Is a crypto hedge fund better than buying crypto?

crypto hedge fund

Crypto hedge funds are booming. So should you be buying cryptocurrency or is it better to invest in a managed fund that focuses on crypto? A crypto hedge fund is a managed investment fund that offers investors exposure to digital assets without actually owning the asset directly. But why invest in a crypto hedge fund when you can just buy crypto? In this article we help you weigh up your investment options. We’ll cover what crypto hedge funds are, things you should know before investing in a crypto fund, their performance versus owning crypto outright and the top 5 crypto hedge funds by assets under management.

What is a crypto hedge fund?

A crypto hedge fund is a type of investment where investors pool their funds together to invest in cryptocurrency assets. Crypto hedge funds are usually operated by an experienced crypto trader or group of traders who have years of experience trading crypto. The fund manager(s) will use the capital from the crypto hedge fund to buy crypto assets, such as Bitcoin and Ethereum.

Hedge funds are known to employ more aggressive investment strategies than other types of funds (ETFs), differentiating them as an investment vehicle. There are different types of investment strategies from longing, shorting and arbitrage trading to more fundamentals based strategies like relative value or tech analysis. The chosen strategy will impact that risk profile of the fund.

The word “hedge” is used because these funds historically focused on hedging risk by buying and shorting assets concurrently, in a long-short equity strategy. They’re not called hedge funds because they protect investors from all of crypto’s investing risks however.

On top of these trading strategies, crypto hedge funds will often stake, lend and borrow coins and tokens to increase the IRR of the fund.

Crypto hedge funds don’t just hold crypto assets. They can invest in crypto adjacent assets. For example, there are funds that invest in and trade blockchain stocks. These are stocks of companies that provide Blockchain products and services.

Crypto hedge funds are different from traditional hedge funds in that they focus only on digital assets associated with cryptocurrencies.

Crypto hedge funds are booming

According to PwC, there were 150 to 200 funds at last count. These funds have total assets under management (AuM) in the billions.

The number of funds set up correlate directly to the price of Bitcoin which is no surprise. Because Bitcoin is booming, so is interest in these kind of more aggressive crypto specific funds.

crypto hedge fund

Who is investing in them, and how much?

The funds, by their structure and the way they’re regulated, target already wealthy investors. Because they are seen as ‘risky’, the US Securities Exchange Commission (SEC) limits access to hedge funds to ‘accredited investors’. Accredited investors have a net worth of more than $1 million, not including the value of their home, or annual individual incomes over $200,000.

Basically, if you’re a US citizen but you’re not already rich you can’t invest in in any kind of hedge fund, including a crypto one (but by all means take your cash to Vegas and blow it all on black…).

It follows that around 50% of crypto hedge fund clients are high net worth individuals followed by family offices and ‘funds of funds’. The average investment in crypto hedge funds is $1.1 million.

Crypto hedge funds are traditional investment vehicles. They’re a known quantity to traditional investors and these are the investor types they will continue to attract.

3 things to know about crypto hedge funds, before investing

  1. Fees – You have to pay them and they’re high. You pay both management fees AND performance fees for the privilege of investing in these funds.
    1. Management fees – average 2.3%
    2. Performance fees – average 22.5%. Often increase with a higher IRR.
  2. Buy-in hurdles – if you don’t have at least $100k you’re NGMI – not gonna make it. You won’t meet the hurdle rate to invest. You also need to be an accredited investor (see below) and prove it, which means paperwork! Meh…
  3. Redemption gates – you can’t take your investment out whenever you want. There are rules about when and how much of your funds you can access at one time. This, they say, it to prevent pricing impacts from large redemptions. So it’s there to ‘protect’ clients, but it just goes against the grain a little.

Are crypto hedge funds better than owning crypto?

The trade offs

Let’s look at the trade offs and benefits of crypto hedge funds, starting with most important part first – cost and performance.

We know the costs or fees are 2.3% management fee on average plus a 20%+ performance fee. So, what does the average hedge fund performance look like, versus owning cryptocurrency outright?

Median performance of crypto hedge funds in 2020 across all investment strategy types was 184%. Here’s how that breaks down:

crypto hedge fund
source PwC

But don’t forget, you’re handing back 20% to 30% of that in fees.

If you had just bought and held Bitcoin your investment would have returned 305% over the same period.

And that’s Bitcoin – the largest large cap crypto of them all. Had you chosen instead (as we did) to buy and hold a lower cap altcoin, like the Layer 1 protocol Fantom (FTM), your return over 2020 was 1088%. That’s a mighty return for investing yourself, with zero buy-in hurdle rates and no performance fees.

