Latest / REL Freedom Podcast / BEST OF: Michael Elefante - Finding Financial Freedom Through 6 Short-Term Rentals

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BEST OF: Michael Elefante - Finding Financial Freedom Through 6 Short-Term Rentals · REL Freedom Podcast

• 0:00
  Speaker 1: Hello everybody, mike Swenson here with Real Freedom, host of the Real Freedom show, and today I'm so excited we have what we're calling the best of some of my best and favorite episodes, and so today's episode is Michael Elefante.
• 0:15
  Speaker 1: Michael is somebody that I discovered on social media.
• 0:17
  Speaker 1: He started out.
• 0:18
  Speaker 1: I found him on TikTok.
• 0:19
  Speaker 1: He had 750,000 followers at the time.
• 0:22
  Speaker 1: As of today, now launching kind of the best of, he has over 920,000 followers on TikTok, but he talks about going from his sales career to six short-term rentals and essentially having financial freedom over the course of about two years.
• 0:37
  Speaker 1: And so him and his wife have a really cool story of how they went all in, poured into investing in short-term rentals and are now financially free, and so they purchased a $2 million home in South Carolina.
• 0:49
  Speaker 1: We're just expecting their first child before we recorded this episode, and a lot's changed since then, but such a really cool story to show that financial freedom is possible and it's possible to happen quickly, and so I've had a lot of people that have responded positively.
• 1:03
  Speaker 1: This episode, absolutely love it.
• 1:04
  Speaker 1: He talks about how he did it his journey to financial freedom through six short-term rentals.
• 1:09
  Speaker 1: So check it out, michael Elefante, on this episode of our best of Real Freedom.
• 1:20
  Speaker 1: Welcome to the Real Freedom podcast, where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate.
• 1:27
  Speaker 1: I'm your host, mike Swenson.
• 1:28
  Speaker 1: Let's get some Real Freedom together, mike Swenson here.
• 1:37
  Speaker 1: You know, when I started the podcast of Real Freedom, the goal was really to highlight people building time and financial freedom through opportunities in real estate, and today's guest is the perfect exemplification of that mindset.
• 1:52
  Speaker 1: Today we've got Michael Elefante on and he started a journey on purchasing short-term rentals with him and his wife.
• 2:01
  Speaker 1: They sacrificed early on.
• 2:03
  Speaker 1: They bought one, it turned into two, which now has turned into six in just a short time between 12 to 18 months and has now been able to travel around an RV.
• 2:16
  Speaker 1: And they just purchased their dream property $2 million in Greenville, south Carolina, and they're all under the age of 30.
• 2:24
  Speaker 1: And so this exemplifies time and financial freedom through opportunities in real estate.
• 2:30
  Speaker 1: They're living it, they're doing it.
• 2:32
  Speaker 1: They put in the work, they took the risks and they're now reaping the reward of that, so much so that they have a baby daughter coming on their way in October and they're able to live in the house they want.
• 2:44
  Speaker 1: Do what they want to do make what they want to make and be able to raise their child in an environment that they can pick and choose what they want to do because of these investments.
• 2:54
  Speaker 1: So this is a great story.
• 2:56
  Speaker 1: If you're on TikTok, you may have already heard of him.
• 2:59
  Speaker 1: He has 750,000 subscribers or followers on TikTok, so you may have run it in before.
• 3:04
  Speaker 1: But, with that being said, I want to get into today's episode where you can hear all the fantastic stuff that Michael Alafonte is doing and, with that being said, let's get into today's episode.
• 3:13
  Speaker 1: Welcome everybody to another episode of the Real Freedom podcast, and today we are going to be talking about Airbnb's, short-term rentals and financial freedom.
• 3:24
  Speaker 1: It's really what it's about.
• 3:25
  Speaker 1: So the goal of the Real Freedom podcast it stands for real estate leverage freedom, to be able to highlight people that are doing that through opportunities in real estate, and I'm so excited to share with you today's guest.
• 3:38
  Speaker 1: We have Michael Alafonte on, and if you've followed social media, you've probably ran across him at some point in time.
• 3:44
  Speaker 1: I know right now he's got over 750,000 followers on TikTok and just a wealth of information about short-term rentals, and him and his wife have picked up a few along the way four in Tennessee, two in Florida, and you guys just purchased a home in South Carolina as a result of the financial freedom that you've experienced because of investing in real estate, and so we're just so excited to have you on and share your journey.
• 4:11
  Speaker 1: So welcome, michael.
• 4:12
  Speaker 2: Yeah, thanks so much.
• 4:13
  Speaker 2: I'm really pumped for our conversation.
• 4:15
  Speaker 2: It'll be a good one.
• 4:15
  Speaker 1: So for those folks that maybe haven't heard about you and don't know much about your journey, why don't you just talk a little bit about before getting into real estate and you really haven't been in real estate all that long, so it's been a short journey but you've gotten a lot done so maybe just talk about kind of your life leading up to that and why you decided to pursue real estate and short-term rentals as an investment vehicle for you.
• 4:36
  Speaker 1: Yeah, so just to provide a little background.
• 4:38
  Speaker 2: I'm 29 years old now I'm 28.
• 4:41
  Speaker 2: I was a college athlete.
• 4:43
  Speaker 2: So as soon as my baseball career kind of came to a screaming halt, I didn't really know what to do.
• 4:48
  Speaker 2: So, as most young people do, I was just looking for some type of job I thought I would have interest in and I also had a potential to make a decent amount of money to go spend it on awesome stuff.
• 5:00
  Speaker 2: I mean, that's kind of just a young person's mindset.
• 5:03
  Speaker 2: Got into a sales role for a technology company, started pounding the phones, really learned quickly what the rat race was all about.
• 5:11
  Speaker 2: The more calls you make, the more time you put in, the more money you can make and commissions, the more hours you put in again over like day in and day out, you can climb the corporate ladder.
• 5:21
  Speaker 2: But I really quickly realized that that's not really what I wanted.
• 5:25
  Speaker 2: It became less about money and more about how I spent my time, and if I wanted to make more money in the realm of sales I had to spend countless amount of hours putting the time and work in.
