Digital Social Hour - Making Millions Off Airbnb, Best Cities for Airbnb & Airbnb Bust | Humza Zafar DSH #302

Episode Date: February 21, 2024

Humza Zafar comes on the podcast to talk about how the airbnb space has changed over time, how he scaled to hundreds of units and his future plans on scaling his airbnb empire. APPLY TO BE ON THE PODCAST: https://forms.gle/qXvENTeurx7Xn8Ci9 BUSINESS INQUIRIES/SPONSORS: [e-mail] SPONSORS: Opus Pro: https://www.opus.pro/?via=DSH Deposyt Payment Processing: https://www.deposyt.com/seankelly Factor: Use code "DSH50" for 50% off your order at https://www.factormeals.com/dsh50 Digital Social Hour works with participants in sponsored media and stays compliant with Federal Communications Commission (FCC) regulations regarding sponsored media. #ad LISTEN ON: Apple Podcasts: https://podcasts.apple.com/us/podcast/digital-social-hour/id1676846015 Spotify: https://open.spotify.com/show/5Jn7LXarRlI8Hc0GtTn759 Sean Kelly Instagram: https://www.instagram.com/seanmikekelly/ Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit podcastchoices.com/adchoices

Luckily, my job was paying me $8,000 a month after taxes. My living was paid for. My car was paid for for my job. So every single dollar that I was making, I was just spending on acquiring more units and just using it to basically buy more furniture. Wow. What job were you making, AK?

As an engineer. Working every single day, six days a week, sometimes seven days a week, working 60, 70 hours a week. Now I see why you left that one. That's why I left. Wherever you guys are watching this show, I would truly appreciate it if you follow or subscribe.

It helps a lot with the algorithm. It helps us get bigger and better guests, and it helps us grow the team. It truly means a lot. Thank you guys for supporting, and here's the episode. All right, we're talking Airbnbs today. We got Hamza Zafar here. How's it going, man?

Doing well, man. All the way from dallas not too far yeah i actually flew in from canada today but yeah generally i do live in dallas okay you had airbnbs up there no so i'm from originally that's where my family lives so i was living parents for the christmas and new year's time and i just came to vegas for the quick day okay so you grew up in canada and then when did you move here so i grew up in canada pretty much my whole life went to school went to university in canada uh then right after i got my first job i moved to philly lived in philly for about three years i then moved to detroit lived in detroit for about a year and a half almost two years

and i just recently moved to dallas texas wow so you were in the cold man yeah and cold my whole life yeah but now with dallas you're probably finally getting some heat yeah that's the problem too right in the summertime it's 110 degrees and it's burning hot. You can't really go outside. Yeah. So when did you get into Airbnb? So I got into Airbnb, first discovered it really was back in 2020 and near the end, around October time, it was November. And I started really diving into it while I was working a nine-to-five job

as an engineer at the Philadelphia airport around November. And I guess when I got basically my first couple of units and really started to take the business seriously during 2021, the new year. And how much money did you start with originally with this? So originally I only had about $4,000. That's all I really had. I was making about 8,000 a month for my job. So I used that 4,000 to basically furnish that first unit and then use the profits from that one, rolled it over and just continue expanding. Nice. So that's not even that much. No.

How were you able to get a house for just $4,000? So my first ever deal was a four-bedroom townhome in Philadelphia in Queens Village. And that was really a test concept to see if I'm actually going to make any money or not. Half the house was already furnished. The other $4,000 I spent buying furniture really cheaply from Ikea, built everything myself, and it was really that much. Wow. Really bootstrapping. Yeah. And that was in Dallas? This was in philly oh in philly yeah okay and the first year what were the numbers like so my first year 2021 uh i finished off at around i think it was

50 units almost and the entire year i don't remember but i finished off at around 100 000 it was my peak month uh at the end of the year. Damn, 50 units in your first year? 50 units in my first year, yeah. How were you able to get that many? So business credit card. So for me, originally, the biggest problem was because I'm not a US citizen, I didn't have a lot of business credit.

I didn't really have any credit at all whatsoever. It took me a little bit of a while to actually build that credit up. So what I had to do was, I had to just use a lot of my cash, just scale the Airbnbs that way. Luckily, my job was paying me $8,000 a month after taxes. My living was paid for.

