Syed Lateef on a $10.7M revenue year in Airbnb arbitrage

Quick Summary

Syed doesn't own any of this. He leases the units, furnishes them, and re-rents them nightly, which is what made March 2020 so brutal: 180 leases, no guests, and a $500,000 rent payment coming due. He gave his landlords three options, came out of it at 90 units, then rebuilt using furniture bought out of Stay Alfred's liquidation at $250 a unit. June alone hit $1.55 million in revenue, though he takes real losses every winter. Before you sign a lease anywhere, check the seasonality with BNBCalc Markets.

Key Points

• He leases rather than owns, so March 2020 landed as 180 leases with no guests and a $500,000 rent payment due. He gave his roughly 10 landlords three choices: let him pull the furniture and terminate, move to a revenue share, or take him to court for whatever he had left. Some told him to leave, some demanded every dollar, and two landlords holding 90 units kept him alive on a revenue share.
• He funded the growth push through December, January and February on about eight credit cards worth roughly $200,000, plus another $100,000 from friends and family. He added about 50 units across those three months, and then flights stopped.
• Stay Alfred's liquidation attorney accepted a lowball offer of $250 per unit for the bankrupt operator's furniture. He bought 150 apartments worth of it and rented three warehouses to store it, against the roughly $10,000 it costs him to furnish a unit new.
• June came in at $1.55 million in revenue and 2022 finished at $10.7 million in revenue, his first eight figure year. The annual number hides the seasonality: he calls that winter a record loss, and says he defers rent and puts costs back on credit cards to get through it.
• His 2023 revenue forecast is $11 million, flat year over year, with revenue per unit down 20% against 2022. He had about $1 million of cash earmarked for four buildings and chose not to spend it, which he says saved him from liquidating assets to cover winter losses.
• About 100 employees, half of them in the Philippines earning $5 to $15 an hour and running finance, pricing and revenue management in house. The local half is cleaners, runners, maintenance and one general manager, handling about 100 checkouts on a Sunday or Monday.
• He lists on Airbnb, VRBO, Booking.com and Expedia, and 85% of the business still comes from Airbnb. His Instagram bio says 300 units, which he corrects on air: last count was 295, and "I need to get five more to go back up to be truthful on Instagram."

Full Transcript

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Jeremy: What's up, guys? I'm so excited today. I am here with the godfather of Airbnb gurus, Syed B. He is out of Chicago, Illinois, and he has probably the biggest portfolio of anyone I've talked to on this podcast. He's been doing it for a while, so I'm super excited for this conversation.

You guys are going to want to stay locked and loaded, because he's going to provide a ton of value to you today. Syed, thank you so much for coming.

Syed: Thanks for having me. I like your energy. I like your attitude with things and everything. I've been following you a little bit on Instagram, so I'm excited to be here and talking to you.

Jeremy: Awesome. Yeah, just tell me, break it down for the folk. How did you get started, and where are you at today?

Syed: Sure. I got started in 2017 when I purchased my first multifamily property. It was the FHA financing where I had to live in the property for a year. After the year was done, I had the unit furnished, and I said, hey, maybe it's an opportunity to put it on Airbnb. I put it on Airbnb, and the first month, it made double the rent. That's when I had an eye-opening experience, and the light bulb hit. I was like, whoa, this is crazy.

As time went on, it ended up being three times the rent when I started getting into my busy season. That's when I said, hey, I need to go all in. I need to leave my corporate job and try to do this full-time.

At the same time, I made the other units in my building Airbnb as well. Every single unit I put on was getting two to three times rent. I said, hey, how do I get more? I want more units. That's when I started my company.

Jeremy: You were hooked. You caught the bug. You started in Chicago. Correct me if I'm wrong, but how many hundreds of Airbnb listings do you have to this day?

Syed: On my Instagram, I said I'm the only Airbnb guru on Instagram with 300 units. Since then, I let a handful go. Last time I counted, it was 295. I need to get five more to go back up to be truthful on Instagram.

Jeremy: I know your high season is probably about right now, or July. You've done million-dollar months before?

Syed: Yes. In the month of June, I had a $1.55 million revenue in June. In July, it's $1.4 million. In August, we're in the middle of the month of August. Right now, it's at $1.2 million. I hope it ends the month at $1.4 million. Yes, multimillion-dollar months.

Jeremy: Probably close to eight-figure years.

Syed: Yes. Last year, I had my first eight-figure year. It ended the year at $10.7 million. This year, it is trending. My forecast is $11 million. I'm flat year over year.

Jeremy: Got it. Very interesting. Every single one of your listings is in the same market, correct?

Syed: No. I'm in a few markets in a few cities, but the majority of my portfolio is in the Midwest.

Jeremy: Gotcha. Okay, Midwest. You got this multifamily unit. You were like, oh sh*t, eye-opening. These are crushing it. I need to get more. Then, did you get more after that through buying, or did you leverage another strategy to start growing your portfolio?

Syed: Right. I didn't have any more money to add more units at the time, so I couldn't pay either 20% down on another property, so I had to figure out how to get more units. Initially, I started a property management company where I would take an 80-20 split with the owner of the property. After a handful of months, I realized that's not the model that I like, and I fell in my hands the rental arbitrage opportunity.

Before even the rental arbitrage model even existed is when I started leasing some units from a landlord. The way it happened was I went to some random networking event, and it was nothing that special or big, but I was standing in a group of people, and one of the people in the group said, hey, we're looking for people to do Airbnb in my building. That was the most shocking thing I heard. I never hear anybody say that. I said, you know me, I love to do something like that.

I got their contact information, and I started reaching out to them. That's when I realized the landlord that she was working with is a pretty substantially big landlord in my market. He had about 1,000 long-term units at the time. I said, wow, this is a huge opportunity.

I started reaching out to them to try to see if I can do Airbnb for him. At the time, I was trying to pitch him that 80-20 split. I think it took me six months of persistence, calls every week or email every other week. Finally, they pushed it off, and I just walked in the office one day. I think the property manager at the time was fed up with me. He's like, okay, fine, I'll just put you in front of the boss.

