Having become a millionaire in his twenties through residential real estate investing, Brain was on the fast track to being on top of the real estate game. That changed a little when he got into building homes, it didn’t work out as well. Brian got into short term rentals to turn things back around and now has the #1 selling Airbnb training out. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
Best Ever Tweet:
“Partner with the owner of a property and list their house on Airbnb” – Brian Page
Brian Page Real Estate Background:
- Became a millionaire in his 20’s as a residential real estate investor, only to lose it all in the historic crash of 2008
- Created a training called the BNB Formula, which is now the world’s best selling Airbnb training
- Based in Charleston, SC
- Say hi to him at https://www.bnbformula.com/
- Best Ever Book: Outwitting The Devil
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TRANSCRIPTION
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Brian Page. How are you doing, Brian?
Brian Page: I am great. Good to be here, buddy.
Joe Fairless: Well, I’m looking forward to our conversation. A little bit about Brian – he became a millionaire in his 20’s as a residential real estate investor, lost it all in 2008, and then created a training called BNB Formula, which is now the best-selling Airbnb training out there. Based in Charleston, South Carolina. With that being said, Brian, do you wanna give the best ever listeners a little bit more about your background and your current focus?
Brian Page: Sure. I have been a real estate investor for many years; ever since I graduated from college, I started flipping homes. That was the first thing that I did. I flipped a little over 100 properties, and did some wholesale deals, and multifamily, and you name it, I’ve probably done it. That was my main business for many years, up until the big crash around ’07-’08. That was where everything kind of came to a grinding halt. I had a huge portfolio of properties that I lost and were foreclosed on, and I had to find a way to start over… So somehow I backed into this idea of using other people’s properties and putting them on Airbnb. That led me down this road, and that’s what I do in addition to getting back into real estate investing.
Joe Fairless: A couple takeaways from losing it all are what…?
Brian Page: A couple takeaways… Well, don’t over-leverage. It’s not a good idea to leverage yourself, and it’s also —
Joe Fairless: How do you quantify that?
Brian Page: Well, for me – I had very little equity in my properties. I had a big portfolio of properties, but very little equity.
Joe Fairless: About how many properties did you have?
Brian Page: At the time I had 23 units, I believe it was…
Joe Fairless: Okay.
Brian Page: But that wasn’t the problem. It wasn’t the rentals. It was — I got into speculative real estate construction, and high-end residential construction. That’s something that’s high risk. I built a multi-million dollar home on the beach in North Carolina, and I had condos being built, and all these things… And when the market turned, of course, the first part of the market that got crushed was vacation properties.
So I would say that had I just stayed with my rentals and flipping business, I probably would have been okay… But I got too big for my britches and got into development and construction. So I would say be very careful if you’re getting into speculative real estate.
Joe Fairless: Okay. Noted on that front. It’s interesting that the high-end spec homes that you described – you mentioned they were more vacation homes… And now here we are with Airbnb, and your BNB Formula. You’re still focusing on the vacation customer, but you’re taking a different approach. Do you own the properties that you’re doing the Airbnbs with?
Brian Page: I don’t, but let me go back to the first thing you said – actually, vacation rentals and Airbnb are not the same thing. It’s a very small minority of people on Airbnb that are traveling for vacation.
Joe Fairless: Okay.
Brian Page: That’s more VRBO, Vacation Rental By Owner. Airbnb is a whole other subset, and we can get into that. But what I did is I started leasing properties, and I got written permission from the owners to list them on Airbnb. I did that over and over and over again, across a whole bunch of units, and that’s how I started making a whole bunch of money with Airbnb. Now I’m back into acquiring. I am buying properties and renovating them, and turning them into Airbnbs… But my primary business and what I teach is how to use someone else’s properties to do this.
A lot of your listeners, of course, are real estate investors, a lot of people listening right now… And that’s great; if you own property, you can do this. But the vast majority of people that go through my training have no real estate background whatsoever, so I encourage them to lease.
Joe Fairless: Okay. And will you educate me a little bit more on Airbnb most of them not being vacation people?