My car was paid for from my job. So every single dollar that I was making, I was just spending on acquiring more units and just using it to basically buy more furniture. Wow. What job were you making $8,000 a month? As an engineer. That's pretty good, right?

Not bad at all. Was that remote? No, I was working every single day, six days a week, sometimes seven days a week, working 60, 70 hours a week. Now I see why you left that one. That's why I left it. Your lifestyle has changed a lot from then. Yeah.

So year two, how many units? So year two is going to be end of 2022. I finished off at 200 units in total. Wow. So I went from 50 to 200. And I think at my peak month, I was at 500,000 revenue. That was in July.

Majority of my apartments and my units are all in the East Coast. So they do really, really well in the summers. And they don't do that well in the winter. Got it. So that was my peak. 2023, I just finished this year off at 400 units. Jeez. I'm doing about a million dollars a month right now.

And I did about 10 million for this year. That is insane, man. Yeah, that's 10 million in total revenue. My actual gross profit, my actual did about 10 million for this year that is insane man that's 10 million in total revenue my actual gross profit my actual like uh profit from 10 million was about two and a half million dollars incredible from that two and a half million dollars you ask me how much money is left over zero i spent 1.6 million dollars on furniture for more units and then on top of that i spent a bunch of money on just growth expanding hiring more employees basically just all the net free cash flow left over for this year of that two million plus was all spent on just basically growing the business and going to you know eventually the goal is a thousand units so like for example right now i have 100 units being starting i'd say in about the next three

weeks wow philly and more in detroit more in d. So 2022, sorry, 2023 was a year of just growth. I was only worried about keeping all that money. I spent it all on growth. 2023, I'm going to really chill out, relax, focus on leaning on operations even more and try to keep as much of that profit as much as possible. Nice. You're still living pretty frugally then.

No, not really. The penthouse I live in inallas is like 15 grand a month okay um you know i i fly you know business class to dubai all the time like i still live relatively well but compared to the amount of income i'm making you know it's still relatively high like on a million dollars million and two in income i'd say i'm doing about i'd say 200 300 000 net profit so relative to how much net profit i'm making i'm still you know living yeah damn that makes sense um so why do you want to hit a thousand units so i just want to that's a number that i have i want to grow the business to that size and if i can do it all without any outside investors without any private funding without any loans whatsoever it's gonna be a really big accomplishment

because all the income is my income there's no hands in my pocket there's no distributions i have to give everybody there There's no million partners. Everything I own 100% completely. And that's been my goal since day one. So like right now, just with the 500 units that I have lined up, or the 500 units that I'll be at by the end of next month, I'm at 400 right now. If I don't expand whatsoever, if I don't grow,

and I just chill at 500 units, I'll finish 2024 off at 20 million. And at 35% net profit margins, I should do at least $7 million in take home income. That's after everything. That is incredible, man. And the fact that you're doing this right now in the current real estate market is super impressive to me because everyone I know in real estate right now is kind of hurting or kind of standing at a pause. Have you experienced anything like that? Yeah. So it's actually good for me that's happening. So I'll give you an example right now.

I just had a building, a new construction building, Graystar managed. The builder built a building, and they have a lot of vacancy. They were on construction loans. They were on a bunch of crazy loans. They needed to basically fill these apartments up. So I signed a deal for 40 apartments in that building, brand new, A-class luxury building.

This is in Ohio. I'm not going to say the city, but greatest NBA player of all times from that city. I think they can. Yeah. But basically, the builder is basically screwed because no one's going to really rent these apartments right now. We're in wintertime.

It's the lowest time of the entire year for multifamily lease up. So he's burning money on the front end. So I negotiated 40 units with four months of rent concession for free. Almost the entire amount of rent I saved was about $250,000 upfront. Wow. So I don't have to pay rent for the next four months and have 48 class luxury units in a brand new building. How were you able to negotiate that? You think it's because you had so many units? It's just leverage, right? Because you have to look at it from the perspective of the landlord.

