If you're able to start getting into real estate investing, it may not replace
your income the first year, but by the year five you should be well
on your way to leading the nine to five grind. Because if you think
about it, let's say you make sixty thousand dollars a year. Okay,
well that's roughly five thousand dollars a month. You know a good airbnb somewhere
would pay that, and if you're managing that yourself, then you've replaced your
income. You're listening to Carrie Letz's Financial Survival Network, where you get valuable
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I'm yours, Carrie Lutz. Hey, you think about getting into real estate.
Maybe you've had a couple of brushes with it in the past, but
you're not quite sure what to do and how to do it. Well,
I've got a fellow attorney on with me, written a book, a book
that you're definitely going to be interested in. Highly recommend it. It's called
Replace your Income and it's by Brian Boyd, the attorney in the Great State
of Tennessee. Brian, thank you for coming on the show. I know
you're a fan and it's great to have you on. So when you say
replace your income, what does that mean exactly? Yeah, and that's a
great question. A lot of people, you know that they have to be
tied to the nine to five job, and you just don't. If you're
able to start getting into real estate investing, it may not replace your income
the first year, but by year five you should be well on your way
to leading the nine to five grind. Because if you think about it,
let's say you make sixty thousand dollars a year. Okay, well, that's
roughly five thousand dollars a month. You know a good airbnb somewhere would pay
that, and if you're managing that yourself, then you've replaced your income.
Now you get into this idea of scaling and you put two or three airbnbs
together, then suddenly you're making a lot more than you were at year nine
to five by managing those properties. But if you're notged in the airbnb market.
You know, buy a duplex and live in one side, rent out
the other, and that's a great way to house hack your way into real
estate investing because the other side of that duplex is going to pay part of
your mortgage, is it not? I think the answer is clear. It
is. Moreover, the tax benefits associated with real estate investing cannot be found
in any other asset class that I know of. And you're an attorney,
you're a former New York attorney. You know this is as well as I
do. That real estate investing provides you a tax incentive to invest and provide
housing for people that otherwise can't afford it. Now, I say that understanding
that people are out there listening. What do you mean people can't afford it?
Well, there is a need for affordable housing in this country, and
if you're able to meet that need, you'll have grateful tenants. You'll be
able to purchase additional properties and continue to scale, And I think that's where
you'll see the rewards of real estate investing, not only through depreciation and cost
aggregation studies that will all set your income, but you'll also create generational wealth
there's no other asset out there than does this all right, So when you
talk about airbnb, though, hasn't that sector gotten very saturated? Is it
harder to make money at it? Now? I seek your You've got a
point there that there are certain markets throughout this country that are saturated and it's
a lot more difficult now to make good money. But in cities like Nashville,
Tennessee, where we are the bachelorette capital in the world, metal tab
Yeah, you're gonna get run over by a pedal tavern if you get on
town. But those properties in the airbnb market in nashvilltonn See are doing just
fine. Another example of properties doing well in the short terminal market is Gatlinburg,
Tennessee. That place remains in the top ten of every list out there
for great investments in short term rentals. Blue Ridge Mountain, Georgia, there's
another great location. So I would say, well, go find the right
location, find the property, and I think you're going to be just fine.
Now, are you going to be in the same profit range that you
were during COVID people were looking to get out of their houses and go somewhere.
No, but that's for everybody. But there are still good markets for
short term rentals. So what kind of cash on cash return can you get
from an airbnb in the places you're talking about. So let's just use one
that I just did. I just bought a place in downtown Nashville. We
did a ten thirty one exchange from a triplex in Knoxville. Flip that over
to an airbnb in Nashville, and we're going from making thirty six thousand dollars
a year in rent for that triplex to a historical number of one fifteen to
one hundred and twenty thousand dollars a year for the airbnb in Nashville, Tennessee.
So you know it's a substantial increase for you. Okay, So but
you've got higher management costs because you've got to clean this place and you got
it linens, you got to sure, you got dishes in it, you
got to and people with it, all the things right, right, So
it's much more management intensive. How do you manage it? Well, we
have a property manager for that one. He takes eighteen percent. But if
that property kicks out one hundred and twenty thousand dollars a year, let's say
sixty thousand dollars goes immediately to pay the note, and then another eighteen percent
from there. So let's say we end up walking with fifty thousand dollars.
That fifty thousand dollars is profit to us that exceeds thirty six thousand dollars we
were capped at in Knoxville. Right, So we've increased our revenue, even
our net revenue I think. And by the way, not only that,
but we've stepped up our basis to do a cost segregation study to depreciate the
asset. So we're going to shelter all that money anyway, it's a great
way to go. Okay, So and how much did you put down on
that property? You go, we put two hundred and twenty six thousand dollars
down on that property. And so what's the net cash flow on it?
