Last updated on August 24th, 2022
Welcome back to another episode of Into The Airbnb, where we chat with Airbnb hosts about their short-term rental experience.
Today, our guest is Uriel Ramirez, an Airbnb host who manages a condo unit in the Downtown Sacramento area. Uriel and his business partner launched this listing less than a month ago and are already recording top performance for their listing. In this episode, Uriel will bring great value by providing us really interesting information about the Rental Arbitrage business model and sharing with us his experience getting started on Airbnb.
This episode is sponsored by Airbtics, short-term rental analytics for high return investments, comprehensive data for insights, ideas and inspiration. Go to app.airbtics.com to find precise Airbnb data such as occupancy rate, revenue, average daily rate and so on. So, without further ado, let’s get into it!
Into The Airbnb Podcast S2 EP 50: $13K in bookings in their first 3 months! – Starting off in the Airbnb business Rental Arbitrage in Downtown Sacramento, CA
You can also listen to this Into The Airbnb Podcast Episode on Otter.
Delia:
So can you please tell me how did you get started with Airbnb or short term-rentals?
Uriel Ramirez:
So I started Airbnb because social media book, there is this mentorship program that I came about, so I signed up for that mentorship and that was for short-term rentals. So it’s through coaching and coaching and I told my friend who is also my business partner that you should check it out. And so since we took that coaching program, we have the tools to build up. This was in November of last year towards Thanksgiving week that we started the coaching program and so that helped us a lot because in that coaching program, we were able to be educated and also to network with other people who are wanting to do Airbnb or short-term rentals. And the Coach actually, he’s around my age, he’s like, early 30s, now you guys know my age. But the coach, he started in 2018 and he retired in four years. So he retired his wife from being a nurse and just doing a short-term rental. So we wanted to go with someone that already had the results that we wanted and so that’s why we took this coaching program.
Delia:
And would you recommend for first time Airbnb host or people who are planning on doing short-term rentals or Airbnb, to also attend to these coaching programs to educate themselves at first?
Uriel Ramirez:
I highly do and I know it might be like intimidation because of the price. But you need to have someone that already you’re looking for the results for already because it’s gonna save you time, headaches and mistakes, costly mistakes, because here they don’t just educate us, they’re not just giving us resources, but they also give us advice when it comes to legal terminology as well. So that way you don’t get basically sued, you have a way to back everything up because everything that we run an Airbnb and short-term rentals, they want to make sure that it’s legal as well because I know there’s people out there that don’t follow the rules interceding and they get shut down and that will be a costly mistake for not seeing the city ordinances and if someone reports you then you have to shut your Airbnb business just because of that reason.
Delia:
So it’s not only like mentorship, but they also guide you and help you in case you need it as well, right?
Uriel Ramirez:
Yeah, correct. So they have people there that connect us with, they already helps with our coach, with the legal matters. So they don’t, since they went through it already, since they have already up to this moment 16 Airbnb properties already and also they know that everything has to go in order, you know, everything to be legal.
Delia:
That’s right. And can you tell me a little bit about, you know, not the hosting experience, but the purchasing experience so far, like in your state? Not sure but I think in the state of California, I think short-term rentals is not allowed or is it in your area?
Uriel Ramirez:
You know, it’s the price in that in California since you know, Airbnb, the founders of Airbnb are from the Bay Area, you know, and so you would think, like, well, it’d be we wouldn’t have like, you know, easy to however many people’s there are some parts that is hotspots and there are some parts that is not for the same reason that there’s strict regulations for short-term rentals. But we’re able to network and you know, to see the spot, of course, in the span that I have the Airbnb, which is our first Airbnb property, which is in Downtown Sacramento, we chose that based on the platforms that they give us, like different software’s like I don’t know if you guys heard of Mashvisor AirDNA and also using Zillow, you know, a little bit of everything to do comes and that’s what we choose on Downtown Sacramento. One of the things that people are scared of and I think it’s a healthy and we have learned this and we have seen this through other people, it’s okay to have your property where there’s other competitors, all you have to do is to be more competitive than they are and to put a spot basically getting the location they love, for example, like our listing is a luxury condo in Downtown Sacramento. So there’s another luxury condo there nearby, so we’re gonna offer something that they don’t offer, you know, maybe a better price, maybe better amenities as well. So we tried to make sure that we’re competitive as well.
Delia:
Yes, because you’re in a competitive area, of course, you have to be competitive. So to analyze your investment, you used all of those tools and also did you, like, choose that area for any other particular reason?