• 5:36
  Speaker 2: So I didn't want to spend my whole life working more and more to make more money and spend less time doing what I wanted to do, or spend less time with my future family so quickly started to watch a ton of YouTube videos, read a bunch of books and then learned about this concept of financial freedom and for anybody who's done their research on financial freedom, real estate often comes up as like that's kind of like where it leads you, real estate being some passive, or relatively passive, income that you can generate through rental properties.
• 6:06
  Speaker 2: So I started doing all the bigger pocket stuff again, diving into more books.
• 6:10
  Speaker 2: I was talking to my wife about it over dinner many times and realized that I didn't know how many doors will it take making $200 a door to hit that financial freedom number.
• 6:21
  Speaker 2: And then it became not discouraging, but I was like trying to do the math in my head on how many down payments yeah, they gotta scale, scale, scale finally.
• 6:28
  Speaker 2: So I was like, well, what if we could do it in less time?
• 6:31
  Speaker 2: The goal was like five to 10 years Learned about short-term rentals in Airbnb Airbnb still kinda young at this point time, 2018, 2019.
• 6:40
  Speaker 2: And I started crunching numbers on average daily rates, how often they were occupied in Nashville it's where I live and I was like, if these numbers are right, this is crazy like why isn't everyone doing this?
• 6:50
  Speaker 2: And I've used Airbnb.
• 6:51
  Speaker 2: I thought it was a fun app to use, a good way to enjoy a vacation instead of a hotel.
• 6:55
  Speaker 2: So we got our first place and we were all in.
• 6:59
  Speaker 2: I actually sold my truck I just finished paying off to furnish the house because I realized that it's not cheap to furnish a big house so we got that first one.
• 7:07
  Speaker 2: That was kind of like the road leading up to it Once we saw the bookings come in and the cash flow, like I, was blown away.
• 7:15
  Speaker 2: So we quickly tried to scale as fast as possible not financial advice by any standard, but we liquidated our retirement accounts to get the second one.
• 7:23
  Speaker 2: Once that cash flow is rolling in, we get a third one and then we get a fourth one and we were financially free in like 11 months and we quit our jobs in 16 months, spent probably seven or eight months traveling in a camper van around the country, bought a house that we never really dreamt of buying here in South Carolina now on a lake, and just kind of have this beautiful view.
• 7:45
  Speaker 2: It's kind of like a surreal moment that we've created this life of relatively passive income and financial freedom for ourselves and it's just pretty amazing to look back on.
• 7:54
  Speaker 2: Like you said earlier, it just happened way quicker than I ever thought possible.
• 7:58
  Speaker 2: So it's just I tell that story just to hopefully encourage other people that it can happen quickly for you too.
• 8:04
  Speaker 2: So I'm short-term rentals, I think personally.
• 8:08
  Speaker 2: In my humble opinion, it's the fastest path to financial freedom, and we could dive into the different strategies, of course, but that's kind of my background and how I got into it and where I'm at now.
• 8:16
  Speaker 1: Yeah Well, and it's so interesting because being in real estate full-time and having a real estate team, what surprised me when I got into the industry is how few people recognize the opportunity of just traditional rentals.
• 8:31
  Speaker 1: So many agents that I talked to like, oh my gosh, I would really just love to get in and become an investor, but I don't know how it's like.
• 8:40
  Speaker 1: You're an agent, like you have all the details at your fingertips and what's stopping you is just taking the risk or, if you don't have the money, finding the money and kind of problem solving, and you're just allowing yourself to sit on the sidelines.
• 8:53
  Speaker 1: And somebody like you that hasn't been in real estate sees the opportunity and you just come in both feet and just rolling in and you see that opportunity, and now you look at how quickly I can double down, and so there's so many people that sit in real estate all day long and they do nothing with the opportunity, and so I think it just shows how great the opportunity to be in real estate is, and it's why I encourage agents stay in it long enough until you figure it out and put the pieces together, because you're costing yourself your future if you don't.
• 9:25
  Speaker 1: And then somebody like yourself comes in and you just put one, two, three, four, five, six pieces together and now you've got this awesome income coming in regardless of what you do each day, and so you can show up and spend time moving into your new house and you're still making money at the same time because those bookings are still happening.
• 9:45
  Speaker 1: So I know a lot of people would be curious to know.
• 9:49
  Speaker 1: So the first deal, right, like, how did you get that?
• 9:52
  Speaker 1: You had talked about selling your truck?
• 9:55
  Speaker 2: So the first one we had saved up for a while.
• 9:58
  Speaker 2: We had focused on our income over the years leading up to that, just the more money we could make and just stash away.
• 10:05
  Speaker 2: So when we were finally prepared to make that first investment, we were ready.
• 10:08
  Speaker 2: But you can start with short-term rentals without even buying a property.
• 10:13
  Speaker 2: So we can dive into those strategies.
• 10:14
  Speaker 2: But I usually encourage people don't ask how much it costs to start, but rather ask how much you have and then go deploy the strategy that best aligns to your budget.
• 10:23
  Speaker 2: Right.
• 10:23
  Speaker 2: But for our specific first deal, we did a 15% down conventional investment loan in Nashville, tennessee.
• 10:29
  Speaker 2: It was a four bedroom house.
• 10:31
  Speaker 2: The purchase price I thought was outrageous at the time, which is hilarious talking about that today, but it was like a $495,000 house that appraised four bedroom at the rooftop, and one thing we strive to do with our short-term rentals is create a cool experience.
• 10:46
  Speaker 2: My goal is to sell the experience, not the product, and that helps us stand out.
• 10:50
  Speaker 2: As Airbnb becomes more popular for investors and for travelers alike, there's going through thousands of properties, so I want to sell someone on the experience to not be erased to the bottom price-wise, but hopefully sell it at a premium to someone who's looking for a fun experience, have cool photo moments in the house hey, everyone, look where I'm staying, type of thing.
• 11:08
  Speaker 2: So we looked around Nashville and obviously you have the music city right, you have the music theme.
• 11:15
  Speaker 2: Bars are really fun, but there's murals everywhere which a lot of people don't know.
• 11:20
  Speaker 2: I didn't know when I moved to Nashville.
• 11:21
  Speaker 2: I saw hundreds of people lined up on a Saturday morning to take a photo in front of these murals with wings on the side of the building.
