How We Made Around $10,000 With a Solid Leasing Contract

When it comes to real estate, many people think of the traditional method of owning and managing properties. But for us, our business model revolves around leasing properties directly from homeowners and turning them into short-term rental spaces—think Airbnb and vacation rentals. It’s a strategy that has allowed us to scale our operations without tying up large amounts of capital in property ownership.

In today’s post, I want to walk you through a deal that taught us a crucial lesson about the importance of having a solid leasing contract and how it helped us make a quick $10,000 despite some unexpected challenges.

The Deal

We were actively expanding our portfolio and came across a property listing that looked promising: two identical 4-bedroom floors, both owned by the same homeowner. This could be a fantastic opportunity. The idea was to lease both floors and turn them into short-term rental units, and everything seemed to be falling into place.

I decided to take a different approach for this particular deal. Instead of doing things the traditional way and meeting with the homeowner in person to negotiate, I opted to close the deal over the phone. Real estate is often a traditional, face-to-face business, but I felt confident that the terms had already been discussed and that we could wrap things up virtually.

However, the homeowner, understandably, wanted to meet in person before finalizing everything. Real estate contracts are a big deal, and they wanted to get a better feel for who I was before signing on the dotted line. So, despite my efforts to close the deal remotely, I hopped on a plane and made the trip to meet the homeowner in person.

After a quick chat and a little more rapport-building, the owner agreed to move forward with the deal. The agreed-upon rent was $1,300 per month for each floor. The lease was signed, and we officially had two new properties to add to our portfolio.

The Setup Process

Once the lease was signed, we were given a 15-day grace period to set up the properties. This meant we could move in our furniture, design the spaces to suit our guests’ needs, and get everything ready for short-term rentals.

Our design team jumped in quickly, but that’s when the real trouble started. The neighbors already occupying the building weren’t too happy about our plans for vacation rentals. They were concerned about noise, traffic, and the idea of strangers coming and going regularly. And to make matters more complicated, the neighbors had a personal connection to the property owner—they were friends or even family—and they were strongly opposed to the idea of us running vacation rentals in the building.

The Termination

Now, here's where a well-drafted leasing contract saved us—and our bottom line. According to the terms of the lease, if the owner wanted to terminate the agreement early, they would have to pay a hefty termination fee equivalent to . In this case, the termination fee was set at $30,000—an amount that would cover our costs and damages incurred from the disruption.

After some back-and-forth discussions and negotiations, we settled on a reduced termination fee of $10,000. While we had already started the process of setting up the furniture and our design team was well into the project, we had no choice but to walk away from this particular deal. The furniture, however, didn’t go to waste. It was perfect for another property we had lined up.

The Importance of a Solid Leasing Contract

This experience reinforced a critical lesson for us: contracts are everything. Without a clear, airtight lease agreement in place, this could have been a costly lesson for us. The contract outlined the exact terms for what would happen in the event of termination, giving us the leverage we needed when negotiations got tough.

In our next post, I'll break down the key elements we include in our leases to ensure that we’re protected no matter what happens. A well-crafted contract can make all the difference when dealing with unexpected issues like these, and it’s one of the main reasons we were able to walk away from this situation with $10,000.

Conclusion

While this deal didn’t go as originally planned, the $10,000 termination fee was a small victory in a challenging situation. It was a reminder that the foundation of our business relies not just on good property management or interior design, but on solid legal protections that give us security and peace of mind.

In real estate, and especially in the world of short-term rentals, you can never predict exactly what will happen, but you can make sure you’re prepared for anything. Our leasing contracts will continue to be one of the most valuable tools in our business—because when the unexpected arises, we want to make sure we’re well-compensated and protected.

Stay tuned for the next post, where I’ll share our lease template and highlight the specific clauses that have been a game-changer for us.