In the latest episode of the Raising Private Money podcast, Jay Conner engages with Airbnb expert John Bianchi to delve into the intricacies of successful short-term rental investments. With over $70,000,000 directed into cash-flowing Airbnbs and a 100% success rate across 150 properties, Bianchi shares valuable insights on leveraging private money, identifying profitable properties, and optimizing revenue drivers. Listeners can expect to gain a comprehensive understanding of what it takes to thrive in the competitive world of short-term rentals (STR).
The Importance of Market Research
John Bianchi emphasizes that different markets offer unique revenue opportunities. These can range from properties that are bigger, better, or more luxurious, to those offering exclusive amenities and superior property management. Understanding what drives revenue in each specific market is crucial for identifying profitable investments. For those looking to deepen their market research skills, Bianchi recommends utilizing resources like www.strsearch.com, which offers free data courses, including a 40-hour comprehensive course called “The Bianchi Method.”
Revenue Drivers and Property Features
In the conversation, Bianchi lays out how key property features and amenities significantly impact revenue. These include pools, backyard spaces, extra living areas, and exceptional property marketing. He highlights the importance of professional property photography, which helps create an emotional attachment in potential guests, enabling them to envision themselves enjoying the space. Capturing the imagination of potential guests can make a substantial difference in a property’s booking rate and overall profitability.
Common Investment Pitfalls
One of the major pitfalls in real estate investing for Airbnb, John notes, is purchasing the wrong property. A poor investment can lead to negative cash flow, financial losses, and a soured experience with the industry overall. To avoid these pitfalls, investors need to rely on data and numbers to make informed decisions. Platforms like AirDNA, which records booking data from Airbnb properties worldwide, can be pivotal in analyzing a property’s potential cash flow. Bianchi’s “20% rule” serves as a guideline: ensuring a property’s revenue is at least 20% of the purchase price is a good benchmark for profitability.
Utilizing Private Money for Purchases
Jay Conner and John Bianchi also discuss how private money can be a powerful tool for purchasing and managing Airbnb. With private funds, investors can swiftly close deals and optimize their property portfolios. This approach is particularly beneficial for high W-2 earners looking to leverage short-term rental tax benefits to save on active income taxes. Bianchi advises investors to engage specialized tax advisory firms like Hall CPA to fully understand and exploit the available STR tax loopholes.
Designing for Success
When it comes to property furnishing and amenities, Bianchi stresses the importance of aiming for the high-end market to ensure long-term success. He sets a budget of over $150,000 for amenities and property design to place properties in the top 10 percentile. This investment ensures the property can survive potential economic recessions, making it a cornerstone strategy for savvy investors.
Strategies for Different Markets
During the episode, Jay Conner questions whether it’s better to invest in upscale versus smaller markets for Airbnbs. Although John prefers not to buy luxury properties outright, he focuses on making standard properties in luxury markets exciting by adding tailored amenities for specific demographics. This strategy has proven successful, as illustrated by an example where a $1,000,000 property achieved over $200,000 in revenue, equivalent to that of a $2,000,000 property.
Conclusion
Jay Conner and John Bianchi’s insightful discussion sheds light on the various facets of investing in Airbnb properties using private money. Whether you are a high W-2 earner looking to leverage STR tax benefits or a budding investor seeking to understand market dynamics and property features, this episode offers a wealth of information. For those who prefer a hands-off approach, John’s services can also identify profitable properties and even handle the acquisition and management details.
With market research, strategic investments in amenities, and leveraging private funds, investors can navigate the Airbnb market successfully. Tune in to the next episode of “Raising Private Money” to find out more about utilizing private capital for lucrative real estate ventures.
10 Lessons Learned in this Episode:
- Understanding Revenue Drivers
Certain amenities like pools, backyard features, and extra living spaces significantly impact Airbnb revenue. High property quality and effective marketing are key.
- Importance of Professional Photography
Professional photos are essential in creating emotional connections with potential guests, making them envision their stay, thus boosting bookings.
- Avoiding Common Investment Mistakes
A major pitfall in Airbnb investing is buying properties that do not have cash flow. Identifying profitable properties through data analysis is critical to avoid financial losses.
- Utilizing Airbnb Data Tools
AirDNA is a powerful tool for predicting a property’s potential revenue. It tracks Airbnb bookings globally, providing essential data for revenue forecasting.
- 20% Rule for Investment
Use the 20% rule to ensure a property’s revenue is at least 20% of its purchase price. This metric helps in evaluating the viability of an investment.
