Julian Sage and Jon Bell are the guys behind Short Term Sage, where they teach you how to build your own Vacation Rental Machine.
Hence their VRM Formula coaching program I’m reviewing today.
Jon was the one who initially taught it to Julian. He started doing Airbnb rental arbitrage a few years back, as a way to make some extra money.
Once he saw it working, he reinvested profits from his first until into the next, and then the next.
Within a couple years, Jon was crushing it.
Yet, he and Julian believe slow and steady is the way to go.
Because, look, you could come in with partners and venture capital and sprint to 100 units, and, on paper, yeah, you look like a boss. But when you go fast, you miss out on the lessons and the experience and the feel that comes with doing most of it yourself and really being in the trenches.
Not only that, but more speed usually means smaller margins. Which might not be sustainable.
“Being smart about what you’re doing is more important than starting out with this big bang,” Jon explains.
“I’d rather see somebody go through kinda what we did, build up the knowledge, build scale on their own, and then maybe somebody comes in and says, ‘Hey, here’s some money.'”
“And the reason why that’s important is, you’re not gonna give away too much at that point. Whereas, if you take it on earlier on [outside money, that is], you’re gonna give up way too much equity.”
“So just be smart,” Jon warns.
“Don’t get in over your head and have this controlling person telling you, ‘Hey, this is what you gotta do. I’m sorry, you can’t sleep today. This is what you gotta go out and do.'”
“It’s the same thing with taking a big line of credit or running up credit cards. When you do that, you can’t stop, right? It’s just, you have to pay it back. So you’re right back in the rat race.”
“We see this with people who come into the VRMF program. Everybody wants fast money.”
Another pitfall Jon and Julian try to warn against is having too many units in one area.
For example, at one point, Jon had 38 units in Alexandria, Virginia.
And, one winter, Airbnb bookings across those properties were particularly slow, cash flow decreased significantly, and all of a sudden he was barely breaking even.
That was a wake-up call for him.
It was time to start scaling outside of his own backyard. He needed to find other markets that were at least steady if not busier during the cold months.
Plus, think about changes in regulation.
If all your Airbnb rentals are in one city and that city decides to change their policy on short term renting, you could be wiped out virtually overnight.
So, no different than stocks, you gotta hedge off your risks through diversification. You gotta spread out.
And, going along with that, you should still keep plenty of reserves on hand and be prepared for times when you can’t charge as much per night and/or occupancy’s not where you want it to be.
“But,” Julian says, “if you come in and you’re not prepared; and you just think you’re gonna get a bunch of properties during a slow season, and now you don’t have any cash reserves?”
“And you just think that things are gonna go magically well without even knowing how to optimize your pricing or how to be able to fill your properties?”
“This is how people implode on their short term rental business,” he says.
Don’t let this happen to you.
Enroll in VRM Formula.
Cost is $5,000 or two payments of $2,600.
Difficult business. I’m good turning websites into cash flow.
Tap below.