Are you eager to explore innovative ways to amplify your investment returns in the real estate market?
The latest episode of the Raising Private Money Podcast with Jay Conner, revealed a revolution in property management strategies thanks to expert Ed Middlebrooks. Through his unique approach, landlords in Florida can experience hassle-free property leasing with substantial profitability loops. Ed’s model offers annual rentals with the added perk of personal use for landlords – an ingenious move betting on landlords’ desires for personal property enjoyment.
**Creative Financing and Arbitrage Magic**
Ed Middlebrooks has harnessed the power of arbitrage, where properties are controlled for short-term rentals and funded through private money. The beauty of this system lies in its scalability – Ed raised an impressive $700,000 in private money within a year, an accomplishment illustrating the vast potential of private capital in real estate.
**The Middlebrooks Methodology**
By providing a 30, 60, or 90-day right of rescission and professional property maintenance, Middlebrooks significantly lowers landlords’ risks. This security, paired with the prospects of never dealing with tenants or maintenance again, casts Ed’s offerings in an irresistible light. His focus on the quality of guests over the booking platform reassures property owners that their investments are in careful hands.
**A Story of Growth and Mindset Shifts**
Ed Middlebrooks’ journey from traditional rentals to a booming short-term rental portfolio represents a tale of growth and adaptability. Influenced by real estate moguls and mindset coaches, he successfully transitioned into full-time investing with an emphasis on short-term rentals.
**Strategic Partnerships and Training Opportunities**
In this episode, host Jay Conner highlighted Ed’s upcoming 2-day live training event – an exciting opportunity for investors to learn directly from a seasoned expert. With significant discounts and added perks, this event represents an invaluable chance to expand one’s real estate acumen.
**Conclusion: Leveraging Landlords’ Dreams for Success**
Ed Middlebrooks showcases how understanding landlords’ desires and financial objectives can spawn a business model that truly resonates with property owners. His system not only subverts traditional landlord headaches but also aligns with their dreams, yielding a harmonious and prosperous venture for all parties involved.
The Attractor Factor in Choosing Airbnb Locations:
“Is there a reason people are gonna come to the area? And a great way to know if you’ve got good attractor factors is to look for the hotels. Do you think Hilton’s gonna build a great big hotel without doing their research? No.” – Ed Middlebrooks
Questions discussed in this episode:
- How does Ed advise handling the payback terms of loans used for investments in short-term rentals, and what impact do these terms have on cash flow?
- What were some of the challenges Ed faced when transitioning from traditional rental houses to short-term rentals, and how did he overcome them?
- What are some strategies Ed Middlebrooks suggests for securing investment capital for Airbnb arbitrage, and how do these strategies align with his overall business model?
Fun Facts:
- Ed Middlebrooks is going to reveal how to operate a short-term rental business without using any personal funds, using a strategy called arbitrage, in combination with private money.
- Ed has a platform set up to find people who bid for the job of cleaning the houses for his short-term rental business.
- Ed uses a variety of online channels (property management systems) for his short-term rentals, not just Airbnb.
Timestamps:
0:01 – Raising Private Money Without Asking For It
0:21 – How Ed Middlebrooks Get Started In The Real Estate Business
6:36 – From Rental Properties To Short-term Rentals
8:14 – Difference of Gross Per Month Between Short-term Rentals and Traditional Landlord Rentals
11:26 – What is Arbitrage?
12:10 – Best Ways of Locating Short-term Rentals In Arbitrage
16:36 – Destinations Air BNB Vs. Non-Destinations
18:27 – How To Manage Short-term Rentals, Stress-Free
24:54 – How To Find Landlords To Convert Their Rental Properties Into Air BNB
26:36 – Different Benefits For Landlords
30:53 – Landlord Days of Toilets and Tenants are Over
32:14 – Using Private Money In Arbitrage
38:52 – Jay’s Free Private Money Guide: https://www.JayConner.com/MoneyGuide
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How Ed Middlebrooks Raises Private Funds for Short-Term Rental Success
Jay Conner [00:00:00]:
Oh, my lands, my friend. I’m so excited for the upcoming episode right here in this show. My friend, Ed Middlebrooks, is going to pull the curtain back and show you how to do the short-term rental business with number 1, without using any of your own money, and by using this secret strategy called arbitrage. You don’t have to own any of these houses. And we’re gonna show you how to combine Private Money with short-term rentals to where you can furnish the house, do any minor repairs, and run the entire business on automatic. Ed is going to show you in this episode how he has a platform for finding people immediately who know how to clean these houses. They bid for the jobs and you run it, it does not run you. So be sure and don’t go anywhere because, at the end of the show, Ed’s got a great big free bonus for you.
Jay Conner [00:01:00]:
I have a brand new free money guide for you to download that will get you started on the fast track to Private Money. Here it comes right now. Well, oh my lands, welcome back to another episode in an amazing show of what we’ve got going on for you here today. This is the Private Money Academy podcast, and we talk all things about Private Money. And I have just an amazing guest that joins me here on today’s show. And my guest is not only a dear friend, but he is also an expert at raising Private Money himself. So what better guest to have on the show than my good friend? Well, I’ll give you a short intro, and then we’re gonna dive right in because let me tell you something, my friend. Ed does Private Money and uses Private Money for a strategy like nobody else I know about.
