John Bianchi - The Airbnb Data Guy
LISTEN TO THE FULL EPISODE ON:
In 2017, at just 24 years old, John sold a $10 million investment portfolio to start an Airbnb Arbitrage business. He quickly grew that to 15 cash-flowing properties in the Chicago area. Through doing that, he created processes to analyze Airbnb data to find highly profitable properties anywhere. Since then, he's been teaching people these processes and is known as "The Airbnb Data Guy". Listen to John share some of the top ways he finds the most profitable opportunities in a given area for short-term rentals and how to win before you even make your first short-term rental purchase.
In this episode, hosted by Mike Swenson, we discussed:
- Ways to have an Airbnb business without even owning the property
- The importance of determining profitability on a property before you purchase or lease for Airbnb usage
- There's a lot of opportunities out there, so run your analysis to understand the positives and negatives of each
- Managing properties (or co-hosting) is a great opportunity to get involved and to help people without putting up your own money
- Stay local when you're getting started
- Second home mortgage is a great way where you can maximize a lower down payment if it works for your situation
- Three Steps To Operating your own Airbnb:
- Figure out the Regulations
- Analyze the Data on your property and competing properties
- Set-up the day-to-day Operations
- Look for the top performing properties of a specific area to figure out how to model your property after them
Timestamps
0:00 - Intro to John’s Career
5:28 - Airbnb Arbitrage
9:38 - Getting Started
12:44 - Rules and Regulations
17:38 - Exit Strategy
18:38 - Next Steps
25:33 - Hospitality Focus
28:36 - Cash Flow
33:15 - Learning More About John
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Full transcript here:
Mike Swenson
Oh hello, everybody, welcome to another episode of The REL Freedom Podcast where we talk about building wealth and gaining time and financial freedom through opportunities in real estate. And so if you are a numbers person, if you are an analytics type person, and if you love short term rentals, this really is going to be a great episode for you.
Mike Swenson
So today, we've got John Bianchi on and we're going to talk all about data all about short term rentals, and what he's doing to help provide clarity to people to help make great investment decisions. And so just a little bit of a background about John, so he's living in Canada right now, back in 2017, you helped other people and sold a $10 million investment portfolio and started an Airbnb arbitrage business at the age of 24. So do the math there. We know how old you are. Within two years, you're managing 15 cash flow in Airbnb in Chicago. And so now that's moving into where you're at today, becoming known as the Airbnb data guy. And that's what you are and what you do.
Mike Swenson
So you talk about data. You're a numbers guy, you're an analytics guy. And so we're gonna dig into that today. So why don't you just go ahead and get us started and and just kind of share a little bit more about your background and how you got to where you're at today.
John Bianchi
Perfect. Thank you, Mike. Appreciate the introduction. I'm super excited to be on this podcast with you, by the way. So my background, it kind of bounces around a little bit. But I did have a $10 million investment portfolio as an advisor. So you know, that's that's spread out around like 200 different clients helping them with their retirement, which is a fun thing to do when you're, you know, 2223, and you're taking care of a six year olds retirement fund, right? Yeah. But yeah, so I was able to build that business up from 21 to 24.
John Bianchi
But realize that absolutely hated it. And so I was, I was actively looking for another business to build and came across Airbnb, and I, you know, opened up a couple was able to understand the operations behind it, then I was able to raise some money and go open up quite a few more. And when I say open up, I was renting the homes to start off. So I actually have never purchased property just for all your listeners to know that right off the bat, right. But I am planning on it. I will throw that out there. I'm actively working on it. But yeah, so I did the rental arbitrage model. And then I also had quite a few properties that I also managed for other people at the same time.
John Bianchi
Got that up to 15 locations. And then in 2020, when everything went to shit, I actually had somebody who also wanted to buy my entire portfolio like right at the exact same time. So I consider myself lucky because I was able to actually get out of the portfolio at a profit. But if I Hindsight is 2020, if I were to do it again, I probably would have just kept the portfolio figured out a way to make it through those, you know, like six months or so and then it would just kept going. But But yeah, so during that entire time period, one thing I did extremely well was understand the Airbnb data that was out there. So there's a site called err, DNA. It has all of the data, a ton of it is bad data, like 80% of it is bad data. And you really have to understand exactly like how to copy properties. Because copying properties in the Airbnb space is outrageously difficult. It's not like the long term rental space at all.