Finally, after six months, I was able to be in front of the decision maker. I pitched him what I was looking to do. He said, listen, I'm not looking to get in the furniture business. I'm not looking to get in the Airbnb business. I don't think we can do this model. I'm like, okay, well, how about if I rent two units from you and pay you rent, but allow me to do Airbnb in those two units? He said, as long as you pay rent, don't cause any issues. You can have these two units.

Then I leased those two units, furnished it, put it on Airbnb. Then after a couple of weeks, I asked, hey, can I have like two more? Then after a couple more months, I said, can I have five more? Then there was a time where he ended up coming to me. He's like, I have this opportunity for you to do 15 here. Quickly, from two, I went up to 35 units with him.

Jeremy: Wow. You built that relationship. I love how a couple of things. First of all, when you started, you weren't like, oh, I'm going to do rental arbitrage. This was before the social media folk of posting all the videos about how to do rental arbitrage. To you, it was just...

This is actually similar to me. When I started, I was doing co-hosting. Then it was just sometimes where the landlord was like, I just want, just pay me each month. I don't want to deal with anything else. I was like, sure. Why not? To me, it wasn't even called, I didn't even think of it as quote unquote rental arbitrage. I thought of it as property management where I'm just like paying them monthly income versus a whole 80-20 split.

That's really interesting to you. That's how you saw it initially. You went deep. First of all, you made that in-person connection. You literally showed up. You weren't afraid to literally knock on the door and walk in and stay there until you were in front of the decision maker, which is awesome. A lot of folk don't have the courage really to put themselves out there. They might do a few phone calls, but ultimately when you're starting, you really got to build a relationship. There's no better way to do that than actually getting yourself in front.

Then you went deep with that landlord. Now you have, you built a 35-unit portfolio just with one property manager.

Syed: Right. To your point, a deal is never made unless you meet somebody in person. A lot of people think that they could just cold email and give a phone call to a landlord or a building owner, and they can make a deal happen. Things never happen unless you go in person, look presentable, speak confidently, and be able to present your idea and to make a deal happen. The biggest thing is go out there, try to be meeting people, networking events, and making a deal happen in person.

Jeremy: That's awesome how you went to a networking event. Again, it didn't seem like you had even a mission of like, I'm going to go to this event so I get X out of it. You were just like, there's opportunity. You need to meet people in order to accelerate your growth. A lot of people today have the blueprint for doing all this, but you just put yourself out there, which is really great. Now you got 35 there. How'd you get the other 260?

Syed: Right after I had 35 with him, I ended up becoming a player in the market where I had a reputation and I was working with somebody that everybody in the market knew about. He was well-known in all the landlords in Chicago because he had so many units.

Jeremy: Landlords talk.

Syed: Right, exactly. It was really easy, not really easy, but it was easier on the second landlord to be able to convince him by just simply saying like, hey, I'm working with XYZ. I'm looking to lease two units. Would you allow me to lease two units? I have 35 units with him. You could talk to him and ask how I've been doing with him. That's the best pitch that I could even do, because I have a reputation now.

They answered me and said like, yeah, after some persistence as well, like a couple of months later, they had a motivated situation. The landlord had some units available, and this landlord actually even has more units than the initial landlord. He had 5,000 units under management. When I asked for two units, he said, yeah, go ahead. Let's try you out in two units. Now with that landlord, the second landlord, at the moment I have 180 units with him. Unfortunately, I'm not doing business with the first landlord anymore.

Jeremy: Got it. Walk me through the economics. That first 35 units you did at that same time, I mean, yes, you're not buying, you don't got to do the down payment, but how much did that cost to furnish, damage deposit, first month's rent? What did that all look like?

Syed: Some of the units were studios to two bedrooms, so it would range from like $5,000 per unit to $8,000 to $10,000 per unit. But the way I was able to get funding or scale quickly with that landlord is I always requested two to three months free upfront. He was motivated enough to agree with those terms. Within those two to three months, I was able to recoup the cost of the furniture to be able to reinvest it back into more furniture and to grow the business.

I'm not able to get those terms anymore. That was when I first started my business, the two to three months free. Right now, it's more like one month free or even less.

Jeremy: Was that because of the summer, or just in general?

Syed: It could be demand for long-term tenants has increased over time. Number two, it's also I've had a lot more capital to deploy to add more units, so I'm not there negotiating probably harder than I can be. I'm taking the deals that sound okay to me versus the home run Grand Slam deals.

But initially, when I started, I was able to convince him to give me two to three months free upfront. But there was no security deposit that I have to pay in my city. There's a lot of move-in fees, but I was able to negotiate no move-in fees on these units. But I would have to pay the first month's rent, so I would have to pay the first month's rent and the furniture. But again, I would recoup those costs so quickly in two to three months to be able to redeploy it back in the business.

Jeremy: Got it. So that's why you 35, let's just say 35 units, you're getting the first two to three months free. So you're putting studios to two bedrooms. Let's just assume your average, let's just say your average furnishing cost is what, $10,000?

Syed: Yeah, $5,000 for the studios. And then it was up to like $10,000 for two bedroom, two baths.

Jeremy: Got it. So 10 Gs times 35, so 350 grand. So tell me how it was that. Do you generally use cash? Do you use business credit?

Syed: When I added those 35 units, it was not like in one shot. It was over time. So it was over like maybe eight to 12 month period. So during that time, it was like adding two units, four units at a time, and then five units. It was being able to take that money and be able to redeploy it back. So no, I did not have like a loan or outside funding to be able to get $350,000. It was using the capital from the business that it generated to put back into those units.

Jeremy: So you were the velocity of money. You're putting the money and quickly got it back, and that allows you to scale incredibly quickly.

Syed: Right.

Jeremy: Got it. Okay. So you staggered the move-ins, you grew to 35 units, and after that, that was all with the same landlord, right?

Syed: Right, right.

Jeremy: And then from there, that worked. You proved it worked. And then over time with this next one, you've gotten 180. How many years has that been over, and what has that growth entailed?

Syed: Yeah. So it's not like 180 that happened quickly. It was actually, I had only like 30, 40 units with that landlord, and then I had some other landlords. So I went through and did the same pitch to every landlord. Like, hey, now I'm doing business with landlord number one, and now I'm doing business with landlord number two. So now I even have a better reputation in all of my market. And a lot of the landlords know both landlords. So they're like, okay, finally you can do it with me.

