​There’s no better insight into what makes a short-term rental business profitable than talking with a lot of short-term rental business owners. A lot of property managers, our guest today does just that, but not just that he actually helps them. Sell their business and he helps buyers buy property management business.

So you better believe he knows exactly what makes a short-term rental business profitable. Today we’ve got Jacobian from C two G advisors. He’s helped close over $750 million in transactions for short-term rental businesses. You’re not gonna wanna miss today’s show. There’s a lot of insight, a lot of details that are gonna help you make your business more profitable.

Catch the whole episode to find out the details.

Well welcome back to the Short-Term Rental Riches podcast. I’m happy you’re here. Again, there’s a lot of activity out in the short-term rental world.

I just got back from a conference. A lot of talk these days is about growing a property management business and selling it, and I have just the man on our show today because he’s been doing this for a long time. He knows all the ins and outs. He is the owner of C two G advisors. Jacoby, welcome to the show.

Thanks, Tim. Happy to be here. Yeah, I’m excited to have you here. Um, there really is a lot going on. You know, at least from my perspective, I’ve, I go to a lot of conferences. Uh, we of course manage properties ourselves. I’m in lots of management groups and a lot of buzz out there about growing and selling.

And I know you’ve been busy, but before we get into that, why don’t you give us just a quick background and how you got to be where you’re today. Sure, sure. So I’m, I’m probably one of the unique ones. Tim, I was, I was actually born and raised in this, this crazy pirate industry in the late eighties, and, um, grew up as a kid in the nineties, stripping beds, taking trashes out, probably breaking some child labor laws.

Um, my, my father was, was a kind of a big name in this industry in the nineties and early two thousands. So my brothers and I, um, we were, we were tangentially involved, um, in, in this industry really before Airbnb. I mean, VRB, VRBO was VRBO. I’ve got a, got a younger sister. She was the smart one of the bunch and, and never, never got involved in this, this industry, but.

Really grew up, grew up in and around it. Um, I, I went off in various directions, um, uh, got into the restaurant industry in, um, 2011 and had a restaurant for seven years in, in Nashville. My brothers and I, we all got, we all got sucked back into the industry around the same time in, um, 2017.

So I, I came back in the industry. My father had, um, the company called C two G Advisors. He was a semi-retired and it was just him doing some, some consulting work and some, uh, subject matter expert work. Uh, for a couple companies. And, um, yeah, I came in. I, uh, uh, he mentored me for about a year. And, um, and then I re really started, I, I, I saw the, the need for professionalizing the, uh, the m and a side.

And, um, honestly at that time as well, the, um, the lease arbitrage players, um, they were in the, in the middle of, of raising hundreds of millions of dollars. So, um, so I started, uh, reaching out to them and created really a, a service to help them scale and to, to assist them with, with finding new, um, apartment buildings in urban metropolitan areas.

Um, talking with landlords and negotiating full building master leases, stuff of that nature. Really, really just like hustling. And it was, , it was a fun time. It was, it was short. , Once, once, uh, 2020 happened. , Most of those, um, either went BK or, or kind of found some lifelines or, or pivoted to, to other, other sectors.

But yeah, so we were, we were doing, , we were helping those companies grow and then in tandem, uh, started like a buy side. , Deal origination business for the buyers out there in 2018. Uh, there weren’t many at that time. Um, and so for a couple years we were helping them find, find sellers across the country and helping negotiate those deals on, on the buyer’s behalf.

And then 20 2020 happened, which, uh, uh, I think everyone knows what happened then. Um, at that time, all deals paused for about six months. So it actually gave me a little bit of time to like think about what, what do I want to build C to G into when, when it grows up? And, um, decided at that time to really, really pivot and, and change our business model to, to really help sellers.

To, to work on their behalf, to, um, help them find the, the right partner in deals and, and also to, to help them get the, get the most amount of money they, they can get in a transaction. So, uh, 2020 going forward to now was really, really switching our, our business model to the sell side. And then since then, just building out the team, building out the systems and processes and, and really trying to go as deep as possible within the industry.

Yeah. Awesome. Well thank, thanks for the background and I know you guys have been busy. I know you’ve successfully handled dozens and dozens of deals for my records, over 750 million worth, and maybe that number’s much higher now ’cause things are moving quickly. Uh, but that’s. That’s no small undertaking.

Um, and I know, you know, I talk with property managers all the time, uh, and they’re all set up. There’s a lot of configurations, you know, they’re set up differently. Uh, their books aren’t always in line. They have different commission models, you know, all types of different setups. So I guess before we get into.

How much property management companies can be worth, uh, can you talk a little bit about how you would value a short-term rental property management business? Yeah, yeah. And it, it was funny hearing you say like, different business models, different ways of setting things up. Um, one of our four core values at C two G is, is curiosity.

And uh, just always being curious if, if we’re gonna try to try to be a trusted brand within the industry. Um, we, we always have to be kind of reading everything daily, listening, really getting our ears as close to, as close to the industry as possible because it is iterating and evolving so fast and, um, and we, which is fun, which is exciting.

So every, every time we, we, we meet a new, a new potential seller or client, like that’s the fun part about this industry. They’re all going to run things slightly differently. There’s not a college for short-term rentals. There’s 27,000 different resources that all give, give different advice and, and ways of doing things.

So it, it is definitely an industry with a lot of different business models, a lot of different ways that people do things, and it’s very entrepreneurial. Most everyone that runs these businesses are entrepreneurs. Um, but the, the, the negative of that is they can. They can be pretty siloed. So they have their way of doing things and they, they think it’s right.

There aren’t great, like best practices around, around the industry. Um, your question was around like, how do we, we value sellers. Was that right? Yeah, yeah. With all the models out there, I mean, what are some of the fun, fundamental things that you guys look at to determine the, the potential value of a company?

Yeah, so like in the end, in the end, um, it does come down to the financials and, and how the company is operating. So, um, we will, we will ask the, we will request from the sellers a set of their financials. Most of these sellers or, or companies are operating on, uh, QuickBooks Online or, or, or one of those, uh, accounting softwares.

And so we’ll, we’ll look at the last three years of their financials. And then, um, the, the PMSs that, that the sellers are on can be any, any number of a dozen of them. Uh, we’ll go through and, and run their reservation level reports so we can, uh, we can see what each individual properties contributing, um, to the company.

And then we’ll, we’ll kind of validate or verify their, their, their financials to the booking reports and see, make sure that those are being, being recorded properly. Um, in the end, buyers are the majority of deals. Buyers are going to pay a multiple of a company’s profits. So, um, we’ll go through their, their profit and loss statement, and we’ll help normalize that to how it should look day one, post close.

And so a lot of sellers. They run things through their business. Um, we are not the IRS, so it’s, it’s fine. I’m a small business owner. I, I definitely run some, some personal stuff through my business as well. I mean, we had, we had one seller at one point that had a yacht that, that he ran through his business, which was, which was pretty exciting, but.

So we’ll go through there and we’ll, we’ll look at their general ledgers and, um, we’ll take out certain like personal expenses or one time non-recurring expenses, um, and really kind of normalize that business to what it should look like on the go forward. And then, um, and then apply multiple to that and we’ll go over that multiple that’s applied to that is based on, uh, the quality of the company.

That’s where it’s a little bit more subjective. So we’ll go through and we’ll look at what does the team look like? Um, how much key man risk does the seller have? What about the quality of the inventory? Um, how is the company pacing, uh, with their peak season versus their peak season last year? Uh, what market are they, are they in?

There are just inherently some markets that are more attractive to buyers than others. Um, and so, so it’s a, it is a mixture of some like. Objective and subjective analysis that we do. Um, and then some, some companies are just not, not profitable, which is, which is fine. Um, and, uh, and for those, we look at those more on like a, a price per contract that, that a buyer would be paying.

And, and so those are more based on what those individual properties are bringing in. Um, like top line as as, as a gross booking value. Okay. Some interesting things there. Uh, yachts aren’t short term rentals also. Right? Uh, you know, if you can fit it in, uh, then fit it in. There are some, there are some companies in, in, uh, in and around like Mexico that do some like yacht rentals as well, which, uh.

It can be a pretty, pretty good business as well. Yeah, for sure. For sure. Well, um, I think a lot of our audience might not be familiar with ebitda, uh, and this multiple valuing system. Can, can you explain for those that maybe don’t know, just kind of what that is and what those multiples actually mean?

Yeah, yeah. EBITDA can definitely be a mouthful, and I feel like my life is, is talking in acronyms. Um, it’s, it’s just an acronym for earnings, which is your, your net income at the bottom of your profit and loss statement before is the B and EBITDA interest, taxes, depreciation, and amortization. So those other, those components may be on your p and l as expenses, and if they are, then we would remove those expenses.

So that would kind of increase your net income for, from those expenses that are removed. Um, and then we go through and so we find an adjusted EBITDA is what we find. So first we would remove those, the IT TDA in ebitda, and then we would go through and remove personal expenses non-recurring. One time maybe you switch from one PMS to another and the new PMS is charging you a $10,000 onboarding fee.

Like that expense would not continue in the future, so we’d be able to remove that specific expense. And, um, and so it’s a collaborative process because we obviously don’t know the business as good as you may, Tim, your own business. So we’ll go through ’em, we’ll make adjustments, some assumptions on them, and then we’ll, we’ll have a discussion with you and say, Hey, here’s, here’s what we see.

Are there any others that we’re missing or any that we, we think are some correct or incorrect? Because what we’re trying to do with the seller is to present. To present a picture to them before any buyer looks at them. And that way a seller can say like, oh wow, this is cool. This is kind of how my, the value of my company today.

Um, and they may say, oh, I’m worth a million dollars today. I really want to get to 3 million. And then we can say, okay, well let’s, let’s work on X, Y, and Z over the next year or two or three years. And then you can get there. Uh, but you, you always, as a seller, you want to know. You want to get a really, have someone, like an advisor hold a mirror up to your business before any buyer looks at you, because they can, they can do, they can find any skeletons or, or red flags, uh, early.

So I guess going back to it, once you kind of get to this adjusted ebitda, then there’s different thresholds of how multiples work to it. A buyer will, they’ll pay a multiple of that adjusted ebitda and essentially, you can think about as. Whatever the multiple is, is the number of years in the future.

They’re paying for your adjusted ebitda. So if they paid, if your adjusted EBITDA was 500,000 and they paid a four multiple, that’d be $2 million. They’re paying four years of that. Um, right. Which, which can be cool and uh, but it is also structured in most cases it’s, this is an ongoing business. Yeah. Most of these business, this is a relationship business.

And so a buyer’s not going to hand you $2 million, cash it close, and then tomorrow you can go down to Jamaica, sipping my ties for the rest of your life. Um, generally they may structure it and pay in this $2 million scenario, they may pay a million or million and a half, cash it close, and then pay the other 500,000 or a million a year later.

And, uh, put like a contingency on there saying like, Hey. If you had 50 properties or a hundred properties under management, there needs to be that many under management a year later, or tie it to like revenue. If you delivered $2 million of revenue to us, there needs to be at least $2 million a year later as well.

Yeah. Yeah. Awesome. Okay. Um, well, so yeah, good idea to work with an advisor, get your numbers in line, um, and basically make the best presentation possible, right? Uh, but even then, there are some requirements many times after the sale where. Maybe, maybe the owner’s staying on, maybe there’s management that’s staying on and, and you know, this is all up for negotiation, right?

Uh, you mentioned a a four X multiple. Uh, I’m curious, I’ve heard a lot of numbers out there recently, and some of them are quite high. So could you, could you give me just a, or give us a, an idea of the range of potential here, maybe from, from the lowest to highest, and then what might make them higher? Yep.

Yep, exactly. So, um, sometimes you will hear, or you will just hear sellers throw out multiples. And sometimes sellers don’t even fully understand what multiple a buyer paid for them. Because a buyer may say, Hey, we’ll pay you a million dollars, but if you stay on for a year and you crush it for that next year we’ll pay you another million dollars or something.

So then a seller will take that 2 million. And then say that was the amount the buyer paid at closing, where it was really actually a million. And then if they, if they do better, yeah. So like there’s, there’s some, there’s some goofiness there, um, for sure. But the, the, the thresholds that we’re seeing right now in the market is if a seller is between 250,700 $50,000 of adjusted ebitda.

Typically a buyer’s gonna pay around a three to five multiple for that. Mm-hmm. So in that, in that case where I said $500,000 for multiple of 2 million, um, and, and some of the reasons why they’ll pay that, why it’s a little bit lower of a multiple is, is typically at this size, the seller may be around 50 properties, maybe 75 properties.

It depends on the quality of the inventory that they’re managing. And the seller is going to be very involved in most cases. They’re gonna have a very small team, if any, um, they’re, the seller’s going to be very, uh, going to have a lot of key man risk there. Like the relationships with the homeowners are probably what the seller, there’s probably not a lot of like, systems and pro and processes built out.

Um, and, and the, the buyer’s gonna need the seller to stay on for a longer period of time to kind of help with the transition. As the company gets bigger in terms of adjusted EBITDA between like 750,000 and a million and a half, this is starting to become more of like an actual business versus like a, a small mom and pop.

And at that size, generally there’s going to be a general manager that’s not the seller. There’s going to be a, a decent team built out, um, and there’s going to be some professional. Uh, benchmarking and measuring and, um, uh, of, of your company. And so once you get to that size, typically five’s gonna be the, going to be the, the floor of what a buyer pay.

And it could go up to like a six and a half, somewhere in that range. 5, 6, 6 and a half multiple. Once you get above a million and a half of ebitda, that’s the, the, the actual tam of these sellers. Very small amount. So there’s around 30,000 property managers in the United States, short term rental managers.

Of that, there’s about 300 that manage 300 or more properties. So there’s about 1% of those manage 300 or more properties. And the average EBITDA per property is around $6,000. So if you do 6,000 times 300, that’s 1.8 million. So there’s only 300 companies in the US that have an EBITDA above 1.8 million.

So at that size, there’s much more buyers than sellers at that size. And so the sellers start to have leverage there. And um, and that’s where the multiples can really get pretty, pretty attractive. And really, like six and a half is going to be your, like, your bottom floor. And it can, it can obviously go up from there.

And, um. While I’m just talking about ebitda, typically, like indirectly with EBITDA as it’s growing means the company is getting more sophisticated and more professional. They have teams built out. They’re, they’re scaled, stuff of that nature. So it’s, it, it’s, it’s not like, oh, let’s just get to this ebitda.

It’s a lot harder to get there unless you’re kind of building this foundation. So tho those are really the, the various buckets there. Um, if a company is less than $250,000 a profit or is like unprofitable, and let’s say they’re at 27 units in Gatlinburg, Tennessee, and, uh, you listen to a TikTok influencer that said it’s, it’s a passive industry and super easy to get into.

You got to 27 units, but you’re just like burnt out. You’re like, get me out of here. Um, in most markets there, there’s willing buyers for your company, but even if you’re unprofitable, typically at that point, they’ll pay around, they’ll look at your commissions that your, that your, uh, units bring in and they’ll pay around like a one and a half multiple of your commissions is, is generally how that looks.

And then it’ll be structured as well. Yeah, so for an unprofitable company, still opportunity to sell. Uh, but basically the more systems in place and the more a buyer coming in knows that things aren’t gonna fall apart when, when. The name changes or maybe the name doesn’t change, you know, that stays, uh, on the backend, but that adds a lot more value.