- Advantages of Short-Term Rentals
Short-term rental (STR) tax benefits are particularly attractive for high W-2 earners, offering a unique way to reduce active income taxes if specific requirements are met.
- Budgeting for Furnishing
Budgeting for Airbnb properties should include $3,000-$5,000 per room for furnishing. This ensures the property appeals to guests and stays competitive in the market.
- Economic Preparedness
Investing in top 10 percentile properties in strong markets helps weather economic downturns and maintain profitability during recessions.
- Creating Exciting Properties
Rather than buying luxury properties, transform “boring” properties into attractive, feature-rich rentals. Tailor amenities to specific demographics for maximum appeal.
- Free Educational Resources
John Bianchi offers a comprehensive 40-hour course on the Bianchi method, available for free, to help investors understand how to purchase profitable short-term rentals.
Fun facts that were revealed in the episode:
- John Bianchi has an impressive track record, successfully directing over $70,000,000 into cash-flowing Airbnb properties with a perfect success rate across 150 different properties.
- Rather than purchasing luxury properties, Bianchi prefers to find “boring” properties in upscale markets and transform them by adding tailored amenities. This strategy allows these properties to generate as much revenue as inherently luxurious ones, sometimes doubling their income potential.
- Bianchi utilizes a unique investment strategy known as the “20% rule” to analyze a property’s potential. This rule ensures that the property’s annual revenue is at least 20% of its purchase price, providing a straightforward metric for identifying profitable short-term rentals.
Timestamps:
00:01 – Raising Private Money Without Asking For It
04:40 – High-Earning Individuals Wanting To Benefit From The STR loophole.
07:45 – Short-Term Rental Tax Loophole Benefits High Earners.
12:12 – Analyzing Data Like Spotting Differences In Photos.
15:59 – Market Differences Impact Revenue Drivers And Amenities.
17:09 – Enhancing Property Presentations With Professional Photography And Video.
20:39 – The Main Mistake Is Buying Wrong Property.
22:08 – Connect with John Bianchi: https://www.StrSearch.com
23:41 – Property Finder Service Helps Identify Profitable Investments.
27:50 – Investment In Top Properties Crucial For Recession.
30:48 – Focus On Family Amenities For Market Success.
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Explode Your Airbnb Revenue with Strategic Amenities and Private Money
Jay Conner [00:00:01]:
Welcome to another amazing episode, Raising Private Money. I’m Jay Conner, your host, also known as the Private Money Authority. It’s on this podcast that we talk about how to raise private money for your real estate deals without ever having to ask for money. Well, today, I’ve got a very, very special guest who has successfully directed over $70,000,000 into strong cash-flowing Airbnbs across the country. He is an Airbnb expert, AKA nerd. He knows the data. He knows the numbers. He knows how to slice it and dice it a 1,000 different ways to find out if the property will be a successful Airbnb or not.
Jay Conner [00:00:46]:
Well, listen to his success rate. My guest has got a 100% success rate across 150 properties for helping his clients acquire cash-flowing Airbnbs. So, what are you gonna learn in this podcast, and why stay to the end? Well, in this show, you’re gonna learn how to find a property that can be a profitable Airbnb because most properties are not. But, my guest today is gonna show you exactly how to do it in just a moment. You’re going to meet my special guest, Mr. John Bianchi, right after this.
Narrator [00:01:22]:
If you’re a real estate investor and are wondering how to raise and leverage private money to make more profit on every deal, then you’re in the right place. On raising private money, we’ll speak with new and seasoned investors to dissect their deals and extract the best tips and strategies to help you get the money because the money comes first. Now here’s your host, Jay Conner.
Jay Conner [00:01:50]:
Well, hello there, John. Welcome to the show.
John Bianchi [00:01:52]:
Thanks, Jay, for having me. I appreciate it. Great intro.
Jay Conner [00:01:55]:
Absolutely. Absolutely. Well, it’s been quite a while since I had anyone here on the show that was specifically niched in Airbnbs. Perhaps I should have had you on the show before now because right now I’m almost at the very end of converting my grandparents’ old farmhouse built in 28 into an Airbnb. So time will tell as to whether I should have done that or not. But anyway, I’m so excited to have you here on the show. What do you think about the idea of people using private money to, purchase Airbnbs?