John Bianchi
Like the like, as an example, in Blue Ridge, Georgia, if you have a beautiful cabin with an absolutely stunning view, you'll make $50,000 more than if that exact same cabin were to be with no view. So a view makes $50,000 a year right. That's, that's insane to think but it's true. So helping people so anyways, I was able to figure out this process of how to actually sort through this data, I sold my portfolio and I'm like, I'm gonna maybe build a course to teach other people how to use this data. And so I did that and I had no idea how to sell it so I put on YouTube for free and it literally just like let it sit out there and was 10,000 people have gone through it now. But from that I had so many people reach out to me for like advice help whatever that I actually turned into a another business altogether called Point analytics where I help people with Airbnb so it's an Airbnb data consider sorry, Airbnb data.
John Bianchi
So I help people with everything be data and help them find the most profitable Airbnb in their location and ensure that their investment gets the most return the highest possible return, ensuring that they don't lose any money that's really like my whole thing is making sure you don't buy or sign a lease that is not going to be profitable because the vast majority of homes honestly are better off as long term rentals and short term rentals. So you got to be strategic and it's it's getting even harder with the new interest rates
Mike Swenson
just for people that maybe are newer to the short term rental space or haven't heard about it. Airbnb arbitrage I want to I want to just quickly touch on that for people that don't understand it. So Airbnb arbitrage arises essentially, you see an opportunity in the market, you've got somebody who's already owning a property, and you can come in and lease that property from them, and run an Airbnb business out of it, and make profit off of it without ever owning the property. And so it's finding the right person, and you're essentially that middleman, you don't have to buy it, you can make money off of it. And the landlord's happy, because they're getting their rent, you're happy because you're getting everything above and beyond that. And so that's where where you can benefit through Airbnb arbitrage.
John Bianchi
So Exactly, yeah, that's, that's what arbitrage is. And out of the three different options, which I can explain three options, arbitrage is without a doubt the worst option, however, it is the best first option, yes, this way to gain experience. So the reason it's the worst option is because you have to sign a lease, which means you're taking on that liability plus you have the utilities, the cleaning, the Netflix subscription, all the amenities like those are all liabilities, right? And you're not gaining any equity in that property. And it's really hard to sell one of those leases, I've done it, it's difficult, right? So there's held that like contract, because it's really just a lease. And you also have to put up like somewhere between five and $20,000, for the furniture, depending on the size of the units, right? So taking out a whole bunch of liability, and you got to upfront expenses as well. Investment, right.
John Bianchi
And so it's the worst option. Whereas if you compare that with managing, when you manage somebody else's property, they buy the furniture, you just manage it, you take, you know, 20% of all the revenue that comes through, and you have no upfront investment. And so you just like you're taking whatever comes through. So that's definitely a better option. But the third option of actually owning it is hands down the best without a doubt, because you actually gain, you know, net worth by inequity from that property. And you can have it long term, and you can do whatever you want with it. And there's a lot more control and options with that. So, yeah, just want to explain those three options real quick.
Mike Swenson
Well, and that's interesting for people to know, too, because there's a lot of buzz out there about short term rentals and Airbnb. And for people to understand, you know, especially people getting started, or people maybe who don't have access to money themselves, here's some low cost options to get started to get your feet wet to get comfortable. And yeah, you did a great job of laying out the kind of the positives and the negatives of each, but you don't have to, you know, buy you see these stories of people buying a million dollar property. It's like, Well, okay, if I'm going to put 20% down, I need to have $200,000. I don't have $200,000, therefore, I shouldn't start and the answer is no.
Mike Swenson
There's lots of opportunities to get started. You just have to understand the positives and the negatives each but like you said, managing is a great opportunity to get in, get comfortable, get your feet wet, you're helping other people and you're not putting up your own money.
