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How Dylan Built a Six-Figure Portfolio in Just 6 Months

Written by:
Jeremy Werden
December 23, 2024

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Quick Summary
Dylan and Jeremy discuss the key strategies and decisions involved in building a six-figure short-term rental (STR) portfolio in just six months through arbitrage. They emphasize the importance of systematic operations, relationship-building with landlords, and leveraging business credit for rapid scalability. The strategies focus on minimizing initial investment risks while maximizing returns through calculated expansion.
Key Points
- Arbitrage allows you to lease properties and re-rent them as short-term rentals with minimal upfront costs compared to purchasing.
- Properly assessing market potential and aligning with landlord expectations are critical for successful execution.
- Aim for properties that offer a six-to-eight-month payback on the initial investment to enable reinvestment and faster scaling.
- Properties already partially furnished or underutilized can reduce upfront costs and improve return rates.
- Build a reliable local team, including cleaners and handymen, to streamline property management.
- Business credit cards with zero-interest offers can help manage cash flow and finance initial furnishings. Responsible credit use builds capacity for larger investments over time.
- Use dynamic pricing software and guest communication tools to optimize revenue and reduce operational burdens.
- Systems for managing maintenance, supplies, and guest inquiries are essential for scaling effectively.
Full Transcript
Check on the full podcast on:
Jeremy: We are live with the Short-Term Rental Pros Podcast. Guys, we've got a very special guest today who started his short-term rental journey at the beginning of the year.
Our relationship goes back farther than that, and in a very short time, he has been able to grow a six-figure portfolio. He has definitely learned a lot along the way and has a very exciting outlook for the future.
So, Dylan, thank you so much for joining us today.
Dylan: Yeah, thank you for having me. Pleasure to be here.
Jeremy: So, Dylan, tell me about yourself. Kind of bring us back—when did you start working? Like, with your first job, what did you do? What made you want to get into short-term rentals?
Dylan: Yeah, so I graduated in 2018 and moved to New York City. I was working for a couple of years at an engineering design firm. We were doing mechanical, electrical, plumbing, and fire protection design for the most part.
All of our projects were primarily based throughout New York City. Through that job, I got exposure to the construction and real estate industry. From there, for the last two years, I've been working in a project management position—managing construction projects that are kind of based throughout the Northeast.
Through those two jobs, I've gained quite a bit of experience in the construction and real estate industry, but more from the design and construction aspect.
Over the last couple of years, I saw what you were doing with short-term rentals. I saw how you were crushing it and kind of reached out, saying, 'Hey, I'd really like to get involved.' Leading up to that, I had done a lot of reading and research on my own in education. I felt like I reached out to you at a good time for me.
I was kind of ready to jump in and was definitely very eager. From there, it's been a really exciting six months, and yeah, I'm just working on expanding.
Jeremy: Got it. So tell us about the six months. What does your portfolio look like? What did you start with? What did you do first? And where are you at now?
Dylan: Right now, I set up my first property towards the end of March this year. Pretty much right after that one got up and running, I started looking for a second one. I got the second one set up right around the end of June.
After that, I focused on the operations, making sure both houses were good from that perspective. Just recently, I started gearing up to look for a third unit.
Jeremy: Got it. Okay, so you got that first one, and that kind of gave you the confidence—like, 'This is room.' What strategy did you do for this first property?
Dylan: For both properties, they're both arbitrage properties. Basically, I signed a long-term lease as a tenant, as a long-term tenant would, and then rented the properties out—furnishing them and renting them out as short-term rentals.
Jeremy: Got it. So this first one you have—about whatever—we're in September, so you started in March, correct?
Dylan: Yeah, right at the end of March.
Jeremy: Got it. So you've got about half a year of history at this point. What do the numbers look like? Break it down for us.
Dylan: For this first one, the initial investment—just furnishing-wise—was around $20K. Coming up, probably by mid-October, I should just about break even. So it's about a six- to seven-month payback period, which I'm definitely pretty happy with.
Jeremy: Which is good because we vocalize, or like my general rule of thumb is, I want a conservative eight months. I'll entirely return that initial cash investment, but you know, obviously, you want to do it faster than that. Did you initially underwrite it in terms of your payback period?
Dylan: Initially, it was right around eight months.
Jeremy: Got it. So you're kind of hitting that metric. Looks like eight months, and you've returned your cash in six months. Seeing that firsthand—was that one, 'Oh, did you take that initial cash return and go spend it on some Gucci? Treat yourself to a nice vacation?' Or what did you do with it?
