNA is a great starting point to see meets demand and occupancy rates. Link in description if you want to check that platform out I highly recommend!
I’m a travel nurse and with COVID I have financially done very well as a result. I bought my first rental property and have been interested in looking into vacation rentals
Nice! As a travel nurse did you stay at airbnbs for mid lengths stays? There seems to be a good market for that as I imagine you would be looking for a furnished place nearby work?
@@melefante6 it could be, and yes I’ve done the whole gambit, extended stays, Airbnb, VBRO, regular hotels, furnished finder. I just have anxiety with things like the Airbnb’s that have been hugely affected by COVID, the idea of a lease assuages some of that 😂 I saw the tick tok about your mountain rental though and know the numbers can make sense.
I do have a question for short term rentals and securing loans for investment properties. With a long term rental if I have a lease then 75% of my rent can count towards income to secure the loan. With buying a vaca rental how are you staying under your DTI threshold as you add debt but don’t have a lease to use to be counted at time of purchase. If you both collectively have 60k W2 income plus less than a year of rental income, how are you able to do that? My bottleneck I foresee is expanding. I have good credit and 20% down not sure how I would prove potential income on a vacation rental to not put my DTI over to afford a $350k rental like what it seems the Nashville property is
@@Justice1813 Great questions to run by a few lenders. Each year, when you file your tax returns and show income from Airbnb properties, lenders can count that as rental income and factor that in to your DTI. Not all lenders will count this though, so it's worth speaking to several of them - especially ones that work with a lot of investors. There are a few different types of loans you can get for STRs. Most common is to do investment loan and you can put 15-20% or you can do a secondary home loan if you plan to use the property yourself some throughout the year. This will allow you to put as little as 10% down on conventional loan and get a more favorable int. rate. Right now we are relying on our W2 to secure our loans plus rental income for properties we acquire in the near future. Some lenders will actually consider some short term rental income into their loan - I've only experienced this with one lender I've worked with, but certainly helps nonetheless. There are other ways to finance properties outside of conventional loans. If you want to partner with someone else and split everything 50/50, that is an option, or they front the money and you set up and manage the place. You could co-host for someone and essentially just act as a property manager for a 15-20% cut of gross revenue as your payment. You could do a hard money loan or private loan - this will likely be higher int rates or int only for a set period of time. Lastly you could also do rental arbitrage, which you would just need to pay to furnish a place you sign a lease agreement on, and you rent it on airbnb on your own time. Just make sure you get the blessing from the owner/property manager and HOA to do it..
This is a great video and solid explanation. Also, amazing cash flow #'s!! I'd like to learn more about how you are selecting your properties and achieving this %
Thanks for the comment! I’ll try and do more specific videos in the future to try and address your suggestions. I do a bit deeper dives into all this plus access to my investment tools and spreadsheets on Patreon as well :)
I would love to get your opinion on alternative methods of purchasing. My husband and I just bought our family home about a year ago and have not paid it down much. Because of this, I do not think our debt-to-income would be low enough to purchase another house with traditional financing. We do currently have one monthly rental property paid for that is valued around $60k, but I know short term will bring in a lot more.
Have you spoken with a lender about what you would qualify for? That would be a good first step to get a sound understanding of what you qualify for today and what steps you can take to work towards a target number.
I’m a college student working only part time currently. How much liquid cash would you recommend having before getting into this. Or is most of it other than the principal payment paid via loans?
Yes, you would only put down 10-20% in most cases and leverage the banks money via a conventional loan. For you, I would suggest looking into doing house hacking strategy! As a first time home buyer, you would qualify for a FHA loan and likely only need to put down 3.5%. You can buy a duplex or a house with multiple rooms and rent out the other half/rooms and basically live for free or even get PAID to live in your own house!! :)
i love the realism from you please keep it up as you grow in followers. i plan to hop in the short term vacation rental space soon . where can i contact you for questions/mentorship?
Hit me on instagram. I will also be launching a DETAILED short term rental investing course laying out everything from A-Z. Hoping to complete and launch in the next 3-4 months :) In the meantime, happy to add value where I can
I found you on TikTok, thank you so much for this video and the tips. The only question I got is: I am from The Netherlands, will it also be possible for me and my partner to do this? I don’t know if America has other rules about investments. Thanks 🙏🏼
@@melefante6 I see. Thank you. Im trying to get out of the Rat Race God Willing. Im 50 and can’t see working more than another 5 years. So trying to see what are the options until I can get medicare. Thank you
Congratulations! Hope to be in those same shoes one day! What exactly are the operating expenses? & What books did you read up on to learn about short term rentals ?
Honestly not many books on short term rentals especially in today’s world. I liked cash flow quadrant and the millionaire real estate investor a lot. Operating expenses includes anything that costs you money to operate the property. Property taxes, insurance, utility bills, WiFi, cleaning expenses, landscaping, etc
I'm 22 and desperately seeking financial stability for the future. I barely have any capital and hope to take advantage of the FHA loan, did you also use an FHA loan for your first property? How did it go
We did not, however MANY people did and I would recommend it for sure. FHA has to be used for a primary residence. But you could house hack, meaning buy a duplex and rent out the other half OR buy a single family and rent out the other rooms. This will help offset your mortgage or even pay for all of it, allowing you to save up that much more money each month to put towards future investments :) FHA loan you can put as little as 3.5% down.
