The Secret to High-Yield Vacation Rentals? Think Small, Earn Big!

A lot's happened in the short-term rental industry over the last decade. And one of the things that we've discovered is that you don't need a normal house to make a lot of money as a short-term rental. In fact, a lot of the more unique properties a lot of times make much more than a traditional homes. I'm really excited for our guest today. This isn't the first time on the show. He was with us over a year ago. Dave Zuk. He's one of the founders of Zuk

Cabins. They've been building some really amazing properties, different variations, unique styles that can be used as short-term rentals, but there's a ton of flexibility with them. They've sold millions and millions of dollars of them. They can send them around the US. Excited to dive into the details again with Dave Zuk. Welcome back to the show. Hey Tim, thanks for having me back on your show. It's good to see you. It's good to see you as well. And for those of you that did not catch the

first episode, Dave has a truly admirable background. I mean, this isn't his first business. He's done lots and lots of things, lots of things in the real estate world from multi-family to commercial assets. Just Dave, you want to give just another quick recap? Yeah, so uh I grew up in modular manufacturing. So my dad had a storage shed business and you know we built storage sheds that morphed into you know bigger garages, modular garages and then later into modular cabins. I think uh it was 2006

I believe when we founded Z cabins. We started building modular cabins. Today we ship modular cabins and park models and 80U units all over the country. I think just about every state and we shipped hundreds hundreds of units across the country just last year alone. And um you know as we got into this space we realized there was a there was a niche. Yeah. We service uh RV parks and campgrounds and individual owners, second third home owners, home buyers. But we also get into the short-term

rental space a lot. And we have a lot of short-term rental owners. Uh people that come back to us again and again. And of course, we eat, our cook, and we we do a lot of the short-term rental space. I have short-term rentals in, I believe, I don't know, seven or eight different states now. But, you know, I I grew up in the space. I ventured into, you know, several different asset classes, multifamily, self storage, more recently, most recently, car washes, building Tommy's express car washes.

Uh, but never strayed too far away from the family business. And, um, you know, this business, this short-term rentals business, kind of fits right in with what we're doing. And and I love the space. I mean, we, you know, we've got many short-term rental homes oursel. My son is involved. My daughter's involved. You know, our family's involved. It's it's a fun business to be involved in. And you know what? You know what I find interesting, Tim, is not too long ago, you know, we just talked

about this recently, like I bet 10 years ago, the thought that you could own a highly desirable piece of property on the water, you know, on the river, the bay, the ocean, whatever, and have that thing not just be a giant hole in your pocket, you know, have that thing actually play cash flow. That that was sort of a foreign concept back there. Normally, if you owned a property like that, you know, it was a it was a liability. you know, it was something that you

used and, you know, of course, you could supplement a little bit with some rental income from family and friends and maybe an agency or something like that. But today with short-term rentals with the platforms and the technology out there, it's a different story and I love it. It is. It is a It's a reality. Uh I sort of joked before we jump on the podcast that if you could have shipped them all the way down into Colombia, we would have loved to put them on our

lot down there where we're developing cuz what you guys are building, Dave, are really, really cool. I mean, just since last year when we had you on seeing all the models and I was out there in person, you know, over a year ago there in Pennsylvania where you guys have your factory and it was awesome. You know, you guys have a machine there knocking out some really really good quality stuff. And just since then, I mean, jumping on your website and seeing all the new models,

it's it's exciting. It is a fun space. It's a reality that that people can can have properties on the water, like you said, and also have a really good ROI. I think that's what you know most of us as investors are looking for at the end of the day. And now not to say people couldn't have really good use for your properties for personal use, but we find a lot of times, you know, in the short-term rental space, people have vacation rentals that they use a

little bit on their own. And then sometimes it starts doing so well that they just turn it into 100% investment. Can you talk a little bit just about the ROI numbers? Because I know you have a lot of short-term rentals yourself and obviously you practice what you preach. You build these and so you've installed a lot of these on some of your own properties. Can you talk just a little bit about the ROIs? Yeah, so I kind of fell into this space. I don't know. I

