Short-Term Rental Investing: Tax Benefits, Cash Flow, & Scaling an Airbnb Business | Michael Elefante

Michael Elefante (00:00)
yeah, yeah, mean, keep in mind I’m teaching people every day. My client base and B &B Investor Academy are launching more than one new short-term rental per day ⁓ on Airbnb and Verbo and all the other sites. So what I’ve noticed is people that are focusing on the experience and compete in the higher end tier of properties doesn’t have to be like a luxury property, but I think it has to be a luxury experience, something unique. It doesn’t have to be a large property either. Some of our folks that are making the highest ROI are on smaller properties.

Michelle Kesil (02:00)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil today I’m joined by someone I’m looking forward to chatting with, Michael Elefante who is the founder of BNB Investor Academy and has a short-term rental portfolio, as well as many other businesses in the short-term rental industry. So excited to have you here today, Michael.

Michael Elefante (02:26)
Yep. It was a good stab at the last name, but it’s Elefante. Yeah. You can call me Elephant too. You put like a French twist on it, but it’s Italian. So you got to have the A at the end. But yeah, thanks for having me and yeah, looking forward to our chat.

Michelle Kesil (02:30)
⁓ okay. Thank you for the correction.

Awesome, let’s dive in. So first off, for those not familiar with you and your work yet, can you share what your main focus is these days?

Michael Elefante (02:49)
Yeah. So I own over 10 different businesses, but they’re all vertically aligned in the short-term rental industry. I got started investing in short-term rentals as a way to replace my income back in 2019. ⁓ with, within about a year, we actually accomplished that with three properties. And then my wife and I quit our jobs after four traveled for a year and then just continued to invest. And then over the years, ⁓ I grew up, you know, a pretty substantial personal brand online, just educating people.

All the different facets of investing in short-term rentals, how to do it successfully and at scale. And over time, have built probably the largest short-term rental coaching business and mentorship business in the country. B &B Investor Academy have taught over 3,000 people, over a billion dollars in real estate acquired at the individual level collectively. And then also co-founded a few different businesses. Summerled Designs, which is the industry leading interior design firm.

All we do is short-term rental designs in all 50 states, 1500 plus properties designed over the last three years. And then the Rise Collective, which was initially a property management company, but then we’ve branched into a bunch of other services as well. B &B Turnkey, which is a done for you short-term rental investment service for higher income or high net worth individuals. And then we have ⁓ B &B Construction. So construction and rehab and amenities, all that type of stuff. ⁓ And then asset protection, lending.

and a bunch of other businesses that are vertically aligned there as well. And then our property management portfolio has grown as well. We’ve been doing that for about three and a half years. We’re approaching 700 properties under management and we manage nationally. And this year we’re pacing close to a hundred million dollars in new bookings for our managed portfolio, which is really, really cool. So that’s in a nutshell, what I do, my personal portfolio. I’m still an active investor myself. I don’t just teach it and do my businesses. So

Currently own 14 properties, the value of the portfolio is about 30 million bucks and those 14 properties stabilized will do three to three and a half million dollars a year in gross rental income.

Michelle Kesil (04:50)
Awesome. And which markets do you operate in?

Michael Elefante (05:41)
Well, it depends which business, right? For my personal portfolio, the bulk of it is in the Southeast, but I also have several properties in Texas, one in New York, one in Florida, but the bulk are in the Tennessee, North Carolina, South Carolina region. And then for the property management company, we manage nationally.

Michelle Kesil (05:58)
And what do you feel have been some of the major keys that have allowed your business to be able to scale, grow, and run successfully?

Michael Elefante (06:07)
So all the businesses, we operate at a high level, but it’s really all centered around creating awesome experiences for people. So we don’t set up normal properties. We’re setting up experience driven rentals, even if they’re smaller properties, but the bulk of mine, I focused on larger properties and we sink a lot of money into rehab and then upfitting them with really great amenities that are very uncommon, not just in that market, but nationally as well.

