EP #17 - I Bought a $1M Airbnb During the "Airbnbust"...Here's Why

In this episode, Jacob shares the details of his first Airbnb investment —a lakefront property in Michigan. Despite the widespread pessimism of Airbnbs in the current environment and the complexities of this specific deal,  Jacob moves forward, excited about the potential of the property. He reveals the property's purchase price, financing, revenue projections, and business plan. If you've been curious about the world of Airbnbs this is a must listen!

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Transcript

Nancy: 0:00

This is the Financial Freedom Fighters Podcast

jacob: 0:13

Welcome everybody to the financial freedom fighters podcast. So I looked at our Spotify account and we have a perfect five star rating for the financial freedom fighters podcast, but we have 16 reviews. I'd like those review counts to go up and I'd obviously like to keep the five star rating. if you guys enjoy listening to this episode or any other episode, We'd really appreciate the, uh, five star view on Spotify, Apple podcast, um, wherever you listen to this we'll transition into what the episode for today is. And so. Ladies and gentlemen, Mike and I are your hosts of the financial freedom fighters podcast, but we were first and foremost, and always will be real estate investors ourselves. And we are not just sitting here talking about doing real estate deals and, you know, opining on what's happening in the real estate market. We are actively investing in real estate deals. And that is what we're going to talk about today. I have my first Airbnb luxury Airbnb. I'll call it under contract. in northern Michigan, and I want to break down this deal with you all, kick the tires on it, really uncover all of the details. I'll be very transparent about, you know, a lot of what went into this, especially some of the anxiety and the mindset. We'll talk all the numbers, without further ado, we'll kind of jump into it. So let's take a step back. Mike and I are predominantly long term rental investors, right? So we buy property, we get a long term tenant in there. That's going to stay 12 months or more, ideally more. And we have a property manager or I have a property manager, And That is still, I believe, you know, over the longterm going to be the most effective real estate investing strategy. And I think that that is where most people should start their real estate investing journey, because over time it's going to be, you know, The easiest, the most headache free, and it's the lowest risk strategy. It's not without risk, but it's the lowest risk strategy when you compare it to other real estate investing strategies. And that's where I started my career. That's where I'm investing. And I don't plan on changing that as being a fundamental core piece of my strategy, right? Long term rentals, I think are the way to go, especially over the long term. It's going to prove to be so there are two different strategies when we're talking about rental properties. the second one is short term rentals, which everyone listening to this is probably familiar with the short term rental concept, you know, Airbnb, VRBO. You're charging by the night, right? You're charging by the night. So you're going to drive a lot more revenue with that model, but with more revenue comes obviously a much higher management burden and much higher risk. You have people coming in and out of the property, potentially every other day, you know, you have a lot of turnover, a lot of wear and tear on the property. There's a lot of risk. In terms of the regulatory environment, we're seeing all that stuff, New York City banned all Airbnbs, right? So a lot of these metro areas are kind of taking a very hard line stance against Airbnb, so you have that risk. And Airbnb also, it's much larger purchases. You're buying nicer single family homes in, vacation markets. Right. And these are going to be bigger purchases and a much higher upfront capital investment, because you have to furnish the place and design the place. Right. And you're not doing that with the longterm rental. So there's just added risks there. And then the newer kind of entrant into the market, I guess that's not new anymore, but is, uh, the midterm rental strategy, which is somewhere in between if you're renting out to, uh, traveling nurses, traveling business professionals, and you're getting them for less than a year They're maybe on a And engagement for a hospital and they're staying there for three months or something like that. Right. And you kind of get the best of both worlds where you have higher revenue than long term rentals, but less management overhead for short term rentals, and that's kind of emerged as a nice strategy. And I'll say this over the course of my career. And I'm, you know, I'm, I'm barely scratching the surface. I'm going to implement all of these strategies, right? Mike and I constantly talk about what does a midterm rental strategy look like in Cleveland, because we have the Cleveland clinic there and things like that, so maybe that's a good strategy that could work there, We've even talked about short term rentals in Cleveland as well. So just kind of want to introduce this, that there's a lot of different approaches to this. I still believe that long term rentals are a good place to start because I would not have felt comfortable. with this up deal that we're about to talk about, if I didn't have the foundation of buying the long-term rentals that I've bought and having that foundation. And so that's kind of the, the backdrop of where we're at. so with that, this property that I've acquired or I'm under contract currently, right. And so our schedule closing date is a couple of weeks from now, but we've um, I would say have