As George Antone says in the Wealthy Code, “The greater the spread, the greater the cash flow…” and a strong cash flow can set you financially free.
You create cash flow by creating spreads.
Spreads are the difference between your costs and what your customers pay.
This isn’t a new idea; it’s just profit margin revisited.
BUT what is new is there’s a new path…
…a new way to create spreads with rentals!
You can now start with a small sum of money and use rentals that you don’t own to make $3,000 of re-occurring income within 24 months.
Isn’t that incredible?
Anna’s Arbitrage Story
Anna’s story is fictional, but it shows what your future could look like.
Anna was a member of the Leading Landlord Community and kept hearing Al drone on about the power of monthly furnished rentals. She thought the idea was interesting but was content with her plan. She simply wanted to buy rentals and pay them off before she retired in 20 years.
Anna always believed short-term rentals were profitable but assumed they were trouble. Her administrative job was stressful enough… passive landlording was more her speed.
She was too busy working for her employer to have time to work for herself.
But when she read that she could replace her administrative job’s income within 24 months, she decided to take a closer look.
Once she realized that spreads create cash flow not the real estate, she was free to form a new opinion.
Anna decided to explore the compounding arbitrage business Al was promoting.
She desperately wanted to dump her job. The commute… the pressure…the ever looming possibility of layoff. It was taking it’s toll on her.
So Anna invested in Al’s short-term rental course and worked with him to create a personal action plan.
She learned that “arbitrage” simply meant she could rent a place, furnish it, and re-rent it to someone willing to pay more.
And she really liked the idea of allowing her profits to accumulate (compound) and using them to fund her expansions. This lean start up plan made her feel hopeful. This new path made sense.
Anna Took Action
Anna followed the steps outlined in the training course and did her research.
She discovered there was an ambulance company in town that needed housing for it’s on-call crew.
Following Al’s advice, Anna introduced her “corporate housing company” to the ambulance company.
Al helped her overcome her fears and she made a cold call.
That lead to getting a contact’s name and email address. Then Anna nurtured the relationship and eventually got an opportunity to house one of their crews.
Anna then rented a two-bedroom apartment from a landlord she met at a real estate investment club. They modified the sublease clause and signed a one-year lease for $1,000 per month.
Anna furnished the unit and signed a short-term lease with the ambulance company for $2,200 per month.
A Huge Spread
Anna started flipping out!
She’d created a massive a $1,080 spread!!! That’s $2,200 of rental income, less her $1,000 rent payment, less $120 for utilities.
This one deal was better than what five long-term rentals could produce!
Anna was ecstatic but stayed in control. She didn’t touch any of her profits.
Instead she let them accumulate for several months until she had enough money to get a second unit.
Snowball Effect
Anna got her second place going by attracting another ambulance company.
She knew what they were paying at the Extended Stay, so she successfully pitched an offer that saved them 30%.
This time Anna rented a small home for $1,200 per month, furnished it, and signed a short-term lease with the second company for $2,420 per month. This was a $1,070 spread after rent and utilities!!!
And so it continued…
Anna saved her profits and reinvested. She saved and reinvested… all while living off her W-2 income.
Mission Accomplished
On her 23rd month in business, Anna had accumulated five arbitraged rentals! On average with vacancies included, each arbitrage produced $650 per month for a combined total of $4,550 per month. This allowed her to finally pay herself a salary.
She was able to pay herself $3,000 each month and still grow her bank balance.
Now Anna could pay her home’s mortgage and buy groceries with her rental money. Nearly all her basic living expenses were now covered by passive income!
Wow… what a revelation! Anna felt a deep sense of peace.
She finally had some financial security… all because she dealt her insecurities and took action.
No more working overtime to please her boss. She no longer feared layoff.
And, even though she wasn’t a millionaire, she now felt rich.
Creating Spreads Creates Financial Freedom
What would your life look like if you had enough reoccurring income to cover your bills? How would you feel?
What if you set your intentions on creating spreads instead of trying to buy dozens of rentals?
Might that quicken your financial freedom?
Now, Anna’s story is fictional but the steps are very real:
1 – Wake up to this limited-time opportunity (we are entering a new age).
2 – Get coaching to navigate the start up process and avoid costly mistakes.
3 – Take action even if you’re worried YOU might fail. Faith is required.
In Anna’s story, her actions created TIME and FINANCIAL FREEDOM.
You could do the same.
NOTE: At the time of publishing, I own five arbitrage units that produce $2,965 each month.
Great topic & it’s really inspiring!
The numbers you shared here do not include the insurance and cleaning fee etc. I checked on AirDNA for my area, most occupancy rate is 50-60%. Can I still make some profit after paying all the fees?
Thanks for any help.
Can you use this method top create passive income
Good point Xiaomei! Cleaning fees are a wash when I do this in real life. I have the client pay the actual cost of cleaning. For arbitrages, if you want to insure your furnishings – you can. I choose not to. The actually landlord holds the liability insurance as normal. Airdna is a good indicator for Airbnb activity. It is silent on VRBO and the 30 other online travel agencies. Airdna would not pick up the niche rental opportunities that are within your reach. You have to pick up the phone and build human-to-human relationships to capture these highly lucrative clients.
Hey Joseph, I’m actually living out this story. I put in about two hours every three months per unit. So yes, it’s passive.
Very inspiring! I have my first “arbitage” with one of my dad’s units; very optimistic that this method is a great way to make passive income. Thanks “Landlord Scientist” for all your helpful info!
Great Senika! There’s no stopping you once you prove the business model works for you.
The greater the spread, the greater the cash flow- that is true.
I have a 3 bedroom home in north east Bronx near Einstein hospital, Jacoby hospital ,Einstein medical school and Fordham university. It’s a nice residential yet commercial area blocks away with public transportation and highway access. Deck and pool in descent size yard. How can I make most money from this as rental and how do I get started. I been stay home mom for years and now face situation that I must move on and support myself so this is very important to me. Thank you for your time and advise.
Hi Rita, You sound like the typical person who gets involved with Airbnb to help make ends meet.
If you want to be more sophisticated, you can build a relationship with a local business and start housing their visiting employees. For more on this, send me an email and ask about my coaching and training program.
You’ve got lots of options, so be encouraged.
My book, 40 Ways to Increase the Net Income of Your Rental Property is another great resource. Best to you.