Dylan: No, I pretty much took that and rolled it right into the next one. The next one was kind of a unique situation. It was already on Airbnb. Through that, the owner didn't really want to run it anymore. I was connected with him, so I took that one over.
That one was already furnished for the most part. I really didn't add too much to it. The initial investment on that one was significantly less—it was right around $5K to get it up and running. Pictures done, cleaned, and some different furniture items added—just to make what I thought were improvements. But yeah. That one's doing—it's doing well as two, and the payback period will be quicker.
Jeremy: Got it. Okay, so you are making your initial cash investment back pretty fast. Why is that important? So you can reinvest, you can grow. And I want to take a step back. So, just a little bit of context—I've known Dylan for, I guess, at this point, five years?
Dylan: Yeah, about five years.
Jeremy: Five years. And we have a very good relationship. I'm trying to make sure I say this part in a way that doesn't get misperceived, but I think honestly kind of shows our story, and, you know, where we are, and, you know, where we are now.
But Dylan and I both wanted to live in New York. He was a recent grad; I was taking time out of college, and we wanted to live in the big city. We wanted to. But, you know, we weren't making a lot. I mean, what—if you don't mind sharing—what your salary was right when you graduated college?
Dylan: I think it was $62K or $63K, which then, after tax and everything, is not a lot. A couple thousand dollars a month.
Jeremy: Yeah, like $3,500 a month or something? Something like that.
Dylan: Yeah, probably.
Jeremy: So, Dylan—and at the time, I was—I had just left, like, the company I started in college and was just doing freelance web design, web development. So I had no predictable income at all. Like, it was, you know, project by project.
So I didn't want—you know—New York, $2,000–$3,000 a month of rent, even for just a bedroom in a shared apartment. So Dylan and I actually met, and we decided that we would literally split—split a bedroom in order to save on rent.
And just to, like, paint the picture—this was a big bedroom.
Dylan: It was a big bedroom.
Jeremy: It was a big bedroom. And we thought that—you know, Dylan was an engineer. I thought I was a pretty crafty guy. We thought we could put a wall in the middle of the room, so, yeah, it would effectively be like two bedrooms. So we could kind of, like, make a—we had, like, this whole plan that we were gonna, like, extend the hallway, and we were, like, essentially literally build a wall.
And we bought some supplies; we tried to put it up, and it just—it didn't work out very well.
Dylan: It didn't work out at all.
Jeremy: It didn't work out. But honestly, then it was just like, 'Might as well just keep it open. Yeah, open floor concepted anyways.
Dylan: Yeah, we definitely thought it was pretty hilarious too. At first, we were like, Oh, this is great. We have the Great Wall of Murray Hill.
Jeremy: Yeah, like, we were so excited to, like, engineer this room to have, like, the best deal in New York. Like, we would both be paying a thousand bucks a month of rent for, like, our own bedroom.
Dylan: Which is still pretty crazy when you think about it for a shared room.
Jeremy: Yeah. Yeah, like that's—which is, like, it's a good deal, even. I don’t know, is that a bad deal?
Dylan: So, I don't know, it feels like a lot when I think about it—for a room that you're sharing.
Jeremy: Yeah, for sure. So, we literally shared a room—shared a bedroom to save money. And a couple of years went by. I left New York at the onset of COVID.
Dylan: I took over my own room.
Jeremy: So, yeah, Dylan took over. At that time, we weren't sharing rooms anymore. We had both moved into our own room, but whatever—for illustrative purposes. I left, started doing short-term rentals. You know, Dylan and I—obviously friends—stayed in the loop.
And then, I guess out—I think in January, you hit me up, and I guess, what was going through your mind? Of like, 'All right, I gotta make more money. Maybe, you know, my job...' Like, you did—you did get a promotion, or you got a new job, so you were making a little bit more than you were before.
But I guess what, like, was that, like, decision of like, 'I gotta—I gotta do something else. This isn’t cutting it.
Dylan: Yeah, I mean, I think for the last—you know, before—before getting the new job, so maybe, let's say, right around COVID was when I started to really think about, okay, where do I want to be, what are my goals, and kind of more of a long-term perspective.
And with the money I was making from a W-2 and kind of the trajectory and different paths I was looking at, it wasn't really adding up to where I wanted to be. So that's when—you know, that's when I started reading a bunch, watching different videos, as a lot of people do, just to get some of the educational background.
And so, kind of played with going down a couple different avenues of investing in real estate—didn't really take action in terms of actually, you know, pulling the trigger on anything. And then I was like, You know what, I see what Jeremy's doing. It seems to be working very well. Let me—let me find out a little bit more about it. And so that's why—yeah—in January, I reached out.