Jay Conner [00:02:08]:
So my guess, first of all, is a new and upcoming investor with acquisitions in multiple markets, and it’s with a specialty in creative financing and private lending. And here’s what it’s for, for short-term rentals. Yes, my friend, is the epitome of taking action now, and that’s why he is so successful, Essie has dramatically grown his short-term rental portfolio from 3 to 13 properties in less than a year of using creative financing strategies, arbitrage, Private Money, and all that kind of stuff. Another cool thing about my friend is that he specializes in mindset, just like I do, other people’s money, all that sort of thing. He applies those strategies for short-term rentals for fast cash flow and unlimited success. Now, his structure is second to none as he applies contract law, and we want to hear about that, in the private domain to grow his portfolio outside of the public domain. And, hey, I know I’ve got your attention now. So put your seat belt on.
Jay Conner [00:03:19]:
Don’t go anywhere because my guest has got a special free bonus for you at the end of this show. So with that, my good friend and fellow Mastermind member, Ed Middlebrooks, welcome to the show, Ed.
Ed Middlebrooks [00:03:34]:
Hi, Jay Conner. So happy to be here. Thank you so much for having me on your amazing podcast. For those of you who don’t know me, my name is Ed Middlebrooks. Brooks. Thank you for that great intro, Jay. And I gotta tell everybody, Jay Conner is the guy who cut my teeth in the world of Private Money and private lending. So getting on this particular podcast with you, sir, is, it’s a dream come true, and it is.
Jay Conner [00:03:57]:
Absolutely. Well, Ed, tell everybody how you got into real estate, what year you started, and how you started in it before migrating over to short-term rentals.
Ed Middlebrooks [00:04:08]:
Sure. Well, I’ll tell you, I got my start, was 2018. In October of 2018, I went to this, gentleman’s, I think, like, a 3 or 5-day event called Quick Start Real Estate School. I think you know him. His name is Ron Legrand. This came on the recommendation of my father who told me, Ed, I’ve been buying and selling properties and and, selling for a profit, fixing them up, And, you should do that too. And I thought, well, gee, you know, I don’t I don’t know how to do any of this type of stuff. And I do remember this guy has been consistently emailing me.
Ed Middlebrooks [00:04:39]:
And sure enough, I went into my junk mail folder, and after hearing his radio ad and signing up years in advance, I found that the email was still consistently delivered to me. And I know exactly where I’m gonna go now. So I clicked on the link, and I bought the CDs. I started getting into it. And I’m sure I’m telling a story that many, many investors know because they too have had this same story. They got the CDs. They got the book, you know, the fastest paycheck in real estate. They learned how to wholesale.
Ed Middlebrooks [00:05:08]:
A lot of people stick with wholesaling and they stay right there. After going to Quick Start Real Estate School, well, I met this gentleman at that event who told me where to get the money now, and I think everybody on this call knows exactly who I’m talking about. That is none other than the Private Money authority, Jay Conner. I then signed up for Jay Conner’s event. I bought into his courses and made out things I learned about Private Money were second to none. I like to say thanks to Ron LeGrand, thanks to Jay Conner, thanks to, Marshall Silver who got my mindset together. I started my real estate investment business career, on full throttle. I started it in the right way.
Ed Middlebrooks [00:05:46]:
So we’re talking only about 2018 when I got my start. And, it wasn’t long after I decided to quit the job that I had a little bit of a mental breakdown. This was before I met Marshall Silver. And the fact that I got my first deal was fantastic. When I cut off that regular check that I was getting from my employer, The constant and fast time of not doing work and the next check was coming from the fears that held me hard, so I went back to work for a couple of years. My first well, one of the first creative financing deals that I did, was on an owner financing deal, and I did fantastic in a little resort community called Lincoln, New Hampshire. And in that town, I could not find a lease option tenant to purchase my property on the terms that would work for me. So I decided to turn to short-term rentals to see how that would work out.
Ed Middlebrooks [00:06:39]:
And, after being in what they call mud season where the entire season shut down, Memorial Day weekend hit, and I found that we consistently started bringing in $6,000 a month gross income, and our rents there were only 4 or not rents, but our owner financing payment was only $1400 a month. So we are breaking even at 2 grand. So on one property, I was making $4,000 a month cash flow, and I thought, man, not bad. Well, fast forward, it’s now May 2021, and I’ve got 3 cash-flowing Airbnbs. And I thought, you know, I need to set fire to this thing. And as you introduced me, it’s barely been a year later. I’m at 13. Well, I gotta do a quick correction because your team asked me, Ed, how many have you done? And I put in 13 there.
Ed Middlebrooks [00:07:27]:
Yeah. And from the time I wrote that to now, we’re actually at 16 properties because we’re doing 3 right now, 1 in Tampa, Palm Harbor, and Port Charlotte, and none of my own money, no banks, and no credit. So that’s that’s my story. That’s my background. And, yes, as of, May of last year when I met Marshall Silver, he got me comfortable with being uncomfortable. I quit my job. And for the past year, this is all I do now. And let me tell you, life is good.
Jay Conner [00:07:52]:
So, Ed, when you started, were you just focusing on rental? So I wanna understand, how did you migrate from focusing on rental houses over to short-term rentals? How did that happen?
Ed Middlebrooks [00:08:06]:
Yeah. So the way that that happened was specifically, I wasn’t doing landlording with long-term deals. I was doing the whole lease option sandwich, owner financing, and finding a lease option tenant. And, really, I just found myself in kind of a town where people weren’t making a lot of money. Right? I mean, you the local people who live there, they worked at the local ski lodge. You know, they were ski instructors because a lot of skiing around there. They were kinda a lot of, how do I say, minimum wage employees. There’s a lot of that.