So it was a time in 2020 where I scaled up to 180 units. This is right before March of 2020, and that's right before COVID hit. And it was in those months of January, February is when I scaled the most I ever scaled. So I took on actually outside funding. Yeah, I know.

So for one, I'm in my slow season and I'm taking like significant losses. And then I took outside funding during that time to be able to pay for furniture. So I was taking losses using my money I gained from the previous year. I was using it for the losses that I was getting in the slow months. And then I had to get outside funding to buy more furniture to scale up during that time.

Because during that time, that's when like the landlords are motivated because they don't have people coming in to lease long-term units with them. So they were able to give me a lot of units. So I think during like those three months of December, January, February is when I scaled up like 50 units during that time.

That time I had to use outside funding. And that's when I opened up maybe like eight credit cards, like Amex and like Capital One. And I kept on asking for limit increases. And there was maybe like $200,000 from there. I got outside funding from friends and family to be able to get another $100,000. And I was using that to grow during that period of December, January, February.

Thinking that, hey, March is coming up, spring break is coming up. I'm going to be in my busy season again soon. And unfortunately, that's not like what happened, right? COVID came, hit me with the brick wall. I was taking crazy losses, taking on crazy debt, crazy growth. And all of a sudden flights have stopped and Airbnb has refunded all the guests their money. And I have a $500,000 rent payment with not that much money to my name anymore.

Jeremy: Yeah. So how the hell did you navigate? Y'all are listening. You got to stay tuned, because that was probably about the worst situation anyone can face. They just grew, scaled right before an unparalleled, I mean, unprecedented and nobody could have imagined situation occurred. So how did you navigate that?

Syed: So at the time I had 180 units and I had about 10 landlords, and the announcement that flights have stopped, it hit our industry before it hit anybody else's. And I knew what the impact was going to be, because I had a lot of colleagues that said like, hey, this is going to be pretty bad. And maybe it's time to start talking to your landlords to start terminating leases.

So with these 180 units, I went to the landlords, the 10 landlords, and I gave them three options. I said, one, allow me to pick up my furniture and leave. Let's terminate the lease. Number two is let's get on a revenue share and share in like whatever dollars come in, because we don't know what's going on. And number three is like, I just don't pay you. And you could like sue me for whatever I have.

And yeah, now it's funny because I'm over it now. Right. But at the time it was, and at the time it was so fresh that a lot of landlords were like, no, we're not COVID charity. We're going to go after you for everything you have. You better pay me every single dollar. So there was about three landlords, four landlords that said that. And Chicago said, oh, landlords. Nope. You can't go after your tenants. Right. But this, none of this announcements happened until like the first two, after the first two months. Right.

So yeah, I went ahead and I was walking into people's offices, and they were shocked and taken away by that, because they said, in all years, I've never had somebody just drop in my office to tell me something so crazy and saying, hey, I can't pay you rent anymore. And you have to let me leave unannounced. But a lot of the landlords appreciated me coming to them so quickly about it and telling them like, hey, I see a problem happening.

So there was three landlords, four landlords that said like, hey, we're not going to give you a break at all. You better pay every dollar. There was three landlords that said, okay, pick up your stuff and leave. And then the two landlords that I really needed for them to say like, hey, you could stay in these units and pay me a portion of the rent, or let's get on our revenue share. There was about two landlords that had 90 units with me at the time.

And so I went from 180 units down to 90. There was maybe like 40 of them that allowed me to pick up my stuff. Maybe there was another like 40, 50 of them that said like, hey, you better pay me. But eventually they started realizing after a couple of weeks how significant and severe this is going to be to the economy. So they started giving me settlement amounts and payments. And I was able to terminate the lease after giving some dollars.

But I went from like that 180 to 90, and I got into this revenue share with these two major landlords, and they essentially kept me in business during COVID. COVID for our industry was not as bad as it was for say the hotel industry. Airbnbs sounded like they were cleaner than hotels. It was less people in and out, and not a revolving door of like people from all around the world coming. So Airbnb wasn't as bad as it could have been. So those two landlords ended up saying that like, hey, you're still bringing in a substantial amount of money. Let's keep you for some time until we figure out what's going on.

Jeremy: Got it. So just to like try to recap, you were at 180, you dropped to 90, and you sold the furniture. I mean, what'd you do? You got 90, 90 couches here. You've got, let's say one, two beds per unit. You've got 180 beds. What do you do with all that?

Syed: Yeah. So I had some buildings at the time and a bunch of garages and basements, and I had like some family garages. So I was moving furniture all in different garages and basements and stuff. And yeah, so I had a lot of furniture during that time.

Jeremy: So it was a crap load of furniture.

Syed: Right. And also even during some of the settlements that I had with like those like 50 units, I gave up furniture for it. I'm like, okay, I'll give you this $30,000 payment and you get to keep my furniture too. So there was like different transactions, different deals for each landlord.

Jeremy: Got it. So you took a lot of the furniture, you gave away a lot of the furniture, you're down at 90. I guess when did things, and then you're getting hit with these rent payments too still. So like how red did it get? And then how did you approach that? And then how did you get it going back to the green?

Syed: Right. So like I said, I was able to figure out payments to those landlords to terminate. So those, and some landlords just let me go. And then the two major landlords with 90 units allowed me to terminate. So we just had to see what results came in, and then I would pay the money on the backend. So they essentially kept me in business.

And for me, so like then what would happen was there was a lot of other companies that went bankrupt during COVID in our industry. One being Stay Alfred and Domeo. And so for the Stay Alfred situation, they started liquidating a lot of their F&E, so like their furniture and all the stuff in their units.

So I was able to put in an offer, like a low ball offer, like $250 per unit, thinking that they will never accept anything like that. But I started getting responses back from like the liquidation attorney that like, hey, your offer has been accepted for this building, $250 per unit. Here's 15 units. You could go ahead and pick up your stuff.

And that was like another light bulb moment for me, saying like, whoa, hey, they have so many buildings all over the country. How much more furniture can I buy from this like liquidation? So I kind of started going to all the different locations around the country and started buying a bunch of Stay Alfred furniture. And I bought a total of 150 apartments with the Stay Alfred furniture.