Um, and in the grand scheme of things, I’m trying to just recap a little bit your, you know, ’cause there’s a lot of good nuggets there, but basically only a few hundred companies in the US that have achieved that, that high scale, at least in terms of property count. Ebitda. Um, so we, we also see an interesting thing happening where companies can roll up together, right?

And, and if one company is, you know, maybe operating 50 units, uh, and their friends also operating 50 units, and maybe if they were to join forces, now they’re at a hundred and they’re starting to get some of these scale. Are you coming across this more and can you tell us a little bit about this idea of, of roll-ups if you have come across it?

Sure, sure. So, um, so historically private equity entered this industry. They really, it, like a small one, entered this industry in 2016, but they really entered this industry in the last like three to four to five years. And so, like the traditional private equity play is a, they buy one brand at a time, maybe, maybe two brands at a time.

And the seller. The private equity group, they do this house of brands play. They keep the brand, the seller may sell all their company, but they roll over a, a portion of the purchase price into equity of, of the actual holding company. And then the private equity group then owns 20 or 30 brands around the us.

And, and then all these sellers have a small ownership of this kind of, uh, holding company. And that’s like, that’s like the, the typical private equity play. And there’s a couple groups in here doing it, doing a good job in, in the industry. Um, about a year ago was when, um, a group called Stakeholders kind of came out and started, started doing their circuit and, and talking to.

Talking to a lot of sellers and really, really saying, Hey, let’s, let’s kind of like accelerate this, this private equity play and let’s, let’s get some of the best names and the brands and, and people to all like, come together at once instead of one acquisition at a time. And let’s, and granted, I’m, I’m speaking a little bit out of turn.

It’s, it’s not my, my company, but from my understanding they’re like, let’s, let’s all kind of come together and join forces. Then, um, we’ll get a private equity company to come and kind of buy us all, or a portion of all of us. And, and that way we’ll have like a collection of the best, best brands around the country.

And, uh, and I think that would, I think they’ve done a, a great job. I have a lot of respect for what they built so far. And I think probably this year it’ll be, it’ll be announced to kind of their partner is, and, and we’ll be, we’ll be pretty cool to see that. Um, they got like, I don’t know, 20 or 30 plus companies to kind of come together all at the same time, which I had never seen in this industry before, which was pretty, pretty exciting.

But kind of falling out from that, over the last six to nine months, we’ve had countless conversations with groups saying, Hey, we want to do something like that, but much smaller scale or like, Hey. I’ve got 50 units, like you said, and my buddy’s got 50 units, like what would it look like for us to just like join forces and for all of that?

I’m like, yeah, that’s awesome. That, that all sounds great. However, you just have to be very thoughtful. If, if you’re gonna say, Hey, I’ve got 50 properties, or I’ve got a hundred properties, my friend’s got a hundred properties, let’s combine in a, a best case scenario in like a bull case. Yeah, one in one can make five.

Like, it, it, it could be great. Um, a couple things you want to just understand is if you’re a hundred percent owner of your company and your colleague’s, a hundred percent owner of their company, you’re now going to become partners and partners in any businesses. Um, I’m married. It’s, it’s similar to being married, but sometimes we’re even more, more involved with, with your, your business partner.

So you wanna, you wanna make sure. Both people have a similar kind of philosophy, philosophy and ethos and culture with, with the companies. You really want to be thoughtful about what is this going to look like going forward? Like, are y’all going to create one brand that both brands are going to roll into?

Are y’all going to keep two separate brands? Is one brand going to kind of eat the other brand? What about the, the staff? How do you communicate this to the homeowners? Um. What are, like, what is the reasoning to do this? Like, are you going to actually be able to save on cost? Will you get some purchasing power with some of the software vendors to where you can negotiate better rates?

Um, and, and so like, it is a great idea. It’s a, it’s a lot harder to execute this kind of like merger type of play. And especially the more groups you get involved, the more hands in the cookie jar, the more complicated it gets. Um. But, uh, what I would say is if, let’s say you’re able to do all of that and, and you’re all agreeing on everything, just because you’ve kind of integrated two companies, it’s not really going to move the needle a ton on day one from a buyer’s perspective.

’cause the buyer is going to say, show me that one-on-one, that you guys are better together than apart. So what I would say is like, once doing it show a 12 months of together that the financials together are better and you’re able to grow more and whatever, uh, other, other KPIs are better together. And if you’re able to show that, then yes, you’re gonna get a, you will get a premium multiple.

You, you will get better and it’ll be, it’ll be a better outcome for everyone. But it’s, it’s, it is harder said than done. But, uh, I love the ideas for people wanting to do it. Yeah, great insight and that, that makes sense. You know, merging two business, two businesses sounds difficult. Merging a third or fourth or a fifth just, just grows in complexity.

Um, so I’m, I’m curious, you know, part of what buyers are looking for is. Stability, right? When they buy a business, uh, to know that they’re not gonna buy it and all the owners are gonna walk away, uh, because now maybe it’s under a new company or brand. Can you tell us a little bit, and I’m not sure how far, how involved you are in after the transaction, but do you have any sort of idea on what like the typical churn rates are when someone does buy a company?

Um, and then also a side note, maybe we can tackle this next, but. You know, us at Sly, we’re really excited about all the technology in the space and the opportunity to run a large portfolio with lower costs by being more efficient with AI and stuff. So I’d love to hear just your, your point on, on both those things.

Yeah. So on the, on the first one, um, we at C two G we don’t do, uh, post merger integration. We don’t do PMI work, uh, post-close. Um, what I would say is like churn post-close, it is very buyer dependent, um, for sure on how, who, who the buyer is. It’s also, it’s also dependent on really the, the, the seller, like where they are in their, in their process as well or, or in their, in their journey.

Um, I would say most. Most companies that we’ve seen recently, this was, this was worse earlier on, five to seven years ago, but I would say recently most of them are, are at 90 plus percent of retention. Um, within the first year. And, um, and then like the win-win is where like, not just looking at retention, but like what the net amount of units is at the end of the year.

So if there’s a net growth of, of, uh, greater than, than what was delivered, then that’s, that’s kind of the win-win there. And so like if we’re working with a seller, we’re, we’re trying to tructure deals that if there. Performance, uh, contingency where the unit count has to be the same, and if it’s lower than the purchase price is reduced by that percentage.

We’ll put in clauses that, like if the seller adds properties post-close, or properties come on post-close, there could re replace properties that may churn. And so with the ultimate goal that like, there’s at least the amount of properties, if not more post-close, and we see that actually in, in many scenarios.

Um, and the, the positive thing is like both parties are aligned. Like the buyer, they’re paying money, they want to buy properties and, and obviously the business, but they, they also want that business to grow in the future. And the seller doesn’t want properties to leave, um, because they’ve had these relationships for so long.

So, so it’s a good thing that both parties want the same outcome. And it’s then like, okay, let’s put our heads together on like how do we actually, uh, strategize to make that outcome happen? Yeah, yeah, that makes sense. And then what was your other question on wa Was it on software AI or something of that nature?

Yeah. Sorry, I threw a bunch of questions there at the same time. But, um, you know, uh, we’re, we’re focused a lot on just becoming as efficient as possible and adopting AI as possible. Uh, and so, uh. You know, the higher someone’s EBITDA is, right? I mean, the AI and technology can translate into a higher net income for a company.

And so do you see some of these buyers coming in, anticipating some savings in terms of operational efficiencies and things like that? Or has that not quite made it into the picture? Yeah. So, um, buyers will generally do this thing called like a value creation, um, throughout due diligence. And some buyers just do it internally and don’t share it with the seller.

Some buyers are collaborative with the seller and they kind of go, go through like, Hey, what is the seller paying for all these, these, uh, various vendors? What will it look like on, on our, uh, with our rates? Uh, what about employees? Where is their? Their overlap. Um, what, what rates are they charging the homeowners?

Are they, um, doing four rates a year? Or how are their DY dynamic pricing going? What is their actual like, um. Other ancillary fees they charge, uh, in addition. And how does that stack up to what we charge? So they’ll, they’ll go through historically, like that’s a, that’s a normal, um, kind of process that buyers are going through.

And like typically, so they’re, they’re immediately looking for what are, what are going to be levers that we can pull day one post-close. And it’s, it’s really, it’s lowering expenses and then it’s increasing revenues is kind of their, their thoughts. The, the like, easy low hanging fruit is typically, uh, the purchasing power for softwares.

So if they’re, if the seller’s on a PMS and they have 50 units, like they’re not gonna have a ton of negotiation with that PMS. But if the buyer has 2000 units with that PMS and they’re adding in another 50, they’re gonna be able to get it at the rate that, that, yeah. That their 2050 units are now on. So, so they’ll, they’ll find those savings immediately.

Um, on the AI side, I still think we are, we are a little early on on that in terms of like, we haven’t seen a ton of buyers discuss like what the AI savings are going to be. Um, I think that like internally with, with us at C two G, like we made a, we made a wholesale switch over to Claude at the end of last year.

And, um, and it, it seems like we’ve seen a pretty, pretty big like, step function in terms of what it can do, um, internally for, for our business. And, and really one of the things that for us is it’s, it’s made us be able to handle, um, much more kind of inflow than we would, would normally have been able to handle with, without having to call it like, hire more, more people.

And so I think, um. I think that’s, uh, that’s only going to kind of expand. And, and I think right now it is, there’s definitely a lot of work being done on like the guest communication side of, of ai. Um, it’s gonna be interesting to see how that kind of flows into, um, revenue management and, um, and just kind of other, other things that can be done.

For sure, for sure. Yeah. I mean, it, it basically is working its way into everything and, you know, our vision in the future is that, you know, one person with a good on the ground team, of course, you know, that’s foundational, but the core operations could be managed with a, with a lot fewer people, uh, inconsistency, you know, um, yeah, the, um, the normal margins in this industry.

Or, uh, or around 20 to 25% like profit margins as a percentage of a company’s, uh, net revenue. So like net revenue would be the, the commissions the company makes plus all their gross ancillary fees. So after the homeowners are paid, their, their, their, their components, um, yeah. And if, if buyers or even sellers, just companies are able to kind of increase those margins incrementally, that’s, that’s just.

Significantly increasing the value of your business. And I think that’ll, that’ll continue and we can all continue to have fun until AI and robots take over the world. Right, right. Um, well, Jacoby, you know, I mean all the insights, uh, I mean, I’m sure you can look pretty quickly at a deal and see a company that’s been run well and, and one that’s not running so well.

Um. Can you give us maybe just some of the top insights, like what could people out there do to, to start making their business a little more profitable today? Or what are some of the things that you find? Yeah, so, um, really I think first off is, is actually having visibility into your, your financial statements.

Just understanding what’s going on. Um, we see so many businesses under a hundred properties. Where the sellers like rarely look at their financial statements, or might be their bookkeeper may provide those like six months late. So they’re literally just like very reactive, just working, working day in and day out on just what’s going on in front of them and not being able to make like database decisions.

Um, so the first thing I always tell tell people is like. Hey, you, you don’t have to be an accountant. You don’t have to be a fi finance guru, but you sure as hell need to have somebody on your team. That is, whether it’s internal or external, it could be, it can be an internal bookkeeper. Uh, you can find a, an external, uh, strong team.

There’s a company called Howard Financial that is absolutely just crushing it right now in the industry. Um, and, and really making sure that you schedule. Every month, uh, a meeting internally to solely go over the numbers for that month. And you want to go as granular as possible so you can quickly find if some, some outlier thing that could be happening.

And so I think, I think really like getting set up there. I mean, we see so many companies that they have one line item for revenue and that’s just like a collection of, I don’t know, commissions. Um. Uh, cleaning fees, booking fees, limited damage waiver, whatever, but you don’t even know what it is. And then they don’t have any cost of those revenues.

They don’t have a cog section, so you can’t see what margins you’re making on these. And then if so, it’s just all thrown into expenses. So you just have no visibility into your actual financials, uh, to see if, like, Hey, does it make sense? I’ve been using this outsource. That this vendor for our limited damage waiver, but like, we’re actually losing money on this, like, doesn’t make sense for me to just bring this in-house and, and see, see how that works.

Um, was it, it like there’s just so much, so much involved with the financial side that I think, I think people, people definitely miss there. Um, one thing I would say is like the, your take rate is an extremely important, important like metric to follow. And the take rate is based on what the guest is paying at booking, whether it’s through Airbnb or through your website.

How much of that dollar amount are you taking to your company’s p and l? And so, um, on average the industry’s take rate is around 35 to 40% of what the, what the guest is booking. And so what I would do is this weekend, and it might take an hour, is go and do some secret shopping in your, on your top three or four competitors.

Go and book, do it on yourself first, but go and book, uh, some, some rentals on their websites for four different, for each season of the year. Go and book it on different unit sizes and then different stay links and see kind of what additional fees they’re charging the guests and whether those fees are static or dynamic, whether they’re percentage fees or flat rate fees.

And then see how that stacks up to what you charge, uh, the guest. And, and something will, something will pop out there. Maybe the market charges a 5% booking fee and you don’t charge anything, or you charge a 2% one. And at that time you can be like, wow, okay. You can either use that to either increase that rate.

Or you can use that as like a marketing, uh, plan to get new homeowners. You can, you can start, start reaching out to homeowners, let ’em know that, hey, our competitors are charging this. We don’t charge this. We are, we’re one flat rate, blah, blah, blah. So I, I think there’s a lot of, a lot of information that can be, can be gleaned from there.

Um, the, the largest expense for a company is going to be going to be the team, the staff. So on average, your team is around 20 to 25% of, of net revenue. And so keeping, keeping track of that, um, is, is super important. So if you’re, if you’re looking and your team’s 50% of net revenue, like you either have to grow into that or, or you’re, you’re overstaffed and, and that, that’s, it’s as simple as that.

Yeah. Yeah, those are some great insights. So first of all, we need to know our numbers, right? If we don’t know our numbers, then, uh, you know, then not much we can do, uh, need to look at our, our staff, a percentage of our costs from, from our team members. And I know that’s harder for smaller managers, right?

Because. They have less properties, they have less commissions coming in. And so that’s what we find, you know, a lot of small property managers is really stressed out ’cause they’re trying to do everything on their own. Um, you, you mentioned a 35 to 40% I believe, take rate. Uh, what percentage of that? So that’s include, that’s all the money coming to the p and l for the property manager, including fees and maybe damage waivers and all those things.

What would you say is the average commission rate that the people you work with are charging? Yeah, good question. So the, the commissions are very market specific, so that’s where, that’s where what’s more important to us is seeing what the actual take rate is. And it’s kind of funny actually because you’ll see in some of the, like mountain markets, their commission rate may be.

25 to 35%, but then they have very little, like ancillary fees they charge. Whereas in like Myrtle Beach, um, their, their commission rate or the outer banks may be 12 to 15%. But they charge a hell of a lot additional ancillary fees. So, so you’re just taking more money from one side or the other? The owner or the guest.

Yeah. Um, and then what we’ve seen in like urban markets, like those, those are younger than the more like leisure destinations. So most of those got built on the back of Airbnb and um, we’ve just seen that those, those are typically lower, um, lower commission rates in some of the more vacation markets. So.