mean, I was aware of the space, but I, you know, one of our friends came to us and said, "Hey, I'm getting into this short-term rental management space. Let me you know, give me something to manage." And, you know, young kid and I'm like, I don't really have anything, you know, I got multif family apartment buildings, you know, whatever. I don't I don't have anything for you right now. But he he kept coming back to me. I know you got real estate, you got stuff, you

know, you got stuff going on. Just give me something, anything. So, I got with my brother and at the time we had a cabin in South Central Pennsylvania up in the mountains and, you know, there was nothing around. Like, there's no river, there's no lake, there's no tourist attraction. It's just a cabin out, you know, on 300 acres out in the middle of nowhere. And so, we we sort of laughed about it. We were like, "Yeah, let's give him that thing." And you know it was

just a it was just a family compound that we would go to on Fourth of July and you know we would hunt out of it and you know we'd use it number of times a year but most of the time it sat there empty and so we we sort of jokingly we were like oh yeah let's let's give him that thing that that'll get him off our backs for a little while. And uh so we gave him the cabin. We we you know we did a

little we did you know it's brand new. We but we made it you know what we felt like was short-term rental friendly. We added a few features to it and gave it to him. And all of a sudden, it was like a month in and we were like, "Whoa, wait a minute. We gota we got to block out hunting season." I mean, this guy just took off. I mean, this thing was renting for, you know, 800 to,000 bucks a night and he was booking out the

calendar. And I was like, "Okay, well, wait a minute. We we want to, you know, we want to use this thing." And in in hunting season, we had to scramble around scramble around and kind of block out some time that we wanted to use it. So, it was an eye opener for us and that's what got us into the space. were like, "Hey, this if this works up there, I guarantee you it's going to work even better, you know, maybe some other places." So, we, you

know, we bought a place on the river and and, you know, kind of just went down that path and watched the concept kind of play out and and we really like what we were seeing and so we just we just kept right on doing it. But in in terms of ROI, you know, I mean, we we I think the biggest home we have, I think, sleeps like 25. And, you know, those those numbers can work. Those numbers can really work. And and it also, you know,

whatever we say, I'm sure you would agree with this, Tim, different areas, different places demand different stuff, different homes, different square footages, more bedrooms, less bedrooms, whatever. Uh, so you just got to play play around with, you know, geographically what's needed in that area. But me, you know, generally what we found is smaller square footage gets us more ROI. So we we started like compacting like how small can we go here and you know where people still will come and pay a premium. So, you know,

if you look on our website, soc cabins.com, and you go on to the park model section, those are 400 ft². And there's people, you know, clients of ours, some of our own, you know, we're getting we're getting three, four, five, $550 per night to stay in a couple hundred feet little cabin. Now, it's it's nice. These people aren't rubbing it, but it's, you know, it's a small square footage unit with a price tag of, you know, you know, just over $100,000 and and you can command

that sort of premium on that small square footage footprint. It's pretty amazing. Yeah. Yeah, that is amazing. I mean, people are they're they love experiences, right? That that's especially some of the younger generations. Uh, and one of the awesome things about having an investment that, you know, is maybe somewhere over a little over 100,000. And I know you guys have a big range of prices with all your different products, but you know, if the entry level price is lower and you can put this property out

next to the river somewhere where there isn't infrastructure because it's already pre-built. I'll let you get into this a little bit more, Dave, but just to to hit on the fact that the ROI can be so much higher because you don't have to build the thing. And to try to build a property out in some area that's completely remote without infrastructure, that's not only expensive, but it's really difficult. And so you guys have managed to just remove that challenge for someone that has a good place

to put one of these things. Can you talk a little bit just uh I know you know you're you're kind of at the top and you guys have a big team handling all the details and all that but maybe just sort of a highle view of the types of models and you know how they come they come furnished and how you can deliver them. Can you talk a little bit about about what's available? Yeah. So, you know, one of the things that we figured out is

it's much more efficient to take the work to the workforce. Like you find you find a community where where the the workforce is really strong and then you bring the work to that workforce. And you know, you you've been here to Lancaster County. Langster County is full of entrepreneurs and builders and people that work with their hands and the Amish community and they they build really good quality stuff. There's communities like that scattered throughout the United States and we have several of them set up with