• 11:28
  Speaker 2: I'm like this is madness.
• 11:29
  Speaker 2: So how can we bring that into the Airbnb?
• 11:31
  Speaker 2: So it doesn't have to be a mural, but this is just what we did.
• 11:34
  Speaker 2: We brought a mural artist get into butterfly wings, nashville written above it, and our target audience was more special occasion, specifically Bachelorette parties.
• 11:42
  Speaker 2: Nashville is probably the Bachelorette capital of the world, I would say.
• 11:46
  Speaker 2: So we were able to charge a huge premium for weekend travel and we still get midweek bookings just a lower price point.
• 11:53
  Speaker 2: But that was our goal and it really panned out well.
• 11:56
  Speaker 2: So ever since we did that, we're like we got to focus on the experience.
• 11:59
  Speaker 2: But yeah, that was our first deal 15% down.
• 12:02
  Speaker 2: It cost us like 30,000 furniture.
• 12:04
  Speaker 2: All in that's four bedroom.
• 12:07
  Speaker 2: It has a rooftop and two other patio, so there were some additional areas to furnish and that included the cost of the mural, which I think was like $2,500.
• 12:14
  Speaker 2: But that deal has been great.
• 12:17
  Speaker 2: It cash flows as currently $6,000 to $7,000 a month after all expenses and mortgage paid.
• 12:24
  Speaker 1: Yeah Well, and I think that's the key for people when they're analyzing Airbnb's is to look at where's that spot you want to be, because we're not talking about $85 a night, $90 a night, like, hey, what's the cheapest I can go.
• 12:38
  Speaker 1: It's a totally different mindset, whereas when I'm working with investors on long-term rentals, you're looking to provide good value For you.
• 12:47
  Speaker 1: This is hospitality, so it's a totally different mindset shift.
• 12:50
  Speaker 1: I'm not providing housing, I'm providing hospitality and an experience, and so, yeah, people are willing to pay more for that when you can deliver a great experience, and that's where the financials can start to look really good.
• 13:02
  Speaker 1: Versus $100 a night is kind of the floor.
• 13:05
  Speaker 1: How cheap can I go?
• 13:06
  Speaker 1: Well, if this person's at $110 a night, I can go $105 a night and hopefully get bookings that way.
• 13:11
  Speaker 1: That's totally different than the way you look at this.
• 13:14
  Speaker 2: Yeah.
• 13:14
  Speaker 2: Yeah that's a great way to put it You're in a hospitality business.
• 13:17
  Speaker 2: It certainly is a kind of a different twist that you have to put on properties in order to maximize your revenue and cash flow.
• 13:23
  Speaker 1: Yeah, and then you're also looking for properties that have a few bedrooms where you can have 8, 10, 12 guests coming in, not necessarily just a couple or something like that Also gives you opportunity to charge more because, yeah, if you said like it's a bachelorette party, maybe it's two families coming together to share a spot, something like that that's where you can charge that premium.
• 13:46
  Speaker 1: And I know for me, having a family of five, whenever I try to book a hotel room now with five people, it tries to put me in two rooms, and so you always have to play with the filters.
• 13:56
  Speaker 1: Where we're fortunate enough, our youngest son is small enough, where, when you put in the ages, we usually look for two beds and a pullout or something like that.
• 14:04
  Speaker 1: But that's where an Airbnb for a family of five can make a total difference, because now I have room we can spread out, we're not cramped in a tight space.
• 14:12
  Speaker 1: So that's where you just have to change your thinking a little bit in terms of how people are staying, and that's where that opportunity is for people that haven't given Airbnb or short-term rentals any thought.
• 14:23
  Speaker 2: Yeah, for sure, and there's actually a misconception, in my opinion, on saturation of short-term vacation rentals.
• 14:29
  Speaker 2: There's actually a huge increase in demand year over year of a lot of new people booking for the first time on Verva or Airbnb, where they were traditional hotel stairs, and then a lot of people now think, hey, I'm going to book an Airbnb instead of hey, I'm going to book a hotel.
• 14:44
  Speaker 2: It's just a different way for people to travel, especially, like you said, in bigger groups.
• 14:48
  Speaker 2: It totally makes sense.
• 14:49
  Speaker 2: You can get a kitchen you might have, you can get a pool, whatever amenities you want you could search for, and all be under one roof and have more privacy than being in a big hotel.
• 14:56
  Speaker 2: So it's definitely a fun way to book travel as a guest too.
• 15:02
  Speaker 1: So when you're looking at spots for okay, so you've got your first one, it's a success.
• 15:07
  Speaker 1: You see the cash flow coming in.
• 15:08
  Speaker 1: What filters are you using, or how are you helping to decide where to acquire future properties?
• 15:15
  Speaker 2: So I do a lot of market research.
• 15:16
  Speaker 2: Airdna is an amazing data and analytics hub that I personally use and recommend to anybody who's first starting out.
• 15:24
  Speaker 2: Basically, you can look at the past three years of average daily rate occupancy and revenue data in any market in the world pretty much Pretty sure they operate most of the world and you can also look at future occupancy and booking trends and median price points too.
• 15:41
  Speaker 2: And then you can look at where the top properties are on a map and literally see the Airbnb and Verbo listings, which is really helpful, so you can see where are they clustered in a market or is it like in certain pockets of the city?
• 15:51
  Speaker 2: Where are those top performing properties?
• 15:54
  Speaker 2: You can use filters too.
• 15:55
  Speaker 2: So if I'm home, then on a two-bedroom place, is it a condo or is it a house in a beach town?
• 15:59
  Speaker 2: Where is it located?
• 16:00
  Speaker 2: And then what amenities and what furniture, what kind of vibes they have, why are people booking these properties?
• 16:06
  Speaker 2: And what I look for is what similarities they have, and then put my own twists, making unique twists on it.
• 16:11
  Speaker 2: Add a couple like wow moments within the house.
• 16:14
  Speaker 2: I usually try and go for like one to three key moments, because those first few photos online are so important.
• 16:20
  Speaker 2: I look at Airbnb as social media.
• 16:22
  Speaker 2: I mean our attention spans as people has grown so small, like two seconds onto the next one.
• 16:27
  Speaker 2: If you're going through hundreds of properties, you have one photo to really get someone's attention to want to learn more.
