Kaizen Blueprint

Aldosius Chandra (00:00)
Taylor, how you doing? Pretty good, man. Thanks for having me. So I want to start off because we're both young guys, but I think you're killing it in the game. And you have a very awesome, you know, starting story of how you start investing in real estate. I guess we could start with that one. Tell us about how you did your first house hack, what house hack is, and let's go from there. Yeah. So,

My wife and I live in Colorado, always have. And so we first got interested in real estate through financial independence around four years ago. Like four years ago, you know, we, we set, you know, the goals like, all right, you know, we want to do house hacking and real estate investing. Like, you know, that's when we were like really set on like, you know, this is the plan. So around three years ago, we actually,

closed on our first property that we own. It's a house hack. Basically, you know, property we buy as our primary residence, live in it for a year, then move out and then have it fully rented out. So it's a six bedroom house. And so we lived in one room, rented out the five others, lived totally rent free. And then once the year came up, we moved out and

did that exact same thing again except this time with seven bedroom house, same thing, lived in one room. And then a little bit after that, we kind of started getting to rental arbitrage. And this year we've gotten a lot more arbitrages. So it's kind of a general introduction on our investing.

Well, before we start into Narental Arbitrage, I know I have a ton of questions about that. I'm pretty sure the listeners will do too. When you first started the house hack, you were pretty young, right? Yeah, I was 19 when we closed on it. 19 years old, purchased a house hack. Tell us more about that because as someone who's young, right? That's even maybe before college or starting out of college.

Buying a house in this economy is tough. It's hard. A lot of the younger generations tend to be the later generation, right? Buying a house later, getting married later, having kids later. You kind of contradict that and kind of go in the opposite direction where you want to invest young. Tell us more about the mindset behind that. And you live in Denver, so it's a very expensive market.

Why didn't that scare you? Tell us about the entire process and your mindset behind it. Yeah, I know. I mean, it's definitely a long process and it took quite a while. It took over a year from when we knew we wanted to house hack to when we actually closed. It took over, it probably took like two years of preparation to buy that first house hack. So, capitalize.

you know, we were able to do like 3 % down. We had all closing costs covered. The property was completely turned key. Got really cheap furniture. So really the only costs we mainly had was just our down payment. And so over the course of two years living with my parents, literally just like absolutely pinched my pennies like to the max and just.

saved as much money as I could for two years, you know, doing just some side hustles, working job, eventually got into wholesaling real estate, which very quickly helped with the funds. And, and I mean, it was definitely a process. I mean, it was pretty scary because, you know, our purchase price was like 500 ,000. The mortgage is like 2 ,700.

You know, it was like, you know, and there was like no plan B with this type of property, you know, like long -term rents were, you know, we were still going to lose money every month. So our pretty much one and only strategy that works for this property at the time was to just do rent by the room. But, you know, I had an amazing real estate agent who does like rent by room himself. And also the house hacking book is based in Denver, you know, like.

Craig, you know, is my real estate agent. So that probably helped a lot with like the confidence. And also just like two years or like a year of just like pure education to, you know, like every weekend going to like networking meetups, like talking to people that are house hacking, listening to house hacking podcasts, house hacking books, just like everything, you know, and.

And so that's kind of how we got started. So it seems like you did three things, right? One was you got educated, right? You start reading the books, you start accumulating knowledge from podcasts and many other sources. And then two, you network consistently. You go to these meetups, you met obviously Craig Kerlop, part of the bigger pockets. He wrote the book House Hacking. And on top of that, you took

actions and actually did two years of working and talking to an agent. So what would you kind of recommend for someone who's kind of in like level one? Like, Hey, I am in college, maybe about to graduate college or even before attending college. I see rich dad, poor dad, or I see someone.

driving down a very expensive car and I asked them what do they do for a living in real estate. But it seems like it's hard to be getting into real estate now with high interest rates and the economy is way different than it was four years ago. So what would you recommend for someone who's just starting out? Yeah, I guess just trying to figure out like what works, you know, like, like.

you know, with today's interest rate, you know, like that same property we bought as rent by room property, it just wouldn't cashflow anymore. Like just with today's market, you know, I mean, we got in like, you know, both of our houses are like less than 3 % interest rate, you know, so, so like, that's a strategy that no longer works. unless if you have more to put down, and so just, I feel like just kind of,

trying to narrow down what's possible. Currently rental arbitrage is super profitable and works. So that's why we are only doing that. I don't plan on doing any sort of rent by room stuff anymore or anything like that. So I think just kind of figuring out, I mean, each market too has different things that work. Some markets, duplexes are a great purchase.

but then Denver duplexes are just too expensive unless you pay all cash for them to cash flow. Some areas Airbnb does better or I feel like just kind of figuring out what are gonna be your options is like a pretty good start. And then just whatever those options are, just really narrow down to like one and just like go all in on the one. So being consistent.

figure out what that investment is that works in a market and be consistent at it. Now, I think that's a good segue into some people are like in California or like, I'm an expensive market. I can't do anything. Well, yeah, you might have to go to a different market or change the strategy or what works in one market may not work in others. So, yeah, yeah, for sure. I think that's why there's a lot of people migrating outside.

out of California, moving into the Texas and Arizona area. Just want to shift gear here and talk about the main topic, right? What is the rental arbitrage? How did you get into it? Tell us more all about it. Yeah. So rental arbitrage or Airbnb arbitrage, basically, simply said, we

you know, rent properties at a set rate. And then we basically fully furnish them and then re -rent them on Airbnb. And the goal is to get, to have our rent higher than what we're paying, you know, the landlord. Like for example, if I'm, you know, renting an apartment for like 1800 per month, my goal is to try to get,

like a minimum of like 3000 a month in rent off of that. And then we collect the difference. And right now we have 20 rental arbitrages. And so, I mean that fully forever funds our lifestyle that we currently have. And so, yeah, I mean, you know, ton of pros and cons with.

you know, purchasing a rental arbitrage, kind of happy to go into all of it. But, you know, simply said it's basically, you know, subleasing properties or apartments, re -renting them out typically like an Airbnb. Now in terms of figuring out where to find these apartments, what do you do? Is there a specific criteria that you look for when looking at these apartments? Yeah. So right now we're targeting like,

more upscale apartments, so, you know, very modern, spacious apartments, you know, they have pool, gym, on -site, they have garage parking, they have security, they have, you know, other amenities, and I think, you know, our properties can very easily outperform the person that's only purchasing because...

typically to get these like high end amenities like an onsite pool and gym. Typically you can only get that when you're renting an apartment. You know, there's not too many situations where you can purchase something and have these amenities. like cause Denver is considered an oversaturated market. I've heard like so many people say like, you know, Denver just doesn't work. You know, there's thousands of listings at any given time, which is true. However, all of ours do.

great because they're not just small basement apartments. It's kind of like a whole new tier. A lot of people focus on affordable housing for travelers and renters, but for us, we're targeting more upscale people. Yeah. Are you looking at

studios, one beds, two beds, three beds. Yeah, I actually have all I have studios, one bedrooms, two bedrooms, and then we have one three bedroom house. And so our Airbnb arbitrage strategy is pretty different compared to the traditional arbitrage strategy. Ours is actually midterm rental arbitrage. So all of our properties, except for one, we require a minimum of

30 days stays. We're trying to target ideally minimum 90 days stays, which is what our average guest stays. So it's definitely a bit different strategy. It's pretty common to do like short -term rental arbitrage. But Colorado's city laws are pretty strict and overall the operations of everything I like a lot more. And,

And so, you know, it's a little bit different strategy as well. So we're targeting midterm rental type of tenants that have higher budgets. You know, a lot of our one bedroom apartments are like, you know, 3 ,300 a month, not including like the Airbnb fees as well. Cause like some people paying like, you know, 3 ,600 a month for like our one bedroom apartment, you know? So like, you know, this is not.

cheap housing at all. There's a lot of competitors in the area that are less than half of what our place costs. But when you look at the two listings, you'll see why there's a price difference. So that leads me to the next question. Who are your tenant demographic? Why would I want to rent from Taylor AirBnB in Colorado for 90 days or?

That's the minimum now, right? For you? Yeah. I mean minimum is 30 days, but our average booking ends up being like three months. And so, yeah, I mean, there are just people that are, we don't really have like much hospital people, which is like one of the biggest things that like midterm mental investors focus on is like hospitals and we're close to the hospitals, but we just,

I don't know if it's just because of the budget or what, but we have our 19 midterm rentals. Only one person actually works at a hospital. Everyone else just here on some sort of internship or program. Colorado is kind of a touristy state as well. So definitely digital nomads and the type of people that

are looking for housing can vary on every single market, you know, it's kind of what the opportunities are and if it's, you know, like a touristy place or whatnot, but people will like our places cause you know, so the amenities that we mentioned, but we also design our properties very well. Like we do basically everything we can, you know, like King bed and you know, higher end furniture and just overall.

staged very well. So, you know, there's no super like particular things we have in our apartments other than like the amenities would probably be like the biggest thing that stands out. And then, then our Airbnb profile basically have all five star views. So, you know, trust that, you know, we're going to be good hosts and also central locations as well. So,

So you're targeting places near shops, near, I guess, tourist spots. Yeah, it's close to like downtown, you know. Got it. Tell us more about like when you first give that apartment, you know, owner a call or wherever that you're going to lease these apartments and then tell us about the process from that up until when it's rent ready and how long it takes and what do you do in between?

Yeah, so it's a pretty straightforward, repetitive process, which we like. Basically, call a complex. The more official term is called corporate leasing, more than like subleasing or rent arbitrage. You ask the complexes if they allow corporate leasing. These are pretty big corporations. So all of these type of things are already preset policies.

So they can just pull up their policies, give you a yes or no answer if they don't know. So it's like super straightforward. And yeah, I mean, once we have the green go on a complex and we like it, and we like the promotions, I'll try to sign a lease like three weeks out. And then during those three weeks, we're getting all the furniture ordered online. It'll take about two to three weeks to get here.

And then once we move in or have the keys, I have a team of movers that will do all the hard stuff for us. And yeah, our team of movers will obviously move everything into the apartment. They'll assemble the furniture, take out all the garbage. And then once that's all done, have the property cleaned and kind of just staged and tidy.

have the photographer out, get the photos back, and then post on Airbnb. You know, it's pretty, pretty simple process. It's the same every single time too. You know, it's a very predictable process, which we really like. So one of the hardest things is furniture. Like when I move into this house, for example, and I want to get specific type of furniture sometimes.

it's delayed sometimes, you know, there's some sort of issues logistic wise or it's missing a piece. Do you see that or? Yeah, there's usually something that comes up once we move in. But, you know, sometimes we just buy something local if we're missing it or, but I mean, realistically, I mean, all of our furniture could come in like 12 days or less typically. So having some,

extra time for delays, whatnot is good. But it's crazy we haven't had too many issues with furniture. With the first few, we didn't have like a really good furniture list. So, you know, it'd be just some small things that we forget. We just kind of like going off our like head of what we need in an apartment. But now we have like a super detailed list that has every single thing that we need to order. So then we can try to.

reduce the amount of things that we forget. Do you decorate? Like, do you have an interior designer when you first started? No, my wife's our interior designer. So, okay. And we're actually interested in offering the service in the future as well for other people. And our properties are, I mean, without a doubt, they're pretty beautiful. You know, I mean, they're,

pretty flawlessly designed. Yeah. So yeah, we just, yeah, I mean, you know, with the furniture list too, just pretty much everything's off Amazon too. So like, you know, we don't shop around with multiple websites looking for the best deals. It's just too much work. So we just literally get like 95 % of everything just on Amazon. We'll just have everything in one cart, purchase it at one cart.

and everything will be delivered in like three separate deliveries or so, you know, so. And that's delivered to the apartment complex or you have like a storage? We have no garage that we have to deliver to. Just because we don't have like the keys to the apartment. Yeah. Until for new vendate. So we're still figuring out like the package situation because trust me, it's.

a lot of packages than you think. And it's very heavy packages. We very, very quickly realized that getting these permits set up is physical labor. It is so much work. Yeah. So you don't go to the gym then. This is your workout. Not on those days. Even our professional mover guys are just like...

totally gasped by the end of the day. And some are easier. Some have stairs, some have elevators, you know, so it's like, you know, the difficulty kind of just depends on, on the complex and whatnot. But yeah, like we have a team of like, you know, for like, we usually have like a team of like seven or eight people. And we just go there and typically get everything done within one or two days.

So and our goal, we're kind of getting things more and more dialed in the more we're doing this. And so in the future, I'd like to really focus on just one day turnarounds for apartments. Yeah. I mean, it's crazy because a lot, you know, when you move, it's a lot of work. Yeah. Even even with hiring movers, you have to pack up. But you do this, you know, very frequently and it's it's crazy. So you must be you must be really strong and Jack. But at this point, right?

On the moving day, I don't do too much moving just because how much I pay everybody. I'm like, you guys can do the hard stuff. I don't even do too much assembly now. I think we're really focusing on how to make everything easier. How can we make the moving process easier? How can we make managing the business easier? I just want to like, I like things easy.

Overall, this business is super easy. I've done multiple businesses, wholesaling, real estate agent, some other side hustles, e -commerce. I've done a couple of things and by far without a single doubt, rent arbitrage is so much easier than all of them. And there's so much more predictable and just straight path. It's so repetitive and it's great.

So speaking about predictability, how do you project revenues? Yeah, so it's kind of a hard thing to figure out. I mean, generally speaking in the midterm rental space, people are budgeting what a midterm rental rents for is typically 1 .5 to 2X normal rent. In some cases, it can be way higher, like 3 to 4X.

you know, seen like for other people on their particular deals. But for us, it's like 1 .5 to 2X focusing on trying to increase like our margins more per property. But I just went ahead with 1 .5. So if apartment was $2 ,000, I'd run it for 3 ,000. And,

And that worked and then I pushed closer to 2X and that also worked. So we actually were undercharging on our first properties. So cash flowing, but even more. So when do you usually see a, I guess a net positive profit? Cause obviously, you signed that lease. I'm assuming you got to put the secure deposit, right? And then.

You got to pay in a monthly payment, then you got to pay in a movers, then you got to pay for all the furnitures. Like how many months does it take for you to be like, okay, now we're start seeing some profits coming in. Yeah, I mean, that kind of, it's kind of depends what we also really focus on now, which has helped with our scaling.

Also, this midterm rental stuff is still kind of new to me. In the past three months is when we've gotten our 19 midterm rentals. And before three months ago, I only had the short term rental and rent by room. So I'm still like figuring out the midterm rental stuff. But what we do to really help speed up the payback process is called rent concessions. So.

A lot of these complexes, I don't even like negotiate this. This is just what they're offering for all residences is, you know, a lot of them will be offering like, you know, get six weeks off your lease when you, you know, if you move in before end of the month or whatever. And so that's been a huge thing because some of them we've actually got up to three months of free rent. And so I'd say on average.

Once we have a property fully listed on Airbnb and furnish finder, we typically have someone move in like two weeks after that. And so for some of them, you know, we have three months of free rent. And so two weeks into the lease, I have someone there and they're paying $3 ,000 a month, you know, and it only costs us like a one bedroom. It costs us around like 4 ,000 to furnish fully, four to 5 ,000.

And so, I mean, a lot of them, we can have everything paid back for within like the first two to three months, just depending on how big the rent concession was, how quickly someone moved in and whatnot. But very quickly, you know, like cash on cash return, it's, you know, very high. Yeah. Almost infinite if you get all your money back.

Yeah, the actual percent's like over like 200 % cash in cash return. So yeah. Are you okay with not, you know, having the equity? Cause majority of the time, real estate investors want to invest because they want to own stuff, right? If you, read books or listen to people who are wealthy, they're like, you want to own stuff. You want to have equity in a business or in a real estate.

but it seems like what you're doing, it's more cashflow base as opposed to appreciation. What do you think about that? Yeah. So obviously, you know, the big pro of purchasing is the property goes up in value over time, loans getting paid down and cash flowing. Hopefully with rental arbitrage, typically just cashflow, but you know, there actually can be like an appreciation or

the ability to sell later. So like for example, you know, this guy he scaled to like 450 rental arbitrage is, and then got an offer for like $12 million to buy his business. So like, you know, including like the furniture and including little operations. So like, you know, this guy that built up this rental arbitrage business, you know, it's cash flowing every month.

And if he wanted to, he could sell it for like over $10 million. So like in a sense, you know, there is some sort of like appreciation or other value other than cashflow. But I think that only comes once you have like an actual very successful large business. Yeah. So, I mean, you know, one pro is, you know, once the furniture is paid for, which is obviously the biggest expense of everything.

Because our security deposits are only on average 250 bucks to 500. At this point, anything over 500 is a deal breaker. So the furniture, you can do whatever you want with the furniture once it's moved out. You can transfer it to different property. You could find uses for it. So like...

In a sense, you know, there's some sort of equity with like all the furniture. But yeah, generally speaking, you know, the bigger con in a way is, you know, there's not as much equity, but I would love to see someone scale as quickly as we did with their monthly cash flow when only purchasing. I mean, like our original plan was,

like starting like four years ago was like, all right, for the next 10 years, we're gonna house hack every single year. We're gonna buy properties that make us at least $1 ,000 per month. And then by the time, hopefully before I'm 30, I'll have $10 ,000 a month. You know, it's the classic. But I've like the more I've gone into this space, like it's definitely possible to get like over 10 ,000 a month in net cashflow in like three months.

or less, like doing arbitrage if you rent the right properties and do everything correctly. So like, you know, house hacking and purchasing is great, but generally speaking, it's gonna take like several years to actually be at a point where like you're fully self -sufficient off it. But rental arbitrage, you know, you can do that so much quicker. And so our plan is to scale our rental arbitrage income

very high and then just use that as like a huge funnel to just purchase. So, yeah, no, no, that makes sense because usually when people purchase homes, you know, that equity, you, especially in an expensive market, you play on appreciation and that cashflow kind of a defense mechanism for you to not, you know, lose money or lose your investments, but then you make money when you sell. What,

are kind of the drawbacks outside of the equity. Like did you, have you ever had issues with tenants or tenants not paying? Like how does, how does that work? I mean, yeah, I mean, maintenance pro is we actually don't really pay for repairs since these are bigger complexes. They have onsite maintenance teams. So like majority of repairs they would cover.

So we actually have like no capex repairs. And I mean, you know, there are some probably drawbacks like, you know, like the landlord or property manager kind of has a lot of control, you know, so I mean, you know, they're kind of the ones that set the rules and whatnot. So there could be some risk associated with, you know, if the complex kicked you out.

But overall, I mean, the risk is just so much less than purchasing a property because like our first rental arbitrage just completely flopped. Like everything went bad with it. It was out of state. It was a really bad location. The demand was low. Like every factor just went wrong. And so.

We had to terminate the lease because we were just losing money every month and having too many problems. But it was really as simple as giving them a notice that we're moving out. And then we had movers bring the furniture from out of state to Colorado. And then we just put all that furniture into a property that actually cash flows.

I mean, when everything was said and done, we did lose like a few thousand on the deal total. But maybe we definitely learned a lot. And then if that situation happens for me buying like a condo or something, I mean, now I have to figure out how to sell this condo. Am I going to be like tens of thousands of dollars underwater on it, you know, just because I've just bought it and I'm really reselling it.

you know, like, you know, you're probably going to lose way more money. And also the process of having to sell a property is going to be much longer than just simply giving. We just had to get the landlord a 30 day notice and we can move out completely penalty free. So, so like, you know, much less risk associated. And there's also a lot less investment into the property. I mean,

Like for a one bedroom, we could probably be like all in, all in like six grand, you know, including furniture, secure deposit, movers, any other miscellaneous fees, you know, six grand. And that's everything compared to even purchasing like a cheap condo, you know, there's going to be lots of other expenses. And also, you know, what if you purchase this property, but then two months later, you know, now there's this, you know, $30 ,000 sewer line.

or something crazy and you don't have to worry about that at all with arbitrage. Well, going back to your first deal, what was a couple of the mistakes that you've done? I know you mentioned it was out of state. It was maybe a terrible location. Yeah, the out of state part wasn't the issue. The issue was the particular neighborhood it was in. So it was in Mississippi and Mississippi is a nice state, but the ghetto areas are...

And I was like, I just don't feel right. Like renting this out, like every single time the guest is growing up, like I'm anxious. Like I'm just waiting to see, you know, the techs like, like get me out of here, you know, like, and then also the, we had some issues kind of with the complex, you know, like maintenance issues that were actually expensive issues that the, complex wasn't fixing for us. We were having so many like pests.

in like insect problems. And then also just like the general demand, just both for Mississippi, if you're curious, just like the general demand like just wasn't there. Why did you choose Mississippi? Because that's nowhere close to Colorado. I literally heard someone say that it was a good market. And I was like, I want to try out of state. So I just did. OK. There was not too much.

I mean, I kind of did like the air DNA stuff and whatnot, but maybe it would have worked out well if we did what our strategy is now, luxury properties, amenities. This was like a dodgy little fourplex. There's like a small management company.

And so, and they didn't have like any Google review systems or anything like that. So a big tip is make sure your complexes, you know, have like actual reviews, at least on average, like a four star or higher, you know, actually reading the reviews too. Because, you know, you can learn a lot about complex just through the reviews. So this, this management company was just so small. They weren't even.

on Google, like there's nowhere you could even see reviews, but I guarantee you if you could, you know, it would definitely scare you away. Why would these complexes rent to you knowing that you will sublease them under the corporate leasing? Because, you know, these complexes, I'm pretty sure they have, you know, thousands of millions of dollars investing in these. And

Obviously, it's ticking out the loan and they want as much people in there as possible because that's driving the revenue. But then they could even buy their own furniture. They're like, if this doesn't lease, maybe we'll put a bed or so here. But then, hey, I'm Taylor and I want to sublease your apartments. Why would they want to say yes? And what's the benefits for them?

Yeah, I mean, there's definitely a right way to be a corporate housing provider. That's like what our company technically is, like in the official terms, corporate housing provider. I think these complexes acknowledge that there's a right way to do it and it will reduce their vacancy. One complex, we're renting eight apartments from them. So it's like, boom, now...

You know, these managers have, you know, like they can see margins to hit, you know, with their, with their hierarchy. And, and I think, you know, they like that we can take on multiple departments, you know, just have to deal with one person essentially, for all of them. And they know that, that it's like working professionals that we're targeting. So they do like.

do business background check on us. so they don't just like let really anybody in. Like we've gotten declined from complexes just cause we don't have enough. Even we still don't have enough like track record. so, but overall, I mean, I think they just know that like, you know, if you're doing it right, you know, especially we noticed that it's way easier to convince a complex to allow you to.

rent their apartments if you have a 30 day minimum stay as well. When you're doing short term rental Airbnb, I think it's definitely more difficult. Because if this person, if we only have a person coming in and out every three months, you wouldn't really be able to tell that the apartment next to you is an Airbnb. If the same person's there for multiple months, compared to two to three groups of people going in and out.

You know every week You know actually that can create some issues, so I think a big thing that's helped us Is having our 30 -day minimum stay and Yeah, that complex likes that they also want like the background check results on the Tenet which we send so they know who's in the apartment. You know they have a contact information they have

their credit and eviction report. Airbnb provides that now? No. So we basically after they book it, we have like a disclaimer on our listing and we also confirm with the tenant before we accept the reservation that after you do submit your reservation on Airbnb, we require an additional third party background check.

Got it. So we're like super upfront with that. And we also require a lease even though it's through Airbnb. So it's a little less traditional Airbnb booking. Yeah. Even though they're booking through Airbnb, I still require a background check and I still require a lease to be signed. And that's just because, you know, now there's tenancy laws in place because it's over 30 days. Now you handle all that or do you have a third party or do you have the apartment complex?

you know, property managers or leasing consultants do that. Yeah. One of our complexes does it for us. They want to keep things in house, which I like. And then, yeah, I mean, we have a, we use a company called Keycheck and it's Furnished Finders partner. I think it might be the same company actually. And it's very easy. You know, you literally just type in.

their first and last name and their email and then sends it to their email and they fill out everything and pay for it. Got it. So it seems pretty easy. Yeah. Yeah. It's super easy. Like, yeah, I mean, you know, it sounds like a lot like background check and lease and, but it's really, I mean, you know, the tenant could do like everything in like 30 minutes. Yeah. I mean, it's just an upfront work, you know? Yeah. Yeah. They just spend a little bit.

doing those two things for us and then they're all set. Do you think, you know, with the rental arbitrage here, do you think you would recommend it for someone who wants to invest with little or no money in a real estate space? Yeah, that's probably the best way to invest now. Like honestly, like I wish I didn't even house hack. Like if I just go back and just rise, I turned 18, just do rental arbitrage. I mean, I would have.

probably like hundreds of units by now. I mean, you can like, I mean, I just, I don't know where you can get the margin where you spend six grand and get a thousand dollars a month back in net income. Like I would love to see where someone could consistently throughout the whole year get that sort of return. I mean, definitely.

Unless if you're like super savvy with like, you know, seller financing, I really don't see how you could possibly do it. And do you think this works in, well, obviously it doesn't work in all markets because you mentioned Mississippi, but in Colorado, it's very expensive markets. Do you think it only works in, I don't know, in class A neighborhoods or markets where...

there's a demand for rentals, there's tourist spots. like rents are pretty expensive. Do you think that works there or what do you think? I think every market kind of works in its own ways. Kind of what we tapped on earlier, like what might work in my market might not work in your market. so like some areas like maybe,

know, affordable cheap studios are just a high demand for, you know, just a cheap small studio or some markets kind of like Denver, in my opinion, there's more there's already so many cheap places you can stay at, but there's not very many high end places. So I think it's just kind of like reading out what your market needs, like, you know, maybe your market has, you know, 10 ,001 bedrooms, but there's not very many three bedroom places.

you know, maybe there's a niche for, you know, bigger places in your market, you know, so like, I honestly think it could work in every market, but I'd say, genuinely speaking, like bigger cities just have more opportunity. You know, there's more businesses there. There's more going on. There's more touristy reasons to be there, you know, and it's the kind of type of people you're going to get. It just really depends on your city. Like,

You know, like the 30 day stay book, which I highly recommend reading, which is a book just on midterm rental. You know, the author, she's like in a super small city in Nebraska, like Omaha, you know, it's very small city. People don't go there just to go there, you know, like they're there for work, but her midterm rentals do amazing, you know, there and then, you know, you know, midtermentals in New York city.

you know, probably could do pretty well, you know? So I think it's just finding what the market needs. I mean, if it's like, you know, the middle just straight up nowhere, then, you know, maybe not. But, I'd say like any decently sized city has potential. You just need to figure out what is the, like what is a need, you know, which can be a hard thing to figure out. What's the driving factor behind, you know, people are moving in. Is it.

jobs, universities. It's kind of hard to figure out, is the studio better in this market or is four better in place better in this market? Sometimes there's a lot of ways to predict things, but I think sometimes the only way is just to go out and do it, see how it goes. Yeah. Do you think, I was reading an article and

Some people mentioned that the rental arbitrage, especially in the Airbnb could be a bubble. This is before everybody's flocking in. Because right now, I think a lot of people are dabbling into self storage. It's like, it's a new thing. You're buying a business. No evictions. It's pretty easy. And it seems very short term. Do you think that this is a bubble? Do you think that?

Not a lot of people know about it right now. Maybe some people know in the investment community, but what do you think? Yeah. I mean, like furnished corporate housing has been around for quite a while. It's been, I mean, not exactly through Airbnb. Like we do lists on like Furnish Finder and they're just like normal corporate housing tenants.

So I think there will always be a need for longer furnished days, you know, because pretty much all of our people are here for like work or some sort of like program reason. They're only going to be in the area for like three months. So they don't need a furnished place. You know, I mean, I think, you know, over time, maybe, you know, what works right now might not work as well later.

It's pretty popular in the space to eventually work up to working with like insurance companies directly or just like corporate housing companies directly. And I think that's something I'd like to focus on more in the future is kind of have more different streams of leads, you know, like get leads from Airbnb, get leads from Furnish Finder.

and then get leads through like companies directly. And as you continue to scale that possibility opens up a lot more. Once you become kind of like, once you have like a lot of properties in a market, you can very easily partner with, you know, like, you know, insurance relocation claims and things like that. So I think in, you know, forever there'll be some sort of.

way to make this work. Maybe it won't be the, I mean, maybe right now it's like very easy. Like I, you can pretty much just like list like a nice place on Airbnb and it'll like, it will get booked. But over time, I think I'd like to become fully self -sufficient on like a direct booking website, you know, eventually have our own platform, website. Like eventually again, they'll, you know, more like marketing.

on Google and whatnot and just kind of like eventually become self -sufficient fully off our own leads compared to like Airbnb. We're live on, you know what I mean? Because we are kind of at Airbnb's mercy, you know, for everything. And they also charge their fees too, right? I think. Yeah, it doesn't cost us anything because how we price it, if I'm trying to net like $3 ,000 in rent.

I'm going to price it where after all Airbnb fees, I get 3000, which is usually like a few hundred dollars. So it's just pretty expensive for people to book on Airbnb, but people like Airbnb because you don't need a security deposit. You have Airbnb's customer service to back up on if the property's not good. And then for us, we have Airbnb's insurance. So Airbnb.

If there's any sort of damage to the apartment or furniture from the guests, I can just simply submit a claim and Airbnb will cover it. Have you ever done that in the past before? Yeah, we did it once. Somewhere around, it was at the property that was kind of a mess in Mississippi. There was a bit of damage and some sheets had to be replaced and the property had to be deep cleaned and they still gave us like a few hundred dollars.

For like the inconvenience actually, we've only had to use them once and so far it's pretty good experience. Yeah Now speaking of booking It's this is final question for an arre - a rental arbitrage. Does seasonality plays a factor for Both the apartment complex when you want to When you want to kind of lease from them?

And also the seasonality plays a role when tenants are booking, do you see, okay, you know, we're obviously for apartment complexes, the spring time is prime time where people want to move in, but then in December, right? And Christmas and new years, no one is looking for apartments. No one is moving. So do you think that seasonality plays a factor in your business? What do you think about that?

Yeah, I mean, definitely the apartments are much cheaper to rent during like the winter for us as well. Like, for example, I, the one apartment, like our first one I signed, our first mentor rental we got like February, like 25th. And that rental rate was like 1900 per month.

because it was in February, but now that it's May, that it's same exact apartment in the same building is now like 2 ,700. So it's $800 a month more per month because we're renting it starting in May to the February. I don't know if it'll be that drastic for us, like for our places in winter. And I'm hoping with us,

starting early in the year, we will be able to have like all the future bookings like cover the winter as well. Like I already do have one property that's booked all the way until May 2025. So, and then a couple other ones are booked until like October, September. And so I think the pro with like midterm rental arbitrage is like,

All right, this property is fully booked until September and it's basically June. So from June to September, I have that long to find someone that will extend that the reservation. So like, I feel like before it's even winter, all of our bookings just because we're so many months in advance that, you know, we'll be, you know, we have the ride through winter.

We'll just kind of see how hard it hits us. I mean, I mean, really all of our properties are booked until like all the ones that we have available are booked typically until like August right now. Like that's our soonest availability on anything. so I'm hoping, you know, it's just kind of, as it gets closer to the winter, it will be just more, more extensions. You know, I mean, there's a lot of people in this space that can have zero vacancy year round.

And the biggest reason is just because there's so much time to find that next person. You know, someone books your place for three months, you now have three months to find someone that, you know, will kind of just extend that. And then, then once it's six months booked out, now you have six months until you get there. And then, you know, cause I have a feeling that a lot of these properties, they will never be fully vacant because we'll just, the amount of time we have.

And anything, I could just lower the margins for winter and raise them back up in spring and summer. That would probably be the worst case scenario is just simply lowering the monthly rent. Do you still advertise just in Airbnb then or the furnish? Airbnb and Furnish Finder. Okay. And in between those times, you still advertise it then?

Like how do you advertise when it's? Well, like how it works is like, you know, like an Airbnb, if it's not available until August, it's not going to appear on anybody's like available properties to book unless you're booking from like August, October, you know? So like, so like the property's still on Airbnb, but it's just the calendar's not available until like August or whatever. So it'll, it'll still show up for like the, the future people.

So yeah, there's, there are always like live, well, like two of them, we have like month to month tenants on them now with like no predetermined end date. So like those, we just fully unlisted and we'll just relist them once we have a official date that they're moving on. Got it. What is, I guess now that you're still scaling, what is the best use of your time?

business because it seems like you have, right. It seems like you have your cleaners for the turnover. You have your maintenance guy. You have the movers. You're not even lifting stuff. So what is, what is that? You know, what is it called? $1 ,000 an hour time spent for Taylor. Yeah. But yeah, I mean, I do have still quite a bit of involvement of everything, but what I've been really focusing on like,

Even though I self, so I don't do cleanings or repairs, but I still self manage the messages. But overall it's pretty passive just because there's not much turnaround. You know, it's, you know, once the property's booked, it's booked for a couple months. There's nothing to do for it. But what I'm really focusing on, what I've been focusing on this whole month and next month is hiring my first full -time employee to,

Basically my plan by the end of this summer is to be in position where I never have to respond to any guests at all. I don't handle the cleaners at all. I want to have basically no involvement. I want to be able to systemize everything where my virtual assistant will be able to handle all communication.

with the guests, with the cleaners, with the complexes. So what I really want to focus on now is just kind of stepping outside the business and just fully automating everything. We have like a couple of softwares we use now and honestly it's very passive. Like I'm pretty busy with like scaling it, but managing the current portfolio, like if I just stay where we're at, it would be very self -

It'd be very doable. It's very, I mean, it kind of feels like I'm unemployed. It feels like I should be at work or something. You're busy racking up those cash, those money from the rents. Speaking of racking up, I know that you spent six grand or however much on furniture. And you know where I'm going with this. You use credit cards.

to fund your travel. Tell us how we got started on the credit cards and kind of like your methodology behind that using the signup. Well, you could talk more about it. Yeah. Yeah, I love credit cards. When you use them in the right way, they can be extremely powerful and very helpful and saves you. I mean, there's so many ways.

help you out to do it properly. We use credit cards basically in mainly two ways. One, to save money on travel. So because we have so much business expenses right now, we can put a lot of expenses on our credit card and get points back. And we use these points to get free flights and free hotels. My wife and I, we travel multiple times per year.

And so, you know, usually we get like free flights and free hotels. That's usually like our goal. And then how it's even been more impactful is these are business credit cards that have like 0 % interest rate for, you know, anywhere between like 12 to 21 months. And so, I mean, obviously furnishing 19 places.

within three months, it gets expensive very quickly. It's six figure costs. And so that's really how we've been able to kind of really just like, boom, just explode our business in the past three months. The reconcession is also a big part of it. And then now we're at the point, so I'm pretty done with credit cards.

or like the interest free ones at least. I'm kind of past that. Now, where we're at, where our monthly cash flow is, we can set up like comfortably like two properties every month, fully paid for, just all upfront, paid for in cash, all the furniture, everything. We can set up like two of these per month now. It's kind of how like the snowball effect is definitely speeding into compound now. And so now,

Now I'm basically, I want to keep scaling throughout the rest of the year. And then, and then I'd like to set some time to, to build up more reserves, pay down credit card debt. And, so you're basically getting away from taking out loans from these credit cards, these credits, and we don't have, they kind of reinvest everything into, into the business, like whatever excessive cashflow that you have outside of.

You know, your lifestyle, you're putting that into the business and reinvest it for future. Yeah. Yeah. We're reinvesting everything. We're just, we're like our lifestyle is like the same, you know, we're just trying to keep the same lifestyle that we have and just keep reinvesting closer on point. But what about the points, man? I'm racking up the points. I mean, I'm...

The awesome thing about having this business now is everything I can charge on the credit card for points, utility bills, the rents, if I want to, the cleaners, just all the miscellaneous fees, I can all go on this credit card. And I'm getting like, I don't know, I have to say how many points I'm getting every month, but it's like a few $10 ,000 worth of.

Points every well, I think the only credit card is built right BILT Rewards that handles the rents. Are you putting all your rents in there or I? So the rents on the art complexes charge a credit card fee like 3 % card fee so all the rents actually Pay just like on the bank account like the rowdy number but every single thing else

Does not have an additional fee to charge on a credit. Well, have you ever used that built before I? Have like to me credit cards. I probably like wouldn't get approved for it. It's my inquiry Very drains like it's been pushed to the axe like I probably have like 20 credit cards Some of them are travel but

Yeah, actually in the future, I think it definitely would make sense to get the return on the rent as well. Yeah, I mean, that's why I always recommend it for people who are renting because, Bill, you get 1X back on rents and you have that account and routing number that they give you.

I looked into the limit, there's a limit of how many points you can get per year and we would very, very quickly hit the limit. So that's also why I wasn't too interested. I think you can only get like a hundred thousand points and it would not take us too long to talk about. Yeah. Okay. Well, speaking about traveling, I know you travel quite often. Where's next?

Yeah, actually next month we're going to Paris, Greece and Turkey.

a few months ago, we went to South America, and then a little bit before that, we went to Europe, and then a couple of Mexico trips and Florida trips. But our plan is to like, yeah, the real reason why I wanna fully automate everything and have it, even the messaging outsourced, I can still handle all that. It's very self -doable, but I wanna be fully automated because our plan is to...

eventually travel full time in like, you know, every continent, you know, and some places have like, you know, 18 hour time changes. And this business is very easy to manage remotely, but the time change. Yeah, it's going to be tough. And now you're transitioning from working in the business to on the business. That's why you start hiring out people to handle, I guess, the day to day tasks, but.

More like month to month tasks if you're consistently buying more or getting tenants and dealing with tenants as well. Just want to shift gear here and talk about relationship. You got married pretty young. Tell us more about that. And that's a commitment at a young age. And would you recommend it for someone, perhaps younger?

Yeah, I mean, it's kind of depends on like relationship to relationship. But the reason why we got married early is because we started dating really early. I mean, we're only I mean, we've been together for over five years. So, you know, after five years, you should probably know. That's the one. But yeah, I mean, you know, you probably should have an idea for five years. And so, you know, I just made.

I mean, it felt like we're married, you know, living together and, you know, our own place and, you know, everything. So we just wanted to really officialize, you know, everything. I mean, you know, this journey has been our journey, you know? I mean, we were, you know, when we first met, I didn't even know what I was going to do after high school. Like, I don't know if I'm going to college or if I'm...

I mean, there was definitely no business thoughts five years ago. It's been awesome to go through a kind of a journey together. I mean, I think when we got together, I probably had like 200 bucks in my bank account and I was kind of failing high school, had no plans after, but none of that really mattered. And so definitely great.

You said you had $200 in a bank account and then you had to do house hack. You did your house hack. When I first met her, yeah. I wanted to ask when you were buying these properties, was it a we thing or did she have one property and you have the other? What was that? When we bought their first one, she wasn't even old enough to be on the loan. Got it.

So we were 19 and 17 on the first property. And then the second property, I was not on the name of it because there was no reason for me to, we had different co -signers for the two. So out of the 22 properties we have, we only own two of them. And technically she owns one, I own one.

And does she help at all with the rental arbitrage business? Yeah, definitely. So she has a big part in the setup process. So kind of designing the property, you know, each property's different floor plans, different shapes, different colors, you know, different themes, you know, like so kind of being able to figure out exactly how to design a property based on its floor plan and everything.

it's definitely super important. So she has a big part in the design process and then also helps out a lot with like the initial move in day. but honestly, like by the end of the summer, neither of us are going to have much involvement. I'd like to have it where we can have other people do like everything for us. So then we can, just focus on like scaling it instead of.

running it. Yeah. Well, the reason why I asked was because sometimes in a partner, not just relationship, right? They tend to substitute each other as, as opposed to complimenting each other. Like, Hey, I could do your job. So what's the point of us partnering? Yeah. I don't want to like get both of us like too involved, you know, like you do this task and I do this task and you know, it's like,

Like we're not like business partners, you know, like we're just, you know, we're working on the business together, but like, I don't, you know, really want to do all that, especially like with this business, it's so easy to hire someone who has pre -existing Airbnb customer service experience. Like the pro of this business is just, it's so easy to get outsourced compared to like,

a complicated construction business. How do I find a manager that knows how to run this super particular thing? Airbnb business, it's so easy to have. It just outlined, here's the rules. I feel like a lot of people in this space can agree that it really is an easy business. Being a real estate agent can be very successful, however, it's like,

you know, your results can just vary so much, you know, even year per year, you know. So I think having a business that's just so easy to run like helps with like figuring out who's going to do what. Yeah. No, that's awesome. I guess we'll go to the final segment of the show and you, I asked you the question for recording.

Name one system. Well, let me reiterate. Our name is, the name of the podcast is Kaizen Blueprint and the word Kaizen comes from Japanese term, continuous improvement. So Taylor, name one system or one thing that help you that you do continuously that benefits other people.

Yeah, I mean, I'm pretty simple like person like, I don't know if you're like any really tricks or anything, but I think for us to be able to scale so quickly is you need to set like time blocks or like just some time, like almost every day to like just evaluate, you know, right here's where we're at. You know, how do we get stuck that next property or, you know, just kind of like getting creative, you know, just.

spending some time every day to figure out, all right, here's the plan for today and this week to continue to grow the company. How can I figure out how to fund this property? And how can I, I don't know, just spending some time every day to figure out what can I improve on the business or what can I do to grow it, I guess. So just spending time just to kind of like,

analyze where you're at. Because there shouldn't be scale quickly. Just where we're at literally three months ago is just completely different. So I think doing that has been super important. Yeah. I mean, reviewing yourself is very important. I think you could be down in the weeds and just have that tunnel vision, but then you got to think of yourself like 10 ,000 worldview. It's like, okay, I'm doing this. I'm making mistakes here.

what did I do wrong there and then work that way. That's cool. That's awesome. Where can people find more about you?

Yeah. So I'm on Instagram at Taylor with two Rs dot D T I don't really post too much, but anybody wants to message me. Definitely happy to share my insight. Awesome. Well, what's the, what's the goal for the next few years? I know in the past three months, his life has changed so much. You mentioned you want to hire somebody else.

What are we thinking? 1000, 5000 units in? In a few years, I don't know. It'll take a little longer than that, but I think my goal right now is 100 units before 25. 100 units before 25. I'm just focusing a little bit more on quality over quantity. So, you know, sometimes having the highest unit count isn't the most profitable. You know, there's...

kind of just still figuring out like what's the best way to, you know, to spend our money and whatnot. But I'd say overall like 100 units by like 25. I mean, I love this business and it's super lucrative and scalable. And so I'd like to really focus on this. And then, and then another big thing is I'd like to get into like really luxury, like vacation homes, you know, like,

super cool cabins and beachfront mansions to rent on short -term basis. That's something that excites me a lot, having really unique luxury properties. I think that would be something that I'd like to go into more, especially as we continue to grow the cash flow. Whatever direction we want to take it in, we can take it any way we want. We can just...

Right now we could just stay as is right now for probably the rest of our lives. Cool. Yeah. Those vacation rentals are awesome. Anyway, I always wanted to go to these geothermal or the A -frame houses. Yeah, that's what I'm thinking. It's just like weird, like lamping properties and A -frames and tiny houses and tree houses. I just want to like...

getting a super unique niche with that. Also, there's also a ton of cashflow opportunity. Some of the deal breakdowns that I've seen on these properties are crazy. I think it's also true. If you're already going international, traveling consistently or traveling full -time, that's the goal. You might as well do travel places or do vacation houses in international countries.

That might be a big goal. Yeah. Yeah. I don't know the too much logistics of international arbitrage or investing, but there are people I do it. Yeah. Well, if you're traveling, you got to hone those language skills, man. Yeah. Read the lease agreements in Spanish and Greek. Yeah. Yeah. Awesome. Any other tips for people who

might want to start in a rental arbitrage or just investing in general.

Yeah, I mean, you know, people that are interested, you can really learn everything for free. Like up until right now, we've not, we did not spend any money on any sort of education or mentorship. Now I do have like two mentors that are paid. But getting started, I mean, just, you know, listening to a ton of podcasts, listening to YouTube videos.

networking with people that are doing it. Those three things alone and just like having the will to just kind of figure it out along the way too. I think, you know, those four things combined, it's like all you need really to get started. We're kind of more like the advanced stuff now, like systems and whatnot. So I'm kind of, you know, fortunately past that point where I can just leverage podcasts, you know, like I need like,

a direct mentor. That's been super helpful now, but that's what I recommend. Awesome. Well, Taylor, thanks for being on the first ever online podcast. We'll definitely going to go again, sometimes soon to see your progressions. Perhaps we'll schedule a call and you'll be in, I don't know, Bali, Indonesia, living life with a...

Digital Nomad in the back. Yeah, I'm going to love that. The laptop. The laptop and a beach front. Awesome. All right. Thanks, Taylor. Yeah, no, thanks for your time and yeah, thanks for having me.