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After reading @G_Alexander post here - https://www.thefastlaneforum.com/community/threads/stop-paying-rent-live-for-free.51893/ - I thought I would share with you a similar strategy that can be implemented on a more global scale.
First of all, this is not for everyone. This is for people who are interested in living in multiple countries and have the ability to work from anywhere.
This is not a get-rich-quick or even a business strategy. This is only for people who have a bit of money to invest and a virtual type income allowing them to work from anywhere in the world.
If this appeals to you however, I can teach you how to earn 7-10% net cash yield on multiple properties in multiple countries allowing you to live rent free and make a pretty good return at the same time.
Let me explain....
First of all, ideally you need cash. It is possible to get loans, but getting a mortgage outside of your home country can be a bit more difficult. Not impossible, but more difficult.
Secondly, you need the ability to travel to the place that interests you and spend some time on the ground meeting with real estate agents, contractors, property managers, etc. This is not passive getting started. It can be once set up, but requires real work on the front end.
The lazy need not apply.
Third, you need to open your mind a bit and get out of your comfort zone. You have have had dreams since you were a kid to live in London, but I can tell you - London is a horrible option for this strategy because you won't get any reasonable rate of return doing what I am suggesting.
You need to consider places off the beaten path that you may not have previously considered or have been negatively swayed due to mainstream media - Colombia, Serbia, Portugal, Brazil, Lithuania, Hungary, etc are all great option - but not places most have considered.
And lastly, be prepared for your friends and family to criticized this new life you have created flying to different countries every couple of weeks living in cool locations and experiencing things they would never have the courage or dreams to experience.
Let's get started.
First of all, you need to be aware of airbnb(dot)com and booking(dot)com. These are your platforms (there are others as well, but if done properly you won't need others). Also recognize this violates @MJ DeMarco's book's rule of control. Yes, you are somewhat in the hands of these marketplaces, but many of you running Amazon, Etsy, Ebay, Shopify, etc stores are in the same situation. And this is not your primary business model either. This is a way for you to invest in international real estate, live like Richard Branson, and earn some cash in the investment.
What you are looking for are cities with low wage and cost of living. You can research this on sites like numbeo(dot)com and others. I like numbeo because it allows you to research all aspects of cost of living and compare to other cities. It is very useful.
You want a a low cost of living city because these cities tend to attract tourists - your target audience. For example, British tourists tend to travel to various Eastern European cities for holiday because their money goes much, much further.
Anything in Switerland, UK, Norway, Finland, Sweden won't likely be candidates as they are typically very costly locales.
Next you want to find cities that have relatively high tourist traffic. These places need to have something of interest for visitors. Festivals, arts, architecture, Unesco World Heritage sites, beaches, food culture, etc.
One way you can check that is to go to airbnb(dot)com and look up your city of interest. Look up 15-20 properties for rent and look at their calendars for the next 2-3 months. Do they have a lot of vacancies, or are they rented out 15+ days per month? You can also get a feel for the pricing in the market for what a 1br, 2br, etc apartment may rent for per night/week/month.
If craigslist(dot)org is in the city, it is also a good resource to check the rental rates. But typically airbnb is good enough.
As is the case with much real estate investment advice, location is key. It is especially key in short term rentals. I would pay 2x as much for a center city apartment that is walking distance to local attractions than for an apartment that is 5km away that forces guests to drive or use public transport. Of course yield is key here, but the center city apartment will rent out much easier and will also be an easily saleable asset if you decide to unload the property in the future.
Next do some research on the local market prices for apartment sales. You can find real estate agent sites or other sites that aggregate real estate for sale in every medium+ sized city in the world (thanks Al Gore for the internet...).
Start building a spreadsheet to analyze pricing. Depending on where you are in the world will determine the unit, but for argument sake here let's just discuss euro/m2.
Create a spreadsheet and start analyzing similar properties in the city where you are interested. You will get a feel for the euro/m2 to give you some baseline for measurement.
Now look at airbnb and see what the average rental rate is per night and the average number of nights those apartments rent for.