Mike Swenson
And then the arbitrage piece, yeah, you're taking on some risk, you don't get to see the high side benefit of the the appreciation being able to sell that asset down the road to but then yeah, there's the purchase, which provides a lot of great opportunity for people.
John Bianchi
Yeah, 100%. And the road, I always tell people, so like, if you're wondering which option now should you should take, right? It's not a matter of like which one but it's a matter of all three at different times, right? So like, if you have absolutely no experience going up to somebody who has a home and saying like, hey, I'll manage this for you give me 20% of everything they're gonna go, you have no idea what you're doing, why would I trust you? Why am I going to do this, right. So that's why arbitrage is usually the one you do first, because it allows your you're paying to get that experience, right. The only other option is, is going up to somebody with a vacation rental saying, hey, I'll manage your property for free. Let me do it for free.
John Bianchi
So I can figure out their operations and then I'll you know, you're going to be able to get your next contract, because someone's gonna believe that you can actually do it because he has some proof, right. So, you know, those are the two sort of options to get started. But then once you're going, you know, management contracts you can pick up all day, but you should really only pick up the rental arbitrage contracts unless the data 100% says it's going to be a good cash flowing property for you. And it makes sense to put that investment in there. You know what I mean? And if you don't have that, like 1,000% confidence in it, pick up another management contract and wait for the next one to show up. And then while you're doing that, keep building up your reserves. And so you can start buying the properties and really building your net worth over years.
Mike Swenson
So for somebody looking to get started here looking to make to make their first purchase. I'm here in Minneapolis, St. Paul, Minnesota, and it's like, okay, I live in a community where it snows it's cold. We have some Lake cabin opportunities. I've heard stories of people in all different states. And so I think sometimes people can get a little bit paralyzed thinking about here's the entire United States or even the world maybe well and Canada, right? Yeah. So we've got a large swath of of opportunity here. How in the heck do I get started? How in the heck do I find a place that's going to work for me?
John Bianchi
Yep, easiest, super easy, especially if you're just getting started and you're not trying to spend a ton stay local. Like I can't stress that enough. Just find something local. Even if it doesn't make you a million dollars, you know what I mean? And it barely be like if you just are losing money on it, or if you're you're barely breaking even like whatever you You're like, Airbnb is so different, there are so many little operational nuances to an Airbnb. And to understand how those things work, there's a huge learning curve, if you're trying to get to figure out that learning curve, with a place that's five hours away, or even like on the other side of the country, it is going to be hell,
John Bianchi
I opened up two homes in Scottsdale from Chicago after already having 10 places. And it was absolute hell to try and make that work, right. And so when you're staying local, like just stay local, find a place local, find somebody maybe that you know, and like open it up and get your experience, I actually started by having a spare room in my, in my apartment, and I just rented out the spare room. And that's literally how I gained my experience. And so it was completely free. And I was able to, you know, cover my rent, I was barely making any any money from it. But I learned a ton from it. And it's like, expanded into everything that I've been able to do now. Right.
John Bianchi
So stay local. When you're first getting started. Once you get your you're a little bit more of an understanding, I always recommend go somewhere that you actually like to go you're in I mean, this is a vacation rental, you can use it as a vacation rental, when people are like, where should I go? I just want to go anywhere. It's like, No, you don't want to go anywhere, if you hate the snow, that don't go where the snow is, you know what I mean? Like, like for myself, personally, I love like the Arizona Sedona Zion, like, Those places are so cool to me, Yosemite.
John Bianchi
So like, I would put way more effort into an area like that, like I would be drawn to want to make the best Airbnb or maybe, you know, do whatever out in that area, way more than I would want to do something in Michigan, right? I mean, like, and I'm somewhat close to Michigan, right? So anyways, that's, that's, that's my advice, when you're thinking about it that way.
Mike Swenson
Well, and even to I mean, you can utilize a second home mortgage to be able to get a lower down payment. So if I'm looking to go somewhere now, there is stipulations around that you have to spend a certain amount of time there. But like you said, if it's a place you want to go, like for me in Minnesota, you know, going down to Florida, yeah, I think you can convince me to spend two weeks in Florida each year, especially in January and February when it's cold. So you that's that's the beauty of the asset that you own is you have the ability to go down and visit. Yeah, you may, you're not going to be able to have bookings during that time. But you can get a mortgage. And so obviously, Check with your lender first, you know, I'm not, I'm not making promises here, but check with your lender.