If I don't take them, nobody else is going to take them either. Every single time a building owner has to basically do an entire lease up, it takes a little bit of time, maybe a year, maybe two years to get even 80% occupied. They need to pay a commission

to every single agent or leasing agent that even rents that apartment for just one month's rent off the bat. There's also the turnover costs and the vacancy costs, right? Signing over 40 apartments,

someone like me, gets rid of 40 headaches, gets rid of 40 tenants, gets rid of 40 tenants, gets rid of, you know, a lot of the problems that you'd have in terms of commission and getting out

to leasing agents. And that's 40 units he doesn't have to worry about. So when you have leverage right now, especially right now is like the best time because landlords

are hurting literally everywhere, you can get crazy deals. Dude, that is insane. I've never heard that strategy, but it's super smart because some people are buying one apartment at a time.

No, it's not worth the ROI of my time anymore. I'm at the institutional level where I'm competing with a lot of the bigger players in the arbitrage space. I don't even do anything less than a couple floors at a time. I need at least 20, 30, 40 units at a time to make it worth the ROI of my money and my time

because the only way to really make money right now is with economies of scale. Me having five apartments and paying cleaning staff $100 to clean a one-bedroom, I'm not making any money. I have 50 apartments in a building five apartments and paying cleaning staff $100 to clean a one bedroom, I'm not making any money. I have 50 apartments in a building where I'm paying cleaning staff, you know, $10, $12 an hour.

That's when I can actually scale and make a lot of money. Yeah, because then they don't have to travel to each location. And yeah, a lot of nuances. Are you interested in coming on the Digital Social Hour podcast as a guest? We'll click the application link below

in the description of this video. We are always looking for cool stories, cool entrepreneurs to talk to about business and life. Click the application link below in the description of this video. We are always looking for cool stories, cool entrepreneurs to talk to you about business and life. Click the application link below and here's the episode guys. So with your big competitors, how larger are these companies? So I'll give you an example. Sonder has like 10,000 plus apartments. It was actually started by a guy from Canada too, himself. He was a student at, I think it was McGill University, started with one summer and scaled to 10,000 apartments. But it's not his company. Obviously, he's the owner, he's the founder.

He took VC back. He had a lot of VC backing and venture debt and raised a lot of money. The problem with that company is that they're losing money. For every dollar they make, they're losing about 30 cents. Wow. Yeah. So I think in the 100 plus million they made, they've also lost millions and millions of dollars. So, you know, my goal is to not expand just for the sake of

market share. My goal is to expand, but also make money at the same time, right? My goal is not to get to a 10,000 apartments. I have no, you know, goal for that. If I'm making, you know, 20, 30 million dollars in take home personal income on a thousand apartments. I'm very happy. I'm good with that. That is crazy. And were there any hiccups along the way, like any years or months where you were losing money or going? Oh yeah. So last winter I lost about $250,000 November,

December, January, February, those four months in total, I lost 250 grand in total. Yeah. So a few mistakes on my end, but overall I should show my market.

One was pricing. I didn't really price all of my apartments properly, assuming that last year, not the 2022 winter, but the 2021 winter, was what can I expect. That wasn't the case at all. So I didn't really discount my rates way ahead of time. And then on top of that,

the actual units themselves, when I first started the business, I was in a lot of B-class, C-class apartments apartments i had to go to dallas rent an apartment for 800 b class c class stuff and make 27 2800 a month that was during the good old days the glory days of airbnb where anyone can grab an apartment throw barely any furniture in there and make two thousand dollars a month in that free cash flow doesn't exist anymore so what i did basically for the year of 2023 was start eliminating and cutting all the units that weren't really profitable. They didn't have enough meat on the bone for me, improving my operations, leaning out my housekeeping, decreasing my housekeeping costs tremendously in almost every single city, and upgrading my units

to higher end luxury A-class units. There's a lot more meat on the bone to actually make profit. Got it. So last November, just in November that just passed i did about two hundred thousand dollars two hundred and twenty five thousand in total net profit wow on 400 units but the november before that i lost 50 grand on 200 units dang so they go off the same metrics i should have lost 100 grand this november but i didn't i made 225 grand because housekeeping costs were reduced by 70 the units units now are a lot better, a lot nicer, designed a lot cleaner. And pricing. I just went pricing way ahead of time, two, three months ahead of time because I didn't want what happened last winter to happen again.