Jeremy: And I think Dylan may have had to, like, suck up a little bit of pride to hit me up, because a lot of pride to hit me up
Dylan: It took a lot, a lot of pride.
Jeremy: He did. I—you know, I started short-term rentals, and, you know, I was—I was doing well. And, you know, I was being honest and sharing with you.
And I think then you were like, All right, I want to do some fashion of real estate. Yeah, like side hustle type thing. And you went another route. You did—you know, you took kind of like—you did a mastermind program, spent a lot of time learning, but, I mean, it was ultimately—didn't pull the trigger, right?
So when you hit me up, I was like, All right, I'll help you out, Dylan. But, I mean, you could say in your words, what was, like, kind of my—I think—criteria.
Dylan: I'll paraphrase a bit because I don't remember exactly how you delivered it, but it was along the lines of, 'Okay, I'll help you out, but you—you need to succeed here. I was like, absolutely.
Jeremy: I'm not—like, you're not—you know, you did this program. Nothing—nothing happened. You know, like, you—you know, invested time and, you know, maybe some other things into that. And, you know, if you—if I'm gonna work with you, you're going to be successful.
Dylan: Yeah, definitely.
Jeremy: And, you know—yeah. I think you made your money back in six months. You have two properties that are comfortably cash flowing. Also, I think something that Dylan has done a very good job of at this point—and, you know, we look back two years from now, if you continue doing what you're doing—you'll have a lot more.
It's just, like, really building relationships with landlords, being comfortable on the phone. I know he was talking that he was—you were pursuing potential co-host opportunities. Just really, like, whatever—you know, if you talk to someone, trying to figure out how you can add value and how you can have, like, a mutually beneficial relationship with them.
And building, also, like, deep relationships with the landlords you already have, because a lot of times they own more than one property. So, that being said—yeah—walk us through kind of that evolution. I know you did—you struggled at first to, like, build these connections and get deal flow. And kind of what have been—where the pain points? And then, kind of, like, how have you overcame them?
Dylan: Yeah, I think initially just making the calls was somewhat uncomfortable. I mean, it's never easy just cold-calling people, especially in the beginning when I'm not as familiar with how the whole picture comes together. Conceptually, it's not too difficult to understand, but actually having it come to fruition and understanding what goes into it is more difficult to speak about in the beginning. So, it did take some time and quite a few calls before kind of finding my stride a bit on that front.
Jeremy: And Blake was also really helpful. Blake…
Dylan: Super helpful.
Jeremy: He was just here, yeah, last week's episode, if you guys haven't listened to that already, Blake was just on. But Blake, I know—I mean, he does this, you know, with a lot of the folks we work with—but he really helped you, kind of, because he had experience doing it before.
Dylan: Right. So, he definitely filled in a lot of those knowledge gaps. He was actually—I had him right next to me when I closed the first property that I had, when I was talking to the landlord. So, you know, he helped me answer some of the questions that I wasn't as familiar with. And now, at this point.
Jeremy: It's easy.
Dylan: Yeah, much easier.
Jeremy: You can close; it's not a problem of, like, getting deals. It's just being selective, right? The ones you want.
Dylan: The hard part now is just finding houses or properties that I think will do well. The talking-with-landlords part is—I'm much more comfortable with, and I think the—I understand the value that is added for a lot of them.
People that want more of a passive investment, that want a good tenant that they don't have to worry about, who isn't going to leave after a year—because that's really when, for a landlord, that's when it's not passive anymore. You've got to get it ready for the next tenant.
Jeremy: Yo’ve got to paint the walls, you've got to fix whatever things are broken.
Dylan: Right. Exactly.
Jeremy: Got to then market it again, take new photos—
Dylan: Yep.
Jeremy: Screen tenants.
Dylan: Exactly. Yeah, and finding a good tenant isn't easy, too. So, knowing that it's actually a valuable thing—that basically, what I'm providing—that has been, I think, having that understanding has been huge just in terms of having the confidence when I'm speaking to people.
Jeremy: Got it. So, you got the first one up. Can you just walk us, kind of, through that? The numbers—I know it's a bigger house, so, right, more of a cash investment—but just, I'm a numbers guy, so just lay it out for us. What did that first specimen look like?
Dylan: Sure, the rent on that house is $2,450 a month. Utilities—couple hundred.
Jeremy: And this is in the, like, Southeast of the U.S., right?