For example, let's say you can buy a 50m2 apartment for eur75,000. That is 1500 eur/m2. If that apartment can rent for 80 eur/night and the average for those type apartments is 15 nights/month then....
So 80 eur/n X 15 n/m X 12 m = eur14,400 per year. That is your gross income.
eur14,400 / eur75,000 = 19.2% gross cap rate.
Of course you will have expenses associated with that but you can count on 40-50% expenses.
I pay my property manager 25% of gross rents. She handles meeting guests, dealing with any questions, checking them out, checking for damage, collecting deposits, cleaning, all communication, everything. The only extras are hard costs of paper products, soaps, lightbulbs, etc.
After you factor in utilities, property tax, insurance and holdback funds for future repairs, you can expect to have a total expenditure of around 40-50%.
Based on 50%, that leaves you with eur7,200 income, or a 9.6% net cash yield.
That is not uncommon.
In some cases you won't do that well, in some cases better.
For example, you may find a place in Florence, Italy you really love and would love to spend time there. After analyzing the numbers you realize you may only get a 6% net cash yield. But if it enhances your quality of life by spending a week per month in Florence, go for it. There is more to life than just money.
But getting a net cash yield of 6% and a free place to live in Florence is still pretty damn sweet.
Using your airbnb(dot) come platform, you can basically just block off the days on the calendar as unavailable for when you want to be at your apartment in Florence (or wherever). It takes a bit of preplanning but still pretty simple.
You can play around with the rates and charge more during holidays or certain events. For example, if you owned an apartment in New Orleans around Bourbon St, I would raise rates significantly during Mardi Gras.
Of course this is a strategy that cannot be completed overnight, but if it appeals to you I would start researching some place that appeals to you. Maybe it can be a good opportunity.
One last point to make. I truly believe people nowadays need to consider investing some of their wealth outside of their home country. This strategy is a multifaceted diversification approach allowing you to diversify outside your home currency, diversify into hard assets (real estate), and diversity outside your home country.
If this lifestyle fits you or inspires you, then you can buy apartment #2, #3, etc and live rent free around the world.
Feel free to ask me questions.
First of all, this is not for everyone. This is for people who are interested in living in multiple countries and have the ability to work from anywhere.
This is not a get-rich-quick or even a business strategy. This is only for people who have a bit of money to invest and a virtual type income allowing them to work from anywhere in the world.
If this appeals to you however, I can teach you how to earn 7-10% net cash yield on multiple properties in multiple countries allowing you to live rent free and make a pretty good return at the same time.
Let me explain....
First of all, ideally you need cash. It is possible to get loans, but getting a mortgage outside of your home country can be a bit more difficult. Not impossible, but more difficult.
Secondly, you need the ability to travel to the place that interests you and spend some time on the ground meeting with real estate agents, contractors, property managers, etc. This is not passive getting started. It can be once set up, but requires real work on the front end.
The lazy need not apply.
Third, you need to open your mind a bit and get out of your comfort zone. You have have had dreams since you were a kid to live in London, but I can tell you - London is a horrible option for this strategy because you won't get any reasonable rate of return doing what I am suggesting.
You need to consider places off the beaten path that you may not have previously considered or have been negatively swayed due to mainstream media - Colombia, Serbia, Portugal, Brazil, Lithuania, Hungary, etc are all great option - but not places most have considered.
And lastly, be prepared for your friends and family to criticized this new life you have created flying to different countries every couple of weeks living in cool locations and experiencing things they would never have the courage or dreams to experience.
Let's get started.
First of all, you need to be aware of airbnb(dot)com and booking(dot)com. These are your platforms (there are others as well, but if done properly you won't need others). Also recognize this violates @MJ DeMarco's book's rule of control. Yes, you are somewhat in the hands of these marketplaces, but many of you running Amazon, Etsy, Ebay, Shopify, etc stores are in the same situation. And this is not your primary business model either. This is a way for you to invest in international real estate, live like Richard Branson, and earn some cash in the investment.