Uriel Ramirez:
We chose that area also because not just for the cons that we saw, though, they know that even though we haven’t even watched, but we know that the cons were looking really good was profits and also, because it’s closer to where I live, you know, I still have my regular job, my 9am to 5pm job and also my business partner has her job and she lives in the Bay Area, so we wanted to start with the first Airbnb to be close to us. So I live like an hour or 40 minutes away from Sacramento and also my business partner too. So that way, you know, we chose that one first because we didn’t want it to choose somewhere way far further in case we needed to do something. So this is just kind of like the learning experience. I know most people maybe that your interview may have a lot of experience in their pockets and well season hosts, but we’re starting I want you guys to hear me from being from already here developing this business, you know, first to do all this research, get educated, before launching, you know, so that way you have a successful launch. And talking about a successful launch, you know, I barely started, we barely started the last week before the Memorial weekend, in May and when we launched it, we have so many inquiries to book that weekend that we were like, wow, like, I can’t believe this, that we already have so many increase then. So now, ever since we launched it, we have not been able to stop the bookings because we’re sold for two months already of reservations for the summer. So it’s all basically the way you trust the mentorship, if you follow the person who already has the results you’re looking for, then everything else when you launch is gonna be successful and will fall into its place.
Delia:
What do you think made your launching successful?
Uriel Ramirez:
We didn’t launch it because there’s a lot of factors. But the number one thing is simple to follow the person who has already went through it, you know, to save you time, save you also the crunch because one of the things that helps us is making sure that Airbnb business or short-term rentals does not become your second job. Your time like my time and your time, has a price that’s worth a lot. So one of the things that we noticed that this kind of business model, there’s other business opportunities like we have a co-host that we met in Facebook that does all our communications as well and she also helped us to get our yes for first property because we don’t own the condo, we do a sublease, which we pay the owner their mortgage every month and so able to use this business model. So I’m not the owner of the condo, we’re just subleasers of the condo to do short-term rentals. But all that for us to come to that point, we needed to have someone to help us to finance that property. That’s when we found our co-host and she did everything virtually, found the property, called the property manager and able to do a contract, able to do our business. So we found someone that already knew what we wanted.
Delia:
I see now. And now that you mentioned about subleasing, can you tell me a little bit of, you told me that this co-host that you work with, contacted the landlord and convinced him and do you have any idea of what pitch did she use to convince this landlord?
Uriel Ramirez:
We met through because she’s also part of the mentorship program that we have. So she already have the same mindset, the same terminology on what we need to do because in this mentorship, we are able to learn about all the common objections that landlords will have, for example, if you say Airbnb, they’re gonna get scared when you say Airbnb, they’re gonna think party people, they’re gonna be thinking, “Oh, no, they’re gonna destroy my property”, “Oh no, they’re not gonna probably pay my mortgage” or “What’s gonna happen”. That’s where we get to learn about many different things that are able to calm the fears and able to bring an answer to the objections of landlords. So we have scripts also that our coach provides us to vote to know what to say for those kinds of objections. So that’s the thing that she did for us, you know, we’re able to find out what were the concerns and fears and the objections of the landlord and making sure that they know that we are able to settle for any pricing issues. I know one of the common issues with being like mean and noise. So one of the things that we have learned in this mentorship is able to have a noise detector device coming new, that tracks not just a noise detection, but also the temperature in your property and also lets you know, if it’s humid and that actually has helped us in launching to making sure that there’s not so much of a crowd because also dictates if it’s overcrowding in your property because, you know, it’s illegal to have cameras inside the property, since it will be the restrict on that. So be able to put a noise detecting device that helps us to document all that in case something gets out of control. And the number one, another thing too to have is a ring camera or even a security camera outside the property so that we document how many people are coming through the property as well, making sure what they say is exactly, you know, what are you’re seeing in the camera as well.
Delia:
Yeah, so basically, these problems have a very, like obvious solution that I understand kind of why landlords don’t want to agree to subleasing for Airbnb sometimes, so it’s really good that you train yourself. You train with others to teach these landlords and for them to agree to do the subleasing because at the end, it’s something that also benefits them, right?
