The Real System is a real estate investment training and coaching program. What differentiates this real estate course from many others is that it is designed around the Airbnb business. This real estate business model is an uncommon route for most real estate investors.
The program claims it can show you a way of earning a 6-figure income without needing to invest a single dime.
Just how realistic are these claims? Is this course a scam? Who even is Jorge Contreras? Is Airbnb a good business venture in 2022? Read along and we’ll jump straight into answering these questions. Hopefully, by the end of this The Real System review, you’ll be able to decide if this course and this business model are for you.
Real estate investment draws similarities with Local Lead Generation. They are both passive income business models, but local lead generation does this by renting out digital real estate to local businesses. You don't have to worry about constantly finding seasonal renters with local lead generation, unlike Airbnb model.
Who Is Jorge Contreras?
Jorge Contreras is a Airbnb expert and successful real estate investor. But before all his successes, Jorge came from humble beginnings. Born to immigrant parents, he had a rough childhood. He was involved in gang and criminal life and at the age of 7 he even helped his dad sell illegal substances. By age 10, he was helping his family smuggle people across the border. He barely graduated highschool and dropped out of college (Freshman year) soon after.
Jorge learned bachata, a partner dance from the Dominican Republic, while in a salsa dance class. He started working as a dance instructor at the age of 20. During his career, he traveled to 25 countries and set up the first bachata Latin dance festival in Los Angeles. He then made the first bachata nightclub. He gained experience in branding, sales marketing, and team system operations from this venture.
In 2012, Jorge began investing in real estate. He read the book Rich Dad, Poor Dad and applied for a mentorship with Rich Dad company in 2015. He gained further success with the mentorship and even started coaching with the company.
His Airbnb businesses flourished and he started earning six figures a month completely on autopilot. Attaining financial freedom by 2017, he finally became a millionaire by net worth in 2018. Soon after, Jorge founded and became CEO of The R.E.A.L. System in 2018. He has since coached 3000+ students.
Jorge has a YouTube channel with 4.22K subscribers and 272 videos. He was featured on Yahoo! Lifestyle in 2021. He has a weekly podcast called The Jorge Contreras Show.
Pros and Cons of The Real System
Let's answer the most important question first before we go any further. The Real System by Jorge Contreras is not a scam. The course does have legitimate training and coaching.
Here's an overview of the good and bad of the course:
Jorge is an Airbnb expert who created his fortune with this business model.
Step-by-step training material included in the course.
Weekly 90-minute live group calls with Jorge Contreras.
The course claims it is affordable for everyday people but the high price says otherwise.
You can find many of the training contents online.and for free.
Airbnb is not a stable passive income model, as they claim.
Who Is The Real System For?
The course is perfect for beginners. The training materials give a complete step-by-step process on how to start and run the business. Coaching is also available to guide you to success.
- Newcomers to the real estate industry who wish to learn how to transform their acquired property into a successful Airbnb business.
- Newcomers without capital who wish to enter the real estate industry. The course teaches Airbnb arbitrage and co-hosting.
- Experienced real estate investors who want to get into the Airbnb business.
What Do You Get With The Real System?
Signing up for the program begins with entering your name, email, and phone number to avail his Airbnb: Generating Passive Income to Create Time, Financial, and Location Freedom free ebook.
The contents of the ebook are mostly Jorge’s life story and an overview of the 3 ways to earn from Airbnb.
The link on the email will bring you to a page where you will schedule your “15 minutes Discovery Session call”. In addition, you will also be asked to enter how much capital you have available to invest in Airbnb, your Instagram and Facebook profile link (assuming it’s to check your situation or for further channels to follow-up on selling you the course).
After booking the call, you’ll be directed to a page with an intro video that describes what the course is all about and what you can expect, and 5 other videos that give you an overview of what you’ll be learning. These videos are actually useful lessons and tips on Airbnb investment.
How much does the course cost?
The Real System coaching program costs a one-time payment of $1,659. The price is given during the call but the intro video after booking warns you it is a 4 figure investment. It is a 90-day group coaching program, and an online course to give you a step-by-step process.
You’ll have access to a weekly group coaching call with Jorge, one-on-one coaching and accountability with one coach, and an exclusive 24/7 Facebook support group with 15.4K members.
Here is a list of what comes with that price tag:
3 Ways of Earning With The Real System
There are 3 ways to acquire, launch, and automate your Airbnb. Each has its own requirements, strategies, processes, and challenges.
