Want to invest in real estate but don’t know where to start? You should be looking at Airbnb. It goes against the grain of conventional wisdom where people are often directed to flipping or single-family rentals, but Airbnb investing can be a good source of passive income if you’re willing to do the work. If your city has a population of 100,000 or more, you’d be surprised to know that it can actually be a viable short-term rental market, even if it’s a need market. Kyle Stanley teaches people how to take advantage of opportunities like this through his podcast, The Fearless Investor. In this episode, he joins Chris Larsen to make the case for Airbnb investing as the number one choice for first-time investors in their journey towards financial freedom.

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How To Take Advantage Of The Exploding Airbnb Market In Your City With Kyle Stanley

On the show, we have Kyle Stanley. He is the host of The Fearless Investor Podcast and an Airbnb expert. You’re not going to want to miss the show. I even loved it so much that I went out and bought his course for myself because my wife and I have an Airbnb in our house that we run here in Asheville, North Carolina. A lot of people ask me, “Chris, I’m trying to get started. What areas should I investigate? Should I do fix and flip? Should I buy a rental?” I always tell them, “Check out Airbnb. It’s a great way to make larger profits than doing a large term rental.” Kyle Stanley is going to talk about how he went from $0 a month in passive income to over $20,000 a month by using his proven strategies. You’re not going to want to miss the show.

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Kyle, welcome to the show.

Chris, thanks for having me.

We are talking beforehand, you’re getting ready to travel to Austin. It’s one of the things I love, how the business that you’ve created has allowed you to have this amazing lifestyle. For the audience, share a little bit more about your story.

Long story short, I was an entrepreneur before I even knew I was an entrepreneur. In college, I was creating different types of projects that led me to my career of being a sports anchor, got into being a sports anchor, realized a few months of doing it, that I didn’t like taking orders from other people. I like being creative, flexible, and being able to do whatever I wanted and create whatever I want. Right around the two-year mark, I started my own business out of sports and green. I tried about three different things that were either my own businesses or an entrepreneurial type of business.

It built up to create the skills of where I’m at now with real estate investing and an Airbnb manager and operator. All those other ones “failed” and I talked about this on my good friend’s podcast, Travis Chappell, the Build Your Network Podcast. Failure does not identify you, it’s quitting that identifies you. For me, even though I kept on going through these failures, I was learning. The failing forward thought like what John Maxwell talks about. The middle of 2019 was when I turned on the light bulb with Airbnb. I’d been dabbling in it for a few years, but in 2019, I was like, “Let’s do this thing.”

From 2019 to November of 2020, that was roughly 17, 18 months, we went from 1 unit to 25 and netting over $20,000 a month. All through the methods that I teach which are owner arbitrage. It’s been completely life-changing. The big thing is that we’ve created a lot of systems too that makes it almost completely passive. I say almost because there’s anything that you can be successful at that’s completely passive. It’s been a wild ride in 2019.

I had a great time on your podcast which I encourage readers to check out. If you’ve read my book, what I talk about in there is how we specialize in multifamily, but a lot of people come to me. I coach some investors that are getting their start and they say, “I can’t go buy a 100 or 200 unit apartment building. How do I get there? Should I go buy a single-family rental?” I’m not a huge fan of single-family rentals. What I tell them is, “You should check out Airbnb.” My wife and I built a house in Asheville, North Carolina. We designed the Airbnb in the house. It’s been phenomenal. I enjoyed talking to Kyle that I went out and bought his course immediately after I was on his podcast. We’ll talk a little bit more about how you can get that later. Kyle, tell the readers why you decide to focus on Airbnb instead of doing fix and flips or some other area of real estate?

In January of 2019, when I said yes to real estate, I had been doing Airbnb as a house hacking method. Not as creative as you. I didn’t create another unit in my home. I had been doing a room out of my house.

It’s cheaper than what you did, building a new house.

The reward is not as high either. You have the trade-off. To dive deeper into that part of the story, my dad had hit tough times with his health and went into hospice in September 2018. That was right around the time that I was like, “Am I doing what I’m supposed to be doing?” That year was going to be my highest salary plus the things I had going on. I’d made $75,000 that year. I was 31 years old. I was like, “That was decent, but I’m working my butt off. I don’t feel like an entrepreneur. I feel like these jobs own me.” I did a lot of reflection there and started listening to BiggerPockets and Cardone Zone.