Ed Middlebrooks [00:08:36]:
And so in looking to to sell this house on a lease option, I just wasn’t getting the type of, I guess you could say, lease option candidate that I needed for the house. People didn’t have a lot of money safe for a down payment, and the amounts that they were offering me for the monthly payment were far less than what I was paying to the seller. I thought, well, if they don’t come along, what am I gonna do? Ultimately, I decided to try Airbnb. So I put the property on Airbnb. We had another creative financing deal, and I had a lease option tenant there who was about to decide not to put down $20,000. And I said, look. Why don’t you give me 10 down? And for the other 10, I’ll give you a credit to fix up this other property. So they did that.
Ed Middlebrooks [00:09:19]:
They put a new flooring, and new light fixtures, took pictures, beautified the thing, and got it all set up for us. We were stuck on Airbnb, and that’s when we started seeing $4,000 a month in net cash flow out of 1 property. And we went man, we gotta do more of this.
Jay Conner [00:09:32]:
On average, Ed, how much more per month does a short-term rental gross in other than just a regular traditional landlord-tenant?
Ed Middlebrooks [00:09:45]:
That is a great question. I will tell you, that Airbnb just reported in quarter one. That is the period from January till March. Some of their best numbers, they’re now touting that we’re out of the we’re out of the whole COVID period and travels back to normal. Of course, they’re not speaking to April and May, which I know for a lot of people have been a little bit more challenging as prices go up. I’m sure you understand right now that rental rates are on the dramatic rise. We haven’t seen rental rates, increasing like they have been in my lifetime. I’ve never seen them going up like they’re going up right now.
Ed Middlebrooks [00:10:16]:
Rental rates are going through the roof. And because of rising inflation costs, short-term rentals are kind of doing this. They’re not increasing the rental rates. So we have great travel. We’ve got we’re past COVID, and yet we also have well, let’s see what the future’s gonna hold. Right? I always ask this question, Jay. I ask the question, I call it WITI. And I wrote this down to make sure that I said this correctly.
Ed Middlebrooks [00:10:43]:
Witi what is the impact? Witi, what is the impact? And I always ask myself those things. What’s the impact of prices going up, of gas prices going up? How does that impact travel? How does that impact somebody’s ability to afford a house? What happens if the price of, gas you can’t have a crystal ball, but you gotta make predictions based on sound logic and great data? And what I like to say there is when you ask the question, what is the impact, You realize that the number that you just asked me about has consistently been between $46,6000 a month, and, that’s net cash flow per property, and that number can change with things like seasonality, area demand, and certainly whether or not people are choosing to travel or if they’re staying at home. So every property is a little bit different. I will tell you consistently across the board, we see about 4 to $6,000 a month of net income.
Jay Conner [00:11:43]:
So is that 4 to $6,000 of net income per month, is that at least double what you get if you were just doing a straight rental?
Ed Middlebrooks [00:11:53]:
It used to be. It used to be. I can tell you these days, that there are some properties already getting 3 $4,000 a month on regular rentals. So now, as you realize I’m an Airbnb arbitrage guy and I use Private Money for my arbitrage business, your first question’s gonna be, well, Ed, why on earth would a landlord rent to you to do Airbnb when they can rent to somebody else and get consistent 3 to $4,000 a month on the rental? And the answer is very, very simple. A, because I’m a professional. B, I have the properties professionally cleaned at all times. They have to be in showroom-ready condition at all times, and we take care of all the maintenance. So I always tell my landlords, when you rent that property to my business to do arbitrage, your days of dealing with tenants and toilets are over.
Ed Middlebrooks [00:12:34]:
That for them means that they can be successful with what they’re doing with their rents, and yet they don’t have to be burdened by normal tenants.
Jay Conner [00:12:44]:
What’s your definition of arbitrage?
Ed Middlebrooks [00:12:46]:
So arbitrage means to lease a property from a landlord, or if you are a BRRR r r investor, I wanna talk to you because these are people who are doing long-term leases. And as an Airbnb arbitrage guy, I lease from a landlord and then I sublease on short-term rentals. Now I don’t have a subleasing agreement per se. The people who come to stay in my properties are my guests through Airbnb. They’re not tenants, and therefore, landlord-tenant law need not necessarily apply. There are some ways that you can, make sure that landlord-tenant law is not applying to you. And what I say is arbitrage is simply leasing from a landlord and subleasing on short-term rentals.
Jay Conner [00:13:27]:
In a voice very short period, you went from 3 short-term rentals, Airbnbs, to 13, and now you have 3 more on the works that you’re closing. What are your best ways of locating these properties, and let’s make sure I understand, to make sure that, so you find them, Make sure that the landlord owns the house in other words, what is your offer? What’s your pitch to where a landlord is comfortable in allowing you? Because I’m I’m sure you’re you’re fully transparent transparent, I’m sure. What is your pitch to the landlord that, hey? I’m gonna be using this property for a short-term rental.
Ed Middlebrooks [00:14:23]:
Absolutely. That is a great question. That is probably one of the number one questions I get out of all of my students. And, I can tell you, yes. Absolutely. I’m transparent. However, Jay, would you agree that if I come out of the gate swinging with Airbnb and short-term rental concepts the mainstream media who loves to create shock jock radio and shock and awe media love to say every time there’s a party that they’re gonna go and plaster that everywhere about Airbnb. There was a party over here, and therefore, you’re probably gonna have that problem too.
Ed Middlebrooks [00:14:53]:
So if I come out of the gate swinging, Jay, would you think that landlords are probably gonna not be too receptive as to, that strategy?
Jay Conner [00:15:00]:
You probably need to use different language that is truthful, but different language than perhaps the stigma that the phrase Airbnb has.
