So you’ve been hosting on Airbnb for a while now, and you’re loving it. Maybe you’re thinking about expanding your business to include an additional property, but you don’t have a ton of capital lying around. Is there any way to scale your Airbnb venture with a modest investment of, say, $10,000 or less? The answer is heck yes, and today’s guest shares how he is re-leasing rental properties via Airbnb, incorporating short-term rentals into his real estate business.
With the help of a mentor, Eric Moeller started investing in real estate at the tender age of 18. Eric has a wealth of experience in house flipping, apartment buildings and real estate development, and he worked from the traditional landlord model until he sold his company in 2015. As Eric traveled the US that year – making use of Airbnb as a guest – he began to realize the investment potential of hosting. After looking at the numbers, he determined that he could double his ROI by pursuing short- rather than long-term rentals, and he developed a strategy for pitching a re-lease model to rental property landlords.
In 2016, Eric moved to San Diego and originated the startup Homtel Tonight, an Airbnb management, leasing and investment company. He is a Superhost with listings in San Diego and Rosarito, Mexico, as well as the architect of the upcoming Airbnb Mastery Summit. Listen in as he discusses his process for selecting units for Airbnb, his approach to determining your niche avatar, and the unique amenities he offers guests. Learn the fundamentals of the re-leasing model as well as Eric’s approach to finding willing landlords. If you’re looking to grow your Airbnb business via rental properties, this interview is a must-listen!
Topics Covered
Eric’s advice around selecting units for Airbnb
- Choose carefully based on demand, city support of Airbnb
- Doesn’t have to be in backyard
- Utilize tools like AirDNA and Rent Responsibly
- If re-leasing, approach landlords with pitch
- Analyze the numbers (with 70% occupancy, should generate 2X amount of rent)
The characteristics Eric is looking for in a potential Airbnb property
- 2BR apartments, standalone single-family houses best in San Diego market
- Location near attractions or airport
- Most unique spaces, potential to create unique experience
Eric’s approach to determining your target guest
- Become guest yourself, note design and amenities
- Research properties in area on Airbnb
- Focus on niche to attract a single avatar (i.e.: beach life, business community)
Eric’s recommendations around designing your Airbnb
- Hire local interior designer
- Buy artwork, etc. from local shops
- Decorate around theme for better booking results
- Budget $5,000—$7,000 for furniture, painting
- Buy furniture second hand or shop at IKEA
The amenities Eric offers guests
- All basics (e.g.: paper goods, towels, fully stocked kitchen)
- Wi-Fi connection and Smart TVs
- Guests can request additional kitchen implements
- Beach properties include surf boards, skateboards and beach chairs
- Luxury rentals offer car service from airport, link to his cars on Turo
- Business properties offer custom workstation
The differences between re-leasing vs. buying property for Airbnb
- More options to change physical structure if buying
- Focus on staging and paint in re-leasing situation
- Same systems, tools for property management
- Update landlord monthly in re-lease (upcoming dates booked, checklist)
How Eric obtains leads for willing landlords
- Online marketing targets real estate investors
- Craigslist (team calls every homeowner who fits model)
- Networking with landlords, investors
Eric’s approach to convincing landlords to pursue the Airbnb re-lease model
- Landlord Credibility Packet to explain processes
- Outline benefits (eliminates vacancies, handling of day-to-day management)
- Agree to one- or two-year lease
- Systems, tools in place to combat problems (noise, damage, etc.)
- Offer extra incentives (additional rent, percentage of profits)
The advantages of the Airbnb re-leasing model
- Doesn’t require significant capital to start ($10,000 for deposit, first month rent, staging)
- Start generating revenue immediately
- Potential to pay back in handful of months
The Airbnb Mastery Summit
- 22 top experts in Airbnb, real estate investing
- Provides blueprint for running, scaling Airbnb business
- Free event August 11—13
Connect with Eric
Resources
Connect with Jasper
Email: jasper@getpaidforyourpad.com
Twitter: @GetPaidForUrPad
Instagram: @GetPaidForYourPad
Facebook: www.facebook.com/getpaidforyourpad
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Complete Transcript for Get Paid for Your Pad Episode 175
Jasper: Welcome to Get Paid for Your Pad, a definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing as well as real life experiences from Airbnb hosts all over the world. Welcome.
AD: This episode is brought to you by Hostfully. a company that helps you make beautiful guide books for your listing. Especially for Get Paid for your Pad Listeners, get two free months of their premium service. For more details, visit. Hostfully.com/pad.