John Bianchi [00:02:35]:
I have a lot of clients that have done exactly that. So you know, depending on how they got the private money, maybe it’s their rich uncle or their brother or their sister or somebody that they know from work. I have quite a few clients who are raising money because they understand how to manage an Airbnb, but they just don’t have the money for it. And so then they raise the money. They then hire me to find the properties, and then they get a good property. They get it set up well, and they manage it well. So I’m a huge fan of it if they understand the data before they do it and don’t lose them, their client’s money their friend’s money, or their parents’ money. Right? So that’s my opinion on
Jay Conner [00:03:12]:
that. How important is it, if someone uses private money, based on what you’ve observed, uses private money in the short term to acquire the property, close quickly, use private money to, renovate the property? But then is it a good idea? Of course, I don’t know in today’s market with interest rates and institutional rates, but then refinancing. Is that a good idea these days in today’s market, or does it just depend on how good the numbers are overall?
John Bianchi [00:03:43]:
Honestly, I don’t I haven’t seen many good deals that worked out that way, as of today. And, like, I’m not saying that they don’t exist. What I’m trying to say is that what I focus on are properties that do not need a ton of repair, and so then, therefore, they’re not gonna have a very high after-repair value. And so there’s a bit of a difference with the type of properties that I hyper-focus on. I mean, it definitely can happen. You just really have to know your numbers to make sure you get it right.
Jay Conner [00:04:12]:
Sure. Now are you servicing, of course, you’re up in Canada.
John Bianchi [00:04:16]:
Yep.
Jay Conner [00:04:17]:
Are you servicing clients primarily in Canada across the US or where?
John Bianchi [00:04:22]:
All across the US. Oh, it doesn’t work in Canada, and almost nobody in Canada is investing in the United States. I’m sure there is a handful of people that are doing it, but, I service almost 100% Americans.
Jay Conner [00:04:34]:
Gotcha. And your client so describe your ideal client. What does your ideal client look like?
John Bianchi [00:04:40]:
It’s somebody who is a high w two-earner who you know, does not have a lot of time, but wants to take wants to take advantage of the STR tax loophole, to be able to save on their active income taxes. And so they need help identifying a property that they can purchase, which they’re gonna feel confident is gonna cash flow for them. Because as you mentioned at the very beginning of the show, not every single property can cash flow. I have a saying which is, you know, every property can be pretty. Right? You can design it beautifully, but not every single property can cash flow. So almost all of the clients that are hiring us are usually high with two earners or, once again, somebody raising money from a rich uncle and trying to scale their portfolio.
Jay Conner [00:05:21]:
Now you just said a phrase that I wanna make sure our audience understands what you just said. And what you just said was the s STR tax benefits. Mhmm. What does STR stand for? You and I know, but let’s make sure the audience knows what STR stands for.
John Bianchi [00:05:38]:
I appreciate you catching that. Short-term rental. So another word, like, is Airbnb and STR are the same thing. It is a short-term rental.
Jay Conner [00:05:52]:
Airbnb, of course, is is is a marketing, trademark. Are you open? Do you also recommend using other marketing platforms such as VRBO and some of the others?
John Bianchi [00:06:06]:
Yeah. In some markets, you need to be on both. So what I like to call traditional vacation rental markets, such as your Gatlinburg, those areas have always traditionally been on VRBO, and they have slowly transitioned over to Airbnb. Now if you’re in the middle of the city, no one’s ever been on VRBO in the middle of the city, and so it’s not the site that people use to find an Airbnb in the middle of the city. And so that’s where Airbnb is gonna dominate. So it does just just depends on the market that you’re in. And then if you’re over in Europe, you know, you’re probably gonna be on booking.com and Expedia and different sites like that on top of Airbnb and whatnot. So, yeah, it’s just market-dependent, I would say.
Jay Conner [00:06:48]:
Sure. Do people use, Zillow for short-term rentals or not really?
John Bianchi [00:06:53]:
No. They do not. No. Like, to sell them or buy them are you referring to?
Jay Conner [00:06:57]:
No. To market your property to short-term renters.
John Bianchi [00:07:02]:
Typically, no. Yep. Yeah. I don’t think it was.
Jay Conner [00:07:05]:
Yeah. So the main platforms are which ones?
John Bianchi [00:07:09]:
Airbnb. Airbnb and VRBO are the main ones in the US. I would say that if you, you know, just get on Airbnb, you’re pretty well gonna be good in 99% of the places across America.
Jay Conner [00:07:22]:
Perfect. Now you mentioned STR, short-term rental tax benefits. Mhmm. You mentioned the high w two-earner that wants to take advantage of that. What are the tax benefits that a short-term rental has and short-term rental property has, that long-term rentals don’t?