And here’s something else to consider when it comes to crypto hedge funds. They will invest conservatively for a bunch of reasons; reputation, performance, regulatory obligations etc. In this way, crypto hedge funds are no different from traditional hedge funds.

A recent PwC survey revealed that crypto hedge funds predominantly trade the large cap ‘less risky’ coins that are slower to move and less likely to moon. 92% of crypto hedge funds traded Bitcoin ‘BTC’, followed by Ethereum ‘ETH’ (67%), Litecoin ‘LTC’ (34%), Chainlink‘LINK’ (30%), Polkadot‘DOT’ (28%) and Aave‘AAVE’ (27%).

Larger cap = lower risk = lower reward.

crypto hedge fund
The coins crypto hedge funds typically trade. Source PwC

So what are you trading returns for when you invest in a crypto hedge fund? Exactly what do you get out this kind of investment (if you do meet the buy in hurdle that is).

The benefits

Time & effort saved

For the fees you pay them, fund managers will do the research for you. They will also manage the blockchain transactions for you. You don’t need to learn anything about crypto – how to use on and off-ramps from fiat, how transact on the blockchain, where to store to coins, etc. etc.

Seen as less risky

Hedge funds use more aggressive investing strategies than other funds, but crypto hedge funds are still seen as less risky than owning crypto itself. Why is this?

Firstly, the fund managers do the due diligence for you. They research the companies, projects and code so you don’t have to worry about putting your money into something that turns out to be a rug pull or some other scam. Fraud, scams and rug pulls are a realised risk in crypto for many investors.

Secondly comes diversification. A hedge fund uses the money in the fund to buy into multiple coins, tokens and projects. The concept being, your money is diversified to help reduce single asset risk exposure and soften market volatility.

While they will help you avoid some of the risks inherent in investing in crypto (check out our article on this here), crypto hedge funds are still exposed to broader crypto market volatility. Although they actively seek to manage the impacts, it’s more to dilute than avoid them.

No asset custody worries

You might sleep better at night knowing that you are not responsible for keeping your crypto safe from cyber hack yourself. That’s because buying into one of these funds, you won’t really own any. No need for cold storage wallets, private keys, seed phrase storage, or any of that palaver.

Tax advantaged

This is a weird one. We’ve always had trouble with the concept of picking investments specifically for the tax advantages, but it can be a nice by-product. If you’re a US Citizen, hedge funds can qualify to be held in IRA and Roth IRA accounts.

Crypto hedge fund list

With over 150 crypto hedge funds in the market, it’s difficult to nail down exactly which one might be right for you. This is precisely why there’s a whole industry of brokers available to refer you to their crypto hedge fund of choice (for a commission or trailing fee of course!). To help out, here’s a list of crypto hedge funds but by no means is it exhaustive. Some of the better known and large fund managers not on the list include:

  • Grayscale Investments
  • Pantera Capital
  • Galaxy digital
  • Invictus Capital and
  • Coinshares.

Is a crypto ETF a good investment for crypto beginners?

crypto ETF

If only 13% of Australians own crypto, are the 87% about to jump in? It’s about the same in the US. Bitcoin is just off all time highs after its epic retrace in May 2021. It’s probably time for the FOMO set in. If you’re a crypto beginner and looking for ways to get involved with crypto, you might have heard about the new crypto ETF. The first Bitcoin ETF launched in the US recently. Australia and Canada have followed suit.

However, before you jump on the bandwagon, there are some things that you need to understand about this historic cross-over of traditional and crypto markets. In this article we will cover the new Bitcoin ETF, who it’s good for, and 5 reasons any crypto newbie might think twice about investing.

What is an ETF?

An ETF is an Exchange Traded Fund, which basically means that it’s a fund listed on the stock exchange.

An ETF is an investment fund that (usually) owns the underlying assets (shares of stock, bonds, oil futures or gold bars) and divides ownership of those assets into shares. These can be traded on exchanges just like individual stocks.

This differs from buying shares in companies because instead of owning fractions of businesses, you are invested into funds containing lots and lots of companies within a particular investing theme.

As the crypto market has matured, many have called for the creation of a crypto ETF or a Bitcoin ETF.

Can you invest in a crypto ETF today?

The answer to that question depends what country you’re in!

If you are in the US, you can now invest in a Bitcoin Futures ETF – an ETF based on the Bitcoin Futures market.

In the last week, US regulators have approved the first US Bitcoin Futures ETFs: ProShares’ Bitcoin Strategy ETF (Ticker BITO).