Brian Page: Well, Airbnb is similar to the hospitality industry as a whole, if you look at hotels, motels in the hospitality industry, most people that are staying at hotels are not staying there because they’re on vacation, they’re staying just because they need a short-term place to stay. They might be traveling, they might be coming into an area, but not necessarily on vacation.
There’s all kinds of reasons people travel. They could travel because they’re relocating and they need a place to live for a few weeks, they could be going to an event in a particular city, for example in cities with big convention centers… That’s actually how Airbnb started in San Francisco – it was near a convention center. People travel to go to visit colleges, they travel because they’re on business, they’re going to a town for a couple days… There’s all kinds of reasons people travel, and it’s generally not vacations.
We’ve seen it time and time again, that people are successful doing what I teach in the most random places that are not at all tourist destinations… And I know that for a fact, because some of my students are in towns of under 10,000 people I’ve never even heard of, and they’re doing really well.
Joe Fairless: So the primary model is getting permission from landlords to use their property as an Airbnb, so you’re basically subletting it on a short-term basis, right?
Brian Page: Well, there’s two models. The first model is leasing it, where you control the property for (let’s say) 12 months, and then you relist it on Airbnb. And let’s say it’s a $1,000 rental. You’re gonna make somewhere between 2k and 3k on average on that unit. After you pay for utilities and your rent…
Joe Fairless: Per month.
Brian Page: Yeah, per month, you could be making 1k, 1,5k, or even more. Now, that’s on a cheaper 1k rental. So that’s one model. The other model is where you partner with the owner. So you approach and owner and say “Hey, you’re asking 1k for your unit. What if I get you $1,300 for your unit, or even more? I propose that you let me list it on Airbnb, and we will split everything we make, all the profit, and I’ll guarantee you your first $1,000, so at least you make that… And we’ll do month-to-month. And if you don’t like the arrangement, at any point I’ll take a hike and you can go back to running it long-term.”
I basically teach people how to pitch these owners… Because I was an owner for many years; I had a lot of properties, and I had to think about what the objections are and how to overcome those objections, and why people might wanna consider doing this versus long-term rentals.
Joe Fairless: And I’ve interviewed some people who do this on the show, and one thing I’ve found surprising, but it made sense once they explained it, is the property is actually taken care of better with short-term rentals than long-term…
Brian Page: Yes, that shocks people.
Joe Fairless: Yeah, it shocked me whenever I heard it. Then this person explained it and I was like “Yeah, it does make sense.” Can you just elaborate quickly on that point?
Brian Page: Yeah. Well, one of the biggest objections I got meeting with dozens of not over 100 owners face-to-face was “Hey, Brian, it’s a cool idea, but it’s too much wear and tear on the property. And I don’t know who’s coming and going, all these people dragging their luggage in and out of the property… I just don’t like the idea.”
So I used to play this little game with the owners; I said, “Okay, I wanna play a quick game with you… It’s called Tenants vs. Guests.” I’m gonna make a statement. I just want you to think of whether this is more likely to happen with a tenant, or with a guest.” And I said “Okay, I’m gonna speak from personal experience here (I’m talking to the owner). Somebody paints the bedroom pink without permission. Is that gonna happen with a tenant or guest? Somebody leaves their car on blocks in the driveway. Somebody’s dog digs holes all over the yard and destroys it over the course of a year. Is that gonna happen with a guest? Well, no, because my guests don’t have pets, for example. Somebody’s ex-boyfriend or ex-girlfriend shows up at 2 in the morning and kicks the front door in. Somebody puts a satellite dish on the roof.” You can go on and on and on.
So all these nightmares that happen are with tenants, and I’ve had a lot of nightmare tenants. But with guests, it’s a different mentality, it’s a different psychology. Guests don’t treat the property like it’s theirs. They don’t say “This is my property. You can’t come in here and–” They look at it like they’re a guest; they’re there for 2 nights, one night, 3 nights, and then they’re gone. So the respect level is completely different than it is with tenants. You don’t see the wear and tear. And then additionally, the cleaning company is coming in every couple days and cleaning that place to be immaculate; because if my place is not immaculate, I’m gonna get bad reviews, nobody’s gonna book the place on Airbnb…
So my owners are always really shocked when they come in in month 4 or 5 and they look at the property, and they’re like “This thing is in the best shape I’ve ever seen it. This thing is immaculate.” I’m like “Yeah, that’s what I do.” So they’re very, very happy… And then owners all the time are like “Hey dude, I’ve got some other units that are becoming vacant soon. Do you wanna take those, too?” So that’s kind of how it works.
