309. What’s the 20% Rule and How Can It Make Your STR Profitable? with John Bianchi

Summary

Podcast Summary: Tax Smart Real Estate Investors Podcast

Episode 309: "What’s the 20% Rule and How Can It Make Your STR Profitable? with John Bianchi"
Release Date: January 26, 2025
Guest: John Bianchi (STR Search, Former Head of Data at TechVestor)
Hosts: Brandon Hall, Tom, and Team
Length: ~50 min (core content: 01:30–49:35)

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Overview: Main Theme and Purpose

This episode explores how to identify profitable Short-Term Rental (STR) properties, the significance of “the 20% rule,” and how investors can leverage data-driven strategies to maximize cash flow and minimize risk in the Airbnb market. Guest expert John Bianchi shares actionable frameworks for underwriting properties, avoiding common pitfalls, breaking down regulatory considerations, market saturation, amenities, and recession-proofing your investment. The discussion also touches on the STR tax loophole and practical steps for both new and seasoned investors.

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Key Discussion Points & Insights

1. John Bianchi’s Background in STR Data (01:36–03:40)

• Helped identify 200+ profitable short-term rental properties with a 100% success rate, driven by relentless Airbnb data analysis.
• Former Head of Data at TechVestor, founder of STR Search, and creator of six free Airbnb data courses.
• Origin story: From spare bedroom host to data-driven STR consultant after COVID forced a business pivot.

2. State of the STR Market in 2025 (04:17–06:29)

• Airbnb still a viable asset class; it’s a maturing industry with winners in specific markets.
• "First principles of Airbnb is that people need a place to stay in large groups." (John, 05:46)
• Demand exists where regulations are clear and local communities support STRs. Some markets, like Panama City Beach, are "STR-proof" due to economic reliance.
• Bianchi’s team has studied 350 markets; only about 15–20 are reliably profitable.

3. Regulatory Considerations (07:03–08:31)

• Invest only in markets with established STR regulations. Avoid areas where new bans may emerge.
• Assess community sentiment: Scan local news, Facebook groups, and city council discussions.
• Understand economic dependency: If a city relies heavily on STR tax revenues, regulations will likely favor hosts.

4. Data-Driven Market Selection & The 20% Rule (08:34–11:58)

• The 20% Rule: “If I’m buying a $500,000 home, I want it to be able to make $100,000.”
  (John, 09:25)
  • Not cash-on-cash; it’s a price-to-gross-rent ratio.
  • Use tools like AirDNA: Identify a subset (e.g., 4-bed homes with pools near downtown), ignore outliers, and calculate average gross revenue.
  • If the revenue equals at least 20% of purchase price, the market is worth a deep dive.
• "That might be the best way I’ve ever explained that." (John, 11:38)

5. Assessing Market Saturation & Subcategories (11:58–15:22)

• Saturation Analysis:
  • Track year-over-year changes in both property supply and gross revenue.
  • If supply and revenue rise at similar rates, the market is balanced (e.g., Miami’s 22,000 active listings; market is not “oversaturated” as revenue keeps pace).
• Subcategory focus: Analyze not just the overall market, but specific segments (e.g., 6-bed luxury homes with pools, vs. 1-bed condos).
• Use filtering in AirDNA to hyper-target your analysis.

6. Real-World Underwriting Example: Miami Condo (16:23–21:53)

• Underwriting a Potential STR in Brickell, Miami:
  • Check for both city and building-level (HOA) regulation.
  • Find relevant comps on AirDNA:
    • Filter for high “days available” (>271), at least 20 reviews over previous year, consistent monthly review activity.
  • Factor in “views,” design quality, and available amenities—these are core differentiators in condos.
• QUOTE:
  “Don’t lie to yourself when you're looking at the data... Find what I call a base comp... Start there, then you can move up. The mistake is, people look at the perfect Airbnb and assume they'll match it.” (John, 20:07)
• Always assess your worst-case scenario: If your worst case is break-even and you’re ok with that, the deal may work. All Bianchi’s clients focus on making the worst-case scenario “not that bad” to ensure resilient profitability.

7. Amenities Strategy: Standing Out in Your Market (22:05–26:14)

• Amenities are not just “nice to have”—they are what you “sell.”
• Understand your guest demographic first; amenities should appeal directly to them (e.g., no jungle gyms in a bachelorette home).
• Must-have vs. nice-to-have: Match competitors on must-have amenities; invest extra dollars where you can create an edge (e.g., catering to families with kid-focused features).
• QUOTE:
  “Airbnb is one of the easiest businesses—look directly at your competition, make a list of everything they have, and add things they don’t. Now you’re selling more.” (John, 23:47)

8. Condo and Unit Size Considerations (26:14–29:30)

• Large-group travel is still the core STR market, but there is some viability for small units in certain markets (e.g., Miami).
• More competition in the 1–2 bedroom segment; make sure to vet thoroughly before assuming profitability.
• “If your goal’s break-even, you’ll probably lose money in a recession. Always stress-test for downturns.” (John, 31:50)

9. Recession-Proofing and Resilience (29:30–33:16)

• Don’t only plan for today’s market; ensure your investment can withstand downturns.
• Aim for top 10% market performance to weather reduced travel demand.
• “A recession does not hit the economy equally. You want to be the best option for the travelers still booking.” (John, 32:17)

10. Alternative Strategies and Portfolio Diversification (34:26–35:59)

• Consider using capital to buy higher cash flow properties elsewhere, then leverage that income to support primary home purchases in the future.
• "You just kind of stack these benefits... Now you’ve got two markets, a little diversification." (John, 35:59)

11. Out-of-State Investing: Proximity vs. Profit (36:11–39:53)

• Being near your STR offers minimal advantage; strong local teams (cleaner, maintenance) are more important than proximity.
• Most top markets are not where most investors live.
• "If you're two hours away, you might as well be across the country." (John, 37:11)

12. Advice for STR Tax Loophole Seekers (41:16–47:07)

• Don’t just chase markets promoted by “gurus” or YouTube trends; they’re often overbought.
• Focus on data, regulation, and the 20% rule; use free resources like Bianchi’s 7-hour STR course (see strsearch.com).
• Avoid overpaying for “pretty” properties; buy value and create attractiveness yourself. Every $100K saved on purchase price is ~$8K/year saved in expenses.
• Key mistake: Failing to get the data (market/price-to-rent) right up front is far more damaging than failing at hosting operations.
• "You take an ugly property and you make it pretty. The lower you get that property for, the easier it is to cash flow." (John, 44:01)

13. John’s Offerings and STR Search (46:30–49:07)

• Free content and training available; direct consult for high-net-worth or time-strapped investors.
• Full “A Team” support (lender, designer, property management, tax, etc.), with discounts offsetting the consulting fee.
• STRSearch’s clients typically achieve ~$300,000 profit over five years by getting the right property and holding long term, rather than losing equity by bailing out after a failed investment.