Ed Middlebrooks [00:15:11]:
Well and that’s that is a very valid point. It’s exactly what I do. So I’m gonna tell you Airbnb is what we call a channel. And so I use a property management system that allows us to be on multiple channels. We can be on Airbnb and VRBO and Bookings and HomeAway and Florida Rentals dotcom. And, you know, we go through Rental United, and we make sure that our property is syndicated with Expedia. There’s there’s now, you know, the the new one coming up I’m researching right now, which is, homes and villas through Marriott. And, you know, I’m always looking for ways to make sure I’m painting the right picture.
Ed Middlebrooks [00:15:45]:
You gotta paint a pretty picture when you’re talking to a landlord. So here’s my suggestion. Don’t talk about the channel. It doesn’t matter if you’re advertising a property directly on your website through Airbnb or VRBO. That doesn’t matter. What matters is the people who are coming to stay there. Ultimately, if you were to host a property on Airbnb, and let’s say they throw a party. Now I’m gonna use that as a worst-case scenario.
Ed Middlebrooks [00:16:09]:
In my 13 properties, I’ve had over almost 600 stays at this point. I don’t even know if we’ve crossed that line yet. They happen so often. Who knows? I’ve had over 600 stays, and I’ve never had a single party ever thrown in any of my properties. So that stigma to me is not based on reality. It’s based on the exception to the rule. What I like to talk about instead of the channel is I like to talk about the people who are coming there. So I say the type of people who come to stay with us, they could be families with patients at the local Moffitt Cancer Center because I know in my Jacksonville properties and here in Tampa, we’ve got we’ve got Moffitt.
Ed Middlebrooks [00:16:42]:
Or they could be families who are coming to travel and go to Busch Gardens down here in Tampa, or maybe they’re going to the beach, or whatever the case may be, I speak to the people who are coming to the area. I also know that in Tampa, we have a very high-demand market in terms of new properties being built. And therefore, a lot of the people that I’m hosting are crews. They’re companies who are coming in here, and they’re doing the contract work of building up the properties. And they can’t hire these people fast enough, and where are they gonna stay? So a lot of times, I’m hosting families who have patients at Moffett, 80% of the time, and the other, you know, 20 to 30 percent of the time, it could be a construction crew who comes into town and they all wanna stay together. The company rents 1 house, puts everybody in there together, and away they go. There are no parties. There’s just not in what we see.
Ed Middlebrooks [00:17:30]:
More than that, we put in huge fines. So, having said that we don’t speak to the channel because the channel is irrelevant. We speak to the people. And when you speak to the people and the reasons they come to stay, you trigger the mind in such a way where you get past that limiting belief of, oh, this is an Airbnb. They’re gonna come and throw parties. They’re gonna destroy my property. Not our guests. Not what with what we do.
Jay Conner [00:17:53]:
Your Airbnbs, do they need to be in resort areas or not?
Ed Middlebrooks [00:17:59]:
You know, that’s the beauty of the way that we do business. People wanna travel where people are needed, and where people want to go. Certainly, places that are on the water are fantastic, places that are in resort communities. As long as you get approval from your Hoa or your Coa, that’s your homeowners association or your condominium owners association, As long as you’ve got their blessing, yeah, those places work great. Do you know what else works? A duplex, a triplex, a single-family home in a neighborhood, places where families are gonna come and visit because they’ve got other family members who are there. And, you know, a great way to look at where your Airbnb’s are, one of the tricks I have is the attractor factor. Is there a reason people are gonna come to the area? And a great way to know if you’ve got good attractor factors is to look for the hotels. Do you think Hilton’s gonna build a great big hotel without doing their research? No.
Ed Middlebrooks [00:18:49]:
Of course not. Therefore, you can contact the manager at the front desk. I will tell you every time I’ve done that, the management at the front desk loves telling you all about how busy they are what their occupancies are, and their seasonality. They love talking shop with Airbnb people. There’s no animosity here. They know that they’ve got all these rooms, and they know that our market and our target audience are different than theirs. So they spill the beans, and they tell me all of their research. They tell me everything I need to know as to whether or not I should have an Airbnb in town.
Ed Middlebrooks [00:19:16]:
And I can tell you, some people love having a cheap hotel room because that’s all they need. Other people, I’m me myself included, I’ve got 4 children. I love renting an Airbnb because I get way more bang for my buck. I’m gonna be paying for the rooms anyway. I might as well get a house that’s got my pool in it and it’s got a full kitchen so I can save money on eating out. So there are trade-offs of both sides of the coin there, and you can have properties wherever, wherever.
Jay Conner [00:19:44]:
One thing that comes to my mind, Ed, and it may be coming to mind to someone else who’s tuning in right now. The logistics of managing this kind of business. I mean, you got people checking in, you got people checking out, you got somebody’s gotta get it cleaned. And as you scale the business, you’ve got more properties. And, you know, my lands, I don’t want to be managing all this myself. I’d be losing my mind. So give us an easy way to understand how is this business model managed to where well, I was getting ready to say you’re running around with your hair on fire. Excuse that.
Jay Conner [00:20:28]:
You wouldn’t be running around with your hair on fire, but you’d be running around crazy. Right? How do you logistically manage this business to where you’re running it and it’s not running you?
Ed Middlebrooks [00:20:40]:
That’s a great question. You know, I would love to tell you that I have a private jet. And when it’s time to do a turnover in Lincoln, New Hampshire, I just hop in my jet, fly to New Hampshire, and do the turnover. And then later on in the day, I come on back and I do my turnover in Tampa, and I’m cleaning them all myself.