Jeremy: So you already had your own furniture at this time. So what did you, and then you just started picking up units with that furniture?

Syed: Right. So then what happened was I had, maybe I had to get warehousing to be able to store all the Stay Alfred furniture. And mind you, like to furnish a unit, like I said earlier, it's cost about $10,000. So to be able to get it for $250, and some like good high quality furniture, was like a steal of a lifetime. It was once in a lifetime opportunity. So I wish I could go back and have bought more. I bought 150 apartments worth of furniture. I wish I could go back and had unlimited amount of furniture from them, because I started passing up deals from them, but I did not know what I was going to be able to do with it, where I was going to store all this stuff.

But at one point I had to figure out warehousing, and I had about three warehouses like all over the country, one in Dallas, one in a suburb in the Midwest, and I had like warehouses all over the country with a whole bunch of Stay Alfred furniture with like the gray sofas and the green chairs. I don't know if a lot of people know like their signature furniture.

So with all this furniture, I went back to those two landlords that I had a relationship with, that we had like a revenue share with, and I said, hey, do you want me to add some more units with you guys? Because they were struggling from a long-term tenant perspective as well. So they were a little motivated. They had a lot of extra units because it affected their business as well. So I said, hey, listen, would you allow me to furnish more units, and let's get still on the revenue share and allow me to put this furniture in, and let's take that 50/50 split again.

So they started agreeing with me. And during COVID is when I kind of scaled up all over again, using that Stay Alfred furniture and not having to be committed to any lease. So it was almost like a no brainer to add as much as possible. So that's when I went from like 90 to again, probably added another 120 during like one year of 2021.

Jeremy: Got it. So what did 20, 2000, yeah, 2020, March, April, May, like did the summer pick up? Are you getting monthly like travel nurse renters, or who was coming at this time?

Syed: So initially we had to lower our daily rate to basically like we took the rent amount, say it was like $2,000 divided by 30, and that's what was our like daily rate for our Airbnbs. We had to do like minimum stays of like 15. And we would only like emphasize like long-term tenants that were in situations that like, there was like always domestic issues, divorces, people in middle of moves, the people that were necessary to work during that time, like the high risk, like situations that people needed to come in for.

So there was some demand, obviously a lot less than what it was before, because all the leisure and business was gone, but there was some demand still. So it ended up being okay. It brought in some dollars, and the landlords were okay with it at the time versus having like $0. So like I said earlier, the demand didn't affect Airbnb as much as hotels. So people have that kitchen, and especially that extended stay.

Jeremy: Right. And I know I was, I think I was talking to like Mike Chang at the time had, our colleague had some units in New York, and he said that doctors who didn't want to like bring COVID back to their families, they would rent, essentially they would just convert their short terms to long terms for these doctors. So they could have them as like a environment away from their family to come home from after doing the shift, the COVID wing shift or whatever. So you saw stuff like that. You saw travel nurses, you kind of saw a different type of demand, and largely being that medium term travel.

Syed: Right. And that was only for two months. And that's when like people realize like COVID was bad, but not like the worst thing in the world. So by the summertime, it ended up being pretty good. It ended up having some like good leisure demand.

It was always based on like the certain wave that was coming on, with how many COVID cases there was and what was going on in the world, like there was the variants and all that. So there was a lot of waves, but luckily that summer there was no waves, COVID cases were down at that time, and people were starting traveling again. And that summer ended up being pretty good.

And again, that made like the landlords happy that I was getting very close to paying them the full market rent at that time. And that's why they kept on giving me more units. But this time I didn't have any upfront costs because I already purchased the furniture on pennies on the dollar. So I was able to scale up pretty quickly again.

Jeremy: And two years later, three years later, how's that Stay Alfred furniture held [inaudible] quality?

Syed: So it's good and bad. One, it was very heavy. Like those sofas that we had were about like 600 pounds. And we have a lot of units that are not in like elevator buildings. So the workers that had to bring it up a couple of flights of stairs, I complained a lot. I'm over that furniture. I think it's really ugly. I can't take the green chairs anymore, but it has helped me scales pretty significantly. And since then I've been happy with it.

Jeremy: Got it. So it served its purpose. So you went back, so you went 180 to 90, added another 130. And then when did kind of like things shift back to normal for you, where it was no longer this 50/50, but you just started paying, started getting into long-term rent agree, or long-term lease agreements? And yeah, kind of walk me through that kind of like post COVID like snap back to normal, what that looked like.

Syed: Right. It was February of 2021 with, then the landlords came back to me and said like, hey, we can't do this like revenue share thing anymore, because it was a slow winter during that time and I was paying far less than market rent. And they're like, listen, if you cannot pay the rent going forward, then you have to pick up your stuff.

And that's when it was like March where I had to start paying like full rent again. And the demand was pretty strong in my market. So what had happened was COVID ended up cutting the supply in half. And at the same time, we had some regulation changes. So it ended up being like the barrier to entry to add units in my city, it was very difficult for people. So with the supply decrease and the demand coming back to like pretty good in my market, and ended up being a record year in 2021 for me.

Jeremy: Got it. So things blew back. You started entering into long-term lease agreements. What'd you say? Hey, can I get two months free up front?

Syed: It was just straight up. Start paying rent again. Because it was with the same landlords I already had a relationship with. So they gave me like almost a break during COVID to not have to even back pay what I had to, the shortage that I gave them during that time. So they're like, just pay rent going forward and we'll be okay.

Jeremy: Beautiful. Okay. So things were really good in 2021. Supply was low. Did supply start picking up once things were kind of getting back to normal? Did folks start trying to come in and take on some new units? And then, yeah, I guess, what have you seen 21 to 20, 2021 to 2023? What's that look like?

Syed: Right. So for me, 2021 was my record year, and that was driven by the low supply. The demand was probably flat from 2019, but because of like the low supply, my rates were like more than I ever had.

In 2022, the demand increased, because that's when like the mask mandates were removed. A lot of things were back to normal. But also at the same time, supply did increase, but supply didn't match 2019 levels because of the regulation changes. So that was helpful again to me and my business, and 2022 was a great year as well, but not as good as 2021 for me.