kind of overcome most of the hurdles, to be able to kind of get that clear to close. Like the appraisal just came in a couple of days ago, and that was kind of the last major hurdle. And we'll talk through all these steps. I think there's gonna be a lot of value in kind of talking about the life cycle of this deal for you, the listener. This is an Airbnb. It is a luxury Airbnb. It is a. Lakefront property in Northern Michigan. And this is one thing that I didn't know, right? Again, like I mean, my big proponents of investing in the Midwest, but I didn't know that Michigan. specifically Northern Michigan around these lakes are such attractive, local drivable vacation spots for people in the Midwest. and I did not know this, another point. So I joined the Airbnb coaching program, shout out to STR legend, Matt McCall Stillman, who is the coach of that program, who was a guest on the financial freedom fighters podcast. He is a broker. Realtor, and he's now an Airbnb coach in, in Michigan, and he has a 30 Airbnb units and he has a property management company there as well. So he, he knows Michigan really well, specifically Michigan Airbnb. And the gap in the market that he's highlighted is he has all of these data points of how his properties are performing. In these various spots in Michigan, but air DNA, which is a, a data service where you typically look at how much a property can do. It's like an underwriting software to get a sense of how much revenue could generate. The data is very sparse in Michigan. They just haven't kind of filled in those gaps. So a lot of the people that would be looking at Michigan or not looking at Michigan because of the lack of data, but because I know somebody. That is a local in that market that knows it really well. I can look at their properties as data points. Like if I can replicate that, then I have real data. That's kind of like backing up what the hypothesis is there. And so that's a big thing is I didn't know that Michigan specifically lakefront properties in Michigan were such an attractive investment. Um, in terms of. You know, family's just driving to Michigan and it doesn't necessarily need to be in like any one central location. People will go to different lakes in Michigan so that was kind of one big insight. So that's, that's where this property is. Northern Michigan, it's lakefront. And that's kind of like the backdrop of the deal. Now, why did I want to do a short term rental? it is not abnormal for a short term rental to cashflow thousands of dollars, uh, in a single month. And that is kind of the appeal of this. that comes with a lot higher risk. It comes with a lot more work. If you can get a property that's going to cashflow two, three, four, 5, 000, you know, depending on the property. it changes the formula for financial freedom, you know, in a way that is meaningful, at least to experiment, I'm not saying I'm going to have one successful Airbnb and that's it. I'm going to, I'm going to quit my job. Hey, if we can get something that's cashflow in a thousand, 2, 000 a month. A little bit more. That's something that's worth attempting to do, but it is not without risk. And so the way I de risk that is one, I align myself with somebody that is a local market expert and someone that's done Airbnb before. So I think that's kind of one takeaway here. This is a team sport. I didn't know anything about Michigan. I needed to be aligned with someone that knows a lot about the market is specifically Airbnb's in Michigan. So I've done that. The second way that I've de-risked this is, you probably have heard about the Airbnb bust. You've heard that short-term rentals are getting crushed. There was a, a gold rush, For short-term rentals in 2021. You could just throw IKEA furniture in any property, throw it on Airbnb, and you were cash flowing a ton. Those days are over. Those days are over. You're not going to just be an amateur operator in the STR space and make a ton of money. You're just not, you're probably going to do worse than long term rentals So there's this concept of saturation is the market saturated. And one of the, you know, the STR minds in the space, Kenny Bedwell, he has a company called STR insights. He always says that a market is not saturated. A bedroom count. Or a property type is saturated. So what does that mean? That means that in one particular market, right? Let's talk about the lakefront market in Northern Michigan. It is entirely possible that there are way too many two bedroom Airbnbs. But if you then go to that same market and you look for a five or six bedroom house, there is probably only going to be a handful of properties that are there in that bedroom count. So again, a property itself. Can be in a market that is quote unquote saturated, but can still succeed in that market to kind of bring this back to this specific deal, this deal is 6, 500 square feet, So it's a big boy. It is a big, big property. It is lakefront, right? So it is a prime location. It is literally steps from the water. So it is a great lakefront location. So when people come to this town to stay on the lake, this property is in prime location for that. And there is a built in amenity in the form of an indoor heated pool. Pools are becoming quite a big deal in the Midwest because not a lot of homes have them. And this is an indoor pool and it's heated. And so this should help a lot of the seasonality that does kind of trouble Airbnbs in the Midwest during the winter specifically. And then the last thing to the regulations are a big, big factor for Airbnbs. And so we called up the actual township and we verified with them, uh, what is the temperature, what is the current regulations on Airbnbs? And this is an STR friendly township. And so those are the three ways that we kind