Earning With Airbnb
- Buying properties
Buying your own property for short-term leasing. You need a substantial capital to purchase, renovate, and furnish your own property. This is a high-risk method but you get to keep 100% of the profits. In the long run, this is the best method that has the highest ROI.
You rent a property for a long term-lease and rent it out as Airbnb. Usually, in a sub-lease, you pay the first month's deposit and purchase some furniture and decor. You need to get permission from the landlord to Airbnb the property.
City ordinances on short term-lease may be an issue. The property owner may choose to do it himself after your term expires. Your profits are minus your long-term rent.
You take over management of someone else’s Airbnb business. It could be anywhere from acquiring, launching, and managing, or all of the above. A usual deal is you take 22% of total revenue, excluding the cleaning fee. You also get 10% of the cleaning fee while Airbnb gets slightly below 3%.
You can even earn a $700-$2000 acquisition fee (for finding the property), a $300-$800 launching fee (from core strategy, theme strategy, and setting up), and 10%-30% of the total income managing fee (for handling cleaning, maintenance, and communications).
This method has zero risk, as you don’t invest any capital at all, in the exchange of lower profit margin and less control over the business.
The Real System course mainly focuses on the sub-leasing and co-hosting methods.
Social Proof Economy
They described online business models as a social proof economy. Your reputation for reviews and ratings is a big factor in determining your success. Jorge explains the review metrics.
6 categories on how renters review your property
- Accuracy - how accurate is the listing (pictures and descriptions).
- Cleanliness -efficient and accountable cleaning team.
- Check-in - how easy and seamless the check-in is (quick and easy access to the proper unit).
- Communication - check in with the customer before they arrive and after they leave.
- Location - how good is the area in terms of safety, and distance to nearby entertainment and leisure locations (such as amusement park, beach, etc.)
- Value - Is the listing worth the price you are charging
4 ways to improve your reviews
- Cleaning crew optimization - use the same communication channel like WhatsApp or Slack, and take pictures and post them after cleaning.
- Communication amongst the team - ensure constant communications between different groups to maintain efficiency.
- Feedback from guests - communicate with guests before they arrive, during the stay, 24 hours before departure, and at the checkout time.
- Ask for review - be proactive in asking for reviews.
Reviews are very important in an Airbnb business. Jorge recommends you get yourself the Superhost title. You need 4.8 or higher with at least 10 reservations while keeping a 98% communication score. Having this status can bring you to an 80% occupancy level.
Jorge claims that the Airbnb business model can bring you passive income. That may be true in some cases, but that's not guaranteed. There are a lot of variables to consider, such as location, season, travel restrictions, etc. The COVID-19 pandemic also cut off this income stream for those in the business.
There are other business models out there that are more true to the "passive income" business model. There is Amazon FBA, affiliate marketing, digital marketing, and Local Lead Generation, for example.
Are Students of The Real System Successful?
The Real System sites are filled with success stories of their students. Take them with a grain of salt.
There are no negative reviews about the course, but of the Airbnb business model itself.
5 Biggest Mistakes New Airbnb Hosts Make
According to Jorge Contreras, there are 5 common mistakes that Airbnb investors make.
- No written permission from the property owner
All lease agreements come with no sublease. You must make a written agreement that allows you to sublease the property for Airbnb.
- City that doesn't allow short-term rentals
Check with the city about its short-term rental ordinances before acquiring. It is better to start short-term rental businesses in a city where regulations already exist.
- No designated parking for guests
Make sure there are adequate parking spots for guests to avoid hassles and negative reviews.
- Properties on a main street
Never get properties along roads with high traffic. This creates privacy and security concerns as well as noise pollution.
- Properties near train stations or tracks
Never get properties near train stations or tracks as it creates too much noise pollution that is undesirable for traveling guests.
How Relevant Is Airbnb in 2022?
Real estate investing is very lucrative, especially in 2022. As for Airbnb investing, though, the story is different. Airbnb business model showed its vulnerability during the COVID-19 lockdowns, when many of the properties were empty and not generating any income. Restrictions may ease, but with new variants coming now and then, it's still too early to tell.
The rising price of housing may benefit real estate investors who buy and sell property at a profit. But for the Airbnb model, you may find it more expensive to acquire or rent property. This can also be an issue when you scale your Airbnb business.
There is an alternative that works like real estate. The difference is that you don't need a physical property. Local lead generation business model rents out your digital space to local businesses. It's very cheap in time and money to set-up and maintain. By renting out your digital space to local businesses, you essentially create a predictable passive income stream.
If you're interested in learning more about this passive income model, check out Local Lead Generation.