You might see 15% or, or so, like I would just stress to people, if you start getting below 15%, like it’s a, it’s a pretty tough game to, to run a profitable company, even at 15%. Like you gotta get the money from someone, so you’re gonna have to charge additional fees to the guests. Like if you’re just straight 15% commission, you’re not gonna be a profitable company.

Um. Unless you’re, you’re taking on properties that are, that are all doing north of a hundred, a hundred thousand dollars a year. So it’s a, you don’t want to be a nonprofit. It’s, it’s enough work. This is a very operationally intensive business for sure. Well, I know, I know we’re wrapping up on time, uh, already.

Gosh, lots, lots that we could dig into. I mean, you’ve got the inside look at, you know, managers across the nation. So a lot to, a lot to learn from you. Um. What would you say? Just a couple quick questions. Would you say that commissions in general are going down the commission rates that people are charging?

I, I think they have gone down in the, the last couple of years. I think they’re, I think they’re probably. In a relatively stable spot. Um, there, there’s always going to be new comp. The, this industry, like in most states, is pretty easy to start a company. Um, most states are not governed by the real estate commission.

So like, there’s always gonna be new groups coming in, trying to kind of undercut the market or whatever. And then like, they may last for a year and then you realize, oh shit, I can’t run a profitable business at this. So then they, they, they sell and go away. But, um. I, I, I think that 15% is probably going to be the, the, the low watermark there.

Um, it’s, it’s just too challenging after that. I mean, long-term rentals is, is I think like eight to 12%. So, um, uh, yeah. Okay. What’s the fastest sale, uh, you’ve closed from, from start to finish? Oh my goodness. Um. We’ve, we’ve done a couple deals, like less than 30 days. Uh, they were, they were really, really small, really small, um, call it 10 to 25 units.

Our average, um, transaction time from like start to finish is four to six months. Um, our quickest. $20 million deal was, uh, we did one that was, uh, 50, like 57 days from start to finish. Which was, which was pretty, pretty amazing. A lot of it honestly is, is, is on the seller. Like there’s a lot that the buyers ask for and, um, it’s tough ’cause the sellers are trying to run their own business and, and get the information for the buyer.

So a lot of it is just like the sellers are like, Hey, I need, I need a couple weeks to, to gather the info. Yeah. Okay. Some of those pretty quick though. And then, okay. One other quick question. I guess in general, how are the multiples trending? Are they going down? Are they going up? Are they stack? They’re going up.

They’re, they’re, they’re going up. Um, and I’ll try to be quick here. Like, we had the 2021, 2022, just like COVID, froth, craze, every, every, everybody was having the best 12 months of their career. And then, um, and then 20 23, 20 24, everything we kind of got on the backside of the mountain. Everything was just slowly going down year over year metrics and almost every market were down.

It was pretty rough and expenses were, were going up. Um, however, I don’t know what went in the water in 2025. And just like a series of large m and a transactions all happen within like 90 days of each other. And so, uh, a company called Stay Terra entered the market with a large acquisition of Prime vacations.

Um, the largest private equity backed group called awayday, they traded hands to a company called Aries. Um, the largest luxury private equity backed called NOC Turn. They traded hands to a company called Calera Capital. Um, cago took Vac Costa Private and then subsequently, uh, CTG. We helped them sell off, um, the, the vast majority of the, of the markets.

And, um, and then, uh, just two weeks ago, um, town Bank announced that they, they sold their, their vacation rental division to, uh, Alpine for $250 million. And the stakeholders group is probably going to, I, I’m sure we’ll see an announcement at some point this year. So all of those companies, if one of those would’ve happened in one year, that would’ve been big news for the industry.

But like seven things happen in this same year, and the buyers of all of those companies now need to three to five x their investment over the next three to five years. So the buyers of those are now all highly acquisitive. And then in all of those processes, there were tons of people that came in, second, third, fourth, fifth, sixth place, and they did a ton of research in the industry and they just lost out on the bid.

So they’re all now looking for, for their first acquisition. So. I think the next, the next three years are going to be, uh, very right m and a wise. So if, if a company can, can build something relatively scalable and, and have a, a focus on, on having clean financials and, and growing their company, like there’s gonna be a, a line of buyers looking for them.

Awesome. Awesome. Well, as much as I’d love to keep digging into the details, I think that’s a good way to wrap up. Uh, for, for anyone out there that’s interested. There’s a lot of opportunity on the horizon. Things are already happening. You gotta get your finances in place. Uh, take note of what Jacoby said, uh, Jacoby.

Where can people find you and your company if, if this is something they think might make sense for them? Yeah, sure. So our website, c two g advisors.com. Feel free to email me, just my first name, Jacoby at C2 g Advisors. I’m on LinkedIn. We go to most industry conferences. We’d love to, even if you’re not looking to sell, we’d love to still have a chat, talk through.

We love talking shops, so if there’s anything you have questions on, um, if we can’t answer it, we’ll we, we should be able to point you the right direction. Yeah. Awesome. Awesome. Well, thanks so much for coming on. Love to have you on again in the future. Uh, and we’ll talk to you soon. Awesome. Thanks Tim.

Welcome back to the Short Term Rental Riches podcast. I’m happy you’re here again. One of the most important things that we all look for investing in real estate is actually making money. But I think a lot of us truly understand what our profit margins are and how much is left at the end of the day.

So I’m really excited to have our guest on today because he knows a lot about this. David Richter, and he wrote Profit First for real estate investing. So we’re gonna dig all into that. Welcome to the show, David. Thanks, Tim. Thanks for having me. Yeah, great to have you here. And, um, you know, there’s, we focus a lot on this show and with short-term rentals.

Mm-hmm. Um, but also traditional real estate. And I think when we get to the short-term rental side, there’s even more going on, you know? Oh yeah. When you have your traditional real estate, you’ve got your utilities, your property tax, uh, things like that. But with short term rentals, there’s all these other little expenses and, and I think it really.

Makes things fuzzy for a lot of people. And I, I don’t think a lot of our, our audience and a lot of people that I meet out at the conferences actually really know how much money they’re making at the end of the day, which is the most important piece. So why don’t you tell us, uh, about your journey and, and your book, uh, and let’s dig into the details.

So I would say that in the single family space, if there’s an exit strategy, I’ve probably been a part of it. Because in my early twenties I got linked up with a real estate company that we grew to about 25 residential deals a month. So we were flipping wholesaling. We had some turnkeys, we did rentals, we did lease options, so we did lots of stuff in that company in my early twenties.

So I got a huge just real estate education there because I was there for five years. I got to really learn how to they grew and how they scaled, but that’s where my eyes were open too. That. Even though we were doing 25 deals a month at our highest point, we were spending about 26 worth of deals out the door.

And it’s like, what are we doing here? So that really opened my eyes even to like, it doesn’t matter that we’re doing all these deals, if we’re not keeping anything at the end of the day, then I was going to masterminds and events. And once we got people one-on-one and not the people on the stage, but like one-on-one, they tell us the same stories.

Like, I don’t know where all my money’s going. I’m like, yeah, we’re doing lots of deals, but where’s all the money? Then I worked with another guy after that stint with that company that had about one deal a month and was in the same position. But that guy actually had about 19 short-term rentals at the time as well too.

But he was still chasing deals and chasing the money and didn’t know he, I’ll never forget one of the things he said to me. He said, I really don’t know. Where my money is. He’s like, I feel like I should have more in the account. But he didn’t have that clarity like you were talking about. And a lot of people just don’t understand when the business finances, especially if you start to do more than one property, and especially if you’re doing more than one property at a time.

Like if you’ve got multiple projects, plus you might have some in service, plus you might have, you know, things just going on six ways from Sunday. Especially like you said, in the short term world, I feel like. It’s there. It just happened so quickly and it’s so active. So that just really did it opened my eyes completely.

That doesn’t matter if you’re doing 25 deals a month, one deal a month, if you’ve got a small portfolio, if you’ve got a large portfolio, that a lot of people just struggle with that clarity, and a lot of people also struggle with financial freedom. Which is why we get into real estate or business or entrepreneur, you know, if you come into that entrepreneur, because it really doesn’t matter how many deals you do, it matters what you do with the money that determines the financial freedom.

So that really. Really set me on this path that I’m on now. I own a fractional CFO company and I wrote, like you said, the book Profit First for Real Estate Investing because I saw this as an epidemic. Like it doesn’t matter where you are on this journey, if you don’t know some of the rules of money and like that you’re actually playing the money game and not.

Date, then it’s like, we gotta teach these foundational pieces. That’s what drove me to Profit First in starting this business and everything. So that’s what we’re doing now. We work with about a hundred people on a monthly basis in the real estate world. So we’ve grown quite a bit over the last few years.

But ’cause a lot of people have just, they quietly raised their hand like, yes, I need the help. I’m, you know, I have no idea what’s going on with the money. Uh, so that’s just a brief overview of from the early real estate days to now. Yeah. And that’s, that’s, that’s the reality. Um. The more, the more you got going on, the more complicated it gets too.

So. Exactly. Um, what would you say, you know, I mean, where, where’s the starting place for someone out there? Yeah. If they’re like, Hey, I’ve got, you know, five, 10 short term rentals and, and I am the exact person David just mentioned, I feel like I should have more money and I have no idea where it’s going.

So I would tell anyone if you’re listening to this, the starting place is the same no matter what. Especially if you have nothing in place currently. Like if a dollar comes into your business and you have one big black hole bank account where that dollar comes in and it gets sucked out again, never to be seen and that swirling vortex of doom out there, I would say profit first.

Is a cashflow management system. So the book is called Profit First because a lot of businesses end up putting their profit last. They say, let me pay everyone else and their mother and maybe we’ll have something someday or maybe at the end of the year, or maybe I could take a draw next month. You know, they don’t have consistent money systems in place, but Tim, a lot of other books.

Have called that out like Rich Dad, poor Dad, like pay yourself first. He says that what about a thousand times in that book and the Richest Man in Babylon and just timeless books about money and the management of money. Tell the the listener, or the reader like you should be taking a portion of that first to be able to pay yourself and make sure you’re healthy.

Make sure the business is healthy, especially if you’re running a for-profit business. So I would tell everyone to start the same. This. What I like about Profit First is to, I think it took it a step further than any of those other books had before because it gave a system. It didn’t just say, you should pay yourself first and stop there.

It’s like, okay, here’s how. How do I start this? Where do I start? What do I do in order to get this magical profit into my pocket? You know, when I feel like all the money’s going six ways from Sunday. So Profit First is built on the envelope method. So that’s been around since the dawn of time, basically, where there’s been intentionality when you get something in, you’re intentional with those dollars.

In recent years, probably the last, I don’t know, 50 years, 60 years, it’s been very popular for the envelope method. Dave Ramsey made it popular probably within the last 20, 25 years in the personal finance space to put little envelopes and put all your expenses in there and name all the expenses. So it could be your, you know, your groceries, the gas, utilities, all that stuff.

There’s money that goes in there every month, and you’re very intentional with those dollars versus like it all comes in and it just all goes out and you have no idea what’s happening in business. I would set up some physical business checking accounts. The very first account, now it’s the profit first system.

So there’s five foundational accounts, but I would have you just start with one. If you’re like, what’s a good starting point? Because this is something anyone can do from this podcast. Like if you wanna learn more, I’ve got more content. I could go deeper and go through all the entire system. But if you’re gonna start somewhere, especially if you’re feeling like, oh my gosh, where is that money?

How do I get a handle on this? How do I put it in my pocket? I would set up one account. Since it’s the Profit First system, you would think I would say a profit account, but I actually call the very first account you should open up the owner’s pay account or the Escape the Rat Race account. It’s there to pay yourself consistently from what’s coming into your business.

Because if you’re not doing that. Probably a lot of other things in your life are affected. Like if you are feeling constantly stressed that you don’t have money or that you don’t have some regular consistent income, even in an inconsistent business, then you’re probably not gonna be making the best decisions for yourself, for your family, for the business if you don’t pay yourself first.

So open up literally a pay yourself first account. We call it the owner’s comp account because it’s the owner’s compensation. So for every dollar. Take a little bit from it. So if you have five to 10, just what you said, Tim, like if that’s, mm-hmm. If that’s who’s listening right now, if you have five to 10 properties, you might say, well, I can’t pay myself what I need from these five to 10, or like, I can’t, where do I start?

How much do I pay myself? I would start with what can you physically do that won’t take the business? You know, like even whether it’s a certain dollar amount or a certain percentage. In the book, we give target percentages even for, for buy and hold properties. Like if you’re this size of business and you’re making this much an income, this is how much you should put in different accounts.

But if you’re just starting out, I tell people, do what you can, but start with at least 1%. Like if you don’t have profit as a habit, it might be forcing yourself to do something you haven’t been doing. And that you might have some bad habits with your money currently, like dollars come in and they all go back out.

So I tell people, start with what you can do. If it’s as little as 1% great, if it’s as great as 50%, and you could take that much from the business because you could start to pay yourself because you’re trying to exit a W2 job. Like this is where I want you to at least have that guidance set up. One account, every dollar that comes in, you put money into that other account and you start to pay yourself consistently.

That’s how you can start this whole thing. So the, the, our industry, the short term rental industry has gotten pretty tough, uh, over the last few years. Yeah. You know, it has like millions of new rentals have entered and more supplies pushed, uh, prices down. And so I know there’s a lot of people out there just saying, David, I.

I can’t pay myself like I’m underwater, you know? Or I, I think I am again. Yeah. Like, maybe they don’t actually know, but I mean, what would you say to those people that are, uh, in that position? Those people, when they come to me, I think they’re trying to battle against themselves. Like, I can’t physically do this.

I always ask them. If you don’t have profit, don’t you think you have a system that should now help you to engineer that profit? Like are you, I usually lead with a question like, are you sick of being where you are? Like, are you sick of being underwater and not having the money that you want? Well, then we have to put good systems and habits in place so that way we don’t end up with the same result.

If you keep, what’s that right? The definition of insanity, doing the same thing over and over again and expecting a different result. And a lot of people don’t understand that. It’s really not the deal flow and it’s really not. I mean, obviously you have to have deals and you have to have properties, and you have to have income.

It’s less about the amount and more about what you do with it. So that’s what I tell people. If you’re not comfortable with where you are now, then let’s put some systems in place. And if you’re saying, well, I can’t do the recommended percentages, that’s why I say start with 1%. Like if you’re living off a hundred percent now.

Can you live off of 99? And if you are upside down, that’s where we have to force ourselves to take a look, to say, okay, if I really, if I’m living on above a hundred percent and you’re shoveling money into your business, do you really have a business, number one? And number two, is there. Do we have to stop the bleeding somehow?

One way is to set up a system like this that it’s no more guesswork. Like either you are living off a hundred percent or you’re living off 150% or whatever, and you’re shoveling your own money in constantly, and this just helps you get that clarity of how much can I put into this other account and take out?

If I can’t do anything, well then I’ve gotta re, I’ve gotta reconfigure things. Whether it’s taking the short term to long term or a midterm, or selling, maybe you have a stinker property. You thought was great on paper, but then now you’re actually in the business and you have the competition. Maybe you’re a couple years into it, it’s like maybe it’s not doing so well for you.