Ed Middlebrooks [00:20:57]:
I didn’t say this before, but my career before I got into real estate investing, was as a 20-year IT veteran, and senior network and systems engineer. I dealt with security, Nutanix, hyperconvergence, and VMware, and blah blah blah, and all this junk. And, ultimately, I figured out a way to systemize using mostly technology and, of course, some human intervention as well. And so we use, our cleaners to go out there and we pay them on a a consistent basis at the end of every single stay they get paid, and we pay them automatically. They get notified of new bookings so that they know what day these people are checking out, so they know they’ve got it cleaned automatically. We make it so that when somebody books, last night, we had a booking in an Airbnb, and, not 2 hours after they booked, the lock codes are all set. It’s about 1 hour. The lock codes get set to the last four digits of their phone number.
Ed Middlebrooks [00:21:49]:
They get an automated message. They go in automatically. The pay place is clean. They report any kind of issues. Any issues are gonna go to my team, and my team is just gonna take care of it. We have very few issues. I suggest 2 or 3 a month across the entire portfolio. And, usually when those issues arise, I’ve got somebody else who’s getting that information in and they just give it over to the right person, and we’ve got these runbooks that say here’s exactly what we do.
Ed Middlebrooks [00:22:15]:
And like anything else in your investing business, you don’t wanna be doing the cold call and doing the follow-up and getting the contract signed. You know, you’ve got VAs and acquisitions for those tasks. You know, you wanna do the things that you do best. Maybe that’s raising Private Money. Maybe that’s in a lot of the deal and getting on with your day like Ron LeGrand does. Maybe, you like to go out and you’re a rehabber and you love going out just checking on the status of properties then you get on with your day. It’s the same thing in this business. Your systemization is absolutely properties, we have a way that we automate the staging and the setup of those properties.
Ed Middlebrooks [00:22:55]:
And then we also automate the guests, the communication, the automated messaging that goes out, how we make sure they understand how to use the TVs. All of it is completely automated.
Jay Conner [00:23:06]:
So how do you find these people that can be reliable to clean the unit or, you know, clean the home, get it turned over in a very timely basis to where you got one family checking out or a couple checking out, and you got somebody else checking in? How do you find these people who make this happen for you just so you don’t have to worry about it?
Ed Middlebrooks [00:23:29]:
So we use a platform called Turnover BNB that integrates with our property management system. Now if I were to find somebody, let’s say a good friend of mine who wants to start cleaning, maybe she’s unemployed and looking for some work and I know that she can handle the job, or maybe it’s a cleaner for a different property. I can bring them into turnover b and b and I don’t pay any fees for that up to a certain amount. Should I need a cleaner for 1, I just go onto the marketplace and I put out how many rooms it is. I give them a copy of my checklist, how many square feet, and they’ll bid on the property. And so we pay anywhere from 65, to $75 for cleaning on the smaller properties to 250 to $300 on larger properties, and get this, in our listing there is a cleaning fee and that cleaning fee is exactly the amount of the cleaning. I know some people reduce their nightly rate and they jack up their cleaning fee to make up the difference because there’s a a strategy to that. I’m not one of those people.
Ed Middlebrooks [00:24:26]:
So I just put my cleaning fees exactly what the cleaning fee is that I pay to my cleaner. So it’s my guests who are paying for them not me. All I need to do is go into the turnover b and b system, and I’m going to assign a cleaner to them. They set up the automatic payments, so when they go into a property, they know the checkout time, they make sure the place is vacant, they go in, they do the turnover, they take pictures beforehand, they take pictures when they’re done, they show me how clean they got it. And when they’re all done, they hit a button, and just like that, they get paid via Stripe.com. It comes out of the account where I receive the money. I don’t even have to deal with paying them. It’s automatic like clockwork.
Jay Conner [00:25:03]:
So how do you determine, how much to charge for a cleaning fee?
Ed Middlebrooks [00:25:09]:
Well, that’s done by the cleaner. So the cleaners will bid on the properties, and I’m gonna pick not the cheapest one, not the best one, but I’ve got a whole reviews process. I can see if they’re COVID-certified and if they have any other, training and certifications. I get to pick my cleaner based on that criteria, and then I look at what is their bid. I would get one that’s for a small property say a 2 or 3 bedroom, and they’ll say $500 per turnover. No. Not doing that. The next one comes in.
Ed Middlebrooks [00:25:37]:
She’s got all the credentials. She’s got great reviews, and she’s a 149 per turnover. The next one comes in. She’s $75 per turnover, and she’s got nothing. That’s risky. And for those of you who are wondering, in turnover b and b, Ed, can you have more than 1? Absolutely. I can have multiple primaries, so the first one to accept the job gets it, or I can have a primary and several backups as well. Either or, it doesn’t matter.
Ed Middlebrooks [00:25:59]:
You wanna make sure that you’ve got plenty of coverage so that if somebody flicks out and they can’t be there one day or they get sick, you’ve got somebody else who can come in and clean the property.
Jay Conner [00:26:11]:
So how do you find the landlords to call to offer this business model to them?
Ed Middlebrooks [00:26:18]:
My VA finds them. I give my VA an entire sheet and she’s got a training and she goes through Facebook Marketplace, she checks Craigslist, We look at, for rent by owner. We look at, you know, all the places people look to find properties. And then, of course, she calls the landlord. She’s got my script. And anybody who says, you know, I might be willing to do that, well, then I’d get on the phone with them, or my acquisition is still get on the phone with them. Somebody follows up. And the key is follow-up.