• 16:31
  Speaker 2: If you click on it, you get five photos on the splash page.
• 16:34
  Speaker 2: So that's what I start in the general market research.
• 16:37
  Speaker 2: There's really two different ways you can start searching.
• 16:39
  Speaker 2: You can look at traditional vacation markets, which is beaches, mountains, lakes, or you can look at urban areas such as Nashville, las Vegas, austin, texas that are growing cities but also have a massive amount of tourism.
• 16:51
  Speaker 2: There's reasons to visit the city and then you also have the work travel and the local events and things like that.
• 16:56
  Speaker 2: There's pros and cons to each right.
• 16:58
  Speaker 2: Vacation travel pretty much always going to have that in those areas and it's also kind of a hedge against anything like COVID to ever happen again.
• 17:06
  Speaker 2: When I noticed with COVID there was a major shift to those markets the traditional vacation markets but now it's starting to shift back.
• 17:15
  Speaker 2: So Nashville is kind of crazy.
• 17:16
  Speaker 2: But anyways, I don't want to elaborate too much on that specific question.
• 17:20
  Speaker 2: I'll talk all day.
• 17:21
  Speaker 2: But that general market research is really important.
• 17:24
  Speaker 2: But you can make money in so many different markets as you're well aware of being where you're located.
• 17:30
  Speaker 2: You don't always have to go across the world to find the perfect property per se.
• 17:34
  Speaker 2: You just have to find the right property in really any given market.
• 17:38
  Speaker 1: What are your thoughts on seasonality?
• 17:40
  Speaker 1: Because I live in Minnesota.
• 17:41
  Speaker 1: Minnesota is cold.
• 17:43
  Speaker 1: We work with a lot of out of state investors where even the idea of having renters in the winter they just can't fathom that and it's like, well, we still have jobs here in the winter, so we still have people that need to stay here.
• 17:54
  Speaker 1: How do you analyze kind of the weather and the seasonality piece, Because your markets are more warm weather?
• 18:01
  Speaker 1: What about those colder climate areas?
• 18:03
  Speaker 2: Yeah, no, that's a great point I do focus on.
• 18:06
  Speaker 2: I really try and have less seasonality in my business.
• 18:09
  Speaker 2: I'd like steady cash flow each month of the year.
• 18:12
  Speaker 2: You can still make a ton of money in a seasonal market if you just crush it during the busy season.
• 18:17
  Speaker 2: What you have to do, and makes the biggest difference in an extra $10,000 a year in cash flow, is how do you capture bookings during the off season.
• 18:25
  Speaker 2: What some people do in a specific location, they may switch it to one to three month long stays, maybe cater to traveling nurses if there's a hospital system nearby, or even rent it out on a three to six month lease in the off season, just to lower cash flow, but still cash flow, and then make all your money in, let's say, the summer months, if that's what it is.
• 18:44
  Speaker 2: So I personally do like to focus on less seasonal areas, but I wouldn't be shy away completely just because a market has basically late spring to early fall, just typically like a summer season, and then it quiet down.
• 18:59
  Speaker 2: So just know what you're getting into.
• 19:02
  Speaker 2: And that's why your DNA is so helpful, because what you can do is see what the traditional occupancy is and also how the average daily rates, tank or fluctuate, how much they fluctuate, and craft a forecast that makes sense.
• 19:16
  Speaker 1: Yeah, and I think another thing that you're very open about and sharing is you have a great calculator tool and I think that's something to recommend to folks.
• 19:24
  Speaker 1: Is you got to be able to put together a nice tool to be able to analyze those properties and so you can actually look at.
• 19:30
  Speaker 1: Okay, if I plug in this average nightly rate, I've got my vacancy rate, I've got my expenses figured out, here's what it can cash flow in.
• 19:38
  Speaker 1: And you do such a good job of just showing people how easy it is and I think sometimes people shy away from it and you're like, hey, let's not overthink this, let's just plug in the numbers and make a business decision here and, if it makes sense, move forward.
• 19:51
  Speaker 2: Yeah, 100%.
• 19:52
  Speaker 2: You got to strip the emotion out of it, especially with short term rentals, because it's really easy to look at a place and be like this is a kickass place, people will definitely rent it.
• 20:00
  Speaker 2: Well, if you don't know how much people are really willing to spend or how often those clientele is actually going to come into town and spend that kind of money there, like you don't really know how profitable it will be.
• 20:11
  Speaker 2: So it is really helpful to strip the emotion out of it and just focus on the numbers and then just stick to your criteria.
• 20:18
  Speaker 2: Honestly, the calculator helps me eliminate properties more than anything.
• 20:21
  Speaker 2: If it doesn't meet my cash and cash expectations, they're out the door and I'll have the next one right, because eventually it's just a funnel of how to get to a property that fits and has upside.
• 20:31
  Speaker 1: Yeah.
• 20:31
  Speaker 1: So on the cash, on cash calculation, what do you look for?
• 20:37
  Speaker 2: My minimum is usually 25%, with upside With higher interest rates.
• 20:41
  Speaker 2: Now I would still be pretty happy with 20 plus, just because it's more expensive to borrow at this point in time.
• 20:47
  Speaker 2: But I still think there's opportunity to have 25 plus.
• 20:50
  Speaker 2: And if you're able to leverage a second home loan by only putting 10% down, if you plan to use the property at all during the year for personal use, then there's major upside.
• 20:58
  Speaker 2: The highest we've had on one of those was 100% cash on cash, which is pretty wild to think about.
• 21:03
  Speaker 2: And then if you're deploying rental arbitrage which you're not buying the house, which you're actually doing a corporate lease to rent and then furnish and re-rent, you can have.
• 21:11
  Speaker 2: I mean, my expected return would be like 100% to 300%.
• 21:14
  Speaker 2: And some people that focus only on arbitrage they're like if it's not 100% I'm not touching it.
• 21:18
  Speaker 2: So it's pretty wild to hear that out loud, but those numbers are very real in the short-term rental world.
• 21:26
  Speaker 1: Yeah, why don't you just take a minute or two and talk about the arbitrage piece for folks that have never heard of it or they can't get their mind around it?
• 21:33
  Speaker 1: How does that work?