Or maybe you do refinance it if you have any equity, so that way you don’t get the tax hit and you do a different exit strategy at that point. But this is where it needs to give you that clarity. And a lot of people just don’t have that, Tim. So that’s where I would tell people. This is that system that will help you make better decisions in your business.

I don’t know if you’ve ever heard this one, but I was at a mastermind one time and the guy stood up there and he said, if you’re constantly fighting fires in your business, you’re the arsonist. And he said that, and I was like, oh my gosh, that that hits home. Because if you’re constantly running outta money or you’re constantly upside down, we need to do fire prevention versus, you know, like where we’re actively fighting the fires.

And that’s what this system does. It helps you to move from a fire. Fighter to a fire preventer, more like the fire marshal versus the frontline firefighter in your own business because you put one out usually and then another one sprains up and you put one out over there and it s springs up. Well, if the root causes, you have a leak at the foundation and like there’s gas lines and they just keep, you know, the flames keep popping up.

Mm-hmm. Well then we gotta take care of that. And that’s what I believe Tim, this system helps to solve is a lot of those root issues because you always follow the money. Follow the money. Like, okay, if we’re not making enough, we gotta do something different. But all, like you had mentioned before too, a lot of people just don’t have that clarity to know if they’re upside down or not.

Yeah. Yeah. Great points and I love it. You know, start starting with the profit. Um, the good news with our industry, you know, on one side it is complex because there’s way other, you know Yeah. Much more types of expenses, but there’s also much more types of income. Yes. And so there usually is a lot of opportunity for basically everyone out there to really find some of those leaks and move some things around to.

To, to create more profit, you know, whether it’s reconsidering how they’re managing the property, uh, maybe they bring it in-house. Yeah. You know, maybe they’re, they make some changes with their, um, their housekeeping or their supplies or, you know, they work on their, their revenue management strategies. So, okay.

So starting with profit first. Um. I love that. W what would be like the next step? Someone’s like, okay, I, I took a look. I’ve got this account set up and I’m putting 5% in each month. Where, where do I go from here? Well, first of all, you’re building great habits, so I would just commend you. ’cause a lot of people, you know, just they have never taken that step before.

I would also say another key thing you could do immediately that might put money in your pocket that you’re constantly shoveling out the door and you don’t even know it is doing a very simple exercise. To go over everything that’s going out the door. I call it the PR and U exercise from Profit First.

I think it’s in my book as well too, where you mark, you just print out your expenses for like the last two or three months in Airbnb or like short-term rentals or everything that’s going on there. That might be a lot. So like it might only be one to two months that you print out, but you mark every single thing that’s going out the door.

Is it p, R or U? Is it profitable? Like is this something that’s actually either making me money or saving me time? Would be replaceable. Like you had said, Tim, this might be in-house management versus external management. Like what if I replace that? What would that replacement cost be and what would the savings be, and what would the time investment be?

So it’d be like, okay, if I have these things that I’m purchasing, what if I replaced them? How much could I either save or save my trouble? And then you is unnecessary. So you would be like, why am I paying for this? Or the subscriptions that you never really use, or those types of things, or. This is if you start to get a bigger team.

That, you know, you might have someone that is a good culture fit or something like that, but then they don’t, they’re not producing and that’s really hard because usually the two biggest expenses in a business is marketing and payroll. And that’s where looking at your returns on ad and spend or however you’re getting, you know, the leads in the door.

Is a big one. And the other one is, okay, what are the people that are on the team? Is everyone pulling their weight? Especially in lean times. You gotta make sure you’re as lean and mean as possible. So that’s where going through this exercise and having an actual step-by-step process, go through, print it off.

P-R-N-U-P is obviously the things you’re gonna keep. It’s profitable to you. R is what you can look at to try and replace or remove or, you know, like to move to something else. And then you would just be, I gotta cut this. Why do I still have this? We, we’ve done this exercise so many times with the people that we work with, Tim, and like on average it’s at least a thousand a month.

People are cutting, you know, like they’re mm-hmm. They just have a thousand dollars of waste laying around. We’ve got some crazy stories with some bigger investors where they cut like 50,000 a month and I’m like, this is nuts. You know? And a lot of times they just never had a system to go through this.

Mm-hmm. So number one, I’d set yourself up for profitability. By making sure that every dollar that comes in goes to at least another account that gives you some profit and gives you a system. Then from there, I’d be like, okay, now that’s kinda like offense where a dollar comes in and I want to make sure that we’re offensively taking this and making sure that we have dry powder.

On the flip side, it’s like, let’s also make sure that we have as much coming in and going to our pocket and going to the bottom line as possible, and having an exercise like that would be another great step to take. Yeah. Awesome. Okay. PRU is it, is it profitable in terms of time or money? Time. Time is a big one also.

Mm-hmm. Is it replaceable or is it unnecessary? Uh, so basically we start paying ourselves. We look at all of our transactions, we identify if they fit in that PRU system. Um. One of the challenges with our industry is that there just are a lot of transactions there, there, and they come in from a whole bunch of different places.

So I know, you know, fortunately, like with AI today, like you can grab a whole bunch of transactions and give it to Claude or Yeah, a chat GPT and it, it can help out. But do you have any recommendations, uh, just on the structure, like setting these up with, you know, maybe a FinTech bank or something like that, that, that makes some of these, these structural pieces easier?

There’s actually banks out there that are like Profit First friendly. There’s a couple ones like relay fi.com. They’re Profit First base where they’ll let you set up, I think 20 accounts for free. So you can name those accounts. You can also do automatic transfers, so like when you get income in, you could set it on certain days of the week or certain days of the month, and it’ll transfer into the accounts that you want to either by percentage or by an actual dollar amount.

So that’s one of ’em. Another one’s base Lane. Com, which is more built for, I believe, the rental industry. So if you’re a buy and hold investor, then that’s another one to look into. Base lane.com. So yes, there’s a couple of them out there, Tim. There’s a couple others that we use internally as well. So those are just a couple of ones that are, um, they go out there and they are actual profit first type banks that help you set up multiple accounts and don’t have a bunch of fees attached to them, and you can do all the transfers that necessary.

And they even help you with some of that automation too. Yeah. And some of ’em even pay you interest. Yes, exactly. Uh, you know, much more than like a brick and mortar bank like Wells Fargo. So, uh, I would check those out. I think we’ve recommended baseline on the show before we, uh, we use Mercury for our business, which is also another FinTech bank.

I mean, we can literally create a new account in like one second. Yeah. Uh, we can issue, uh, digital credit cards with limits and um, so they have some really good options as well, so. Okay. Um. What’s left after the PRU stage? David, where, where does someone go from there? Or if you have, have five to 10 rentals?

No, I, well, there’s there. I mean, I could tell you all the steps to the end of time here, but another great thing if you don’t have it in place currently is getting someone on your team that understands real estate. Like a good bookkeeper or a good accountant or a good, you know, if you need higher level help, uh, like a part-time CFO or something, making sure that the people on your team understand your industry.

’cause that’s one of the biggest mistakes I see people make, is that they link up with someone that’s cheap or overseas and they don’t understand. Real estate investing, especially if you’ve got a short-term rental with about a thousand transactions coming in and out and you, they’re not sure, okay, where do I classify this?

What do I do? Or if you ever purchase a long-term or short-term rental or if you’re just doing it even a flip or a project or if like you’ve bought one and it needs work and you’re doing that, it’s like, where do all those transactions go? You do not want to go to at tax time or like down the road and say all this is wrong.

You not, didn’t really have the clarity. ’cause that’s part of being a. Good business owner as well too, is not only knowing where your cash is going, but knowing what your numbers are telling you so you can grow the business like you want to. And a lot of people just don’t have the right people in place that are really helping them because either, number one, they don’t know real estate, or number two, they might do the transaction, but they’re not meeting with you on a regular basis to be like, okay.

What’s going on? Here’s something that I see. Here’s something that you could do that type of thing as well too. So you need to make sure you have some good people in your corner that actually understand your industry, and that will at least give you the time of day that will have some type of meeting schedule to go over the numbers because.

The $10, $20 per hour task is like the data entry, right? But like the a thousand dollars per hour task is taking that data and analyzing it and saying, what can I do with this? You know, so, so that way you could have better PRU conversations. That way you could have better cash conversations that way. You could say, okay, where do I need to put the money to grow this thing if I’m, if I have five to 10 now, how do I double to 20?

Doors and make sure that I don’t go crazy and don’t have too much things going this way that way. So this is where a lot of people forget that the financial side as you grow, should grow with you. So if you’ve got a bookkeeper, make sure they’re real estate investing. If you’ve got a good real estate investing, then the next step is like, okay, do you have a leader helping you get to that next stage and make sure you’re still profitable?

It’s like making sure your finances grow with the rest of the business. A lot of people, usually that’s the last area. That they worry about. It’s like, well, let me get the deals, the marketing, the operations, which is great. You gotta get all that front end stuff, but just don’t forget the backend because at the end of the day, we all want financial freedom.

And if you don’t have the financial systems to grow while you grow, you’re gonna say, oh shoot, where did all that money grow? What is going on here? So that would just be the next thing, and making sure you have the right people in your corner team. Yeah, no, great point. Um, I’ve recommend recommended a book, uh, a lot of times called Who Not How.

Oh, yeah. I think it’s, I think it’s by Dan Sullivan and Yep. You know, one of the things they talk about is if you’re, if you’re procrastinating in something and maybe that is organizing your finances, it’s probably because you either don’t like it or you’re not good at it. Right. But there’s someone out there that is good at it, uh, and that does like it.

Um, and so yeah, who not how, you know, if, if you’re in that position, you got a bunch of deals coming in and, and you have no idea what the numbers actually look like? Uh, probably, probably time to get some help. Um. Do you have any tips, David, though? I, you know, we’ve got a big range of listeners, uh, yeah. On this show.

Some people that are just getting started, some people that have really large portfolios, and I know some of the people that are just getting started are thinking, oh gosh, I, you know, I can’t afford to, to bring someone in and I want to do this myself. Uh, and I can imagine a lot of people get in and, and they maybe get this set up.

But then it falls apart like two months later. You know, one of the nice things with the automatic transfers is that it just happens automatically. Right. But, uh, do you have any other tips or suggestions for someone out there that’s like gonna try this on their own? They’re just getting started and how to.

To keep consistent with it. Yeah, so automate it as much as possible. So if you are going to start profit first, that’s the nice thing about starting there, is you don’t need to be a financial wizard. You don’t even know how to use spreadsheets. Like you don’t even know how need to know that stuff. All you need is to set up the bank accounts, and especially if you set it up at a bank that does the automatic transfers, a lot of that can happen automatically.

Okay. You get your first deal under your belt. You’ve got all the money, you’ve got, you start to get rental income, you know, or the short term income coming in. Okay. It hits your account and then by a certain day, whether it’s Friday or the 15th of the month or whatever it might be, it then transfers by how much you want to into those accounts.

And I would start with what the most you can do, what’s the most you can do to keep. You afloat and to keep the business afloat. Is it 50 50? Is it, you know, a split percentages? That’s why I would also recommend picking up the book. You know, if, just a shameless plug there, if you want more guidance. ’cause in there I just give you like the 1, 2, 3, here’s how you do this, here’s how you get where you want to with profit first.

But the best thing, Tim, is for them to be consistent. So make it as foolproof as possible by setting it up at a bank that allows the automatic transfers and you could just have it done automatically and then. From there, if you need help with the numbers and stuff, bookkeepers really even, even in the real estate industry, are still pretty cost effective.

So if you need someone like that, that would be one of the best First hires is either an assistant that can also do the books or an actual bookkeeper, but as long they have to have real estate investing knowledge. So getting someone to help with that side because you don’t wanna go to tax time and be like, ah, shoot.

You know, here we go again. Now I’ve gotta get all the receipts and all the things for the last year and I don’t remember what this was from, you know, a year ago. You know, that type of thing. You just want your future self will. Thank you. If you set some of these up right at the beginning and. Even if you’re at the beginning, profit first can be put on automatic.

The other parts, the parts that are the financial end. Unless you are just inclined to the numbers and the spreadsheets and that type of thing, you’re either gonna need to get someone to help you or just run a very simple spreadsheet or something. Can you just do all your transactions in and out for the month, or at least download your bank statements, you know, once a month.

So that way you can put it, you know, like for your account to do when you first file your taxes. But that’s what I would say first. Tim is profit first can be almost automated as much as possible. If you put some of these key pieces in place and just start with what you can do, then you just put it on autopilot.

So when money gets deposited, you know it’s gonna transfer on those specific days. Good points, and we wanna make sure everyone knows how to, to get in touch with you, find your book. Yeah. Uh, but just one other question as we, we kind of wrap up. So, um, we’ve already identified, we know, I mean, I know talking with managers and owners, investors, basically every day, like this is one of the areas in the short term rental industry where people just leave it.

In the back, you know? Yeah, for sure. And they don’t really look at it. And, and part of the reason is because it’s complicated. Uh, and so there are some, some accounting programs that have popped up specifically for short-term rentals. So we kind of have several pieces here, right? Like we, we need to get some structure in place to make it easier, you know, to facilitate automatic, automatic.

Transfers, things like that. We need to get a system like, or your system in place. Uh, but then there is the backend piece too, you know, like the actual accounting. And a lot of people use QuickBooks. So I’m curious, is that what you find most people are using still as QuickBooks? For smaller, smaller operators, it’s still the, yeah, even small operators, it’s still the elephant in the room at this point.

No one’s come to dethroned them. We’ve got a couple people using other softwares like Zero or FreshBooks or that type of thing. But yeah, I would say out of our clients it’s like 98% and there’s not many people on other things, but. If you have a system like that, the nice thing about a system like that, or any of the ones that I just mentioned there, a lot of ’em have automatic functionality where you can literally set up your bank account to sync with QuickBooks.

So at least, even if you don’t know where to put ’em, because you’re not an account and you don’t know how to, you know, categorize the all the transactions, you can at least pull all the transactions in for the month. So that way, even if you had a thought like you were doing a lot at. Transactions. You could still have everything there so nothing gets missed.

That’s the biggest thing, Tim is like, you just don’t want anything missed. So a system like that really helps you catch everything versus the manual entries or ledgers or spreadsheets, things like that. Yeah. There’s a, another one that I started using, I don’t know, maybe a year or so ago, called Monarch. I don’t know if you’ve heard of this, this?

Oh yeah, I’ve heard of Monarch. Yep. Yeah, monarch’s great. For anyone out there that is unorganized still and you got a bunch of accounts in a bunch of different places, uh, that can help you centralize. Never really low, you know, annual fee. Uh, and it’s a place where you could organize all those expenses so you could export them and go through the process and making sure that you’re profitable and identifying your transactions.

Yeah. Um. Awesome, David. Well, uh, you have a podcast. Uh, tell us about your podcast and your book and how people can get in touch with you. Well, there’s one site you could go to for all that simple cfo.com, simple, CFO, like chief financial officer.com. That’s where we have a podcast page, that’s where we have the link to the book.

The book is on Amazon, so if you want the physical book, you could get it there. I think we even give a downloadable version of the book on the site as well too. Like you could get the free book at our website. Uh, you could also book a call with our team there if you’re like, Hey, I’m running around like a chicken with my head cut off and I need some help getting this under control.