The net cash flow after we pay for the note and the property management fee,
it's probably kicking out three thousand dollars to four thousand dollars a month net
after everything's paid. That's pretty good, pretty good. So that's like a
twenty five percent the cash on cash return. Yeah, I mean it's look,
it's not like it's down on the Vegas Strip. It's not one of
those kind of properties. Is not a penthouse property. But for Nashville,
Tennessee, it's a good little earning property. And who could use it an
extra forty eight thousand dollars a year? Right? Heck yeah, heck yeah.
So what are the things that people do wrong when they go into the
airbnb market? Yeah, that's a great question. I'm glad you asked it.
They tend to overbuy. They they go and they look at a property
and they're like, oh, this is perfect. It's a four bedroom,
four bath, it's got a half bath, it's got a pool, it's
got a hot tub. Well, there's a certain niche in the airba world
that will stay there, but it's not going to be consistently rented because if
you have four bedrooms, four baths or they're probably talking at least eight people
stayed, right, and how many groups of eight do you typically have?
Not a whole lot? Those Those sound like party houses, is what they
sound like. I am encouraging people, Hey, buy a two bedroom,
two bath. You know, you and your kids go for the weekend,
spend one hundred and fifty bucks a night. You know, you get a
whole house and that will be a great little earning properly for you. Don't
swing for the fences. A'm small, mist small. Buy the small house
that you know is going to generate good money, it's going to pay for
itself, and it's gonna kick out a little bit of profit every month.
If you can do that and get comfortable with that, then think about scaling
up. But too many people just want to go swing for offences and then
suddenly they've got a house that's not renting and it's not paying for itself.
That's not a great investment. You need to look at the numbers. You're
a numbers guy. Look the numbers don't lie. Do the numbers. Do
the numbers? Do the numbers? Hey? So what about the concept of
rental arbitrage? Oh? Man, I know quite a bit about this.
A lot of people are cracking down on this rental arbitrage. And while I
think it is a phenomenal business plan, I mean you've got to be really
smart to have gotten into that. I think it's probably going to go away.
A lot of these buildings that they're renting these units and are getting wise
to it, and they know you're not actually staying in this property, and
the hoas are cracking down on it. Owners are cracking down on it because
instead of having one tenant in one unit, you're getting multiple tenants on a
regular basis, and the wear and tear is going up. So a lot
of the owners are saying, hey, stop that, and that's not what
we rented this stright, right, But there are people who perhaps you're having
problems renting at a single family home in a non HOA community and someone comes
along and says, hey, I'm going to do this, and I'll pay
you an extra one hundred or two hundred dollars a month to do it,
then it's kind of win win, right, Yeah, absolutely could be.
It just depends on what is tolerance level for you know, the wear and
tear that goes into your unit, right right, Yeah makes sense. But
hey, then you get to all the benefits of the airbnb, being an
Airbnb host or hostess without the initial upfront investment. Right. No, that's
true. I mean it's really it's going to take an economic analysis for you
to decide is this worth it for you? Because you could become a SuperHost,
right and you don't even own the property. And then you start scaling
your SuperHost across multiple platforms with houses here, apartments there, penthouses there,
and look, it's a great way to make a living. I know people
are making a killing doing Airbnb arbitrage, but there is a crackdown on it
right now, especially as Airbnb in the short term rental market has kind of
pulled back and you know, last eighteen moments, it's not quite as lucrative
as it was, and so you just got to figure out is it worth
it to do this? Yeah, and so if you're not owning the property
and you're just gonna arbitrage. And we should specify rental arbitrage as when you
rent a property rather than buying it with the sole intent of renting it out
as an Airbnb, realizing the difference in the monthly rental that you pay from
the daily rentals that you get on Airbnb, and obviously in certain places works
better than others. You want high demand. You know. When I look
at the pages, though, like in Florida, it looks like everybody in
their uncle our airbnbing their properties. You know, do you wonder No,
I am, I think you're right. You know, I was in Miami
last fall and you know, whenever I go to a town, I try
to figure out what's going on in this town to the airbnb's And there's some
gorgeous properties in Miami that I know aren't owned by the airbnb host because there's
one guy I was falling on social media and he was like, a I
don't own it, I just arbitron. And you know this one particular guys
like, look, I'm netting ten grand amarn't. I'm like, well,
that's wonderful. But to your point, I think Florida is full on Airbnbs.