John Bianchi [00:07:45]:
So I am not an expert at this whatsoever. Right? So I’m gonna state that right off the bat, but I will do my best to try to explain it. When you own a short-term rental, an Airbnb, you can take advantage of what’s referred to as the STR tax loophole. I strongly recommend, you know, either looking up articles or YouTube videos that specifically talk about that. If you meet certain requirements, you can write off your active income, and from my understanding, it’s one of the few ways that you can write off your active income. Right? And so people who are doctors or engineers or just some sort of high w two-earner that has to pay, you know, 50,000 plus in taxes every single year, they can purchase a short-term rental. And then if once again, they meet certain requirements, they can then qualify for the short-term rental tax loophole and be able to write off those taxes. And so, yeah, that’s it.
Jay Conner [00:08:45]:
So the bottom line is to ask your CPA
John Bianchi [00:08:48]:
Yes.
Jay Conner [00:08:49]:
What is the STR, short-term rental, loophole to where you can write off your taxes what sounds like you were saying?
John Bianchi [00:08:58]:
Exactly. And I would not reach out to your CPA. You might want to because maybe you got the relationship there, but this is one of these scenarios where not every accountant understands it extremely well. There’s one firm called Hall CPA, which is, like, the go-to for this. They understand it inside and out, and they make sure that you qualify for it and are not, doing anything illegal.
Jay Conner [00:09:26]:
Interesting. Well, I must say, I never heard of it. So, if I haven’t heard of it, that means my CPA probably hasn’t heard of it. Because I’ve had some short-term rentals. Not a lot of them. I’ve had 3 short-term rentals, in the past. So, I’m very interested in digging into that, myself. So, on a 30,000-foot view.
Jay Conner [00:09:47]:
No, just to make sure I can understand it, make it a 50,000-foot view. Okay. So on a fit you’re a data guy. Right? You love numbers. You love analyzing data. So, on that 50,000-foot view, what are some of the key criteria that you analyze when you’re analyzing a property and it comes back and says, yes, this property should cash flow, or nope, this property is not going to cash? So, you probably got some long, very sophisticated formula that you put all that data in and then it spits out a green go light or a red stop light or a yellow light that says caution. You need to sort of check this thing out some more.
Jay Conner [00:10:31]:
But what are the what are the key areas that you analyze?
John Bianchi [00:10:35]:
Great question. I love the way you phrase that. One thing I’m gonna state right off the bat is that I’m not a trained data analyst. So I didn’t go to school for it. I don’t have a formal background in it. Nothing. I just had to figure out how to make sense of the data that was out there because I had raised money to start up a rental arbitrage Airbnb business about 6 or 7 years ago now. And so during that period of, you know, feeling the pressure, I came up with a little bit of a process, and that process has worked well.
John Bianchi [00:11:07]:
I’m gonna explain 2 things. 1 is gonna be what I refer to as a 20% rule, which is pretty straightforward. And then 2 is just the simple way to understand if a property meets the 20% rule. So when I’m going to look for a property, I wanna feel confident that it can meet what I refer to as the 20% rule, the price-to-rent ratio. So if I’m buying a home for $500,000, I want the revenue to be at least $100,000 If I can make that happen, or if I can feel confident that $500,000 can generate a $100,000 in annual revenue, then that property is going to cash flow at an amount that I’m gonna be satisfied with in most markets. And so that’s my main metric. Right? Now the hard part is knowing how much that $500,000 property is going to generate before you buy it. Right? So the way that you figure that out, and I’ve been trying to explain this in the simplest possible format for years now, and this is what I’ve come up with.
John Bianchi [00:12:12]:
Okay? Have you ever heard you see those games that you played as a kid where you had 2 identical photos, and the idea was to spot the difference between the two photos? And, you know, maybe it was it was a giraffe, and the giraffe’s tail went one way and then the other way. Right? That was the whole difference. It was one of my favorite games as a little kid. Right? And what I realized recently is that what I’m doing as a data analyst is I am looking at all of the, let’s say, 4 bedrooms within one specific market, within one specific area, and there’s gonna be a revenue difference between all of these. Some are making, you know, 150,000, and some are making 100,000, and some are making 80,000. And all I’m doing is trying to spot the difference between the property making 150,000 and the property making 80,000. And it’s like playing that game where you’re quite literally going back and forth between the photos and saying, why would this one make 150, and this one make 80? Right? Because that’s that’s how big of a variance there definitely can be between the same property in the same area.