How much in savings did you invest in your first property? Before scaling off and doing more. Or did you go ahead and buy most properties around the same time?
We saved up and invested 15% down plus furnishing costs in the first property. We actually sold out of much of our 401k and IRA accounts to fund our second purchase. And the third was savings from work and investment income combined. The fourth will be a cash out refinance on our primary residence and using the appreciated value to fund the purchase for the next deal!
What a great video! This was so informative and encouraging. My husband and I are starting our adventure in planning out owning our own Air B&B. I may have missed this, but how did budget in your initial expenses for furnishing and decorating your properties?
That’s awesome!! It depends on the property. If it’s completely empty I would budget around $4-5k per number of bedrooms. That includes common spaces and kitchen, etc. plus an additional $2,500 or so per extra space like a game room or outdoor patio space :) I’m sure you can do it cheaper though just depends if you want to hunt for deals on FB marketplace, etc or just want to buy new off Amazon and wayfair and get it done ASAP
My husband is in the military and we just bought our first home using the VA loan, we talked to a realtor about how we want to do Airbnb or use this house as a rental in the future (I’m pretty sure we have to live in it for a year before renting it out). We will be in Virginia Beach for 5 years and were thinking about buying a house maybe each year so we can use them as rentals and have that extra source of income. We can continually use the VA loan. I know in the future if we want to sell the houses we will have to pay capital gains for not living in the house for two years within a 5 year period. We are still unsure on if this will be our plan but we’re trying to figure out what would be the best option for us because our goal is to be financially free. Having that many loans out scare me, but from what I heard some debt is good? What’s your advice? We’re very new to being home owners and don’t know a lot!
Yes for a primary residence loan you’d have to live in it for a year - not a bad plan for you guys!! There is good debt and bad debt :) good debt is leveraging other people’s money to buy assets that cash flow every month. The revenue you collect services the debt for you and builds your equity position in each property.
Commenting because you crush these videos, and provide unbelievably valuable information. 2022 goal to add our second air BnB property. Thank you thank you!
I’d say continue learning as much as possible and saving as much as you can. I think house hacking is the best strategy to get started in real estate. Also in the meantime work on building credit even if it’s just a simple credit card that you use for gas or food purchases. This will go a long way when applying for home loans. You could also look into cohosting or rental arbitrage too as a good way to get started without needing as much capital
This was very useful, I'm actually starting out with long term investment properties with tenants but I was interested in doing short term tenants with Airbnb, my one barrier is just figuring out how I would get the money to furnish the place for people, my question is how much do you spend on furnishing the house ?
It depends on the property, how many bedrooms, extra spaces, bathrooms, outdoor space/patios, etc. Are you catering towards the business traveler, family vacations or weekend trips? We usually budget for a ballpark $3-5k per the amount of bedrooms the house has. So for a 3 BR house, we would budget for $15k. Now, you can certainly furnish a place for much cheaper if you scavenge FB marketplace for good deals. So you could spend far less depending what you want to do!
Would you start with a smaller investment like a 300k house that makes 50k a year or wait and save up for a house that’s say 600k and makes 100k a year? I can afford option one but next year I will have enough for option 2. Thanks !
Also found you on TikTok. You definitely do a good job explaining all of this. I might just enroll in your course after watching all your recent UA-cams. Keep up the good work
Great video; A few questions regarding how you are financing these and future properties: Are you continuing to qualify for conventional mortgages based on your W2 income, or are you qualifying with the help of the rental income? If qualifying based on rental income, do you need to two years of rental income tax history to qualify? Are you working with portfolio lenders instead of conventional mortgage lenders to obtain future mortgages on vacation rentals? Thanks!
Right now it’s conventional loans and we qualify based on W2 and some rental income. Moving forward we will leverage rental income as we file tax returns. Some lenders will let us use forecasted revenue for the loan but not many do. As far as I’m aware to use rental income you just need one tax return but some lenders may have different requirements.
How do you manage properties that you don’t live near. Do you hire out a company to take care of things like a broken stove, toilet, etc. or do you just try to do it all yourself long distance?
My husband found you on TikTok, and after discussing how fed up we are working for other people and what we want our retirement to look like, we decided that this would be our way to go! I'm looking forward to watching the rest of your content and learning everything you have to teach! Have a blessed day!
Michael this is amazing! Thank you for sharing this knowledge. Some questions for you. 1. Average labor and set up/remodel cost per house you and your wife invested into each property prior to putting them on the rental market? 2. What percentage of the passive income cash flow returns are you taking and investing back into your current properties or into new properties each month? 3. Thoughts on investing in a rental property with a friend? Thank you!