Dylan: Got it, yep.
Jeremy: So, you're in New York, and your first property is in the Southeast. Had you ever even been to the state you invested in?
Dylan: I hadn't been there.
Jeremy: Even though someone here had invited you, to uh, to come. But yeah, he did not come.
Dylan: So, timing didn’t work out.
Jeremy: Let’s not—we don’t have to get into that.
Dylan: So, no, I hadn’t been there. But I had—you know, you and Blake are pretty familiar with that area of the country and understand the market there well. And so, that’s kind of where I geared my focus in terms of where I was looking, just because I felt like I had those connections that understood that area of the country.
So, $2,450 a month for the rent. And once I signed the lease, I actually drove down there to do the setup portion of it because I didn’t want to pay for a flight and a rental car. And I knew I’d be driving around picking up supplies and stuff. But from when I signed the lease to when I listed it, I think it took a little under three weeks—so about 20 days.
Jeremy: And I came with a bunch of our mentees. We were having a mastermind a few hours away. But yeah, how great did that make you feel—that sense of community?
Dylan: Yeah, it’s all good. I had a lot of support, which was nice. Yeah, some nice tips while you guys came through, too, just in terms of the furnishings. Yeah, it was good.
Jeremy: And in terms of prior to furnishing, I guess, how did you—so, first of all, what was—did you think that investing out of state—I feel like a lot of folks, New York City, you know, big cities, highly regulated. I know we just talked to Blake, who—you know, he likes highly regulated cities and has certain strategies there. But I guess, did you think investing out of state would be possible, and was it easier or harder than you imagined?
Dylan: It’s definitely—it’s been easier than I would have thought. And I think one of the biggest questions people ask that don’t have Airbnbs is: How much time are you spending on it? Like, how are you doing it out of state? And a lot of the different tools that allow you to do that—I wasn’t—I didn’t know about getting into it, and most people don’t.
And I think that’s kind of where that unknown comes from, and where that question comes from. So, yeah, we have—I mean, it’s basically—I’m just following a kind of a system that you figured out throughout the years and has worked well.
But there’s software for guest communication, which is huge, software for dynamic pricing, which basically is just taking in supply and demand at a given time and fluctuating your pricing around a certain average that you’re setting in terms of what you’re charging on a per-night basis.
So, having those tools has been really key for the management perspective. And then, also knowing how to build out a local team—so, having different contractors, handymen, as well as cleaners that you can trust, that you know do a good job, is so important. And the more you have those kinds of systems put in place, the fewer headaches you have to deal with as managing the properties.
Jeremy: Absolutely. So, frankly, it’s been pretty easy. That’s what it seems like.
Dylan: I wouldn’t say it’s been easy.
Jeremy: The setup was, like, a challenge and overwhelming, right? And all that, you know, especially because you did a bigger house. If you start with a studio apartment, where you’ve got one bed, right—I mean, how hard is that going to be? But you started with—I mean, what—a four-bedroom? A five-bedroom?
Dylan: A four-bedroom, two-and-a-half-bath house.
Jeremy: Sleeps 12?
Dylan: 13, and it’s 2,600 square feet. So, it’s not a small house.
Jeremy: Got a hot tub.
Dylan: It’s got a hot tub, big backyard. Yeah, so it’s a big house. So, the initial setup was definitely—it was a lot of work. But I still did it in three weeks. So, like, three weeks for the return I’m getting—the cash flow—
Jeremy: Yeah. Initial—you said $2,450 monthly rent, right? You paid one month’s deposit on it?
Dylan: One month’s deposit, first month’s rent. And then, since then.
Jeremy: How much in furniture, in total?
Dylan: Right around $20K.
Jeremy: Got it.
Dylan: It was about $18K in furniture.
Jeremy: You put a lot of that on a zero-percent APR credit card?
Dylan: Well, only $3K of it on a zero percent.
Jeremy: Because I didn’t have a lot of business credit.
Dylan: Right. Exactly.
Jeremy: Have they bumped that up since then?
Dylan: They have.
Jeremy: So that’s what happens with business credit, right? You might start without a lot. And Blake said on the last episode that he now has, like, a quarter-million in business credit that he has access to.
Dylan: Which, like, so—that’s actually definitely been a really cool thing. And that was my plan in the beginning. I was like, "Oh, perfect. I'll get a business credit card. I'll just use that to furnish the house.” And then I got the card, and it's got a $3K limit. I was like, "Wow, that's not as helpful as I would have hoped.”
Jeremy: You also had a personal credit card.