Several other fund managers, including the VanEck Bitcoin Trust, Invesco, Valkyrie, Ark Invest and Galaxy Digital Funds, have also applied to launch Bitcoin ETFs in the United States but as yet these are not approved.

The ProShares Bitcoin ETF is a futures based ETF.

The are no Bitcoin or crypto ETFs (either Futures or Spot) approved for investment in Australia, but there are several in Canada and Europe.

crypto ETF
The first Bitcoin ETF launches in the US today

Futures vs Spot Bitcoin ETF

Futures-based ETFs are different from spot market ETFs in that they track futures contracts rather than the spot price of an asset. A Bitcoin futures ETF follows Bitcoin futures contracts rather than the value of bitcoin itself. As a result, the ETF’s price will not correspond to the price of bitcoin.

A futures ETF is a ‘synthetic ETF’ because it’s based on financial derivatives (futures contracts) traded at the Chicago Mercantile Exchange (CME). The fund BITO doesn’t buy and sell any Bitcoin and you don’t actually own any Bitcoin by buying into fund!

A spot Bitcoin ETF is in the works. Word is that trust fund manager Grayscale will soon apply to regulators to have their Grayscale Bitcoin Trust fund changed to a Bitcoin ETF.

What is the difference between a Bitcoin ETF and a crypto ETF?

A Bitcoin ETF will follow the Bitcoin spot price or futures contracts. It doesn’t cover other cryptocurrencies. It’s movement up or down relates only to Bitcoin’s movement.

A crypto ETF will track a broader basket of cryptocurrencies. It’s movement / price is weighted to the fund’s allocation of this basket cryptocurrencies. It make sense that the first crypto ETFs are likely to track a basket of large cap coins or more established crypto themes, like Decentralised Finance coins or Layer 1 protocols. Although there seems to be growing support for an Ethereum ETF to launch next.

Why you may be tempted to buy shares in a crypto ETF

Exposure to a new asset class

Crypto ETFs are new. Hell, mostly they still don’t even exist. But they’re coming, and large investment houses will undoubtedly be successful selling these funds to their clients as a new ‘must have’ asset class in their portfolio. They will espouse a bunch of benefits about an ETF being less risky, easier to buy and out of, more passive – all appealing traits for new crypto investors. Will you be convinced? Let’s look at these.

Diversification

If you buy into a crypto ETF that holds a basket of cryptocurrencies, then on the surface at least your portfolio is more diversified than owning one coin and you minimise risk. How? Your investing eggs aren’t all in one basket. Also, a basket of crypto may slightly dampen the market volatility of exposure to a single coin. That said, large cap crypto and crypto asset classes can move together and move wildly, so you’re not avoiding volatility altogether.

Easy to buy and sell

Investors who want exposure to cryptocurrency without actually holding any will find it easier to purchase via an ETF than going out and buying Bitcoin directly. This makes crypto ETFs accessible to traditional investors that don’t want to go through the learning process of setting up their own crypto wallet and navigating the on and off ramps into the crypto ecosystem.

For example, you can buy shares in an ETF through a regular stock broker or on an easy to use stock app straight from your mobile. To get crypto is a bit more involved and there’s a learning curve.

Reduced investing risks

Crypto funds are still relatively new and we’ve posted extensively about the different risks of investing directly in crypto (and how to manage them).

If you really don’t want to take the plunge buying into a crypto ETF could help avoid some of these risks – like human error in navigating the block chain. Any ETF fund manager will also do the due diligence for you. They vet the coins in the basket, so your risk of things like project failure (when the coin goes to zero) and rug pulls are theoretically less. You also don’t need to think about coin custody and cyber hacks because you won’t actually ever own any cryptocurrency.

A crypto ETF is good for crypto (but is it good for you?)

A crypto ETF is expected to bring more money into the crypto asset ecosystem. Mainstream investors will see it as opening up the possibility of large gains to traditional stock market investors. The common view is crypto ETFs will bring new money, new investors and greater legitimacy into the crypto ecosystem.

This is good for crypto hodlers like us because demand for crypto assets that we own will increase.

The price of Bitcoin has already pumped more than 10% on the news of the Proshares Bitcoin Futures ETF and the ETF will not even hold any Bitcoin!

But in the end, a crypto ETF is a traditional financial instrument. That means already obscenely rich middlemen taking their fat fees and others controlling your money. Ask yourself, is buying into a crypto ETF a good way to start your crypto investing?

Here’s 5 reasons we don’t think so..