I figured out the real estate was the thing, but I couldn’t figure out how to get in, then I went to a FortuneBuilders event in January of 2019. It was all about fix and flip and wholesaling. I was like, “These are the skills that I’ve developed to be able to be good at something. This is that something.” I said yes to real estate on January 6th, 2019, the first deal as a fix and flip under contract in February 2019. In the first year, I flipped four and also did one wholesale, but it was right on all of that when I was like, “I’ve got this place and I’m going to BRRRR.” It’s Buy, Rehab, Rent, Refinance, Repeat.

I was like, “Instead of a regular rental, why don’t I try Airbnb on this?” That was when I started doing more research on Airbnb. I heard about this arbitrage model of not even having to own the house. I was like, “I had no idea. You had to own the home.” I started thinking about it and was like, “Yes.” When I first started at Airbnb, they didn’t ask me for the deed of the house. They didn’t ask me who’s on the title. All they said is, “What’s the address?” This light bulb went off and I said, “My plan before was flip the houses, BRRRR a few houses, maybe get a few subjects with creative terms, and keep building up this $200 to $300 passive income.”

I saw Airbnb and I said, “I can make over $1,000 per month per unit. I can, this thing so much faster.” It’s can take a little bit more work, it’s going to be a little bit more turnover and everything, but I started looking at the pros and cons and I was like, “Especially in California, I would much rather be an Airbnb host than a regular landlord.” I did an entire podcast on that. If you check it out on my Fearless Investor Podcast, I talk about the reasons and the differences between regular landlord versus Airbnb hosts. It’s a little bit more work, but the ways in which you are protected and are able to do this thing is way more exciting to me. At the end of the day, it was acceleration and not having to deal with all the land BS that you have to as a regular landlord for very little pay.

I think it’s a fantastic method. For the readers that have heard of Ron LeGrand, if you haven’t, he’d talked about these methods of buying subject to, renting it out. I’m a big fan of arbitrage, which is doing something where you either limit or eliminate the risk and you still get a reward. It’s a fantastic method. I like Kyle that you teach more than only do it one way. You talk about different strategies because different markets necessitate different strategies. I think it’s fantastic. It’s something that is a huge opportunity in the future. In our book, I talk about how we identify different markets, where we buy multifamily properties. I talk about why I moved to Asheville, North Carolina, and many years ago, I had all these different criteria that I said, “This is why I’m moving here.” Kyle, share with the audience what markets do you own and why those markets?

The first one was my own backyard here in Fresno, California. I started it as the house hacking when I lived in Arizona. When I moved to Fresno, I was like, “No one comes to Fresno. Airbnb is not going to work.” It turns out a lot of people come to Fresno. What I’ve learned in this whole process is that most places that are 100,000 people or more are more than likely going to work as an Airbnb. Don’t overthink your market too much, but I would use a resource called AirDNA. That’s a good one. We also have a Profit Calculator on our website of FearlessKyle.com. You can download it. By using those two tools, you can start to see, “Is this a viable market for Airbnb?”

From there, the biggest thing I would say is, do you want to be in a market where it’s a rollercoaster? In July, you are making $10,000, and in January, you’re making $2,000. I’m talking about gross numbers. I think those work. I know a lot of people that do that well. Those are the vacation type areas. Those are the ones that you need to look at in the Southern California areas. Some of the places in Florida, Nashville.

Augusta, Georgia. People are like, “I rent my house out for the tournament every year and I pay my mortgage for the year.”

Those are great ways to be able to house hack your home. The other side is for me, I’m in Fresno, California, which to me is a need market, not a want market. People aren’t coming here for vacation. They’re coming to Fresno because they have to, not because they want to. They have a family, they’re coming from business, they’re coming because, “I want to go from LA to San Francisco, but I don’t want to do that entire eight-hour drive in one day so let me stay over for a night.” For that reason, I don’t have a whole lot of fluctuation on both rates and my occupancy. Month to month, I know what I’m going to make. You needed to decide like, “Do you want to be in a vacation area or do you want to be in an area where there’s consistent demand?”