Mike Swenson
But a second home mortgage is a great way to do that where you can maximize a lower down payment, have a vacation home now that you have to go for, you know, two weeks out of the year to be able to fulfill that and be able to make income the other 50 weeks out of the year.
Mike Swenson
You know what, what else would you recommend for people? How else can we get started? Or if we're now looking at an additional spot? Where would we want to go?
John Bianchi
Yeah, so there's sort of a three step operation like I try and make it as simple as possible. Think about getting it started with three steps, first, figure out the regulation, because there's tons of regulation absolutely everywhere. And you have to make sure that it's actually legal where you want to go. So figure out the regulation is step one, step two, figure out the data. And step three, figure out the operations. So I don't recommend trying to understand how to operate an Airbnb until you actually have the Airbnb, right.
John Bianchi
So do everything you can to figure out the regulations, which will, you know, shouldn't take too much time. The data is where you want to spend the majority of your time to actually understand where is a good spot to buy. And then you can figure out the operations Now, the reason I'm I'm I mentioned it in that order is because that's that's step you have to take. But when it comes to the data, think about it in a demand sense, right? So hotels are in a lot of places, but they're not absolutely everywhere, right? So when I say demand you with your opening up an Airbnb, it's essentially a hotel. And people have to be traveling wherever you're going to be going, which seems super simple, but like it's the reality is once I say here is like find the places where majority of people are traveling, where there's nonstop travel, where people are going to continue to keep traveling for years and years and years. Right.
John Bianchi
So like the easiest example of this is national parks, people are going to keep going to national parks national parks aren't going anywhere. Disneyland is not going anywhere. Right? Like beaches aren't going anywhere. For the most part, rising tide is not gonna help but all these things, these are these things like, those are some of the things you want to be thinking about. Right? And they sound very, like obvious, but you know, sometimes people be like, well, I want to go you know, look at the name like I don't know, like Indianapolis, Indianapolis just does not have a lot of tourism demand, you know, it just really doesn't so like there's not a lot of money being spent on Airbnb in that area.
John Bianchi
And then therefore, it usually makes more sense to have a long term rental there than a short term rental there. If you compare that directly with like Nashville or Austin where there's just a crazy amount of short term demand for people going for bachelorette parties and bachelor parties like you know that's that's how you kind of have to think about it. So if you're if you are trying to decide where should I go right first look at the regulation then pay attention to like where's there's a lot of a lot of demand. And then from there you really want to start diving into the data and I can I can walk through that my like Quicken Ellison on that if you'd like, before
Mike Swenson
I turn you loose on the date, I was just going to get back to the regulation, you know, for people that are newer to this wondering, okay, what are the regulations that are out there? So, number one, there might be rules and regulations around Can I operate a short term rental in a city? So here, you know, I'm Minneapolis, St. Paul, there's some suburbs that have said, No, you can't operate that and short term rental could mean you know, less than 30 days, you know, however they define it. So there are some cities that just say, No, you can't. There's other cities that might limit the number of short term rentals that you have. And then there's other spots where it's, there's some sort of association in place.
Mike Swenson
So I know, once you get into Florida, there's lots of associations. And some associations might say no, or a condo complex apartment complex, townhouse complex, things like that, where the association might say no, so that's where not only do you have to look at the, you know, maybe the county level, the city level, you also have to go down and look at the association level to find out because there's certain pockets within a certain city where you might be able to do it here and not do it here.
Mike Swenson
So there is rules and regulations, the best place to start, as is a Google search, the other place to start is to call that city to and say, Hey, what rules and regulations do you have? Because while you might, you might have been able to fly under the radar in the past, before cities had regulations. If you're planning on holding this asset long term, you want to stay above board with people and you don't want to have have a very profitable operation running and then find out that the city or the association, now learned about it, and they're going to shut you down. Now, what are you going to do so? So better to just follow the rules right off the bat?
