Helping an Airbnb Manager Get to $2M Profit

0:00Unternehmer/Gast I'm Janelle. I'm from Melbourne, Australia. Grew up in LA though, so I don't have the accent. I'm sorry. I run Airbnbs for other people and I have five of our own properties. I have a portfolio of 55 right now. We I've made or 2 million last year for the owners with a profit of around 244 to me.

0:26>> So you take a whatever 12% something like that off the top. >> Um eight sorry, 20% off the top. After >> Okay, so you took 400 and then you profited 240 on the 400. Okay, got it. And that's on the 55 then you have your five locations which are separate. >> Yes. >> Got it. Okay. >> So my question to you is I want to be making 2 million profit. We are in a small beach town two stoplights >> Mhm.

0:50>> with horrible weather in winter. Nobody's going to the beach in -5. >> Yeah. >> So how do I get to 2 million with that weather? Um when I can expand out and make more or bring in more properties within my local area or do I need to go into a whole new area which brings its own risks. Um and then I also have the opportunity of acquiring another portfolio right now.

1:17>> To manage or to uh >> Own. Or well, not personally own but manage on other people's behalf. So >> So you're getting getting from another property manager. >> Correct. Yes, she's closing out. But it's all high-end properties. It'll be about a million I just calculated of additional profit to owners. >> To the owners. So you're going to get Well, you whatever 12% is what you made on the other one. So let's assume another 120 grand a year. >> Yeah. >> Okay. >> So >> So that'll

1:44>> That's great. >> Yeah. >> Yeah. >> So but it still doesn't >> [laughter] >> Yeah, for sure. But do I need to do keep doing that to get to my two or what can I do? >> Yeah. So I mean the opportunistic deals like that um I'm guessing you have it relatively well oiled if you're at 55. So, how many properties is the the one that you're buying? >> 18.

2:10Alex >> Okay. Is that going to be a huge issue for you to take over? >> Um yes, that's some of what the boys have talked to me about. Um ironing that out. It's not a huge huge one. >> Is it same market? >> Yep. >> Okay. I mean, I would say like the big thing is there's many ways up the mountain, right? And so, you could just say, "I'm going to look at all the other property managers in the area and try and buy up all of their books of business for very low amounts of money." That's one way.

2:38Um the other way is you can try and mop up all the individual mom and pops and say, "Hey, wouldn't you like to have all your time back? And then let's just make this all passive for you." And there's going to be some percentage of people who do that, right? Um or you can obviously expand. Which one is right? Um I unless you have a reliable way of getting these opportunistic deals, I wouldn't say like that's going to be my strategy. Like take them when they come, that's great cuz it's not it's your core business. So, that I don't see as a distraction.

3:04That's like right down the middle. I do this, they do this. I'm just putting their book in. Good with that. Um in terms of the beach town, what percentage of the market would you say you have in terms of properties that are available that you manage? >> There's only one other management company as big as mine. She has um 120 on her books. >> Okay. >> And then I monopolize the rest. >> Got it. Okay. So, you two together are like what, 80 or 90% of the market or something? >> Um yeah, besides the mom and pops. >> Well, then yeah. So, it's unlikely that you're going to grow a huge amount in that market. So, you are in one of these, right? So, we're like you are in a tiny local market that there's only so many players and so many houses being rented.

3:38Um and so, it does make sense for you to expand to an adjacent market. And so, I mean, that's that's the like unless you started a different business, that's going to be the nature of of the expansion. >> Okay. Now, my only other question is I've only ever done three letterbox drops for advertisement. >> Okay. >> Do you is it worth trying some sort of advertising to see if I capture some more or just completely >> existing market? >> Yeah.

4:05>> Well, well what percentage like who's who can you tell How Okay, the question I asked earlier was what percentage of available, let's say non-managed homes exist that you can potentially get? >> Um >> Is it 20, 50, 100 like >> It'll be a few hundred, but seasonally more than likely. >> But your current one seasonal, too. So that's not that's not different. Okay.

4:32Alex Um It's probably going to be the same work for you to go to a new market to get properties as it is for you to be in your existing market and and continue to gobble them up. And so I would say I would I would keep gobbling them up as long as the gobbling is there. Once it becomes once you have once you're at 120 and and the other ladies at 120 and there's not, you know, there's not many more houses to go after, basically you're you're getting the point of diminishing returns where it makes sense to go after virgin territory.

5:02>> Okay. >> But I'm sure there's going to be property managers there, so I wouldn't think like, "Oh, I just happen to know who this one is." You just don't know who the person is there, but there's a property manager there. So I think it makes sense for you to start where you have some advantage, which is like, "I'm the second biggest property manager in this whole area. Let me take this over for you. I have all the systems dialed. You're just going to get a check in the mail." >> Okay. >> Yeah. And so in terms of the acquisition process, I'm pretty sure there's a lot of like You would know this better than me, but I imagine you can probably like have inquiries on Airbnbs and stuff and then talk to owners without that much difficulty.

