The Science of Flipping - How To Own An Airbnb Property Without Using Your Own Money in 2022 with Cody Sperber

Starting point is 00:00:00 Oh, now, there we go. All right, are you ready? One, two, three. All right. All right, dude. Well, thank you very much for joining me here on the Science of Living podcast. We are in your studio. We are right here in your office.

Starting point is 00:00:16 And I flew all the way out to Miami just to give you a bro hug when I walked out this podcast. I love that. Partially, partially true. But you and I are actually speaking at the Scandal and Escape event here coming up for our boy, Kent Clothier. And if you guys don't know who this young gentleman is right here, this is the clever investor himself, Mr. Cody Sperber, a good buddy of mine. Dude, I appreciate you being here. Yeah, dude. No, love your podcast. Appreciate being here. Yeah. And love talking and teaching people to have some financial literacy.

Starting point is 00:00:46 I think that's the game right now. Dude, you got to get into the real estate business so you can get out of business. Just get out of all of it. And we were talking, you know, so here's the deal. Let me give you a little, let me gas this guy up for everybody. Been doing this for almost 20 years, wholesaling, flipping, buying rentals. You've been educating for a decade or so i would argue one of the top investors one of the top educators out there

Starting point is 00:01:10 for the last 10 plus years going into 20 as an investor and so when this guy talks i want you guys to really pay attention because him and i were growing out for the past hour or so about a subject i'm super passionate about so we are totally scratching the game plan and we're going to go into this subject right and so it is about air's and I think and I know that that is the future of where my business is gonna be Heading yeah, you're already, you know seven months so much a year ahead of me and you're going aggressive And so I want them to know what you're doing how you're doing it Why that model makes more sense than flipping developing wholesaling? Yeah, and I will tell you this you this, before everyone gets scared and says, oh, I'm broke, I'm just starting, you don't need your own cash for any of it.

Starting point is 00:01:50 Flipping, developing, Airbnbs. Between myself or Cody, we could show you how to raise capital, where to find the right money resources. But let's dive into what you're doing, bro. This is exciting. I love what you're doing with Airbnbs. Yeah, it's a great rent multiplier. Yeah. When you really just look at it, I mean, who doesn't want to own a hotel? It's just everybody, you know, it's like, what a cool business. And it's the ultimate luxury real estate investor lifestyle business, because let's imagine that you have this

Starting point is 00:02:19 portfolio of regular Airbnbs. That's just a cashflow play. And for me, I'm going to buy 100 more this year, just in Phoenix. Yeah. Okay. And these are all 300 and to $500,000 houses. These rent really, really well on Airbnb. They're very affordable for people. They make on average, you know, six to 8,000 a month. Crazy. Right. So it's like normal rent on a house like that would be like two grand a month, maybe, maybe twenty five hundred three. But this is like six, seven, eight consistently. And in every Airbnb, when we do our analysis, we only expect it to be rented 60 percent of the time. Really? Now, on average, we're getting about 80, you know, 75 to 80 percent occupancy rates.

Starting point is 00:03:06 If you market it right, good pictures and really put it out on all the good websites and you have good reviews and it gets easier over time. Like the first year you get the portfolio going, it's a little tougher. You don't you don't have reviews. Yeah, you're getting the systems going. But once you get reviews, it's just like the occupancy rate goes up and things start cranking. Let me ask you two quick questions, because I know I want to know and then I know everyone's going to want to know. How are you analyzing it? Are you using a product that I have now found called AirDNA? I think that's a way.

Starting point is 00:03:35 Yeah, that's a way. I also have expert team members that are helping with this. In the market. And we'll get to that. I think management is a conversation. That's right. Right. And so but what I'm what I was getting at is imagine you have this portfolio of like regular houses that are Airbnb in. Right. But then every once in a while you bought a luxury one. Maybe the first year you only buy one or none. And then the second year you buy one. And then

Starting point is 00:04:00 the third year you buy four. And then the next year you buy eight. And I'm talking about like one, two, $3 million houses in primo locations around the world. We're now six, seven years from now, you put in all this work, raising money and buying, renovating, furnishing, managing, theming, doing all this stuff. But six, seven years from now, you're free and you're not like sort of free. You get to go to your own properties and all these best locations. And think about how many favors people are going to owe you when you're like, just stay at one of my spots. I have a hundred of them. Pick whatever you want. Oh, it's your birthday. You're a high powered individual. I'm trying to break into your circle. Why don't you stay at my Hawaii villa? Right now, all of a sudden you got a little weight to push around. And so I have a friend named Steven Petoskey out of Canada. He was the first one to build