What you are looking for are cities with low wage and cost of living. You can research this on sites like numbeo(dot)com and others. I like numbeo because it allows you to research all aspects of cost of living and compare to other cities. It is very useful.
You want a a low cost of living city because these cities tend to attract tourists - your target audience. For example, British tourists tend to travel to various Eastern European cities for holiday because their money goes much, much further.
Anything in Switerland, UK, Norway, Finland, Sweden won't likely be candidates as they are typically very costly locales.
Next you want to find cities that have relatively high tourist traffic. These places need to have something of interest for visitors. Festivals, arts, architecture, Unesco World Heritage sites, beaches, food culture, etc.
One way you can check that is to go to airbnb(dot)com and look up your city of interest. Look up 15-20 properties for rent and look at their calendars for the next 2-3 months. Do they have a lot of vacancies, or are they rented out 15+ days per month? You can also get a feel for the pricing in the market for what a 1br, 2br, etc apartment may rent for per night/week/month.
If craigslist(dot)org is in the city, it is also a good resource to check the rental rates. But typically airbnb is good enough.
As is the case with much real estate investment advice, location is key. It is especially key in short term rentals. I would pay 2x as much for a center city apartment that is walking distance to local attractions than for an apartment that is 5km away that forces guests to drive or use public transport. Of course yield is key here, but the center city apartment will rent out much easier and will also be an easily saleable asset if you decide to unload the property in the future.
Next do some research on the local market prices for apartment sales. You can find real estate agent sites or other sites that aggregate real estate for sale in every medium+ sized city in the world (thanks Al Gore for the internet...).
Start building a spreadsheet to analyze pricing. Depending on where you are in the world will determine the unit, but for argument sake here let's just discuss euro/m2.
Create a spreadsheet and start analyzing similar properties in the city where you are interested. You will get a feel for the euro/m2 to give you some baseline for measurement.
Now look at airbnb and see what the average rental rate is per night and the average number of nights those apartments rent for.
For example, let's say you can buy a 50m2 apartment for eur75,000. That is 1500 eur/m2. If that apartment can rent for 80 eur/night and the average for those type apartments is 15 nights/month then....
So 80 eur/n X 15 n/m X 12 m = eur14,400 per year. That is your gross income.
eur14,400 / eur75,000 = 19.2% gross cap rate.
Of course you will have expenses associated with that but you can count on 40-50% expenses.
I pay my property manager 25% of gross rents. She handles meeting guests, dealing with any questions, checking them out, checking for damage, collecting deposits, cleaning, all communication, everything. The only extras are hard costs of paper products, soaps, lightbulbs, etc.
After you factor in utilities, property tax, insurance and holdback funds for future repairs, you can expect to have a total expenditure of around 40-50%.
Based on 50%, that leaves you with eur7,200 income, or a 9.6% net cash yield.
That is not uncommon.
In some cases you won't do that well, in some cases better.
For example, you may find a place in Florence, Italy you really love and would love to spend time there. After analyzing the numbers you realize you may only get a 6% net cash yield. But if it enhances your quality of life by spending a week per month in Florence, go for it. There is more to life than just money.
But getting a net cash yield of 6% and a free place to live in Florence is still pretty damn sweet.
Using your airbnb(dot) come platform, you can basically just block off the days on the calendar as unavailable for when you want to be at your apartment in Florence (or wherever). It takes a bit of preplanning but still pretty simple.
You can play around with the rates and charge more during holidays or certain events. For example, if you owned an apartment in New Orleans around Bourbon St, I would raise rates significantly during Mardi Gras.
Of course this is a strategy that cannot be completed overnight, but if it appeals to you I would start researching some place that appeals to you. Maybe it can be a good opportunity.
One last point to make. I truly believe people nowadays need to consider investing some of their wealth outside of their home country. This strategy is a multifaceted diversification approach allowing you to diversify outside your home currency, diversify into hard assets (real estate), and diversity outside your home country.
If this lifestyle fits you or inspires you, then you can buy apartment #2, #3, etc and live rent free around the world.
Feel free to ask me questions.
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