We have different services like the bookkeeping or the fractional CFO or the CPA things for real estate investors specifically, we work in the short-term long-term space. So if you need that, that’s at simple cfo.com. Kinda your OneStop shop for all things profit first for real estate investing. Awesome.

Well, uh, appreciate you coming on, David. What you do is, uh, super important. I mean, if if people aren’t staying above water, then, then, you know, it’s, it’s, it’s not a good ending. Right, exactly. So really important, uh, appreciate you coming on and, and thanks for all the advice. Thank you, Tim. Take care.

Well, welcome back everyone to the short-term Rental Riches podcast. I’m happy to be seated here virtually with yet another founder, a tech founder, uh, and a company we actually personally use in our portfolio. Uh, today we’ve got Thomas t Wald with us, and he is the co and founder of Charge Automation.

Welcome to the show, Thomas. Thank you. Thank you, Tim. And, uh, thank you for supporting Charge Automation, trusting in charge automation being a customer. So happy to hear that. Yeah. Yeah. And we’ve been happy. I know, uh, we’ve given you a few shout outs, uh, on the podcast Before, you know, the, the podcast is really just about how we’ve been operating our personal portfolio and growing and, you know, changing with the times.

And technology is one of those pieces that’s always changing, especially today. I mean, it’s at like warp speed. Um, but would love to hear a little bit about your background and, and, and how you got to be where you’re today. Um, so I think my background is very similar to a lot of people, how they end up in this industry.

Uh, almost accidental when I’ve discovered that, um, you know, um, renting a property short term is way more profitable than long term. Um, I used to be a real estate agent prior to that, so I’ve had some, uh, property and real estate experience and this is, um, way back in 2011. So Airbnb was just a year or two years old, so it was new industry.

Most people didn’t understand or they have never heard of Airbnb, the word. Um, and I, um, had some investment properties that I started doing short-term rental on, uh, quite early. And once I kinda discovered that it was a good profitable, um. Business. I scaled it up, um, doing, uh, rent arbitrage model. Um, and we’ve scaled to as much as, uh, 200 properties, um, very rapidly.

Um, and would scale comes, uh, bottlenecks and processes and the, the disadvantage that we have as property managers. Is that we don’t, we’re not like hotels where we have everything in one building. We have scattered, um, locations. So you can’t meet all your guests all at once when they’re checking in, uh, or different times of the day.

It’s just not scalable. And one of the biggest challenges that, uh, we were having at the time, um, was Airbnb was growing, but um, booking.com was already established and I was, I put my properties on booking.com, um, and we start getting a lot of reservations. So unlike Airbnb, but with booking com, you do have to process the guest credit card yourself.

Mm-hmm. Um, so. Uh, that I, and with pushing the credit card also comes a lot of, uh, frauds and chargebacks, things that you’re not really exposed to, uh, primary with, uh, Airbnb. Right. And given that I’m a software engineer by education, I built a, a tool to help me, uh, collect the payment automatically for my guests, and at the same time do an extra authentication verification process when collecting the payment.

Um, and that kind of eliminated our fraud chargeback. And we, we literally, and at scale, we were doing about $20,000 that we’re losing chargebacks, uh, a year. Wow. And it literally went down to, to, to zero. Um, and we’ve added a little more, um, you know, guest verification process along the way. So that kind of reduced a lot of our issues that we’re having with our guests and frauds.

Um, and that was pretty much the beginning. Um, and when other hosts in the community kind of discovered about my tool that was having the same issue, Hey, you know, can I use your, your, your, your software? Uh, ’cause I’ll have the same issue. And funny enough as, uh, our first client or person that reached out to me was all the way from Australia.

Uh, I’m in Canada. Mm-hmm. And they had 600 properties. And far was the biggest issue, uh, they had and they said, I want your software like yesterday. Um mm-hmm. So there a bit of modification for them to be able to use it. And we did that. Um, and the revenue, you know, from that customer was about 10,000 a month.

Um mm-hmm. Which was pretty, uh, exciting. And I, I realized that, okay, there’s something here that people need and want. Um, and I start really to focus on the software component of it building, you know, there. What started as a payments and verification component that, but then, um, the customers start saying, Hey, since you already have the credit card on file, since you already have, you know, doing all these things, can I also have ability to sell extra services?

Like, you know, airport pickup, uh, early check in, late checkout services. Um, and then we’ve added that component. And then they say, Hey, you’re already doing this. Can I also ask them a little more questions about why they come into my property before they arrive? Then we added ability to add some custom questions as a part of the check-in process, and then they said, okay, you’ve got all of this.

It’s amazing. But once they do all of that, can I have like a guidebook where they can read the checking instruction and get the access code, and then we added a guest portal or guidebook. And there was no definition of what we’re building at the time was brand new, but it is what’s known as right now, guest experience software.

So we kind of built it accidental, but also, you know, uh, product led growth where our customers are requesting, um, for, for, you know, what, what they want software to be. And, and they built it. And this is what it is now. It’s a full guest experience solution that handles everything from checking to checkout once the guest makes a reservation.

Yeah, exactly. And so yeah, you built it first for your own portfolio, solved some problems. Uh, obviously lots of other people in the industry have the same problems and now here you are, you’re a software company. Exactly. It is software company. So yeah. Such a long answer for short question, but yeah. No, but, but your guys’ tool really does a great job at, you know, facilitating all of that.

Um, and you mentioned, you know, one of the big things, chargebacks and maybe, you know, for the operators out there that are just getting started or they maybe have one or two properties and haven’t made it onto booking.com, or they haven’t made it onto these direct booking platforms where we always take the payments.

Maybe chargebacks doesn’t seem like a big thing, but once you get to that stage and if you’re planning on growing your portfolio, I mean, they are. Dramatic. You know, someone stays at your property and essentially the chargeback is they go to the credit card company and say, Hey, this was fraudulent, or whatever.

They dispute the charge and the credit card co company gives ’em the money back and you’re out. You, you had someone stay at your property potentially, and uh, they stayed there for free, so. It is a massive Im, it, it’s, it makes a massive impact. It is, and I, I mean, I’ve had many, many stories. Um, and it’s not just a chargeback.

I mean, that’s one component of it. So one is obviously the guests, uh, you know, stayed enjoy their estate and then they filed a chargeback. Now you lost our money. But then typically those kind of guests are also trouble. So they will smoke in the unit, right? They’ll throw a part in the unit. They will, they will, yeah.

Destroy the place. Um, so your cost is not even the chargeback, it’s the whole process. And you have to block the property for a certain period of time. You’ve gotta cancel the next booking. It is extremely painful. Um, so if you can prevent it, uh, prevent it. And most people think that if I can just, um, have all the evidence, I have pictures that this person stated in my.

Property, I’m gonna win this chargeback. Um, unfortunately, you know, 99% of the times you don’t win those chargebacks. Um, right. And they’re fraud. It’s a hundred percent you don’t win. So, um, it’s better to avoid than trying to win it back. Right, right. Exactly. Yeah. They often are not sure most favorite guests.

Yeah. So having that go guest authentication upfront, uh, really goes a long way. Mm-hmm. Um. Let’s see here. So where do we wanna take this next? I know there’s a lot of different ways we can go. Uh, chargebacks is definitely a big one. Um, you know, payment gateways and sort of automating that. I think the reality is, is that the.

There isn’t unfortunately a single tool out there that does everything perfectly or everything in the most efficient way. Uh, and so one of the reasons we came to charge automation also is for your just payment gateway, um, you know, to have a, a more reasonable fee for processing charge, uh, charges with Stripe.

Can, can you talk about kind of what that payment gateway is for those of our audience? Probably don’t know. Yeah. I’m glad you touched on that point. So. I think most, uh, PMSs typically support one or two payment processors, usually Stripe plus somebody else. Um, and. If you’re using Stripe, obviously you could use charge automation to be able to be able to collect the payment and avoid fraud chargebacks, um, and save some fee along the way.

Uh mm-hmm. But let’s say you are in a country where Stripe is not operating or you’re in a country where, uh, you know where Stripe has banned the, or, you know, close your account for whatever reason that may be. So now you’re stuck. Now you, you need to work with another payment processor, but the problem is that does that payment processor that you want to work with does not work with your PMS.

And this is almost accidental also how we we, how we got into this Because the customer came to us and said, Hey, Stripe closed my account. Here’s the payment processor I want to use. Here’s the PMs I want to use. You know, can you do this for me? Connect. Connect this two. And then we’ve pretty much been able to integrate that new payment processor where we connect the PMS and the payment processor with the bridge and the logic in there.

Um, yeah. And pretty much every customer that came in requested for another one and for another one, and for another one, before we know it, we have over 120 payment processor integrations. So now anybody from any PMS can use pretty much any payment processor in the globe, um, which is wow. Uh, like I said, it’s accidental, but it opens a lot of, um, opportunity for people to be able to choose the PMs they want to use and the payment process they want to use without having to compromise either one of them.

Yeah. That’s amazing. Wow. So you guys work with 130 payment processors? Yes. Under 30 plus now at the stage. Wow. That, that seems like a lot to keep track of. Uh, I’m sure some of them are more commonly used than others, but how, how do you guys manage all of that? You know, it, it, it’s when you’re building it, you don’t realize it.

And then when we have to maintain, update the APIs and changes, it’s really, it becomes, um, a handful I would say. Um, and we’ve kind of, I mean, after building so many, you, you do have a process. And some of them are just one-offs. ’cause, you know, one customer with a large number of portfolio properties wants to use it and some of them are like concentrated where a lot of people use it in certain countries.

Yeah. Um, so, um, we, we don’t keep and maintain all of them. We, we see that the activity, the usage, and there, there’s still customers using it. Then we continue to, to make updates. But some of them customers don’t use them anymore. They just, you know, staying there. So those ones we just kind of. Keep them, um, off the shelf until a customer wants to use it, then we may have to, you know, update some of their content.

Gotcha. Gotcha. Okay. Well, most of our audience is in the US and most of the short-term rental operators, owners, investors are using Stripe. Curious to hear from you. What are maybe like the top three payment processors that you see out there in terms of functionality, flexibility, and, and maybe pricing, you know, what are the best ones?

Well, I would say. I think, like I said, Stripe is a default one because it’s, it’s already available in the PMS. It is the easiest one to get an account with. Um, but it’s also not the cheapest. Um, so most, most people, um, go with that at the default. But once you scale up and once you start doing. Some serious volume.

Um, then that extra, you know, 1%, that extra half a percent, uh, you’re paying, uh, becomes significant. Uh, when you, when you do the total. And that’s where then people start evaluating. What other options, you know, are there? Um, and this is where, I mean, um, in us, you know, obviously authorize.net is a, you know, a second probably most popular one, um, in the industry.

Uh, but also a lot of like, um, big payment processors, whether it’s Chase Payments, um, or there’s Elon, um, a handful. Um, I mean, a quick Google search will probably give you those ones, but, uh, these are some of the popular ones. Um, that, that, that we work with. And most people usually switch, uh, from Stripe if they, if, if cost saving becomes an important factor.

Mm-hmm. Um, and, and, and we’re the, and we’re the pretty much, I would say, the only company in the industry that’s solving that problem at the moment. Yeah. Yeah. Yeah, the more properties you add and the more direct bookings you do, or the more you know bookings you do outside of Airbnb, or if you’re taking payments directly on booking.com, the, the more important these, these little percentages, uh, become, um, right.

You know, and that’s just another way for us in the industry to be more efficient and to have more net profit. And I think a lot of people out in the industry right now are, there’s a lot of buzz about upsells, you know? Mm-hmm. Uh, I think just because the industry’s gotten so competitive and people are trying to find ways to, you know, squeeze a few extra dollars out.

Uh, but this is one of the things that charge automation does really well. Uh, and helps facilitate. Can you tell us a little bit more about, you know, what you guys have built and, you know, chargebacks in general, or not chargebacks, I’m sorry, but, uh, ourselves. Yeah. Yeah. So there’s a general shift in the industry, uh, because it’s gotten very competitive and now the old school way is, you know, let me maximize, um, my A DR, right?

Um, and average daily rate, right? But I think how you have to think about the new way of thinking is not about, you know, how much you’re making, uh, for that booking, but it’s how much you’re making for that stay. So, so you may be competitive on the rate, but then you have all the additional ancillary revenue opportunities where you maximize that booking.

So that booking might have been a $2,000 booking, but by the end, that stay end up become a $3,000 stay because the guest has spent on a few different I items, so. Mm-hmm. Whereas you might have lost a customer if you had priced your daily rate at very high, but not have any upsells. So it is a competitive strategy and it is, uh, the modern way of competing in, in the, in the competitive SDR industry, uh, even the hotel space.

Um, so having said that, um, that’s where then you wanna see, you wanna optimize your upsells, you know, how do you drive maximum conversion, upsell. And one of the biggest, uh, friction point in upsells is when you present the guests, uh, an opportunity to buy upsells. A, you don’t wanna bombard them with hundreds of upsells or like some third party website where you just load up everything.

It has to be very curated. Um, and then from the curated point of view, once they wanna select, you want to show the credit card that they already use with the reservation on at the same level. So you give the Amazon experience where when they see the payment methods already attached, it becomes a one click up.

So where you just add and complete the payment. Right. But if you ask the guest to pull out their card and enter the numbers again to complete that payment. Now, statistically, uh, and this is a, a data, um, that was on done on research is it’s about, uh, 17% loss when you don’t have the payment method on file in the conversion received.

Yeah, so, so now if you have the card on file, you’re converting 17% more, um, which is, which is huge. So you’re giving the Amazon checkout experience. Um, and then the second part is. D you have guests coming from different parts of the world and they’re used to paying the way they, they pay locally. So you want to give that local payment experience.

So if they’re used to paying by Apple Pay, give them an Apple Pay option. Uh, Google Pay, uh, if they’re from Brazil, let’s say they, they don’t wanna pay by picks if they’re from, um, mm-hmm. Uh, let’s say someplace in Europe, um, like Holland, uh, it’s, they pay by ideal. That’s the way of people have people pay.

So not everybody takes just raw credit card numbers as a way of payment. So adding that, and I can’t remember the conversion, but I think it gives you another seven, 8% better conversion. Um, so, and that’s what we do. We charge automation, is that we give the guest ability to pay. You could be using Stripe, you could be using any payment processor, would give the guests a chance to pay through all.

Preferred payment methods and based on where they are and based on their browsers and location, we’ll load up the payment method that is used by the guest, so he’s more likely to convert and pay that upsell. Uh, and with that, uh, what we looked at is so far our customers are paying, spending over $180 per reservation in additional upsell revenue.

Um, mm-hmm. Uh, which is huge. And if it, you know, so if a property is taking, uh, four or five reservations for the month and you’re already at, at a thousand plus, uh, an upsell income, but all these little optimizations is where you maximize not having, Hey, I have an upsell. I could sell it. But it’s how you sell it.

How you convert it is, is, um, is the most important part and. You know, we’ve spent years and years, you know, optimizing those things and looking at the data and what’s working, what’s not working, AB testing to say this is how customers are converting. So, um, using professional tools is what helps you convert more upsells.

Yeah, definitely. Yeah. Some excellent points there. I, I know there’s. Just over the years, over the last decade, there’s been so many guidebook options that have come out and, you know, they’re all helpful for the guests and the guests like to see extra information, but removing those steps, basically, you know, making it easier for someone to, to add things on.