And what we found is that people are willing to pay for a great experience, especially this day and age where everyone’s on their phone, computer, AI, they’re just hiding behind a screen. I think people are really craving real in-person experiences. So what we’re doing is we’re creating the destination in and of itself versus traditionally people will just pop up in Airbnb or hotel around the destination. So we’re kind of blending the two and popular tourist markets, but creating things that people don’t even want to leave the house because they’re having such a good time.

Michelle Kesil (07:04)
Can you give an example of how you create that experience?

Michael Elefante (07:07)
Yeah. Yeah. So just to give you a background for investors who are looking to get into short-term rentals, a lot of data is out there, right? Online. You can go find how much the top performing properties are making, where they’re located, what amenities they have, look at all their photos. Those are the must haves. Then I take it over the top. look at uncorrelated markets or even just try and come up with a vision for the property. I’ve added things like turf par three golf courses to properties. We’ve done all the sport courts, pickle balls, luxury home gyms. We’ve done soccer fields, volleyball courts.

⁓ And just amenities stack a lot of these different things. We’ve done indoor golf simulators. And so what we try and do for these properties, since we’re catering to multi-generational travel, is we have a lot of fun activities and things for people of all ages. So not just the adults and not just the kids. So there’s something for everyone to do. And that’s where we’re able to really drive large bookings and great reviews from folks. So we’ve done a whole bunch of stuff. And with our B &B Turnkey service, we’ve even gone as far as building lazy rivers.

in properties for people or for pro for investors, which is really fun. ⁓ especially in markets like Arizona, where you can use a pool pretty much year round. That is a feature that again is very uncommon and families, especially with kids go crazy over it. And so they’re willing to pay for that amazing experience.

Michelle Kesil (08:21)
Yeah, amazing. And are all of your ventals focused on short term?

Michael Elefante (08:27)
Yes, yeah, short-term rentals and then we’re just branched into hotel management as well. We’ll probably get into hotel investing in the not too distant future as well. But I think we just signed our first 115 keys or so across multiple smaller hotels. So once we really hit the ground running there, we’re gonna continue to expand that. And the goal is to get to several thousand keys over the next couple of years.

Michelle Kesil (08:51)
And so when you partner with investors and you’re helping them grow their short-term rental business, what are some of the main components that you feel they must have in order to have success?

Michael Elefante (09:04)
Well, really it bundles down to like, what are your goals? Right? Are you looking for cash flow? You’re looking for tax savings? You’re looking for both? Are you looking for a second home that makes some cash flow, but you get to use certain parts of the year. And based on, you know, the budget will then pick the strategy for them or pick the market or the property. And then we’re going to have a keen focus on based on those goals. Right? Some people are also looking to force appreciation on properties. They have bigger budgets to

Dump into, you know, rehabbing the bathrooms, you know, creating additional square footage on the property, adding bedrooms, things like that. So really all bundles down to the it’s we’re investor first. And through that service, we don’t take any equity or profit share. So it’s really cool for investors who are used to investing in syndications or funds where they just have a very small sliver of the pie. Instead with this, they own 100 % of the rental, we charge service fees and then a property management fee, which is discounted for them on the back end.

but they get 100 % of the upside in the property and 100 % of the tax benefits as well.

Michelle Kesil (10:06)
Awesome. And what are you most focusing on solving or scaling to next?

Michael Elefante (10:48)
⁓ mean, just continuing to scale my portfolio, you know, for me, I just have a big focus on like living a fruitful life. So I try not to work a ton, frankly, the whole reason I got into real estate was to spend more time with my wife and kids and to travel a ton. So we have accomplished that and I never want to lose sight of that. So, ⁓ but outside of that, we continue to scale the other businesses and the goal there is to potentially have like a minority or majority exit in the future.

or at least set ourselves up for that as a possibility. And I think the businesses collectively will be worth well over nine figures by the end of this year.

Michelle Kesil (11:24)
Awesome. And how did you manage to get to that level of success? Were there certain coaches or courses or strategies that you had to learn or was it your own trial and error?