Starting point is 00:04:48 a really massive luxury Airbnb portfolio. He has over 53 million dollar houses. Dang. And this is his side hustle business. This isn't even his main business. Him and a bunch of Canadians pitched in money. They bought the first one. They all said, wow, that was a great experience. Let's do it again. And it started making money. And these things, they way more than pay for themselves. So the business model is for us, I don't do Airbnb arbitrage. Some people teach arbitrage where it's like you rent a spot and then you re-Airbnb it. That's right. Right. I'm not doing that because I want to own the real estate. That's right. Right? I'm not doing that because I want to own the real estate.

Starting point is 00:05:25 That's right. So do I. I'm trying to build wealth. I want the tax benefits. I want the control. I want all of it. I mean, at the end of the day, the reason why we're doing this podcast is I want people to realize the transactional business is beautiful. But that's not the – it's a means to an end.

Starting point is 00:05:39 The end being the wealth. Controlling real estate. Being able to bring in income. Have depreciation. Have tax write-offs. That's how the rich become richer. And then to find the loopholes that make it even more beneficial, like flooring, I just found out. Right? I didn't even know that.

Starting point is 00:05:54 You can write off flooring. That's right. So I would encourage all of you, if you are going to get into the space of Airbnb, own the real estate. Don't do the arbitrage thing. It works. I know people that do it. Own the real estate. Own the real estate. Own the real estate.

Starting point is 00:06:05 And here's what's cool. You might be sitting there thinking like, I don't have money to go buy an Airbnb or buy a rental property. My mentor used to always tell me, Cody, you're never going to have a money problem in this business. You only have a creativity problem. And for me, when I think about when we started getting an Airbnb, I'm like, how do I raise enough capital to build this portfolio without having to come out of pocket with my own cash?

Starting point is 00:06:29 Right. And so luxury, it's really easy. It's actually easier the more expensive the property is. For me, my luxury model is real simple. I'll go to a guy like you that I know has a bunch of dough. And I'm like, listen, Justin, I need 300 to 350, maybe $400,000 of your cash, but I'm going to give it all back to you within a year. Okay. So you're going to give me 350. I'm going to go buy a house in old town Scottsdale for 650, 700,000. I'm going to tear it down. I'm going to use your money to get into a hard money construction loan.

Starting point is 00:07:05 Eight months, I'm going to build a place, right? And then I'm going to theme it. I'm going to furnish it. I'm going to Airbnb it. I'm going to refi it. It's called a Burr BNB. That's it. I'm going to Burr BNB this bad boy.

Starting point is 00:07:18 And at the time of the refinance, because of the way I do my, I get pretty creative on the HUD using repair credits and other things, that I'm able to get the comp to go way up here. So by the time it's built, I might be all in at 1.6, but it appraises for 2 million, 2.1. And at an 80-20 loan, I have a lender that does basically, I forget what he calls it, like DCR, DRSC loans or something. It's basically asset-based lending for businesses, long-term financing. So he does a 30-year, four and a quarter percent rate in-term refi out of the construction loan into this long-term financing at four and a quarter, 80-20. No kidding. So I'm leaving 20% trapped in the deal, but I forced the equity up by building a new house

Starting point is 00:08:11 versus buying an old one and just remodeling it and turning it into an Airbnb. If you tear it down, build a new one, you're all in at 516. It's worth two to two one. I refinance. I'm handing you your cash back. But now I'm saying, dude, I'm going to leave you in the deal. You're now risk-free. I put in the work. I earned my spot in the partnership. I'm going to own, in this make-believe example, I might say I'll own 70%. You own 30. We're now kind of partners. You get the write-off. You get the depreciation. You get all that. But you also get 30% of all the cash flow this bad boy spits off. By the way, do you want to do another one?

Starting point is 00:08:48 You're going to be like, yeah, I'm in. So the luxury is actually a little easier. The cheaper ones, you don't really want partners in the cheaper ones. So we just went out and we started putting out the words that we'll pay 10%, 11%, 12%, up to 18%. We didn't care. Just lines of credit. It's just all math. Just like anything else in the long-term wealth building game, the rentals are just math.