John Bianchi
I couldn't agree more of that. You just like I went into Chicago, Chicago had some regulations. I tried to like fall within the regulations, I'm not the best at under, you know, legalese. Like I just really am not. And, you know, I like picked up a couple homes that weren't technically legal. And it kind of, you know, screwed me over in the long run. And I would I would have, I was trying to follow the rules, I just, you know, misunderstood it, stuff like that, right? So, but it really, really becomes difficult when you have a home that you've invested in, that becomes illegal, or is illegal to begin with negative to try and figure out an exit strategy or getting into a new home or something like that.
John Bianchi
So yeah, and like, it just never works out in the long run. And I would never, ever in a million years buy a property that could potentially become illegal, right? If a city doesn't have any regulations in place, and they're out there talking about it, you just don't want to buy a home there. Because it likely will could potentially be legal, and then you have to get rid of it. Right. So like, go to places where there's already regulations established, once they're established, they usually don't like make them that much worse anytime soon.
Mike Swenson
Right. Yeah. And even to think about an exit strategy, you know, there is medium term rentals, there is long term rentals. Think through like, Okay, what would happen if, if something were to happen here? What could I do? And picking a property where there there's an acceptable exit strategy, if something were to happen?
John Bianchi
Yeah, exactly. Like even the there's a guy that, you know, we're looking to buy some properties together. And one thing that he always says is, like, you know, worst case scenario, we have to rent this thing out long term. Could we get the rent here? I mean, to cover at least the mortgage. And so that's like, what's something that we're paying a lot attention to, with all the different areas that we're going into? So yeah, def always have an exit strategy. But always remember, you know, it is a nice property, like you can you can rent it, right, you're gonna meet or, or even short term or like, you can get someone in there. Usually, it means if you're in the middle of nowhere, it's gonna be a little bit more difficult than a city. But yeah, usually you're okay.
Mike Swenson
With that being said, Yeah. Talk about the analysis here. What are what are we doing, John?
John Bianchi
Yeah, that's, that's a very broad question. So I got
Mike Swenson
five minutes. And I'm just kidding. We could talk for this about hours. But go for days, we've targeted an area that we're interested in, what are some some tangible next steps here to take that
John Bianchi
this is my 100% standard advice, it's the path that I go for the company that I work for. So just you know, I'm a full time short term rental data analyst for a sorry, a short term rental investment fund. I'm the data analyst, right? So I'm looking at Airbnb data all day, every day. And this is the route that I take. And so I'll explain that right now. The issue that I usually see people doing is that they will find an individual property so they have like a budget and an area and they'll go what meets my budget, right? And I mean, like what's within my budget and then they go and buy that home and turn into an Airbnb, hands down the worst way you can do it without a doubt.
John Bianchi
And the reason being is because you don't know if that home in that area is actually going to be really profitable or not. And sometimes people will like the they'll use a couple of tools out there to like try to reaffirm that yes, this property that perfectly meets their budget is one that they should get right but it's really just a kind of backwards way to go because if you have to go through so many properties over and over again waiting for them to come online to see if it's actually going to be a good Airbnb or not. So with that I recommend going about this is ticket all the way back to the entire market. Right take a look at your entire city all of the data within your city, and then figure out which neighborhoods In that city have the most demand which areas are making that because whichever has the most demand has the most money being made, right?
John Bianchi
Usually that can be like the cluster of where all the Airbnb czar, or you can use some of the software tools like air Genie that are out there to actually understand how much money is being made in each one of these different areas. And additionally, the you know, like my company helps with this specifically. But the idea is that you want to look at your entire market and narrow it down to the zip codes or the neighborhoods that are without a doubt, have the most demand or making the most money on Airbnb, right? Then from there, what you want to do is you want to be able to figure out which unit size so like a one bedroom, two bedroom, three bedroom is making the most money out of those in that neighborhood specifically. And then.
