Real Estate Real Fast Episode 12 Cover

How to find, analyze, fund, and manage AirBnBs properties (with Kyle Christian, over a decade of experience in multiple facets of the real estate investment world) – Real Estate Real Fast EP12

Summary

In this episode of Real Estate Real Fast, host Aaron Jistel interviews Kyle Christian, an experienced investor in private and hard money investments, flipping houses, and managing AirBnBs and hotels. Kyle explains his strategy for finding good AirBnB deals, including serving underserved markets, analyzing and validating numbers, providing clear instructions to guests, and looking for reviews when evaluating management companies. He also discusses the financing process and recommends resources like Roddy List and Skip Force. Finally, he emphasizes the importance of taking action and setting realistic expectations.

About Kyle Christian

Kyle Christian is an experienced real estate investor who has been in the industry for over 10 years. He is well-versed in real estate investment,with experience ranging from private and hard money investments to flips, AirBnBs, hotels and more. Kyle is known for his ambitious projects, such as a multi-million dollar flip and a beautiful hotel in San Angelo. He also specializes in financing AirBnB properties and can provide guidance to both novice and experienced investors. 

Highlights

  1. Kyle’s background and experience in real estate
  2. Strategies for finding a deal ideal for an AirBnB
  3. Analyzing and validating numbers
  4. Advice for running an AirBnB
  5. Evaluating a management company
  6. Financing an AirBnB
  7. Using a channel manager to manage AirBnBs
  8. Challenges with managing multiple houses
  9. Setting realistic expectations and urgency for deals

Episode Links

Takeaways

[0:04:20] How to Find Deals Ideal for Short-Term Rentals

Kyle looks for stressed properties where he can capture a lot of equity. He does a lot of wholesaling and uses lead generation to find motivated sellers. He also likes to serve underserved markets so that he doesn’t have to compete. If the property isn’t working out as an AirBnB, he can refinance it and get cash out or turn it into a standard 12 month rental property.

“I’m looking for a fixer upper, something where I can create equity. I’m going to refinance out of that and have captured equity. A bonus or a cherry on top will be a really good location. On those, we put in a little bit more money by furnishing it and turn it into an AirBnB.”

[0:08:54] Analyzing and Validating the Numbers for AirBnB Investment

When analyzing and validating numbers for an AirBnB property, make sure to plug in your cost of capital, repair costs, stabilization period, and current rate into a worksheet. It’s important to pay attention to the rate as it can change drastically and affect your monthly spread. Make sure to include cash on cash and return on leverage when calculating your numbers.

“I’ll just have a worksheet to plug it all in. What I’m looking at is I plug in my cost of capital, what the repairs are going to be, how long I’m going to be in the stabilization period, and then I’m also plugging in my numbers on the back end when I refi. Because you always have to be considering the exit. What’s the rate at right now? It’s really important to pay attention to that right now cause you know, you could be cash flowing the property in a capacity that you feel very well meet your, your criteria where you call it a good deal. 

[0:10:44] Automation and Clear Communication are Key for AirBnB Management Success

In managing AirBnB, it’s important to be prepared for anything that could go wrong. To ensure guests have all the information they need, clearly spell out what to expect when they book, and then send an automated message on the day of check-in with a small recap and the access codes. Automation can help make the process smoother.

“Anything that can go wrong will go wrong, so just don’t underestimate people. On the front end, be really clear about what to expect at the property and how to check in, and use automation to set yourself up for success so you’re not in the weeds on dealing with small issues.”

[0:13:08] Tips for Becoming an AirBnB Superhost

It is important to get five star ratings as an AirBnB host. This can be achieved by being personable and listening to guests if they express issues, so that they don’t leave a bad review. It is also important to be very responsive when hosting, as it is a hands-on job.

“You have to be pretty on call when you’ve got a guest in your place. You have to be responsive. You gotta be making sure they’re well taken care of.”