Starting point is 00:09:13 What is it going to... For me, the 14 rental properties that I bought this year, I wanted the 1% rent ratio and I wanted it to be 75% of ARV, all in. The obvious reasons are what you just said. A lender will take 75% out so I can take ARV, all in, right? And the obvious reasons are what you just said. A lender will take 75% out,

Starting point is 00:09:26 so I can take as much, all my cash out as I can, as long as I'm not overdoing the rehab, and then I get my 1% rent ratio. That's the long-term, slower wealth building play. I like this model because of actual income like out of the gate, right? Like this is, like you're saying. And with my luxury ones,

Starting point is 00:09:45 Justin, I literally do nothing. I have, I pay somebody, they take, there's, I got them down to 15%, but it's industry standards, 25, 20 to 25% for somebody to come in and property manage it for you. They handle all the guests turnover. They handle all the cleaning, they handle the repairs, they handle the listings, the pictures, all of it. And all I do is sit back and collect checks. And at luxury, that number works because these things are all renting for $750 to $2,000 or $3,000 a night. That's correct. Right? So it's like big cash flow. I'll give out 20% of it. No problem. That's right. But they manage and do everything. All the listings are on point and all my reviews are on point. Yeah.

Starting point is 00:10:28 Luxury, I hand off to somebody else. Yeah. Non-luxury, I manage it all internally. Do you on the... And we use Guesty. Guesty on management? It's like a guest communication tool. It does a bunch of different things, but it's a little bit expensive.

Starting point is 00:10:45 Um, there's another one. I'll, uh, here, let me just throw out another one. This one's actually pretty good. Have you heard of the Casa for VA Casa or whatever? Yeah, of course. So I'm super excited about this for the, what we were just discussing is, um, the actual income and wealth and depreciation that you get on the onset so if you guys are out there and you guys are wholesalers what i would tell you is you need to be finding individuals like myself sperber and anyone else that's looking to buy this type of rental i would go and research these right this is where air dna came to mind is you go get an account of air dna i think it's like 20 a month and you go get an account of AirDNA, I think it's like $20 a month, and you go look at all the other properties that are Airbnbs and contact those people,

Starting point is 00:11:30 such as Cody, or when I get my first one, it'll be me, and say, hey, do you want another one? As a wholesaler, you need to be knowing this model so that you can sell it to me or to Sperber. You want to know how to think about these properties in the same way now most people don't understand what cody understands which is he could scrape the property and then build up he'd be able to pay more than i'd be able to pay so if i wasn't going to do that i wouldn't be able to pay as much as him because he's creating so much more on the back end of it he'll get the value to two to one where i might have to be stuck at one six right because he's building you'd leave Because he's building. And you'd leave money trapped in the deal. And I'd leave money trapped in the deal and I'd probably buy too low because I was scared of leaving money trapped in the deal.

Starting point is 00:12:11 I might not get the deal and Sperber will get that deal all day. So you have to think like us if you're going to be a good wholesaler and then transition out of the wholesale space, keep your checks coming in, so you can start buying these type of models. And Cody just says, he raises money, I raise money, I have private money, literally sitting on the side right now, they're saying, I have money, Justin, just let us know when you wanna borrow and whatever. Raising money is all about your network, right?

Starting point is 00:12:38 And the more you're in those networks, and you're more, you know, you have a Clever Summit coming up, right, in April, so excited to announce that, we can talk about that and make sure people are going to the clever summit it's right no it's in vegas vegas yeah vegas yeah um by the way april 22nd 23rd and 24th if you want to come hang with some of the biggest mentors speakers trainers in the world uh it's a wealth building conference. It's all about making your money grow, making your money cash flow, multiply, and making your money meta. And what I mean by that is the world's changing.

Starting point is 00:13:13 Wayne Gretzky has a great quote about, you know, a good hockey player skates to where the puck is. A great hockey player skates to where it's going. Where's the world shifting to right now? I mean, Facebook changed its name to Meta for a reason. The Metaverse is this whole wild frontier full of... Dad, bro, I talk a lot about this. Dude, it's crazy. You know, my business partner's cousin was the first one to flip a virtual property for 2.4 million. He bought it for 18,000. So in the real world, you can't do that. You can't, you can't flip a virtual piece of real

Starting point is 00:13:51 estate. You can't flip a real piece of real estate that fast for 18 grand for 2.4. No, it doesn't happen. But in the metaverse, it does. And, and we haven't even, we're not even at the ground floor. We're, we're somewhere in the basement still with this opportunity. So people that are catching on now that is like spending hours researching what is an NFT? What is a metaverse? How many metaverses are there? Why is this one different than this one different than this one? And once I started going down that rabbit hole, I was like, oh my God, this is the coolest opportunity of our generation that we will ever see. Because big brands are spending billions and billions of dollars to get into this thing.