Yeah. So are you using AI to determine the price you charge now? Yeah. So there's a software everyone uses called Price Labs. It's pretty self-explanatory once you sign up. But just using that software alone isn't enough. There's a lot more in-depth revenue management skills that you have to have to actually apply

to make sure it's actually working. Have you seen a sweet spot in terms of the pricing? It's dynamic, right? It really changes. In the wintertime, you're trying to sell off apartments as low as possible. At break-even or a little bit above, summertime, you're just blowing up your weekend rates.

You're blowing up those concert rates to even seven eight hundred dollars a night taylor swift concert was crazy for me this year um i think i didn't sell a single apartment for less than six hundred dollars a night for the taylor swift concert yeah i made a lot of vegas uh no so in the cities that i met in pittsburgh and philly and detroit those are three cities that she came to every single apartment minimum six hundred dollars for the entire weekend jeez i think she was making like a million a day or something yeah so i was i was making a lot of money because that could be an interesting strategy go go after cities where like artists perform out yeah but because you can't rely just on that because those things are really dynamic you

can change at any time yeah so those are nice to have it happens once in a while but can't really rely on it i feel that do you stick with like the same cities for them for the most part no so i try to expand uh where i can but i've actually changed my strategy this year last year my goal was to expand horizontally and get into you know multiple different markets but realize it's not really the way to go i want to expand more vertically because if i'm expanding vertically my economies of scale actually get a lot better and actually actually hire housekeepers and cleaning staff for a lot lower, therefore increasing my overall net margins. That makes sense. Yeah, because then you could just use the same team rather. Yeah, there's no point of getting 20, 30 apartments in 10 different cities. Get 100 apartments in three different cities. You'll make a lot more money and make

way more profit. Your margin is going to be a lot better. Yeah. So you care mainly about the cash flow, not the equity, right? Correct. Yeah. There's no equity in this business whatsoever. The only equity you really have is the actual business itself, is the business sellable after a certain amount of EBITDA that you're making per year. Yeah.

It is to bigger arbitrage companies, to private equity. You just, you have to be past a certain point for them to even be interested. Yeah. That point is around, I'd say 500 plus units.

For the 500 plus units, if your goal is to sell, then you can sell the business if you want. Yeah, is that a goal for you or no? Honestly, I have no idea. Either I scale to 1,000 units and if your goal is to sell then you can sell the business if you want yeah is that a goal for you or no honestly i have no idea either i scaled with thousand units and sell or sustain and make it a lifestyle business yeah because i feel like i mean how many hours are you actually putting into this a week now i'd say probably three four hours a week that's it yeah damn yeah i mean you could just make 10 20 million a year off three to four hours a week

right so and that's the goal right so we'll see really where life takes me. As of right now, I'm just trying to get to a thousand. Yeah. So what's this Airbnb bust? I see people are quitting Airbnb. So almost every single news outlet in the media, you're going to basically hear Airbnb bust almost everywhere. And it is true.

And I'll give you some context behind it. So the old days, two years ago in Airbnb, you could go rent any apartment, put anything in inside of it, ugly pictures, price it randomly. You'll make a lot of money. Because so many people have been talking about Airbnb arbitrage specifically in social media,

right, in the news, and how lucrative the business model it is, markets got saturated. What happens now is you have a huge amount of supply and demand cannot keep up. The only people that are actually going to make any money are the top 20% of hosts. They're probably going to attract 80% of all the revenue.

So you have to be an exceptional host nowadays. You can't just put in random furniture, and you're going to make money. Your design has to be on point. Your pictures have to be on point. Your reviews, very important, have to be on point. You have to be a super host. Your pricing strategy, your revenue management has to be on point. The quality of your unit has to be on point your reviews very important have to be on point you have to be a super host your pricing strategy your revenue management has to be on point the quality of your unit has to be on point

the amenities you have free parking do you have a gym do you have a pool all these things matter now and those are the hosts that are actually making most of the money so are you one of those yeah yeah that makes sense the reviews for me are super important like if it's not like a four or five or above i literally won't say that even four anything below 4.8 is considered bad really four eight damn that's tough because with restaurants i feel like it's it's people are more strict right right like for me like restaurants like if you're below a four i won't eat there yeah for abnb uh you can't even be a super host unless you're a 4.8 or above wow that is insane um when it comes to the furnishing, did you have to learn all that on your own