John Bianchi
And the reason why the bedrooms is really important is because that's an example in Chicago, a three bedroom in the in Lincoln Park makes about 60,000, whereas a four bedroom makes about 100,000. Right, the difference between those two in rent at least is about like $500, right. And so there's a huge difference in profitability, just by having a four bedroom. And the logic behind it is there's no five bedrooms in the area. So the four bedrooms are the biggest. So they can ask the highest premium, or the three bedroom can ask more than a four bedroom. So you really want to understand you have to understand that bedroom count makes a big difference. Right? Another great example, this is in in a certain area in Phoenix, two bedrooms make 30,003 bedrooms make 90,000. Right, huge difference. And so really understand what the different bedroom sizes. Now, it's not enough to just look at the bedroom size in a neighborhood and say, Okay, I'm going to make you know, whatever, right?
John Bianchi
There's still additional details about that specific home that are going to drive the revenue, right? And so you have to figure out, what are the details of this home that are going to allow it to do really well. And so what I always do is I look at the top performing properties of that certain unit size in that specific area to figure out what they have that's allowing them to make 100 $150,000, whatever it may be, right. So I'll give an example of Scottsdale, because it's a really easy example. And I know it's back my head back man.
John Bianchi
In Scottsdale, you got to have a large backyard. Like first off, you have to have a pool, a Pool Heater like that is without a doubt a guarantee, you have to have that. However, you also have to have a large backyard, I'm just saying not just saying like a decently sized backyard, a good sized backyard, right? We don't look, we look for properties that have to be at least 7500 square feet or larger, right, as a total property size. And the reason being is because you actually need like a little putting green in the backyard for people because that's the biggest driver is golf. And so people need to be able to do that. You also need to have a firepit area, you need to have a little outdoor bar with ideally like a cabana, cabana or something like overtop, you need to have lounge chairs, and you need to also have like a house, it's big enough to have two living rooms. So you can have a pool table in one, you need all of these things, because your competition has them. Right.
John Bianchi
And so you can't beat your competition unless you have all of these things. Otherwise, you got to expect that you're gonna make significantly less money, right? So when it comes to data, right, like, when I think of data, I go the entire city, then I figure out the neighborhoods, then if I go to unit sizes, then if it grows every single amenity and feature within that area in it that are driving the revenue that are allowing people to make the most amount of money, and I create a list of everything. And then from that list, I know what I need in the home to be able to make X amount of money, right? And it's the Burger King logic. So you know, McDonald's spends millions of dollars to figure out what pointer to be on Burger King opens up across the street, right, we're doing the same thing, we're replicating what's already working across the street. And so the beauty of it is that you can do all this work and you can figure out, okay, you know, four bedrooms can make $100,000.
John Bianchi
And I need all these features, we have like a list, you essentially create yourself a Buy Box of everything that you need. And then you just simply plug into Zillow, I'm looking for a property that's you know, 500,000 to 600,000 that's a four bedroom within this certain area with a certain square footage that has a pool, and then they'll pop up and then it's like cool that home their cash flow is that one their cash flows, and you can just very confidently purchase that property know exactly what you have to do to hit those numbers, instead of the opposite where you're just like, going to the property first, the finding the property should be the very last thing you do.
Mike Swenson
Right, and when one thing I just want to mention quick for folks that are newer here, and newer to the short term space, but maybe have investment experience is you know, I work with investors quite a bit buying multifamily homes, a lot of long term rentals. Your mindset with long term rentals is you want to provide a solid place for them to live and you're looking for solid amenities, but it doesn't have to be over the top. If you're looking for like good quality middle class type stuff. If you're in the luxury space that's totally different. So a lot of investors that I work with, they have this mindset around, solid, stable, decent, you know, investments When we're looking at something like an Airbnb, we're now in the hospitality business, right? So it's not in the housing businesses in the hospitality business. And like you touched on a lot of great points in Scottsdale, they want golf, they want a pool.
Mike Swenson
They want a cabana, they want a fire pit. And so you're looking for the amenities are going to accentuate the revenue and the profit that you're going to have. Versus when I'm looking in the long term rental space. I'm looking for solid, stable, you know, rental quality type atmosphere here, you're looking for hospitality quality.