of, you know, Have become comfortable with this idea. And for you, the listener, that's how we want you guys to think about whenever you're approaching a strategy, outline the risks that are in front of you with the strategy, right? Whether that's long term rental, midterm rental, short term rental. I talked about three different risks. I had no local market knowledge. I de risked that in a certain way. there's literally Airbnb's that are doing terribly right now because they're just a two bedroom or a one bedroom or even a three bedroom house. And people are just choosing hotels, right? So there's a problem of saturation. And so I de risk that by only focusing on bigger properties and unique properties in locations, that will lend itself well to those types of properties, those super properties, as some people call them. And then the last one is the regulations. And I de risk that by doing the work, doing the research and picking up the phone and calling the township, Because I think a lot of people are going to do a Google search and nothing is going to be more valid than just calling up The township or the city, and just being like, Hey, what is the stance on Airbnbs? are you looking at short term rentals in a metro area? Right. Or are you looking at short term rentals in a destination type of market? Because for me in particular, I did not feel comfortable there. There are people probably making a killing on Airbnbs in metro areas because, you know, people, people want to stay in Airbnbs sometimes versus hotels. Right. Uh, but for me personally, I didn't feel comfortable with that because of the temperature of the regulations, like that economy of the metro area obviously doesn't depend on the Airbnb. Right. There are jobs, there's industry, there's a ton of different things. But when we're talking about these destinations, these big lakes, these places where people go to stay, to vacation in the summer and in the spring, that's where I became a little bit more comfortable. So that was just a little breakdown of the thought process on the strategy. And a little bit of breakdown on why, you know, I felt Airbnb was worth experimenting. And another thing, I said this in a different podcast when we had Steve on, everyone is afraid of Airbnb. I think there's a lot of good reasons to be afraid for Airbnb right now. if you're in a place where regulations is not favorable, if you're bought, if you're just buying a run of the mill and you have a Ikea furniture and designed house, I think there's a lot of reasons to be afraid, but with fear comes opportunity. And if you are entering it at the right time, not just, not just STRs, but any type of strategy, when there's fear, there's opportunity, You got to be fearful when others are greedy. And greedy when others are fearful, there's a lot of fear in the Airbnb market right now. And that is what gave me the signal to say, Hey, I think now's a good time to attempt to do this, but I want to go about it the right way. So that's a little bit of background on like my thought process of this. And hopefully that's helpful. Now, how do we find the deal? So Like I said, I have a realtor in Michigan, but I'm also a part of this coaching program. And the cool thing about the coaching program is everyone is in this program helping each other find deals. That's kind of been what like a very cool part of it. And there's a lot of people in the program there in Michigan specifically. And so this particular deal was sent to us by Someone in the coaching program, shout out to Jared. He's also a listener of the podcast and he is obsessed. He's actually studying for his real estate license in Michigan right now, but he is obsessed with finding deals. He is like every single deal that hits the market probably has a million different searches right now on the MLS for that. And he's just sending deals. He knew my buy box, which we'll kind of get into. And he sent this to us and I was in Mexico at the time. for my cousin's wedding and this deal came across my desk. I was drinking margaritas. I wasn't in the mindset. to buy this deal, but it checked all my boxes. It was lakefront. It had all the amenities, right. Indoor pool. And I underwrote it quickly and it hit all my numbers. And we'll go over the numbers more specifically. But I was in Mexico and so I could have said, you know what, let me just wait till I'm back from Mexico. Let me just wait till I'm back. But every single deal that I've gotten I was one of the first people to offer on that property on all the deals I've gotten. I was one of the first to submit an offer. And that is an insight for you, the listener. If it hits your buy box, if it hits your criteria, You have to pull the trigger. because If you just delay it, that property is going to get snatched up. it just so happens, we were the first one to offer on this. We're the first ones to offer on it. We had a good offer. And so we can kind of go over the, the, the offer right now. It was listed for 7. 99. That was a purchase price. It was listed for 7. 