Joe Fairless: Yeah, it makes sense after it’s explained… But I imagine 90% of those conversations that question is asked and you have to change the perception of the owner…
Brian Page: Yeah, you’ve gotta educate them, you really do. And one of the biggest objections is “What about liability? What if somebody slips and falls, and sues me, and all this stuff?” The cool thing is there’s an entire insurance industry that sprung up around short-term rentals. For very little money you can get not only a liability policy to cover you if anybody gets sued, but you can also get a policy that’s specifically designed for short-term rentals… And I like to just pay for the policy myself. So I tell the owner “Look, not only am I gonna take excellent care of your property, I’m going to insure it. And on top of that, Airbnb has a one million dollar guarantee.
So you’ve got that, you’ve got the insurance that I’m paying for, you’ve got your own insurance… So your property is insured three different ways. When was the last time a tenant offered to insure your property?” So they’re like “Okay, I get what you’re saying here.” So I overcome all those objections with reasonable arguments.
Joe Fairless: Would you say you make more money relative to the risk when you work with a landlord, versus when you own your own property and do it?
Brian Page: Well, that all depends on how you quantify risk. Somebody that’s brand new to real estate, has never been a real estate investor, I strongly recommend they don’t rush out and buy a property and put it on Airbnb, because they don’t really know the right locations to purchase in, and all that kind of stuff. An experienced real estate investor – of course, buy property, because you’re gonna build wealth, you’re gonna build equity; why not own the property. But the ROI on the small investment you’re gonna get doing a lease is just unbelievable… Because you’re talking first month’s rent, and deposit, and maybe some furnishings if it’s not already furnished. So for $5,000 you can get a property.
It’s like, if I said to you “How many properties would you buy if they only cost 5k/piece?” Because once you get into it, the cashflow is yours. And the cashflow is way more than if you just do a long-term tenant and you own the property. So I look at it like, hey, every 5k I pop down, or even if it’s 10k, I know that that’s gonna generate 10k, 20k, 30k/year in net cashflow. And I don’t know any other thing in real estate where you can have that kind of ROI on a very small investment.
Joe Fairless: Let’s talk about an Airbnb that’s gone wrong.
Brian Page: [laughs] Hey, actually that’s a good question. I’ve never been asked that, strangely enough… Because you do hear about horror stories. I’ve never had a horror story. I’ve had some very messy guests… Luckily, I’m not cleaning the property, so that really just — the cleaning company is like “Oh, boy.” And they charged me a little extra to clean those. And I’ve never really heard any real horror stories from my students, other than messy guests.
Occasionally there’s small things that are damaged, but what I tell people do to is you can charge people a deposit – so Airbnb will do a hold on their credit card. It could be $100, it could be $500, whatever amount you want. That money is not taken off the card unless you make a claim. But the cool thing is you can make a claim up to a couple weeks after they leave. So if somebody breaks something, I can make a claim, saying “Hey look, I need 50 bucks”, and Airbnb will then ask me for proof and then they’ll release that money.
So you can do a deposit to cover that kind of stuff. And like I said, you wanna be insured for these kinds of things. You wanna do the business properly.
So does it happen? Yeah, I’m sure it happens. Does it happen at the rate that tenants destroy properties? I don’t think it’s anywhere even close in that neighborhood. And you’ve gotta remember, every guest that comes through Airbnb has already uploaded their identification… So I have a license or a passport of every individual. Their credit card has already been uploaded, they’ve already paid in advance for their stay, before they even show up at your property, because that’s what Airbnb does… So all these things – it’s not like you’re just taking a stranger off the street. And not only that, you can see the reviews. So I can say no to anybody that doesn’t have good reviews on Airbnb.