John Bianchi [00:13:17]:
And so what I’ve been trying to explain to people is that the top performing properties have things that the underperforming properties do not have, And if you can spot the difference, if you can just understand what these have that these don’t have, you will understand what the revenue drivers are for that market. And so then once you understand what the revenue drivers are, you can then understand if the property that you’re looking at to purchase has those revenue drivers, and if it does, then you can feel confident that it could potentially make the 150,000. And if it doesn’t, then you might be lowering yourself to the $100,000 category, And that’s just how you would go through that. You would just repeat that process over and over and over again until you felt abundantly confident that the property you’re about to purchase was going to meet the 20% rule.
Jay Conner [00:14:04]:
So when you are doing this comparison to come up with an answer to whether the subject property should be a go or not a go, How do you know what the other properties are making? How do you know their revenue?
John Bianchi [00:14:21]:
So there’s a website out there that’s, existed for about 8 years now, and it’s called AirDNA, and it’s www.airdna.co. That website records the calendar of every single Airbnb that exists across America. The entire world. Sorry. Across the entire world, and what it’s doing is it’s trying to predict how much that property is making based on the bookings that it’s seeing come through on the calendar. Mhmm. And so the algorithm is just recording every single Airbnb, recording the calendar, what’s the nightly rate, did it get booked, did it get blocked, and then eventually, it comes up with this annual revenue number. And then AirDNA has taken all that information and pulled it together in a nice format, which is very easy to read and to go through.
John Bianchi [00:15:09]:
There are about 4 other websites, maybe even 6 at this point, but there’s only AirDNA the one I’ve been using for 7 years, and and I find it to be the most useful and easiest to navigate out of all of them.
Jay Conner [00:15:24]:
Okay. So you’re using AirDNA, using that software to give you the revenue of the other properties. So back to the comparison of of properties. In your experience, what are some of the main revenue drivers that you can have? 2 comparable properties, one’s bringing in 80,000, one’s bringing in 150,000. What’s that $150,000 property got to offer, that the $80,000 a year property doesn’t?
John Bianchi [00:15:59]:
So every single market’s gonna be different. So every single time you go into a market, you gotta figure out what are the revenue drivers for that specific market. But just some general examples here it usually comes down to the property being bigger, better, or more luxurious, and having something that the other one just straight-up does not have. So, you know, with a big $70,000 difference like that, what you might find is that the property would have the one making 150,000 would have a pool, a large backyard with maybe a pickleball court in it, and maybe a putting green in it. And it’s got, you know, 2 extra living rooms inside. And, you know, one’s filled with a game room. The other one’s filled with a movie theater, and it’s just offering a wide variety of additional amenities that are gonna make the place worth a lot more money. And then the home doing 80,000, you know, likely has none of that, and maybe it wasn’t marketed as well.
John Bianchi [00:16:56]:
In other words, the photos are not taken nearly as well, and it’s not showing nearly as desirable in comparison to the other one. And so those are can be those can be some very clear reasons as to why one property would be making more than the other property.
Jay Conner [00:17:09]:
That makes sense. One thing that I have done in my real estate investing business for years is when I have a property that we have renovated, and, I mean, it’s drop-dead gorgeous, ready for Southern Living Magazine pictures. And we stage them to the hill. I mean, we stage them to the hill. What I’ve done for years, in addition to having an excellent professional photographer with the pictures we also, by that same company, create a music video of touring the outside. We got drone footage. We’ve got walking through, the entire inside of the home. And this, you know, fantastic music is pumping and playing in the background.
Jay Conner [00:17:54]:
You’re seeing all the staging. How do you how important do you think that might be?
John Bianchi [00:18:00]:
So the websites, VRBO and Airbnb, actually don’t allow videos.
John Bianchi [00:18:06]:
Yeah. So we have not been able to do that. And so all we have are the photos that we take, and then therefore, the photos that we take are extraordinarily important to get done well. So if they did allow it
Jay Conner [00:18:20]:
I’m sorry. Go ahead.
John Bianchi [00:18:20]:
No. I was gonna say if it did allow it, it would it would change things, I would say. I would say there would be, like, tons of those videos all over the place and trying to show them off, and I guarantee people from LA and New York would try to make the most amazing beautiful videos so that you would be dying to go to this place. Right? But they just don’t allow it for whatever reason.
Jay Conner [00:18:39]:
Do they allow a link in the listing that takes you off of their site so that you can go see the video elsewhere?
John Bianchi [00:18:46]:
They do not. However, what some people have done is they’ll put up a photo, and in the photo, they’ll have a link in there. So it’s not one you can click, but if you go and type it in, then you can see the video. However, it hasn’t made a huge difference for the amount of revenue that you end up making or if you win a booking over somebody else. So it’s just not that it’s not worth the squeeze, you know?