I, I think getting the reservation in the first place. Is one thing, you know? And yes, you’ve gotta have competitive pricing and make sure you know, you know what you’re doing with your revenue management, know what your market’s doing. But then it does create a whole bunch of opportunity after you already have someone, and I’m sure, you know, depending on your market, you, you could come up with some data on, you know, how likely it is for people to purchase the airport transfer, how likely it is for people to, to purchase the chef service or whatever it happens to be.

Mm-hmm. Um, to really raise the overall net income. Right. Yes. Uh, go ahead. Yeah. Um, and so, yeah, making that easy is, uh, is a big part. I know before we were with charge automation, we, we tried a lot of different things. You know, the PMSs have their own versions of upsells. Uh, there’s other options out there.

But storing the credit card information, like you said, making it easy goes a long way. Goes a long way. Indeed, indeed. Um, and also, uh, when, uh, people are on vacation or on a business trip, I know they’re not there to read paragraphs of your, your guide or, you know, along information. Um, and the old way of doing it was like, you know, when once a guest books, you know, they will receive five messages, you know, and it will be like, Hey, here’s a link to complete your check-in.

Um, here’s a link to do, uh, ID verification. That’s a separate one. Oh, and if you wanna read our, our, about our, about property, here’s a link for it. Um, and if you wanna buy some services, here’s another link. So now you gimme four or five different links, uh, as a and as a guest, I, I don’t want to think, I just wanna, you know, know, do what I have to do, uh, without much thinking.

So. Of combining all that, you know, fragmented experience for the guests into like one smooth process where they don’t think, they just click, click, click, and, and they’re done with it, uh, is the way. Um, and like I said, the last component of the, the check-in is once they complete that process, they do, I know online checking.

Um, and they pay the secure deposit or the balance. They buy some extra services. Um, and then the last step is, uh, give them access to the guidebook where they can see the information without. Changing the links without going somewhere else. Just keep it in in the same journey. Yeah. Well that’s, it’s a big part of the guest journey.

What you guys have tackled, you know, from payment to, to upsells, to guidebooks. What do you, what’s next for charge automation? I mean, what’s the next big, uh, thing to tackle? Good question. Uh, so, uh, I mean, we have a lot of exciting stuff that, that we’re working on. I can’t just talk about yet. Um, but. In terms of, uh, the product, um, you know, we’ve been at it for quite some time.

Um, you know, I think almost, almost, uh, almost 10 years now. So it is very mature product from that point of view. Um, but at the same time, you know, we are still a company that’s working, like we’re an early startup. Um, we add, um, I think on, in every sprint, which is our sprints about, you know, uh, about a month or so, uh, in every sprint we know we we’re adding about.

50 60 improvements or features, uh, to our product. And it’s changing, uh, drastically, uh, every time. And this, at this point, it’s more, it’s not more one of the big things, but it’s more like on the micro little things that really impact the guest experience. How do you make everything extremely smooth without, you know.

And it’s every, any friction at all. Um, yeah, and it’s just, yeah. So it’s a, it’s a micro fine tuning. Uh, our solution is what we’re focusing on because we’ve tackled all the big important items and then making it to work very seamlessly with your PMS. So, you know, you’re not spending too much time switching tabs.

Everything is, you know, readily available to you. Um, so all this little increments, incremental improvements that we’re doing is our focus.

Yeah. Um, well, I know. Software has just gotten easier to make now, you know what I mean? It’s exciting. We can use AI to help us code and, and do things much faster. I’m not a developer, but, uh, I, I do like technology and I, I try to stay up to date with things. How do you see our industry playing out? As someone who’s been in the software side of things for the last 10 years, knowing that there’s lots of operators out there, especially the larger operators trying to do some of these things in-house, you know, or maybe they’re just like you have done over the last 10 years have have solved one little problem and then that turns into two or three.

How do you see that, uh, changing just the software landscape, I guess, in our industry? Yeah. And this is, this is. Much bigger question. Um, because we literally we’re talking about like, you know, how does, how’s AI gonna change our industry? Um, ’cause that’s how, you know, things have gotten much easier and faster to build.

Um mm-hmm. And what I’ve, I’ve, I’ve noticed is, you know, and we have some customers have also know, built some aspects of our product, uh, you know, in, in house. Um, so what’s gonna happen with, with our industry is that a lot of hosts. Uh, who built their own little product and they wanna expand it. You might be able to do 80% of the work, uh, fairly quickly, but then for the last 20%, for the all the little incremental changes that you’re going to do, uh, that’s where really, you know, where, where it begins.

And the way, the way to give you, um, an example is like if you’re building a house. You can easily just put up the brick, um, you know, or the concrete very easily. Mm-hmm. But now you gotta do the wirings and, uh, you know, the drainage, um, all the little things, you know, the, the tiling and there’s all this extra finishing.

That is gonna take you a lot more time. So they might kind of save money by doing in house, but in the end they would have to hire someone. They have to maintain it. So I don’t think it will become cheaper. They might have the con the you, you might say, you know, I’m gonna take the house and build it, but I don’t think it will be cheaper necessarily.

So it’s not a cost saving strategy. Yeah. Uh, if you have a plan to sell that product to somebody else. Uh, maybe, you know, there’s a bigger picture, but to build it in house. To continue to maintain it. And remember, I mean, there’s also security issue. There is, you know, maintaining servers, um, you know, DevOps, uh, I mean, it’s a much bigger project, right?

Um, that this is so, uh, companies who are doing it, like, you know, again, if you wanna build software tech company, yeah. You know, you can build things, uh, faster and then keep investing. But I look at it from our side, you know, you know, we use AI in all our developments at the stage. And we’re building things there and doing a lot faster, but I cannot see how it would be cost saving for someone to bring it in house.

Yeah. Yeah. Gotcha. Not quite there yet. Yes. Lots of, uh, uh, yeah. Well, awesome, Thomas. Um, let’s see. I’d love to hear you have your own personal portfolio that you’ve had, you mentioned, and that’s kind of where things have started. How do you mind talking about your personal portfolio, just for a few minutes and, and kind of how that’s changed and what you’re doing to, to stay competitive?

Yeah, so. I’m, I’m a user first. Um, and, you know, with my own product, uh, we, we use before things get released to the public, you know, we use my own portfolio product. Uh, and it used to be about 200 post COVID, you know, I went down to, to, uh, about, uh, you know, 80 or so. Um, and we use this as, as a testing ground, uh, for from, for a lot what we built.

And I, I really experienced everything firsthand and everything that we, we built it is to, you know, benefit my operation, which means I know by internal I’m benefiting, um, um, other companies, uh, as well because everyone has the same issue. Uh, and. Also, yeah, I’m at the stage where also I’ve been, I’ve been a host, uh, for about, you know, almost 15 years now, right?

Mm-hmm. Um, and I have a lot of deep, deep experience, uh, in, in the operation. And I, I live it every day, so I. To me, uh, optimizing every single component of, of the journey is, is what’s important. And then maximizing the revenue. Um, and it’s gotten very competitive. It’s got, you know, it has, and I realize it will not get easier.

So now you have to think of creatively how to do this. Um, and, and there’s obviously, I mean, there’s the pricing tools. There is. Uh, know in, in the, in the upsells, how do you want to test it out? You know, does it make sense? And then how much did I make? So I’m doing a lot of this research, uh, internally with, with my own, uh, before, you know, concluding if this is a better way to, to do it.

I don’t know if you, if you have any specific questions about how, how, uh, I’m doing anything else, but, uh, generally, uh. I think what I’m building is, uh, you know, what the product charge automation is, is, uh, this direct outcome of my own operation. Yeah. Well, a lot of good points there. I mean, um, yeah, the industry’s definitely gotten harder and, and returns used to be really good, and now they’re getting smaller and smaller, you know, as more people discovered short-term rentals.

And so we have to learn ways to be more efficient. We have to embrace technology and we have to learn ways to create better guest experiences. Um, and then outside of that, I mean. There’s a supply and demand equation, you know, in a lot of these markets have just seen a lot of supply growth. Um, yes. Mm. And you know, my, my philosophy, uh, in my operation is I don’t trust people.

Um, I trust process. Mm-hmm. Um, because I’ve been through a lot of stuff. People, you know, people get sick, people leave, quit. People do different things. So you can’t build a business around people. Um, there has to be a process whether that person is there or not. Business has to keep going. And I’ve built, um, no, the automation is really, does not rely on a person that doesn’t rely on a person’s knowledge, uh, or experience.

It’s really a process and, uh, and my goal is how do I create a business that, uh, can operate? Whether that person’s here or is not there, and how can I operate it with as little people as possible? Uh, because that saves you money, it saves you headache. And in a competitive space, you know, uh, human labor is the most expensive thing.

And if you can save that, then your, you know, then you can com You can stay competitive in, in this, uh, in this tough, uh, in the competitive industry. Yeah, for sure. Yeah, those are, we share a lot of those same ideas. I mean, that’s our idea behind quarterly is, you know, making things more efficient, using more technology, and, uh, excited to see where you take things with, with your, with your software companies and with your portfolio.

And would love to stay connected. Uh, how can, how can people find you and, uh, what’s the best way to get in touch? Uh, so best way to get in touch, uh, again, we have, uh, again, by email. It’s, uh, thomas@chargeautomation.com is, uh, the best way to reach us or our website, charge automation.com, uh, where you can find, learn about our product as well.

Uh, and I really wanna say yeah, and then thank you for giving us this opportunity. Uh, and, you know, it’s, it’s very, very good end. To see a customer that’s using our, our product. Um, and also, you know, to, to discover that you have a podcast and be part of it is, is quite exciting. So, uh, I would like to say thank you for this as well.

Ah, you’re welcome. Thanks for coming on and, and look forward to staying in touch. Thank you. Cheers. Thanks, Thomas. Bye-Bye.

Well, welcome back to the Short-Term Rental Riches podcast. I’m really happy you’re here again. Uh, I have an excellent guest today, Natalie Palmer. She’s the co-founder of Level Up Your Listing Summit. It’s the largest annual women’s STR conference.

She’s also the host of the No Vacancy Podcast, which I’m sure a lot of you have been tuning into. Uh, it’s quickly landed in the top. 1% of podcasts worldwide. She works closely with Airbnb as an ambassador. She now helps investors find passive returns by connecting them with luxury hospitality projects.

Uh, and she lives in SoCal with her husband, and I know she just had her fourth kid, so I know she’s really busy. And we’re excited to have you on the show today. Welcome, Natalie. Thanks so much, Tim, for having me and yeah, it was great getting to connect with you just a few weeks ago. I had you on my podcast, so, um, if people wanna go hear Tim’s story, you can go check that one out, but happy to be on today.

Yeah. And that’s one of the fun things about being a podcaster, I guess we get, we have an excuse to talk to a lot of other people in the industry and really dig into the details and, and also meet a lot of cool people along the way. So I know you have a lot of awesome things, uh, that you’ve been doing and been doing for a long time.

But for those of, uh, for those of our audience that haven’t tuned into your podcast before, can, can you tell us a little bit more about you and, and your journey? Yeah, yeah, I’ll definitely give an intro. So I’ve been, uh, in the STR space for, uh, eight years now, and basically started with co-hosting before I even knew what co-hosting was.

Um, essentially I was, uh. Uh, outta college and like floating around, didn’t know what I wanted to do. I was taking on a bunch of side hustles. I was like doing branding on the side and social media. I was a wedding planner part-time. Like I had a million different gigs. Mm-hmm. And um, growing up we had a second home in Big Bear, California that we would just go and use.

Used as a ski place and when my sister and I got older, we just weren’t using it as a family anymore. And I had been hearing about Airbnb, so I was like, mom, dad, like, could I list this place on Airbnb and get a percentage for hosting it? So kind of like created the co-hosting model before I. Knew that that was actually a thing.

Um, but in one winter season they, they took some convincing, they were like very skeptical to let me take their precious home and turn it into a short-term rental. But once I got them on board, we made enough in one winter season. My parents were like, okay, we’re putting that towards a down payment on a second one, and you’re gonna manage that one for us as well.

Um, and then from there, I just had a ton of different, like neighbors and owners start approaching. Mm-hmm. And saying like, Hey, we see that your place is always booked. Like is there any chance that you could manage our. Short-term rental as well. Um, and so I just started co-hosting full-time. So that’s like kind of how my journey started.

After a few years of doing that, my husband and I started investing in real estate. Um, so that’s pretty much been my journey with, um, short-term rentals. But in the last year, I’ve. Was pregnant with my fourth and just got so busy with things that I’ve now moved over to helping with capital raising. Um, I’ve just had to take a step back from like renovating properties and managing them myself.

So it’s been really nice to still. Get, like get to be involved, but more like I’m remote now and I just like connect investors with really cool projects and I let the operators be the one who, ones who run everything. So my work is done once I get it funded, which has been a really nice change of pace for me.

Yeah, definitely. Oh, there’s a lot of pieces to it, as you know. Uh, and it can get exhausting, you know, the more, the more properties you add, the more things are are to do. It just gets multiplied. Um, so starting with that first property in Big Bear, um, how many properties did you, did you scale to before you decided?

Uh, to just start working with other investors. Um, yeah, so at one point we were managing 10 i I was managing 10 listings total in, in Big Bear. Um, so still those two first ones for my parents, um, and then eight others for other owners. Um, so it was a very like boutique business. I know. How many properties do you guys manage?

200 plus worldwide. Never got to that. Um, and all of the properties were all in the same, actually in the same exact condo complex in Big Bear. Um, and so it was a really, I I still manage today five total, including those two for my parents. Um, I’ve had some owners that have like sold or converted to long-term rentals and I have had no interest in building the co-hosting business back up.

Um, so today I managed five, but. Yeah, it’s been a really, this is like one tip I have for anyone listening who maybe wants to get into co-hosting. If you can find a, like condo complex or apartment building to scale in, I have one cleaner that works for all of them. We have the same handyman. Um, I, you know, like my, I’m running for the HOA board right now and my, my dad has been on the HOA board in the past.

It’s just so like easy to scale your operations. We almost do the boutique hotel model. But mixed with co-hosting. So it’s so easy to scale. My cleaner will like go start at one unit, start the laundry there and like hop around from spot to spot, unload dishes while another dishwasher’s running. Um, so yeah, that’s kind of how it’s been for 2017 is when I started doing all of that.

Um, and then really it’s in the last year that I still run that the co-hosting business, but it’s only five listings right now. Um, and I’ve really gone all in on capital raising. Awesome. Well, I want to talk to you more about the capital raising. Sure. But let’s dig in just a little bit more on, on the operations and, um, you know, your education and all of that because this industry’s changed so much.

I mean, it’s totally different than, than what it was a long time ago. I think it’s exciting because there’s lots of really good opportunities still, and so it definitely makes sense for a lot of I investors out there. If you find the right property. Um. And I totally hear what you’re saying. You know, having properties in the same space makes things a lot easier.

I, when I got started, I got started with smaller multifamily buildings, so it’s sort of the same idea, you know? Yeah. One housekeeper could clean five units. Um, can you tell us just a little bit about how you’re currently managing those five units, though? Maybe what software you’re using and, um, you mentioned your housekeeper.

Do you have anyone else helping you out with those units? Yeah, my mom is retired now actually, and so she’s jumped in and has been helping a lot. So she’s now the one that like drives to big bear and restocks things for us. Um, but I really try, honestly, you guys, your housekeeper is like your number one best asset for sure.