Ed Middlebrooks [00:26:46]:
You gotta take action. Don’t be afraid to hop on the call. And I will tell you, I have heard other people in this space say, always go on out there and meet with them in person, and then pitch them the whole short-term rental idea while you’re standing in front of them. And those people say, I For those of you who have a Prius, my electric sucking Prius, and get out For those of you who have a Prius, my electric sucking Prius, and get out there and go talk to a landlord in person without even knowing if they do this? I say no, and here’s why I say no. My VA is doing all the calls. She’s getting all this information. She’s following up on our dialing system. So we’re calling them more than once.
Ed Middlebrooks [00:27:28]:
We’re asking anybody who hasn’t rented the property, would you consider doing this with us. Would you consider doing that? She’s got a whole script. When we follow up, I can tell you I successfully closed 90% of the people over the phone who are landlords who just simply have questions, but their minds are open and they’re willing to engage, 90% of them, we will close into short term rentals, which is how I got 3 of them in the past 30 days.
Jay Conner [00:27:53]:
What are 2 or 3 of the biggest benefits you give to these landlords, to where you can use it as an Airbnb?
Ed Middlebrooks [00:28:02]:
Well, in my teaching and training program, I have a portion of that called hypnotizing landlords, Jay. Hypnotizing landlords just comes down to understanding the needs of the landlord. Landlords wanna get paid. Right? They’ve got this investment property. They wanna make a return on their money. Now it used to be that I could even offer them a little bit more than normal market rates because as long as I see it in my short-term rental numbers, I might offer to pay a little bit extra. However, I recently did one in Cape Coral, Florida. Now for those of you who don’t know, Cape Coral is the hottest landlord market in the nation.
Ed Middlebrooks [00:28:36]:
Marshall Reddick, one of these big lender companies, came out and reported on Cape Coral, and they called it the biggest long-term rental market in the nation. People are moving there in droves, and therefore, you know, housing is becoming scarce there and the rental market, the the prices are shooting up. I called a landlord who posted his property. My VA reached out to them that day. And by that evening, I was on the phone with them and he said, Ed, I gotta tell you, you’ve got a really hard road to haul here. I said, why is that? He said, well, I told Emily, your assistant this morning, I might be open to doing this. Since I answered the phone, I guess I’ll go ahead and give you a shot, but I’m already about ready to make my decision. And you should know, I’ve got somebody here who has fantastic credit.
Ed Middlebrooks [00:29:23]:
They’ve offered to pay more than the $1900 I was asking. They’re offering to pay $23100 a month. I have somebody else here who’s offering to pay me $1900 for the entire year upfront. So your offer had better be good. Jay, I gave them my offer, and they went with me. I’m gonna give for anybody who’s in the state of Florida, I’m gonna give this one bull’s eye answer. Yes, I talk about how we keep the property professionally cleaned and maintained in a sure room-ready condition. Yes.
Ed Middlebrooks [00:29:53]:
I talk about how the maintenance, you know, we take care of cleaning the air ducts, replacing the air filters, and, you know unless the roof is leaking, or the property’s flooded, or a hurricane ripped everything off, they’re not gonna even hear from me. Things are gonna work like clockwork. This one bull’s eye thing that works in the state of Florida, probably like nowhere else, as I always say to the landlord, I see you have a Maryland area code. Would I be right in assuming that you purchased a property down here in Florida with a dream of one day being able to use it? And to cover that debt, you decided to go ahead and lease that property out on annual rentals, and now you can never use the property? And 9 times out of 10, yeah, that’s right. How would you love to have a strategy where I’m paying the bills and you get to utilize the property? What do you mean, Ed? Well, you see, Jay, I ripped a page out of the timeshare manual, and I’m gonna give you 2 weeks out of the year to use that property or any other property in my portfolio, and you should know, I’ve got properties all over the state of Florida, up in New Hampshire, in the white mountains for skiing, and even in Puerto Rico. I’ve got properties all over and we’re growing all the time, I don’t care which property you choose. You do business with me and you’re going to get access for 2 weeks out of the year. Oh, and by the way, I never want to do business with anyone who doesn’t want to do business with me, Jay.
Ed Middlebrooks [00:31:09]:
Therefore, in my contract, I’m gonna give you a 30, 60, or 90-day right of rescission. What that means is I’m gonna lower the risk. If at any point in time, this agreement isn’t working out for you, I’ll go ahead and give you back the property, you just give me 60 days written notice to vacate. I’ll finish up the rentals I’m doing, we’ll get all of our stuff, we’ll go somewhere else. Because you gotta remember, I’m not your normal tenant. I don’t live there. So you’re not kicking anybody out of the house. So should your market change or your ideals change, go ahead.
Ed Middlebrooks [00:31:39]:
Let me know. I’ll get my short-term rental done someplace else. No problem. And let me tell you. Let me just add one thing to that, Jay. That one thing right there actually, I gave you 2. And that second one that I just gave you means we take all of the air that’s built up and all of that tension right out of the conversation. Because now they can experiment with it, And I’ll tell you, I have yet to give back a property because some landlord didn’t like what we were doing.
Jay Conner [00:32:08]:
Well, you know, most landlord and renter relationships in a traditional way are, you know, one of the biggest, pains that landlords have. They talk about, I’m tired of tenants and toilets. Right. Tenants and toilets. Phone calls at 2 a.m. In some kind of way in your business strategy, do you take part of that stress off of the landlord?