Dylan: Yeah, exactly. And I still had—I just put more of my own cash in that I had on hand than I would have originally planned for, but I still had it. Yeah, so, but since then—I mean, it's been six months—they've bumped that card up a couple of times. I think it's now at maybe $12K.
Just opened up another card, also zero-percent interest business card, and that one's closer to $20K.
Jeremy: So, you have $30K in business credit, essentially?
Dylan: Yeah, $30K zero-percent, 12 months.
Jeremy: All you really did. Because there's a lot of, you know, business credit courses, but really, at the most basic level—you get a business credit card, you use it, you spend money on it, you buy things, you pay those things back. Yeah, that's really all you did.
Dylan: Pretty much.
Jeremy: If you trade accounts, you can do the DUNS and Bradstreet, which is obviously best practices. But in a nutshell, that is how. Is that how you got more business credit?
Dylan: Yeah. And the crazy thing is, I didn't—I didn't realize this, but they've been bumping it up without me asking them to bump it up.
Jeremy: Yeah, it's been cool to see that. I mean, I would have to pull up my app right now to, like, see how much I have, but I think I'm at, yeah, quarterback or something. Yeah, okay, so cool. So, your initial cash investment—first month's rent, deposit—it's called $5 grand.
Dylan: Right.
Jeremy: Furniture—call that?
Dylan: Furniture was around $18K.
Jeremy: So, we're all in, $23,000.
Dylan: Right.
Jeremy: It's been six months. So, that means for you to have just, you know, gotten that initial investment back, that would be about almost $4,000 a month of cash flow.
Dylan: A little less because I'm also including now the second house into the payback period of kind of the portfolio.
Jeremy: Sure.
Dylan: I would have to double-check what this house just by itself is doing.
Jeremy: Dylan was showing us his books earlier.
Dylan: Yeah, it's pretty close, though, because the new house—it's only been up for a month or two.
Jeremy: Got it. But that one came furnished.
Dylan: That one came furnished, I only put $5K into it, five to six. So, that one by itself is probably also going to—that one, the payback period will be much quicker.
Jeremy: Because it's just a lower initial cash flow. So, the first one is probably higher monthly cash flow.
Dylan: Much higher.
Jeremy: But the second one is a faster return on investment.
Dylan: Exactly.
Jeremy: Faster payback period.
Dylan: Right.
Jeremy: I got it. Okay, cool, cool, cool. So, two properties—wiping the slate clean. Yeah, we're back to where we started. And now, you know, you don't have a $3K business credit card—you've got $32K in business credit.
Dylan: Right.
Jeremy: What are we looking at moving forward?
Dylan: So, I definitely want to expand the arbitrage portfolio. I recently kind of started gearing up to look for a third one. Seriously, the rest of the summer—after setting up the second one—kind of focused on the operations. I also had a couple of trips, so it just didn't really make sense timing-wise to look for a third. And I also wanted to build up some more cash after putting it into two properties.
Jeremy: Sure.
Dylan: So now, I'm definitely ready to look for the third. So, I've kind of been actively looking, I'd say, for the last couple of weeks—or the last two weeks, really. And then, also, another thing I want to do now that I understand the operations and can speak about it intelligently is co-hosting.
Jeremy: Got it.
Co-hosting—I just view it as minimal risk. There's really no risk outside of your time that you're investing. And it's kind of a nice way that you can have one property, that you have one good client with a big property doing, you know, north of six figures, and you're charging 20% on that—that's pretty good. So, that's kind of how I'm looking at that. And also—so those are kind of the two ways.
Jeremy: That would be less cash flow than your first property flow, but much higher—Infinite. Infinite return on investment.
Dylan: Right. These are no cash upfront and really no risk.
Jeremy: Got it. Okay, so, and I guess we're talking about co-hosting—I'm definitely pushing co-hosting with folks I work with a lot more. Just, you know, I get tilted to questions all the time about economic uncertainty.
And, like, there's always some degree of economic uncertainty. And, you know, early COVID—everyone thought the world was going to go to doom. There's always going to be people saying that. But my answer—it's just easier to just say, 'All right, if you're worried, do co-hosting,' right? Like, there's no downside.
You know, there's only—like, I would argue that there might be more limited upside because, like, your gross margins—for every dollar revenue you make, if you do a good arbitrage property, you can be making 40% gross margins. Whereas co-hosting—you're charging, like, a 20% fee.
In addition, I would say that co-hosting is more akin to, like, a job because you just have to keep the investor, like, landlord happy. That's like part of the deal—keeping guests happy—but you have to keep them happy.