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Memorable Quotes & Moments

• “It’s not 20% cash-on-cash. It’s price-to-rent. If I’m buying a $500,000 property, I want the gross revenue to be $100,000.” (John Bianchi, 09:25)
• “Don’t lie to yourself when you're looking at the data... Find what I call a base comp.” (John, 20:07)
• “Airbnb is one of the easiest businesses. You look directly at your competition, make a list, and add things they don’t have.” (John, 23:47)
• “If your goal’s break-even, you’ll probably lose money in a recession. Always stress test for downturns.” (John, 31:50)
• “If you're two hours away, you might as well be on the other side of the country.” (John, 37:11)
• “You take an ugly property and you make it pretty... The lower you get that property for, the easier it is to cash flow.” (John, 44:01)

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Timestamps for Key Segments

• [01:36] – John’s background and entry into STR data
• [04:17] – Is STR/Airbnb still viable in 2025?
• [07:03] – Regulation sourcing and community acceptance
• [08:34] – The 20% rule explained
• [11:58] – Market saturation and subcategories
• [16:49] – Underwriting a real condo in Miami (AirDNA data tips)
• [22:05] – Amenities: Outperforming competition
• [26:41] – Small units and the risks of break-even strategies
• [29:30] – Recession-proofing STR investments
• [34:26] – Alternative: Use cash flow from one market to buy primary later
• [36:11] – Out-of-state investing and local management
• [41:16] – Best practices for STR tax loophole chasers
• [46:30] – Working with John Bianchi and STRSearch services
• [48:43] – Announcement of a new free STR tax course

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Summary & Recommendations

For anyone eyeing short-term rentals as a cash-flow play or for tax optimization:

• Rigorously screen markets with both regulation and demand.
• Use the 20% gross rent-to-price rule as a first-pass filter.
• Analyze not just market-wide metrics, but zoom in on your property’s subcategory.
• Be honest and conservative with underwriting; prioritize properties whose worst-case scenario you can live with.
• Build or buy your “edge” through amenities aimed at your most lucrative (and recession-resilient) guest segment.
• Optimize for long-term survivability, not just today’s numbers or tax breaks.
• Take advantage of free educational resources before spending big on properties or paid consulting.

Key Resource:

• Check out strsearch.com for John Bianchi’s free 7-day Airbnb Data Masterclass and the new 3-day STR Tax Loophole class.

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Transcript

[Brandon Hall]

You're now listening to the Tax Smart REI Podcast, the number one tax podcast.

[Tom]

For real estate investors.

[John Bianchi]

Your source for.

[Podcast Host / Outro]

All things real estate, accounting and tax. Here we reveal our secrets that can save you thousands in taxes, streamline your accounting process, and help grow your business. Stay tuned to hear insightful interviews with industry experts, successful real estate investors, and current clients on what strategies they use to grow their business and how they steer clear of Uncle Sam.

[Brandon Hall]

Thank you for tuning to this week's.

[Tom]

Episode of the Tax Smart REI Podcast.

[Brandon Hall]

Today we're joined with John Bianchi to.

[Tom]

Discuss his secrets to finding winning short term rental properties. I know everybody out there wants to use the short term rental loophole to reduce taxes, but sometimes the biggest challenge is just getting started, finding the right property. So we're gonna be discussing that today. We'll be diving into all that in just one minute.

[Brandon Hall]

Hey, Tax One investors. As you may have heard, the IRS received additional funding from the Inflation Reduction act and they've been using it to ramp up enforcement efforts. And we've been receiving more requests from investors looking for audit support than ever before. That's why we created the IRS Audit Checklist, which is designed to help you stay compliant in the event of an IRS audit. You can access the Checklist by visiting ww.therealestatecpa.com IRS checklist. Again, you could grab the IRS Audit Checklist by visiting www.therealestatecpa.com IRS checklist. That's it for now. We'll dive right into today's episod. John, thank you so much for joining us today. Could you give our audience just a.

[Tom]

Brief overview of your background and how you got involved with short term rentals?

[John Bianchi]

Thanks guys for having me. I do appreciate it. A little bit of background about myself. I'll just kind of give my resume so I can build a little bit of credibility real quick and then I'll kind of give a quick short story of how I got to this place. So as of today, within the past three years, I've helped identify over 200 plus properties. So I've helped other people buy these properties and they're all short term rentals and every single last one of them is profitable. So we have a 100% track record right now at finding properties that work in the short term rental world. And the reason being is because I'm obsessed with data and it's literally all I do. And it's not even all data, it's just Airbnb data. For whatever reason, it gets me super excited. You're able to just see how much every single last person is making, and then you can study it and then you can replicate it, and then it works. And like, there's a lot of other businesses out there where you can't get that kind of information. And so it just feels like a cheat code when it comes to Airbnb. And I think that's why I'm obsessed with it. But anyways, yeah, so I've been the head of data for TechVestor, which was the largest short term rental investment fund in America. Still is, you know, have my own business, which is called STR Search. We help identify properties for people to purchase. And, you know, I've been running that for over a year now. And it's, it's going good. This is, this is all I do. I've got six free Airbnb data courses that teach you my entire process. One of them is 40 hours long and I didn't build it until after finding 120 plus properties. So that's kind of the resume.

[Interviewer / Co-host]

Right.

[John Bianchi]

Hopefully I can build a little credibility there. But the backstory was that I started off renting out a spare bedroom, learning about this Airbnb thing. I was running a business at the time that I did not care for and I wanted to try and transition. And I found out that this Airbnb thing was kind of cool. And once you learn the process, it can kind of get easy. And I started reading blogs, realizing that other people were building businesses. I then went out and built my own business out of Chicago and down Scottsdale and over in Michigan. Covid came around, wiped that out. And I just still loved the industry as a whole. And so I did the one thing I did best, which was data. And I turned my ability to understand Airbnb data into a business. And now we're here, STR Search. You know, so Journey has been going for about eight years.

[Tom]

That's awesome. A lot of people out there looking to find successful properties. And data is always a great approach. And with that track record like yours, I'm sure we're gonna have a lot to talk about on today's episode. So, kind of just to start off, you know, we work with a lot of investors across the spectrum of real estate. Many of them are high income earners who do like to use short term rentals to help reduce their taxes, but also because they do tend to cash flow better than maybe your traditional long term rental. And these were really popular back, you know, a few years ago. What's your take on the Overall short term rental market, I know it's specific to different places, but in 2025, are short term rentals still a viable asset class?

[John Bianchi]

Oh, 100%. And now I'm biased, right? So anyone hearing this is like, of course he's going to say that, but I'm actually coming out with some content around this very, very shortly. So I would say Airbnb is still maturing, and it's a. It's a newer industry in a sense. Like, technically. VRBO and renting out homes has been around forever, but the way that Airbnb did it allowed us to tap into so many different pieces of real estate in so many different cities that it's kind of had to learn where it works and where it doesn't work.

[Interviewer / Co-host]

Right.

[John Bianchi]

You see regulations coming into place, like, it's not going to work here, but it does work in other places. And so instead of trying to look at all of the data of Airbnb in this moment, I just try to think about it in a very, like, simple way and ask myself, does Airbnb make sense in this scenario?

[Interviewer / Co-host]

Right.

[John Bianchi]

So if I'm going to New York and I'm staying with one, like by myself or up to four people, I'm getting a hotel 99.9% of the time because there's going to be somebody at that front door and I know they're going to be there and I can get in very easily. And it's going to be a smooth process.

[Interviewer / Co-host]

Right?

[John Bianchi]

If I'm going to Gatlinburg with 16 plus people, I'm not getting a hotel room ever. There's going to be a zero percent chance. And so if we just use this logic of people asking, like, hey, what's your outlook on Airbnb? There's the whole, all the headlines of Airbnb is dead. And, you know, housing prices have increased and interest rates have increased and like, is it even possible to cash flow anymore? And it's like, well, the first principles of Airbnb is that people need a place to stay in large groups. And if you can find the places where there's good regulations where that's possible, then those are most likely not going to go anywhere.