99. And we went. Right at list we offered right at list and it had been listed before at a much higher price than 900 and kind of over time they took it down and took it down. And that's another factor of the short term rental market. That was kind of interesting to me because. A lot of these properties right now, they're bigger purchase prices. Obviously these are, there's a much bigger purchase price than some of the properties that I purchased in Cleveland. But when you had a property, a good property in Cleveland that was going to cashflow and it's a nice clean property, that thing would not sit, that thing would get multiple offers in a single day. It would be done and dusted probably within a couple of days, because that's what it, that's what it is with longterm rentals. People know when they spot a good longterm rental, the competition is fierce. Now. Short term rentals in a high interest rate environment, these things sit a little bit longer because they're much bigger purchase prices. The short term rental market is a lot smaller in terms of the appetite of the investor because of the higher risk. And so these types of properties, they don't necessarily go the quickest, right? Because of the higher purchase price because of the high interest rate environment. So we went right in that list. we got our offer accepted, we got our offer accepted. And at that point it was go time. It was go time. This is the biggest acquisition that I personally have ever done. And it is a completely different strategy. And so I kind of want to walk you guys through the numbers of what we are expecting this property to do, So we'll kind of go through the financials right now. So the purchase price, like I said, was we, we offered at seven 99, but what we ended up doing. we ended up increasing the purchase price to eight Oh seven, but doing eight K and seller concessions effectively the net impact to the seller. Is nothing, but you're getting a little bit of help at closing with this structure because we're getting eight K less that we need to bring to the table. Um, in terms of closing costs. So that's what we ended up doing. Eight Oh seven purchase price with AK and seller concessions. Now, how do we finance this? This is another element, another wrinkle to this, that is unique to the short term rental space. In the short term rental space. A lot of people use second home loans, Tony J. Robinson talks a lot about this. Every call talks about this, like this loan product is available to short term rentals this. opens up to you lower down payment financing than a traditional investment property. Now, typically this is around 10 to 15%, but this particular lender 5 percent down, second home loan, no PMI, So they keep it on their books. You have to have a relationship with the bank, right? So you have to have a, an account with them with 25, 000 in the account, now I want to highlight a couple of things here, right? Low money down is a risk. taking this approach. You're not walking into this with a ton of equity, But in the short term rental space, this opened up a lot of different options for us, because we are going to need to furnish this. We are going to need to rehab this instead of putting all the money in the down payment, which there would be a sizable down payment. If it's 20 percent down, We are taking the low money down approach, leveraging the financing that's available to us, which I've never heard of this before. 5 percent down second home loan, no PMI, very, very rare loan product. And so that's how we financed it. Now let's talk the numbers. I think this is probably a lot of the questions that, that people are having is like, okay, that's a big purchase. How are you justifying this type of purchase for the short term rental? What do we expect this thing to do? so the underwriting process for short term rentals is a lot different than long term rentals and long term rentals. You can go to rentometer, you can go to Zillow, there's a bunch of different tools and the variance for that. It's not that wide, You can't do that with Airbnb. you're going to be wildly off. It really depends on the property. It really depends on the bedroom count. Really depends on the amenities, really depends on the design, right? So there's a lot more work that goes into the underwriting process itself. Because if you're bad at underwriting Airbnb, this thing could be, it could be a disaster. You could be wildly underestimating, overestimating your revenue, wildly underestimating your expenses. So you have to take a lot of care. Now, luckily. This is what I would consider to be one of my strengths, right? Is the number side of real estate investing. I work in analytics in my day job. I take the data very seriously. I always have. And this is the area of this part where I was like, I am not going to mess this up, right? I'm going to be very conservative. I'm going to do everything that all the big STR investors say to do in terms of analyzing the deal. So the first thing that you have to estimate for Airbnb is revenue, You have to estimate the revenue. Okay. And the way you typically do this is you look on air DNA, right? Air DNA is a data aggregator. It scrapes all of the data from Airbnb, VRBO and basically says, this is what we estimate this particular property to do. It's a pretty cool service. but you can't just take that plug in your address and then trust what air DNA is going to say, Because that's not going to work either. Air DNA is a good. Starting point, but you need to kind of peel back the layers of like, okay, how much can I expect this to do? So what you have to do, You have to build a strong competitive set of similar properties with similar attributes and similar amenities. And so we go through, we try to find, you know, a good set of properties that are this size, that have this bedroom count, that have a pool, right. That are lakefront. And you kind of go through that. And in that exercise, you kind of observe this is, you know, a high, medium, low kind of approach of what the revenue range is. And we actually had the benefit of having our Airbnb coach, right. Who analyzes a ton of deals also kind of validate this on his end. We also had. literally the head of data analytics at TechVestor. Which is the Airbnb syndication. He actually underwrote this property as well. John, John Bianchi, super smart data mind. He actually underwrote this property as well. So we, we triangulated all of these different kind of expert opinions. And what we got to is we, we think