Uriel Ramirez:
Yeah, correct. And also the subleasing, that’s the business strategy that I use because you get a more profit. My business partner who, no my other person, who is a co-host, she doesn’t, she’s not part of the subleasing strategies, she’s part of the co-hosting strategy. So she doesn’t have to put anything down to invest because she’s the one that is going to find the city ordinances, also contact the property managers and then able to get paid until she gets an approval or gets from the landlord. So that’s what she does and also able to pay her to be a co-host. And Airbnb, was such percentage, as well, so she does all the communication. So something that I have learned through this experience, the co-host will be the person who has time to do other stuff. Like I mentioned previously, I may have my business, but I didn’t have the time. We were feeling like this was like a second job for us and we didn’t want it to feel like this kind of business was going to be a second job. We wanted it to feel like we’re not working in the job, but we’re working on the business.
Delia:
So by you saying that, I assume that since the very beginning, you were thinking about doing subleasing or rental arbitrage, like that’s the normal term, right?
Uriel Ramirez:
Yeah. So this will be our first one and we’re thinking of to get a second one, but this time being owners of the property. That’s another business concept too, to be able to do your Airbnb business by owning your own property as well. But working with that business model concept or short-term rental.
Delia:
And can you tell us a little bit about the benefits of starting with this business model, with rental arbitrage?
Uriel Ramirez:
Yeah, so like, for example, if you’re able to own your own property, there’s so many ways that you can invest by having your own property, not just because it’s your own property, but through the Airbnb business of short-term rentals. From that you’re able to pay your mortgage and then on top of that get profit, you know. Whereas right now that we’re doing subleasing, we don’t own the property, we’re paying the landlord their mortgage, they’re happy for that, you know, they’re happy that we’re able to also increase their appreciation value after property because we do remodeling, we do, you know, also in the property. So that when you know, we’re ready for business and so that’s gonna make the landlord happy. We’re not benefiting because benefiting in the surplus in strategy, the landlord, so that’s why they’re hapoy, it’s increasing the value of the property so that way, if they want to sell it, they’re gonna get a huge equity out of their property.
Delia:
Yeah, that’s right! And how does this business model benefits you as an Airbnb host?
Uriel Ramirez:
So for me, for this subleasing strategy, we get the profit after paying the co-host, paying also taxes, you know, and also no owning the property. You know, we don’t have to pay for other stuff that landlords have to pay, like, you know, city taxes and everything else, so it helps us that way. So even though we have a contract for a year, you know, it’s secure to say that we’re going to have business for one year and able to renew it again, that’s we were hoping that only the landlord, will give us after knowing how well we did that, after one year, we’re able to get it again for another year. But after during that time level to have build up our portfolio and able to convince other landlords to let us to rent it for that kind of business model maybe in some other areas because our second location will be either in the Bay area or South Lake Tahoe, as well.
Delia:
Oh, so you’re planning to continue with the subleasing model, right?
Uriel Ramirez:
Yeah, we want to follow the footsteps of our coach because our coach, it has many properties in Southern California. So we want to do what he does. Like he also does the same thing, he does a subleasing strategy and he’s also the owner of two homes and he also does investments as well.
Delia:
Okay, that’s really amazing! And can you tell us how do you deal with the neighbors thing? You know, sometimes neighbors, for you, like in a condo, and for other people in apartments have issues with people doing Airbnb. Do you have that issue currently?
Uriel Ramirez:
No, we don’t have that issue currently since we really started. And we still like the people, you know, making sure that we, that them, you know, with their IDs, making sure that they are who they are and try to review, you know, like any previous reviews that they made on the guest too. Recently, like, right now we have a guest that came from Armenia, she stayed in our Airbnb since yesterday and gonna stay all the way up to July. So they are host, they’ve Airbnb house in Armenia. So they have property, so it doesn’t like oh, so they understand the business model, too. In the Western neighbors, I mean, we noticed that they’re like, you know, which you should notify them that what you’re doing and that you have if there’s any issues that they could give you a call.
Delia:
Yeah, that’s right. And they all agree with it? With business model you’re currently working there in the condo?
Uriel Ramirez:
Yeah. So we let the business property manager and also the other managers that they have and the condo because they have an HOA, you know, HOAs have a strict rules. So kind of telling them that yeah, we definitely want to make sure that the people who come in or not, you know, are not going to be problematic and that we’re going to check their background before they come and stay in the property.
Delia:
That makes a lot of sense.
Uriel Ramirez:
And that’s one of the ways to calm the fears of all the people who are no leadership committee at that building, so that will take a rest assured that, yeah, we’re not just letting in just lightly people, we’re making sure that we check the backgrounds and anything.
Delia:
Can you tell us a little bit, now that you talked about that, background checking process you make for your guests?