[Interviewer / Co-host]

Right?

[John Bianchi]

The city has said we're good with Airbnb here as long as you follow our rules and pay your taxes. And then everyone goes, okay, sounds good. And so then you find those homes, you rent them out, and there's a lot of travel demand for that area. It's pretty straightforward stuff, right? But the trick is you got to find the home at the right price in the market with the right amount of demand to be able to drive enough revenue to be able to still cash flow. And that is like the thing that I have set last three years of focus on and have succeeded 200 plus times. So 100% it's possible to continue to do this. We're doing it right now. I'm seeing them all over the place. We have studied 350 markets and we have about 15 to about 20 that we know for a fact work flawlessly. So that's my breakdown.

[Co-host / Client Representative]

That's awesome. Hey, before we move on to any other questions as we speak about regulations, that is something I feel like has always been kind of like in the last couple of years, a big topic that we've talked about with other like short term rents people. And we've just, you know, heard from clients and things. Is there anything where it's like a simple, I don't know, way that you look at it or research it to say, hey, this is a good market, or is it just several things kind of all in one to help you understand like, hey, the regulation risk here is low or the regulation risk here is high. How do you kind of evaluate that as you look at properties or markets?

[John Bianchi]

Good question. I am terrible with legalese. Like, it is just kryptonite on my end. So I usually have other people help me understand it so that I make sure I don't make those mistakes. But the markets that I like to go into have to have regulation in place. They have to, if there's no regulation, and then they come in out with regulation that bans everybody. That was really stupid move, right? So it has to have regulation. Now the second piece to this is that you want the city and the area, like the people who live there to be okay with Airbnbs and that there's not some big uproar or annoyance or group that's trying to like get them banned.

[Interviewer / Co-host]

Right.

[John Bianchi]

And you can find this by checking articles for the city. There's always articles out there that talk about like, are they planning on doing something? Are people complaining? Like, can you look up in Facebook groups? You can kind of see what the community is feeling when it comes to Airbnbs, right? So that's the two things. One, regulation, and you don't want the people to be actively trying to make it more restrictive. And the third thing is like, does that community die if those Airbnbs go away?

[Interviewer / Co-host]

Right?

[John Bianchi]

So like the city, how much revenue are they getting from those Airbnbs how much are they dependent on those Airbnbs? Because some places they can't get rid of Airbnbs. Like there's no way they're ever going anywhere. Panama City beach, they're not going anywhere.

[Interviewer / Co-host]

Right.

[John Bianchi]

They need those Airbnbs. That is their economy. And so if you just use that logic and they have regulation in place, you're kind of okay, right? That's my process for figuring it out of where I feel comfortable going and not going.

[Tom]

That's great answer.

[Brandon Hall]

When it comes to.

[Tom]

We may have just kind of went into this a little bit, but maybe from a data perspective, what should investors be looking at when selecting a market in 2025?

[John Bianchi]

Start with the regulation. So go through the exact same thing that I just mentioned. But then you got to be figuring out the saturation, which just made a whole video about that as well. So we can get into that. And then the other part, well, before you even get to saturation, if you are looking for cash flow, then what you got to do is you got to be able to figure out can these properties cash flow.

[Interviewer / Co-host]

Right.

[John Bianchi]

Which is not an easy thing to do. But there's a process that I'll try and walk everybody through right now. So if you're following along, like grab out some pen and paper and try and follow this process or just give the. I'll give the high level understanding. Right? So regulation's good. Step one. And then we're going to figure out is there cash flow, if cash flow is what you care about. And then once we figure that out, we'll go into saturation.

[Interviewer / Co-host]

Okay.

[John Bianchi]

So cash flow, I use this thing called the 20% rule.

[Interviewer / Co-host]

Okay.

[John Bianchi]

Now I'm going to state this like several times. It is not 20% cash on cash.

[Interviewer / Co-host]

Okay.

[John Bianchi]

That's not what I'm referring to. It is price to rent ratio. If I'm buying a $500,000 home, I want it to be able to make $100,000. The revenue is 20% of the purchase price. If you underwrite a property where that's the ratio and it cash flows at an amount that you're going to be happy with, okay, it can be lower, but you're almost always going to be really happy with that, that ratio. And so as a top line number, when I'm looking into a market, I want to try and see if I can find that. And if I can find that, then I'll spend a lot of time understanding that market as a whole. Like spend a couple weeks deep diving it and truly breaking it down.

[Interviewer / Co-host]

Right?

[John Bianchi]

So very quick first check on a market is I use AIR DNA to try to understand what a subset of homes can make. So as an example, I'll look into downtown Scottsdale and I won't look at all of the properties because you got one bedrooms all the way up to eight bedrooms there. I'll just simply look at the four bedrooms that have pools that are all relatively close to the downtown area. And I will ignore the luxury and I'll ignore the bad listings and I'll just take a look at the ones in the middle, the ones that are put together well, that have good photos, that are normal sized homes. Okay. I'm trying to get like a grouping of homes that are relatively similar in the same area and I'm trying to figure out how much they generally make.

[Interviewer / Co-host]

Okay.

[John Bianchi]

And so once I have that understanding of what they can generally make and what they generally look like, I can then hop over to Zillow and find a property for sale on Zillow that generally looks the same, that's also a four bedroom with a pool in the downtown core. So now I have this idea of like how much these homes are making and what they are selling for on Zillow. And then at that point it's just, it doesn't meet the 20% rule. The revenue that I'm seeing over here is at 20% of the purchase price that I'm seeing over here. And if you can see that, that gives you a little check mark to go. This market may cash flow well and therefore it's worth spending some time understanding everything about it. That makes sense.

[Tom]

Yeah, no, it makes sense.

[John Bianchi]

Okay. That might be the best way I've ever explained that. I've tried to explain that probably a hundred times.

[Tom]

That was very well explained. Basically, you know, when I heard you're looking at certain areas like near the downtown core, right, Looking for to find a subset of properties that kind of meet that 20% rule. And if so, then you know, it's a good market.

[John Bianchi]

Long story short, you know, it's a market that has a chance. Let me just. I keep saying that because you never know until you truly deep dive it and figure out the anything can kind of look good really quickly. But once you really get into to it, you, you find you figure out all the nuances, right? And then the next thing, which honestly too many people worry about this and you really do not need to, it's the saturation. So saturation is simply, are there too many airbnbs in that market for the amount of revenue that's being made and are too many people opening up new Airbnbs and the revenue is not increasing, and so everybody's making a little bit less year over year. Is that the case? Well, I just analyzed, like, just posted this video this week, but I posted a video on Miami where I tried to figure out Tom, here in Miami, I tried to figure out they've got 22,000 active listings there, right? So you think 22,000, that's a ridiculous amount of listings. Is it an oversaturated market or saturated market? You don't need to say over. And so what I did was I pulled out every single property on a month by month basis and figured out how much they increased year over year. So there's charts in there where you can just easily export it. And now you can see there were, you know, In June of 2022, there were 15,000. In June of 2023, there were 17,000. Therefore, there was 2,000 more listings year over year. And what is that as a percentage?

[Interviewer / Co-host]

Right.

[John Bianchi]

And then you can understand how much the supply has increased. Then you can do the exact same thing with the revenue. You pull it out, you check what it was year over year, and then you see if they're going together. So if the supply increased by 10%, did the revenue also increase by 10%? And if it did, then the market is most likely not saturated.