There’s a lot of safeguards there, which prevents a lot of the riff-raff and people that are gonna disrespect the property from getting in there. So I’m not saying it can’t happen, I’m just saying it’s extremely, extremely rare.
Joe Fairless: When you take a look at the political climate in certain areas being against Airbnb, especially in the North-East and on the West Coast, what do you do as an investor who relies on Airbnb for your cashflow?
Brian Page: Okay, that’s a great question, and I’ve been asked this many times… So there were a couple years there where I was teaching this where I didn’t really know what to tell people, because they would say “Well, I don’t think it’s allowed where I live” or “I don’t know what the regulations are here” or “It’s definitely not allowed.” So I didn’t know how to really handle that, because I don’t know of every city and every town… So what I decided to do was I hired a research firm, and we paid a lot of money to do a study over the course of several months… And what we did is we essentially looked at every single town and city in the U.S. over 30k in population. And just so you know, that’s 2,000 cities. And we put them in a spreadsheet and we basically categorized then. We quantified whether short-term rentals were allowed, banned or not. And what we’ve found is really interesting. We’ve found that 92% of towns and cities do allow home sharing, and 8% don’t. So 9 out of 10 places you can do this.
Now, the ones that say no are usually the bigger cities, usually cities where the hotel industry is very powerful. We’re talking San Francisco, New York, Atlanta proper… These kinds of places. But what was interesting was as I started researching these cities, I found out that I had many students in all of those cities that were doing well, that have results, and I was like “How are you guys doing this?” So I reached out, “Are you guys breaking the rules, or what are you doing?” And some of them were; some of them were doing it despite the rules… But most of them were just “Hey Brian, I just drive to the next town over, where it’s not regulated, not restricted, and that’s where I do my Airbnbs.” And I was like “Ohh, okay.”
So I started looking into this and I found people in Atlanta for example wouldn’t do Airbnbs downtown, but they would do it in any of the ten other towns that make up that metro area. So I just tell people “Look, any kind of real estate is location-specific. So if you’re gonna open a Laundromat, you can’t do that in a residential neighborhood. You’ve gotta go where it’s zoned. And you can’t live in a Laundromat, you’ve gotta go to the residential.” So it’s the same thing – you’ve gotta go where it’s allowed. And for most people, that’s within a 20-30 minute drive of where they live, or it could be in their backyard if it’s an unrestricted town. Essentially, anywhere that you live in the U.S. you could do it, especially if you’re willing to just go where the opportunity is.
Joe Fairless: What’s something that we haven’t talked about, that we should?
Brian Page: Hm. Well, one of the questions that I get a lot from people is they doubt that owners would be willing to do this… And they say “Why in the world would an owner not just do this themselves?” And it’s a good question. There’s many reasons why they wouldn’t do it themselves, but I can just tell you over all the years of doing this I’ve never had an owner that said “Hey Brian, that’s a great idea. I’m gonna go do that right now myself.” They just don’t do that… Because you’ve gotta put yourself in the shoes of the owners.
I am an owner of properties, and many people listening are probably landlords… Most of us just want the least amount of hassle possible. We wanna get our rent, and we wanna make sure our property is gonna be maintained and taken care of. That’s all we care about. We do not wanna get in, start another business, or handle guests coming and going… And it sounds like a lot of work, and it can be a lot of work if you don’t have a system. So I’ve never really had that be an issue. I’ve never had owners just say they’re gonna do it.
So it’s really just a matter of “Hey, do you wanna rent to me, or do you wanna rent to some other random long-term person?” And if I can convince them that I’m the best choice, they’re going to lease it to me. That’s a huge opportunity, to be able to set up those properties. So that’s one of the questions I get a lot…
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Brian Page: Let’s do it!
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:16:41].08] to [00:17:17].23]
Joe Fairless: Alright, best ever book you’ve recently read.
Brian Page: Oh, man… I’ve just finished a book yesterday, and I read a lot of books. It was amazing; it’s by Napoleon Hill… It’s not the one you’re thinking of probably top of mind; it’s called Outwitting the Devil.