5 reasons to think twice about buying a crypto ETF

1. You’ll pay more

There are additional fees associated with using a fund set up by institutional investors. Instead of paying more of you hard earned fiat, you can buy crypto directly and pay less for the opportunity.

2. Wall Street gets richer

ETFs involve middlemen who clip the ticket on your investment. If you’re cool fattening their pockets, then go you. But if you know about the idea behind crypto and believe in its human good, then making Wall Street richer should grate on you.

Crypto is about decentralised system of finance where opportunity isn’t controlled by Wall Street and everyone invests from a level playing field.

3. You miss out on DeFi opportunities

Owning cryptocurrency can open up the opportunity for gains in addition to the underlying asset price movement. For example, holding a crypto asset can qualify you for an ‘Airdrop’ in which you’re gifted another asset by the same crypto project (for free). We’ve received many an Airdrop that has turned into sweet profits in the past. You won’t get this owning shares in an ETF.

DeFi is also a killer opportunity to compound your crypto investment gains. You can own a crypto, be exposed to its market price and also earn passive income from lending that crypto or staking it in a DeFi protocol. An ETF only exposes you to the price gains or losses of the underlying crypto asset.

4. It’s double the market risk

ETFs are part of the stock market (fiat currency based). Irrespective the asset an ETF covers, it is arguably influenced by overall stock market movements and sentiment. On top of this, a crypto ETF will be influenced by crypto market movements and sentiment. The question is, do you want to carry both of these risks in the one investment?

5. It’s not the future

You don’t need to learn anything new to buy a crypto ETF. This may seem like a benefit, but is it in the long term? We would argue that with digital assets and blockchain tech growing exponentially, the sooner you learn about how to use blockchain technology and transact cryptocurrency assets, the better off you’ll be in the long term.

Conclusion – invest in yourself not Proshares

None of this is financial advice peeps, be we think crypto is here to stay. Digital assets are a legitimate asset class and a growing part of our asset portfolio. The opportunities you open up from understanding the crypto ecosystem right now are asymmetrical.

But they won’t always be.

It’s up to you. You can invest in a crypto ETF and you might get some nice gains. Or you can invest in yourself, learn crypto and use it like we have to get to your financial freedom.

If you want to join the digital asset revolution and just by crypto instead, check out our starter guide to the right of screen. It’s free and it will get you buying your first crypto safely in 6 easy steps. It even has links to everything you need on the internet. -> -> ->

If you want to buy into the new Bitcoin Future’s ETF we’ll provide an updated link to the fund as soon as the product is public!

How to manage Airbnb properties for others

manage Airbnb properties

If you want to escape the office and be your own boss you we know of a great income option that can be as big as you make it: manage Airbnb properties for other people. In this post, we’re going to answer the biggest questions for wanna be Airbnb managers and co-hosts. We’re Superhosts who manage our own and other people’s Airbnb properties.. So we know a thing or too about what you’re in for and this guide comes from the heart! Here’s what our article will cover:

Contents

  • Can you manage and Airbnb for someone else?
  • How does it work?
  • A gap in the market for good Airbnb managers
  • Different business models to manage Airbnb properties
  • How do Airbnb property managers get paid?
  • Do you need a real estate license to manage and Airbnb?
  • How much work is it to manage an Airbnb?
  • Do you need money to get started?
  • How much can you earn?
  • 4 steps to start managing Airbnb properties for other people
  • Conclusion
manage Airbnb properties

Can you manage an Airbnb for someone else?

Yes. You definitely can manage an Airbnb for someone else. We would go so far as to say there are tonnes of Airbnb owners out there looking for reliable people to manage their Airbnb properties! We’ve been in those exact shoes.

The best thing about it? There’s loads of different ways to set it up to suit the services you offer and the needs of local Airbnb owners. Some that don’t require you to obtain a real estate license.!

How does it work?

It all starts with Airbnb owner wanting someone to manage their Airbnb property on their behalf. The types of tasks Airbnb owners often need help with include:

Existing Airbnb listings:
  • managing the listing on Airbnb, including bookings, the calendar and nightly rates
  • guest communications and resolving guest issues with Airbnb
  • managing or doing the cleaning and laundry
  • keeping inventory inside the Airbnb
  • managing property maintenance and upgrades
  • any social media (mostly on vacation rentals)
New Airbnb listings:
  • styling and set up for the Airbnb – sourcing furniture, linen, decor and other supplies and setting up the home within a budget
  • listing the property on Airbnb – setting up the account, guest communications, professional photography, payment methods etc

Airbnb management services

These tasks listed above are the types of services you would target when you manage Airbnb properties for others.