And, you know, which means you need—you want to have good investor partners. So, I'm in, and I'm sharing these things as Dylan is getting into co-hosting. Like, what do you want to be thoughtful of?
You want to be thoughtful of: you're working with a good owner, you know, one that lets you do it, gives you space, but also, let's say there's an issue with the house—they deal with it, or they let you deal with it. You know, they're not—they don't cheap out about safety issues and stuff like that.
So, all right, so I guess, yeah, what has been the process of starting to look at co-hosting and kind of getting into that?
Dylan: I mean, to be honest, it's still very new.
Jeremy: Sure. We'll be—we'll come back for that one.
Dylan: Yeah, but I mean, in terms of just what I've been doing so far is just looking, honestly, on Zillow. Looking at a lot of furnished places, just reaching out to the landlord and saying, 'Hey, have you thought about—I think there's a ton of potential you have here in terms of turning this into a short-term rental.
Between myself and a couple of people I work with, like you and Blake, we have 30-plus units of kind of data and experience in terms of how to run short-term rentals, how to optimize them. And I'd basically want to implement these same strategies into your house. We can make it as passive as you want in terms of I'll handle all the operations.
And so, that's kind of the…
Jeremy: I’m sold, I’m sold. Go ahead and take my property.
Dylan: Yeah. So, it's—I mean, it definitely helps. Yeah, so it helps to have now a portfolio to reference or to show as a reference. Granted, I haven't found a co-host client yet. It’s still a work in progress.
Jeremy: And this—this is the Short-Term Rental Pros Podcast. Yeah, Dylan's on his way there, you know.
Dylan: Yeah, no, I'm not—I'm not there yet.
Jeremy: I'm not giving him that—I don't—title at this point. Yeah, but I think it's good to have people who are on their journey. Because you can see—you know, I mean, it's crazy. I mean, do you think it's crazy thinking about where you were six months ago to where you are now?
Dylan: Yep.
Jeremy: And like, has that changed kind of your outlook and optimism for yourself, your professional career, for your pursuit of freedom? Like, how has your mindset shifted?
Dylan: I think my mindset over the last couple of years has been relatively—like, I have these goals that I want to achieve, but it was more about, 'All right, how do I get there?'
Now I feel like I have—I've got the ball rolling in the right direction. Like, I've got kind of clear steps and actionable things that I can do to get closer to that. So, that definitely has given me confidence, like, 'Okay, I'm doing the right things now. Now it's just about doing more of it and then basically taking the cash from there, maybe putting it into slightly less management-intensive parts of real estate as well.
Jeremy: Got it. Okay, so we'll talk about that management intensity. You were just telling me that first—the second property, the first renter, was like a multi-month renter.
Dylan: Yes.
Jeremy: How management-intensive was that?
Dylan: Yeah, that—that was—that was my longest guest so far. I think before that, my longest guest had been maybe a 10-day stay. But I just had a guest leave that had been there for a little over a month. He didn't ask me—he asked me maybe one or two questions the entire time. And so, it didn't even feel like—
Jeremy: You forgot about the property?
Dylan: Yeah. It's like, I didn't even have it.
Jeremy: I have to check when I'm doing midterms. Like, I better just check and look at the calendar and be like, 'All right, how long have these people been here? Like, what's going on? Because it's easy just to literally forget about it.
But okay, so it's pretty easy. So, you like them—you like medium-term rentals?
Dylan: Right.
Jeremy: On the episode with Blake—we talked a lot about medium-term rentals, right? But is that something you might want to—seeing how passive a medium-term rental was—something you might want to do more in the future?
Dylan: I'm definitely gonna look into it more. Also knowing that certain areas of the country that could be—that have a lot of opportunity, there are some restrictions around stays under 30 days.
So, there's pros and cons there. With the shorter stays, in general, your returns are probably better, but they're going to be more—they're more management-intensive. So, the medium-term rentals is also another avenue in the future—or near future—I'll probably be exploring.
Jeremy: Okay, so, yeah, what can we—so you're doing—looking into co-hosting, you're starting to make calls, you're starting to make that pitch. Do you want to buy—I guess, what do you think your short-term goals are? Get some co-hosts and get some more arbitrage, right?
Dylan: Right.
Jeremy: What's your five-year? Like, if you were to say, 'This is where I want to be in five years,' we're live, so we're holding you accountable. I mean, I—you know, I hold Dylan’s ass accountable. So, what do you want? What am I helping you with? What are we doing?