Hi Emma! Thank you! 1. It completely depends on the individual house. One we bought new and furnished from scratch - we budget for around $3-5k per total bedrooms on average. But it can vary depending on the space.. one of them we bought turn key, meaning it was fully furnished and the only thing we did was changed out some decor and swap a couch for a pull out couch to accommodate more guests. Another we bought furnished, sold most of the furniture and decor and used some of that money to help with the remodel cost and new furniture. That remodel was a larger project and the total cost from remodel, to furnishing, photos and cleaning to guest ready was $49k. But again, it was a larger house, so it each investment is different. People can start will a smaller property and less money out of pocket and quickly scale as they start cash flowing! 2. We are reinvesting all of our investment income. So whenever we have the targeted amount of money necessary for the investment we are going for (between w2 income and investment income, etc) we start making offers on places. 3. I'm all for going in on investments with friends or investing partners. It can make the barrier of entry smaller and you an also learn together. As long as you have the same goals for the investment and have a plan you should be good to go! You can even do hard money loans if you do a remodel... Use private money - buy the house cash (at a discount), remodel it and then refinance it based on the new value of the house, pull out all of the investors money and now you own 20% of the asset and are cash flowing. During the time you renovate - most hard money loans will charge interest only on the loans for the time you have the loan.
@MrLorenzoVerna once you have rental income you can use that towards income on top of you W2. Your lender will look at your credit score, debt to income ratio, among other things. You can also partner with another investor... You could also find ways to get in real estate with no money or no mortgage. Rental arbitrage is a cool way to do this! In the meantime, I recommend saving up as much as possible and focus on your earnings so you can one: have more money to invest and two: qualify for investment loans. You can actually get up to 10 conventional loans backed by freddie mac / fannie mae.
You are great at explaining these things! I’m 22 & my boyfriend and I are just starting our jobs out of college but I’m trying to convince him on this type of plan bc I don’t want to work a 9-5 forever! Airbnb is what I want to get into but trying to see how this can be possible for us & how long it will take to save up to invest. Any recommendations for type of account to put our savings in?
Good for you two! I’d say sock away 3 months of living expenses as emergency savings and begin investing some in the stock market and have a target amount of money to save up for real estate. You could try the rental arbitrage route or do house hacking to get started! Great strategies with a lower cost barrier of entry :)
This was fantastic! Very informative and helpful in understanding how this process works. I appreciate your willingness to be transparent and open about how you and your wife successfully achieved financial freedom.
No. You control the prices. Airbnb now shows the avg daily rate including cleaning, service fees and taxes to guests though so that might be the delta in price people are talking about but the actual nightly rate is what you tell it to do
How do you know what to price per night, and what are the nightly rates for yours? Thanks!
Our prices range drastically property to property and time of year and day of week. I usually do a lot of research before acquiring the property to know about what the avg daily rate will be. You can also look at very like kind properties on Airbnb or Vrbo to see what they’re charging and that should help.
Great info!!
Glad you found value in it!
Thank you❤
Congrats!
TY!
So does this mean you have to do the maintenance work yourself or pay someone to do so? Do you do also lease the properties?
We own all ours at the moment. Many people do arbitrage though and do very well! We do some of the maintenance work for the ones we live close to but we try to outsource majority of it
@@melefante6 Nice! Thanks for the reply. Really looking into real estate but my fears keep holding me back! Did want to start in wholesaling but not sure what route to take
@@oscarmonreal2538 anytime! Keep learning and eventually just have to take the leap of faith. It is certainly nerve wracking at first but to be honest most of what we learned was through doing and the actual process :)
Did you have to put 20% down on all the properties? And are they 30 or 15 year mortgages?
Nope. We put 15% down as an investment loan on one of them and also on another one we are currently in contract for. One we put down 20%. And the other we put down 10% as a secondary home loan since we plan to use it some for personal use. All 30 loans to maximize our cash flow
How do you acquire properties?? Do they just come fully furnished and ready or what??
Two of them we bought furnished and the other two empty. Turn key properties (furnished and basically rent ready) will be more competitive with other investors and likely be sold at a premium. The benefit is basically financing the furniture into the mortgage vs spending out of pocket. We acquired through conventional loans. One secondary home loan 10% down and the other investment loans 15-20% down
Insightful video. I just want to know best how people split their pay, how much of it goes into savings, spendings or investments. I'm 27, and earn nothing less $150k per year, but nothing to show for it yet
Wtf do you do??
Can you make a video or link one on how to actually start buying properties on air bnb
Here is a video on the step by step process on buying a place: ua-cam.com/video/ap2K00DJL3M/v-deo.html
Finding the perfect location/market for Airbnb properties: ua-cam.com/video/iJd-JkGhOK4/v-deo.html
Let me know if there is anything not covered, that you'd like covered in future videos :)
Hey you say 6 bookings but what that means in days ? thanks
23 total days booked in November for that house
Great video, do you need to create an LLC? Or register a business to get started ?
Nope! You may consider LLCs as your personal assets grow. LLCs just protect your personal assets from each other. So if someone sued you at one of your rentals and your insurance didn't cover the liability, they cannot reach outside that LLC and touch your other properties or your personal assets. But to answer your question, no - you don't need a business or LLC to get started at all.
@@melefante6 awesome, thanks for the response. If I wanted to put a down payment on a airbnb that is already fully furnished, how can I find those ?