But what had happened in 2022 is because of the pent up demand in the summer, my winter was significantly worse than I ever could have imagined. There was like a fatigue of travel in my markets where people all came during the summertime and they didn't need to come anymore. So I had a record summer, but a record loss in my winter. So my cashflow was like crazy during this time.

Jeremy: Yeah. And I respect, I mean, I think you've got a lot of, I'm trying to think of the word that isn't, I was going to say, maybe I'll say cojones, got some grande cojones for being able to run such a cyclical business. I mean, I think one thing obviously you probably do a really good job of is cash flow management, and just knowing that your highs are, because I think a lot of people, they get into this game and maybe they start, whether it's by chance or by luck, or they heard online, oh, let's, they get their property and they start running in June, July, August, and it does incredibly well. And they start getting some cash in their pocket. They start to see their savings or their checkings account go up. And then what's the most human reaction to do? Get rid of it, spend it. We are, especially Americans, we're very consumptuous.

But it's seasonality. I mean, generally it follows the bell curve, and especially in a Midwest market that probably has harsher winters than most other parts of the world, or parts of the country. I guess, how do you do your cash management or plan, just knowing that you've got to like literally survive the winter? The winters can be really rough.

Syed: Right. It takes a toll on you. Like I haven't completely figured it out. And sometimes I get really ambitious during the summer times and I start growing more units, but that, that dollars that I should be saving in my reserves as I'm using for growth.

So I do get into situations every winter where one, I'm deferring some rents, like five days to get extra income. I'm turning off the auto payments for all my softwares and utilities. I'm putting a lot of things on credit cards all over again, knowing just get me through the winter and I'll figure it out in the summer again. But there is some thought behind it too. Like I have cashflow forecast that I kind of have an idea of what I'm working with, but it's like, I did not expect how bad this last winter it was going to be.

So there was a time where the money proceeds I was making last year in 2022, I wanted to purchase four more properties, four more buildings. I had a million dollars of cash that I wanted to deploy out. And during that time, like interest rates started increasing and prices for buildings started increasing. So I said like, hey, I started timing the market. Maybe it's not the best time to buy, but that was probably the best thing for me, because if I did end up buying, I would have to liquidate all those assets during my slow season to be able to cover for my losses. That's how bad my losses were during my winter time.

So it all worked out last year, and I'm kind of trying to figure out what's going on this year, because 2022 was a record demand year and that was a pent up COVID demand, and 2023 my RevPAR or my demand and my revenue per unit level is down 20%. So I'm kind of trying to figure out like what's the cashflow situation that I'm going to need during this next winter time. Is it going to be as bad as it was last year, or has things streamlined and stabilized better? So this is kind of what I'm figuring out, but that's keeping me from not taking on any other big investments at the moment.

Jeremy: Got it. So you're kind of stockpiling cash, so to speak, right now.

Syed: Yeah, exactly. Because I don't know what's going to happen this winter. Like, is it really going to be as bad as last year, or is it going to be back to little normalcy?

Jeremy: Has supply in your market picked up in the last year?

Syed: It's been picking up slowly, but again, those regulations are causing it to not like double, triple. Like I've seen some other markets that have added a huge supply. Like a lot of the Southern markets in the United States, like Texas markets and Phoenix and Miami markets, like there's like supply issues together. There's a lot of supply being added. Fortunately, I don't have that issue, but I have a demand decreasing issue in my market.

Jeremy: Yeah. And that's something I always want to say is like, and I even the risks of arbitrage, and especially kind of doing the smaller apartments, is in many ways, like someone can go into a building, let's call it Houston, Texas, Houston, Texas during the demand boom of 2021. Folks started getting crushed because there's so many buildings and so little regulation. And again, someone can come in and literally launch a hundred apartments in one building, in one neighborhood. And next thing, maybe you've built a business over like four to five years. That's a pretty strong business. You have 60 apartments, and then someone just launches a hundred next door. That's kind of a risk.

So it really is good to kind of be places where supply is constrained. Like, especially for like these huge volume businesses where, I mean, I personally, and I just admit, I don't have as big of a cojones as you probably have. I'm not going to lie, but like, I try to stay on like two properties that are generally speaking like bigger four bedroom homes that have something like unique about them, where it would be really hard to like recreate that supply. Maybe someone can add one or two of them, but like, no one's about to come into my markets and add like 10 of them at a given time. And for me, it's like, I feel comfortable with that. But if I was doing like the hundred, 200 really super high unit count, like you want regulations, right? I mean, regulations are extremely helpful.

Syed: Yeah. Like I would never want to go in a market that has, that does not have regulations. They have to have regulations for me, or else it'll just be that next market that there's going to be a huge increase of supply where everyone rushes to. It's like the ones that you'll see in like the media and AirDNA. These are the top 10 best markets to do Airbnb. Yeah. For that, for the previous year it was, but now next year, now that everybody knows, it's not going to be the best at all.

And that's kind of what happened during COVID time, is people started rushing to Arizona and Dallas and stuff because everything was open. There was people wanted to travel there because there was so many restrictions to go out in other cities. So there was a lot of demand going on over there. And at the same time, they have so much product there and people started asking for more Airbnbs. And yeah, it was good during that time, but I'm hearing stories that people are really struggling in those markets now.

Jeremy: Yeah. I think the main one I was doing research on, it was like Austin, Texas, because Austin, Texas absolutely boomed during COVID. Fun place, wear your cowboy hat downtown, tons of bars, wide open. And then this summer got hit with a hundred degree, a hundred, whatever, 110 degrees on average for an entire month. Summer is supposed to be the best time of the year. No one's coming to town because you've got this heat wave. And if that's what your summer is looking like, then chances are your winter is not looking too good either.

But it's just an example of one of those places where like, you really just got to watch demand. The supply and demand is ultimately what it comes down to. And like, especially in the game of like corporate leases, master leases, where it's really like, you can come in and do 30. No one's going to stop you, and you already have the furniture for it. So all you got to do is get a couple of U-Hauls and bang, a week later, you've got your photos up. Everything's locked and loaded.

Syed: Yeah. So I hear a lot of my colleagues that are, they're struggling in the Austin market and they're letting go a lot of units over there. So you just got to be careful where you're adding your units.

Jeremy: Yeah. Granted, they've probably already made two X, they ran three X or two X, their initial, whatever. They've been paid back at this point.

