The Science of Flipping - Airbnb Arbitrage Explained feat. Dr. Chau Bnb

Episode Date: September 21, 2022

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right and i would tell anyone out there if you are just getting started in the space of real estate investing look for the path of least resistance you don't need to go out there and buy the home i mean dr chow is saying the best way you can is control the property and make the active All right, what's up, everybody? Welcome back to the Science of Flipping podcast. I am your host, Justin Colby. Today's a very special episode as I have an incredible real estate investor here, Mr. Chow, Airbnb champion. What is up, brother? What's up? Hey, everybody. Dr. Chow, BNB over here. How's everybody doing? All right. Well, dude, I'm very excited to have you on. And as always, I start every podcast with our main sponsor, MinutePages. If you're a real estate investor and you don't have an online presence, you need to have MinutePages for $97 a month.

Go to MinutePages.com. Have credibility, influence, and authority. I promise you, Dr. Chow is also going to agree. Everybody's online. Make sure you have that, MinutePages.com. So Dr. Chow, I'm jumping right into this. My audience loves real estate, but they even love creative structuring of real estate even more. And you have built an incredible portfolio of Airbnb rentals and corporate housing without having to buy these things. I think there's a lot of my audience that probably thinks you have to go out and buy these homes and renovate these homes and furnish these homes and do all this stuff. So let's dive in with what you've been able to build here, because I even believe it is just,

it's just so impressive to be able to use this arbitrage model and build what you've built. So why don't we take a shot at it from here yeah absolutely can i go over my story a little bit like 30 seconds 100 awesome so i grew up in a poor country came over here as an immigrant with nothing uh stay in one bed with my mom and dad me and my sister all four of us literally sleep in one bed in a tiny one bedroom apartment for years i try to learn english along the way. So we thought a way to get our financial freedom is to go to school, become a doctor, get the MBA and all of that flashy stuff. Right. Which I did. It took me years, a ton of sacrifices and everything. Once I got out, I graduated. You know, I thought on top of the world, I got a white coat. I'm going to make my mom proud, take care of them, retire them forever, living the American dream, driving a beautiful Tesla, leaving a big house, blah, blah, blah.

So I turned out more like the American nightmare, man. You know, I mean, I was I was frustrated. I didn't have the time freedom that I can. I was I feel I was trapped like a corporate slave, like a jumping monkey. They tell me jump. I see how high, right? And then on top of that, my mom was diagnosed with cancer at the time. So I was like, what the hell am I going to do, man? I don't know how much time she has.

So I've got to make some move fast, right? So basically, from then, I started my entrepreneur. Well, my entrepreneur journey started a long time ago but I never had any luck with it like I try like e-commerce I try online offline I try to do some real estate flipping uh became a realtor as well try to do some multi-family but the thing is that these things need either a lot of time or a lot of money which i did not have at the time because i was a mountain high in debt you see so and i didn't have the time either because i was working overtime too to try to uh you know pay off my loans and stuff like that so i was like

what is an opportunity where it doesn't take a lot of money and it doesn't take a lot of time so i went to a lot of conferences, right? Travel around the world trying to figure it out. I met somebody that gave me the epiphany is that I don't have to actually own the property in order to make money from it. It's called leveraging OPP, other people properties. Everybody talking about leveraging other people money, other people time, but not a lot of people talking about leveraging other people's money, other people's time, but not a lot of people talking about leveraging other people's properties, right? So light bulb went off, right? Now, at the time, I was only had a few rental, a few Airbnb's, but I owned those rental.

It took me a long time to acquire them, you see. So for each rental, it took me like years and like borrow money and all of that, right? Rehabbing and making rents ready and all of that. And then we ran into somebody and then they trashed the place and had to rehab again. So how many can you relate, right? Yeah. So anyway, so from then I was like light bulbs.