Jay Conner [00:19:10]:
Sure. Sure. So when it comes to taking, professional pictures of the property, does your company oversee that for your client?
John Bianchi [00:19:21]:
Yeah. We’re we’re I’m pretty crazy about that, to be honest. That’s, like, that’s the area where you have to get it right. And if the photographer does a job that’s, like, 80% good, we’ll send them back out there to do it all over again. And we’ll pay the person again to do it in case they, just missed the photos. But what you’re trying to do is create these photos so that when somebody is looking at it, they feel emotionally attached to it. And it shows off your fire pit in this way that they can see themselves sitting there. Right? You’re not just taking a photo from a distance.
John Bianchi [00:19:57]:
And when you take a photo of the hot tub, they can feel themselves in there with a drink and with their friends and hanging out, and maybe you get models in the photos to show off what it’s like. The way I always like to explain it is that you want it to feel like it’s straight out of a magazine. It’s because when people look at those photos and magazines, they are in love with it. It’s just like pulling them in for whatever reason. Right? So if you can recreate that, you’re you’re gonna create some magic, and people are gonna want your property.
Jay Conner [00:20:24]:
What are some of the common repeating, repeating, repeating again and again mistakes that investors make when they’re investing in Airbnb and they just don’t know what they’re doing?
John Bianchi [00:20:39]:
The main mistake that I see, and I think it’s the biggest mistake so there’s a ton of little mistakes, but the biggest one is they buy the wrong property. And it’s the main thing that I’ve been trying to build my business around. Like, if you go and look at my website, right at the very beginning, it says, trying to ensure that nobody buys nonprofitable Airbnb again. The, the amount of people that I’ve spoken with who have bought a property that will never cash flow breaks my heart. It is so upsetting because if they had just done a little bit of extra work if they had just followed the process that I give away for free, they would have been able to figure it out. But they buy a property overpriced in a market that does not have enough demand to offset their expenses, and they end up losing money. The worst part about it is that everybody who buys one of those, they don’t realize that they’re losing money until the full year has gone by. Because they may think like, oh, we’ll make it up in the slow we’ll make it up in high season.
John Bianchi [00:21:29]:
Right? And then they end up not, Or they go they give another excuse and they go, well, you know, year 1 wasn’t that great. We were just getting ramped up, and maybe we need to add some more amenities. And so then they go throw more money at the property, and they run it for a whole other year. They make no money for the next year, and then they end up selling the property after 2 years making no money. And in fact, losing money and working for free for 2 years. And so that is hands down the biggest mistake that you see in the Airbnb industry and quite frankly why there are so many people that have negative things to say about the Airbnb industry, once they’ve tried it once or twice.
Jay Conner [00:22:02]:
You mentioned your website. Let’s go ahead and give out your website, to our audience. And your website is www.strsearch.com, which stands for short-term rental, www.strsearch.com. S trsearch.com. So when someone goes to that website, what are the benefits of going to the website?
John Bianchi [00:22:27]:
The main thing that I’ve been trying to do again is to ensure that nobody buys nonprofitable Airbnb and to be able to do that, I can’t gatekeep my process. That’s how that’s how I logically think about it. And so I have created 6 free Airbnb data courses. So if you go to that website, you go to the top right corner, it’s gonna say free courses. You can click that, and, 5 of those courses are about anywhere from 2 hours to 3 hours long. There’s one course called the Bianchi method, which is a 40-hour-long course teaching every single step of the process that I used to be able to identify the 150-plus properties that have all cash flow positive over the past 2 years. And so what I’m trying to do is build trust within the community, so that people have a reliable resource and a reliable process that they can use to be able to find profitable properties. And if they wanna hire us because they don’t wanna do the work or they don’t have the time, they have that option.
Jay Conner [00:23:24]:
So let’s talk about that process or the service that you and your team offer to your clients. So from start to finish, you know, let’s say that I’ve contacted you and I’m interested in your services. What does that list of services look like?
John Bianchi [00:23:41]:
So the main service that we have is what we refer to as the property finder service. You hire us to be able to identify which property you should purchase. And, it’s it’s quite literally that simple. So if you have over $150,000 of cash ready to go towards the closing cost of down payment, the furniture, and the renovation, then we’re gonna be able to help identify a property for you that we believe is gonna be a strong cash flowing property, and also just be a good real estate purchase. Right? So that’s the end goal. You’re also going to get connected with all of our preferred vendors, whether it be a realtor that we have been working with for a while, a lender that we’ve been working with, the designers, or whatever else it is that you’re gonna need to be able to bring that property to life. Right? Now the actual process of how we identify the property to determine which property you should get is based on all the research that we’ve done over the past 2 years. So I’ve researched over 300 markets, and I’ve identified it identified a handful of those markets that I believe to be the best cash-flowing markets across America.