5:30Alex >> Within reason. You have to play it >> Yeah, you don't want to you don't you don't get banned. Yeah, exactly. But I'm saying like it's not hard to find a property, look up who owns it, contact, right? And so that would be like an AI can do all that and make a list in 10 minutes. Um and then hit them up. And then I'd hit them up every way I could. >> Okay. >> So, I'd call them, I'd text them, I'd mail them. Because the thing is is you're looking at a a hyper-targeted list. You're looking at 200 leads. Right? And so, I would I would go above and beyond because also from an LTV to CAC perspective, um the average property, so you have 55, you make 240, so you're making what, 4,000 a year per property? But it's very sticky. Right?

6:06I'm guessing people don't cancel often. >> No. >> Yeah. So, um you're probably like I'd be looking at, you know, you're going to be willing to spend call it up to you know, 1,000 bucks to get a property. And I think that's reasonable, third of your first year. And then you still have all the years after that that it's going to kind of cash flow. If you think about it from an investing perspective, if you could put $1,000 into something it becomes $4,000, that's a great investment. Right? So, I just be willing to spend the money and just see it as an investment because you have a reliable way of turning the money into more money.

6:34Which is what ultimately ROIC, return on invested capital, that's what every person who's an investor ultimately wants to look at in a business is like if I put money into the business, what am I going to get back out? And you want to look at the core economics of the business. And so, LTV to CAC is the is the is the most basic unit of of of monetary arbitrage that exists. And that's what all businesses are based on. And so, you have a good one. And what was your annual retention of your customers? >> That I didn't fire? >> Yeah, yeah, that you didn't fire. Sure.

7:02>> um I think 97%. >> Okay. And of the ones you fired in total then? Let's put everything in. >> Um I fired around 11 last year. >> Okay. So, call it 80 whatever, 8% something like that is your actual, you know, uh logo retention or revenue retention. So, you could just back of napkin say that it's a 40K LTV. So, $4,000 a year, 10% churn, it's a 10-year LTV. So, you you have a lot of room in order to spend to get these customers. So, I just wouldn't be worried about like you putting extra elbow grease in. But these 200 people need to become your 200 best friends. Um and you'll probably be able to get like 20% of them if you just work your ass off. It's all great. You go from you know, 55 to to to 95. And then you have your 18, so now you're at 120, and you're the same size as that lady.

7:43Alex Um and then at that point you'll have to expand to the next market. >> Okay. >> Cool. >> Cool. >> Yeah, and one more thing, um I would send a regular pulse to those 200 because you just want to have the day that they have a bad tenant who blows up a a toilet and you want to catch them on that day. >> Yeah. Definitely. Thank you. >> Yeah, you're welcome. >> [applause] >> Okay. Um Thank you guys, that was a wild ride. Um

8:09>> [laughter] >> Um I uh This is kind of a theme today. Who here is between one and three million? Okay, most of you. That's like a lot of you actually. Um So, we we refer to it as a swamp and I want to put a little bit more explanation to why we refer to it as a swamp. So, if you look at the math behind this, let's say you have a two million dollar business, all right?

8:40If you have, let's say, uh 25% margins, you're making $500,000 in in profit, okay, in the business. Now, let's say you want to leave $100,000 in for future stuff and you've got, call it, uh you know, minus 100 and then you've got $400,000 left to play around with, right? Typically when you're at this point, you've reached kind of the edges of your current business model's ability and so you need more help to scale. Some of you guys are probably feeling stretched right now. Hopefully going to get some head nods. This feels familiar. Okay.

9:11And so, the reason this is such a difficult spot that so many businesses get stuck in is that it takes more risk to get out of the swamp than to get into it. And so if you have that $400,000, if you were to hire, let's say, two good people, all of a sudden your profit is gone. And what if one of those two people or both of those people don't work out? Well, you're out all the money.

9:36So, the alternative is like, okay, well, can I just work even more hours than I currently am to try and get ahead of this? That's another option, but you're already working most of the hours that you currently are. So, you play a little bit of optimization. Can I let this fire If you're a business owner and you are not growing as fast as you'd like, I'd like to give you a free gift. So, my team and I put together the $100 million scaling roadmap, which is basically 200 hours of us looking over all the portfolio companies we've had and what stages of growth they went through and more importantly, where they got stuck and how they got past it. And so, we broke it in these 10 stages and we made this little kind of quiz thing where if you put in your business information, it'll tell you where you're at and the most important part for you, what to do for each of functions of the business across product, marketing, sales, customer success, recruiting, IT, human resources, and finance. And so, no matter what you're struggling with, someone else has already struggled with it and solved it. And so, I'd like to give you this thing absolutely free. You can go to acquisition.com/roadmap, plug in your business information, and if you want us to actually help you deconstruct the business and you're trying to scale, we'd love to help you out. On the thank you page, you can book a call with my team and we will look at the business, see if we can help, and if we can, we'll invite you out to Vegas and we'll do this in person live.