John Bianchi
Exactly. Without it and in the thing about, you know, I haven't bought a long term rental. So I can't really say but I'm assuming you know, the deliverables. Solid things are pretty standard across the board, wherever you go, you know, you solid kitchen salt bath. stuff along those lines, right?
Mike Swenson
Yeah. And when they're making decisions around, vanities, countertops, flooring, paint, decorate, not even, well, no decorations, really in the long term space. But you're looking for budget friendly can hold up well over time. Here, it's a different mentality. Because yeah, you're you're trying to attract in and drive revenue, drive profit. And so those amenities matter. You're, you're in the hospitality business, that's your mindset versus long term rental. It's a totally different mindset.
John Bianchi
Exactly. And I'll also say that it changes per market, for the most part, right? You don't need that, that what I just explained for Scottsdale, you don't need that the Smoky Mountains, and you wouldn't do very well in the Smoky Mountains, if that's what you had, right? Yeah. And so whereas like, you maybe need the exact same thing across the board anywhere in the United States, for long term rental, it changes for short term, and you've got to pay attention to that data. I know, like when most people hear data, most of the time when people hear data, they think of numbers. But you know, data could also be does everybody have a fire pit in their backyard? Right? And if that's the case, then you go yep, they do. I need one too. Right. And so like, that's kind of the fun data. I like to think of it that way. Right? So anyways, just wanted to kind of bring that up.
Mike Swenson
What else now? You know, in terms of, I've found those properties. What else do I need to know?
John Bianchi
Like, honestly, not much like that's, that's if you if you like the place you're at, you know, the regulations are good. You've gone through the data, and you have a general idea of how much a certain home can make within certain areas. And you know, that there's homes for sale in that area that meet that standard or that requirement, then it's really just a matter of like budgeting everything else. So you've now found the magical number, right? So to me, the magical number is, what is my top line revenue? Because everything else is very figure notable, right? Like, what's the cleaning fee going to be you can you can make some phone calls and figure that out. And so you now can figure out if how profitable the location is going to be for you, right?
John Bianchi
And like how much it's going to cash flow and all these different things, more importantly, how much you're gonna have to spend to get it to that point of what it needs to look like, right? And then it's just a matter of just literally making offers that fall within the budget of what you need to make, right. And that's, that's really make the offer. And then when it comes to operations, that's not me. So I don't I don't talk operations. There's so many people on YouTube that talk operations, I try and stay 100% focused on the data. And so my, my sort of where I help people with eye end right there.
Mike Swenson
I had a conversation with somebody recently about an Airbnb. And they're kind of like, oh, yeah, like that. I've seen some people have bought on like, I've heard it's kind of exciting. But what are some of those numbers that can draw people in? Like, what can I actually make in cash flow in a month with a high performing Airbnb?
John Bianchi
So my, the one thing to keep in mind is that it's seasonal. So you know, it's not the exact same every single month. So whenever I talk to it's not monthly, it's annually that I sort of talked about exactly right. And so my best performing property did $40,000 in pure profit, 100% profit in my pocket. And the second best was around 30,000, that I had like a few around 20,000. And these are places that I rented, right? So I was renting those, and that was the they're making about $90,000 a year my expenses were about 70. Right, so it's pocketing the other 20. And, you know, additionally, I had also a cleaning company. And so the cleaning company was providing me with more money there too. But so what we look for with the fund that I worked for, is we're looking for like a 15% cash on cash. That's what we're going for all the time.
John Bianchi
That's that's sort of our goal. We really like we have a I have a 20% rule that I use. So I'm always looking for areas around the entire country that meet my 20% rule, which is I want the revenue, the annual revenue to be 20% of the purchase price. So if it's going to make $100,000 I want to buy the home for 500. Right? If I can do that, then the odds of hitting like 20% cash on cash or 50% cash on cash goes through the roof, right. And so that That's, that's, that's really what I'm looking for,
Mike Swenson
you know, for people that have been in the long term space, you know, sometimes they might hear like, $150 a door $200 a door $250 A door per month, you're talking about $2,000 per month, $3,000 per month, and there's people that clear 567 $1,000 per month for their properties. And so that's the upside of, you know, why, why should I learn all these things about regulations and operations, and this, that, and the other is your potential for profit here is significantly higher than a lot of long term opportunities out there.