Jasper: Welcome! Today I welcome Eric Moeller on the podcast. He’s a pretty active guy, he’s a real estate investor, re-leases apartments on Airbnb, he focuses on the high-end luxury property management, and he’s the CEO of Home Tell and host of Airbnb mastery summit. That’s a whole mouthful. Eric, welcome to the show.
Eric Moeller: Ah, thank you for having me!
Jasper: Absolutely, where are you?
Eric: I live in So. California in San Diego.
Jasper: Awesome, there’s a lot of digital movements out there. It’s a good place to network and connect. For people like you and me, who are in this business. The topic of today’s podcast is investing Airbnb for real estate investors, so how to integrate your Airbnb into real estate business. That’s something you have a lot of experience with, so we’re going to be talking about. If you want to invest in an Airbnb and you want to buy a property with the purpose of Airbnb, what are the things you should look at? How do you choose? Remodeling? Decorating? I’m excited to get into it, it’s a topic I haven’t talked about a lot before, but I think people are interested in it. So, let’s dive right in.
Eric: Let’s do it.
Jasper: First, let’s get an idea of how you got into Airbnb in your real estate business, can you give us the elevator pitch?
Eric: Yeah, for sure. So, I’ve been a real estate investor literally since I was 18, luckily, I was mentored by a large investor in my home town in New Jersey. I’ve been investing since an early age. I’ve been involved in every aspect, from house flipping to apartment building to real estate development, and I’d built a company based off that. We had a bunch of apartment buildings and went down that traditional model. Long story short, in 2015, I sold that company and traveled the company and stayed in Airbnbs, I always knew what it was, I used it as a guest, I never realized the potential of Airbnb until I started traveling for a few months around the country. I was going to unique cities in the states that I would never go to because I was finding interesting Airbnb. After talking to the actual hosts, I realized a trend. More of those hosts were making enough money to pay their rent, but making well above their mortgage to where it was a full-time income. Beginning of 2016, I decided to move out here to San Diego, I had the opportunity to narrow down and focus on creating a start-up company, and I just connected the dots. Middle of the night, I realized, okay, here’s this huge opportunity right now in-Home Share and this amazing company that grows day after day. Long story short, started messing around with the model, I spent a few months studying it, started crunching the numbers. I realized the same buildings and homes I was looking at to purchase for long term, if I kept short term rentals in there, I was looking at double the income. A lightbulb went off – I thought, there’s really no one out there that specializes in this, I knew there was a major opportunity to merge my skills with this niche and trend. So, yeah. We started messing around, buying properties, flipping them, realized that the real estate market is too crazy to purchase, so we made a switch to partnering with landlords where we’d rent out their vacancies like corporate housing, we’d stage them, then rent them out on Airbnb. From month 1, we were making a profit, on month 3, we were fully paid off on those investments. So, we dove all in. That’s what we’re doing now. We focus on buildings that have vacancies, we rent them from a year to two years, stage them, then host guests. The other arm we noticed was the property management side. Specifically, in luxury space. More and more guests were looking to get out of staying at 1 or 2-bedroom apartments and stay in bigger homes and I noticed there was a major opportunity there to create a company working with landlords that have unique homes. That’s a quick elevator pitch of how we got into it – we’re expanding quickly.
Jasper: That was an elevator in a 456-storey building.
Eric: I love it, man. I love it. My backyard was Manhattan for a long time, so I’m used to big buildings.
Jasper: You’re doing cool shit, great to hear. Here’s my first question. Let’s say you’re an Airbnb host right now and you want to expand your listing. You’re thinking, you know what, this is pretty fun, I love doing this. I’m going to either rent or buy as Airbnb, how do you go about selecting the unit.
Eric: So, I think the most important step is to understand the market. IT depends what you’re in, what city, the relationship with Airbnb and short-term rentals. Giving that you’re in a city that supports it, as of now San Diego supports it and will continue to. First, focus on the market you want to be in. You know this, it doesn’t’ need to be your backyard with these models. Literally could be out of state, out of city, choose your market carefully based off demand of guests and how the city supports short-term rentals. There’s so many resources – Air DNA, Rent Responsibly, they release that information. Secondly, deciding if you want to be a re-leaser or a sub-letter, or an actual investor who buys real estate. Right now, because I’m focused on re-leasing, it’s focusing on the city. The next step is to figure out how to approach landlords on this model. I see people leasing and then note telling their landlords and that opens up so many issues and we need to stay away from that. Start talking to landlords, start talking to landlords that have vacancies. Pitching them the model of “we’re going to rent from you, we’re professional renters, we’re going to stage it and then host short-term guests.” As far as numbers, I’d like to see, if my rent is $1,000 monthly for a 2-bedroom in downtown San Diego – I want to project that at 70 percent occupancy through that month I can bring in at least $2,000 monthly. It’s picking the right apartment in the right city with the right landlords that can generate twice the rent. Focus on that first, do your due diligence, then start reaching out to landlords.
