Financial Independence Through Real Estate Investing And Developing Multiple Streams Of Income
Excited to announce the first ever podcast I have had the privilege to be invited to!
Checkout the House Hacking Success podcast on any and all podcast platforms. Episode 18 is where you can find it. You can also visit the below link on youtube to see video!
First Airbnb Superhost tip and trick! Here we go.
The length of stay requirements you have on your listing is critical to drive higher occupancy rates. There are a few different tips and tricks I would recommend when setting this for your Airbnb.
Pro Tips For Why The Length of Stay is Important
First, understanding how often your listing will be displayed is critical. The lower your minimum stay rule, the higher likelihood you are to show in a search. Think about it, if someone is looking for a three night stay and you have the min stay at four nights, your listing won’t show up. The more often your listing shows up, the more often you will have opportunities for the guests to book! More bookings is more revenue!
Second, did you know you can edit the min night requirement by specific date ranges!? I didn’t either, until yesterday when I was doing a bit deeper of a dive. Airbnb actually doesn’t do the best job letting you know this is an option.
Providing an example will help illustrate this in the best manner. Let’s say your min night stay is set to 3 nights. You have someone book Monday to Wednesday of a certain week. Another guest books Saturday to Tuesday of the same week. This would leave you with Thursday and Friday night unbooked. You might be okay with that, but why not try to increase your bookings and get those two nights booked.
You might be thinking, well if I have a 3 night min stay, there is no way I can have someone book. Luckily, that is not a correct statement and you can alter those dates specifically! Here is how:
Go to your listing and click on the Availability tab as shown below
Next, scroll down to the ‘Trip details portion of the page and click ‘Edit’
Next, scroll down and click ‘Add another requirement’ as shown below
Now, you can go in and choose to edit specific min stay requirements for specific date ranges as shown below. Ensure you select ‘Specific dates’ as shown below
You will now be able to input the Start Date, End Date and min stay for that time period as shown below:
Ensure you click save, and then you will see something like the below edit I made to my Airbnb listing recently:
This is an incredible way to have a higher min night stay but still allow yourself to fill smaller gaps in vacancy.
Third, understanding your market is very important. There are many areas where a couple night stays are more the norm. Many areas where you are targeting business travelers staying during the week. In my area, Orlando,Fl, there are many families that come to Disney. The typical stay is dependent on the time of year. Off season, it is much more common for weekend only bookings. With that in mind, I set my min to ensure at least three nights are booked. Early on, it is important to offer one night mins. This will allow your listing to get a higher amount of views. As you get more and more experienced you will figure out for your area what the right min is.
Key Takeaways:
Addendums are one of the most critical components of an effective negotiation!
What is an addendum? When purchasing a property, you are making a legal agreement with another individual(s). When you go through this process, everything is negotiable. Once you agree upon a purchase price of the property, the negotiation is just beginning. Addendums are used as a legal document that both parties agree to changing the terms of the deal. The document must clearly state the new agreement and both parties are required to sign.
Once both parties sign the document, the addendum will be attached to the contract. The underwriter will then use that to do run the final closing statement.
How I used Addendums on This Deal?
You can either be a good negotiator or a bad one. In real estate, you’re not the one that is doing the direct negotiation as your real estate agent does. This could be a good or bad thing. I like to negotiate and negotiate at my job on a daily basis so I prefer to be the actual one doing the negotiation.
In this particular deal there were a few things that were critical for me to negotiate on. In the first addendum I received $2k at closing to cover repairs identified during the inspection. This was a big win as I was able to take care of the repairs for around $1,200.
Here is where the true magic came in. The appraisal for the property ended up coming in low. There are a few reasons why I believe this happened. New legislature was passed not too long ago that now bids out appraisals. This means when someone requests an appraisal, the first person who responds wins. With that being said, you can get someone who does a good job or poor job. Unluckily, or maybe luckily, the appraiser for my property was bad.
What Having A Bad Appraiser Means?
Having an appraiser who does a bad job can be a very good thing for you! If used in the right way.
The appraiser ended up coming back with an appraisal price below the price we agreed to on the contract. This meant I had a few different options.
Option 1: I could pay the difference, in cash, between the appraisal amount and the agreed upon contract amount. This would require extra capital on my end at closing. Not the best option, but I have a strong cash position so it wouldn’t hurt too bad.
Option 2: I could go back to the seller and ask for them to lower the price to the appraised amount or I would walk. I have good grounds to stand on here because I don’t want to pay more for the property than the appraised value.
Option 3: I could dispute the appraisal with factual data. The appraiser would review the data and determine whether they agree or disagree. They would then proceed to make the change and I would be back at Options 1 or 2. I knew the appraisal was low by $7-10k.
Final Decision
I decided to send an additional addendum asking the seller to reduce the price. I had never done this before, but the worst thing they could say is no, so what the heck.
The seller came back and dropped the overall price by $5,000 based off the appraisal I sent them! Boom! Money in the bank!
That is not all, it gets better!
Why Addendum Verbiage Is Critical!
This is where things begin to get interesting. When asking my agent about the second addendum, I made sure I was clear to her that I wanted Addendum 1 to remain. This would mean I would still be getting the $2k in closing costs and the $5k decrease in price. My agent called the other agent and the agent said the seller would not give both. Here is the trick on the second addendum, shown below:
In Addendum 2, the only thing stated is an agreement to drop the price to $210k. There is no mention of Addendum 1. So from a legal standpoint, if no mention of nullifying Addendum 1 is agreed to, then Addendum 1 stands. The seller signed the document agreeing to the the drop in price. What they also signed though is agreeing to both addendum 1 and 2.
This is something the sellers agent should have made clear in Addendum 2. Addendum 1 would only be nullified if a clause in Addendum 2 clearly stated that.
Legally, we were now in an agreement for both Addendum 1 and 2 to be attached to the final contract at signing. This mistake is 100% on the sellers agent. Since the seller did not want to give the $2k at closing, the sellers agent ended up giving up $2k of their commission to the seller.
Unfortunate for the sellers agent, but part of doing business. You have to understand how to cross your t’s and dot your i’s.
Key Takeaways:
