Here’s a strategy that allows you to launch Airbnbs with zero dollars out of pocket and even without any experience. My name is Jorge Contreras and I currently do over six figures a month and I’ve been an Airbnb host since 2017. Since 2017 I have used three strategies to get to six figures a month that is purchasing, Arbitrage, and co-hosting.
What is Airbnb Co-Hosting? Earning Revenue Without the Dinero Out of Pocket
Co-hosting is the process where you manage other people’s Airbnbs and in exchange you get a percentage of all of the revenue; we call this a revenue share model. One of the reasons I absolutely love this strategy and I feel like people are sleeping on this strategy is because it literally requires no dinero out of your pocket.
I’m talking zero; you don’t have to pay any rents, no closing costs, no down payment, no deposits, no furniture, no photography, no decor, nothing. All you need to do is take over the business, manage it, and implement a system on the back end so this way you have some leverage, you’re not working another nine-to-five, and you can start making passive income. You can turn an active income into passive.
The Revenue Share Model: How to Earn 20% of Gross Revenue on Day One
I want to break down the three ways that you can monetize this co-hosting strategy: there’s going to be a fee on the front end, in the middle, and a recurring on the back end. Let me just clarify how this strategy works first; because you are managing someone else’s business, you are getting a piece of all the upside with none of the downside. For example, let’s say the property that you are managing as a co host makes $10,000 a month and let’s say your management fee is 20% of the total gross revenue, not including the cleaning fee. With the cleaning fee, the guests pay us the cleaning fee.
We the hosts are now paying that fee to the cleaning crew, so it’s just a pass-through cost; we’re not going to make a percentage on that money because we don’t keep that money. Everything else, yes. Usually there’s the gross and then there’s a net.
The gross is the total revenue that comes in; the net would be after the person that you are co hosting for pays their rent or mortgage, utilities, and all those costs. Whatever is left the profit after all those expenses including utilities, replenishables, and repairs is the net profit. I’m not talking about net profit; I’m talking about the total gross revenue.
If the total gross revenue is $10,000 for example, let’s say they’re charging $500 a night and 20 days got booked that would be $10,000 of nightly revenue, and if you’re making 20% you would make $2,000 and never have to put a single penny out of pocket, which means you’re in profit in day one. That’s how co-hosting works.
Solving the “Accidental Host” Problem: Turning Active Stress into Passive Income
Why would somebody want you to co-host for them and how do you even get these opportunities? Well, first of all, there’s a lot of people out there who became accidental Airbnb hosts, meaning they weren’t generating enough money from long-term tenants, they heard about this opportunity where they could make more revenue with Airbnbs, they furnished it, got a little bit of decor, took some pictures, and then just kind of jumped off the building and building everything on the way down.
Now that they got one or maybe two, they realize this is a lot of work because they don’t understand how automation works or building a team and a system. Now they’ve got like this nine-to-five, and maybe they have another nine to five where they have another business or they have family, and now they’re having a hard time running this business.
It’s making great money, but it’s taking so much of their time and they haven’t been educated properly on automation, like automating messages, or how you could hire a virtual assistant in another country like in Mexico or Latin America which has a similar time zone to the US. You could pay them like $30, $40, $50 a month to do all the communications.
They don’t know about automating your pricing or automating your cleaning with your staff. If you understand these things, you might have a better understanding on how you could take an Airbnb, implement a team and a system, and make it a 90 to 95 percent mostly passive income business. You come in, you provide them a hands-off experience and even though they’re paying you a percentage, it’s likely that they could still make more money than they would if they just had a long-term tenant.
Lead Generation: Finding Co-Hosting Opportunities in Global Facebook Communities
Where do you find opportunities to co-host? There’s a ton of free Facebook communities; go into the search tab and type “short-term rental host” and then type a city like Miami or Los Angeles. Every major city has groups where you can connect with existing hosts who are probably in a similar situation and they could use some help.
The Front-End Income: Acquisition Fees and Launching Setup Services
Strategy number one to make money from this strategy is charging an acquisition fee, which is just a fancy term for getting the property. In order to acquire a property, there’s a few things that go into place: number one, you need to do some research, look into the regulation, and make sure you can get a permit into that city. You got to run your numbers on airdna.co to make sure their numbers are good and you’re going to be the one calling the landlords in order to offer this opportunity assuming you’re going to co-host for someone who’s going to sublease the property.
You could also do this for somebody who wants to buy a property; maybe somebody who wants to buy a property wants you to help them decide which property they should buy based on their pre-qualification amount. Whether the person is subleasing or purchasing doesn’t matter; you’re helping them do all the due diligence, run the numbers, make sure they can get a permit, and then help them find a property to buy or talk to landlords on their behalf and pitch the arbitrage strategy. I would say I wouldn’t do an acquisition fee for anything less than five hundred dollars and I think fifteen hundred dollars is probably the max.
Strategy number two is a setup fee. The person who didn’t have the time to go acquire this property likely doesn’t have the time to set up and launch the property. You’re going to charge a launching fee because you’re going to put together a furniture list and a design for this property. Once it’s approved, you’re going to order all this stuff from their Amazon account so that everything gets delivered to the property.
You’re going to coordinate with somebody, whether it’s the future cleaner or yourself, and once the boxes are there, you and your team now go over there and you assemble all the furniture, you do all the decor, you create the listing on Airbnb, and you create the welcome books.
The setup fee really depends on the size of the property. If it’s like a studio you might charge like a thousand bucks; if it’s like a five-bedroom five-bathroom pool home that’s a freaking mansion you might charge them like seven or eight thousand dollars. If it’s somewhere in the middle like a two or a three-bedroom house, maybe 1,500 square feet, you might charge anywhere from three to five thousand dollars because you’re going to probably have to hire one or two people to help you set up the Airbnb.
The Back-End Goldmine: Building Recurring Wealth Through ongoing Management
The third one is the management fee on the back end, which is a recurring revenue strategy because you’re going to be managing the property on an ongoing basis. That would be that 10 to 20 percent of the total gross revenue. On the first of the month for the previous month, the owner should pay you that 10, 15, or 20 percent of the proceeds of the gross revenue for whatever the property generated.
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