Why new construction is by far the best airbnb strategy 

Hey man, do you have a website or email? We’re currently building STRs and we agree design is where you stand out. Thanks!

I mastered the design of houses 😅​@@pshahen21

I also design/build architecturally unique short term rentals where the design IS the strategy to beat the competition.

Super fair. I thought this was clear. I consider this a "free house" in my book. I invest money to build home. Then cash out refi to get all of said money back. Meaning no money in the deal. But I suppose a TRULY free house is one where it's owned free and clear. So I could see why someone could be confused by my loose definition of the term "free house." Although I'd say that a good chunk of the real estate community would agree with my way of thinking.

@@RobuiltIf you're then using that money to build another house, you would be building a portfolio of homes, but then each home will have that monthly mortgage attached. In a market where house prices are not appreciating, or at worse falling, you won't be making much real gains. Especially if you have a high mortgage burden. In a poor rental market you might start missing some payments and then there would be trouble.

That was EXACTLY what I was thinking 😅 when the word "free" was used but I see where he is going. You take a loan out to build and instead of letting that construction loan just sit there, you make the "equity" in the house available for other investments by doing a HELOC. Actually a great strategy. I am anxious to get into the Airbnb business and would not want to spend this kind of time to get going, but if I can get established and start bringing in solid figures I would definitely do this. I live in a state where there is a ton of land available to purchase and build on with some amazing views and waterfront opportunities.

My ex gfs dad daisy chained a bunch of houses and we used to get his mail sent to our house. She would open them to see multiple houses he was losing, I'd see bills from 200k- 600k being sent to the house every month.

Yeah, this is mega solid. I've known a few builders that do this. It gets supercharged when you've got a great relationship with a bank and they extend a huge line of credit that allows you to build multiple houses that you can either then sell or cash refi out of.

You mred to be building a primary every year if you're married or have a family member to live in one. Every 24 months you sell the primary tax free. All the business tools are expensed and bare bones CO allows you to finish it right before sale or upgrade before sale. Wife didn't want to move every year until I said the kitchen and master closet would be the same in each one. Send her for a spa day and have the movers take everthing from the cabinet and put in the same cabinet I. The other house.

Sounds like the perfect scenario to get all your money back! How much did you put in and how did you fund it?

@@Robuilt came in myself with $250k, $500k financed through a private lender. Tracking to be 100% paid off from STR income by end of 2025. Not sure if you saw Kai's video on my place but he came out last year. My whole channel is about how I build my homes/and my IG blew up from my container build (thepacificbin) which is helping to keep occupancy around 90% at high adr.

Dude a $300,000 spread ROCKS. That's amazing. Congrats. Out of curiosity, why did you end up going with 6 bathrooms, 4 beds versus a 4/4?

@@Robuilt we were limited to 3 full baths due to septic permit. Original plans had two more half baths. One half bath in the main living area (kitchen/living room). Another half bathroom in the theater/game room, but we wanted a cabana bathroom in the pool room so folks wouldn't have to leave the room to get changed, etc. We actually used your referral code to get started on Airbnb. 🤝 RockyCreekRetreat - ez to find on Google

@@Robuilt it was limited to 3 full bathrooms due to septic permit. The original plans had two more half baths- one in common area, one in theater/game room. We added one to the pool area as we didn't want folks having to leave the room to use the restroom. The square footage easily supports a 5 bedroom with one more full bath, but the septic limited us to this figure. Not mad tho.. we are on track for 180k gross in 2024.

Do you refinance to get your money out? Or how do you have so much money to just build so many?

10?! That's rockin' dude! That is one of the things I love about this model. You get to thoughtfully choose layouts and amenities, versus having to retrofit funky houses.

One downside is if you are in a congested area and the new construction is on the other side of town. For example, in SE Charlotte, NC, there is no more "room to build" in this desirable side of town. So a lot of the new construction is in cheaper areas of town which are much less desirable. I guess it depends on the location. I'd have nothing to do with a any homes in N Charlotte, NE Charlotte, W Charlotte or NW Charlotte. That is where all the new homes are being built because those areas have cheap swaths of land because it is undesirable. Maybe in 10 years?

Is that 30-40% discount after paying a GC or are you your own GC? I like the idea of this model but would need to pay a GC and then need it to still be worthwhile. But if I could still get for 30% under retail then it sounds like a great deal.

@@jonpayne4319 we use a builder but get discounts on their fees since we are active and give them a bunch of business. Could probably go cheaper if we GC everything but it’s a bandwidth thing.

🫡

Oh weird. No idea. Maybe because I didn't have an editor on this one today who usually fixes this stuff lol.

I’m noticing the same thing - doesn’t seem like I’m getting any right ear audio

On my samsung galaxy S22 ultra sounds really good. The top and bottom speakers are on and sounds like surround 😂

Biiiiingo.

There were a couple of places where he misspoke. By free house, he was meaning he didn't have any money out of his pocket tied up in it at that point, it was only loan money tied up in it. Not, that he owned it free and clear.

@@hugh261 what else do you think I misspoke on? Maybe I can clarify,

Here's a video where I talk about this process a little more that does go into a bit more detail: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-qpwKHEmG6cY.html

​@@Robuilt4:25 and at nearly 4:33 it was clarified as there is a 30 year loan. Sorry, after that the mention of free house threw me off. Man .... How autocorrect doesn't save the day with me saying "gouse" is hilarious. Typing it on purpose right now it keeps changing it to house. 😂

Great question. The answer sadly is it depends. If the use case is STR, then usually i'm going to make the house a bit more premium-adding expenses across the board. Meaning, it'll be much harder for it to work well as an LTR. But if the use case is LTR, then I'm going to try to be A LOT more budget friendly. Regardless, you have a little more wiggle room when it's new construction because you are getting a significant discount on the cost basis of the home.

It makes most sense outside of those markets haha. The new construction strategy can work in any market where people invest in real estate ;)

What market?

@@Robuilt latest is WA State. Home isn't finished being built and I've already got equity in the home.

You need 35% of the cost to build for a construction loan if you're new. If you haven't built before you will need a contractor.

By building your own STR you're free to build outside of city limits. When you create an experience-based Airbnb location isn't a huge factor anymore, so you aren't limited by specific areas. This is also how you can find less expensive property, reducing your cost to build. Unique/ luxury Airbnbs are the future of short term rentals, according to the data, which means this is the direction a lot of hosts will be going to stay relevant and profitable in the STR market.

Ignorant take. Short-term rentals isn’t a new investment. It’s been around for decades.

Actually there's a lot you can do. Many cities only ban STRs in residential zoned areas, but do allow STRs in some conditions or areas that are zoned residential. You can get a property that's not zoned residential. That's what I did - my property is actually zoned commercial and they can't stop me from having an STR. There are lots of vacation areas where places that look residential but aren't. Another is building with a resort community which are typically zoned commercial.

@@MrHamlet today. And that is changing more and more every day. I am all for new construction and building. But absolutely not with AirBnB in mind. The proof is in the pudding that what is here today will not be there tomorrow.

@@Palantir_Daily Nobody said it is new. It has been around for decades, yes. And with each passing month more and more cities are legislating it into the ground. An ignorant take is not acknowledging this fact. An ignorant take is "building" a home with the intent of AirBnB knowing that fact.

You need the money to build the next house. The rate on a refi is lower than a construction loan. Rent or personal income needs to cover all costs. You should only have one person on any lease or mortgage. Couples make the mistake of doubling thier debt on a primary. That .eans you can't get a construction loan.

Not for specific use. And there is a 20-30% margin on new construction so you come out ahead a lot of the time.