that the property is going to do 200, 000 gross annually, 200, 000 gross through the analysis of having, you know, A competitive set of properties, understanding the attributes, So there was a range here. The range was about one 75 in the lower end of the range to about 240. And so what I felt comfortable was saying that this property is going to do 200, 000. So that's where we're kind of landing with the revenue. Now we'll run through the rest of the numbers. There's a lot easier. To kind of quantify the rest of the number. So I'm estimating about a 40 percent expense ratio for the operating expenses, right? So if that is 200 K that's out 80 K in operating expenses. Right. And so we're talking about cleaning. We're talking about utilities, obviously for the Airbnb. We're talking about maintenance. We're talking about all the operating expenses that you typically have for. A long term rental, but also additional operating expenses, right? Cause you have the platform fees for Airbnb. the cable, internet repairs and maintenance as you normally would so you want to kind of take those and those are the operating expenses. And here's a big thing. Here's a big thing to call out. We are going to self manage this property. In the Airbnb space, it is prohibitive, typically prohibitive. If you want to cashflow, what you typically would cashflow on Airbnb is prohibitive to have a property manager because they charge 20, 25 percent of gross revenue. And in the long term rental space, that's eight to 10%. And that is a much more palatable number. But 20 percent of gross revenue for Airbnb, and these numbers are much larger, the gross revenue, you're talking about 60 percent of your profit. 20 percent of gross is 60 percent of net. So it's prohibitive. And so we are not in the, in my operating expense. It is not including property management. That's, that's a very important point. So that's a 40 percent expense ratio. Typically what I see in underwriting in Airbnb is around 30, 35%. That's where I see most Airbnb people underwrite the expense ratio. So I'm being padding it a little bit more at the 40%. moving on to the debt service. So we had 200 K gross revenue, 80 K operating expenses and 70 K debt service. So that's just mortgage and interest. Is our debt service there. So we're, uh, remember to remind the listeners, we went low money down, 5 percent down, no PMI, but it's a low down payment. And the interest rate is high on this because it is a different type of lending products, right? So it's a high interest. So this is where a lot of risk in the deal sits. we have 200 K in gross revenue, right? And we talked about how we got to that number. We have 80 K in operating expenses, which is conservative, but we think that is a smart thing to be conservative in this realm. We have the debt service at 70, 000. So if you take the operating expenses, put this plus the debt service, that's 150, 000, In total. outflow to the property. So if you take that, what is left over is 50, 000 in net cashflow, obviously divided by 12. That is a little over 4, 000 a month in net cashflow. And this ladies and gentlemen, I'm not saying this is guaranteed. I'm not saying that there's not going to be variance here. I'm not saying that we're going to get this in year one. But if we can get to this, that is a single property that is on average, right? And there's going to be seasonality here, but on average cash flowing at 4, 000 a month, and we will see, right? There's risk here. There's massive risk here. There, there's a lot of risk here. And that's what I want to kind of highlight to the, uh, the listeners here today is that I am taking a calculated risk. but if it does work, it changes, the financial freedom formula or the equation in a way where it would take several, several long term rentals over a longer period of time to get to that point for this one property. And it's worth the experiment is kind of all I'm saying. It's worth the experiment and that to kind of round it out. What is it going to take? You know, what is the upfront capital that it's going to take the downpayment that the furnishing the rehab that we're estimating all this stuff, because that is one of the big roadblocks to, to Airbnb is the upfront capital costs, right? If you're talking about a long term rental, you're talking about the down payment, talking about the closing costs, maybe some light rehab, right? Depending on the property you're buying, but for an Airbnb, You're talking about design rehab furniture and furniture is a big cost. And so what are we estimating for a total all in cost? That's around 200, 000, That we're estimating for total all in costs. Now that is not a small amount of money. And it is much more than even I, myself would typically be looking to place as an investment, me and my wife. And so that is where it came into the equation that said, okay, I'm an investor. How do I problem solve? I brought a partner onto this deal. I was talking to my best friend. He also is in real estate and he's been wanting to kind of like make an investment. And for a lot of the long term rentals, I talked to people all the time. They're like, Hey, do you want to do a deal together for the, for the long term rentals? Doesn't make sense. Right. I don't need, I don't need a partner and it's going to take a long time for that to make sense. It doesn't make sense. But for Airbnb, if we are able to generate the profit that I'm expecting to generate, maybe it does make sense, right? Maybe it doesn't make sense to partner. So as an investor, I didn't want to invest 200 K of my own capital into this. So I said, okay, like. Let me, let me bring a partner in. So I brought my partner in Kevin into the deal and the cash on cash return of this, right? For the investor is it's going to