• 21:35
  Speaker 2: Yeah, and listen up.
• 21:36
  Speaker 2: If you feel like how, man, I'd love to do real estate, I don't have a ton of money, this is for you.
• 21:40
  Speaker 2: You don't need a down payment, you don't really need credit or anything like that.
• 21:44
  Speaker 2: What you would do is just form a basic LLC let's call it Michael's Corporate Housing Company and then you would approach either traditional property managers or an apartment complex you can also do single-family homes or condos and what you're doing is basically signing a corporate lease.
• 21:59
  Speaker 2: Basically, they're renting to you as a business, not a residential lease, not as a person renting there.
• 22:05
  Speaker 2: So what you're doing is gaining permission to actually furnish it and then re-rent out on a short-term basis to your client.
• 22:11
  Speaker 2: So traditionally it was more like work, relocation, travel, nursing things of that nature, but it's kind of transitioned into some of that but also just short-term rental travel in general.
• 22:24
  Speaker 2: So it could be vacation, leisure travel, family travel, whatever it may be.
• 22:28
  Speaker 2: But basically all you need is money to furnish it and then some costs associated with setting up the lease, if there are any, so much less cost prohibitive for people, especially if it's a smaller unit.
• 22:39
  Speaker 2: You could start with a few thousand bucks max and then you're in and then anything you bring in on Airbnb or about any of these other platforms, minus your monthly rent and minus your operating expenses like utility bills, wi-fi, things like that, is cash flow.
• 22:52
  Speaker 2: So the return can be substantial.
• 22:54
  Speaker 2: And that's an amazing way to scale Because, let's say, you start with five grand or 10 grand, rather, in your cash flow, like a thousand bucks a month.
• 23:00
  Speaker 2: It only takes you five to 10 months to get into another unit and now you got two grand a month.
• 23:06
  Speaker 2: You could do the math and very quickly, all of a sudden you could be making five to 10k a month in cash flow.
• 23:11
  Speaker 2: That's life changing.
• 23:12
  Speaker 2: You could leave your job if you wanted to at that point or just continue to scale.
• 23:16
  Speaker 2: So it's just an amazing method that I think people should look into.
• 23:22
  Speaker 1: Do you find a certain type of property might lend itself better for that, like an urban condo or something like that?
• 23:29
  Speaker 1: Or you'd also mention single family homes.
• 23:31
  Speaker 1: Are there types of properties where you feel like the risk is a little bit less or there's maybe a higher upside?
• 23:37
  Speaker 2: So honestly, I think you can go either way.
• 23:39
  Speaker 2: I think it really comes down to the individual property, what the rent is and then what the market average daily rates are in occupancy.
• 23:46
  Speaker 2: So it really comes down to individual property analysis.
• 23:48
  Speaker 2: I think if you're looking for something that feels a little less risky and there's less money on the table on your side, go for something smaller, do a studio apartment or something.
• 23:56
  Speaker 2: The benefit of going the apartment route is if you form a real, because it's really about relationship building with the property management organization or whoever owns the place.
• 24:05
  Speaker 2: You need to make it a win-win scenario.
• 24:09
  Speaker 2: They aren't doing you a favor to run it at a short-term rate.
• 24:12
  Speaker 2: You're doing them a favor because you're reducing their occupancy rate, which is boosting their overall revenue and cash flow.
• 24:18
  Speaker 2: Rent is paid on time, every single month, and the property stays in fore sale condition because you have to professionally clean it between every group of guests Normal tenants not all of them are great.
• 24:29
  Speaker 2: Some people really live in a place and they don't clean up after themselves.
• 24:33
  Speaker 2: So there's a lot of benefits both ways.
• 24:35
  Speaker 2: What I'm getting at is if you can form a great relationship with that property manager, they may come to you for the same property or other properties to be like hey, I have 10 open units, Do you or anybody else want to rent them Because I need to fill them.
• 24:47
  Speaker 2: And if you can build that type of relationship, that's where things can just go bonkers for you in growing that business.
• 24:54
  Speaker 1: Yeah, and I think you had mentioned, too, having that good relationship and then making sure that the property manager is keeping up on repairs and stuff that they need to still keep up on, because you need to have that win-win there, so that way, you continue to have great reviews and they're keeping up on the property, you're providing the cleaners and all that.
• 25:11
  Speaker 1: So, yeah, and go research that on YouTube, find people out there that are doing it at a high level, but that's a legitimate thing, and, like you said, you don't have to have a lot of cash to do it, or, even so, if you have a home and there's an empty bedroom, that's another great way to start.
• 25:28
  Speaker 1: You're now in the hospitality business, though, so you're having people coming to your house, so if that's something that interests you, it's still another opportunity.
• 25:36
  Speaker 1: It's a way to get going and a way to get your foot in the door.
• 25:39
  Speaker 2: Yeah, absolutely.
• 25:39
  Speaker 2: I mean you can house hack to Airbnb.
• 25:41
  Speaker 2: There's so many different methods.
• 25:42
  Speaker 2: And then the last strategy I'd like to mention is just co-hosting.
• 25:46
  Speaker 2: There's a lot of people out there who don't want to manage their own Airbnb's or they're paying traditional exorbitant costs to have a property manager, typically charged 20 to 35% of revenue, to manage their properties.
• 25:57
  Speaker 2: If you've come in as a co-host, I'm just going to manage your listing, manage gas and manage the cleaners and manage maintenance.
• 26:03
  Speaker 2: You can automate a lot of that through tech now, but I'll manage it for half the price as your big box PM.
• 26:08
  Speaker 2: If you're going to charge 10% and you do have a property that does 100K a year, then you'll make 10 grand a year just to manage it.
• 26:15
  Speaker 2: So think about how many properties it would take to onboard to whatever your financial freedom goal is, and then you could take that money and funnel into your own investments.
• 26:24
  Speaker 2: But co-hosting takes nothing but just grit and hard work and networking.
• 26:28
  Speaker 2: That first one is definitely tough if you have no experience, but once you lock one in, I've known people to scale very quickly to multiple properties.
• 26:35
  Speaker 1: For folks that don't know your story.
• 26:36
  Speaker 1: Just share a little bit about that growth.