Airbnb owners may want all or just some of these services. For example ,some Airbnb owners may just want Operations Managers. Operations Managers typically cover cleaning, maintenance, inventory and any on site services. The owner may be happy to manage the listing and guest communications themselves.

What this means is that there is loads of flexibility in how you operate and what you do when you set up a business to manage Airbnb properties for other people.

Once you find a service offering that you’re good at and works for your market, stick to it!

A gap in the market for good Airbnb managers

Professional Airbnb management companies are expensive. Any Airbnb owner that engages a professional management company will likely lose a hefty part of their Airbnb profits. Management companies start from 20% (of total Airbnb revenue before costs – eek!) and go as high as 50% ‘depending on what services are involved’.

Airbnb management companies are also still rare. While Airbnb’s are everywhere around the globe, professional Airbnb management companies are not. In our experience, they operate on a volume based model, which means they are located in and focussed on large cities with lots of Airbnbs.

If you’re not located in a large city, there may be a gap in the market for you. Huzzah!

Don’t fear city dwellers, there’s still plenty of room in the market depending on your chosen business model and value proposition.

Different business models to manage Airbnb properties

From professional Property Managers to Airbnb Co-hosts

Professional Property Managers (usually incorporated businesses) manage both the Airbnb listing and the operations for the Airbnb owner. To do this, they list the Airbnb property under their name or brand. The owner simply sits back and receives their Airbnb income and performance reporting.

This is the model with the highest fee structure as the Airbnb manager has all of the responsibilities listed above and more. It is also the model that is likely to trigger real estate license requirements and public liability insurance requirements in many states, both in Australia and in the US. There’s more details on this below.

By all means, if you’re looking to build an Airbnb property management empire in your local market, then go for it! Get licensed, insured and off you go!

However, the good news is there are also other models to manage Airbnb properties for others, where licensing is not necessary.

For example, you can co-host an Airbnb with another person (the owner) and still provide services and get paid, without having to receive the rental income.

What is an Airbnb Co-host?

An Airbnb Cohost is a secondary host role on the Airbnb platform. A cohost helps the Airbnb owner manage their listing. Cohosts can be added to a listing by the Airbnb owner.

Airbnb restricts the activities that Co-hosts can perform on the platform. Generally you can’t access the owner‘s payout or tax information. But you have access to almost everything else about the listing, enabling you to provide co-host services.

How do Airbnb property managers get paid?

Percentage fees

This is where you’re paid a percentage of the total Airbnb revenue (usually after Airbnb fees). The percentage is up to you and the Airbnb owner, but industry practice is to start at around 10%.

Remember, that’s just the management fee and it does not cover actual operating expenses! You can see in the equation below where these are deducted.

This payment method works best when you are managing all parts of the listing, including revenue, on behalf of the owner as you get to see all income and expenses. You simply take your negotiated fee from gross earnings (ex Airbnb fees). It’s easier to work this out AFTER Airbnb fees are deducted because of the way the platform reports income. Here’s an example of what it might look like.

Airbnb management fees = (total monthly Airbnb income – Airbnb fees) x 10%

Airbnb owner profit = total monthly Airbnb income – Airbnb fees – Airbnb management fees – operating expenses

You don’t have to calculate your fees this way – it really depends on what you and the Airbnb owner negotiate. You may take a percentage of Airbnb owner net profit, instead of total revenue (minus Airbnb fees).

By guest turnover

This is when you are paid by the Airbnb Owner (via bank transfer) in the form of a fixed fee per guest stay at the Airbnb. You negotiate what is included for this fixed rate.

This kind of payment method suits Airbnb Operations Managers. But make sure to be clear on what is included and what is not. For example, cleaning, laundry, gardening and basic maintenance. Any repairs, replacements etc would typically not be included in the fixed fee. They would be paid separately by the owner, although you might be responsible for organising them.

Because there can be extra duties outside of guest turnovers that sometimes need to be taken care of, it can be a good idea to agree an hourly rate to perform these one off tasks.

Hourly

You’re paid a simple hourly rate and are on call to manage the Airbnb as needed. This may include cleaning, laundry, guest check in, maintenance, gardening and the list goes on.

If you head own this path, our advice is to negotiate an ‘after hours’ rate. Airbnb management can involve night time call outs when things go wrong – like the guest can’t operate the fold out bed or misplaces the door key.

Do you need a real estate license to manage an Airbnb?

Not necessarily. It really depends on what you do as an Airbnb manager.

In Australia, if you’re receiving rental income on behalf of someone (whether short or long term), you need to have it paid into a trust account. To open a trust account for this purpose you need a real estate licence.