Jasper: What about the characteristics of the apartments? Something specific? Are you looking at size of rooms? Whether they’re the same? Anything concrete?
Eric: I’m a big believer for my re-renting side, I believe in 2-bedroom apartments. I feel that, especially in the market I’m in, I get families and business travelers that are looking for that. For the re-renting side, focus on 2-bedroom apartments and houses, no condos. You can run into a lot of issues. I’m a big believer that the more unique the unit is, the more character the property and the experience you can create, the better and higher demand you’ll have for that property. I want it next to attractions, downtown, the beach, airport. Trying to find the right landlords that will allow us to do this type of model that have unique properties to create an experience. On the management side, we do the same thing but 10x. We look for the most unique properties in our areas. Doesn’t have to be close to the downtown areas, I have a property 45 away from the beach but generation 17k a month just from that house. The first step is getting the market you want and knowing your clientele, but I’m a huge believer about trying to find the most unique properties in the best areas for those models.
Jasper: I think one of the things that’s important is to understand who’s visiting the are – how do you find that out? I always tell people who are looking to buy or rent a property to put on Airbnb, I always say start with pretending you’re a guest and stay in an Airbnb in that area so you can see what’s out there. Learn a little about the market, what are the big attractions. Anything you advise?
Eric: So, that’s what I did when I first moved out to San Diego and was wanting to get into the short-term rental business. I bounced around to all the communities staying in Airbnb with super hosts who had unique homes and reviews. I put myself in there as the guest and made notes of how they were designing and what they were giving out. Like Pacific Beach, I stayed with 3 different super hosts and they had surfboards and skateboards and targeting people who were traveling to San Diego and wanting to experience the beach life. Three super hosts had amazing reviews, fully booked out occupancy, and designed their homes to attract that person. When I stayed downtown, it was very clean and they were targeting the business community. I realized that in the downtown, there weren’t those extra amenities. It was a minimal apartment that was a great to stay for business and great to work. You have to get your hands dirty and stay in a few places around your area, or do some research. It really is just understanding the market that you’re in, who would be traveling and then choosing a niche to focus on. I’m not a big believer of renting to everyone – I believe in focusing on a niche. Focus on that niche, design all properties and marketing for that one avatar.
Jasper: That’s such an important point, if you try to appeal to everyone you’ll appeal to no one. How do you go about selecting your place, do some research, now let’s dive into the design of the place? Now you’ve purchased something, are you going to get furniture? Do some remodeling? What are those things? What are the amenities you’re providing?
Eric: One of the first things that we do is we have a system for our properties. We figured out what asset we want, what avatar, the designs are followed by a system. When we first got started, we hired local interior designers for a day rate, to come in and give us design tips on the local flair. Bringing in the experience of the San Diego communities into our apartments. My properties down in Mexico, we bought our artwork, all the things that give it character, we bought from all the local shops in that community in Mexico. When people are traveling, they have that experience outside of Airbnb and that community in our apartments. That’s one thing, designing your home as a theme. The more unique you can get, the better results you’ll have with bookings. We do some painting. Our typical apartment will cost us 5-7k. We keep the painting really light, but we try to tie it in with the culture of that community. We purchase everything second-hand. We buy everything off Craigslist or Amazon or we go to Ikea to get entry level stuff. With 5-7k you can have a business in Airbnb fully up and running, designing to your marketplace. Within a few months, earn that back.
Jasper: I recently sold my apartment in Amsterdam, and I had a lot of furniture in there that my family wanted, so I rented a van and I brought the furniture to my family members. I bought everything Ikea in 2007 and everything was still standing. IT was still in working order, and the funny thing is, I had one wardrobe that was missing some of the bolts, so I went to Ikea and they gave me the right screws and bolts and I had to know which it was, so I looked it up. The wardrobe only cost like $120 or so, and I was thinking, that’s value for money. Using it for ten years? It looks good. Ikea is definitely a great place to go. IT can be challenging to put it together. On that note, I saw a funny meme recently, Ikea had its birthday. Someone made a meme that said, “Happy Birthday Ikea, here’s your cake” and it was a bunch of flower, some eggs, a pack of butter. I thought that was pretty funny. Let’s talk about amenities. Anything you always provide? Bathroom stuff? Kitchen?