• 26:37
  Speaker 1: Then Each of the properties that you've gotten, your move to Florida, finding those properties just to share folks that maybe haven't heard how that's happened for you.
• 26:47
  Speaker 2: Yeah.
• 26:47
  Speaker 2: So, like I mentioned, the first property was in Nashville.
• 26:49
  Speaker 2: It was just an easy market to invest in because we lived there and it was a high tourism and high growth city.
• 26:54
  Speaker 2: So we got the second one, also in Nashville.
• 26:57
  Speaker 2: It was a smaller place, a two bedroom condo downtown that rents very well, very high occupancy.
• 27:02
  Speaker 2: The third one we actually leveraged a second home loan a vacation home to 10% down out in Gatlinburg, tennessee, so we could go and visit just for pretty.
• 27:10
  Speaker 2: You know, three and a half hours away.
• 27:11
  Speaker 2: Not too bad.
• 27:13
  Speaker 2: We did a more of a rehab on that one and that one rented out like nuts.
• 27:17
  Speaker 2: It's crazy.
• 27:18
  Speaker 2: We pivoted there during COVID because Nashville was pretty slow for several months but the mountains, lakes, beaches just went nuts.
• 27:24
  Speaker 2: So we did that one there.
• 27:26
  Speaker 2: And then we partnered on the fourth one, which was a great opportunity.
• 27:29
  Speaker 2: We actually met this guy who was a home builder and house flipper in Nashville.
• 27:33
  Speaker 2: He built the two houses across the street from us and we just became friends over time while he was building the homes over what?
• 27:38
  Speaker 2: An eight or 10 month period and he said, hey, if there's ever an opportunity for us to partner, let's do it.
• 27:42
  Speaker 2: And I was like, okay, like let me look for one that needs a lot of work that we can basically do the Burr method on, which is buy, rehab, rent, refinance, repeat and pull a ton of money back out.
• 27:52
  Speaker 2: That will also be a high cash flow property.
• 27:54
  Speaker 2: This is probably the most insane investment we've ever made.
• 27:57
  Speaker 2: I don't know how we secured this deal at this point in time, but we bought a place it was a four bedroom plus a loft in Gatlinburg, tennessee, for under $500,000 at a price for four set of $575,000 before we did any work, sunk about $110,000 into it but did about 70,000 in furnishings, furniture and design data property about 12 months later appraised for $1.2 million and it cash flowed us.
• 28:27
  Speaker 2: It'll cash flow six figures a year, which is just nuts to think about.
• 28:31
  Speaker 2: But what we did as a cash out refi, we pulled out over 2X what total amount we invested in and we said, basically it's just an infinite return on our investment, which is amazing about the Burr model, so that was really cool.
• 28:41
  Speaker 2: Then, like I said, my wife and I both quit our jobs.
• 28:44
  Speaker 2: At that point we were cash flowing around $30,000 a month and we bought a camper van and we long-term rented our primary home in Nashville for a year and we traveled around the West.
• 28:55
  Speaker 2: We're trying to figure out where we wanted to actually live and in the meantime, we're like, hey, let's also hit some markets that may be good short-term rental markets.
• 29:00
  Speaker 2: While we're out, stumbled through Florida, bought two homes down there because just we saw how steady South Florida was.
• 29:08
  Speaker 2: It wasn't very seasonal and it was actually busiest during the winter and early spring, which is when we're slowest in the mountains and even in Nashville.
• 29:16
  Speaker 2: So for us it was more of a balancing act on when the heavy parts of cash flow would be.
• 29:21
  Speaker 2: So it's kind of more level throughout the year.
• 29:23
  Speaker 2: And we also saw a major trend during 2020, 2021, 2022 of people leaving major metro areas for sunny, warm Florida.
• 29:32
  Speaker 2: So we saw that mass migration and what it did to the housing market.
• 29:36
  Speaker 2: So we're like, well, it's a good long-term hold in addition to the cash flow that we could do there.
• 29:40
  Speaker 2: So, yeah, it brought us to six homes.
• 29:43
  Speaker 2: We actually sold our primary home in Nashville.
• 29:45
  Speaker 2: We ended up buying our new primary in South and Greenville, south Carolina.
• 29:50
  Speaker 2: So, it's just been a pretty wild two and a half years.
• 29:53
  Speaker 2: But now, with six properties, our cash flow should be 40 upwards of 50K a month from just those six and we have focused on larger properties and as we've gone on we've tried to make a more luxury experience and the reason we've done that personally, I'd rather manage one big property than three small ones that both produce the total same amount of cash flow, because it takes the same amount of time to check in a guest in a big property that does a small property, so one set up about the same amount of time commitment.
• 30:24
  Speaker 1: Yeah, it's a little bit of a different mindset shift because people will naturally think bigger property, bigger rest, but at the same time it's the same amount of work and you're able to capitalize on those higher returns.
• 30:35
  Speaker 1: But I think sometimes people just naturally think, oh, I'm gonna start small.
• 30:38
  Speaker 1: But from an efficiency standpoint it's very efficient to do it that way.
• 30:42
  Speaker 2: Yeah, yeah, for sure, and I wouldn't discourage anyone from starting small by any stretch of the imagination.
• 30:47
  Speaker 2: But I just think, as time goes on, especially since we still currently self-manage, I'd rather manage less larger properties than more small ones, just because from a time commitment perspective, it just makes more sense.
• 30:59
  Speaker 1: Yeah, and for people out there that think that self-managing would be a headache, talk about that process, cause I know it's very simple If you have good partnerships, good boots on the ground, really it's just making some phone calls and doing some very minimal stuff.
• 31:13
  Speaker 1: So it's not like you.
• 31:14
  Speaker 1: Self-managing six properties is now.
• 31:16
  Speaker 1: You're working 60 hours a week to make that happen, right, yeah, maybe 20 years ago it probably would be.
• 31:21
  Speaker 2: But the beauty of technology and the rapid evolution of technology is there's just so much cool tech out there that automates a lot of old manual tasks, especially in the vacation rental space.
• 31:32
  Speaker 2: As long as you have good local cleaners and they communicate well through a cell phone and you leverage apps that help automate guest messaging, cleaner scheduling and then even cross a point or calendars between Verba, bookingcom, airbnb, but all the guest messaging is automated, the pricing is automated, so it's really just responding to specific things from guests questions, and then specific things from cleaners or if there's ever damage.