Syed: Right. They've made good on it, but yeah, but my thing is like, a lot of people can make fast money and quickly. And I respect when somebody can be in business for a long time. And that's what I want to be able to do. I don't want to have that like one, two years of like a market and then have to pick on myself and leave. I want to be in a market and stick to it for the next three, five, 10 years. That's the kind of business I respect.

Jeremy: Yeah. And I think that's why, I mean, you've in many cases like you've taken over your market. So like you are the big player there. And when you have that scale, when you have scale in a specific market, like early on when I started, I was kind of like a little bit of, oh, I need to diversify and like be in all these different places, and that was like my mindset, especially because seasonality. I was like, my winters suck. All right, I'm going to get started in Florida now, but like, I need to have my Januarys in February. I need my bank accounts to be going up from somewhere. I can't have it.

But that being said, like if you're in so many different places, like it's harder, it's more difficult for you to like respond to situations. So like for you, again, you faced like about probably the toughest situation you could possibly face, but then you just got in your, you got in your, I don't know if you were driving the Lambos or the Ferraris at this time, but you got in your Lambo and you drove down to the office and you figured it out.

Syed: Yeah. I agree with you on that. A lot of people want to be able to stabilize the cash flows and go to all these different markets. But for me, as long as you can manage the cash flows on paper, where you have a nice Google spreadsheet to be able to forecast what's going to happen, you could keep the reserves there and you can manage it properly, and you don't need to like bounce from market to market.

My opinion is go to your backyard and become an expert in your backyard and scale as big as possible there. You don't have to go to Philadelphia, Florida, Texas, and be in like five different markets. And to have like a stable business, you could do a real substantial business in your own backyard.

Jeremy: Beautiful. I know. And this is something I want to touch on. And I know you've like helped out a lot of folk who, at this point, have a hundred, 200, whatever units. What the hell did the operations look like? I mean, I pull in seven figures, like fun to me. I'm like, d*mn, like things can be obviously streamlined better. But when you're dealing with add another figure on top of that, what's your operations look like? I mean, it must be absolutely insane.

Syed: Yes and no. So I do have a hundred resources in my business. So a hundred employees, 50% of them are in the Philippines. So I run my entire business out of the Philippines, and people call them virtual assistants, but I call them my team members. They are essential part of my business. I have managers, directors, leadership. I have everything. Like I have a hierarchy, like a corporate hierarchy in Philippines. My team in Philippines, their salary is ranging from like $5 to $15 per hour.

Jeremy: And 15 bucks an hour for someone in the Philippines.

Syed: Yeah. Yeah. Because the people that are getting paid $15 an hour are really high level. They run my finance and accounting and my books. They also run my pricing and my revenue management. They're running my operations.

Jeremy: You've built your own internal pricing management?

Syed: Yeah. So because I started early in 2017, this was before any of the revenue management companies were even existed in our industry. And I saw the value of how important pricing is. And at the time I built an in-house, but it was me doing it, and it was like too much work for me.

And eventually I started finding out that there's companies that are getting started up in revenue management, and I tried them out and I gave them a sample size of like, take these 15 units, take these 20 units, and then let's compare it to what I could perform. And I was ending up beating like the other third-party companies in my revenue management. So I ended up building it out in-house. And I have to say now, I think I have a better process or hand on my business from a pricing perspective than even like the largest of companies right now, or any of the revenue management companies.

Jeremy: And you probably know, you just know your market better than anybody else. You know how much you can raise things for the big events where they're not going to really know, like they don't have the data that you have. So again, that's also one of the scale benefits of knowing your market and being the kingpin there.

Syed: Right. And also like I have some high-level people creating some like really nice dashboards for me. So I know my performance on a daily basis. We use like Tableau, and I'm getting updates and nice graphs like every day on how we're doing from an ADR perspective, our RevPAR, occupancy per unit, in per neighborhood, per bedroom size, and how we're doing from a pacing perspective, lead time. I have these like data points, and we do compare it to like what we see in like data sites like AirDNA and Wheelhouse and PriceLabs. We use their market data and we compare it to ours. We also built in some hotel data to see like how hotel data market demand is doing. So we are pretty sophisticated.

I want to say this, from masterclass on this, this is what I want to say. We're really sophisticated. I even say, I have told like my colleagues that like, I believe like my dashboards and my pricing is as sophisticated as like the public company Sonder. Like I think I do it better than them even. So I'm really proud of where we built out our revenue management team.

But back to your question, how my team is set up is 100 employees, 50 of them being in the Philippines, and then the other 50 in my local markets over here. But the ones that are over here are mainly cleaners, runners, maintenance people, and one general manager overseeing what's going on in like the markets. So more of my high level people are in the Philippines, but more of my labor is in my local markets.

Jeremy: Got it. And what would you say you're, because I do have like three apartments in my portfolio. Again, like I predominantly, my quote unquote like buy box or rent box or whatever, is generally like a bigger house, which is a bigger investment, but pros and cons of everything. My apartment is like, you want to run them like super high occupancy. If they're not rented, you drop the price like super low.

Like I'm assuming like you've got, I mean, if there's hundreds of apartments, the amount of turnovers you probably have on a given day, or the hundred apartment turnovers, meaning a turnover is when a guest leaves and then another guest comes in. Like how much volume? Like you probably, I mean, you're probably doing tens of thousands of guests a year. Like what, give us some of the cool numbers you got.

Syed: Yeah. So on a Sunday or Monday, it's about a hundred checkouts that I have per day on those times. So we have like our 30 cleaners running around the city, cleaning as much as possible. And we stagger it based off like what check-ins we're having coming in like the next day.

On a weekly basis, I think I saw a stat recently, it was around like 500 checkouts in a week. So like 2000 checkouts in a month is kind of what we're doing. So it's a lot of cleaners cleaning these units. So it's a lot going on. But yeah, like you said, like 10,000 people probably is a good number that's probably coming in on an annual basis.

Jeremy: Yeah. And then probably a hundred, maybe a hundred thousand a year, which is just absolutely like...

Syed: I should get some data on that and I'll get back to you guys and see like a round estimate.