Michael Elefante (11:37)
mean, a little bit of both, ⁓ when I first got started getting investing, there wasn’t a ton of other coaches or mentors doing the short-term rental thing. So I really figured everything out on my own. And then I, you know, was one of the pioneers in the space to, know, actually coach and educate and mentor other people. Now I have paid a lot of money for coaching and consulting on the business side. So while I was good at short-term rentals and real estate, what I was not good at, or at least didn’t know yet was how to market, generate leads.

you know, convert leads. So sales, right? Close people on different services. And then most importantly, fulfill and have a really good fulfillment process and operations. So our investors are super happy with the service. Those have been some challenges. And one of the best things you can do once you go from solopreneur to entrepreneurs, you have to hire great people. So whether you have business partners, whether you have an operations manager or a COO, and then you have people that lead the different teams in different departments.

So we’ve grown to a point where several of our businesses have COOs, CROs, Chief Revenue Officers, we have Chief Marketing Officers, Marketing Managers, and things of that sort. So once you can hire great people, then you can kind of take a step back from the operations piece and focus more on building the business and relationships. And that’s where we’re at right now.

Michelle Kesil (12:51)
Amazing. And what is your current strategy in getting the leads for the type of rentals that you would want to invest in? Is there a specific like geographic location or attributes that stand out for you?

Michael Elefante (13:06)
Yeah. I mean, there’s one company I’ve invested in myself. It’s called STRIQ. they actually have STRIQ 2.0 coming out May 1st, 2026. And this is going to be an incredible platform. That’s AI driven AI first, where you can actually open up the map. It’s connected to the MLS and connected to all the historical data like ADR revenue performance, REF PAR, those types of things for short-term rentals. And you can actually set filters based on

cash on cash return, revenue to purchase price ratio, all these other things, and it will show up on a map and eliminate ones that don’t meet your criteria. So you can just zoom in and out. That is like the next generation of investing strategically with short-term rentals. But generally speaking, I just look at tourism growth, not tourism growth, population growth and tourism trends. Population growth is really important. So for example, why I’ve invested a lot in the Southeast, well, North and South Carolina, Tennessee and Georgia,

and Florida have all dramatically grown in population over the past decade. Well, what do people do when they move to a new city, especially if they bring their family while they look up things to do or local vacations to take where they can drive to the beach, the mountains, the lakes, different cities. So those are areas I’m focused on investing in because it creates sustainability. There’s no perfect market. What I want is a sustainable market and then I can go find a good opportunity where I can create a unique experience and that’s the ticket to doing really well in short-term rentals.

Michelle Kesil (14:27)
Absolutely. And as far as restrictions or regulations, are there any bottlenecks or obstacles that you find short term rentals gives people?

Michael Elefante (14:40)
Yeah, real estate type or local, right? And in every way, and form. So regulations are always a concern with short term rentals, a lot of cities that have a history of being tighter on regulations and less investor friendly, New York, San Francisco, Las Vegas, even they make it a little bit harder or even make it impossible to garner a permit. So I try and focus on markets that are more investor friendly, especially markets that have

Traditionally relied on tourism tax revenue from short-term rental very visitors So the Great Smoky Mountains is a is an easy example because there’s 30 plus thousand cabins there and that city in town is completely Reliant on tourism and people coming and spending money on different activities restaurants buying, you know products and services there And so those regulations are always going to be more lenient because they’re reliant on it So that’s something to keep in mind. I think if you’re investing in urban markets, you’re gonna be more

prone to future regulation changes. ⁓ But yeah, you gotta avoid some of those particular cities that I mentioned.

Michelle Kesil (15:45)
Absolutely. And so if an investor wants to learn and get into the short term rental space, where do you suggest they start?

Michael Elefante (16:34)
I mean, it always starts just looking online. You can consume tons of free information. But at the end of the day, if you want to move faster in any business or investment vehicle, you really should hire a mentor or coach, whether that’s me or someone else. I encourage you guys to reach out. I’m always happy to chat online. You can find me on Instagram or you can find any of my companies online as well.

Michelle Kesil (16:56)
And as the owner and operator of all of these companies, what have been some of the major lessons that you’ve learned in building and growing and developing a larger scale business?