shops, manufacturing facilities that manufacture, you know, where we manufacture our products. But, you know, when you are out in the middle of nowhere or even, let's say you're in, you know, New York or Colorado, you know, the Northeast or, you know, heavy heavy populated areas, one of the biggest challenges in the construction industry is the workforce. You know, that so it's it's very inefficient. I think that last I looked the average contractor was, you know, in his, you know, late 50s, early 60s. That's sort of

a problem. And so, you know, being able to take the inefficiency out and add a layer of efficiency in there by bringing the work to the workforce and then shipping that product out as a finished unit or almost finished unit. Some of our modular products, we got to send a crew out to button everything up after we get it on property. But really when you know the more work you can do on site at the factory in the middle of the workforce if you went to

whatever the outskirts of New York City and you you tried to put a team of you know modular workers together in a shop that that would be challenging uh challenging enough right you know right in the heart of the manufacturing but it's uh we we figured out a way how to take the inefficiencies out of it and really build a really good product and be able to ship it all over the country and it makes sense for a lot of uh investors. Yeah, it makes it

makes total sense. And and so it makes it much easier for the investors, you know, for all the things you just said, but correct me if I'm wrong, but you guys also ship some of these furnished. Oh, yeah. Yeah, they are furnished. And uh you know, so we'll we'll ship them across the country. We'll often, you know, we we have a small team of people who furnish them for us. They'll put all the furniture together and ship everything with the unit. So, yeah, it's uh it's

designed to where let's say you're a short-term rental owner or a small boutique resort owner or something like that. We we'll come out there. We'll we'll we'll bring the units to you. We'll build the decks and the porches and, you know, furnish the units inside and out and it it can be, you know, of course there's some few infrastructure things need to be done on site, but other than that, we we'll build you a unit that's pretty much moving ready. Yeah, that's awesome. I know last

time you were on we talked a lot more in detail about some of the financial benefits of uh purchasing a property or a investment like this and depending on the model. You guys have really branched out and and you're you're just you've got a whole bunch of different models these days, but we talked more specifically last time about the park model homes and some of the unique benefits of being a park model home. you know, some being no property tax potentially, you know, bonus depreciation, potentially

the ability to possibly, you know, get financing. Can you talk a little bit about uh those pieces? Yeah, so there's lots to like about it from just kind of a lot of different avenues and they, you know, you you hit on a couple of them. This is a 400 foot, if if you're a licensed park model, if that's your building, that thing is licensed just like a sort of like a travel trailer that you pull behind your pickup truck. It's it's licensed. It's movable. It's portable.

So, there's no real estate taxes that come along with it. You know, there there's you can put this places where it may not be legal to to like go put a modular building in. So, there's different units that we build work for different places or different uses or, you know, for different people, but there there's a lot of advantages to these park models and taxes, easeability of of putting them on the property. You can, you know, if you need to, you can put them on there

for seasonal use and pull them off the property when you're not using them. So, ease of use, you know, getting them in there on wheels, setting them up, getting them ready for the for for your short-term rental guests. Low cost. Licensing is generally pretty easy. There's, you know, the financing is different than say if you were to go with one of our ADU units or HUD units, but it's uh, you know, each one of them has its own benefits and features, but we've sold a lot

of park models to to a lot of our customers over the country, and, you know, they they've worked very well from a short-term rental perspective. Yeah, there's a there's a lot of things I'm thinking about here, ways to take this conversation, but let's just let's stick on the investment side of things. You know, one of the things that I think that's really cool about what you guys have created and made available to everyone out there is that, you know, if someone has a nice chunk of

land and they have this idea, they're like, you know, I've seen people do this. They've put glampings out there and they've put these, you know, modular homes or ADUs or whatever it happens to be, and and they do really well, rents for $500 a night like some of some of yours do. They don't have to buy 10 of them at the same time. You know, they can test it out. They can get one out there and put it up and see how it does. And if