• 31:59
  Speaker 2: But honestly, it's probably about 30 minutes a week per property.
• 32:03
  Speaker 2: I would say Some weeks more, some weeks less, but that's just the beauty of it.
• 32:08
  Speaker 2: Now and most I think I mentioned earlier most traditional PMs, and they still do charge 20 to 35%.
• 32:13
  Speaker 2: So if we'll do, I think last year we grossed around 600K, so if we were to do 20%, even that'd be a lot of $120,000 that we've given to do a PM that takes us two hours a week to do from a van in the middle of nowhere.
• 32:26
  Speaker 2: So it's like I'd rather pocket that now to help scale faster and then sit back and pass it off to a PM later down the road.
• 32:35
  Speaker 1: Right.
• 32:35
  Speaker 1: So what does the future look like for you?
• 32:38
  Speaker 1: What irons do you have in the fire here?
• 32:39
  Speaker 1: What's the twinkle in your eye for the next 12 to 24 months as you think about your business?
• 32:45
  Speaker 2: Yeah, so I've actually lately I've been focused a lot more on my coaching business and my social media brand because I have a lot of kind of things that have just happened organically over the past 12 to 14 months there which I wasn't really expecting.
• 33:00
  Speaker 2: So just kind of hitting that full force and helping other people do the same thing that I've been able to do has been really rewarding, both financially and just kind of like intrinsically.
• 33:08
  Speaker 2: Just seeing other people hit financial freedom through short term rentals is just like amazing, amazing feeling for me and them.
• 33:14
  Speaker 2: So I've focused a lot on there and I'm being more opportunistic.
• 33:17
  Speaker 2: So we're kind of we just set up these two properties in Florida, which was a lot of work.
• 33:21
  Speaker 2: So now we're kind of sitting back, sitting at our own home and once I'm still hunting for properties, of course every now and then.
• 33:27
  Speaker 2: So once we find a great opportunity, regardless of where the market's at, I think I'd like to be prepared to just jump on it and be more opportunistic, to like wait for like a home run.
• 33:36
  Speaker 2: But that's kind of where we're sitting right now.
• 33:41
  Speaker 1: Yeah, why don't you just quick touch on the social media piece for a little bit?
• 33:44
  Speaker 1: Because, yeah, you're up to 750,000 followers an hour on TikTok.
• 33:48
  Speaker 1: How did that?
• 33:50
  Speaker 1: What was your mindset around that?
• 33:52
  Speaker 1: And as you started to see some value in that, what type of priority did you give to making sure that you're continually posting, kind of mapping out what my posts are gonna be, and doing that because your method is very simple, straightforward, honest and open and I think people really value that.
• 34:11
  Speaker 1: But talk about that social media piece and how you were able to be successful there.
• 34:16
  Speaker 2: Yeah, so I actually started doing longer form content on YouTube in 2020, I think it was and didn't get a ton of traction.
• 34:24
  Speaker 2: My content was actually pretty subpar as far as like camera work, lighting, editing, so that's probably why.
• 34:28
  Speaker 2: But I was really just regurgitating what I was learning in real estate and just sharing all this awesome stuff that I found.
• 34:36
  Speaker 2: And then I started I actually did a challenge with a real estate buddy of mine on TikTok like a post a day for 30 straight days, and I'd never used TikTok.
• 34:44
  Speaker 2: So a couple of videos hit the algorithm pretty well, got a few hundred thousand views, and I was like this is crazy, because YouTube is really really hard to kind of hit that at the beginning stages.
• 34:55
  Speaker 2: So then I was like let me just keep this up and just see where it goes, so started to figure out that just being open, honest and kind of organic with the audience and saying, hey, here's what I'm doing and here's how much money I'm making from it.
• 35:08
  Speaker 2: You can do it too, Like you said.
• 35:10
  Speaker 2: That really resonated with a lot of people and a lot of people messaged me saying, and you really opened my eyes.
• 35:14
  Speaker 2: I didn't really know this.
• 35:15
  Speaker 2: I'm like that's really cool.
• 35:16
  Speaker 2: So I just found a lot of just fun in doing it, Didn't really I didn't make any money on social media for at least 12 to maybe 24 months total.
• 35:28
  Speaker 2: And then finally, all of a sudden, all these different business opportunities bubbled up.
• 35:30
  Speaker 2: A lot of people asked me for calls.
• 35:33
  Speaker 2: I took a bunch of free coaching calls and then people are like weren't you charging for this?
• 35:36
  Speaker 2: I'm like I don't know, I never thought about it so like, if you build a course, I would take it Like this is all.
• 35:41
  Speaker 2: Like you already have it all planned down.
• 35:43
  Speaker 2: I'm like, okay, I never thought of myself as a course guy or any of this, but built a course.
• 35:47
  Speaker 2: Did coaching do like a like six month long mentorship program?
• 35:51
  Speaker 2: I sell like the calculator, spreadsheets and a bunch.
• 35:55
  Speaker 2: And then I partnered with brands, too, that I'm already using and loving every day.
• 35:58
  Speaker 2: So I can basically promote what I love about their product and I get paid to do so.
• 36:03
  Speaker 2: It's just amazing what kind of leverage you can have if you can grow a personal brand and grow a following.
• 36:10
  Speaker 2: That's why I've been more focused on that.
• 36:12
  Speaker 2: Just the scalability of that is just crazy.
• 36:15
  Speaker 2: So I'm just kind of seeing where the tide takes me, I guess, as you could say, yeah, it feels very natural.
• 36:23
  Speaker 1: It doesn't come across as forced the ads that you do.
• 36:26
  Speaker 1: It's not out of the scope of what you're trying to do.
• 36:31
  Speaker 1: You share your analysis tools in your videos like hey, here's what I'm looking at.
• 36:37
  Speaker 1: I know a recent one is Birmingham, alabama.
• 36:39
  Speaker 1: Here's my spreadsheet.
• 36:41
  Speaker 1: I plug in the numbers.
• 36:41
  Speaker 1: Well, naturally people are going to ask well, how did you get that calculator?