Eric: Every single one of our units have all the basic stuff that every Airbnb should have. You want to put yourself in as a guest coming to that home. You want them to feel like they’re at home. I always stock the house with everything they need—paper goods. Our kitchens are always packed, fully stocked with cooking utensils, everything they need, and if they don’t have it, they can make a request. We’re always stocking brand new, fresh towels and that stuff in all our units. On top of that, we make it as simple as possible with technology. Best internet possible. Always smart TVs that hook up to platforms. We’re really trying to make it easy for them to relax the second they walk in. As far as additional? That’s our basic stuff. Additional, it depends on the type of property, the market and the clientele. We’re experimenting with some cool stuff. So, for luxury properties near the airports, we offer them car service from the airport to the house. These are people spending 7,8,900 a night on our homes. The cost of an Uber or a cost of our guys picking them up is cost effective. We’re also, offering car rentals. It’s called Turo.Com, we’re tying those into our listings. When someone books our home, we send them a link to our cars, about 4-5 cars, to our guests. It comes down to the marketplace. Our beach houses, we go beyond. We have some basic surfboards and skateboards, beach chairs, all the stuff they need for the beach. When it comes to business side downtown, we stock them for, in mind that our guests are there for work, we’ll set up a work station, everything they need to go relax and start working. Each property is a little different. We have basics and based on the property, we’ll add on little things to make the property unique.
Jasper: That’s really great.
AD: You’ve heard me talk about Hostfully a lot the past few months. I love sending my beautiful Hostfully guidebook to my guests as it makes me look very professional. I also love including screenshots of my guidebook in my actual Airbnb listing. This helps me stand out from the crowd. Well, now I’m thrilled to announce that I’m a sponsor of the Hostfully host program. Twice a month, Hostfully selects a host and features them on their top-ranked blog, this is great promotion for your listing and a cool way to share your favorite local spots to a large audience. What’s even cooler is that each Hostfully host gets a free set of sheets from the Clean Bedroom, and now that I’m a sponsor, you’ll be featured in my newsletter, my social media feeds, and free access on my video course to be a great host. For more details and how to apply, visit hostfully.com/hostfullyhost.
Jasper: Another question I had is, are there any differences between when you’re re-leasing and actually buying? In terms of how you select the property and the design?
Eric: When it comes to design, not really. If you’re buying, you have more options and flexibility to add and change, so to make improvements to the property with intention to short-term rent. When you’re renting, you don’t own, so all you can focus on is the staging and the paint. Obviously, if you’re renting, don’t knock down the walls. We focus just on staging and paint. When it comes to properties we’ve purchased, we go in with intention to maximize space for short-term rentals. As far as management, if you’re leasing or renting, it’s all the same systems, all the same tools, regardless of buying or renting. On renting side, you want to include your landlord in more than you would on homes you own. Tools are the same, the only difference on renting is that we update our landlords monthly on who’s coming in, the dates that are booked, and monthly checklists, etc.
Jasper: Let’s talk a little more about the renting side. There are a lot of people who are thinking about doing that, it’s more attainable. So, can you talk more about how you find those landlords that are willing to let you rent out on Airbnb and also, how do you convince them? I feel like a lot of landlords, if you don’t offer them value, it’s going to be liability and they don’t have incentive.
Eric: As far as how we find them, we’re straightforward. We have three approaches. One is online marketing targeting people who own real estate, the message is there telling them what we’re doing. We get some trickle through on that, that’s phase two of a re-renting business. One they have a handful of properties. The main way we’re getting them now, one is Craigslist. Our team literally goes on Craigslist every day and we call every home owner. We go through a pitch, we explain who we are, what we do and our track record and then tell them what we’re interested in. The second way is networking. You want to network with the people who control real estate. We got to a lot of places in San Diego and we express what we’re doing and looking for. Through those channels, that’s how we find landlords. Now, when we show up at the appointment, we’re not coming empty handed. We show up with the landlord credibility packet. A PDF, a printout, that explains us, the systems we use, the tools we use, the benefits for renting to us, and we go into detail about who we are and why they should rent us. Most of them are against it because they’re uneducated about what Airbnb and how we can run it professionally. The benefits for landlords are a couple of different things. Landlords don’t like vacancies. They want to make sure they rent their apartments out to good tenants. That’s what we’re offering to them. If they have multiple vacancies, well rent it for you. Here’s everything you need. We’ll sign a 1-2-year lease and we’ll take over the day to day management for our unit. So, they like the fact that units are getting filled. Now, if it’s a landlord you see opportunity to do multiple properties with, or you find a property you can make a ton of money on, we add extra incentives. We give them extra money above their rent as an incentive. We have one landlord where we make $2,800 a month on it and give them 5 percent of our profits. There are so many ways you can negotiate with the landlords, I say put themselves in your shoes. What are the benefits? What are the cons? What tools are in place to combat any of those issues, like noise or damage. It’s a process and a numbers game, you have to talk to 100 landlords to find 1 that may be interested and then make sure you’re presenting the right information to resolve any of their concerns.
