All too often, we come across content in the passive income sphere (more like a blob but that’s another matter) that is either all filler, or the classic regurgitated 5-minute-fix that you’ve heard too many times for your liking. This story about Airbnb passive income is by no means an article intended to bash proven methods – on the contrary, the composition of this post was undertaken to utilize what has worked in the past, but with a twist for those who either are not comfortable with the current models, or who are finding difficulty getting past the sometimes insurmountable barriers to entry that come along with them. Usually it goes something like this…
“Hey, do you want to be a millionaire in just 43 seconds? I used to be an unemployed merman in the Atlantic, but with just six easy payments of 10,000 doll-hairs and a loan from a bank, I was able to buy two condos in Fiji – two turned to 50 and now i’m the coolest guy in the world so take my advice.”
There is, indeed, a progressively developing movement towards sharing creative income streams, as well as shedding light on other proven methods – for example compound interest, that can help supplement traditional income, and make us a little less reliant on our day jobs. Accepting the reality that a “normal” individual can achieve financial independence through means that are not restricted to the conventional methods of income, slowly but surely, has allowed these same “normal” individuals to share their methods and have people find success in them.
Insert Mike. Its 2017, Mike had been a robotics engineer at Boeing for exactly two years. In 10 minutes, he would get off the 3-seater couch outside his bosses smoke stained glass office, and walk in there to discuss his promotion. Ah yes, the 2-year mark of maturity – the right of passage from an Engineer I to Engineer II in the world of robotics. A young lady walks out of the office, with an expression that was near impossible to discern. He tried not to read into it too much so it didn’t dull his optimism for the meeting. He catches the door before it closes, pulls the handle and walks in ready to hear the “congratulations!…” speech.
The Entrepreneurial Realization Moment…
The rest of this post is Mike’s story, written by Mike, in his own words!
32 minutes later, I expressed my appreciation for his time and walked out. I wondered if the next guy saw the same indiscernible expression on my face as I walked out and forgot to hold the door open for him. I hope I didn’t bring down his optimism for the meeting.
I realized I was moving sideways. But not even in three-dimensional space. It was a line on paper, and even the line always led back to the original spot which was the coordinates “you are doing great” and “keep it up and maybe you’ll get a promotion next time.” I have had this conversation before, in quarterly meetings with my boss. So could that even be called moving? Sure, the money was alright at my job, but what was I building on? Did I have a foundation for being able to have time to spend where I wanted to spend it? How much time would I have to invest initially and at what rate would I be securing a compensation in the form of future time (and money of course)? All the engineering wizardry I attempted to summon could not justify the math – I simply was spending too much time in a low rate of return position.
To give some context, I had always been interested in Entrepreneurship. In high school and college, I dabbled in some projects and the notion of having time to spend with the ones I cared about meant very much to me. I got started a few of years ago when I was reading the book “The 4-Hour Workweek”. I’m sure some of you are familiar with it. I was obsessed with this idea about passive revenue and being able to live a life of financial freedom. Just travel the world and do all these things but I just never knew how to do it. I never knew how to take that action at a level that would actually provide a feasible substitute (or alternative it now seems) to my current routine. I had to move, even if it was slowly.
My First Airbnb (Jumping in Head First)
So now that we got that out of the way, let’s switch the tone up to match my mindset…
I decided I was gonna quit my job as soon as I could. So, I started looking for opportunities. A couple of days later, I sat down with a friend for lunch. We were at the sushi restaurant and he was telling me about one of his colleagues – someone he knew that had an Airbnb. At this time, I didn’t know much about Airbnb but he was telling me that his friend rented out 3 guestrooms. He had a house. He stayed in the house. He rented out the 3 guestrooms… each made $2,000. A month. I looked to him and like, “Are you serious? Wait, you’re telling me that this person makes $6,000 a month just renting out his rooms?” He was like, “yeah, that’s exactly what I’m telling you.”
It was then that it clicked in my mind like, “Wait. Hold on. I gotta understand this business model. What is this whole thing about Airbnb? What is the opportunity here?” But what even made it crazier is that he went on and explained that his friend who rented out those rooms didn’t do anything. He had people that cleaned it, he had people that took care of all the communications with the guest – everything was automated. So he was making $6,000 a month not doing anything at all – just renting out a room.
“Holy crap, this is it. This is the passive revenue I’ve always wanted. This is the 4-hour workweek. Airbnb passive income – this is it.” I started doing so much research, as I wanted to know as much as I could about the AirBnB model. I wanna become a master. So I geeked out, I studied for weeks, and I started analyzing my city. I was looking for the exact places in town that had the best occupancy, that had the highest revenues – really dig in down to the research. Eventually, three or four weeks into it, I knew I was ready to do it. I looked at the numbers, and I knew exactly how much I would be making in certain parts of town and I knew exactly how much it was gonna cost me. Again, I was very analytical and I knew as long as I could get the data right, I can make this work. I constantly asked myself “What would it be worth…how would my life change if I get this up and running…what would I be able to achieve outside of work if I could substitute my income passively…?” I studied up and eventually, I found the property that I wanted and I snagged it.
It was a total of a 6 week turnaround and I had launched my very first AirBnB!