@@bradenpahanish5208 you’d likely want to look for a place in a hot short term rental market and look on the listing to see if it comes fully furnished. You can actually negotiate furniture to be included in the purchase in your contract with the seller if they agree to it too
I am 25 and an Airbnb host in jersey city NJ looking to buy more NJ(near NYC properties) any good advices?
Had a question if you can please answer. The house you and your wife live in did you also purchase or are you renting it.
Butterfly looks like a Townhome. No issues with HOA STR or noise complaints?
Most of the units are short term rentals there so no complaints there. :)
@@melefante6 wow can I buy one :). Thats hard to find
@@brandotex there are many for sale in Nashville at the moment!
@@melefante6 seriously? Would love to see a listing
Love the channel!
Thank you so much!
are these rentals close to you or in other states?
We have two close by and now two that are about 3.5 hour drive from where we live
AMAZING video
:)
So we have a home that has tons of equity in it, but love the home and don’t want to sell for the equity. Would you recommend a home equity line of credit to utilize the equity in our home to buy a first rental property??
I would suggest evaluating a cash out refinance. We did a cash out refi to purchase one of our recent Airbnb’s. It’s smart, in my opinion, to look at the return on equity and like you mentioned consider repurposing that equity into a new investment :) that’s my perspective at least
Stop loving a house. It's an investment. Grow up.
This is so helpful! Thank you so much for sharing!
TY for watching!
Great video, thank you!
Thanks, Steve!
@@melefante6 would it be possible to make good roi in NYC? Prices for houses here are very high...
@@steveallayev5962 yes I’m sure you can find a good deal that produces high ROI. It all comes down to the numbers and making sure you evaluate the property accurately and conservatively. NYC is expensive so it just depends what your budget is and willingness to also evaluate other markets
How much money did you put in to get started
There are different strategies to apply that can be $0 to a lot of money to start and anywhere in between. Personally we save up for a down payment for a buy and hold. We saved up 15% down, plus closing costs and about $30k for furniture for a 4 BR house
how do you keep track of all of this? Excel?
I use google sheets :)
With the current surge in prices for homes in say Gatlinburg, do you still think you could make a good and fairly profitable STR there? Thats where I have been looking. Will you continue to look in that area for properties that are less sought after value add properties to make it work?
Yes absolutely. I am avoiding “turn key” properties as they are bid on by too many investors at the moment but still good deals to be found. As long as your cash on cash return % is at or above expectations I say it’s a good investment
FINANCIAL FREEDOM
Did you acquire all four properties under a LLC to mitigate risk are you personally? Wanting to get into rentals but unsure the route to go.
We have not segmented them off into LLCs yet. We will likely do that in the near future. For STRs its critical you have STR specific umbrella insurance plan. This covers you from a liability perspective
how much did you put down on that first property?
15%
@@melefante6 thanks im alone here and its expensive to come up with down payments
@@kingnaira8648 you could do other strategies to start with little or no money!
- Rebtal arbitrage
- Cohosting on Airbnb
- Partner with another person
- Wholesaling and flipping
Encouraging indeed. Congratulations! And thank you for sharing.
Amazing. Well done, Michael!!
Thank you, Charles!
FINANCIAL FREEDOM!!!!
:)
How much did it cost to furnish each of your properties? And did you need to get any licenses?
It depends. One of them we bought fully furnished and others we bought empty. No licenses required other than local permits depending on the city
Financial Freedom!!
:)
FINANCIAL FREEDOM!
:)
Thoughts on the short term rental market in northern Illinois?
I'm not familiar with that market. What areas are popular for tourist destinations? I like the fact that Chicago has so many people that also want to get OUT of the city, especially right now and can work remote or just to relax outside the city. Have you peaked at Airdna at all? Their numbers are a good baseline, but take them with a grain of salt because they are averages... Also you could check Airbnb and VRBO and just find properties in the area that have a lot of reviews and see about how much they charge on each day of the week and throughout the year, how often they're booked out. You should be able to get a good ballpark of occupancy rate (total nights per year) x avg nightly rate and see roughly how much you could bring in revenue wise.
@@melefante6 Awesome - great info thank you! Watching all your videos. My wife and I are planning on buying our first rental.
Love it! Good luck to you and your wife! I hope you crush it!
Thank you! I will continue to support your channel.
Thank you!
Awesome
Hi Michael great video! Did you buy the furniture for the home or purchase the homes furnished? If you bought the furniture and renovated the apartment how much did this cost?
We bought one that was empty and had to furnish. The next we bought furnished and turn key. The most recent one we bought furnished but did a cosmetic rehab and only used about half the furniture the sellers left and bought new furniture for the remainder. It ranges.. I usually budget for $3-5k per number of bedrooms the house has. It will vary slightly on the sq footage and number of additional spaces the place has. Game room, outdoor patios, etc
FINANCIAL FREEDOMMMM🔥🔥🔥
:)
I’d love to know more about how exactly you you went about buying you properties and how much money you’d estimate somebody would need saved up to start doing this, thanks!
Sure! Each investment is different. Some come fully furnished and turn key while others need to be furnished and maybe even some rehab work which is additional money out of pocket. I use AirDNA a lot for market research and then individual market data. It’s a direct data pull from Airbnb and Vrbo. Then you can work with lenders to see why you qualify for and what type of loan works best and necessary down payment, etc.
