Most people would consider having multiple “businesses” as laterals rather than complementary aspects.
But let me tell you, when you combine things together that are seemingly separate but end up being complementary, you create a true unique selling proposition.
If you want to be in real estate, have skills in online marketing, and can creatively apply new and unique business models, then you are really in a league of your own.
That’s what happened when AirBnB first went into business, and then again when people realized they can have a totally different business model with their own real estate.
The Real Estate Method of Long-Term Investing
Real estate investing has been around for decades and it has built people immense amounts of wealth.
This can be from wholesaling, flipping, holding rental properties, or owning commercial properties.
In each case, the real estate investor can make a sh*t ton of money from land and the properties on top of them.
One of the tried-and-true methods of growing steady wealth is by having rental properties.
The easiest way for people to do that in most cases is through either single-family homes or multi-unit apartment complexes.
With single-family homes, you can have a long-term tenant that pays you monthly, covering your mortgage and gaining a little bit of profit.
This is called having cash-flow.
With commercial properties like apartment complexes, people start small with duplexes and then trade up to bigger complexes using the 1031 exchange.
This means that you can sell a property and buy another one without having to pay capital gains taxes.
This has been done for a long time, and people have built millions in assets simply by doing this.
Most real estate investors that have some years on them will tell you that these two buy-and-hold strategies are the best way to create a solid foundation of passive income.
Combining Online Marketing Into The Mix
Check this out:
If you take the buy-and-hold strategy and turn that into an online marketing gig, then what do you get?
AirBnB’s idea was to provide places that people could rent on a nightly basis that were not in hotels.
They built their platform then scraped the properties craigslist, where they’d seen a need forming, and attracted audiences to their site.
In what seemed like overnight, they built an empire of rental properties and such a large user base that they grew far more quickly than anyone would’ve imagined.
This is the power of putting technology and marketing with a business model that has already proven to work.
Creating The Unique Business Model
Homeowners noticed something really neat:
Since they could rent their own properties for a nightly rate, they were making a lot more money than with a long-term tenant.
A tenant might be $950 a month for a particular 2 bedroom apartment, but when you rent the unit for $100, you only need to rent it out for almost 1/3 of the month to reach the same amount of revenue.
After evaluating the demand for housing in particular areas, homeowners realized they can triple the revenue they bring in from a single property.
With that revelation, there’s only one way to go from there…
…Purchasing more properties and replicating the model.
Now real estate investors have turned to catching as many short-term rental properties as possible with the intent of putting them up on nightly rental sites like vrbo and airBnB.
Once that business model started trending, other real estate investor saw an opportunity.
Wholesalers are able to find sellers who need to get rid of a property, and they pair them up with a buyer who is interested in it.
They get a check as their “fee” without ever having the purchase the property.
They are simply doing the middle-man’s work.
Why not do the same thing with the airBnB short-term rental business model?
Now we’re seeing a trend of investors finding homeowners that are willing to monetize their properties but don’t know how or don’t want to learn how to deal with short-term rental processes and regulations.
Investors will get a homeowner to agree to the model, and then turn around and prepare it for airBnB-style renting.
This means that they might have to put in some work into the interior, which generally raises the home’s value anyway but also gives a better “cozy” feel to the space.
Then they will list them on these short term rental sites.
The properties will get bookings and the investor will split a portion of the profits with the homeowner, making it a win-win-win situation for all parties involved – the homeowner, investor, and tenant.
This is called a Master Lease model by some, and they are becoming increasingly popular in tourist areas or neighborhoods that have a lot of events or venues.
Check out this video on rental arbitrage to find out more:
Other methods might involve simply buying properties that fit the mold.
Areas such as downtown Houston always have a need for rental properties for the various events, venues, business meetings, and tourists.
These areas are also subject to foreclosures, and people are struggling to keep their homes.
This can result in another win-win situation where, as an investor, you’re able to save a homeowner from bankruptcy while also remodeling the home and preparing it to be a profitable business for you.
Many other cities can provide homes at a discount as well, you simply have to learn how to look.
Catch The Wave
Check out the Master Lease model and see if it might be something you can dig into yourself or do with your own properties if you have them.
These might also be called AirBnB arbitrage.
It’s worth checking out the demand on short term housing in your area and seeing if you might be able to make some additional profit on the housing that’s available there.
Let us know what you find, and check back to learn more! (http://mautomat.com).