Dylan: I mean, I think, right now, the arbitrage and the co-hosting make sense just to build up the cash flow more—the monthly cash flow. Cash flow—I want it to be at a higher pace or coming in quicker before I feel like it makes sense to buy and just basically deploy most of what I have into buying a house, furnishing it. The return on investment is just going to take way longer.
Jeremy: Sure
Dylan: Granted, you have the appreciation, equity, total way more tax benefits, but for now, I think immediate next steps are to get a couple more properties up and running through arbitrage and co-hosting.
Next year, I may look to buy, but I think it also kind of just depends a bit on interest rates, how many properties I’ve.
Jeremy: hey, you’ve got that W-2 still. You’ve got that W-2. Get you one of them low down payment loans.
Dylan: And I’ve learned a lot about that…
Jeremy: Throwing that on the business credit?
Dylan: Yeah, exactly.
Jeremy: Not really kind of joking, yeah, but it depends on the numbers.
Dylan: But I’ve also thought about, 'All right, well, I’ve learned a lot about the short-term rental loophole. So then, I’d have to kind of put pen to paper, like, Okay, does it make sense to try to capitalize on that next year?
Jeremy: I will say
Dylan: I think it’s at 60% next year, the depreciation.
Jeremy: Even when it’s at 20%, it still makes sense. It’ll still—it’ll always make sense because if it’s over five years, it just means you’re doing that 20% each year, right?
So, the short-term loophole essentially is a way to buy a house as an Airbnb, has, and write off—because it’s an actively managed business, right? If you, quote, satisfy certain criteria, you can write it off against your active income, which in Dylan’s case is currently his W-2 job.
So, if you’re making—say you’re making $100K—is that fair? Are you big—I don’t know.
Dylan: It’s more, but not like significantly.
Jeremy: Got it. So, let’s say you’re making $115K.
Dylan: Sure.
Jeremy: All right, he’s making $115K in New York. Again, you’re at that 50%, 42% tax bracket in total, so you’re paying half your paycheck to Uncle Sam.
If you can show a theoretical loss via accelerated depreciation, which you can write off 80% of the accelerated depreciation amount this year, you have to do a cost. This is a whole other episode. We’ll do another episode on the cost segs and short-term rental loophole.
But essentially, you can probably decrease that $115K—let’s say you buy a $500K house, $400K house—you could, you know, probably decrease that $115K to like $55K, $60K, or something like that.
And then your tax—you’re going from a 50% tax bracket, in terms of like city, state, federal, down to probably like a 25% tax bracket. So then, you save money again because your tax rate is then lower. So, it compounds the savings. I’m excited to get you in on that too.
Dylan: Definitely.
Jeremy: So, five years from now, you’ve tapped the short-term rental loophole. You now own at least one property?
Dylan: Oh, definitely. I mean, within the next five—it’s honestly kind of hard to plan out or say like, 'Oh yeah, I’m gonna own X amount.'
Jeremy: I’m not good at setting goals because I’m just like—I take opportunities that make sense at that time.
Dylan: But I think next year it would probably make sense to buy, and then within the next five years, uh, yeah, honestly, I have to put some more thought into it.
Jeremy: All right, we’ll come back to that one. So, more arbitrage, more co-hosting, and then buying—partially for the tax advantages of buying.
I guess, what has been the—show—I’m gonna break it down a little bit. Before that, I guess, when you reached out to me, did you have to suck up any pride?
Did you—you know, you tried another type of real estate that wasn’t one that I had experience with. You know, I don’t know what happened there, whatever. We don’t want to get into that.
Dylan: That’s coming back around.
Jeremy: And then you hit me up. So, what was that like? Just, you know—I don’t know if you DMed me, called me, I don’t know. I don’t remember exactly the mode of communication.
Dylan: I think I texted you first and then, I think you called me.
Jeremy: Okay, well let’s just say you Instagram DM’d.
Dylan: Sure.
Jeremy: What was it like? You know, were you—did you feel a little bit like, you know, I’m asking something from somewhere? Well, I guess, what was going through your mind there?
Dylan: I mean, we were—we’re good friends, so it definitely felt—I mean, super happy for your success, obviously, and it’s honestly been really super impressive to see you grow through your different business endeavors.
You started off with the boat rentals, got into Airbnbs, you’ve got a couple of other things happening now too. So, that’s—I mean, it’s been awesome to see as your friend and definitely, like, pretty inspiring.
But yeah, with all that said, reaching out and asking for some guidance on the short-term rental front definitely took some—I had to suck up some pride. But I’m happy I did it.