Do you have videos on how you purchased your properties and what method you used to rehab any of them? Did you take out a loan to furnish them? Did you only use personal savings for each home?
We have 1 long term rental and are under contract with our 2nd but I would love to learn more about financing an airBnB especially how you go about funding the furniture etc. thank you for the information you have provided so far.
how much do you rent out these houses for a night
Ranges drastically day of week/weekend, time of year, etc
Really helpful video. I am really young and have a full time career. This seems really achievable
It is! You can do it! :) thanks for the positive feedback
Good for you. Thanl you for sharing
Financial Freedom
how do you get approved to buy the house when you already have a house if youre not making a ton of money
You’d need to speak with a lender on what you qualify for. You can have up to 10 conventional mortgages in your name
Michael Elefante so im lucky enough that i will be getting 50k cash from deployment next year and my fiance will be getting 50-60k as well. we will want to buy our own nicer mobile home and a couple acres... should we finance all that and use the cash to buy a mountain rental?
@@dawsonhancock8164 with interest rates being so low right now, it’s almost free money when you finance over a long period of time considering time value of money and inflation. So it may make sense to invest in a rental for example that can cash flow and pay for your other living expenses :)
Minute 5:45... smells like Rich Dad Poor Dad 😂
I'm a fan!
very insightful video! thanks for posting
Thank you!
I got a large amount of money from a law suit and I’m a maintenance man so I can do all my own maintenance. How much would I need to invest in a property?
It depends which strategy you go with. Buy vs rental arbitrage. And size and location of property.
I’m 27 and i worked and managed Airbnbs for a company..I’m leaving and about to start my own business. I have great ideas
Nice!
I just got yo say tnx for the motivation and excelent info it is greatly appreciated
Thank you for the positive feedback!
Super excited about these opportunities you have available. Seen your Friday giveaway on TikTok. This definitely something that I want to pursue with the help from you to have Financial freedom.
I own my house out right. Completely debt free. What are your thoughts on taking equity out to purchase an investment property. And if so how much? Should i buy the investment property outright or just a down payment?
I am not a licensed financial advisor of any kind (always want to mention that) but based on my experience, especially with how low interest rates are, tapping into your equity could enable you to invest and achieve a much higher return on that equity that you currently get today. You can do a cash out refinance (tax free event) or a HELOC. I'd just compare the two options and if you decide to proceed, pick the one that makes the most financial sense :)
Personally I would not buy cash because int rates are so low. With inflation skyrocketing over 6% this past year, a 4 or 5% int rate on a loan right now is essentially free money. So for me I'm leveraging. You'll also get a much higher cash on cash return taking on debt instead of buying cash. But some people want to be 100% debt free under all circumstances, so it's just what you're comfortable with and your goals
FINANCIAL FREEDOM! I love watching your videos on TikTok, they are witty, informative, and inspirational. Such a smart individual 🤓🤩🤩
Thank you!!
Michael...Thanks for the down and dirty and real talk...My wife and I have also picked up two STR properties since Nov 2019 and are looking for our third right now. One in the Smokies and one in Branson. A quick question for you is do you use a dynamic pricing tool or enemy method to structure you pricing on your STRs? Again, great content and looking forward to looking at your other stuff.
All the best
Paul
Thanks, Paul! And congrats to you guys! We use price labs as our dynamic pricing tool. When evaluating markets and individual properties we look on AirDNA quite a bit and then look at similar properties in that area to really get an understanding of the prices they’re booking at each day of the week and each month throughout the year
@@melefante6 Thanks for the quick reply...I'll have to get on and check out Pricelabs and compare that to how we've been setting our pricing. Again thanks and I'm sure we'll be in touch!
I found this video EXTREMELY helpful!!!! I’m fed up with just dreaming and not having the financial freedom that I always knew I wanted. I’ve been reading real estate books and now like you said it’s time to put things into action.
Drop comments below! Thank YOU for watching :)
I'm interested in knowing how much you are able to rent each cabin with 4 to 5 bookings since it doesn't look right for an over 6k revenue. After researching Airbnb rentals in Nashville I'm only seeing $60 per night for max rents. Please explain how you are getting more in rents. Also are you including the state taxes you have to pay for short term rentals?
It completely depends on location, amenities, emotional appeal, and mainly how many people does it accommodate. Our larger nashville property we accommodate 12 guests and cater towards bachelorette parties. Our weekend pricing ranges from $400-1,000/night depending on time of year and demand. Right now is very slow season for nashville and lack of travel still due to covid
Dang that's awesome, keep it up
TY!
Congrats man, keep up the good work! Glad I found your channel
Thank you!
This is a VERY well made video. Your explanations make these things much easier to understand. I appreciate the breakdown of your properties and sharing this info. I’m seriously inspired to get into short term rental properties like this! (PS: I found you on TikTok - crazy how social media brings us together)
I appreciate that so much! Thanks for the positive feedback. Social media is crazy. Gets casted in a negative light often but has tremendous upside like you mentioned :)
How did you decide where to buy your properties? Did you research where there weren't many airbnb's? Or did you mostly do it on surrounding attractions or activities? I feel like location would be one of the most important aspects of deciding what property to buy. Thanks so much!