be 50 K of net cashflow on 200 K of capital invested. So that is a 25 percent cash on cash return, right? So within four years, potentially. If we're able, if this works out, then we're able to get all of our capital back. Now, those are the numbers at a high level, but I want to stress this. I want to emphasize this underwriting is good because you want to know your numbers and real estate is a numbers game. But I do not think for a second, for a second, that it's going to pan out exactly the way that I have it on my spreadsheet. I don't think that for a second, I am an investor for the longterm, so I know what's going to be a rocky road, especially the first year of getting an Airbnb operational and things like that. If we listed this property on Airbnb, it's a four bedroom house, right? But it's a four bedroom house in 6, 500 square feet. And so there are room for more bedrooms in here. There are room for more bedrooms in here. And this property is built in the early two thousands. And I don't think a lot of the interior has been updated since the early two thousands, but to get this property to its maximum potential, we think we need to turn this four bedroom house into a seven bedroom house. And we need, we think we need to kind of update some of this interior. that rehab portion is kind of how we're thinking about allocating the rest of the budget there. now this is a piece and I want to highlight this with listeners because I think this is very real. I've never done a remote rehab before. And this is probably part of the deal that's giving me the most anxiety, because I know that there's a good amount of work that needs to go into it. And even getting to the point of trying to understand the budget, I'm still talking to contractors as we speak, trying to get a firm budget of the scope of work that I have right now. And so I, I could be off, right? I could be off. I mean, we're going to close on this property, but I could be off. I'm not blind. I'm not blind to the fact that I don't, I really don't know what I'm doing in this regard. Right. And I, I, I'm g I'm going to be at the. The whims of the general contractor that I partner with, the people that I'm working with and how I manage this. But that is kind of like how we're thinking about it. Now I've, I've semi validated this with like high level conversations, but the contractor still need to get in there, get like high fidelity bids. They need to actually like visit the property. And I'm actually traveling to the property in a couple of weeks with my business partner, meeting with some of the contractors doing this, but this is the work. Guys, this is the work of being a real estate investor, feeling the anxiety let me tell you, I have lost sleep throughout this closing. I've lost sleep. I have almost several times backed out of this deal, several times backed out of this deal. Thought I'm over my skis. This is a lot of money to be investing in a deal. I've never done this before. talking to contractors and I have no idea what I'm saying. I have felt all of the emotions in this deal, but the one thing that kind of brought me back to reality is we got the appraisal two days ago, and just for the listener, the appraisal is kind of like the last step of the transaction process where the bank is validating that this thing is worth what we think it's worth. So that they can lend up to that amount, right? So they can lend up to that amount. Now, if it appraises below value, that then you have a problem, then you have an appraisal gap. And we've talked about this in past episodes. So this property, the last hurdle to clear was it needed to appraise, It needs to appraise at the 807 purchase price. That is what we were looking for. I got the appraisal back two days ago and it appraised for 987, 000. My realtor in Michigan said he's never seen it before. Uh, appraisal this high. we'll break this down, but what this means is we bought a property on the market for 180, 000 below value. That doesn't happen very often. And I knew that this was a special property. I knew that it had the makings to be a million dollar property, but to have the external third party kind of validation of this really brought it back home for me and said, okay, now we have some options because we walked in low money down, but if the value, if the appraisal is correct, then we're effectively walking into this as almost as if we put a traditional kind of down payment with the amount of equity that we have in the property now. And so that opens up a lot of different exit strategies down the road, What if the rehab does increase the value, right? What if the rehab takes it above the million dollar Mark and adding the bedrooms and updating the interior and things like that? What if it takes it to, you know, even higher? And what if the interest rates come down, And what if we're able to refine to a better loan product at a much higher value? I don't know if it's going to be. A perfect cash out refi or a burst or, or whatever, but it opens up options that we have this equity that we didn't think we were going to have. And so when we got that appraisal, I said, even if this isn't a monster Airbnb, there are exit strategies that are open up. You have to think about all the exit strategies. You have to think about the different moves that you can make. And so that told me right there, you know, despite the anxiety, despite everything, I was like, I'm pushing forward with this deal. We're going to make it happen. And now we're just waiting for the clear to close. I hope this was helpful to you. it is my first Airbnb. I am Jacob. You can find me at cashflow saga with that, ladies and gentlemen, we are the financial freedom fighters podcast. We will see you in the next episode. Peace.

Nancy: 28:35

Goodbye