[Interviewer / Co-host]

Right.

[John Bianchi]

And if you were to actually look at Miami over the past two years, it's almost stayed like, in perfect lockstep. Meaning that it's almost a perfect balanced market at this moment with the amount of listings that are there. And so not saying that, like, you can't add more listings, but it seems like as people are adding more listings, the revenue is kind of keeping up. Meaning that because there's millions of people traveling to Miami, those Airbnbs are getting filled.

[Interviewer / Co-host]

Right.

[John Bianchi]

Even though there's 22,000 plus all of the hotels. So that's how you figure out saturation. The last thing I'll add on to this when it comes to saturation, which is something that I've started to talk about for the first time, is subcategories. So you can't just look at all of Miami as a whole and say, is it saturated or not?

[Interviewer / Co-host]

Right?

[John Bianchi]

Because there's one bedrooms and there's six bedrooms. There's luxury places, there's non luxury places. There's spots close to downtown and spots like half an hour away. There's bachelorette themed homes and bachelor themed homes.

[Interviewer / Co-host]

Right.

[John Bianchi]

And each one of those ones I just mentioned is going to attract a different traveler, right? A different group of travelers, a subcategory of people going. And so what you need to understand is the, let's say the six bedroom with a pool that is about a half an hour away from Miami but is going to be sort of like a luxury property. Is that option oversaturated or not? You don't care about the one bedrooms that are right on South Beach.

[Interviewer / Co-host]

Right.

[John Bianchi]

You care about these ones over here specifically. Are these oversaturated? And you can add enough filters into air DNA now where if you can remove everything else and you're just looking at that subcategory and then you do the exact same process where you pull out the supply and you pull out the revenue and you figure out if it increased or decreased year over year to get the true saturation for that subcategory. And that's what's going to allow you to ensure that you don't put like hundreds of thousands of dollars into a multi million dollar property when it's already a saturated market within a Miami market.

[Interviewer / Co-host]

Right.

[John Bianchi]

Does that make sense?

[Interviewer / Co-host]

Yep.

[John Bianchi]

Yep. Cool. That was a lot I had to cover. Again, I said, pulled a pen and paper, hopefully someone did and wrote it down.

[Brandon Hall]

With 2024 officially in the rearview mirror, now is the perfect time to start planning for how you're going to maximize your tax savings in 2025. With major tax changes looming under the new administration and IRS audits on the rise, navigating the tax code alone is now riskier than ever. Whether you're leveraging the short term rental loophole clear, claiming the real estate professional status, utilizing passive losses, 1031 exchanges or anything in between, our expert team of tax advisors at Hall CPA has your back. We'll help you uncover hidden opportunities and avoid costly mistakes that could put you at risk during an audit. With potentially tens of thousands of dollars of tax savings online, why wait? Visit www.therealeestatecpa.com podcast to request your free 30 minute discovery call today. Again, that's ww.therealestatecpa.com podcast for a free consultation. Let's help you ensure you keep more of what you earn in 2025. That's all for now and we'll dive right back into today's episode.

[Tom]

You know I'm going to be re listening to this because believe it or not, this is total side quest from this conversation. Well, it's not, it's. It's on point. I'm actually going to be underwriting a Condo here in downtown Miami to see if I bought it. Could I just have it as an Airbnb and just park it there? And if I ever need to move into the property, I'll just move into it.

[Interviewer / Co-host]

Right.

[Tom]

But like, that's what I'm looking to test right now. So, like, this is, this is all very helpful. This all makes a lot of sense to me.

[John Bianchi]

Well, what's your. Do you want to. Do you want to talk about that one for just a second? Can I give a little bit of advice? I can't help it. I got to get. I got to do it.

[Tom]

Yeah, yeah. I don't want, I don't, I don't want to say the exact location.

[John Bianchi]

No, no, no, you don't need to.

[Tom]

The exact condo building, but it's in Brickell. And yeah, I'm happy to hear your advice. I'm happy to give more information on it if you need.

[John Bianchi]

So first thought, and I'm sure you've already looked into this, but you always got to start with regulation. Now there's city regulation, but there's also building regulation and HOAs.

[Interviewer / Co-host]

Right.

[John Bianchi]

So do, does the building allow.

[Tom]

Yep. So this specific building and there's like a handful of others do allow airbnbs.

[John Bianchi]

Okay. So obviously next step. I know you probably know this, but I'm just sharing it. Just as like, maybe somebody will find this helpful.

[Interviewer / Co-host]

Right.

[John Bianchi]

You're going to obviously want to find as many comparable properties as possible on air DNA. Now, majority of the information on air DNA is not useful.

[Interviewer / Co-host]

Okay.

[John Bianchi]

There's a lot of data that's on there that is not data that you can take and make a decision based off of. You've got to find what I call the good data.

[Interviewer / Co-host]

Okay.

[John Bianchi]

Anyone who tells you that air DNA is not useful does not know how to use air DNA. I'm living proof that air DNA works very well. So what I mean by that is they have this one metric called days available. Make sure that, that you're looking at properties that are 271 days or more. Okay. That means that they've been live for almost a full year. You need that first metric because air DNA tracks things on a daily basis. And so they can only track moving forward, which means if they've only tracked it for 30 days, it's not going to be useful data. You need the annual revenue number.

[Interviewer / Co-host]

Right?

[John Bianchi]

And then the next thing is you also need a full time host. And the way that you can figure out if a host is full time is by the amount of reviews that they've received over the past 12 months. So a quick check at this is, do they at least have 20 reviews? And if they do go, okay, anyone who has less than 20 reviews, I'm not even going to take a look at their listing. Once you are looking at these listings that do have 20 reviews, you need to open up their review calendar and see how many reviews they've received every single month for the past 12 months. And as long as there's at least like one to three every single month, you know you're looking at good data. So repeat that one more time. You gotta have days available above 271 and you've gotta have at least 20 reviews and ideally one review every single month for the past 12 months, one to three. And if you can get that, you're looking at good, useful data.

[Interviewer / Co-host]

Okay?

[John Bianchi]

And the reason I stress this is because a lot of people do Airbnb part time and, and Air DNA's algorithm is not perfect. It's the best we have, but it's not perfect. And so then therefore, we just want to get out the good stuff. Okay, now that you've gotten that, you've got, you've gotten rid of a lot of the noise, then you can start looking at the data and trying to figure out where you're going to fall within the ranking of all the Airbnbs that already exist within that general area. Things to keep in mind when it comes to a condo is going to be views. That's going to be a huge one. If they have water views, do they have parking lot views, do they have like a building view? Like what's going on there? Because that does make a difference. Additionally, design is going to go really far. So because you don't have a lot of outdoor space and things like that, if you don't have a strong design, you're just going to fall into the pile of all the Airbnbs that don't have good design. Because you don't have a backyard at a pickleball court to stand out, that makes you a no brainer to book, right? However, your hoas that you have within your building also matter, right? Do you offer a pool? Do you offer a gym? Do you offer those sort of things? You kind of want to let people know that those exist, right? And so I could keep going, but those are the basics that you want to do. And then don't lie to yourself when you're looking at the data, okay? I promise you, everybody lies themselves. Don't lie to yourself. Look at it and find what I call a base comp. Try and find the Airbnbs that currently exist that you know for a fact, like in your gut, you're looking at it and you're going, I know for a fact I can beat that property. I've got better views, I can do better design, I can do better photos, I got a better location, I got better amenities. You go, I know I can beat that. Start there. Because if you start there, then you can move your way up. The mistake that everyone makes is they look at the beautiful, perfect Airbnb listing that is like a 10 out of 10 that's making a whole bunch of money, the amount of money they want to make, and they go, what if I did that? What if I could just do that? And it's like, hey, dummy, you don't have the views of the water. You know what I mean? So it's like not calling you a dummy, but you know what I mean? And so, yeah, follow that process and you'll have a more realistic understanding and then give yourself a range because it's never, you're never going to get perfect. So are you going to fall between like 40,000 and 60,000?