Michael Elefante (17:10)
We bootstrapped a lot of pretty much the whole comp all the companies so we did not take on any debt to start or You know build the businesses and I think that’s the beauty of a service-based business because once you acquire customers You start making money immediately and we’ve always been a profit first focus because if we’re not profitable Well, that’s gonna be a lot harder and more uncomfortable to scale. So regardless what business you’re in I would always focus on profit first versus top line and Be careful taking on debt

for the sake of growth because it can really bottleneck the business. It can also put you in an uncomfortable position of stress and anxiety where that is never, know, good things usually don’t come when you’re running a business at a high stress level.

Michelle Kesil (17:54)
Absolutely. And what advice would you give to someone that’s looking to continue to expand and maybe grow more as an investor?

Michael Elefante (18:05)
Yeah, I mean, everyone runs out of money at some point. So I think partnering with other investors or raising capital is always really helpful. And a lot of people just get in this waiting game where they’re investing, they run out of money, and then they just wait for a long period of time. So there’s a lot of different methods or strategies you can do which require less of your own capital to start or scale.

Michelle Kesil (18:25)
Yeah, absolutely. And what kind of opportunities do you see in the market now as maybe things that have been shifting economically, do you still feel that there’s a lot of profit and growth to be made in short-term rentals?

Michael Elefante (18:42)
yeah, yeah, mean, keep in mind I’m teaching people every day. My client base and B &B Investor Academy are launching more than one new short-term rental per day ⁓ on Airbnb and Verbo and all the other sites. So what I’ve noticed is people that are focusing on the experience and compete in the higher end tier of properties doesn’t have to be like a luxury property, but I think it has to be a luxury experience, something unique. It doesn’t have to be a large property either. Some of our folks that are making the highest ROI are on smaller properties.

⁓

unique experience for couples that are going to be willing to pay a lot of money for that experience. So that is the ticket regardless of what know subset of the short-term rental market you’re playing in. And I think it’s the same thing even for hotels. mean people are seeking experience first and then accommodations second. All right. So whether it doesn’t matter what area you’re competing in that that is certainly the ticket to high cash flow higher high ROI.

Michelle Kesil (19:39)
Yeah, absolutely. And what does your investor academy look like? Is it a online course program? What’s the structure?

Michael Elefante (19:50)
Yeah, it’s multifaceted. We have coursework and all our templates and AI prompts and all that great stuff that people have lifetime access to. But the more important thing is we’re coaching and mentorship program first. So I have a team of coaches. You have a one-on-one client success manager who has a multi-property portfolio themselves. You get coached directly from me and my team, tax strategists, asset protection, attorneys, ⁓ and a bunch of other folks.

It’s more of like an accountability program on top of just like the typical stuff you’re gonna get within a coaching or course. So we’re actually in the trenches with you. And I think that’s why we have such a high success rate. ⁓ And I think pretty much all five star reviews as well, which we’re really proud of.

Michelle Kesil (20:35)
Amazing. Well, before we begin to wrap up here, if someone wants to reach out, connect and learn more about everything that you’re up to, where can people find you and connect?

Michael Elefante (20:46)
⁓ Instagram is always an easy place at Elefante6 Michael Elefante you guys can also go to bnbinvestoracademy.com

I also have a bunch of free resources in my Instagram. If you guys are looking to get coached up on investment analysis, how to create a buy box for short-term rentals, and then the tax savings piece as well. That’s a big thing most people don’t understand is with short-term rentals, you don’t have to qualify for real estate professional status to take advantage of the depreciation, bonus depreciation, tax savings, because ordinarily passive loss is only counted against your passive income, not your W-2 or earned or active income. So with short-term rentals,

is more or less a loophole because if the average length of stay is seven days or less and you materially participate at least a hundred hours and more time than anyone else, then you qualify to take any of those losses and carry it over up to a certain limit on all your active income. So for W2 earners, especially if you’re making six or multiple six figures, this is the most powerful investment you could possibly make. And so if you guys want free resources on that, I have that linked in my Instagram and I’m happy to answer any questions there too.

Michelle Kesil (21:52)
We’ll appreciate your time and your story. Thank you so much for being here.

Michael Elefante (21:57)
Yeah, thanks, Michelle.

Michelle Kesil (21:58)
of course. And for those tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Michael, who are building real businesses, and we’ll see you on our next episode.