In the US, states vary on their real estate licensing requirements for Airbnb.

It’s really a state-by-state requirement in both Australia and the US.

The good news is, you can avoid this requirement by avoiding managing the Airbnb revenue.

How much work is it to manage an Airbnb?

It’s entirely up to you, based on your business model.

If all you are doing is outsourcing work to cleaners, handymen and linen providers for your 10% management fee then it’s not a difficult gig. You’re mostly coordinating guest turn-overs, managing guest communications (and these can be automated now on Airbnb systems) and managing inventory, quality and disputes.

The skills you need are things like coordinating, communicating staying organised and problem solving.

If you’re doing the cleaning, laundry, maintenance, and gardening yourself then it is a lot of work so make sure you negotiate fair payment for it.

Do you need money to get started?

Not necessarily. There’s no or minimal start up capital needed if you’re already an experienced Airbnb host and you’re managing outsourced activities.

You may spend $50 on AirDNA data to determine your business model and fees. If you want to advertise on Cohost Market (seed down below) you might need another $50.

You will need a car, and may need to be co-located with the Airbnb listings that you are managing. That said, remote Airbnb co-hosting is a thing. Stay tuned as we explore this in a future post!

If you’re new to Airbnb, we absolutely recommend you learn the business before starting to market yourself as a co-host. Invest in your Airbnb education like we did. Your new business and income will thank you for it!

How much can you earn?

How long is a piece of string? If you’re asking whether you can earn a full time income managing Airbnb properties for others, then the answer is definitely yes.

The amount you earn per listing, per month depends on:

  1. Everything in our guide above.
  2. The property itself. Luxury properties, unique properties and well-booked properties are clearly your target market. The better the listing performs, the more you earn. To earn the big bucks, you need to be able to spot a great listing, or make a good one even better!
  3. How many properties you manage. As we mentioned previously, there are tonnes of new automation tools and platforms that have sprung up around Airbnb. Many are designed to automate the tasks of property management. This means you can build a really, really good income stream managing multiple properties with automation in place.

You can even build your own Airbnb management empire!

4 steps to start managing Airbnb properties for other people

manage Airbnb properties

1. Learn the Airbnb business

We can’t emphasise this enough. Airbnb is a competitive market. To successfully managing other people’s listings you need to know how to:

  • find Airbnb owners to work with
  • nail your elevator pitch about why they need you to manage their property
  • showcase the Airbnb listing
  • optimise for the Airbnb algorithm
  • get bookings and manage nightly rates and calendars
  • maximise revenue
  • manage guest demands and needs
  • resolve disputes
  • comply with Airbnb’s many rules and policies (or risk having your account shut down).

If you’re marketing yourself as a Airbnb manager and learning these on the fly, you will be out competed. Full stop.

Revenue will suffer and so will your income.

You certainly won’t get a look in on the type of properties that we mention above and that will earn you the highest income as a co-host or property manager.

Invest in yourself – we did!

If you’re serious about building a real income from Airbnb then our advice is to invest in yourself. We did, and it has paid off big time. We live on our Airbnb income and it’s allowed us to quit the rat race. We can be our own bosses and we automate a lot of the tasks we do.

Bnb Formula is our recommended course to learn how to successfully manage multiple Airbnb properties. Check out the incredible value that is included in this online course and registerright here!

Remember, you’re only as successful as the listings you manage!

2. Decide what services you will offer and your fee structure

You need to write down your business model and work out your minimum fee, whether it be fixed or variable (percentage). We wouldn’t suggest opening your negotiations with your minimum rate of course, but don’t undercut it either!

If you want an example of Airbnb earnings, take a look at this this post about the monthly earnings and expenses for our 1-bed apartment listed on Airbnb.

You might also benefit from a one month subscription to the AirDNA analytics tool. Here you can find real data and actual earnings of real listings in your area. You can also see the nightly prices and occupancy rates of these listings. With this information, you will be able to determine your fees and the types of properties you should target. It’ll cost you less than $50 for this invaluable data.

3. Pull together your Airbnb management team (if you’re outsourcing tasks)

In some cases, an Airbnb owner may already have service providers that they use for their listing. You can inherit these if you take on management. In that case, you won’t need this step.

Alternatively, you may want to pull together a core group of reliable people around you to perform the tasks of cleaning, laundry, maintenance, gardening and repairs. Your Airbnb management team should include these people:

  • cleaner (who does linen and inventory preferably)
  • gardener (for stand alone homes only)
  • carpenter (for broken furniture, doors, etc)
  • plumber
  • electrician

As part of this, you’ll be negotiating rates for each service. You’ll either incorporate them into your business model or clear them with the Airbnb owner. Just note that cleaning and laundry is listed separately on Airbnb and paid for by the guest directly, so rates can be market driven.