Great question! Location is definitely crucial. We are in locations with high demand for tourism. The markets are both fairly saturated with rentals but there is still strong enough tourism for most people to do very well and if you furnish the property in a way to make it stand out from the others, you will do exceptionally well. AirDNA is a great starting point to see meets demand and occupancy rates. Link in description if you want to check that platform out I highly recommend!
I’m a travel nurse and with COVID I have financially done very well as a result. I bought my first rental property and have been interested in looking into vacation rentals
Nice! As a travel nurse did you stay at airbnbs for mid lengths stays? There seems to be a good market for that as I imagine you would be looking for a furnished place nearby work?
@@melefante6 it could be, and yes I’ve done the whole gambit, extended stays, Airbnb, VBRO, regular hotels, furnished finder. I just have anxiety with things like the Airbnb’s that have been hugely affected by COVID, the idea of a lease assuages some of that 😂 I saw the tick tok about your mountain rental though and know the numbers can make sense.
I do have a question for short term rentals and securing loans for investment properties. With a long term rental if I have a lease then 75% of my rent can count towards income to secure the loan. With buying a vaca rental how are you staying under your DTI threshold as you add debt but don’t have a lease to use to be counted at time of purchase. If you both collectively have 60k W2 income plus less than a year of rental income, how are you able to do that? My bottleneck I foresee is expanding. I have good credit and 20% down not sure how I would prove potential income on a vacation rental to not put my DTI over to afford a $350k rental like what it seems the Nashville property is
@@Justice1813 Great questions to run by a few lenders. Each year, when you file your tax returns and show income from Airbnb properties, lenders can count that as rental income and factor that in to your DTI. Not all lenders will count this though, so it's worth speaking to several of them - especially ones that work with a lot of investors. There are a few different types of loans you can get for STRs. Most common is to do investment loan and you can put 15-20% or you can do a secondary home loan if you plan to use the property yourself some throughout the year. This will allow you to put as little as 10% down on conventional loan and get a more favorable int. rate. Right now we are relying on our W2 to secure our loans plus rental income for properties we acquire in the near future.
Some lenders will actually consider some short term rental income into their loan - I've only experienced this with one lender I've worked with, but certainly helps nonetheless.
There are other ways to finance properties outside of conventional loans. If you want to partner with someone else and split everything 50/50, that is an option, or they front the money and you set up and manage the place. You could co-host for someone and essentially just act as a property manager for a 15-20% cut of gross revenue as your payment. You could do a hard money loan or private loan - this will likely be higher int rates or int only for a set period of time. Lastly you could also do rental arbitrage, which you would just need to pay to furnish a place you sign a lease agreement on, and you rent it on airbnb on your own time. Just make sure you get the blessing from the owner/property manager and HOA to do it..
This is a great video and solid explanation. Also, amazing cash flow #'s!!
I'd like to learn more about how you are selecting your properties and achieving this %
Thanks for the comment! I’ll try and do more specific videos in the future to try and address your suggestions. I do a bit deeper dives into all this plus access to my investment tools and spreadsheets on Patreon as well :)
I would love to get your opinion on alternative methods of purchasing. My husband and I just bought our family home about a year ago and have not paid it down much. Because of this, I do not think our debt-to-income would be low enough to purchase another house with traditional financing. We do currently have one monthly rental property paid for that is valued around $60k, but I know short term will bring in a lot more.
Have you spoken with a lender about what you would qualify for? That would be a good first step to get a sound understanding of what you qualify for today and what steps you can take to work towards a target number.
Right Market and right property…. Thank you 🙏
AMAZING!!!!
Thank you so much for watching!
Hey can I call you? I just need help getting this down. I saw you from TikTok and am anxious to talk and share ideas.
I’m a college student working only part time currently. How much liquid cash would you recommend having before getting into this. Or is most of it other than the principal payment paid via loans?
Yes, you would only put down 10-20% in most cases and leverage the banks money via a conventional loan. For you, I would suggest looking into doing house hacking strategy! As a first time home buyer, you would qualify for a FHA loan and likely only need to put down 3.5%. You can buy a duplex or a house with multiple rooms and rent out the other half/rooms and basically live for free or even get PAID to live in your own house!! :)
i love the realism from you please keep it up as you grow in followers. i plan to hop in the short term vacation rental space soon . where can i contact you for questions/mentorship?
Hit me on instagram. I will also be launching a DETAILED short term rental investing course laying out everything from A-Z. Hoping to complete and launch in the next 3-4 months :) In the meantime, happy to add value where I can
@melefante6
I’m curious to know how you scout for a new property and then negotiate / close a good deal. Good job you two!
FINANCIAL FREEDOM!!!! Love yalls story man!
😊 thanks Tray!!
I found you on TikTok, thank you so much for this video and the tips. The only question I got is: I am from The Netherlands, will it also be possible for me and my partner to do this? I don’t know if America has other rules about investments. Thanks 🙏🏼
I’m not sure what rules are there around short term rentals or investing overseas in the USA but It is likely possible!