it works well, they can get more. That's, you know, we're we're building this project down in Medí where it's not that way because we have this big construction crew where we want to build them all at the same time because the crew is already there. And for us to build them one by one, it just it doesn't make sense. It would also take much longer. So, I think that's one of the really cool pieces of this sort of investment. Why don't you talk a little about

about yours, Dave? You you're mentioning you've added quite a few to the same area because they're doing really well. Well, that that's a good point. And I'm glad you brought that up because we get quite a few investors that come to us with their big grand plan. Oh yeah, we're going to do, you know, we got a place we're going to do like 20 of them. We're going to do like 30 of them over the next two years, whatever. Often times our response then is just

just do one, you know, I mean, just do one or three or five or whatever. Just get started because we know that once they start seeing the numbers, there's no question they're going to come back and do the the 20 or 30 that they were planning to do on the front end. It's just when you know often times those plans sort of get stalled because it's big you know it's a big project a heavy lift a big push you know but we're just like let's do

one and and you mentioned depreciation bonus depreciation works very different than on a modular cabin that's built on a footer this is you can take depreciation just like it was equipment you get depreciation and you can depreciate it over 5 years you know who knows I mean we're expecting some favorable tax rulings coming out here in the next uh hopefully this year but we'll see but you know even if we don't get that. You can still you can depreciate it over over 5 years. And that's

because it's considered depending on the model. That's because it's considered basically a vehicle over that gross weight. That did I get that right? It's it's taxed the same as a piece of equipment. Just like you were to buy a tractor or a brake press or something in your factory, it's taxed like that. So, you know, it's 5year lif same as if you were to buy a travel trailer. You know, 5year depreciation schedule. You mentioned a project of ours. We bought one of the things we do

is we'll is we buy large pieces of property and oftentimes we'll buy that large piece of property from a single focused seller. We bought a couple thousand acres in northwestern Pennsylvania where uh it belonged to a timber company, an institutional timber company. So what's on their mind? Only one thing and that timber. And so we we bought it and you know, of course, we we took a lot of timber off it in the last couple years, but we also taken that several thousand acres and we're

chopping it up into small 100 acre, 100, 200 acre, 50 acre, depending on where it is, and we're chopping it up and and selling on that real estate. There were several areas that were just they were they were just prime. They're just like you you get to that area, you just got to stop and just gaze because it's just like amazing. You know, you got like a 30 mile view. So, we had several of those spots uh available on on select pieces of the property. And

so, we were like, well, let's put two park models up on the hill and let's see what they do. And my my initial reaction was, oh my goodness. Again, I mean, it's out in the middle of nowhere. You got to drive, you know, it's like an an hour north of Pittsburgh and it's, you know, you got to drive, you know, back roads, gravel roads, just, you know, to get to the last couple miles to get to the to to the park. I'm like, well, you never

know until you try. when we get these two up there and they just rent out like crazy and and uh you know our our max our our highest nightly rental You want to take a guess at what our highest nightly rental was just happened a couple weeks ago in a 400 foot unit up there take a take a take a guess gosh uh 750 you're really close it was like 700 just over 700 bucks I mean it was crazy and so these things are renting like

crazy and and so we just keep adding to them just like I was telling you with you know we we tell the people, hey, let's buy one, just get started because we know they're we know they were going to be back. It happened to us and, you know, we put two of them up on the hill and people love them and and they, you know, rented out like in the 90% 90 plus% occupancy rate and, you know, really nice, healthy ADRs and so we just kept

adding. I think we're up to like, I don't know, forget 11 or 13 of them now. And we just we just keep adding them because they just keep doing so well. So, yeah, it it works really well as an investor. You know, like I said, we eat our own cooking around here. We love the space and work models work really well. Yeah, it's awesome. Yeah. Well, you know, things have progressed a lot in the the last decade, you know, not just in the construction and, you

know, what you guys are doing in options, but but also with management. We talk a lot on this channel about virtual management. You can have a property in the middle of nowhere and you can do a really good job managing it with all the tools and and the processes today. And so, yeah, re really exciting. Gosh, to think what you can do to the value of a piece of property that was just for a timber use, you know, and you slap 10 of these things on