Okay, so I'm going to do that. And so fast forward a year, I was got scaled to 20 Airbnb's, you know, got my financial freedom, retired when I was only 32, 33. And then, you know, rest history, take care of my mom and retire them, buy them the big house, all of that. It was an amazing experience.

Then I ran into the problem of running 20 Airbnbs vacation rental. How many in here has vacation rental, right? How many are sick and tired of dealing with vacation, you know, pot here has vacation rental, right? How many are sick and tired of dealing with vacation, you know, potheads and drunks, right? So I had to deal with all of that. It's always a party, man. It's once a year, you know? So I was like, heck with that. I'm going to do corporate housing. I rent out to companies. So companies, they stay longer, an average of three, four months instead of three, four nights. So it cut down my time, my energy about 10 times the work. Secondly, they don't

party because they don't want to lose their job, right? They want to have their job. So, and thirdly is that these companies has funds. So they're willing to pay, they pay well, and they pay on time. I want my money on time, right, Dr. Chow? Yes, sir. Yep. So yeah, man. So it's been amazing right now.

I have a coaching mastermind program. I teach people all over the nation for it. I have over 150 members in our mastermind and we are crushing it. I love that, dude. So let's dive into some of the nitty gritty about how this works, right? To your point, I think the vast majority of people out there think you have to buy it. You have to remodel it. You have to manage it. You have to, you know, you need all this money to do these things. So talk to us about like, let's start with where do you even find these type of properties that you would use for your corporate Airbnb model? Yeah, absolutely.

So finding these properties is, okay, so the three H's. I'm going to give you a little, a secret, you know, that I don't really normally share, but I know your audience like the tactical stuff. So right now, three H's, h's hospitals hotels and highways okay you want to look at actually the highways for us where two highway intersect that's where the money is the government has already figured out the most traffic where they are so we just gotta flow with the big guys right and then uh during where two highway, you know, there's a four piece of the pie. Right. Why are those pieces of the pie? The hospitals and the hotels like to hang out, whatever reason. Right. The other side of the track. So and right is now you follow the whales.

You're going to get fat. OK, we are small fish. Just follow the whales. You're going to get get fat so just follow them if they if they already done their research their multi-billion dollar company they put a hundred million dollar down build hospital 10 million dollar build hotel don't you think they've done their research why do we need to do more right so those are the best ones so you can uh check those boxes off and of, airports is great. Corporation headquarter, corporate headquarter. I guess that's the fourth H is the headquarters, right?

So if all those things checks off, you have a 90% chance it's going to work out great. The three H's and now a fourth H, absolutely. So, and then tell people a little bit more about what is, I think a lot of people understand arbitrage, but kind of define that for everyone and why you like that model better than what someone would say, well, no, you want to own the real estate. That's the whole key is owning the real estate, which there's people that would make that argument.

So talk about that model a little bit for us. Yeah. Yeah. So I'm all about owning real estate, guys. However, I was trying to get my financial freedom and I was going to the multifamily conferences. I don't have $2 million to put down. In order for you to make 100K a year, you need about $2.5 million in either real estate

or stocks or whatever, right? To actually make you a different. So unless you have $2.5 million, how long will it take for you to save $2.5 million? For me, it was never, okay? Or at least 30 years. I didn't want to finance. So if you don't have financial freedom and you're stuck, you're not making at least 10 to 20K a month almost passive income, I would highly recommend leverage somebody else's properties, make that money, and then go back and buy as many properties as you want. So now we're getting into multifamily syndications now because I have the funds to do it and the time to do it, right? So that's what I would focus on first is get your financial freedom. Yeah. So I would tend to agree with you a hundred percent. And while I have more long-term rentals, I would tell you the reason why I coach the way I coach

is there's active income, then there's wealth building. Right. And until you can kind of, you can do them both at the same time, you can wholesale and flip, which is active income and wholesaling doesn't take money, right? It's the arbitrage of you line up the seller with the buyer. And I would tell anyone out there, if you are just getting started in the space of real estate investing, look for the path of least resistance. Don't need to go out there and buy the home. I mean, Dr. Chow is saying the best way you can is control the property and make the active income. You don't need to go out there and buy the home. I mean, Dr. Chow is saying the best way you can is control the property and make the active income. You don't have the tax write-offs by owning real estate, blah, blah, blah, but it's the path into the door. From there, as your income gets to a place of start buying the homes, right? I think, Dr. Chow, you said you have what,