But for me, like you brought up, like you're trying to get like the most occupancy by lowering the price. So in my urban markets, majority of my dollars come from the weekends, and I'm having like 80% occupancy on the weekends and then maybe like 40, 50 on the weekdays. So that's kind of how my pricing strategy is. So I increase, and it could be driven by how I do my pricing strategy, because if I didn't have the weekend so expensive, then maybe they will take longer bookings. But we found out our RevPAR is best by this strategy that we have. So we get majority of our dollars coming on the weekends. And then a lot of our Tuesdays and Wednesdays are struggling. And most of my cleans and bookings are coming in on the weekends.

And like for me is my units, I try to emphasize on smaller units. I know you mentioned that you are in bigger units, which is a good business model. For me, because of my volume, I'm not able to control the people coming in those bigger units, and they're more susceptible to like parties or large gatherings, complaints from neighbors. So in my model, it works out best when my units are smaller and I have less risk of bad things happening. And then also like I'm lowering the price on a big unit, you could end up getting some like shady people during the week. So that's kind of where my model is. And I'm probably leaving dollars on the table, but that's okay, because I'll be able to scale my business better if I'm able to control the people coming in and out.

Jeremy: You have a very standardized process, I would say. And also, I mean, your units, you probably don't have like backyards for them or anything, because I mean, that's something that you deal with a house is a backyard. You deal with maybe there's 15 guests staying there, which isn't an issue if they're inside the d*mn house. But when they go outside, that's when you cause problems, but you don't have them.

I mean, the issues you deal with are the elevators, right? Like folk in the elevators, folk going through the front door of the building, parking, like it's its own layer of like, there's pros and cons to everything. But when you do that one thing, you figure it out. I'm sure you have noise monitor. Do you have noise monitoring devices in your apartment where you're able to, you have your team is able to see at any given time if anyone's being too loud or whatnot?

Syed: Yeah. So I use like the Minut devices, and I have them in maybe 250 of my units. We're trying to do our best to get them into all units. We were kind of late in the game to get those in our units. So we're trying to figure out how to get them now after having so many units, and it's a challenge in itself to like wait for checkouts, to get somebody out there to install them and then manage it. So it's like a work in process that we're figuring it out.

Those Minut devices are really helpful because one, we get complaints from the landlord saying neighbors complain to them about us having noise issues. So it's nice to have like the data behind like, okay, when was the noise issue, on this day at what time? Well, according to the data, they went up to this decibel and not above and beyond that. So one, your tenant is not credible for what they complained about. And number two is like, we're keeping our place in the control. Like it sounds better to the landlord. So I really appreciate those devices. They've been really helpful to me.

Jeremy: And you got every front door, you got a Ring, do you have a Ring doorbell camera?

Syed: No, unfortunately I don't. Again, I added these units before like that idea came. I wish I could have it, but not. So a lot of my units are not in like luxury A class buildings. Like I made my business within like this B class type building, so like a lot of older buildings. So like the functionality to be able to get wiring and to be able to keep those like on all the time. And it kind of doesn't make sense because they're like walk up apartments, and I would have to have multiple cameras, and like the landlord might not be okay with it. The tenants don't like it.

So some of them I do, and it would be ideal to have them in all. But right at the moment, I've been able to control it more on the screening side versus like after the fact, and like after they're coming into the unit to see like who's coming in. If you do a lot of your work on the front end, you don't have to worry about seeing cameras of people walking in or not. But yeah, that would be a nice feature to have in all units.

Jeremy: So what, yeah, tell us. So what is that TLDR on the front end? How do you vet guests?

Syed: Yeah. So my team in the Philippines, I have maybe about seven resources screening guests on a daily basis. And what they're doing is one, they're first starting the communication with the guest. Like, hey, what's your reason for your stay? Why are you coming? Who are you coming with? And we kind of get a gist of like even how they communicate to us. Like how are they writing their sentences? Like we ask the first and last names for some of the guests, and like the age too.

And we do a little work on the back end to start searching some of these people up. We kind of find if they have a LinkedIn, like that's like perfect, like, hey, you're a professional. I would love to have you. We find some people's Facebook and Instagrams, and we kind of see like the quality of people that are coming. If they have reviews, it's even better. Like it's easier to be able to accepting. I also kind of get a feeling of like, hey, is this in my A class building or my B class building? Can it take like some risk to it? And also it's like, if it's like a studio unit, like I'm okay like having these two people in. So it's a lot of screening on the back end that we spend a lot of time and a lot of people.

We are using also some like screening softwares. So the two big guys are like Autohost, and we were using like Guest Ranger, I think is the name of the company. They were cheaper than Autohost for us. So we were using them as like a selfie and ID verification. We kind of built our own back end to do the exact same thing, because we felt like we didn't need to have their like background check anymore, because we were looking up their social media anyway. So we kind of have our own like a portal for some guests to come in and upload their ID and take a selfie to make sure that they match. And we only use that for like certain guests, like higher risk guests or different platforms. Airbnb, we don't do it. I'm only mainly VRBO and Booking.com is where we use that software.

Jeremy: So you are multi-channel, because I know some of your, some of your, I don't want to try to think of the word, but like some of your, like if you're a pro, I'm not, if you're a prophet, like your followers, what are they called? Like your deci, deci, I don't know. Disciples?

Syed: Disciples.

Jeremy: Disciples. D*mn. What is wrong with me? I got to get, honey, can you get me some coffee?

Syed: Yeah. I need some too, I think.

Jeremy: Yeah. I know some of your disciples, they're just Airbnb. They rely on AirCover, and they kind of, that's, and then they just get like general renters insurance policy. So I think it's interesting, or maybe I'm mistaken, but that's what I thought.

Syed: Yeah. So some of my colleagues, I think I know who you're referring to. Yeah, they're just on Airbnb and they run their business that way, and I'm sure it's a good way.

So for me is I always started from the beginning where I had it on other platforms as well. So that's kind of what I know. And I just assumed that like, hey, if I'm on more channels, more visibility, I could get better bookings, better occupancy. So I am on Airbnb, VRBO, Booking.com, Expedia. And we had at one point working with like Marriott to come into our mix, but they were too complex with like the softwares, and we're like, we don't want to take this initiative on right now.