Ed Middlebrooks [00:32:33]:
Absolutely. I use that in my speech to them. I tell them as soon as you rent to me, your days of dealing with tenants and toilets are over. You don’t deal with tenants anymore. They think of me now I’m not a licensed, real estate broker, therefore, I don’t do property management. They will tell you they think of me like a property manager. And so at this point, they’re saying, look. I know he’s getting profits, but, hey.
Ed Middlebrooks [00:32:54]:
I’m profitable too. Everybody wins, and I don’t have to deal with tenants and toilets anymore. Where do I sign? I get to use the property. If I don’t like it, I get to get out of the contract. I’m not stuck in an agreement with somebody. And, you know, the property is professionally maintained and in showroom-ready condition at all times. Shoot, if he’s doing what he’s saying he’s gonna do, then I can come down and use the property, and I’ll be able to see that he’s doing what he’s saying he’s gonna do. Simple.
Jay Conner [00:33:21]:
Well, that’s a huge that’s a huge benefit that you give to a landlord, particularly if it’s that the property is located in an area that, you know, they would like to come visit. One last question, Ed, before we give everybody your contact information. And I know you’ve got a huge bonus, to give, to, you know, everyone here. And that question is, you know, you talk about how you combine arbitrage, meaning you don’t own the property, you rent the property, you control the property, you then put Airbnb or short-term rentals in the property. What does Private Money or using other people’s money do, how does that combine with the strategy of your business model?
Ed Middlebrooks [00:34:05]:
Sure. Well, Jay, you are the Private Money authority. So I’m gonna ask you when you go and you position Private Money lenders, and you’re just talking to people that you know, acquaintances, people that you’ve met that you’re tell telling them about Private Money, Do you ever find that you come across some Private Money lenders who would enjoy getting started, they just perhaps don’t have the capital requirements that you need to do a fix and flip?
Jay Conner [00:34:32]:
Absolutely. We’ve got private lenders at all different levels. We got private lenders that, you know, only have maybe 30, $40,000 to start. We have other private lenders that have 100, 250, and $500,000 to start. So, yeah, I mean, there’s all different levels. And on those people that only have, like, 25 or 30,000 to start, we say, well, you know, I can’t buy a property at that amount, but perhaps there’s another way we can work together. So how do you do that?
Ed Middlebrooks [00:35:04]:
Sure. And, I’ll tell you, I’ve done Private Money notes as low as 5,000. Now you should know I’ve raised close to $700,000 in Private Money in the past few months. I will say say in the past year. In the past year, I think I’ve done close to 700,000 when all is said and done. And forgive me if my number’s a little bit off there, but nobody’s looking. So, anyhow, I’ve done quite a bit in terms of Private Money, and I’ve done smaller amounts of money. When I say 5,000, that’s not typical.
Ed Middlebrooks [00:35:31]:
That’s not typical. I have one private lender who gave me $5,000, and I used that on an arbitrage deal that was already furnished. I used that money to get a couple of things done I wanted to get done, put in my locks, and my automation, and get all my setup and stuff done. And then at that point, we started putting it on Airbnb, and we started seeing the typical results that we see. So even in $5,000, here’s one thing to keep in mind though. In arbitrage, we aren’t purchasing the property. Therefore, I cannot secure them with somebody else’s mortgage. It doesn’t work that way.
Ed Middlebrooks [00:36:05]:
They’re doing an unsecured business loan directly to my business. They’re my money partners. You can think of it as a working capital loan. Jay, have you ever looked at working capital loans? Meaning unsecured loans? Unsecured loans with no personal guarantees, or working capital. This is a business loan, and it’s called a working capital loan. They give it so you can grow your operations, and these are, you know, with banks and hard money. Have you ever seen those loans? I can tell you, Jay, they are high interest, and they are high payback. In other words, let’s say I borrow $70,000 or some other big chunk of money, many of those working capital loans will have a daily payback, a weekly payback.
Ed Middlebrooks [00:36:51]:
Very few of them have a monthly payback, and the terms of paying back 70 grand might be as short as 4 to 7 months. So you can imagine that daily payback and how it negatively impacts your cash flow is horrible. And I know people who get them, they’ll get a $70,000 loan and they’re only gonna spend 10 or 20,000 because they’re gonna use the rest of that money. They’re gonna stick into account just to pay back those monthly payments to make sure they’ve always got it because some of those daily payments are ridiculous, and I can’t even imagine going in and doing a daily payment of 5, $600 a day. Not me. Uh-uh. So what do I do? Well, I’m talking to people like I’m doing fix and flips, and I give them the script that you told me to give them and I’m getting them into my program the way you told me to get them into my program. However, when somebody comes and says, Ed, what kind of capital do you need to invest? And I’ll tell them 200, $300,000 because I’m thinking fix and flip, and they go, oh, I’ve only got 15,000.
Ed Middlebrooks [00:37:50]:
I’ve only got 10,000. I’ve only got 20,000. I say, you know what? Don’t despair. I have another model that may work better for your investment, and I will typically pay a 10% rate of return. Now in this model, it’s a business loan and you’re unsecured, so I can’t tie you to a mortgage, but you know what? The amount of money you’re given is at low risk simply because you’re giving a small amount. And I’m using it in my Airbnb arbitrage portfolio, which means you’re gonna get a monthly check, and I pay them back. I amortized it over 10 years with a 5-year balloon. So this is a 5-year principal and interest payment.