20 in arbitrage and roughly 10 that you own give or take yes yes i mean that's the model right now dr chow has the best of both worlds and i would tell anyone the same thing right go for the path of least resistance what is one or two things that you want to talk to the people about your model that you want to maybe highlight here on the show yeah absolutely yeah thank you for that so uh for this model is fast money. Okay. There you go. I really want to make money slow in it. Not many.

I never get it right. I want to make money fast, man. Fast money is real, man. You know, we don't have much time. The biggest thing is that we don't want to waste time because time is not renewable. It's the only resource that and renewable and nobody know how much we have okay and even if you are young you don't know how much time your mama have so let's take care of it okay that's it so fast money f-a-s-t f is to find a location like i shared with you a to acquire the property sublet it whatever right acquire the. The S is to set up to stand out. The T, you want to tap into the corporate housing, okay? So those are the four-step proprietary system that I created and we can dive into it in my free class and other classes, but we don't have time to do that right now. But the main thing is, guys, you want want to make money fast you want to leverage other people's properties and that is how you can do it fast does airbnb own any properties no no is it the biggest hospitality company in the world yeah the hilton the hilton took 100 years

to build what airbnb took 10 years to build and it kicked the hilton out of the water right so it's all about leverage leverage the number one key to success and it's kicked the Hilton out of the water. Right. So it's all about leverage. Leverage is the number one key to success. And I love what you're sharing earlier is the path of least resistant. Exactly. Why choose the hard road guys? You know, for me too, you know, pick the path of least resistant and make some money now or write us down money now, money monthly, and then money later. Okay. So it's okay if you are working a job and trading money now, so you can have money monthly, I'll be charged. Right. And then you invest in buying your own

property money later. You got it. So you want to be all three men. Yeah. No, I love what you're saying, brother. I'm totally on. I'm right in alignment with you. I would say one thing i think people of the audience would be asking if they had the chance right this second is what would you say like why would someone do this why would a homeowner i should say why would a homeowner allow you dr chow or any of the listeners why would they allow you to do this? Great question. So if you are a homeowner and you're doing a long-term tenant, right? Let me ask you this. Let me roll it later real quick.

Hey, Justin, how are you doing? Good. How are you? Awesome. I love the property, my friend. I think it is an amazing property. I love everything about it. So here's what I do.

We're actually a corporate housing provider. We have a nationwide network over 100 members and we want to rent your property one thing is we're gonna clean it every few months you don't have to worry about that professionally clean secondly any maintenance under 200 justin i'm just gonna pay for it i'm not even gonna call you okay how would you like for me to not call you about stupid small shit like that right would love it yeah and number three is we are dealing with corporations companies professionals so we will have the funds we pay on time we set up automatic payment and we take care of the property man let me ask you this does any of your applicants right now offer you these

these things that i offer you none of them exactly so why what you say man yeah let's i mean it's easy you show them the value here are the value i've corporate you know i do corporate housing i have you know 100 corporations that i work with that obviously need short-term housing i'm gonna pay 200 for all the knickknack little nonsense i mean you just show all the value and say you can have that or you can have a 12-month lease with someone who's going to pay $200 for all the knickknack little nonsense. I mean, you just show all the value and say, you can have that or you can have a 12 month lease with someone who's going to smoke and has dogs and probably is going to be a frat party on the weekends and whatever else. What do you want to do?

And then you obviously you're indifferent enough to say, hey, pick whatever one you want. And if it's not me, that's OK. I got to move on to go find more housing for the corporations. Exactly. Yeah. I mean, we're looking for many more multiple homes in the area. Right.