there and they're renting for $500 a night. I mean, that in the commercial world that has a, you know, values are based on income, right? And so, if you're jacking the income way up, then the property's worth a lot more. Exciting stuff. Dave, maybe let's let's just talk a little bit. You know, one of the things about being in a remote area, we've got the construction out of the way, right? Because you guys handle that whole piece. comes furnished so they don't have to worry about

that. Management can be done virtually. But what about like some of that basic infrastructure? You know, does are people using solar with these or are there water tanks or what how do those sort of main infrastructure pieces go in? Yeah, I'm glad you asked. There's a number of different ways you can do this. Obviously, many of these places, you know, where you where you would sit these uh park models are not in places where there's public water, public sewer. Obviously, if there if you got public

water, public sewer, great, use that. If you don't, then you can go to a well and you can go to, you know, a more conventional uh sewer program. But, you know, a lot of times you're using a tank, using sewer tank, getting it pumped out every, you know, month or two, whatever, depending on your occupancy. You can put a tank in the ground. We do have some off-grid options. We just uh kind of kind of uh done some research and development, so we just did two

of our own that are off-rid. They are they run on propane for the uh the heat, the fridge, the stove, the you know kind of the you know your heating and all that. And they got a they got a water tank underneath. So you know one of the challenges that we found is is some of those places that I described you know you got you're sitting up in the middle of up on top of the hill with a you know with a 50 mile view or

a 20 mile view. Those are usually kind of the most challenging or the most expensive places to get your facilities to. And so, you know, that may be a a place where you would say, you know what, I I I'll go solar. I'll go generator backup with a propane tank and I'll go off-rid. So, now you don't have to run your electric in from, you know, 2 miles off or a mile off. So, there's ways you can do it. And people love that unique experience. You

mentioned that earlier. People people today are not like our parents and grandparents where they collected stuff. You know, our parents collected stuff like antiques and and collectibles, you know, stuff stuff that you would put on a shelf. Our generation and younger, they collect experiences. And so, if you can get them an experience and go really unique and and and put them in a place that's just that's just amazing, they'll give up the electric. I mean, not saying they won't get electric, but they'll give up the

power lines and maybe a few of those conveniences. Even if you got to go with a with a portable toilet or something like that, just something different. They want that experience. So, there's ways you can go off-rid with these things that that's still pretty special. Yeah. Way way more options than we had. Um, you know, although we left out one one important piece, this isn't for everyone, but you know, if someone's out there and they love the silence and they love the tranquility, but they still

want to watch Netflix, you know, they still want to watch Netflix at the end of the night. I would venture to say that Starlink is probably available in most places these days, but is that uh is that accurate? Oh, 100%. Yeah. I mean, there you're talking about, you know, again, just a game changer. you know, you don't have to run the high-speed line from, you know, two miles off or, you know, a mile off. You can now tap right into Starlink for whatever 120 bucks a

month. And, you know, you're right. People people like that experience, but they also like to have, you know, access to to highspeed internet. So, today you've got many more options than you did, you know, 10 years ago. That's right. All the pieces are in place. Well, exciting stuff, Dave. Great having you back on the show again today. You know, for people that want to check out all of your products, they can go to zukcabins.com. zukcabins.com. You'll see we have park models, we got modular cabins, we

got ADU units. If you don't know what that is, uh, do a little research on it. ADU. A lot of townships and uh, cities are now, you know, allowing a licensed ADU unit in their townships. U, we've got HUD product, which is totally different from a financing and a permitting uh, standpoint. So, we got a fairly broad range of of modular buildings and we're shipping them all over the country. So, check us out. Yeah, that's awesome. That's awesome. Yeah. And we also have a page set

up on our website, strriches.com/cabin. We have some more information about uh Dave and everything they've done there and also a way to to get in touch with them. Really cool products. I've seen them with my own eyes. Uh Dave, it's been a pleasure getting to know you better over the last I don't know how many years now. Uh, but really cool what you guys are doing and and thanks again for coming back on the show. Thanks for having me back, Tim. It was a pleasure.