• 36:45
  Speaker 1: Well, you go click on the link and you can go download your calculator.
• 36:48
  Speaker 1: So people want to know what you're doing.
• 36:50
  Speaker 1: So they obviously want to be coached by you.
• 36:52
  Speaker 1: They want to have those masterminds or those training calls.
• 36:54
  Speaker 1: So it just very much is an organic overflow of you just doing a good job and telling people about it and being honest.
• 37:02
  Speaker 1: There's probably some people that are rubbed the wrong way by your honesty, but I know people appreciate that versus all the BS that's out there in the real estate world of, because there's people that are sharing how much money they're making by sitting in their Lamborghini with their cash check.
• 37:19
  Speaker 1: You're sharing how much money that you're making in just a very open and transparent way to help others, and so I think that authenticity really comes through with people.
• 37:28
  Speaker 2: Yeah, I appreciate you saying that and yeah, I've seen my share of those videos out there which leads you down a rabbit hole of trying to find where the value is.
• 37:36
  Speaker 2: Like show me what you're doing.
• 37:38
  Speaker 2: Like I want to know.
• 37:38
  Speaker 2: So for me, I just want to give as much free value as possible, and I think that is what has enabled my brand and all these other things I'm doing and making money on now to just grow exponentially and it's just wild.
• 37:52
  Speaker 2: But so I hope to continue that.
• 37:53
  Speaker 2: I just want to be authentic and be myself.
• 37:56
  Speaker 2: I don't need to be post-inner flexing, be anything crazy or anything like that, just to try and pump the algorithm.
• 38:03
  Speaker 1: Yeah, I remember having a conversation with another person at real estate a couple of years ago about where's the genre for the.
• 38:10
  Speaker 1: I want to be a good husband and a good dad at the same time that I'm being in real estate.
• 38:15
  Speaker 1: Like you, don't really see that genre very much because it's always the flashy cars or this, that or the other, and it's like I just want to be a good father, a good dad and do a good job in my business and grow that way.
• 38:26
  Speaker 1: So yeah, yeah.
• 38:28
  Speaker 2: Yeah, there needs to be more of that.
• 38:29
  Speaker 2: For sure I like that.
• 38:31
  Speaker 2: It's unfortunate because I feel like the videos.
• 38:35
  Speaker 2: The other side of it is when, like the flashy videos, those hippie algorithms so perfectly, because you have a lot of people, especially younger people, like, oh, I like that lifestyle, like, like, comment share, and then you have 50% of the crowd being like middle finger up, like man, screw you, this bullshit content you're putting out, like, oh, this lifestyle isn't real, you're just flexing.
• 38:56
  Speaker 2: So then it just creates bickering in the comments, like all this just pumps the algorithm.
• 38:59
  Speaker 2: That's why a lot of people do it.
• 39:01
  Speaker 1: Yeah.
• 39:02
  Speaker 2: So for better or worse.
• 39:04
  Speaker 2: That's why a lot of those videos tend to do well.
• 39:08
  Speaker 1: Yeah, I had somebody reach out on a comment on a Facebook ad of ours talking about real estate investing, and they're like you know something about I would rather take $20,000 less than to sell to a greedy person like you.
• 39:20
  Speaker 1: And it's funny because I wrote back, you know, because I want to keep the algorithm going.
• 39:25
  Speaker 1: I don't want to just delete a negative comment.
• 39:27
  Speaker 1: And I said something along the lines of like yeah, you'd be surprised to see what kind of flashy cars we pull up in.
• 39:33
  Speaker 1: Either it's my seven year old minivan that has a dent in the side where somebody hit it in the parking lot, or my pickup truck, where the AC went out, you know, over the winter.
• 39:42
  Speaker 1: You know, and it's like that's the type of guy that I am, like I'm not.
• 39:45
  Speaker 1: You know, this flashy person that a lot of people, when they think investor or real estate, they think of that type of person.
• 39:51
  Speaker 1: Like you know, I'd rather spend my money on more productive means versus a flashy car.
• 39:55
  Speaker 1: You know, right, yeah, yeah.
• 39:58
  Speaker 2: So, you can have the flashy cars down the road, but you just got to build the foundation, so yeah, one of the things that was a big takeaway for me when I first started was, you know, let your assets pay for your liabilities in life.
• 40:11
  Speaker 2: And I think it was like cashflow quadrant or bridge, that port, that where I kind of got like the first you know whiff of that concept.
• 40:17
  Speaker 2: And that was right.
• 40:18
  Speaker 2: After I bought it like a dream truck that I, you know, I started making commission in my sales job like I can afford this truck now paid it off as fast as possible, and I'm like why would I do any of this?
• 40:27
  Speaker 2: I was doing everything that I totally shouldn't have to do, so instead sold the truck, bought the assets and now pay for the liabilities in life, and I'm like this is what people are talking about.
• 40:37
  Speaker 2: It makes total sense, right yeah.
• 40:38
  Speaker 1: And you can afford the truck and not feel guilty about it, because you've allowed the assets to pay for that.
• 40:44
  Speaker 2: Exactly, yeah, you don't have to wake up every day and be miserable not miserable, but like unhappy driving it because you know you're driving to a job that you have to go work in order to pay the month, the note on it every month.
• 40:54
  Speaker 2: So it's like a totally different feeling having cashflow pay for things in life.
• 40:59
  Speaker 1: So for yeah, so for folks that want to find out more about you, some of the tools, the offerings that you have, how can they do that?
• 41:06
  Speaker 2: Really everything flows through any of my social media platforms Instagram or Tik Tok would be a good starting point, which I think my handle is M Elefante 6.
• 41:14
  Speaker 2: Or you can just search my name, michael Elefante.
• 41:17
  Speaker 2: You should find me there.
• 41:18
  Speaker 2: So yeah, feel free to throw me a comment or shoot me a DM.
• 41:22
  Speaker 2: I try and respond to everyone that reaches out like a genuine question.
• 41:25
  Speaker 2: So I appreciate it.
• 41:28
  Speaker 1: Awesome.
• 41:28
  Speaker 1: Well, thank you so much for coming on the show, thank you for sharing with everybody, and just wish you the best of luck in the future.
• 41:34
  Speaker 2: Yeah, thanks so much.