John Bianchi [00:24:46]:
And it’s my job to ensure that you get a cash-flowing property. So then, therefore, the more cash flow potential that you can get from a property, the more likely you are to be able to make it work even if you screw up. Right? So if you were to come to me and say, hey, I wanna buy a property in Boise, Idaho. I would say, hey, sorry that’s not gonna work. I don’t believe that there are strong cash-flowing properties in Boise, Idaho. So I’m not gonna I’m not gonna tell you to buy a property in Boise. And so instead, if you come to me and you said, hey. I’m open to going, you know, into any of the markets that you’ve identified across America that you think are gonna be best for me based on my budget.
John Bianchi [00:25:17]:
Can you help me find a property? That’s where we’re gonna be able to come into play and help you identify that property. Does that make sense?
Jay Conner [00:25:24]:
Yeah. That does make sense. What is a, what’s a good rule of thumb, if there is a rule of thumb for, of course, it’s going to depend on the square footage, number of beds, number of baths, but do you have like a formula or an estimator as to how much you should plan on budgeting to furnish your Airbnb?
John Bianchi [00:25:47]:
I don’t. I don’t have a great number. As you said, it does matter. It does vary. Then on top of that, it depends on the amenities. That’s gonna be, you know, are you gonna be putting a pickleball court in? Are you putting an above-ground pool? All of these things are gonna greatly change the amount. I think a rule of thumb that I’ve heard quite a bit is that if you’re gonna budget for what’s gonna cost you, budget anywhere from, I think it’s 3,000 to 5000 per room. So if you have a 5 bedroom home, it’s gonna cost you 15,000 no.
John Bianchi [00:26:17]:
I’m getting that number wrong. Yep.
Jay Conner [00:26:19]:
25,000. Yes. Exactly. I mean, it’s 3,000 and it’s a 5 bedroom. It’s gonna be 15,000.
John Bianchi [00:26:25]:
Correct. Yes. Should be better. Right?
Jay Conner [00:26:28]:
Using it depends on if you’re using the 3,000 dollar number or the 5,000 dollar number.
John Bianchi [00:26:32]:
Yes. Exactly. Right? And then so that would be just the furniture on the inside. And this is what I think is where I’m I’m different from most people, is that I’m trying to ensure that my people are getting properties that are gonna be in the top 10 percentile of that market, and the main reason is that I wanna ensure that they can make it through the next recession that is coming. So I used to be a financial advisor before, and as a financial advisor, you study all of the different times that the market has dropped. Right? When the market drops, it takes anywhere from a year to 2 years to pick back up. And when it does pick back up, it’s amazing. Right? Everything goes well.
John Bianchi [00:27:08]:
It’s the best time for the economy. However, if you can’t make it through those 2 years, right, let’s call it 1 year or even 2 years, you’re gonna be forced to sell that property. It’s gonna be the worst-case scenario. And I strongly believe that when we hit our next recession, there are gonna be people losing their shirts on their Airbnbs because they’re not gonna be able to cover the bills and not gonna get people in there to rent them out long term. And so then, therefore, when you’re buying an Airbnb, you should be buying it trying to protect against the worst possible scenario. And that worst possible scenario is when we hit the recession. And my theory on how to avoid that is that you pick a market that still has strong demand. Right? That’s gonna have travel even if the economy goes down, and you become one of the best properties within that market.
John Bianchi [00:27:50]:
And by being one of the best properties, when somebody does go to book, even if there was, you know, 1000 people traveling there before, and now only 100 people are traveling there. Your property is one of those 100 properties that will still end up getting booked by the people still traveling. And if you can always focus on that, it’s going to allow you to hopefully make it through the next recession. And so the reason I say this is because you’re asking about the budget of, you know, how much does it cost to be able to furnish. And in reality, the reason why we tell people, you know, if you don’t have less than 100 and $50,000, we don’t work with you, it’s because I strongly believe that you need more than 150,000 to put towards the amenities and proper design to be within that top 10 percentile so that you can make it through the recession, so that you can make it to the boom of when everything goes well, and you’re not losing your shirt during that period. And if you look at the, there’s an indicator by, what’s his name? The amazing investor is, who’s the best investor out there? What’s his he’s, like, 90 at this point, and and I always slip on his name.
Jay Conner [00:28:55]:
Oh, Warren Buffett?