or did you just outsource it? No, you can really outsource it. So originally when I first started, my wife helped me a lot with furnishing the apartments, designing everything. And now we started scaling and it got really hectic and really busy. Just hired basically VAs overseas,

full-time as interior designers. They're just as good as American interior designers for one tenth of the cost. And they basically do the entire design aspect for me now wow and they do it remote you do it fully remote all i need to send them is a 2d floor map yeah some pictures and some video and they'll create a beautiful 3d rendering of the exact measurements exact dimensions of the exact design that you like that is impressive man and then who actually like goes and puts all the furniture there

furniture builders uh people from task, teams on the ground. So it's the current city they're already in. They already have teams that handle the entire thing. From the moment the furniture arrives to the moment the listing gets listed on Airbnb, pictures set up and everything. For a brand new city, then we have to basically go there, find a team, build a team, and start from scratch. Yeah, that's cool. And you mentioned you started this off credit mainly, right?

Business credit helped a lot, yeah. So credit cards? Yeah cards yeah so business credit cards all 0% APR so I have never paid a dollar on interest I can't so my goal was to basically just use business credit cards at 0% APR so should the chase freedom chase ink the amex blue all the usual 0% APR cards I just ran them up like crazy. Dude, I just got 200K in those. Oh yeah, which one? Amex Blue, Chase Inc. gave me 50. Nice, nice. US Bank, Bank of America had like four of them. Umqua Bank, have you heard of that one?

No. Yeah, Umqua Bank. Some guy held me out. But yeah, dude, it was like 200K for 0% for a year. Yeah, that's amazing. That's literally the best. That's free money that you can use to expand your APN business, not worry about having to pay it back until a year. Yeah, that's amazing. That's literally the best. That's free money that you can use to expand your Airbnb business, not worry about having to pay it back until a year later. Yeah, no, I'm a huge fan. And I mean, you see guys like Dave Ramsey, like hate on taking on

debt and stuff. But I feel like with that method, it's very low risk. Correct. Like Dave Ramsey hates the fact that you're paying 25% interest on credit cards, which I agree you shouldn't pay at all. But if you're not paying anything and you're paying zero percent for the next year it's a no-brainer why wouldn't you especially if you could put in a cash flow because then you could just make that money and keep the difference yep yeah so um do you do this mainly is there any other investments you have that's pretty much it man honestly uh when i first uh when i was working on n5 i tried many different things i was on crypto uh stocks etc didn't really you know nothing really stuck i lost about half a million dollars in crypto damn yeah well i

didn't i didn't put in half a million i put in about 10 000 into an altcoin called harmony one i've heard that one yeah it went skyrocket like crazy and this time i was growing the business working the job and you know i my count at the peak went to almost half a million i think it was 485 000 half a million uh in value and my whole family screaming at me saying sell sell sell my wife saying sell change our lives and obviously you know when you see that happening you see the sky rocket happening you don't think about selling no because you think it's gonna go to a million two weeks later and greed got to me right and didn't sell and when bitcoin fell from 60 something k and it crashed every altcoin just basically just dropped like crazy and it went down to like 20 and greed got to me right and didn't sell and when bitcoin fell from 60 something k

and it crashed every altcoin just basically just dropped like crazy and it went down to like 20 grand same bro i had over 10 million in crypto and i was like i'm gonna ride this to 100 like it was going up like six figures a day every day every day you wake up yeah and i'm like wow now it's worth like one or two million i never sold it so that was a huge learning lesson next bull run i am not doing that. I'm honestly not really investing any money in crypto anymore. I'm not investing any money in stocks, not nothing. I just put whatever the minimum amount I have to put into my SEP IRA.

That's pretty much it. Besides that, dude, every dollar I make, every dollar I make goes right back into the business. Because for me, it's increasing my overall monthly income, my monthly cash flow. I'm starting to feel older now, man, because I'm looking into bonds. I'm like, damn, I'm playing it safe now. This is weird.