4. Market your services

Here’s where the Bnb Formula training will first come in handy. The training teaches you were to find Airbnb owners, or potential Airbnb owners. It also teaches you how to pitch to them. We’ve done these pitches successfully and the training actually works. Without it, we would have struggled to bring owners and their properties on board.

Where to advertise

Other places to list your services as an Airbnb Co-host or manager are:

Fiverr – Fiverr is a freelancer website with global and local reach. It’s popular in the US and growing in Australia.

Airtasker – in Australia you’ll find people advertising their Airbnb services on Airtasker. It’s where we went to try and find help managing our Airbnbs.

Upwork – this is an other freelance online marketplace where people go to find help with their Airbnb properties.

Airbnb Facebook groups – there are heaps of these but be careful about the group rules and any self promotion as you enter.

Cohost marketprimarily in the US, UK and Canada this is a platform where you can register as a Co-host of property manager for a small annual fee of less than US$50. In return you get to market your services and search job listings specific to the Airbnb sector.

Conclusion

You can make a legitimately great income, be your own boss and quit the rat race. Just manage Airbnb properties for other people. You don’t need a license and you can build a service offering to suit your local market. In this article, we’ve provided tips about different business models, how much you can earn, and 4 steps to get started today.

If you’re keen to kick-off your new Airbnb co-host or property manager venture, your first step is to sign up for this Bnb Formula training.

Find out how to put yourself in the top 1% of Airbnb hosts and maximise your income.

Get learning now, and good luck!

Our first steps into the world of off-grid living

Off-grid living

It’s been 2 months now since we moved into our humble home in rural Tasmania and began our adventures in off-grid living.

Time for another update to our financial freedom journey!

What a busy period, with lots of adjustments – work, lifestyle, home life, finances, remote business running – just about everything really. 🙂

Unpacking into our new life

Before the dreaded unpacking, we camped in our little cottage for two weeks while the floors were re-done. I wouldn’t recommend it, but the floors look great.

We also had a wood heater installed, which makes for a cosy winter night with a glass of red or a tasty craft beer. The first night we ran the heater I worried we might burn the house down while we slept (we’re Queenslanders after all!). Now we’re chopping wood like maniacs and drinking more red wine than ever. Something about those flickering flames… 🙂

Cheap and cheerful $100 DIY reno

We love a DIY reno and also completed a cheap and cheerful do-over of the once ghastly pink study.

To make the standing desk for two, we bought $45 worth of timber and hinges and built two trestle legs. We then repurposed a beautiful, heavy timber barn door from the kitchen into a gigantic desktop. Add some crisp white paint to the walls and ceiling and voila! The room is perfect, with a picture window so pretty it’s a dangerous distraction from blogging.

The study is where I work when it’s raining out, which it almost always is in Tasmania!

We’ve had to pinch ourselves a lot in these last two months. We feel like we’ve stumbled into a huge slice of luck to be living here. But then, I’m a firm believer that luck is the meeting of preparation and opportunity. And our financial freedom was a journey we started 8 years ago…

We’ve met our curious cow neighbours and our thin Queensland blood has proudly survived the winter frost and a late spring snow.

Urban life to off-grid living – what has the transition been like?

One welcome adjustments and part of our financial freedom plan has been our move to off-grid living.

I confess, we’re not entirely off grid. We do have power lines. But we are off-grid for our water, waste water, septic, rubbish and 80% of our heating. For these life-time urban dwellers, it’s been a fun and a learning experience. So what exactly do we do differently now?

We manage our own water supply

Our water doesn’t just turn up at the tap as it does with urban living. It’s on us to make sure we have enough water and that it’s sufficiently clean to use and drink. We run two water pumps and two ‘pump and gravity fed’ rainwater tanks. The water is not clean enough for our liking so we have ordered a whole-house water filter to be installed before the main pump to clean up the water supply to the house. We double filter our drinking water through a Dolton tier one drinking water filter inside this cute and custom pot-belly pottery urn.

In return for our efforts, our variable water cost is zero. Our infrastructure costs are sunk and contained (no water utility to put up the fixed cost component of the water bill). And we don’t complain about the rain.. 🙂

We heat our home ourselves

We had 5m3 of dry timber delivered just after the wood heater was installed. Wow. That ended up being a lot of timber! We were stacking it for days inside our shed. Two months in, we’ve used about 1/4 of our timber supply. At $120/m3 delivered plus fire starters, we’re paying $90 per month for whole of house heating.