Jasper: what I really love about this business is you don’t need a lot of capital to get this rolling. If you’re out there and have some Airbnb experience. Literally go on Craigslist and hit up those landlords and see if you can convince one to rent to you. How much would you need to get this started? You need to sign a lease, the deposit, money to buy furniture. What’s the ballpark figure? It could be a good business opportunity for me.
Eric: I always tell my consulting clients they should keep in the back of their mind $10,000. That’s a ballpark to get your first Airbnb going. IT doesn’t mean that’s what you’re spending, but it’ll be around there. The main expenses are first month’s rent, security and staging. That could be depending on what kind of market, what kind of staging, could range on a few things. My typical two-bedroom is costing me 5-7k in staging. We go mid-grade staging. A little above and beyond. Our typical rent out here is $1600 and $2500 per month for 2-bedrooms. The nice thing is, and this is why I like this model. For so many people and situations. Once you invest that in there, you have the listing up on Airbnb the second you sign that lease, you start marketing it, you can start generating money on that immediately. If you’re in the right market and get the right property, you can pay back your investment in a handful of months. You can get a small loan, you can get something to invest in your first unit and start generating income on it. And have it paid back in a handful of months. It’s a really cool. I came in from the real-estate side of the business to 100s of units in the next few years. Even the millennials are picking up rentals to help them pay for their college debt. I met some ex-students who have debt, they rented apartments and the income off that is paying their college loans. I’m noticing baby boomers are doing the same to generate extra income for retirement. You don’t have to be an investor like me trying to scale to 500 units, you can be someone who in a couple of weeks has a property, up and generating income. I don’t know any other model in real estate where you can do that.
Jasper: You’re absolutely right. I totally agree with you. I wanted to do a shout out of Clear bank for people who don’t have the cash, you can get a loan at Clear bank. It’s designed to borrow to entrepreneurs in the sharing economy. You get your loan, they take a percentage of your Airbnb income as you make it back. Eric, you’ve provided an amazing amount of value. It’s super interesting to talk to you. Before I let you go, I want to talk about the Airbnb mastery summit coming up. You’ve invited a lot of interesting people to speak on Airbnb. What’s it all about?
Eric: What I did is I went out and got 22 of the top experts all around the world that specialize in Airbnb businesses and investing. I keep getting asked this question over and over, how can you scale a business in Airbnb. It’s such a brand-new niche that there’s no main blueprint out there on how to do this. There’s podcasts and you get snippets, but what I wanted to do was grab these experts and talk about how they’re building their Airbnb businesses. We have you, some guys who have 1,000s of units, some of the top real estate investors that specialize in buying apartment buildings and houses and how they go their take on how their integrating Airbnb into their investment. It’s really interesting. It’s the first of its kind to bring that many experts on this topic. The main takeaway for attendees is how to start the Airbnb business, the tools and teams you need, and the tips and tricks to scale it professionally to hundreds of units. It’s a free event. All the speakers have agreed to jump on for free and give as much information as possible. So, August 11-13 is free. Toss in an email. We send out a ticket to listeners and they can hear from experts like yourself, the list goes on and on. We’d love for you listeners to come out and join us on August 11.
Jasper: Awesome, I’ll obviously include a link where people can sign up in the show notes at Get Paid for You Pad. com/podcast. You can find all the information. I think it’s been extremely valuable everything you’ve shared for us, I want to thank you for coming on. I’m excited to be a speaker, I recommend everyone to sign up. Anything else you want to share with the audience?
Eric: They can check it out at AirBnbnMasterysummit.com, and yeah, thank you for having me. This was great!
Jasper: All right, Eric, thank you so much. And thank you listeners for listening to this episode, I hope you enjoyed it as much as I did. Of course, there will be another episode on Friday where I will be discussing this week’s news, so I hope to see you there.