Starting point is 00:14:31 Because when Apple comes out with their glasses and Facebook and Oculus start evolving to the next generation of their stuff, people's meetings, their vacations, their shopping sprees, how they get their groceries. Like we're at iteration like 0.5 of like, okay, I'm going to door dash something. Well, imagine if you just put your goggles on and every restaurant you've ever wanted was like all around you. And you were like, okay, I'll go there. And you're at the restaurant and you click some buttons and it magically shows up at your door, but you're doing it in the metaverse. It's crazy. Kids playing video games right now. It, it takes a full generation, but they're all training right now to be the most gangster players in the metaverse. Yep. The only thing I'll say about that is the people in the

Starting point is 00:15:17 metaverse are sitting on a couch in a real piece of property. Oh, there's no doubt that real real estate. I'll never give up the real real estate. As much as I'm a crypto investor as much as I'm in a meta. I don't know, enthusiast because I haven't bought my first property there yet. There's always going to be a couch and needs to be sat on to be living in the meta. Right. So for me, I'm always going long term rental in this Airbnb play. Right. Because people are always also going to travel. Yeah, you're going to want experiences. And the other, and just because I'm flopping, my brain's all ADD right now, but I talked about Guesty.

Starting point is 00:15:52 Hospitable is another one for guest management. You start putting VAs with these software tools and your whole business model is raise money, buy an Airbnb, get the team to rehab it, furnish it. I have people that will come in. We're shopping on, like, furniture auction websites. Oh, yeah. Buying cheap furniture.

Starting point is 00:16:14 Really nice, cheap furniture. Getting it shipped out to us. We have a crew of two people go and put it up. I pay them $1,500 per setup for a regular house. They do everything. They mount the TVs. They, they put the way that is the fact that you're doing that is smart. Cause I just bought my home in Miami. I'm still waiting still. It's been five months on a couch, a dining table, dining chairs, just shop in, in the auction sites, my furniture from mine. I know it's different,

Starting point is 00:16:42 but, but you're, I'm able to buy three beds all at one time. I'm able to buy five mattresses all at one time, four nightstands, sets of nightstands all at one time. Yeah. And, uh, we got some,

Starting point is 00:16:53 you know, it's pretty easy with Airbnbs. Once you have a checklist of like, here's the, um, uh, uh, silverware we buy.

Starting point is 00:17:01 Here's the toaster we buy. Here's a, you're just buying. That's it. You're just buying procedures. Every every single house you have these things and you just you're buying them that's it I love that dude so I would say this because people we could go in depth just drop my mic again you're welcome we're not starting over because we could probably go in depth on exact structure numbers strategy the easiest thing I

Starting point is 00:17:29 think is you're going to get a lot of questions why don't we point them to your social and you can take questions on your social yeah yeah I mean or wherever you want to point I think I think they should come to clever summit because I'm bringing TJ to Johnny there he's awesome Airbnb expert I'm going to be talking about some Airbnb stuff that we're doing. We're going to be talking a lot about the Metaverse shit that we're into.

Starting point is 00:17:49 So hit me on any communication. I will make sure you guys can get to Clever Summit one way or another. Cody and I just talked about how we can get everyone over there

Starting point is 00:17:57 and fill that bad boy up. Yeah. I'm going to be there. It's going to be incredible. I mean, the people that you already have slated is just going to be... Yeah.

Starting point is 00:18:04 It's going to be crazy. Yeah, it's... The lineup already have slated is just going to be. Yeah. It's going to be crazy. Yeah. It's the lineups always. I mean, we'll have 1500 people there. The lineups always ridiculous. It's in Vegas. I got some cool, fun surprises for the attendees. Yeah.

Starting point is 00:18:16 They're going to love it. Yeah. It's going to be wild. It's, you know, here's the only thing that matters, though, is you are learning about these different ways of creating wealth. You've got to make money and make it quickly. Yeah. Invest it as aggressively as you can, right? And the challenge is most people get stuck making money, and the second they get it, they're like, oh, man, I deserve a nice new car.

Starting point is 00:18:43 I deserve a vacation. I deserve an opportunity to just relax and chill for a little bit. And I see so many young people get a little bit of success, make that first hundred K, make that first 200, 300 K. And they go and buy the, the nice watch and they start balling out a little bit. And then everybody on social is like, yo, you're dope. You're awesome. Oh, that's your new Range Rover. That's sick. And they get this reinforced feedback loop and it puts them off on this tangent and they lose their edge. The best people in this real estate game know how to keep themselves in a painful place, even when they don't have to be there. And when you can control your spending emotions

Starting point is 00:19:26 and just shift it to investing, you're going to win this game. Six, seven, eight, nine, 10 years from now, you're free, dude. You're free. I fucked it all up. I went the wrong direction. I dominated as a wholesaler.