Joe Fairless: Really… With Sharon?
Brian Page: Unbelievable. Sharon Lechter… It was unpublished for 70 years. I didn’t know it came out in 2011, but that book rocked my world, and I shared it with other people and they said it’s changed their lives… So I can’t recommend that strongly enough.
Joe Fairless: It’s crazy… I love Three Feet From Gold; I think Sharon participated in that one. I can’t remember… I did not like Outwitting the Devil at all; it came highly recommended to me by someone, and… I just didn’t — I just wasn’t feeling it. But so many people said they love it, so Best Ever listeners, don’t listen to me…
Brian Page: Okay, there’s parts of the book that are slow. The first 2-3 chapters – you’ve gotta burrow through those. But once you get into the meat of it, it is so good.
Joe Fairless: Huh. Well, agree to disagree on that.
Brian Page: [laughs]
Joe Fairless: What’s the Best Ever deal you’ve done?
Brian Page: Best Ever deal I’ve done… In real estate?
Joe Fairless: Yup.
Brian Page: Okay. So in real estate I would say I bought a fourplex that was fire-damaged. It was pretty huge… It was like a 3,500 sqft. building. There was a little tiny sign out front, and I approached the guy who I saw coming out the front door… I said “Hey, how much for this thing?” and he said “Thirty grand.” I said “Holy crap.” Thirty grand for four units; big, big building. And I knew that I could get $800/unit.
I bought it for thirty grand, I ended up fixing up those units… I don’t remember what I put into it. It was quite a bit of money to fix everything up. But I ended up flipping it and I think I made 130k on that deal. So that was really one of my most profitable deals ever. I probably should have kept it… I now like to acquire and not flip/sell… But that was probably my best deal.
Joe Fairless: What’s a mistake you’ve made in real estate that we haven’t talked about already?
Brian Page: A mistake that I’ve made in real estate… Huh.
Joe Fairless: Or maybe thinking about a particular transaction, just something that “Hey, I missed this, but I won’t miss it again”, something like that.
Brian Page: Yeah. I sometimes will pull the trigger really quick on junk properties, and not do a thorough inspection… But I’ve had a couple of those times where it’s backfired on me. But not enough to make it unprofitable deal.
For example, I just got a house a few weeks ago, and I drove up — I was the first person to respond. It was a wholesaler – I’m on his email list – he’d sent out this deal… I dropped everything I was doing, rushed over to the house… I was the first person to arrive. And when I got there, there must have been five other pick-up trucks that pulled up right after me…
So I got on the phone with the guy, couldn’t get in the house, I was peeking through the windows… I just said “Look, I’m gonna pay you exactly what you are asking on this house, but you have to promise me you’re gonna sell it to me right now. I don’t wanna get in a bidding war with all the people that are about to look at this house.” And he said “Deal.” So I just bought it.
Today I went over there and looked at it… It needs some work, but nothing too major… So I sometimes roll the dice like that and it works out, but I knew that my numbers were good enough that even if there was something majorly wrong with it, it was still gonna be a good deal.
Joe Fairless: Best ever way the Best Ever listeners can get in touch with you?
Brian Page: Sure. Well, if they wanna learn my strategies of how I’m doing this and how I’m making money with other people’s properties, and how I do Airbnb, and most importantly how to scale it to 6-7 figures a year, then you’re gonna wanna check out my free training. Just go to thefreetraining.com.
Joe Fairless: Brian, thanks so much for being on the show, talking about how to pitch owners about these opportunities to partner up or lease out their properties and make the spread above whatever you’re paying them with that partnership or that lease, as well as talking about some things to keep in mind if we are gonna do this liability insurance, then clarifying some Airbnb stuff that perhaps they’re amiss about certain perceptions, like what I was mentioning with the short-term rentals being much cleaner and more well taken care of than longer term…
So thanks for being on the show. I hope you have a Best Ever day, and we’ll talk to you again soon.
Brian Page: Thanks, Joe. I appreciate it.