We live with less waste, more sustainably

Here’s a revelation for you. There’s no curb-side rubbish collection in the middle of rural nowhere. Who’d have thought.

This means that we have to take our rubbish for a drive to the transfer station each week. As we are putting it in the car, we find we are way more careful about what goes into our bins. We compost our kitchen waste. We recycle everything, especially paper and cardboard into our heating supplies. We live more consciously about our waste, and more sustainably because of it.

The same concept applies to our septic and grey water. We don’t use toxic chemicals down the loo, the sink or for cleaning. This keeps our septic system healthy and respects the surrounding farmland where our grey water filters.

We are rewarded for doing these things with much lower Council rates and a satisfying sense of living more lightly on the land.

We’re more self reliant

The transition to running our own systems hasn’t been hard. There’s no noticeable difference in the quality of the essential services that we now provide ourselves. But we do feel more self reliant and prepared for any future.

And that was a big part of our ‘Plan B’; a plan to rely less on centralised systems for our own well being.

Our next step off the grid will be uninterrupted power supply, and to build a growing tunnel for home-raised fruit and veg. So much to do and learn, this retiring from a wage earner job thing sure is hella busy! 🙂

That’s all great Tara, but now show me the money, right!

Net worth

Our net worth has grown by just under $55k in the September quarter, mostly due to cryptocurrency and some superannuation gains. We also added a new ‘digital assets’ category to our portfolio. This covers off the websites and domains we own. Property still makes up the largest share of our personal wealth. We also continue to hold more cash than our emergency fund rules require as we didn’t make large investments during the quarter.

Debt position

Our good debt position hasn’t changed as we have interest only loans on our investment properties. Bad debt remains at under $10,000. We funded our move in cottage renovations with cash that we had put away because the home cost less than we had budgeted. Oh, and some sweat equity!

September quarter income

Our Airbnb income this quarter was down on expectations thanks to two weeks of lock-downs in August. We’re not complaining because we know pandemic lock downs have driven many tourism businesses to the wall.

To manage this risk ongoing, we’ve been building up a business emergency fund for our Property Management business. It’s a strategy we’re using for peace of mind that we can ride through the uncertainties of living with a pandemic. We didn’t have to draw down on that fund in August, which we are grateful for.

Our expenses

If you’re wondering how expenses might change with your financial freedom, here’s what ours now look like. We live on around $3000 per month – less than half of what we lived on in Brisbane! With lower living costs, our money goes further. This geo-arbitrage strategy has helped bring forward our financial freedom date by years. It should definitely be on your radar if you’re open to it.

Not counted in our living costs is the capital we put into setting up our cottage – $36,000 from savings. This included:

  • new floors throughout
  • wood heater supply and install
  • NBN wireless connection and phone signal booster antenna
  • DIY study renovation
  • a new doorway to bring the stunning mountain views into the loungeroom,
  • some new large appliances and yard equipment
  • additional kitchen cabinetry
  • water filter systems
  • Snake mesh fencing – which we’ve half installed
  • Ikea shelving for the study
  • new blinds, which have yet to arrive.

Savvy spenders, not frugalistas

Our largest expense by far this quarter was food. We’ve spent more than usual to stock up our fridge and deep freezer. Rent comes in second but it’s all from July, before we had our new home. Happily, we’re no longer paying rent.

While we’re living on about $750 per we, we’re not practicing frugality. We still go out and eat out every weekend. We’ve been on a weekend trip to Launceston and a couple of day trips. It’s just that, where we live means we don’t ‘incidentally’ spend money on things like Uber, take out and coffees. It’s much easier not to consume blindly when the shops are a 35 minute drive away… This too has been intentional.

Our savings rate

Because our income was down this quarter, our savings rate also dipped from July’s 75%.

We still managed a healthy 52%. You can check out how much you need to be saving to win your own financial freedom right here.

Our investments

In July, we said out next investment would be a rooftop solar system, which we expected to give us a return of around 20% each year. We haven’t had solar installed because it rains a lot in Tasmania. We still intend to go solar and hope we can get it installed over summer and take another big step in our off-grid living adventure.

In September we did invest some fiat currency we had sitting on the sidelines into three Layer 1 crypto projects. These investments are already paying off.

We also made a small investment during the quarter into a US based innovation ETF with a very savvy fund manager. We’ll reveal all in a post at some stage. But first, back to the off-grid living thing – there’s wood to be chopped!

Til next update, have fun, be happy and do good!

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