[Interviewer / Co-host]

Right.

[John Bianchi]

Don't just say 50. It's like, what's your worst case scenario? And then the cheat code is if you're happy with the worst case scenario, which is like, let's say your worst case scenario is you broke even. If you're okay with that, that should be the revenue number where you're like, if I do a bad job managing this, I'll break even.

[Interviewer / Co-host]

Right?

[John Bianchi]

It shouldn't be. If there's a chance where you're not okay with the worst case scenario, don't move forward with the property. That's the way that we've had all 200 properties have been profitable is because we hyper focused on the worst case scenario. And we always tried to make it where in the worst case scenario it wasn't that bad. You know what I mean? You're still profiting. You're not making as much as you wanted, but you're not losing money.

[Interviewer / Co-host]

Right?

[John Bianchi]

And so that's why every single one is profitable, because our worst case scenario is a scenario that still works. Any questions on that?

[Tom]

I'm sure if I sat here, I would drill down into a bunch of questions.

[Co-host / Client Representative]

I have a question for you, speaking, John, about amenities. You mentioned that a couple times. And I believe just from what I've seen, amenities are super important. So can you just talk about amenities you're commonly looking for? Maybe it's just based on the market and what other amenities are already there. But talk to us a little bit about how you think about like hey, a good short term rental has these amenities. Or talk to us about that.

[John Bianchi]

Yeah, so I've been explaining amenities a little bit differently to people to help it make more sense, right? If I had a property, right? If my property was just bedrooms, bathrooms, a living room, a dining room and that's it, right? And then in the backyard, I did nothing and had a second living room and I just put another couch in there.

[Interviewer / Co-host]

Okay?

[John Bianchi]

That's my Airbnb. Now your Airbnb, in the second living room you added an all out game room. And in the backyard you added a pickleball court and you also added a hot tub and you also added cornhole, just simple fireplace as well. You got that there too, right? So now we have to think about this logically. If say Tom is a guest, Tom is the guest and he is now looking at your Airbnb or my Airbnb and he has $100 to spend. When he buys yours, he's getting a hot tub, a fire pit, cornhole, pickleball court and a game room. When he buys mine, he's not getting any of that. And so his hundred dollars goes significantly further. So he's buying more for the few days that he's going to be there. Everyone calls it renting, but you're buying it, you're buying it for a handful of days, right? So he's just bought more with his money. So why would he ever in his right mind book my place over your place? Okay, Airbnb is a business and it honestly is one of the easiest businesses because you can look directly at your competition, make a list of everything they have, and then add things they don't have. And now all of a sudden your property, if it would be head to head, you are selling more things, right? And so that's why amenities work. It's just you're selling more things. Now every single market is different and every subcategory is different, right? So like we were talking about in Miami, do you have a six bed luxury home or do you have a one bedroom or do you have a little three bedroom that is like rate downtown core and what is the group that is going to be staying there? So this is the piece that you've always got to ask yourself first. What is the demographic that is willing to pay the most to stay here?

[Interviewer / Co-host]

Right.

[John Bianchi]

And the best way to explain this is you would not put a jungle gym in a bachelorette themed home. It just logically makes no sense. And so if we just start with who's our demographic? Okay, that's our demographic. Now let's figure out what they care about, what they enjoy, what would make their time at my Airbnb a fun, enjoyable, memorable experience. And let's tailor all the amenities to that, while keeping in mind exactly what all of your competition has. Okay, now, there's a process here because you've got money to deploy, and you've got to deploy it properly. And so you're trying to figure out of this, let's say, $40,000 that I have, what should it go to, what should not go to? And it's like, okay, well, I've got this family demographic that I want to focus on, right? But I have all this competition as well, and I want to beat my competition, but I want to go above them, too. And it's like I want to do even more than they're doing. And so how do I determine what to do? And so the process that you want to walk yourself through is must have amenities, and then nice to have amenities. Must have. What does all of your competition have? Match them if your budget allows you to match them.

[Interviewer / Co-host]

Right?

[John Bianchi]

Because now people aren't deciding between one or the other. They're seeing like, oh, we. They both have the exact same things.

[Interviewer / Co-host]

Right?

[John Bianchi]

And now you're on a level playing field. Okay, Then this is where you go deeper and you go, okay, but my demographic is families, and I'm going to make an amazing experience for the kids, because if the kids are happy, the wife is happy, the wife is happy, the husband's happy. And so then therefore focus on the kids. And so then you take that extra dollars that you have, you've already allocated to the must have amenities, and you figure out how do I enhance the experience for the kids so that these families have an amazing time and I get a huge competitive edge over my competition. And now when Tom goes to look at your Airbnb versus my Airbnb, he goes, why would I not buy this one? That is clearly a better experience for my family and my dollars go further. So, yeah, that's amenities in a nutshell.

[Tom]

Yeah, that's a great explanation. That's a fantastic explanation. What I'm going to do, I'm going to review the transcript of this when I'm done. When we're done recording and take a look at this. But, you know, this is absolutely fascinating. Amenities is definitely something that's key question I had as we're Kind of running through this condo size. I know you mentioned before, like, these are typically Airbnbs are for people who are going to be group stays. Right. Like larger groups. Have you seen any success with smaller units? Like a two bedroom, for example?

[John Bianchi]

I've personally have not done it myself, but I have seen other people in the industry have a ton of success. So I'm not here to say that those are not going to work. That's not at all what I'm trying to say. All I'm trying to say is that if I'm going to New York, I'm going to stay in a hotel. I've been doing Airbnb long enough that. And staying in Airbnb is long enough to know that I hate staying in an Airbnb and in a major city where I got to go into an apartment where I don't know if I'm legally allowed in there or not, and I got to sneak up to this room and then all of a sudden I can stay there. And I just think about it long term. That's the type of stuff that the hotel lobbyists are really trying to get away from.

[Interviewer / Co-host]

Right.

[John Bianchi]

And the condo buildings don't want and all these things. And so, like, I'm just thinking personally now, mind you, what you're going into. The condo allows it.

[Interviewer / Co-host]

Right.

[John Bianchi]

In Miami, there's a lot of small travel, right? Small travel, small group travel is what I'm trying to say. Yeah. And you know, staying in a condo in Miami is a lot different than staying in a condo in like Boise, Idaho. And so just trying to understand your market matters. And then on top of that, I think there's out of the 22,000 listings that are in Miami, I'm pretty sure 11,000 of them are one bedrooms. So you got increased competition. And that's not even including the hotel rooms, which there are a ton of as well. Right, right. So those are my thoughts, just like off the top of my head. How much is the condo going to cost you?

[Tom]

I would say it's probably gonna be like around 700,000 for like a two bedroom. So my plan for this condo is this.

[John Bianchi]

Right?

[Tom]

This is, this is my thesis. Because right now I'm renting out this building. But, you know, things in Miami are moving quickly.

[Interviewer / Co-host]

Right.