And I live a couple hours from the properties, so I will, a lot of times we’ll just like ship things to her. Like she tells us what we’re running low on and I’m like, okay, I’m sending. Toilet paper and paper towels and dish pods and whatever to you. And then she’ll bring them and restock on her next trip over to clean.

Um, so she’s been just the best asset and you know, like with damages and stuff, she’s the one taking pictures and telling us with repairs something’s broken. She reports to us what we need so we can hire, um, you know, whatever, a handyman or someone to come fix the appliance. Mm-hmm. Um, I like our housekeeper is the most.

Important part of the business, like it’s not even close. Um, my mom, like I said, she’s retired so she’s been helping with things too. And then VAs for messages have been really helpful. Um, I would say that that was easier to take advantage of when I had 10 listings. Like the cost of keeping a VA on was more justifiable.

Um, but now that we’ve dropped down to five, it’s harder. I do have a VA that. Has worked with me in the past. I don’t keep her on fulltime anymore. Um, but it’s like if I know we’re busy or like at nights she comes on and stuff. Um, but really it’s just me and my mom tag teaming messages throughout the day now, so it’s pretty manageable.

Okay. And then Tech stack. Yeah. You also asked me about softwares. Um, I really like hospitable and Price Labs of course. And, um. Then we just use like smart locks and ring cameras. So really nothing. Yeah. Crazy. I I don’t wanna overcomplicate it. So, yeah. Simple. Yeah, it’s easy to, uh. To want to use all the latest and greatest tools.

There’s just so many now, E every conference I go to, it’s like, I mean, there’s just a dozen new ones, you know? Yeah. But, um, okay. So some really good points there. The housekeeper one for sure. That that’s a huge advantage. Having someone on your team that really cares about your properties, and I think that’s one of the things I’ve found with my portfolio.

Love to hear from you, but. You know, if you, if we’re working with the same housekeepers, treating them really well, they take ownership of our properties, especially if we’re remote. Like you’re two hours away, they’re in your properties much more often than you are. Definitely. And so when something happens, like, you know, they take ownership, uh, in that.

That really helps in the operation. Um, I’m curious if, you know, things are way different today than they were when you got started. Do you have any other, uh, quick tips for any of our listeners out there? Things that maybe you’re doing differently now that, that you weren’t doing back in the past? Um. Oh, let’s see.

Well, one of my best tips, like back to the housekeeper topic is I, I really recommend that people find one housekeeper that just works with them and maybe they have like two or three helpers underneath them, but doing that as opposed to hiring like a cleaning company where they just send a new person every time.

’cause to your point, you want somebody that’s gonna like take ownership. Over it. I don’t want somebody who’s thinking, oh, I don’t have to dust the base boards because I’m not even gonna be the one here. Next time they’ll send another cleaner that’s on payroll that day. So that’s like one of my best tips is just to really find somebody like dedicated to your property.

Um, but let’s see. You asked me if there’s something I’m doing now that I didn’t at the beginning. Um. Such a good question. Let’s see, my, I, I would definitely say my pricing strategy has changed. I think in the past we would really, um. Try to raise prices as dates got closer and you know, do like kind of surge pricing and stuff.

As things got closer and right now I am more willing to like drop. I’ve noticed that people are booking things more last minute. Um, I think my whole philosophy on pricing has probably changed in the last, like two years. Um, I also used to do much like we’re in a very seasonal market and so I was more. I would only wanna open like three months at a time because it was like, okay, if we get a really good snow season, I know I can charge more for winter prices.

So I didn’t want winter dates open when it was still summer. I wanted to wait and play it out a little bit. But now I’ve noticed like it’s really beneficial actually to have the calendar more booked out farther in advance. I think the OTAs and like Airbnb’s algorithm kind of rewards you. See more bookings coming in.

So that’s probably the one I can think of that’s like really changed since the beginning. Just pricing looks so different from how I used to do it. It definitely does. I mean, when you got started, when I got started, there weren’t really pricing tools available. No. You know, no. My pricing strategy was using the other condos as comps.

Like I was like, okay, that one got booked really early for that price, so I’m gonna raise the prices on the other ones. Like that got snatched too quickly. Um, I would use like all the other nine as my own like comp set. Mm-hmm. And now it’s so much easier with, with things like price labs. Yeah. Yeah, totally.

Well, let’s see. So you have ventured into fundraising. Yeah. And helping investors acquire properties. That sounds really interesting. Can you tell us more about that? Yeah. This was actually something that I wish I had started sooner, but through my podcast and my network, I. Would get a lot of people reaching out and saying, you know, Hey, I’m a high income earner, and started listening to your podcast to try and get into short term rentals and use some tax loopholes.

And I’ve realized that I want nothing to do with this. It seems way more work than I thought, but if you ever have an opportunity for me to invest with you, like keep me posted. So I had kind of been growing a list like that over the last few years. Um, and then on the flip side, you know how it is when you’re talking to guests.

People have such cool projects they’re working on, and we’d turn off the microphone at the end, finish recording, and people would tell me like, oh yeah, I would love to do this, but we need 2 million in capital to make it happen. And so for the past few years, I’ve kind of had this idea of like, I think I need to be like a matchmaker in this space, but I don’t know why I didn’t jump into it.

And then, um, finally I started working with, um, two of my friends, Maddie and Skyler, and they’re growing a brand called For the Love of Upstate. Which is a luxury portfolio of gorgeous short-term rentals all in upstate New York. And they had somebody raising capital for them, but she had to leave. She pursued something else.

And so we got to talking and I was like, they wanted this, this void filled. And I was like, that’s something I’ve been wanting to get into, like let’s try working together. We just hit it off immediately. It’s been a great partnership. So I’ve been working with them since April, so coming up on a year. Um, but I, I love it.

Like, it’s just been, so, I think also coming from the podcast world, like I love talking to people and getting to know people in these one-on-one conversations. And that’s really what it’s been. It’s a lot of what do you want as an investor and like building deep relationships with people who are gonna send, you know, a hundred thousand dollars.

So. It’s just fit very well into what I’m doing. And like I said, the best part is Maddie and Skylar are the ones finding the properties and designing them and launching them and managing them. And I don’t have to do any of that part. Um, yeah, which is so funny ’cause I’ve talked to people who have said like, oh my gosh, like what Maddie does is my dream job.

Like, wouldn’t you rather be doing that? And I’m like, Nope, not right now. Maybe there’ll be a time in the future where I wanna get back to designing properties and being more hands on, but. Not right now. Lot. So there’s, there’s a roll out there for everyone. Yeah, definitely. Yeah. Well it is really nice to, you know, to be a podcaster.

I mean, you have tons of good connections. How long have you had your podcast? How long have you been? Um, I started it like early, um, like Q1 of 2022. So four. Oh my gosh. Is that four years? Yeah, it is four years now. We’re in the future. Oh my God. I can’t believe how quick that’s been. I would’ve told you it was like, oh, pro, like two years.

Wow. Yeah. Yeah. So yeah, lots of good contacts. Yeah. That you’re in a really good position to, to connect people, you know? And that, and that’s the reality, you know, is that there’s a lot of people out there with a lot of money, but they don’t want to do the work. And maybe they don’t know people in the industry, people that they can trust.

Uh, and so being a connector and being in that position, that’s, that’s really awesome. Um, now you also run a conference, uh, that you’ve been doing. Tell us more about that, because I imagine that’s another place where, again, uh, you’ve been able to connect with a lot of, a lot of people in the. Yeah, definitely.

Um, yeah, like you mentioned in the, in the intro, I’m also the co-founder of Level Up Your Listing Summit. Um, we are the largest annual women’s short-term rental conference. We do welcome men too, but if you go on the website just. Be warned. Our branding is very, is very girly and we make no apologies for that.

Um, but we probably have about 15% male attendants every year. Um, but yeah, this is something I’ve started with my partner, uh, Tatiana Taylor Tate. She’s an award-winning interior designer, also does short-term rentals and co-hosting and property management. And she’s based in Vancouver. Um, but her and I met at a short-term rental conference.

And we loved it. That was the first time we met in person and I had never that, that event totally opened my eyes to like, how many people are in this world and interested in this topic. Mm-hmm. And like I mentioned earlier, I had a background in, um, event planning and I was a wedding planner before I ever found short term rentals, and I really missed events.

I didn’t wanna do a career in wedding planning ’cause I realized I would never have a Saturday to myself ever again. Mm-hmm. But I did miss doing events and then with Tatiana being a designer, I think we knew that we could come together and something that was frustrating us in the industry was a lot of people at conferences.

Short-term rental conferences would talk on stage about how important branding is and differentiating yourselves and how the space was changing and you had to be more competitive. But they were saying this on stage in like really stuffy hotel ballroom with no personality. And we were like, I think that we could make a conference where we.

Put our money where our mouth is and like really turn it into a whole guest experience. So that’s what we did. And if you wanna check out our website and like our gallery of old photos, uh, from previous years, we’re about to have our fourth summit and we really focus on brand activations, like guest experience.

It’s just so much fun to attend. Every single booth that we do has like a whole theme to it. And. I don’t know. We call ourselves like the Coachella of the short-term rental industry. Like it really feels like a festival when you go. Um, but our next one is coming up March 29th through 31st in Phoenix. So yeah, we’re just, uh, couple months away.

Super exciting. Awesome. Well, uh, I’m hoping that, uh, we’ll be able to attend and I know Yeah, we have to get you guys there. Yeah, we’d love to be there. And, and conferences really are, I just did an episode on, um, a recap on a, a conference that I just went to, and there really are such a good place. I mean, yes, there’s lots of good information on podcasts, but to, to be with someone for an afternoon or a lot of the people that we meet at these industry conferences are people that we end up.

Doing business with. Yeah. Just like you and becoming friends, you know, lifelong friends. So I think it’s a really good opportunity and um, that’s awesome. You guys have been doing that. Um, and fourth, fourth time around you guys know what you’re doing. Uh, so that’s good. I hope by now we do. Yeah, we’re learning every time.

Yeah. But, oh man. Events are, events are no joke, you guys. It’s like so expensive. Lot of work. So much work. I just can’t even believe like the numbers were. You know, sending a check to the AV team for like $30,000. And I’m like, oh God. Like it’s just such big numbers you’re working with, but yeah, that’s what it’s, and you have to, uh, yeah, you gotta.

Yeah, there’s all the things we calculate, you know? Um, but Okay. Well excited for that. Um, let’s maybe go back to your, to the acquisitions and stuff you guys are doing. Sure. You said, so you, you’ve been a connector in the space, you know, helping a lot of people. Um. Uh, with, with your partners, find the right properties, can you tell us a little bit more about maybe how they’re finding the properties or I’m not sure how, uh, detailed you get with them on that?

Yeah, yeah, definitely. So right now, like I said, I’m working with, um, uh, specific portfolio. So it’s for the love of upstate and I think maybe eventually I’d love to help other. Projects also get funded. Like if somebody had some great vision for like AGL site or a, you know, tree House Village, like step into some of those.

But right now I have a really good partnership. So I’ve been working exclusively with, uh, for the love of upstate, but. Our model, like how they find properties is, this has been really interesting too. The upstate New York market, there’s really not a lot of data on, and so the first few projects that they were fundraising for, this is before I came on, it was.

There was no air DNA to like even prove that the model would work. Mm-hmm. It was really just Maddie and Skyler saying like, we’ve lived here for a while. We think we know what people want. And, uh, the, the housing prices are so good there, but they were basically calculating that they would make the same amount of revenue, like.

150 to 200,000 a year per short-term rental. That’s almost the same revenue you’re gonna get right now in like a Scottsdale or in Austin, or maybe a Nashville market. But in those three markets, your purchase price is gonna be 1.2 to 1.5 million. And we are finding houses in upstate New York for between 300 to 500,000 that are projected to do that same amount.

So that was kind of the first, um. Sort of how the idea of like building an upstate was born and then it’s just so close and driving distance to so much of the population. It’s so dense over there in the northeast. So we knew that we’d have, you know, a good influx of people to come visit. But yeah, there’s a lot of, upstate New York has a lot of like those, you know, old.

Uh, inherited, passed down homes like very grandma chic that just haven’t been updated in 40 or 50 years. And Air, DNA was saying you could maybe make 30,000 a year on these. So the numbers were not there to prove it, but we just did our ninth, ninth or 10th project. I forget. And. All of them are doing between 150 to 200,000 in revenue.

So now we’re able to prove our own comps with our own properties. Um, and air DNA still hasn’t quite caught up to what we’re doing. I don’t know if I want them to at this point. Like we feels like we found like, kind of like a hidden gem of a market. Um. So yeah, that’s, that’s what’s been really cool is like the purchase prices there are just so easy to make money on.

Um, but that’s been something that’s been really fun to navigate with investors. Like people will just say like, how we, we, I’ve heard a lot of people say like, oh, well, shouldn’t we invest in like a Scottsdale or something that like, has more comps and more mm-hmm. Proof behind it. And that we know that those numbers are more justified.

And it’s like, yes, you can, but again, you’re looking at these 1.2 to 1.5 million purchase prices, if not higher. And it’s so competitive. You have to do the entire backyard with the giant chess and the infinity pool and, you know, every, the, the golf simulator, like every amenity you can think of. So it’s nice to find these like hidden markets where.

Um, you can do the same revenue, but for a third, a third of the purchase price. Yeah. So, yeah, I feel like we tapped into something really special in this market and I think the key with markets like this where, you know, Scottsdale’s gonna have business because there’s so much to do there, so much food and nightlife and.

Golfing and events in town. Same with Nashville, same with Austin. When you’re doing a market like upstate New York, the property itself has to be a destination. And so we really focus on like wellness amenities and putting in cold plunges saunas, massage tables, hot tubs. Um, you really have to focus that like the property.

It’s is gonna be a place that people wanna go to just for the property itself. ’cause there might not be much to do around there. Yeah. Gosh, there’s, so, there’s so many good points there. Uh, first of all, congrats. Those are, those are amazing returns. Um, thank you. And yeah, some, some really good points there.

It’s taking that leap, you know, when there, yeah. When there is no data. But you mentioned something that really stands out for me is that your partner is familiar with the area and she was. Going after that model for something that she could see herself in. Yeah. Um, that’s, I think it helps when you are your own guest avatar.

Like you can picture like ly I would book this and I would come with friends who want like a wellness weekend if you can find something where other people don’t have to get it. But if you know that you would book it, I think that that speaks volumes. Yeah, absolutely. Um. And assuming the regulations are open there, you know?

Yeah. Whereas New York and a lot of those places are locked down, which also provides more demand, I would think, for surrounding areas. Um, that’s a good point. I hadn’t thought of that. ’cause a lot of our investors here in New York and immediately get scared and I’m like, no, no, no, that’s New York City.

Like we we’re not dealing with any of that in upstate. Um, but you’re probably right Tim, that it’s, uh. It squeezes people to have to drive a little bit further to go enjoy stuff like this. But Upstate has been really, really friendly with, with regulation. I mean, the only thing would be like, you know, if we started like throwing parties or something, right?