Uriel Ramirez:
Yeah, so we try to focus our audience to be traveling professionals, so traveling nurses. So we put our platform not just on Airbnb, but we also put our property in furnish finders as well and of course, direct booking. So that way we get our main audience being traveling professionals and that’s something that we tell the property managers and other leaders who are in the community, that’s our target audience of the people who are going to live there or traveling professionals.
Delia:
How do you manage to get your target audience? Just by sorting the amount when you get bookings? Or do you also like target them in other different ways to approach them more close?
Uriel Ramirez:
So we put that in the description that, you know, that we set up a property to be a home, like work from home, you know, so that’s why we provide it in our property, so that way they have that ambience that they’re working from home remotely. And also, we let them know that, you know, that this is the whole purpose that we’re doing this. So because in where we put our property, you know, everything is in the capital of California. So we get a lot of people who work in the capital or people that work in their businesses as well, that will attract them as well. So we try to reach out, like my co-host is the one that does all that communication. So she’s reaching out through the local Facebook groups as well and also through other, well that’s the way she actually found the property there in Sacramento, through the local Facebook group.
Delia:
Okay, so that’s really interesting. It’s not my first time hearing about people doing the synergies to Facebook groups, so that once again, shows like that is really important for us to have these communities of Airbnb hosts
Uriel Ramirez:
Correct. I strongly agree. And I noticed that Airbnb, I think it has the platform, they build like a host, a local host Facebook group, like a private group, just people who are around your areaas well. So I kind of new, so probably you know more of this than I do.
Delia:
I’ve seen these Facebook groups that’s been set up by Airbnb’s employees I think… But it’s like the official Airbnb group. Yeah, I’ve seen that. So I’d like to know about the investment you’re currently making, so our listeners can have an idea of the approximate number of the investment they have to make to do subleasing, is that okay?
Uriel Ramirez:
Yeah. Okay. Okay, I’ll give you the formula that we used here to be able to do our investments. So what we did through the coaching, they tell us basically, whatever you pick, what was the number on the mortgage, divided by 15 and times up by two and that will be the base rate that you will give for your nightly rate in Airbnb because definitely, you want it to have 15 bookings at least to make, to pay the mortgage because this is a sublistings strategies. So after the 15 bookings, it will be all profit for the investment. So the way that we have invested with my business partner, is we didn’t use the bank at all, we use our own savings that we already had in our bank, to be able to buy the furniture, to be able to buy towels and kitchen essentials as well and even, I mean, we do also use store credit as well, so to be able to buy most of the stuff. So we’re planning, basically from the profits to be ablel to pay all that. Also for right now, we know, we understand that with this first property is able to pay out what we have already invested and that’s why we want to do more than one property, so that way, we can see a cash flow and passive income despite how much because for him, he has considered having for Airbnb is what you will see the cash flow. So we have a call already, our cash flow number for me is 5,500 per month. So that’s the flow and in order for me to get that, I need to get another another property, you know, because with just the first one, it has helped to recover for what we already spent on stuff and items and furniture, everything, permit, insurance, all that that involves in short-term rentals.
Delia:
Basically, with this business model, you won’t be able to see an immediate cash flow?
Uriel Ramirez:
No right away, correct. You need to have more than one property.
Delia:
And even if this property goes long-term, let’s say one year, two years, you won’t be able to see any cash flow with it?
Uriel Ramirez:
Oh yes. After two years, yes, after two years. Right now, for the moment we’re just focused in to able to recover what we have already spent, so we’re like trying to work that hard right away. So we have already made like I told you since we launched and we already have two months of confirmations. We have already made basically like six times the amount of what we have to pay the mortgage so far, because you know the person that, we already had like about five separate gas already reserved in our property since we launched the last week of May of this year.
Delia:
Is it okay if you share those numbers with us, like how much you pay for the mortgage? And how much have you been making since the launching?
Uriel Ramirez:
So the mortgage, we paid 2,300 and plus $50 for water bill included. Then so with all the utilities we spent between 2,500-2,100 and I say that because depending on the energy usage, you know, that can vary and so now that we have made all the bookings because Airbnb tells you the bookings earnings for the whole year, for all the bookings that we have, so far this year, it’s about $13,000. That’s all the bookings that we have for this year because we also have bookings filling up for the month of October. Then there’s some in September as well. So it seems like October it’s a high season reservation bookings here in Sacramento because there’s a lot of events going on in Sacramento. We have the property close walking distance to what we call Golden One Center, the convention center, where you have celebrities that come to concerts and scenes and so many events. That’s another reason why we chose also Downtown Sacramento.
Delia:
Okay, so this listing is really bringing you like, good money, I think, right? It’s a good amount.