[Tom]

And you know, I don't know how quickly or not quickly the prices are going to rise. So what I'm trying to do is lock in a condo that I own, but I'm not living in. And my worst case scenario is break even.

[Interviewer / Co-host]

Right.

[Tom]

I'D be happy if I broke even on the thing. I'm not trying to make money on it. It's just like, somewhere to park. Just like I'm reserving, like, a future primary residence is kind of what I'm looking at doing.

[John Bianchi]

Okay, I, I, that makes sense. Yeah, that makes sense.

[Co-host / Client Representative]

That's like a different mentality then from, like, what we're talking about with John, which is like, hey, we're looking for cash flow. That's the goal. And, like, if you're just like, yeah, looking for a primary, kind of just like, breaking even, then I feel like, because for those of you who aren't watching, unlike YouTube and you're just listening to the podcast, as soon as Tom said 700K, John was like, I'm not sure about that, if that's gonna work. Because the 20% rule means 140k in revenue.

[Interviewer / Co-host]

Right.

[Co-host / Client Representative]

That you need to hit on that. And I think John and us are like, is that really realistic with the.

[Tom]

2 bet I have something blocked on my calendar to scratch the surface on this. I haven't even looked into, like, is it viable? I just know that this is a good Airbnb because I stayed there twice, and it's one of these buildings in Miami that's always Airbnb out, so someone's making money on it. So, anyway, anyway, I don't want to drill down too much of my situation about me. This is about everybody else.

[John Bianchi]

I think this is perfect. I mean, like, this is, we're taking, like, a real life scenario and we're trying to make sense of what you should do based off of your scenario. And there's, I mean, I want to give advice on it because other people are going to benefit from hearing that.

[Interviewer / Co-host]

Right.

[John Bianchi]

The logic that you have where you're saying Miami just continues to rise, there's no more land to build, and home prices are likely going to keep going up. And you're like, I want to continue to live in Miami, but if I don't buy now, I'm going to be screwed.

[Interviewer / Co-host]

Right.

[John Bianchi]

Essentially, is what you're saying.

[Tom]

That's my mindset.

[Co-host / Client Representative]

Yeah.

[John Bianchi]

Which totally makes sense. Like, it's actually a pretty strategic logic because then if it can cover itself, then you're kind of holding on to it for the time period. And then, like, as life goes on, you're like, yeah, now I'm moving in there and it's mine. I'm taking it over and all that kind of stuff. Kind of a cool scenario to be a part of. But the thing you Gotta reinforce, I guess, is if you're going to do that, you really have to feel comfortable that it can, at a minimum, break even. And I have said this a lot of times, I apologize. Hurts your feelings. But a lot of higher net worth people that hear about the str tax loophole, their goal is to break even. And I always say that's stupid, right? And I go, don't, you don't have to do that now, mind you. I apologize for everyone who just called stupid, but I'm saying that you don't have to break even, okay? Like there's ways of understanding the data and navigating that market or any market to be able to find a property that is going to do better than break even, where your worst case scenario is not even close to break even, right? And then all of a sudden, you know, you're not just, here's the problem. The problem is that if your goals break even, I can almost guarantee you're going to lose money. And you know why? Because today the market's pretty a okay, right? It's not the craziest thing in the world. The economy is doing okay. The problem is when we hit the recession. And you need to have that foresight. So I stress this. Every single client we work with, the goal is to get them through whatever recession comes next. That's how I think about this. Because today's easy, right? If you're breaking it, you can break even easily today. But what happens when the stock market drops by 40% because of some thing in the world that nobody can control and, and the economy comes to a halt and the number one thing that people are going to stop spending their money on is travel. And then you, all of a sudden, the competition is through the roof and not as many people are booking out the 11,000, you know, Airbnbs that already currently exist as one bedrooms. I know you're going for a two, but you get what I'm saying, right?

[Interviewer / Co-host]

Yeah.

[John Bianchi]

And so the fear that I always have is, can you make it through a recession, right, with the property? That's what matters. That's why I say trying to break even isn't the smartest. Because how long can you go covering the mortgage and the expenses of that property before you got to go, I can't do it anymore, I got to put it on the market. I know I'm going to take a haircut. You know, I bought it for 700, I'm going to sell it for 650 or I'm going to sell for 600 I don't care. I just got to get rid of these monthly payments because I can't afford it.

[Interviewer / Co-host]

Right.

[John Bianchi]

That's the scenario where I want no one to fall into, like, ever. And so the objective is, how do you get a property that can be in the top 10 percentile, or how do you make your Property within top 10 percentile? Because a recession does not hit the economy equally. It hits people who make less money a lot harder. But people who make money doesn't hit them as hard. And even it does hit them as hard, they still have money. Those are the people that keep traveling. They keep moving. Even during COVID when everything went to people are still traveling, you were told to stay inside. People traveled. And so the strategy is try to take your dollars and use them in a way that are going to allow you to be at least within the top 10 percentile of your market. So that when everything comes down and we go back to this same scenario of choosing one Airbnb over the other Airbnb, yours is so much better than all the other ones. And now you've brought your price down to theirs, you're still getting booked, you're still covering at least your bases. And that's when you're breaking even, right? That's when you're okay with breaking even.

[Tom]

This is all very insightful. I hope everybody out here is taking notes, are going to re. Listen to this again, because this is what you need to hear, right? It's not what you always maybe want to hear, but this is what you need to hear. Okay? Airbnb is definitely a business. It's not just a tax strategy. It's not just another rental property. And this is all, you know, kind of breaking it down.

[John Bianchi]

Tom, before we move on, this is kind of crazy. This is. This calls happening. I'm going to show you guys this. This is a client of mine that is in the top 10 percentile after only two months of being listed in the market of Miami. Oh, like, exactly. To a T. We were talking about. I just. I'm holding my phone because it's a story that I posted because it was just sent to me today that that's what wins.

[Tom]

Yeah, it's a small world. It's crazy that happened because, like, this is exactly what we're. Exactly what we're talking about right now.

[John Bianchi]

It's fun when, like, I. It's always. It's a lot of it has been theory in my head, and I've been fortunate enough to be able to take these theories and, like, actually Test them. You know what I mean? Like, everything is saying that this will work, and then you do it, and it's like, oh, it worked. Cool. Okay, let's do it again. So anyways, sorry if that wasn't what you wanted to hear, but I think we should have a call afterwards and, like, we. I'll give you a helping hand as best I possibly can on this property and see if it makes sense.

[Tom]

Yeah, yeah, no, absolutely. I'd appreciate that.

[John Bianchi]

Cool. Can I give you one more thought to. Just like you can. I'm going to plant a little seed and see where this grows. If you can deploy $700,000 into a property, right? Like, what if, hypothetically, you bought, like, a 400, $500,000 property? And what if that property made, let's say, 30 to $50,000 in cash flow?

[Interviewer / Co-host]

Right.

[John Bianchi]

Because it sounds like you have enough capital to be able to do that based off of what I know. And so the question then becomes, what could you use that cash flow for?

[Interviewer / Co-host]

Right.

[John Bianchi]

So could you use that cash flow today to just move into the 700, like, save up a little more again, and then. Then just move into the $700,000 condo today rather than down the road? So you use the capital now to create yourself some cash flow. You wait a little bit longer, use that cash flow to then go live in the condo that you want to live in. Because I'll tell you, that's my exact strategy. I want to get an Airbnb that's going to cover my mortgage, because I feel like it'll just be a weight lifted off my shoulder to be able to do that. And I know where they exist. I have the capital to be able to do it. And so I'm going to be. I'm going to go and do that, and it's going to cover my mortgage, and I'm going to be like, cool. Now my mortgage is covered.