So if yours probably qualify, we'd love to do multiple homes with you. Right. I love what you said there. You said properly qualify. Right. So now you're spinning it. Yeah. And making them qualify for you versus, you know, you qualifying for them.

Right. That is a total sales ninja tactic that you went, you know, most people are like, Hey, can I rent your place? Right. You just spun it saying you need to qualify for this program. I have the hundred corporations that need to place, know people executives in their in the property so if you qualify then let's move forward but you may not qualify i love it yeah exactly and we're gonna do all the above for you and then i pull out of the ace car if they hesitate and i really like it how about i pay you 200 above market rent i mean come on does anybody offer you any of this no that's right well yeah and because i mean listen airbnb is so seductive or vrbo or any vacation rentals because you can make way more than your long-term rental right typically by the way this is not always the case sometimes people make bad

purchases but typically you could two three four five x what a long term would be yeah so for you to be able to say listen i'm gonna hold this as my little ace card it's brilliant you could two, three, four, five X what a long-term would be. So for you to be able to say, listen, I'm going to hold this as my little ACE card is brilliant. You know, $200 more a month than what a long-term rental will get as someone who owns rentals. If you came to me with that, I have to at least entertain it. I have to really look at that and be like, you know, cause it comes down to me, a rental short-term, long-term, whatever it comes down to a P and L how profitable is this investment? Right. You give me a hundred or $200 more when I'm making, you know, $1,200 a month and now it's 14 or maybe even $1,500. That totally changes. Yeah. the long-term profit.

A hundred percent. What else would you like to leave, you know, as a highlight to the model? And, you know, obviously mention, you know, where they can find you. You have your logo right here, Dr. Chow B&B. Make sure you give them a follow. But what else do you want to kind of bring to the audience here on this episode? Yeah, absolutely. So you can follow me

at dr chow b and b d r c h a u b and b i'm on instagram tiktok everywhere and then you can go on to our beyond b and b secrets.com to opt in and we will give you a free gift we'll give you a pdf that has all more detail what we talk about. And I also do a live free class every Thursday at 7 p.m. Central, which is today actually. But you'll go on beyondbnbsecrets.com slash live. You can get a whole one hour free class and you can ask me any questions inside of a very small Zoom room as well. So you can have your questions answered. Besides that, you know, definitely reach out and see if we can schedule a time.

See if you qualify for our program. And then we can help you go from there. We have a lot of demand right now. Like now that series, I have over 250,000 followers. So we're qualifying our students to make sure it's the right fit for everybody uh with that being said guys don't like act now for your future whatever it is whether it's this business or something pick something that will that doesn't have a lot of risk right like it's called asymmetrical risk to reward very low risk super

high reward like this business. Secondly is you want something that doesn't require a lot of time. So this one is only take us just a few hours a week. It's not like, you know, 40, 50 hours. So that, and you know how to leverage it. So you can actually make the income and grow it from there. Okay. So, and then third thing is find a team and a mentor that you can hang on to that you jive with. And that will carry you through a tough time, carry you over all the hurdle. So that is how I was able to trade my frustration for peace,

right? I was able to trade my burnout for vitality because I have time. And I traded being trapped, to have absolute financial freedom now. Every single month, I hang out with a multi-billionaire now. So, you know, every single month. Literally, I was just with Grant Cardone. A month ago, it was Richard Branson. And then next week, I go see Russell Branson. So life is good, man.

Let's go. Yeah, I love it, dude. Well, I really appreciate you giving this. There's not a lot of people I would bring into my audience that could teach the exact principles of this, right? And so as a real estate investor myself, I think there's an avenue for everyone, right? And I think this is a great avenue, especially the path of least resistance. A lot of people don't know how to get into the short-term rental game. This is a great way to do it. So thank you very much for showing up, you know, showing out and just delivering for us here on the Science of Flipping Man. Yeah. Thank you for having me guys. God bless. Take care. All right.