Ex-Facebook People Leader Turned Short-Term Rental Investor on Building a Data-Driven STR Empire

Today's Guest: Sief Khafagi

Sief is an ex-techie turned real estate investor who has helped thousands diversify into real estate after spending nearly 5 years at Facebook. He’s syndicated acquisitions totaling more than $100M while designing & developing more than 25 properties. Today, he's the founder of Techvestor, which helps real estate investors and busy professionals passively invest in the emerging asset class of short-term rentals (aka Airbnbs).

Highlights From The Show:

We begin the episode with Sief sharing his background story and what he does in the short-term rental space. He shares that he is the CEO and Co-founder of Techvestor. One of the first data-driven and tech-enabled short-term rental funds that allow investors to invest passively into this asset class without doing all the work that usually comes with it. This means that there is no finding it, no designing, no furnishing it, no running it, and no operating it. They provide a completely passive experience and are running about 20 million dollars in short-term rental funds. He shares that all of these are for passive investors who are in 9 different markets, and they hit the ground with great performance aggregate even in this inflationary environment. According to Sief, short-term rentals are the next great asset class to be institutionalized because people will chase you for mobility and a flexible lifestyle.

We then discuss Sief's investment strategy and why he believes short-term rentals are here to stay. Sief shares that short-term and vacation rentals have been around for decades, and the trend is here to stay. He also shares that they believe in human behaviors and that people want local experiences. For them, they are predominantly focusing on 4-bedroom or larger homes. People traveling in groups tend to choose Airbnb over hotels because they are more economical, provide a great experience and enable them to stay together, which is an integral part of being in a group setting. Sief also explains that they explore different options and use a data-driven perspective to find what is in demand and low-risk opportunities in different markets. They are institutionalizing the asset class they are offering, enabling them to command and offer various features that others don’t provide by either choice or lack of knowledge.

Next, we talk about Sief's strategy of finding properties and how he drives better occupancy in his short-term rentals. Sief shares that Airbnb is a product, and there is a user journey to how everything works. He explains that Airbnb is like Google, and for you to show up on the 1st, 2nd, or 3rd page, you have to rank, and there are strategies to ranking, such as photo quality, description, tenure, and reviews. According to him, ranking is arguably the most important thing because people rarely go to page 10 of the Airbnb platform. For them, they optimize the journey to give them the most optimal chance to rank and profit from their clientele’s journey. They use models for their property depending on the demand of the different types of clientele in the market. Sief also shares that they find properties through MLS and bring key people into their team to give them key advantages and access. They also do mailing for off-market properties because they know their exact buy box, which they refer to as their golden circle. They know what exactly they want to buy, the type of property, where it’s located, and what they are willing to pay for.

We then discuss Sief 's investment model, the Done For You investment model, and how it works. Sief shares that if anyone wants to have their own short-term rental, they charge $65,000 for all the services. They find the property, design, furnish, run, and operate it. This is their standard rate, but if you want to purchase 15 or 20 of them, there is a negotiation level that happens at scale. According to Sief, everything else is passive and hands-off for you, and he recommends this option to anyone who wants to REI for tax purposes, wants to get their hands off and use it for their family. Their fund is a better option, and most investors pick it because it’s passive, and all the stuff gets handled for you without you having to do anything for yourself. Sief shares that the most significant rule is diversification.

Lastly, we talk about the software that you can rely on to analyze properties that are available to the public. Sief shares that for him, he would use all of them, including AirDNA, which provides you access to data that gives an idea of what that property may do. He shares that one of his favorites, which is more manual, is signing up for a rank race. It will allow you to understand where other properties rank and, most importantly, their prices, how they look, and occupancy. He recommends going to the Airbnb platform and finding your closest 5 to 10 competitors with properties that look, feel, and are the same size as yours. Look at their dynamic pricing and create your analysis to understand how the properties work in the current market. Sief also encourages you to use data going back to 2018 (pre-pandemic) and compare it to understand the trends, the history of where you’re buying, and your risks to close profitable deals.

Make sure you don’t miss another amazing episode of the Just Start Real Estate Podcast with Sief Khafagi and get valuable information on how to invest in short-term rental!

Notable Quotes:

“Short-term rentals are the next great asset class to be institutionalized because people are chasing mobility and flexible lifestyles.”

Sief Khafagi

“The Airbnb Platform is like Google, and for you to show up on the 1st, 2nd or 3rd page you’ve to rank, and there are strategies for ranking such as photo quality, description, tenure, and reviews.“

Sief Khafagi

“The Airbnb platform is cost-effective compared to starting, launching, and running your own brand and traffic. A lot of investors underestimate the efforts of building a brand successfully and at a reasonable scale versus going to a marketplace that exists.”