The biggest return on investment is you, yourself, right? Your business. So if I can spend that money on my business and returns hundreds of thousands of dollars every single month in net profit, for me, it's a vehicle that I can keep using. Do I want to buy buildings later in the future? Yeah, for sure.

I'll eventually get there. I can't get a mortgage, so I have to buy everything in cash. It's a lot harder for me to do that, right? Can't go buy a $10 million building with 10% down. So for me, I have to have $10 million in liquid cash to go buy that building. So I'll eventually do it someday, but right now the goal is just keep doing the business

to 1,000 units. Are you keeping an eye on the value of the US dollar? No, not really. I mean, it's a little concerning i mean with depreciation and like they're just printing so much people are and with bricks coming but i don't know i'm kind of finding ways to hedge against it but with real estate i guess that's a bet too yeah like you know with things going up in inflation obviously housing prices are going to go up too but at the same time interest rates are also going up so it's a give or take right in my

business i'm okay with interest rates going up because landlords are hurting a lot more so you can't really sit on vacant apartments that much you need to get them rented out uh when interest rates are low uh it's for me it's like it's the opposite right like i i prefer when landlords are hurting i prefer when multifamily is hurting that's when i basically get the best deals wow interest rates are low access to capital is a lot cheaper too so it always helps to have a lot of cash laying around for times like this. You're in a good spot, man. Most people in real estate got wrecked if they didn't have a backup fund or anything

and all their money was in the house. They had to sell at a loss or they can't even afford payments right now. Are you doing anything with foreclosures and stuff? No, nothing. You're just buying new apartments? Yeah, renting. I'm just strictly focused on the business. I don't do anything else besides it. No, nothing. Nothing? Nothing. So you're just buying new apartments? Yeah, well, renting, yeah. Renting, yeah.

Yeah, I'm just strictly focused on the business, man. That's pretty much it. I don't really do anything else besides it. Wow. Is there any apartments that just someone threw a party or something? Oh, yeah, dude. So, for example, in cities like Detroit or Philly, you're going to run into that issue a lot. A lot of big players and big companies tried starting in Philadelphia,

but they left after a year, six months. Buildings all kicked them out because they couldn't handle the clientele. They couldn't handle the people coming in from North Philly, from Jersey,

from Camden, from Trenton. They would throw crazy parties. So you learn your lessons and you learn from your mistakes and you build systems in place to prevent that from happening. So any single time

anyone books on Airbnb through any platform whatsoever, they have to send a picture of their ID with a selfie then they go through a background check then we actually approved them we have verbiage in all of our listings to prevent those people from even booking in the first place so yeah for me i literally don't even remember the last time i had a party being maybe a year and a half ago um but that's really the only is basically the only way to survive in this business to prevent that from happening yeah because if they're having a 100 person party they're gonna mess up the apartment and cause damage but you can charge

them for that right correct yeah you can charge them okay it's not a total loss i'm sure if they break something airbnb will cover it right air cover is great they cover literally everything nice is there any other apps or you just on airbnb uh primarily on airbnb like you know a lot of people like verbo and booking.com but i just prefer airbnb mainly because air cover anything happens you're covered basically for everything. They have the best policy in terms of payouts. Are you trying to increase the number of beds in the apartments? Yeah, so that is something that I am doing that I have noticed

that you will make more money with the more amount of people you sleep. The problem with apartment buildings is that a lot of them have occupancy limits. You can't sleep more than four people. Some of my landlords are really strict on it. Some of them don't care. They say, do whatever you want. Just don't tell me about it. So those are the ones where I try to fit

as many beds as possible. Sleep, you know, eight people in a two-bedroom, 10 people in a two-bedroom. Those ones make the most money. You fit 10 in a two-bedroom? You do, yeah. Bunk beds, sofa beds.