I always say, “Start in your own backyard, learn it, master it.” Even if it’s a room out of your own house, the basement that you turn into a man-cave and a place for someone to go and stay, at least you’ve learned the process. You understand the problems, the process, and the teammates that you need in order to say, “Now that I’ve got this mastered, and I’m making a little bit of money here in my own backyard, how can I go to market that’s profitable with this, duplicate what I’m doing here, and know how to be able to systematize that in a different market?” That would be my recommendation.

You said a word there, systematize. If I’m reading and saying, “Airbnb sounds great. I don’t want to vacuum, I don’t want to clean, I don’t want to get a mask and a biohazard suit on and spray chemicals with COVID and make sure I all this.” How do you systematize this? How have you scaled this?

First of all, I’d tell them the same thing. I don’t want to do that either. I use an acronym called MAS or Master Automate Scale. That’s what I talk about with my course too. We’re teaching you how to master automate and scale in the Airbnb business. I own Airbnbs in Arizona as well. That’s another market that we jumped into. Mastering it, for example, one of my new business partners is over in Arizona and right away he was like, “How do we automate this?” I was like, “I need you to do it first. You feel that pain of like, ‘Here’s how it’s done and now I can teach it to someone else, but I hate this so much that I need to automate this.’ I need you to feel that pain before you go out and try to bring someone in.”

You master it yourself. That means you clean a couple of times yourself, you set up the place a couple of times, you’re communicating best a couple of times, then automating it. There’s a lot of great ways to do that from a technology that some third-party companies have from Smartbnb, Beyond Pricing, and some other CRMs that are great for Airbnb and Vrbo. Scaling it though, to me, once you’ve found a way to take from, “I was putting ten hours a week into one property. Now I’m putting one hour a week into one property.” Now it’s like, “I can add and know that I’m not going to be spreading myself thin.”

That’s what our course talks about and showing you how to be able to bring in the right people, the right automations, the right systems within the house that has taken so much time off of her hand by creating things that are easy for our cleaners, easy for the guests to find, easy to understand. We used to get emails or messages all the time on the app, “What’s the Wi-Fi information? This is happening. What do we do?” We have options and ways that guests can tackle their own problems without contacting us. You find that this can be a business, as long as you treat it like a business.

That’s one of my favorite sayings is to begin with the end in mind. If you’re reading and saying, “I don’t know where to start in real estate. I don’t have a lot of money.” What Kyle teaches is the ability to go out and build a strategy that’s going to help you scale a business and run it like a business, not turn it into a job for yourself. That’s why Kyle and I enjoyed talking about. That was one of the things, Kyle, you talk about your father getting sick.

When my mother got sick and passed away from cancer, that was a turning point for me too. It was that point in being introspective and thinking, “Am I doing what I’m meant to be doing? Is everything clicking on all cylinders?” I’m being the father, husband, mentor, and person that I’m meant to be. That’s when we shifted into multifamily. Those experiences in life give us opportunities. I appreciate you sharing that. What are some pitfalls? Do you have any interesting or crazy stories that you can share with the audience from your years now in the Airbnb business?

It’s not as crazy as you would think. That’s the biggest question. Everyone’s like, “Oh my gosh.” There’s a couple of Facebook groups. One of them is like Airbnb hosts vent. It’s a place where all Airbnb hosts jog on and vent. The people who are looking to get into Airbnb accidentally get in this group and they’re like, “I’m never doing this.” I’ll give you some real bad stories. I want to share how we were able to figure these guests out.

In beginning, I was knocking on all the doors of my neighbors, letting them know what I was doing. Here’s my number. Don’t call the cops. Call me if you hear a loud party or something. One day I wake up and there are ten text messages from all the neighbors saying heard three gunshots at 3:00 AM last night. I was like, “Oh my gosh.” I called the guests and they were like, “We heard that too. We were wondering where that came from.” I was like, “Every single person that I got a text that it came from you. If I find gun holes or bullet holes in my house, you’re paying for that.”

One of the neighbors ended up telling me it was someone who was doing a celebration. It was someone’s birthday and they were shooting up in the air, which like scary still. We evaluated that situation. What were the red flags? Red flags were no reviews, they lived within about an hour away from home. These are things that now we can see as red flags and how do we tackle that? Now we have a strict prequalification process where we’ve been able to eliminate most parties. New Year’s came around. One of our 25 units had one party. We’ll call that a win. The New Year’s going to be one of those times that’s tough to see to someone.

That was the unit that you live in yourself.