This was so informative and helpful to my future, thank you so much!
Thank you!
Congrats. Great accomplishment. Just one qs? How are you covering health insurance costs?
Private health insurance. It's not as bad or expensive as most people think
@@melefante6 I see. Thank you. Im trying to get out of the Rat Race God Willing. Im 50 and can’t see working more than another 5 years. So trying to see what are the options until I can get medicare. Thank you
Congrats on the achievement. Super cool and a big goal for my wife and I. Above everything else, hope you and your wife are happy 👍🏼
Thank you Blake!
You saved up the cash from your jobs and then bought 4 properties in 1 year? I'm a little unclear on that from your video.
Congratulations! Hope to be in those same shoes one day! What exactly are the operating expenses? & What books did you read up on to learn about short term rentals ?
Honestly not many books on short term rentals especially in today’s world. I liked cash flow quadrant and the millionaire real estate investor a lot. Operating expenses includes anything that costs you money to operate the property. Property taxes, insurance, utility bills, WiFi, cleaning expenses, landscaping, etc
Great video brother!
thank you Joshua!
I'm 22 and desperately seeking financial stability for the future. I barely have any capital and hope to take advantage of the FHA loan, did you also use an FHA loan for your first property? How did it go
We did not, however MANY people did and I would recommend it for sure. FHA has to be used for a primary residence. But you could house hack, meaning buy a duplex and rent out the other half OR buy a single family and rent out the other rooms. This will help offset your mortgage or even pay for all of it, allowing you to save up that much more money each month to put towards future investments :) FHA loan you can put as little as 3.5% down.
How much in savings did you invest in your first property? Before scaling off and doing more. Or did you go ahead and buy most properties around the same time?
We saved up and invested 15% down plus furnishing costs in the first property. We actually sold out of much of our 401k and IRA accounts to fund our second purchase. And the third was savings from work and investment income combined. The fourth will be a cash out refinance on our primary residence and using the appreciated value to fund the purchase for the next deal!
I would really like to understand how to invest in real estate with no money down. I keep hearing people talk about it and I can't figure it out.
Same
Here are a couple videos that may help! :)
ua-cam.com/video/zbSw9uVjZQk/v-deo.html
ua-cam.com/video/qZO72Ar7Tbc/v-deo.html
What a great video! This was so informative and encouraging. My husband and I are starting our adventure in planning out owning our own Air B&B. I may have missed this, but how did budget in your initial expenses for furnishing and decorating your properties?
That’s awesome!! It depends on the property. If it’s completely empty I would budget around $4-5k per number of bedrooms. That includes common spaces and kitchen, etc. plus an additional $2,500 or so per extra space like a game room or outdoor patio space :) I’m sure you can do it cheaper though just depends if you want to hunt for deals on FB marketplace, etc or just want to buy new off Amazon and wayfair and get it done ASAP
FINICAL FREEDOM 🙌🏽🔥
Great info very much appreciated I’m 17 years old and hope to become financially free before I’m 25 🙏🏾
🙌🏻
My husband is in the military and we just bought our first home using the VA loan, we talked to a realtor about how we want to do Airbnb or use this house as a rental in the future (I’m pretty sure we have to live in it for a year before renting it out). We will be in Virginia Beach for 5 years and were thinking about buying a house maybe each year so we can use them as rentals and have that extra source of income. We can continually use the VA loan. I know in the future if we want to sell the houses we will have to pay capital gains for not living in the house for two years within a 5 year period. We are still unsure on if this will be our plan but we’re trying to figure out what would be the best option for us because our goal is to be financially free. Having that many loans out scare me, but from what I heard some debt is good? What’s your advice? We’re very new to being home owners and don’t know a lot!
Yes for a primary residence loan you’d have to live in it for a year - not a bad plan for you guys!! There is good debt and bad debt :) good debt is leveraging other people’s money to buy assets that cash flow every month. The revenue you collect services the debt for you and builds your equity position in each property.
Commenting because you crush these videos, and provide unbelievably valuable information. 2022 goal to add our second air BnB property. Thank you thank you!
Thanks! And you got this!
if you’re 18 (in my shoes) what’s a good first move? and did you start working towards this goal this early or is it unrealistic right now?
I’d say continue learning as much as possible and saving as much as you can. I think house hacking is the best strategy to get started in real estate. Also in the meantime work on building credit even if it’s just a simple credit card that you use for gas or food purchases. This will go a long way when applying for home loans. You could also look into cohosting or rental arbitrage too as a good way to get started without needing as much capital
@@melefante6 i appreciate the good outlook and info
This was very useful, I'm actually starting out with long term investment properties with tenants but I was interested in doing short term tenants with Airbnb, my one barrier is just figuring out how I would get the money to furnish the place for people, my question is how much do you spend on furnishing the house ?
It depends on the property, how many bedrooms, extra spaces, bathrooms, outdoor space/patios, etc. Are you catering towards the business traveler, family vacations or weekend trips? We usually budget for a ballpark $3-5k per the amount of bedrooms the house has. So for a 3 BR house, we would budget for $15k. Now, you can certainly furnish a place for much cheaper if you scavenge FB marketplace for good deals. So you could spend far less depending what you want to do!