Uriel Ramirez:
Yeah and also I like to say that this also is helping us to provide employment opportunity because we’re not just paying our co-host a percentage, which is about 17% of each booking, but also because, you know, with Airbnb, it helps us to be able to pay for a cleaning person and often the cleaning fee. So you could say we have two employees now, we have so far that we pay through the earning. So we’re hoping to build a team. That’s another thing that we have in our vision, to be able to build a cleaning team, a handyman team and other things too to help us with our business, to be able to leverage this to be much more bigger.
Delia:
Oh, I see. That’s a really good strategy! I never heard before about someone thinking early to build this thing for them. But I think it’s very smart what you’re doing because many hosts struggle when they get like two or three rentals and they don’t have a cleaning person, they don’t have a safe handyman, they struggled to find it.
Uriel Ramirez:
Yes and that’s something that we have learned through that mentorship, like you know, like our coach, he has never seen one of the properties at all, he never has seen any one his the properties because he already has a team who was in charge. He has a team for communication, he has a team that cleans the property, he has a team for all the legal stuff as well and he has a team for for taxes purposes. So it’s like, it’s a lot imagine out of doors for 16 properties to being able to, he even has a management team for all that too who is in charge of all those maintenance you could say.
Delia:
Wow, that’s really interesting! So I would like you to tell me if there’s any particular challenges that you have encountered as an Airbnb host at any particular time?
Uriel Ramirez:
You know, right now, I cannot think of any challenges. I think, you know, one of the challenges so far has been because there has been a setback. We could have started this you know, before the end of May, we could have started this when we first did our contract in April and the whole setback was because the contract is like it’s all you owe. We didn’t have a team for cleaning. We didn’t have a team for handling it because we didn’t have someone right there, you know, they couldn’t show up or didn’t follow up through, you know that they’re gonna help you, but the last minute they canceled on us. So that’s why we have learned to have a backup, backup your contractors, don’t just pull all your eggs in one basket. Don’t just depend solely on one cleaning person, have multiple cleaning people that definitely can come and they could be there in the last minute. Same thing was handyman already so far, since we started I think I already have five handyman in my phone already in case I need someone to do something to fix, so I has one there if the other handyman can’t make it.
Delia:
The backup plan is really, really great and really going storing up. It’s literally my first time hearing of all of this, but I think it’s a really great tip because yeah, it’s important to have backup. Lastly, you already gave us many many tips, but are there any particular tips that you’d like to share for other Airbnb hosts?
Uriel Ramirez:
Yeah, something that I would like to share because I noticed because I met someone also on the same mentorship program, something that I didn’t know that he valued and that he had admired, from my experience is able to work as a team, you know, I’m not doing this by myself. I have a team, you know, I have my business partner and I also have my co-host who does all the communications because there’s people that do this by themselves and two is better than one. Trust me, the way that you’re going to be able to work with them is to see what they have that you don’t have. I have all the techie skills that my business partner doesn’t feel strongly, but she’s the one that created that building there, you see that the core right there in the listing, she did all the deep part. She’s really she loves it and she’s really good at it as well. I’m not a decor person, I think I’ll probably mismatch a lot of things there that you see, but she did an awesome job. So have a team, it’s always better to take someone with you. So that way, the team will make the dream work for you.
Delia:
That’s right. That’s right. Teamwork, it’s really important and it’s not, like in the Airbnb hosts community, we don’t hear much about teamwork.
Uriel Ramirez:
Yes and that’s why people get exhausted so quickly because they feel that they’re in it alone and they are doing it alone because they don’t put the trust and able to find someone that could compliment them. Not to be a competition, but to be a complement to what they have, their skills, their abilities to the abilities and skills that that person doesn’t have. And that’s what I found with my business partner, you know, she has a deep core and I had a technie skills, if we don’t have any other skills, we’ll find someone like a co-host who’s able to do all the communications that we can. I don’t know, I’m not a handyman at all, I don’t know how to fix things, you know, okay, I’ll find someone, I’ll find it through an app or find someone through, I know through my community that knows how to do. That’s how it works.
Delia:
That’s great! And that’s a really, really great tip, which is my first time hearing it, so I bet is going to be really, really helpful. And that would be it for today. Thank you a lot for your time and for sharing this experience with us!
Uriel Ramirez:
Thank you so much for the invitation. I’m glad to be able to be here and hopefully, you guys able to take all these tips and if you guys want to book that location, we’ll take you to see it, then just contact us and we’ll give you a discount.
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