Jeremy: I definitely—Blake was talking earlier—it’s like how many of our friends do short-term rentals at this point, and like, definitely—I’ll help you guys. I’ll help out my friends. They hit me up, I’ll help out anybody, you know, I’ll help out.
I guess I want to get on that—you know, kind of our community. And has it, you know, been—I know that you’ve been looking at, you know, getting some extra cash from some of those in our community who, you know, maybe we’ve helped them get their first property, but they want to passively invest in the second.
We'll get into that in a second, but I guess this is more internal reflection of like—it’s kind of funny that, yeah, when you, like, kind of show friends and help them, like, some, you know, some are like, you know, grateful and, like, will say, you know—but then some are kind of like, Well, I did this. Like, this is all me, whatever, man.
Like, Yes, you provided exactly everything I needed to do it, but I did it. I'm like, "Okay, no, that’s good. That’s great.” All right, I don’t mean to—I don’t mean to—it is funny. If anyone—I don’t know if anyone’s listening, I’ll take—I’ll take some compliments here.
That being said, yeah, in terms of the group, yeah, I know you’ve talked to folk about, like, raising money and stuff. I guess, how has the group itself, like, been helpful?
Dylan: It’s been great. I mean, it’s—it’s still a relatively newer group, so a lot of the people in it are experiencing and having the same questions that I have.
So, it’s been helpful to see, okay, where are they having struggles, or the questions that they have are shared by a lot of us. And so, working through that collectively and hearing different people’s experiences and how to do things better when there’s mistakes that are made—that’s been very helpful.
And then also, on the raising additional capital part, there are some people in the group that happen to have a lot more cash than others, looking for places to invest it. And so, that’s also been a nice avenue now that we’ve kind of been able to explore.
Jeremy: Yeah, and it’s been cool. Like, like you said—I mean, obviously, I’ve been doing this for a few years. I’m still doing things, but having people who are kind of at the stage you’re at, or having, like, more—like, I think you were setting up a property while someone else in the group was setting up a property nearby. So, you really had, like, parallel experiences.
Dylan: Yep. And then it’s also been nice just because we set up properties at the same time—it was both of our first properties. We’ve communicated back and forth pretty much consistently since we set up that first property. And we’ve been able to answer each other’s questions, share resources like cleaners and handymen. So, that’s been super helpful.
Jeremy: Awesome. So, Dylan, I ask this to everybody on my show. I’m gonna have to paraphrase it for you or change it. I ask, what’s your pro tip? I’m not calling you a pro yet. We’re saying, what is your aspiring, aspiring pro tip for those listening?
Dylan: I would say, start with your own education and research. That’s kind of the approach I took. And then, once I had—without knowing about potential certain options as a means of investing, it’s difficult to just jump into something.
But having enough of a background to then reach out to someone that has done it, that has been successful at it—I would say start with the research and then try to find a mentor. That will definitely expedite what you’re able to do.
Jeremy: Got it. Okay, so today we touched on the last six months. We’ve talked about what you’re excited for moving forward. But yeah, anything else you want to share that’s pertinent about your experience that our audience would find, you know, valuable?
Dylan: I would say, with the right systems in place for short-term rentals, it’s definitely not as crazy or difficult as people probably think it is. And so, yeah, just, if you reach out to your community, if that’s something you want to be a part of, and find someone that’s done it successfully—yeah, go after it.
Jeremy: And maybe, maybe a year from now, we’re helping you get virtual assistants onto your team so that one message you sent that month to that guest. Maybe next time you don’t even have to send that one message.
Dylan: That’d be great.
Jeremy: It gets sent. Awesome. Well, Dylan, thank you so much for coming today.
Dylan: Yeah, thank you for having me. Really, a pleasure to be here, and it was a great time.
Jeremy: Yeah, and guys, again, we—both of us—went from sharing a room, and hopefully, a couple of years from now, you know, we can look back at all that. And, you know, hopefully, we have some photos or something from there.
Dylan: We definitely do.
Jeremy: We put that as, like, the thumbnail? I don’t know if we do, but maybe we’ll look for them. But awesome. Thank you guys so much for joining today. Stay tuned for the next episode.
Please, guys, like, you know, I’m just doing this for y’all. Give us that five-star review. Let me know if you have any topics you want me to cover. I’m trying to make this pod as valuable as possible. I’m trying to have as many interesting people as possible, so feel free to comment.
Let me know what you’re looking for, and as always, appreciate you all. Stay tuned for the next episode of the Short-Term Rental Pro Podcast.
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