Ed Middlebrooks [00:38:26]:
You don’t get that out of normal working capital loans. My payments on these are anywhere from $300 a month to maybe 900 and some change a month, and I’ve borrowed as much as $75,000 from one investor because they wanted to be a partner in my Airbnbs. They didn’t wanna do any of the work. They just wanted to invest, and they get paid back based on people who are coming to rent my Airbnb. And I got this one tip and trick that I put into all of my agreements just because of things like seasonality and uncertainty in short-term rental markets, And that is, should we not be cash flowing positively, we reserve the right to skip payments for up to 90 days. Now, the investor earns 100% of the interest that they’re getting, because I’m not making a little piddly principal payment back to them. That piddly principal continues to earn interest throughout those 90 days, while we, you know, we’re figure out what we’re gonna do. So I will tell you that this company that I have, some of my Airbnbs are also lease option deals.
Ed Middlebrooks [00:39:28]:
Therefore, I’ve got lease options there. So, Jay, what do I do in the event of economic collapse or Airbnb going bankrupt I lose those channels and I try to go in different channels and I just don’t get the money in. Well, I’ve got 90 days to fix and flip. I’ve got 90 days to sell off the lease options. I’ve got 90 days to do owner financing and lease options to get big down payment checks. I’ve got a strategy and I’ve got options because more than just a short-term rental guy, what I teach in my program is more about being a real estate engineer. You’re a transaction engineer. So it’s when the deal comes in, you decide what the best highest, and best use for that property is going to be.
Ed Middlebrooks [00:40:07]:
Sometimes it’s short-term rentals, sometimes it’s not. And that’s where they play.
Jay Conner [00:40:11]:
I I tell you what let’s do. Let’s make it easy for the person that is listening to you and me right now. Number 1, if you are interested in getting into Airbnb and short-term rentals, as Ezra said, you’re going to need some Private Money. You’re gonna need some Private Money to perhaps stage the house, to furnish the house, maybe some light repairs. And so I have got a gift for you just for tuning into the show. And that’s how to get, be plugged into Private Money very, very quickly, and fast track your private matter to where you can get these houses furnished and get them ready to go without pulling any cash out of your pocket. I just wrote a brand new free money guide. It’s called the Private Money, money guide, and you can get it for free.
Jay Conner [00:41:02]:
It’s a free download at www.JayConner.com/MoneyGuide. Download that guide. Now that’s going to show you quickly how to get the Private Money to work with the short-term rental Airbnb business. So Ed, now let’s tell them how to get the training from you that they need at an unbelievable, like, negligible price.
Ed Middlebrooks [00:41:33]:
Absolutely. Absolutely. Well, you know, I was gonna I was gonna give them the full price, but since you said I have to give them an unbelievably negligible price, I guess I better drop it here. So here’s what I’m gonna do. I’ve just forwarded my domain name, www.thebnbcookbook.com, to my Eventbrite, my 2-day live person training event, which will also be available via Zoom for those of you who cannot come to Tampa, though I do highly recommend you do that. May 31st or June 1st, you wanna go to www.thebndbcookbook.com. B and b like Airbnb. It’s www.thebnbcookbook.com.
Ed Middlebrooks [00:42:10]:
Now when you get there, you’re gonna see the full-price ticket. To get your special discount at $1,000 off, I’m giving $1,000 off of a not-even $2,000 event. You’re gonna get a special deal. Come to my 2-day live event for $497. That’s it. And we’re feeding you too, by the way. You get food at that price. 497 gives you 2 days at my, 4000 square foot lakefront estate just north of Tampa, Florida.
Ed Middlebrooks [00:42:39]:
So come on down, see the palm trees, Go get wet. Go swimming. Go on boats. Come down here for 2 days. Spend it with me. I’m gonna teach you everything you need to know to take action now. Get started. To do this, the coupon code is jayconner.
Ed Middlebrooks [00:42:55]:
That’s all one word. It’s jayc0nner, not o r. I know, Jay, you struggle with that. Jay Conner is your coupon code to get $1,000 off. That makes your total 497 measly dollars. You know what I said earlier? I said we cash flow 4 to 6 $1,000 a month. Now that to me sounds like a pretty good use of your money. $497 to get to a 2-day live in-person event that’s going to teach you how to make massive cash flow as you’ve never seen before and not have to do all the work and learn it all yourself from scratch.
Ed Middlebrooks [00:43:31]:
I’ve already done it. Come and do it with me.
Jay Conner [00:43:34]:
My friend, that is a no-brainer. Get your money guide on Private Money. That’ll get you ready for the event at www.JayConner.com/MoneyGuide. Download that right after the show. And also right after the show, get right on over to Ed Middlebrook’s website, which is www.thebnbcookbook.com. And be sure and use your coupon code, all one word in caps, jayc0ner, and that will drop the price by $1,000 And you’ll be with Ed right there on the lake in his 4,000 square foot estate to learn all about short-term rentals. Ed, thank you so much for joining me here on the show.
Jay Conner [00:44:24]:
I can’t wait to join you myself at your event.
Ed Middlebrooks [00:44:28]:
I can’t wait to have you. I don’t know if you’re coming to this one, but we’re gonna have you here really soon. Let’s talk about June.
Jay Conner [00:44:35]:
Alright. Sounds good. And thank you so much. I appreciate you.
Ed Middlebrooks [00:44:40]:
Pleasure. Thank you.
Jay Conner [00:44:41]:
Alright. There you have it, my friend, another episode of this show. Here’s to taking your business to the next level. I’m the Private Money Authority. We appreciate all the likes, the shares, the rates, the reviews, the 5-star reviews. And be sure if you’re watching YouTube, be sure and tap that bell so you don’t miss out on any of the upcoming notifications of our amazing shows. We’ll see you right here on the next show.