Just throw a bunch of beds in there. And those are landlords that are cool with it. They don't really care. That is savage, man. 10 people in a two-bedroom. I miss days man broke sleeping on the on the couch yeah and for me but i make a lot more money that way because now 10 people can split that price of a two-bedroom i can charge a lot a lot higher premium yeah what are you working on now other than scaling this

that's pretty much it man i've been scaling this i started uh so i started uh social media about a year and a half ago i've been trying to scale my social media up now uh that's going pretty well uh and that's pretty much it just growing my student base uh and just docking my journey to a thousand units yeah that's the biggest thing right now yeah youtube's really well man you have a lot of informative videos yeah yeah i'd say you're probably one of my favorite airbnb people on youtube oh thank you because a lot of them like teach it but they're not on the real business so that's why i started uh basically so i didn't know what any of this whole course guru stuff was up until two years ago i had no idea whatsoever i just thought everything was a scam and then as i'm doing the business i'm on social media and i'm seeing these people talk about airbnb

selling courses on airbnb and i'm like these guys don't have a real business i find all their properties they have like three apartments you know they're talking about the information information so elementary like what are they talking about so i'm like all right let me just and at that time i was docking my journey about like 10 11k followers on instagram post on instagram and say hey guys i'm gonna do a 700 master class tell you guys everything you need to know about airbnb send me sell me a thousand bucks if you want to learn i'm going to dubai in four days for vacation uh and i told myself i gotta get four people to sign up that pay for my plane tickets yeah my wife and i i had 28 people send me a thousand dollars that same hour it's made 28 grand just

like that all right perfect uh very next day seven hours straight do it then i put some instagram story guys i have the recording available for 800 bucks seven hours long 35 people paid 800 bucks right away i'm like i just made 60 grand in two days what the heck then i realized all right people actually want to learn from someone who actually runs the actual business who has a real business but actually doing the thing he's selling that he's talking about let me actually dive into it so my first year on online social media course sales i think i did about maybe i'd say about a million holy crap a million year yeah and that's like and this is all just me posting on my instagram story like i have no systems i didn't know what a closure was i don't know what setters

are i don't know what ads are literally just me walking around docking my life so if you guys are interested click the link in the bio that's it literally nothing else second year i learned a little bit more about the guru space the core space and started hiring a team uh with fulfillment and just build that entire systems and processes for that business. So this year, I think I finished off about 3 million in core sales. Amazing. And the margins in InfoSpace are amazing. Yeah. So my margins are about, well, now that you add a bunch of people on the infrastructure, I think my margins this year are about 75%.

Yeah. That's super high. Two and a half. Yeah. Two million plus in the total net cash flow. That's incredible, man. How many people are you coaching right now um so three different packages obviously you know well not only have two one is just a regular program that just revamped completely for 2024 because everybody's changed so much it's the last time i recorded my course uh and the second one is my mentorship that was 20 grand more people actually buy the 20 grand one to root me one-on-one rather than the 5k one wow there's a lot more perks you get a lot more help with me individually yeah so yeah and just in general like i just basically trying to figure out what way that can deliver value to my students and what ways

everything is changing that way i can make sure everyone's you know making as much money as possible and it's cool because you're actually doing it live i actually have students come fly out and shout at me for a week well i'm literally building 30 apartments out in a brand new city and people are just watching me and like they're shadowing me and doing everything these are my furniture builders how we're furnishing departments so that's the thing people really want to see a lot of people in space can't do that they don't have a real business they're fake it's all it's all a bunch of fake gurus they talk about it sit in front of the camera with their mics and yeah video cameras and talk they don't have a real business you're just speaking bs but i love that yeah that

type of stuff where you're hands-on you can't read in a book and you're actually seeing it with your own eyes you're there in person i mean there's not many people teaching like that yeah like that's that's incredible especially people in the airbnb space because like you said you see their videos they have like five properties and it's like you're not i feel like you're not at the level yet where you could teach no zero i'd say you need to be at least 100. Yeah, around there, yeah. That's a good number. That's when I started, actually. 100 is literally when I started, yeah.

Yeah, because then you're doing, what, seven, eight figures. You've got a real business. Yeah, with 100 units, doing about 3,000 a month. The 100 units should be doing about 300,000 a month. You're doing about 3 million a year.