Starting point is 00:19:39 I was one of the first biggest guys in Arizona to really scale a wholesale business using technology. First one to use email marketing. First one to use text message marketing. First one in the world to use ringless voicemail marketing in the real estate game. I was smashing it, making millions and blowing it all. I was buying my friend's shit. I was buying friendships by buying my friend's shit. I was blowing it on cars and lifestyle and I just kept moving on up. And you know what I didn't do?

Starting point is 00:20:08 I didn't pay my taxes. What I didn't do is invest. And the second I got sick or the second I got tired or the second I stopped, everything just went off a cliff. And it sucked. And my mentor just kept smacking me.

Starting point is 00:20:21 Sperber, you're fucking this up. You gotta stay in pocket. He drove this piece of crap car. I'm driving around something nice. And he's like, dude, you'll see. He had wisdom. And I thought I was young gunner. What do you know?

Starting point is 00:20:35 I make money like it's a faucet. I just turn it on and off. He has wisdom that comes from experience. He also had like $30 million in his self-directed Roth and never sweated about a single thing in his entire life and paid zero in taxes. Yeah, that's right. Made it all, kept it all, and lived under the radar.

Starting point is 00:20:52 Nobody knew he existed. I think there's a bridge, though, and we can go on a different topic, but I think there's a bridge between doing what you and I both did and young in the game in our 20s and 30s, spend all the money you're making, versus where we're at now. I'm 40 or 40. 43. Three, right?

Starting point is 00:21:08 I think our mindset is different. So I think there's a bridge between being the asshole that spends all the money you make and then just being a hoarder. It's simple. It's simple. It's simple. I want a Lamborghini, okay?

Starting point is 00:21:20 That Lamborghini cost me five grand a month and 30 grand down to get into a Lamborghini lease. That's right. It's not very expensive to get in a Lamborghini in the bigger picture. Correct. It's about five grand a month to carry the lease because you don't buy a Lamborghini. You lease, you corporate lease a Lamborghini. Yeah.

Starting point is 00:21:36 And you put 20, 30, 40 grand down to get into it. Sometimes if it's your first one, you might have to put 60, 70 down. You earn that money from wholesaling and rehabbing houses, right? So you now have this bucket of cash. I go buy the Lamborghini. Unless I'm putting that Lamborghini in ads like Cody Sperber and I'm using it as a marketing tool to raise money or other things. If you're just using it to stunt, that's the dumbest thing you can do. Instead, flip it. Don't use your earned income to buy the Lamborghini. Take that 40 grand, 60 grand, 80 grand in the five grand a month and go buy a fourplex, turn it into four Airbnbs, rent them each for $350 a night

Starting point is 00:22:12 because they're all cute little one bedroom studios themed out. And now you do that four times. You get 16 doors all pumping cash out that more than pays for your five grand a month Lamborghini. That's right. your five grand a month Lamborghini. That's right. And now you deserve the Lamborghini. That's right. It's just a shift. How do I get it?

Starting point is 00:22:30 My assets got to pay for it. If I use my earned income, you're an idiot. Yeah. And that's what my mentor kept telling me. And I was like, whatever. I just make money like it's no big deal. And at 44, I would be 15 times ahead of where I am right now if I were to listen to him. Because I made tens of millions of dollars and lived a great lifestyle did

Starting point is 00:22:50 not buy as many assets as I should have this year was the first year I did it right so we have a very similar story I just now know what I didn't know when I was 30 I figured you can always do that so now I started well dude I appreciate you being on this podcast brother great seeing you i look forward to speaking with you down in san diego um if you guys are interested in coming to the clever summit yeah uh reach out to either cody or myself you can comment anywhere uh this is on youtube this is on instagram this is on itunes spotify every platform you possibly can think of if you're not watching this you need to watch it because we're in a dope ass studio right here at the clever investors office so um make sure you're

Starting point is 00:23:28 over at the youtube channel subscribe and i'll see you i'll give you the link for clever summit you can put in the description done i'll have a link for you in every single description for you guys to be at clever summit later guys boom boom

The Science of Flipping - How To Own An Airbnb Property Without Using Your Own Money in 2022 with Cody Sperber

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