But majority of my business does come from Airbnb, like 85% of my business does come from Airbnb, and I would love to have it where it's on other platforms, and we kind of try to work with those platforms to be able to grow on them. And just whatever the market is saying, they like Airbnb to book our places, and it is what it is.

Jeremy: Got it. Okay. Wow. So 85% of your traffic, even being multi-channel, 85% of your traffic is still Airbnb, which for me is actually less, because again, it's kind of like the houses versus apartments thing and old folk, which is kind of like my guest avatar or whatever. Like I love grannies. The grannies use, they use VRBO for whatever reason. Even though, I mean, I don't know why they do, because Airbnb sides with the guests on every little thing. So whereas VRBO is like, all right, you want to hold their deposit? Here you go. Hold their deposit. Go ahead. Sure thing. I digress.

So yeah, we're about an hour here, and I just want to touch on, so you obviously have a crap load of like knowledge, and then just like, what are some of the tangible tips for folk like starting out, or even like folk like myself who aren't up to eight figures a year? Like what would you, what do you recommend?

Syed: So one is like go on the knowledge side and watch videos. There's a lot of people on YouTube that are giving like free content and giving tips how to get started. There's a lot of good Facebook groups that everyone talks about the different problems and things that are going on. You could go the accelerator route and hire a coach or a mentor or a course, which I also recommend doing. I didn't go that route because there was no such thing when I started. But obviously if I learned from somebody else, it probably kind of saved me from a lot of time and a lot of effort for me to figure it out, and a lot of money I spent on making mistakes. So I think those are good options to get started.

But also just like taking action is huge. And a lot of people get into the analysis paralysis side and just learn and never take a step in making it happen. So I think being able to take on a unit somehow, some way, whether it's lease arbitrage, whether you're doing it in one of your extra rooms, or you're doing it from a family member or a friend, just take action and get involved in business. Just don't sit on the sidelines.

Jeremy: Got it. I think something I like from earlier is literally get up and go to networking meetups, walk in. If you want to do the corporate arbitrage route and walk into the building, start talking to them, because they probably got on the phone call before, but they probably have not gotten someone to literally just walks in there.

Focus on relationship building. I mean, focus on long term relationship building, because it seems like for you, a lot of the landlords that you had early on, you're still working with, rolling with several years later, and they've helped you weather storms and they've helped you.

I mean, at this point, how many landlords do you interface with? Which I think one thing that's cool about having so many units with so many landlords is like, I'm sure the landlords call you, like they still got your number. I mean, you can outsource so many things. But at least in my experience, like the one thing you can't really outsource is a homeowner or a landlord like wanting to talk about something and wanting to talk to you about something. So I actually would like to hear your opinion on that.

Syed: Yeah. So everything is based off your reputation and relationship that you have with the landlords. With my landlord that I have maybe like 60, 70 percent of my business with, we like talking to each other. We like hanging out with each other. We like going to coffee with each other. I got him into pickleball and we started to play pickleball together. He's an older gentleman, but he [inaudible] basketball back in the day.

Jeremy: I'm sure he did.

Syed: And I do enjoy talking to him. Like when I was in Miami for a conference, he has places in Miami. So it was like, oh, you're there. Let's hang out and let's go coffee. And I just like seeing him in action. He's a very wealthy guy. So I like hearing like even him getting on the phone call and talking to other people for business.

But so like I do spend time on like the business development side and relationship side. Like every new unit comes through me, from me getting a phone call from a landlord I'm already working with, or me reaching out to a landlord that I already have a relationship with. So that's like one of my biggest things that I'm involved in that I'm not able to outsource to anybody else, like the relationship I have with my landlords and new growth is kind of what I'm involved in. But mostly everything else in my business is somebody else's handling.

I do have my like weekly leadership meetings, like an hour and a half every week. It's called my L10 meeting. I use this system called EOS from this book called Traction. So that kind of changed my entire business. But in that meeting, it's like a week's full of decisions like happened in that meeting. And it's like I have to be like focus and making those decisions. So it takes a toll on me. And I'm thinking about like how I'm going to handle the situation throughout the week, but the decision is made during that meeting. So that's kind of how my like day and my week goes. It's not a lot of work, but it's a lot of like stress.

Jeremy: You're making decisions. You're the decision maker. You're responsible for a hundred folk. And that is something like honestly, I feel like people don't think about. And like I admittedly, when I started my own business, you don't really think of like the gravity of like having people's like livelihoods on your hand. And it's in a good and bad way.

Like, for instance, my first crew that I had on a local lake, like they just got their first vacation where their beachfront ever. Normally they have to pay to like stay off the beach. But summer was good this year. They were thankful that they've made enough money where they can get a nice as waterfront property. And that's like, there's moments like those where you're like, oh dmn, like you're providing for people, like you're actually helping them in their life. But then at the same time, you're a decision maker where these people's lives go both ways. But just like anything awesome. So sounds great.

Yeah, I guess, how can folk, how can they follow you? I mean, I see you're posting a lot on social now, and I think you're very transparent. And I love that personally, because obviously a little bit less of that sometimes online. So where can folk, where can folk find you?

Syed: Yeah, so I think I could transition into like what I'm doing now. Like the past three months, I started posting a lot on social media because I'm trying to build my personal brand. I've been behind the scenes for a lot of years and just putting my head down and working and scaling my business. But I see the value of creating a personal brand. And I want to eventually get into coaching and mentoring, and even in the course business.

So I started posting three months ago on my Instagram, Syed B. Follow me there. I'm posting a lot of good stories on like things I've experienced. And yeah, I like the fact that I am putting out some content that not a lot of the other people on Instagram are posting. A lot of people are posting a lot of the cookie cutter stuff, that you hear the same regurgitated information from each person to the next. So yeah, I'm looking to provide a new approach and some other value. And hopefully you guys would appreciate the content that I put out.

Jeremy: Yeah, guys, give Syed a follow. He's, yeah, he's definitely not, from what I've seen, not your standard guru. He is the OG godfather. He is the prophet to many of the disciples that you guys might see online. So thank you so much for coming today. And yeah, so excited to follow your journey.

Syed: Appreciate it. Thank you so much.

Jeremy: Awesome. All right, guys, hope you all enjoyed. Stay tuned for next time. And that's a wrap.