It's only an asset if it puts money inside your wallet, otherwise it's a liability, says Robert Kiyosaki. Homeowners who don't monetize guest rooms and vacation rental properties actually possess "liabilities" that cost them cash, according to the real estate guru.
For example, each month couples take money out their wallet to pay the mortgage. But in reality, they're managing the property for the bank (the real owner) while paying Wall Street's profits (e.g. interest payments).
Airbnb is the world's biggest accommodation marketplace, a company now valued at $38 billion . But back in 2008 in San Francisco, the founders rented out air mattresses at $80 a night to scrap money for rent. They raised $30,000 selling cereal.
That kind of grind is notable but isn't unique.
Hosts who monetize an extra room or beachfront villa provide neighborly service. They leverage existing infrastructure. They comprise the sharing economy.
And the $150 billion hotel industry is making noise because the lines are blurring. Here's how owners can benefit from a rental property.
1. Have renters pay the bank. Get tax breaks.
To hustle means to get paid for your pad.
By having a rental property, which gets favorable tax treatment,money works for you. And you accumulate valuable properties as your nest egg -- paid for by renters and the bank.
"Owners get cash flow, and their expenses lower the tax bill," says Amiad Soto co-founder and CEO of Guesty, a property management platform for short-term rentals. "Phones, computers, vehicles, insurance, and office space can get deducted." Soto, a college dropout, founded Guesty with his identical twin brother in order to monetize their apartments in Tel Aviv while traveling. Today, Guesty is the highest-funded platform of its kind, according to Crunchbase. If that's not hustle, I don't know what is.
All those rental payments lower risk: Customers pay the bank, and owners remain solvent. They have a higher chance of eventually owning the asset free-and-clear.
2. Streamline property management.
Property management is a $14.5 billion industry in the U.S., and growing 9% annually.
Case in point: Airbnb alone has listings in over 100,000 cities and on any given night, 2 million people are staying in them worldwide, according to company stats.
A vacation villa or city condo with spare accommodation can collect rent without the high cost of hotel administration. Hosts pay 3% to Airbnb, according to the San Francisco, Calif.-based company.
"With tech platforms, it's easier to streamline operations associated with property management, and that makes it convenient for owners," says Soto. "These platforms enable hosts/property managers to automate tasks associated with their listings (bookings, payments, guest communication pre and post-stay and more) and therefore save time, enabling them to increase the number of listings they manage."
Moreover, cheaper rates that are sometimes offered by short-term rentals attract travelers, specifically younger generations in which travel has become a right rather than a luxury.
3. Stop speculating on the housing market.
Will it crash or won't it?
Warren Buffett says that in the past five decades, 70% of the stock market's returns have come from dividends, and only 30% from asset appreciation.
With rental income, owners wouldn't be so dependent on a bull market. They can monetize a property while still in good condition.
Buffett doesn't invest in gold or cryptocurrencies because they don't produce anything. He compares these to gambling because you'd have to bet that prices will increase at some point. That isn't true with productive assets like companies, bonds, farms, or real estate. These offer recurring proceeds in the form of dividends, yield, crops, cattle, and rent payments.
Cash flow is king. In the long-term, it unlocks a ton of value.