John Bianchi [00:28:57]:
Warren Buffett. So Warren Buffett has created a metric where that is an indicator of how much the stock market has raised and how much the economy has raised. And if you look at that indicator right now, it is twice as high as how much the market has raised in comparison to 2,008. So before the 2,008 crash, the stock market was double what the economy had raised. Now it is quite literally double that. And so I can’t imagine that we’re not gonna run into a recession in a very short period, and I’m very nervous for my clients because my entire reputation is ensuring that these people have positive cash flowing properties, and I wanna keep my 100% success rate. So, anyway, that was a long rant, but, it all ties into this idea of budget and how to succeed. Right?
Jay Conner [00:29:45]:
Absolutely. Would you go, for your Airbnbs, would you go more upscale or smaller? I prefer the market.
John Bianchi [00:29:54]:
I prefer it depends on the market because there are some markets where you do have to go upscale. But I think the way to win is to not buy the luxury property, but instead create a property in a luxury market that is more valuable in comparison to a luxury market. So as an example here, Scottsdale is a market that has a ridiculous amount of luxury properties. Right? And there’s a bunch of them that are on Airbnb. And if you go and look at these properties, they’re fairly boring. They may have a tennis court in the backyard and a beautiful pool and, you know, a nice kitchen, that is nice. However, it’s not as much fun, and it’s not as exciting, and it’s also not hyper-focused on a specific demographic. And so what I prefer to do is to find properties that are considered to be, regular boring properties, and then make them exciting depending on the demographic that you’re trying to focus on.
John Bianchi [00:30:48]:
So if you are gonna be focusing on a, you know, families for that market, try to figure out every single, you know, amenity that you could add to that property that’s gonna make it extraordinarily fun for the kids, and go above and beyond just the game room. But if you do a game room, make sure that the colors that you use are very bright and fun and colorful, which kids are excited about. Right? Don’t make it an adult one unless you are trying to focus on adults. Right? And so I don’t and I don’t advise my peep my clients to buy luxury properties, and we haven’t. Therefore, we’ve made it work by buying what I would refer to as these average properties.
Jay Conner [00:31:30]:
Okay.
John Bianchi [00:31:31]:
Yeah. We have one of the
Jay Conner [00:31:32]:
I think I understood that. I think I understood the answer. Yo. You said don’t you said don’t lean towards luxury properties. Lean towards boring properties that can become exciting.
John Bianchi [00:31:42]:
Exactly. Yeah. Sorry. Sometimes I go a little too deep, but, one of my favorite examples is that, in a market that we’re in, somebody bought a $2,000,000 property, and they’re making over 200,000 with that property. We bought a $1,000,000 property, and we are making over $200,000 with that property. And so we’ve been able to match their revenue with half the purchase price.
Jay Conner [00:32:06]:
Love it.
John Bianchi [00:32:07]:
Yeah. Love it. Yeah. Well,
Jay Conner [00:32:10]:
what an interview here, John. One more time, let’s give out your contact information. Www.strsearch.com, standing for short-term rental search dotcomstrsearch.com. Final and parting words there, John, for the audience.
John Bianchi [00:32:28]:
All I wanna say guys is, again, I’m trying to ensure nobody buys a nonprofitable property. I’ve got 6 free courses, one of them being 40 hours long. I promise you if you follow the process, you’ll figure out the secrets. It takes a lot of work, but it ensures that you don’t buy a nonprofitable property, and my track record proves that because we haven’t missed it yet. Right? So strongly recommend that you go through that course if you’re considering purchasing a short-term rental. And if you don’t wanna do all the work, we have the option that we can do it for you. Simple as that. Thank you again, Jay, for having me.
John Bianchi [00:32:58]:
I appreciate it big time. This is great. I love your questions. You got me you got me all passion passionate.
John Bianchi [00:33:05]:
I got a lot of energy going now.
Jay Conner [00:33:06]:
I love it. I love it. John, thank you for joining me.
John Bianchi [00:33:09]:
Thank you.
Jay Conner [00:33:10]:
And there you have it, my friend. Another amazing episode of Raising Private Money. I’m Jay Conner, the Private Money Authority, and I look forward to seeing you right here on the next episode of Raising Private Money.
Narrator [00:33:24]:
Are you feeling inspired by the knowledge you gained in this episode? Then head over to www.JayConner.com/MoneyGuide. That’s www.JayConner.com/MoneyGuide, and download your free guide that shares seven reasons why private money will skyrocket your real estate investing business right now. Again, that’s www.JayConner.com/MoneyGuide to get your free guide. We’ll see you next time on raising private money with Jay Conner.