John Bianchi
Yeah, 100%. That's the the I mean, you're doing more work, but you're making more. But the one thing I can't stress enough is that there are so many people, especially in the United States, that are doing more work and making less money, because they bought in the wrong location, they didn't set it up properly, they didn't put the right features in place, they don't know how to take good photos, like, there's so many little things that people have done to like, lose. Whereas if you just understood the data, you would know exactly what kind of what the whole needs to look like, and where it needs to be. Right.
John Bianchi
And then, and then from there, it's all figured out, like the operate, like how to talk to the guests and how to do all stuff. That stuff is so easy, but you can't take a the wrong location, the wrong size bedroom and bathroom and operate it the best in the world, you're still going to not make money. Does that make sense? Right? If I had a three bedroom in that Linkin Park area in Chicago, I could have been the best host and the best listing in the world. But I probably would have made maybe 70,000 In my expenses would have been almost 70,000. Right? So you once you get the right product, right? Or the right location, then you can figure everything else out. So I can't stress that like enough.
Mike Swenson
Yeah, I think kind of going back to the bigger picture here. Yes, there are tenants that break things, yes, there are people that do things that they're not supposed to do. And but at the same time, the opportunity here is great. So like, like the numbers we're talking about, you can't expect to have all this revenue without having some sort of stressors. There's there's things you can put in place, there's leverage of people cleaners, handyman, that sort of stuff that can help you out. There's lots of resources out there of people that will help you furnish properties, what to buy and all that. But at the same time, there's a lot of opportunity here. And yeah, there's going to be some headaches, but at the same time, the reward here can be great.
John Bianchi
Exactly. And the in the the fact that you're making that much more money at the beginning, will you know you have to do the work, but you're making a little bit more. But because there's so much extra cash flow, you can eventually get to the point at scale where you can hire somebody to actually take care of all those things for you. Right. So when I got to like 10 properties, I think it might even been like seven or eight, I ended up hiring on somebody to manage everything. And like they were taking care of the vast majority of all the little day to day operations, right. And I did that because I got her to run the cleaning company, which saved me like enough to pay her salary. And then she pretty much took over like everything, right? And so it you know, there's enough money coming through that it allows you to be able to do that, after a certain number of properties. So something to keep in mind as well.
Mike Swenson
Awesome. Well, thanks so much, John, appreciate you coming on. You know, if there's people that are like, hey, this, this data thing sounds awesome. I want to be able to learn more, how can they find you? And what are you going to teach them?
John Bianchi
Yeah, so you can, you can email me and we can hop on for a free consultation. I like I really enjoy meeting everybody that I work with. So my email is [email protected]. That's [email protected]. And, you know, a lot of what we talked about today was sort of the, it's hard to go through numbers without being able to actually show the numbers. But the main thing that my company provides are reports to help people figure out where the most profitable location is within their city. And I have a free course that goes along with that that's like over two and a half hours of teaching you everything you need to know to be able to get to that answer.
John Bianchi
But that report has all of the numbers, all the data, all the information, like everything you need. And it's the exact same report that I use on a daily basis for work. So yeah, that's if you're, if you're looking for something like that, if you really love your numbers, if you really want to be 100% confident about your purchase, my company without a doubt can help you do that.
Mike Swenson
Well, thanks so much for coming on, John, I appreciate it. Appreciate everything that you shared. Yeah, you're just a wealth of information. And, and we talked offline beforehand about how you know you get the benefit of being great in real estate as you get to use this information to help others but also for your own personal gain. So if you want to have your own investments, you get to use this information for your own good and so that's the beauty here.
Mike Swenson
That's why real estate you know, building wealth through real estate is such a fantastic tool. And so you're just an example of that of doing it personally doing it to help others you know, the job that you're in, and to be able to help others do build wealth and create that time freedom. Like you said, yeah, the worst thing in the world is oh my gosh, I built this so big. Now I have to hire somebody else to run it for me instead of me doing it by myself. So not not a bad problem to be something. Well, thanks so much, John, for coming on. I appreciate that.