[0:15:17] Pros and Cons of Self-Managing vs Hiring a Management Company for AirBnB

Self-managing an AirBnB property can be a great way to learn the ropes and understand what you should be looking for in a management company. Be sure to read reviews of any potential companies to ensure they are providing the best possible experience for guests. When self-managing, make sure to listen to feedback from guests and take action when necessary to prevent negative reviews. Additionally, set up checklists for turnover crews to ensure all details are taken care of and provide a hotel-like experience for guests. 

[0:20:33] Financing an AirBnB: Exploring the DSCR Loan Product

You can finance an AirBnB through a DSCR loan product which looks at the asset itself producing income to sustain debt service and has a 30 year amortized period with competitive rates to conventional finance. The underwriting process is simpler than conventional finance as it doesn’t require personal income.

“It’s a lot easier and there’s less hurdles to jump through than your conventional finance than where it’s looking at your own personal income.”

[0:21:57] Refinancing Options for Real Estate Flips

In the scenario of a flip that isn’t working out, you can consider refinancing to move to AirBnB model if the numbers make sense. This way, you could prepare for any market shifts or changes in house prices and hold the property for yield as an AirBnB.

“It’s better to know what the exit is going to be on the front and nobody wants to be mid street and say, oh wow, I can’t sell this, what do I do? It’s not a good experience, I would say it’s definitely not going to be what I would call prudent investing.”

[0:24:25] Steps to Buy an AirBnB

To buy an AirBnB, you will need to get a front side appraisal for the financing and a backside appraisal for the refinance. You can put equity down towards the down payment, and if you don’t have enough, you can gap the difference. You’ll also need to provide proof of income, credit score, and experience. Rates and monthly payments are determined after all of these steps are completed.

“It’s really exciting for me to be able to go after a stressed property for that reason, to capture that equity. Right. So then it makes the total deal a screamer because you’re using leverage, not actual cash or less actual cash out of pocket.”

[0:27:11] Taking Action on Lead Services for Motivated Leads in Texas

Kyle uses different sources for his lead services in Texas, such as Roddy List and Skip Force. He emphasizes the importance of taking action and finding the humor in bad calls. He recommends listening to the podcast featuring Mike Singletary for more information on getting contact information, and suggests being thankful for ‘No’s’ as they are a step closer to a ‘Yes’.

“You just have to take action. I wanna set some expectations for you if you’re cold calling people or cold texting. People are not gonna be nice because everyone is doing that. But then you get someone who will talk to  you and maybe all you need is one.”

[0:31:45] Why Should You Consider Using a Channel Manager for AirBnBs

Kyle uses an online channel manager called Smoobu to help manage his AirBnBs. This channel manager helps block out other calendars to avoid double bookings, and also sends automated replies. Kyle may consider switching to a more expensive channel manager if he gets more AirBnBs.

“If you’re on a myriad of OTAs, online travel agencies such as Airbnb or VRBO, you’re gonna find yourself in the weeds if you’re trying to be on all those. So a channel manager is something that will block out the other calendars as soon as a booking occurs.”

[0:35:24] The Benefits Of Using TurnoverBnB For Your Property Management Business

Challenges with having houses not close to each other include hiring good turnover staff and using a TurnoverBnB technology which links calendars to the turnover crew, has a host facing app, a turnover crew facing app, and has detailed checklists and photo evidence for any claims. The founder of TurnoverBnB is open to conversation and is willing to adjust to their client base.

[0:39:30] How Long Does it Take to Process a DSCR Loan?

It depends on how fast you can provide information, but it can take up to 30 days. The fastest Kyle has done it was a jumbo loan for $1.2 million which cleared in six days due to urgency from the seller and borrower. Appraisal can be a wildcard with third party involvement.

“I always recommend in any deal you’re doing, urgency is important. I think lenders need to get information. As long as they’re waiting on you to get information, it’s going to slow down the process.”

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