[Interviewer / Co-host]

Right?

[Tom]

That's even smarter. So basically, what you're doing is you're just finding a property that cash flows enough to pay the mortgage instead of, you know.

[John Bianchi]

Exactly.

[Tom]

That makes a lot of sense.

[John Bianchi]

Yeah. Different. Different. You might have to wait a little longer to buy the property. And, like, you know that maybe it goes up to 800,000, but, like, at least you. You've got this to offset. It adds to your income. You own a property in a different market altogether. And so you've got. Now got two markets, you got a little diversification. Maybe it's a little place you can actually go and visit, because now you live in Miami.

[Interviewer / Co-host]

Right.

[John Bianchi]

And so you just kind of stack these benefits by having you take advantage of the SDR tax loophole. Have you guys heard of that? Nope. Nope.

[Tom]

First time.

[Co-host / Client Representative]

The next thing, I was actually gonna. So, a lot of our clients buy out of state. So, for example, like, maybe you have a client in Minnesota, and then they'll go buy a property in, like, you said, like, Panama City beach or something like that, out of state. But how do you think about. For people that you're working with, do you think that where you live and where the market is to buy has any sort of bearing? Like, do you think it makes any sense to buy near where you live? Because a lot of clients that we were, they're like, hey, I want to be able to, like, drive over to the property if something breaks, right? Something like that happens. Talk to us how you think about, like, where a client lives and then, like, the market that they should move into.

[John Bianchi]

It's quite literally the exact same logic that I just gave Tom there. So a lot of people are in a scenario where they're like, I want to be within driving distance to it. I don't even care if it doesn't cash flow that well. I just want to be close to it. And it goes, okay, so you want to be close enough so that you know you're gonna have a property that nearly breaks even when instead you can have one, you know, that's maybe a few states over that's making about $3,000 a month in cash flow, right? And it's like, so, okay, you're willing to give up, you know, $36,000 a year to be able to drive and take a look at the property. However, the goal of an airbnb is to have your cleaner clean the property. You're not cleaning it, right? If you're two hours away, you might as well be on the other side of the country, because you're never going there to solve a problem. You're never like, oh, your air mattress. Let me drive two hours to go give you an air mattress, right? It's like, no, you're using TaskRabbit or thumbnail, whatever it's called, to find somebody to then go bring that air mattress. Or you've created a relationship with your cleaner where the cleaner understands, like, hey, I'm on call if anything goes wrong, and I clean the home whenever there's a turnover. And that's pretty well it, right? So the reality is that when you haven't gotten your first Airbnb, there's a lot of Things that you're really scared about. One month into having your Airbnb, you're not really scared of anything. I've said that, I've said that line to owners for years. And I know back in Chicago in like 2018, I told people that and they're like, yeah, I like a one month in there, like, yeah, I see what you mean. Like, it's actually not that scary of a thing. Like, they're worried about everything getting damaged and destroyed and being close enough and being able to be on call. But the problem is that not every market is made equal and not every market cash flows. Well, you've got to find that discrepancy between purchase price and revenue to be able to get the cash flow if that's what you're aiming for.

[Interviewer / Co-host]

Right.

[John Bianchi]

If you don't care about that, do whatever you want.

[Interviewer / Co-host]

Right.

[John Bianchi]

Just keep in mind the recession talk that I was talking about earlier, because that's what scares the hell out of me. So I strongly, strongly, strongly try to advise people to not take that route unless they absolutely have to. Because there's just so many better markets.

[Interviewer / Co-host]

Right.

[John Bianchi]

If you live in one of the great markets, that's amazing. But most people don't. I've studied, I've said this already, But I study 350 markets, there's only about 15. We're kind of getting that up to about 20 markets where we have found good cash flow. Most people don't live in those areas. Most people are not in driving distance. Self managing an Airbnb, having a strong cleaner, it's really easy when you have one Airbnb. Talk to all of the gurus online. That's one thing that they're actually not lying about is that managing one Airbnb is very easy to do.

[Co-host / Client Representative]

Yeah, we're, we have one Airbnb. Like you said, we're in Minneapolis and we're like in the suburbs. But the specific short term rental is in kind of more downtown area almost. So it's 30 minutes away. And like you said, it's like, yeah, it could be in a different state. Essentially. It's just like, yeah, most of it is just communication via the, the app. And it's like, hey, I could be in Florida, you know, doing the same thing. Or hey, as long as I've got a good team to clean it again, I could be in Europe or I could be in Australia, like, they've got to take it. Or if you've got a handyman right on your team, it's like, great. I could Be anywhere, whether it's 30 minutes or halfway across the world, it's all kind of the same. So. Yeah, that's, that's a good point.

[John Bianchi]

I. When I had my places in Chicago, I lived in one place and it was about five. Like they kind of have these like flats, you know what I mean, where they've got these sort of like small apartment units, multi unit buildings everywhere. And it was like four down where I had an Airbnb. So it was my house air. My Airbnb right down the street. I didn't talk to a single guest or see a single guest for like a year. And it was just always occupied. And I remember thinking one day I was driving down the road and I looked over and all the guests were checking in. I just was like, I have no idea who that is. You know what I mean? It was just like, like, how weird is it that I just have never communicated with these people, but they're going into my Airbnb and just kept driving, you know what I mean? Like, didn't even think of it. And anyways, so that's just how Airbnb goes. But yeah, hopefully that answered that question for you.

[Co-host / Client Representative]

Yeah. John, this has been awesome. And maybe a couple last questions as we wrap up our time. Like, a lot of people who talk with us, right, are looking at a CPA firm to help them use something like the short term rental tax loophole strategy, whatever you want to call it. Some people hate the word loophole. That's fine. The point is they're looking to us to help them maximize their tax savings. Where do a lot of people, like, if you're talking to a client who's like, hey, I'm just about to acquire my first one, I want to, you know, offset my taxes using the short term rental loophole. Where do you first point them? Is it the whole regulation kind of thing that we started there or do you start them in like a different direction of just looking to acquire a property?

[John Bianchi]

Well, you always got to start with regulation. It kind of depends on the person, I guess you could say, right. I'll get, I'll just like rapid fire. Some advice that some of these people like, need to hear, right? Because I love the loophole. I call it the loophole. It's very easy to understand. It's a loophole, right? Tax savings. It's kind of fun. So a lot of these people are very busy, right? They're high net worth individuals who succeed very well, they have strong careers and that they are busy with what they do. And they want to figure out a way to be able to save on those taxes, but they don't have a crazy amount of time.

[Interviewer / Co-host]

Right.

[John Bianchi]

And so the thing is that they're kind of like looking into the industry. Maybe they have a little bit of real estate experience, this is what I've noticed. And they tend to just lean towards where what they hear online. And so I strongly recommend that you don't do that. Okay, so the markets that all of these gurus are kind of saying, and you're hearing everybody like point you in those directions most of the time, especially however old that content is, those markets are done, right? There's markets where like you just can't buy and compete and cash flow well or even break even because the purchase price of those homes have gone up so high in comparison to the amount of revenue. And there's so many people that you're competing with where it just no longer makes sense.

[Interviewer / Co-host]

Okay.