Would you start with a smaller investment like a 300k house that makes 50k a year or wait and save up for a house that’s say 600k and makes 100k a year? I can afford option one but next year I will have enough for option 2. Thanks !
Also found you on TikTok. You definitely do a good job explaining all of this. I might just enroll in your course after watching all your recent UA-cams. Keep up the good work
Thanks, Evan! Appreciate that!
Great video; A few questions regarding how you are financing these and future properties: Are you continuing to qualify for conventional mortgages based on your W2 income, or are you qualifying with the help of the rental income? If qualifying based on rental income, do you need to two years of rental income tax history to qualify? Are you working with portfolio lenders instead of conventional mortgage lenders to obtain future mortgages on vacation rentals? Thanks!
Right now it’s conventional loans and we qualify based on W2 and some rental income. Moving forward we will leverage rental income as we file tax returns. Some lenders will let us use forecasted revenue for the loan but not many do. As far as I’m aware to use rental income you just need one tax return but some lenders may have different requirements.
How do you manage properties that you don’t live near.
Do you hire out a company to take care of things like a broken stove, toilet, etc. or do you just try to do it all yourself long distance?
My husband found you on TikTok, and after discussing how fed up we are working for other people and what we want our retirement to look like, we decided that this would be our way to go! I'm looking forward to watching the rest of your content and learning everything you have to teach! Have a blessed day!
Awesome! Can’t recommend it enough :) wishing y’all the best!
Michael this is amazing! Thank you for sharing this knowledge. Some questions for you.
1. Average labor and set up/remodel cost per house you and your wife invested into each property prior to putting them on the rental market?
2. What percentage of the passive income cash flow returns are you taking and investing back into your current properties or into new properties each month?
3. Thoughts on investing in a rental property with a friend?
Thank you!
Hi Emma! Thank you!
1. It completely depends on the individual house. One we bought new and furnished from scratch - we budget for around $3-5k per total bedrooms on average. But it can vary depending on the space.. one of them we bought turn key, meaning it was fully furnished and the only thing we did was changed out some decor and swap a couch for a pull out couch to accommodate more guests. Another we bought furnished, sold most of the furniture and decor and used some of that money to help with the remodel cost and new furniture. That remodel was a larger project and the total cost from remodel, to furnishing, photos and cleaning to guest ready was $49k. But again, it was a larger house, so it each investment is different. People can start will a smaller property and less money out of pocket and quickly scale as they start cash flowing!
2. We are reinvesting all of our investment income. So whenever we have the targeted amount of money necessary for the investment we are going for (between w2 income and investment income, etc) we start making offers on places.
3. I'm all for going in on investments with friends or investing partners. It can make the barrier of entry smaller and you an also learn together. As long as you have the same goals for the investment and have a plan you should be good to go! You can even do hard money loans if you do a remodel... Use private money - buy the house cash (at a discount), remodel it and then refinance it based on the new value of the house, pull out all of the investors money and now you own 20% of the asset and are cash flowing. During the time you renovate - most hard money loans will charge interest only on the loans for the time you have the loan.
@@melefante6 THANK YOU!! This is extremely helpful and was more than what I asked. I foresee having more questions in the future. Cheers.
@@emmamarlatt5020 Anytime! Thank you so much for watching and commenting!!
@MrLorenzoVerna once you have rental income you can use that towards income on top of you W2. Your lender will look at your credit score, debt to income ratio, among other things. You can also partner with another investor... You could also find ways to get in real estate with no money or no mortgage. Rental arbitrage is a cool way to do this! In the meantime, I recommend saving up as much as possible and focus on your earnings so you can one: have more money to invest and two: qualify for investment loans. You can actually get up to 10 conventional loans backed by freddie mac / fannie mae.
Job hoping I'm trying to avoid because of covid and working remote etc. It could not end well.
新房车朋友來了，非常棒了
You are great at explaining these things! I’m 22 & my boyfriend and I are just starting our jobs out of college but I’m trying to convince him on this type of plan bc I don’t want to work a 9-5 forever! Airbnb is what I want to get into but trying to see how this can be possible for us & how long it will take to save up to invest. Any recommendations for type of account to put our savings in?
Good for you two! I’d say sock away 3 months of living expenses as emergency savings and begin investing some in the stock market and have a target amount of money to save up for real estate. You could try the rental arbitrage route or do house hacking to get started! Great strategies with a lower cost barrier of entry :)
This was fantastic! Very informative and helpful in understanding how this process works. I appreciate your willingness to be transparent and open about how you and your wife successfully achieved financial freedom.
Thank you!!
:) :) :)
🤓
Improve your thumbnail, your content is good year, the thumbnails are sketchy, hire professional
Thanks for the feedback and watching
Have you experienced AirBnB listing your properties for more than it shows on your end? I've heard of that happening.
No. You control the prices. Airbnb now shows the avg daily rate including cleaning, service fees and taxes to guests though so that might be the delta in price people are talking about but the actual nightly rate is what you tell it to do
I can’t get past your eyes- I can’t focus 😩