There's a popular destination called thirty A down on the Gulf Coast, and
you know, I know people that have multiple properties down there because the rental
market is so strong for short term. So it's yeah, Florida is a
great place to invest if you're looking to invest, but be careful about the
saturation of the market, and maybe it's better to go to less popular destinations
like Miami, Fort Lauderdale, you know, West Palm Beach, Yeah,
Slee Lessert, the lesser traveled ones. I mean, I have a friend
who's making six figures she owns or well, it's funny story, Brian,
she bought her home, single family home. It had been added on to
it's in court Saint Lucy, and she split it down the middle basically and
put in a kitchenette and it's two bedrooms, separate entrance and separate driveway.
And so then she bought two or three more and it's cleaning clock. Her
average Delhi rental is one hundred and sixty five dollars a day, which ain't
bad. And Scott ninety five plus percent occupancy rate. Wow, that's that's
impressive. A ninety five percent occupancy rate. That's incredible, super host like
no bad reviews. I always like to see one or two bad ones because
that makes your your positive reviews that much more credible. And yeah, ninety
five percent. There is even expansion potential in some of these, you know,
putting in a pool, putting in a cabana which wouldn't require a wouldn't
require rezoning or anything because temporary structure. But you know, just cool things.
And Port Saint Lucy is like, you know, but you know what
it is as people that go there to visit relatives and all that. Not
a lot of hotels there. What about the fact that airbnbs have become as
expensive as hotels in many places. Now, well to that, here's what
I would say is you're getting an entire house or an entire unit, right,
it's not just hotel room. You're getting kitchens and like in some of
my airbnbs, we have hot tubs, kitchens, game rooms. You know,
there are a lot of ancillary things. I have one air view b
that I offer a vehicle with. So if you don't have, you know,
a rental you're flying into town, you can you can rent them when
that comes with the house. And so for touro or no, we do
it straight through the property manager out there, you know, just gives your
licensure your give us your license, give us your insurance, sign this waiver
and you can use the vehicle. And we do that because that particular property
has kayaks that you can go kayak the river with. And so you get
that truck, you can put the kayaks in and go, you know,
kayak the river. But you know, it's just one of those nice things
that we provide along with the house. That's pretty cool. I heard of
people doing it with kayak, but not direct like that, but that's interesting.
Hey, So besides Florida, Tennessee, what are the markets who're seeing
like real growth in well. I think you saw a lot of growth out
in Montana over you know, the COVID years. I think it's started to
slow down. Bozeman is still growing pretty quickly, even though they passed an
ordnance not allowing airbnb in certain parts of the town. But it doesn't mean
there aren't private residences that are still airbing being their houses. So I think
you're going to see continued growth out west. You know, the Denvers,
the Vales, the Bozeman's, the Missoulas, the boiss You know, people
want to get out and want to be in the nature h you know,
the rivers, the mountains, the streams, you know, the wildlife.
You know, you're seeing a lot of that explosion out west of people just
saying, hey, we'd like to get out and see something else. I
do think that there are still growth opportunities in places like Tennessee, Texas,
Florida, South Carolina, North Carolina over like Asheville, North Carolina. Even
the Outer Banks region of North Carolina is a good little market. Charleston,
South Carolina is a good market. North Georgia, the Blue Ridge Mountains are
a great market. I think Austin is definitely pulling back. I think it
got oversaturated during COVID, and I think they're passing ordinances now to limit airbnbs.
I know Dallas passed one, you know, in December, basically banning
airbnbs. So there's still a lot going on in the country. I know
people aren't really pleased with California right now, but California is a gorgeous state.
It really is. And there are places within California that, yeah,
you could probably kill it in their B and B in your neck of the
woods in New York, the Finger Lakes, Regent gorgeous in the summer,
gorgeous. You know, is it Lake George that you guys have up there
that is you already? I mean, that would be a beautiful place.
You know. Let's look at Michigan, the Upper Peninsula. A lot of
people like to go there. There are still opportunities out there, but you
got to think outside of the box. You gotta think outside of your region.
Okay, all right, well, hey, we appreciate your coming on
again. You should check out Brian's book Replace Your Income and it's on Amazon
and sold wherever find books used to be sold. And got a question for
Brian or myself. The email address is kl at Carrie lets dot complication.
Answer quick and Brian, just tell us your site where we find you.
Yeah, you can find me on social media on Instagram at Brian T Boyd
and that's also on TikTok. If you want to find me on Facebook,
it's Brian T. Boyd. You can just type and replace your income.
It'll pop up. If they need to talk to me for a legal issue
or tax related matter. You know, I'm at Thompson Burton. It's a
firm here in Middletonnessee, and they can find me here. That's where I
am right now. And not to mention your main site, which is a
Briant Boyd dot com and the link is in the show. That's this interview
on Financial Survival Network dot com. While you're there, please sign up for
your free newsletter. Brian A total pleasure, Thanks for stopping by, Thanks
for having me here. I appreciate it. Thanks for listening to Carrie Letz's
Financial Survival Network, your solution to today's trying times. For the latest,
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