[John Bianchi]

There's a lot of those markets, very traditional vacation markets. That's kind of what's happened, right? You almost have to build to make it work in those areas. And it's not the properties that are online. The next thing is obviously look into the regulations and try to find the regulations. Then follow my 20% rule to look into those different markets, get an air DNA subscription, buy the pro version. It's the cheaper option which allows you to be able to see everything that you need to see.

[Interviewer / Co-host]

Right?

[John Bianchi]

Use that 20% rule and eventually find a market that has good regulations and good cash flow.

[Interviewer / Co-host]

Okay.

[John Bianchi]

And once you've done that, then you want to deep dive it.

[Interviewer / Co-host]

Okay?

[John Bianchi]

So I have created a 40 hour long course, but as of the time that this probably comes out, we've actually completely revamped it. So it's seven hours, a little over seven hours broken down into seven days. And it's significantly easier to get through. That just talks about the core concepts of understanding data, being able to build a buy box, knowing which markets make sense, being able to forecast the revenue and underwrite the property, to feel confident moving forward with it. So what I recommend is like just, just rip through that, right? You can get through it in a day if you wanted to, maybe over a weekend, but you can get through it. And that's going to allow you to start hunting for these properties. Because the mistake that a lot of people make when they have money to blow to be able to get tax savings is they pick the fun markets that are dead okay, in my opinion. And they pick the pretty properties. And those are the two Biggest mistakes I see, they overpay for a pretty property and that you don't need to do that. You take an ugly property and you make it pretty, and that allows you to get the price as low as possible. And the lower you can get that property for, the easier it is to cash flow. Every $100,000 right now works out to be about an extra $8,000 in expenses on the year. So I had one client that was looking between two different properties. One was $100,000 less. I did everything I could to get him to buy the $100,000 less property, which he did. And they both had the exact same potential. One was just a little prettier. And I was like, avoid this. You know what I mean? Okay. I said a lot. Let me summarize it. Your first step is to not just go to the markets that you've been hearing forever.

[Interviewer / Co-host]

Okay?

[John Bianchi]

The next step is to just rip through the course that I give away for free. Just rip through it.

[Interviewer / Co-host]

Right?

[John Bianchi]

You can get through it a lot quicker than you used to be able to. Then, with the knowledge you now have, get an air DNA subscription and start opening up markets that you're curious about, markets that you kind of care about. And you'll learn that when you go through the course and start to look for that 20% rule. And look for it, look for it, look for it, look for it. Eventually you'll come across one and then build a buy box and then figure out what works there. Then talk to the realtors and then get going from there.

[Interviewer / Co-host]

Okay?

[John Bianchi]

And that's the process that if you really want to get this right, and there's one thing I want to stress, the only thing you really got to get right at the beginning is the data. Because if you screw up on a guest experience, which is what most people are worried about, they're like, I don't know how to host, I don't know how to message guests. I don't know how to clean the home. Those things you can fix very easily. If you screw up with the messaging of the guests, all you have to do is not do that again the next time.

[Interviewer / Co-host]

Right?

[John Bianchi]

If you screw up with picking the wrong home in the wrong market, with not enough demand, that's never going to cash flow, and it's not going to work out for you. And the you overpaid for the property, trying to get out of that property is going to suck. And it usually takes two years before you realize you failed one year in the first year, you're just ramping up Like, I'm figuring this out. I'm going to do better next year and I'm, you know, you, you lost money or you broke even. And then in year two, you're going, I'm going to add more amenities so I can be more competitive and I can actually win. And then you add more money to the property and another year goes by and you don't make any money again because your property is overpriced in the wrong area with not enough demand. And in year two, you go, I guess Airbnb is dead and you sell your property. So don't do that, right?

[Co-host / Client Representative]

I can't believe you're giving away those videos and walking through that for free. If people want more than just like, the videos that you've got, I think on, on your website and feel free to share that in just a second. But, like, more than the videos, like, how else can people maybe work more directly with you and get more access to you?

[John Bianchi]

So I have only one service and I've kind of built up my business this way, right? All of my content and all the processes are free. You can go and learn them. And I do that because I don't like to gatekeep, I don't like to be a course seller, let's put it that way. However, you have the option to hire me. So if you don't want to do it yourself, if you don't have enough time, you have the option to hire me and my company to be able to get the secrets and know where to go and kind of feel more confident about the property you're going to end up purchasing, right? And so if you're in that situation where you want, maybe you don't have enough time, but you want to take advantage of the, the loophole, right? We can guide you into finding a property that will meet your budget and your preferences and you'll be very pleased with, right? Like, that's the exact objective. On top of that, though, we're going to connect you with everybody. So we're the top of the funnel, right? And once you get the property, you're going to need everything else, right? So you'll need a lender, you need a realtor, a designer, a construction company. You'll need like a property management company, revenue management company, cost segregation company. You'll need all of these. And so when you work with us, we know that's going to happen. We've built out what we call the A team. We then introduce you to all of them. And because we're going to make the introduction because we give these guys so much business, they're willing to give a discount. And so we're trying to make this kind of a no brainer. And so if you end up working with us through all the discounts that you end up getting, it offsets our fee completely.

[Interviewer / Co-host]

Right.

[John Bianchi]

So you get a property that works extremely well, one of the best ones in America, that could be the top 10 percentile of all of Miami. And you paid nothing to us to do that.

[Interviewer / Co-host]

Right.

[John Bianchi]

And on top of that, the people who do end up working with us, between the cash flow, the appreciation, the principal pay down, it ends up being around $300,000 in profit over a five year period. And the reason I state that, because if you buy the wrong property in the wrong area, the wrong market, and then you fail after two years, you're going to sell it, which means you've lost all the gains that you could have got from holding the property long term. And anybody who holds on to real estate long term looks like a genius. And so that's kind of my objective is get you through that recession. Does that make sense?

[Tom]

Yeah, no, it makes a ton of sense. And that's strsearch.com awesome. We're going to drop that into the show. Notes for everybody who's listening. I highly recommend you checking it out. Tell John is the real deal here. I've checked out some of the YouTube videos already, so really excited to to drop that in there for everybody.

[John Bianchi]

I appreciate you guys having me on here. I love. You know, Brandon and I have done some work together actually. What's kind of cool, I'm not sure if you guys even know this. This week we are launching the free STR Tax loophole course that Brandon did for everybody. I kind of interviewed him and asked questions and so right. On our website we've got the seven day Airbnb data masterclass, right. And then we have the three day STR Tax loophole class.

[Interviewer / Co-host]

Right.

[John Bianchi]

And they're both right there and you can go through them and so you can learn everything about the SR tax loophole, make sure you qualify, make sure you're good to go, you understand the material participation, what that means and all the different ways to be able to do it. And then you hop over and figure out the data and now you've got both those figured out and you just put it to work. So yeah, super excited about that. So again, appreciate you guys for, for having me.

[Tom]

Absolutely. Thanks for coming on, sharing the knowledge again. That's strsearch.com they'll be in the show. Notes for everybody.

[John Bianchi]

Thank you.

[Podcast Host / Outro]

Thanks for listening to today's show. If you enjoyed the show, please find us on itunes and leave us a review. You can also email [e-mail] with any feedback or topic suggestions. We are always taking on new clients and with the new tax laws in play, you really don't want to navigate this alone. Let us help you save money on taxes with your accounting and CFO needs to become a client. Navigate to our client [e-mail] and fill out a web form with as much detail about your situation as possible. Thanks so much for listening. Have a great rest of your week.