Thinking Outside the Box – Airbnb Without Ownership
The moment I launched that day, that first day – I made more money in a day than I made in a month as an engineer…
But this was no ordinary AirBnB set-up. I guess at this point I should mention that I really did my research around the AirBnB platform. It may come as no surprise that AirBnB is lucrative surely, but perhaps it is just as much common knowledge that real estate is no cheap come-across either. I didn’t have 20% for a down payment and although I was very much familiar with the concept that risk equals reward, I wanted to find a way that could perhaps change the way short-term rentals were approached. I didn’t want to throw a lump-sum into an investment if I didn’t need to – I think there is value in being creative and working in mutually beneficial relationships. “People need tenants on contract…” I thought, and “My math shows that I can secure more than a 12-month lease worth of income through AirBnB bookings…”. Why don’t I just play matchmaker?
I played matchmaker. My first AirBnB was a legitimate and great cooperative effort with a property manager who was comfortable with me being on the lease as a routinely responsible tenant, while I was responsible for ensuring that the rent was paid on time and the unit was being maintained and respected. No loans, no hefty investment from my savings, no barrier to entry that prevented me, someone with not too much to their name, from involving myself in the very high potential short-term rental game.
But it wasn’t all fun and games…
Optimizing My Airbnb by Copying Others
Once I got the property, I realized I didn’t know anything there is to know about furnishing or what decorations I should have. Any of that art side of business – I had no idea what I was doing. I didn’t know what colors were nice, if they would like this or that better. So I went back to the research. Same strategy. I tried looking at ”what are the best listings in town? Who’s making the most money? Who’s getting the most guests? And what are they doing?”
So I started studying their pictures, the descriptions, the text that they use, the titles – everything there was that I could possibly study. I started to make a model of all the best listings, all the best Airbnb’s in town, so I knew exactly how to furnish it, I knew exactly what it should look like, I knew exactly what I should say.
I prepared eye-catching visuals, interest-sparking text, and an offer that made sure potential visitors would see the very real value that my listing would offer. I coupled this with the framing required to secure a property manager and the professionalism involved to make sure the unit is best kept for my next guest.
It took some work, but the trade off of six weeks, a few hours a week, for what I was able to get back from that time spent is immeasurable.
Want to Airbnb Like Me? I Will Teach You!
Ultimately, I summed my approach down to three primary differentiators:
#1: Cash Flow Finder
How to be the highest paid Airbnb listing in town even if you’re just starting and you have zero reviews, ie. how to be successful from the get-go.
#2: How to Use Other People’s Properties to Make this Happen
How to locate landlords who will be more than willing to work with you and let you list their properties on Airbnb even if you have zero experience in real estate.
#3: Money Machine
How to automate and scale to six figures without ever meeting, greeting or cleaning after your guests even while you’re working your full-time job like I had been doing.
There are other ways to secure passive income. Other ways to develop a system that ensures you can get some of your time back. An investment in something does not have to be debt-inclusive to the point your bank is broken. We need to be creative and understand that the markets are always changing and opportunities are out there for us. We,“Normal” people are able to find our financial independence in ways that we have yet to discover. It’s not always about the most popular or cash intensive methods, but sometimes a little intuition and symbiotic appeal just might do the trick. It has been written about extensively by now that there is always some sort of investment needed for “passive income” – it doesn’t just start that way. Even getting involved in the financial markets requires capital.
Right, so who is this method not for?
If you don’t wanna put in the upfront work to create a great Airbnb and experience for your guests, I’m sorry, this business is not gonna work for you. If you are looking for a get-rich-quick scheme where you aren’t adding real value to the marketplace, again, this isn’t for you.
So, who is method this for?
If you do not have any properties but are willing to be resourceful and put in the work to become financially free, then this will work for you. If you have a property already and you wanna make 4x what a regular tenant pays, then this training is for you. If you already have an Airbnb but you wanna know how to maximize bookings and get more listings, then again, this is for you.
It was a crazy moment and in that time, I realized how big this opportunity is. I didn’t just quit my job off the bat, and I didnt want to throw my money into something that had excessive risk without truly understanding the foundations of the business model. Over time, and with the addition of panning out the intricacies of how to maximize its potential, I am now in a place I could have never been at my previous role as an engineer. And if you do this right, the opportunity is endless.
This was my beginning in Airbnb and it completely changed my life.
Three months later, I quit my job and now, I’m a full-time entrepreneur. Starting businesses, traveling, spending more time with my family and friends, teaching my model to other individuals who are seeking financial independence; doing everything I always wanted to do and all this stemmed from that single Airbnb listing. If you find yourselves longing for similar freedoms, be creative and take action – at the end of the day, everyone is a “normal” person and they are achieving those freedoms every day.
If I can do it – if I can create an Airbnb passive income empire, then no doubt, you can too!
Update: June 2019
This post was written by Mike Xave. Mike originally contacted me to publish this post on Dumb Passive Income in order to promote a training course that he created and was selling. Mike ended up being a douche – as he did not pay out affiliate commissions to me that I earned as a result of publishing this post. He then shut down his affiliate program with no good explanation. I since removed all links on this post that led to Mike’s course. I can’t find any comparable courses anywhere else online that are worth a damn. Here’s a pretty good post by Sarah Jean Know on a similar (but not exactly the same) topic…
Image Credit: Sonnige airbnb-Wohnung / Sunny airbnb in Lisboa by Marco Verch via Flickr