Yeah, that's solid. You said you've got 50 units coming up, activating in the next three weeks? I think I have like 100 starting in the next three weeks. Is that all one building? No, multiple different cities. Damn, how are you sourcing these? So a lot of it, honestly,

so before originally, I had a system of VAs that would scour Zillow.com and just hit up every single building, property management company, landlord, using my scripts. And that's pretty much how I scaled all the way to 300. The last 100 units that I got and the next 100 units i'm getting even maybe the next two 300 are all basically from connections because a lot of these landlords have buddies they have friends one of the buildings that i'm in in dallas he actually has a friend who owns a building in ohio that has

you know 40 50 units vacant and he's like hey they're playing golf one day or whatever it is i have a guy who has you know 50 with me. Let me give you his number. And that's how we got connected. Another one was I had a building in Pittsburgh. The same owner has a friend in Philly. I came to meet with him and have 50 apartments starting with him next month as well. So a lot of it now is word of mouth and connections

and just talking to these landlords and seeing what other projects you're working on, what other friends you have, what other landlords could you recommend to me. Yeah, I really like this model because other than the furniture costs and maybe staff, there's really not much investment, right? Yeah. That's pretty much it. Yeah. And you're not getting to those numbers until you have some money coming in anyway. So

you're really not risking your own money. Yeah. When you're starting out, your margins are actually really, really high because you don't really have a lot of staff, right? So it's pretty much you and you can hire some VAs for 500 bucks a month and that's pretty much it. Your margin should be around 40 somethingsomething percent, 45%. So mine were when I first started. Then, of course, as you scale the business over time, your margins do decrease, but you're making more money. Because you have to build the infrastructure

to support 400, 500 units. Yeah, 40 is really high for Airbnb. Yeah, and that's when you first start out. So my margins right now this year, I think, was at 25%. My goal for 2024 is to continue leaning down operations and finding inefficiencies plugging in any holes increase that margin to 35 yeah because this year if i don't like after the 500 units i'll should do about 20 million in revenue at 35 percent now margin that's seven million dollars and take home net income that's amazing so and you're in texas

so no state income tax right i am in texas correct no state income tax, right? I am in Texas, correct. No state income tax. But it's tough to pay, you know, the other federal taxes. Oh, yeah. That one, I'm still looking for ways with that one. I'm actually starting a charity this year. Literally, dude, you have two options. And I've explored this very, very deeply. One is go buy real estate, right? Go get a big mortgage, do some cost segregation.

Yeah. And you basically will pay, you know, almost nothing in taxes. I can't do that. So literally my only other option is to figure out creative ways that involve me not living in the United States. I'm not an American citizen, right? Puerto Rico. I'm Canadian.

No. So I was basically thinking about moving to Dubai and getting a Dubai citizenship and getting that investor visa. And that's pretty much the only way where I don't have to pay anything in taxes. Wow. Problem is I have to be in the United States

for less than 120 days in a year. I really can't do that. I don't know. I'm thinking about ways. I'm figuring it out. I'm actually going to Dubai in two weeks. I have some meetings there. Figure out ways.

What can I do with all this money? Park it offshore somehow. Or just basically, what can I do in terms of living? Where can I live in certain parts of the year and certain parts in another part of the country? Just to basically offset my taxes. Because I can't do cost segregation, can't go buy $10 million buildings

and have a lot of income, so I have to basically decrease that. Yeah, that's what Kiyosaki does, right? Yeah. Yeah, you get to the point where you're sacrificing your freedom a bit. So this year on $10 million in income, so $10 million in revenue,

let's say total income out, let's say it was $2 million something, I only paid about $250,000 in total taxes. Wow. So a big thing you can do with arbitrage is you can prepay a rent. Let's say my monthly rent

is $500,000 a month, right? On December the 25th, I can prepay two months of rent. I can prepay a million dollars of rent. And that entire million dollars, I can basically write off

for this year. That is cool. That is really cool. That's one big thing that basically everything in the industry does is prepay a lot of rent. Yeah, and you could do that in business too.

My accountant just told me you could prepay vendors. Right. So last week, I just prepaid like 300 grand. Yep. To save money, which was crazy. It's part of the game, man. Well, great episode. Where can people find you?

You guys can find me on Instagram at Humzazafar. My YouTube is also Humzazafar. And my TikTok is HumsazafarBNB. Love it, man. Thanks for coming on. Thanks for watching. We'll see you tomorrow.