Even that a few of our properties, we can host weddings and the county had no issue with it. But you know, we might have to just like submit a request ahead of time. But yeah, upstate is very, very friendly with short term rentals, we’ve ran into no issues there. Yeah, well you, you mentioned some other, some other key things there too, is that the, the property is the destination.

This was something I heard as well at the recent conference that I was at, and it’s something that we’ve been seeing a lot. Uh, and I think one of the exciting things about it is that I. If your property is a destination and you, you, you can really push the upper, upper limits of price, you know? Yeah. It’s its own unique destination.

There’s not a lot of comps like, you know, Scottsdale where everything’s kind of the same, even if they all have pickleball courts, you know, if there’s a. 500 properties that are identical with pickleball courts. Um, so can you tell me and your partner’s a designer too? So you mentioned some, some cool things like cold plunges and stuff like that.

Are there some other sort of design tips or tricks that you might be able to share with us? Yeah, this is my best, and I’m not the designer, so I’m repeating from, from my partners, but this is the best tip that I heard when adding amenities. To your properties if you’re gonna follow this model of make the property the destination is.

I’ve seen a lot of people who just have a checklist and they’re like, okay, hot tub check, sauna check, uh, cold plunge check. But if you’re gonna go that route, the best advice I’ve heard from designers is to make sure the amenities you’re picking are not just checking a box, but they. Feed into the whole experience so you can find those, you know, portable saunas that just pop up in like a black vinyl tent and there’s some hose attachment that creates steam in there and one person can sit there.

Okay. Yeah, you can technically check off the box on your Airbnb listing that yes, you do have a sauna. But is that picture going to like inspire the guest experience that you want? So in our case, we either build saunas from scratch, like have them, you know, cedar planked and everything and bring in all of the, um, I don’t even know, the tech or the appliances to like make it work and heat up.

Mm-hmm. We’ll try to position it so it has like a waterfront view and we hold, put like a whole window there. Get, like the barrel saunas are really cool and make sure you have at least like a two or four seater so people can be in there together. Um, same thing with like, we’ll do like red light therapy rooms and you just wanna make sure like, you know, the ceiling is paneled and it’s got clean, crisp, white towels in there and like.

Fragrance mist, like you really wanna make it something and not just check off the box of like, oh yeah, we bought a red light therapy mask so we can claim that we had it. So I would say that’s like the biggest tip I’ve taken from designers is really do every, um, amenity with intention and not just checking off the box that you got it.

Yeah, that’s a good point. You know, if someone marks a king size bed on their listing and the first time you down, it’s a mattress on the floor, the legs break off. Like there you go. That’s not a very good experience. I guess technically you had the king size bed, but is that what somebody was really envisioning?

Probably not. Right. So, awesome. Okay, so you guys are building out, uh, like an individual portfolio at the moment? Yeah. All under the same brand. Um. Everyone in the space has been talking about branding you, you know, and you guys put a lot of thought into your, uh, conference, uh, it sounds like, into branding.

Yeah. Um, these destination type properties are really good candidates for repeat guests, I would imagine, you know? Mm-hmm. They love it. Uh, maybe they live in New York and they’re like, sweet, we can drive a couple hours. We’ll be back here. Can you tell us a little bit more of maybe what you guys are doing to try to get some of those guests back or build out your branding?

For these properties? Yeah, social media has been huge for that. And if we have somebody reach out about one property that happens to be booked, what’s so nice is if they’ve fallen in love with the brand and not just one particular property, we can always say like, I’m so sorry, but the Pearson House is booked.

But we do have the Upstate River retreat available for the same dates and it’s, you know, decorated like this. And usually if somebody’s reaching out over social media or direct booking, they’ve, they’ve already. Followed and like engaged with you and again, fall. Mm-hmm. Fallen in love with the brands. Like they’re not even picky about which property they go to unless one is smaller and it can’t like fit the people they need.

But outside of that, they just wanna experience like the brand. I mean, it would be the same as, you know, think of these like hotels, collections, the W or St. Regis, like these Lux hotel brands. Do you really care if you’re staying at the W in Paris or the W in London? Like maybe not if you just wanna go and like experience that, that brand for itself.

So that’s something that we’ve really tapped into is, um, I. Not necessarily repeat guests, but just getting people to be happy with like whichever property they get and wherever they stay. Um, but then of course for repeats, we do have, you know, um, like postcards and stuff in the properties. Like, stay with us again.

Scan this QR code. Mm-hmm. We follow up with messages, you know, book direct with us next time. Um, if they do a direct booking, it’s so much easier to just like recapture that they’re already on our email list and, and things like that. Um. Yeah, that’s, I’ve seen a lot of investors too who wanna have like something in like all different locations, let’s go open something in the Smokies and go open something in Montana, and you get pretty spread out.

It’s kind of nice to have everything in one area where people can like, choose from just different properties in the same, in the same concentrated area. Yeah, that’s a good point. It also helps out with what you were talking about earlier, you know, just with operations, I mean, if you’ve got all your properties in the same areas can work with fewer, fewer team members on the ground.

Um, these do sound like larger, more luxury properties. So can you tell me a little bit about your guys’ operations and how you’re handling that part? Yeah, so operations, we do this total spread across all the nine or 10 properties. Right now it’s probably. Up to three and a half hours, like between all of them to drive.

Mm-hmm. So it’s not as close as like my condos that I was, that I was managing. Yeah. Um, so we do have to have different, like housekeeping teams and stuff. Um, but at least from a launching perspective, we have the same contractors and they’re willing to drive. A few hours so we can book them out and have a contractor team working for us exclusively right now.

Like we keep them busy with enough projects. Um, so that’s really nice. You just get consistency in work and if we have leftover, like trim and materials from one project, it just gets driven to the next one. So that’s been helpful. Um, but yeah, housekeeping teams and, uh. You know, random, like, uh, landscaping or like pool cleaners, like things like that.

We do have to localize a little bit more. I don’t know if our landscaper would drive two hours between properties. Right. Um, but also on the remote front, like your tech stack stays the same. Your pricing strategy, um, VAs handling messages, like all of that. We can also, um, standardize with just a few key players.

Right. Okay. Well, I’m curious how much you guys are actually investing back in these properties. ’cause you mentioned like the old granny. Yeah. Uh, you know, photos that, and it sounds like you’re doing a lot. You mind sharing, you know, how much you guys are actually putting into and how long it takes. Yeah.

Yeah. So, uh, really happy to say that our launch process has gotten shorter. Um, we always tell investors it’s about six months to renovate, but our last couple projects have come in at four months, so we’re getting faster and more efficient with this. Um, but yeah, we always tell investors plan for six, just in case.

Um, and, uh, what was the other part of your question? How much we’re putting into it? Yeah. You know, it obviously depends on each property. Some need more work than others. Um, but one thing we really focus on is right now there’s a lot of talk in the STR space on. Things like, you know, don’t even bother renovating the bathrooms.

Like you’ll hear that a lot. People will say that like, bathrooms don’t make money. Nobody’s booking an Airbnb because of the bathroom. They just wanna see like the common areas or the backyard or the amenities where they’re gonna hang out. Maybe the kitchen. That’s kind of the area where people focus and they’ll tell you like, don’t spend time on bathrooms.

Don’t spend time on the laundry room. Like nobody cares about those areas. We have really taken the approach, like our bathrooms are. So high end and so luxurious, like bidets and heated floors and like we really invest into the bathrooms nicely. Um, we also do a lot of like if the property needs a new roof or something, like we will not skimp on that, even if that’s not technically the thing that people are booking for.

But part of working with investors is. Especially if you have equity, and these aren’t just like private money lenders, but if they’re partners and they have equity, they’ll get profit on the sale. And those are the things that improve your resale value and help the property appreciate. A pickleball court or a giant chess set might be.

Popular for a short term rental, but that’s not gonna help a future buyer, um, see more value in the home. So we do focus a lot on like fixtures and higher end tile and yeah, luxury finishes. Um. Resurfacing herd wood floors, like repairing, like wood trim. Like if we can preserve any character, that’s definitely something we try to do.

Um, focusing on like wraparound porches, like all those like very unique things that we’ll just add to the appreciation and then that helps us refinance and we can pay out investors sooner. So we really like to focus on like the actual. Appreciation and resale value of the home in addition to the amenities.

Um, but a lot of STR designers, like I said, they’ll, they really like skimp on some areas and will just throw in like a fun wallpaper and a neon sign and, um, more colorful throw pillows. And that hasn’t really been our approach. Like we wanna actually make the homes better than when we bought them. Yeah.

Okay. Um, okay, so you guys are going back and pulling out equity then afterwards. Yeah. Uh, and it’s interesting. You really are building your own comps and so if someone’s giving you a loan as a short-term rental and they’re pulling up your, your comps, yeah, you’re creating your own value in the properties, which just is amazing.

That sounds amazing. Yeah. Um. Definitely. Uh, and you do put in a lot of work. I think the other benefit to putting in all the work up front is that you have less maintenance issues. You know, and you know, the, that’s al Barss are breaking off the wall or the roof leaks. That’s never point a good guest experience.

Yeah. Yeah. It’s, it’s like hard to view it that way ’cause you put so much more work in at the beginning. But I think you’re right. Like once it’s launched, we’re not. I mean, obviously things break. I don’t wanna say it’s like, you know, we never have to lift a finger again. Like of course you do. There is wear and tear involved with this.

But that’s a really good point. Like we, we try to concentrate more of the work in those like four to six months and then hopefully after that things are a little more well maintained. And I think too, that the type of guest we have booking does treat the property better. Like when they can see that the hosts and owners put that much effort into it, I think that you just do attract better guests.

I agree. I agree. Well, very cool, Natalie. Um, so it’s been quite the journey from your, your portfolio, uh, now helping others, uh, invest in some beautiful sounding properties running the conference. What, what do you see happening over the next few years? I think what I predict is gonna happen in this industry in the next few years is like.

Squeezing of the, I think like the middle class of short term rentals is gonna get pushed out. I really think that we’re gonna see basically. Like top, top, top tier properties, like just the 1% of like beautiful destination luxury properties. And then I think that there’s still gonna be budget friendly options, but it’s like that whole middle portion of listing that can’t decide.

Like they’re not gonna drop their rates to be a budget friendly option. ’cause they did spend a little more on it. They’re not making enough to reinvest and bring it to that next tier. I think those are gonna get squeezed out or maybe have to switch to like midterm rentals or long-term rentals. Mm-hmm.

Like that segment has just gotten so competitive. So that’s kind of what I see. Like either just double down on being like a budget friendly place and don’t even worry about like reinvesting and sucks to say, but like, just own what you have that it is like a worse experience, but it’s, hmm. An economy choice, or you need to really go all in on making the property the destination.

Yeah, there’s a lot of truth to that. We see that, uh, in the numbers, you know, and in all the markets that we’re in. And with Air DNA, I think the exciting thing though still for me, always in this industry is that, uh, if you’re doing a really good job operating, even if you’re a budget or middle class Yeah.

Or luxury, like you still have to do a good job operating. And if you do, then you can earn a lot more than your competition. That’s so true. You know, we talked a lot in this conversation about like amenities and, and, and luxury and making the property nice, but something that just goes so far is respond to messages promptly, like communication and be clear when you communicate and cleanliness.

Like those are things that no matter what your home looks like right now, or what amenities you have or what you’re pricing it at, you can. Have better communication and better cleanliness standards and guests do notice that stuff like that is something immediately within your control. Definitely, definitely.

Well, Natalie, uh, it’s been great learning more about your story and everything you’ve got going on. Can you share with the audience again, just, uh, where they can find you and your, your upcoming conference? Yeah, for sure. So, again, I’m Natalie Palmer, and thanks so much, Tim for having me. Um, and um, we’ve got Level Up Your Listing Summit coming up our fourth year, March 29th through 31st in Phoenix.

You can just go to level up your listing summit.com to find tickets to that, or if you’re interested in sponsoring or have any other ideas, connect with us there. And then I’m also the host of No Vacancy, the podcast. Um, you can find that anywhere where you get your podcasts. Awesome. Well, thanks for coming on.

I look forward to staying connected. Thank you.

[00:00:00] Okay. Well, welcome back to the Short-Term Rental Riches podcast. I’m really excited to be sitting here virtually with Sean Shiraz. He is the CEO of a company you’ve undoubtedly heard about lofi. They’re one of the industry’s leading property management software platforms, helping tons and tons of owners and businesses run their short-term rentals.

Sean, I’m really excited to have you on the show today. I know you got a background in technology. We’re gonna dive in some details. Welcome to the show. Thank you so much for having me, Tim. Appreciate it. Yeah, yeah. Uh, it’s always a pleasure to, to talk with the CEOs, you know, the founders, the people kind of driving the, driving the ships of some of the industry’s largest, uh, largest providers in the technology space.

And let’s see, you have a background in technology. You want to tell us just a [00:01:00] little bit of how you became the CEO of, of Lofi? Yeah, absolutely. Um, I, uh, I joined earlier this year as CEO, and, and before that my career has been in product at a number of, of tech companies. So before lofi, I was Chief Product Officer at Pipedrive, uh, CRM software for those familiar.

Then before that was at Intuit, the financial software company, uh, for a number of years in the US and in Brazil and, and in Europe. Uh, which was an incredible experience, uh, in both of those cases to learn from companies that are incredibly customer obsessed, but also create software that is for the small guys.

The, the underdogs in the spaces, right. You know, Intuit was all about creating software for those that were going out on their own, that wanted to be their own boss and be their own small business owner to do their taxes on their own. And they, it created incredibly easy to use software, uh, that [00:02:00] is the leader in those categories.

And same thing with Pipedrive. You know, Pipedrive came out when Salesforce and HubSpot were the dominant CRM players. But no one was really focused on how do we create a CRM that a sales team is actually going to use? Uh, and so Pipedrive was as easy to use, you know, just the right amount of features that you need for your use case.

Not anything more than that. Uh, that completely disrupted the CRM space. And so I have always been attracted to working at companies that have a product that’s disrupting, um, the space and in particular serving an end of the market that is underserved and overlooked. The underdogs, right? We all love a good underdog story, the David versus Goliath, and that’s something that has always attracted me to the companies and the products I work on.

And so when the opportunity at Lofi, uh, came about, uh, this was [00:03:00] definitely a core part of their DNA and their origin story. Uh, the company has been exclusively focused on the long tail end of the short term rental market. Again, serving the needs of the independent hosts and the small scale property managers that have been, uh, overserved and underlooked by, uh, software that’s been around historically.

And Lofi was really there, um, to serve their needs and to ultimately help them become independent and independent in the, in the sense of financial independence, independent in the sense of independence from your time. So you, you’re less time managing the day-to-day and independence in the, in the sense of location.

Right. You’re, you’re, mm-hmm. You know, we were just chatting, you’re, you’re, uh, recording this from Brazil, got properties, you know, around the world, which is incredible. You know, and it’s because of software and because of the setup that you’ve set up, that’s probably allowed you to do that. Right? And so we, we try to do the same thing with Lofi to help our our customers [00:04:00] with that.

And, you know, I, um, uh, in my early days when I was living in San Diego, I was an Airbnb host, uh, in the early days of Airbnb. You know, had an incredible experience, uh, doing that. And like meeting strangers. I never thought I would meet, uh, and love that. But you know, now kind of fast forward being on this side of it, uh, seeing, um, uh, the software that we’ve got at lofi, I definitely could have benefited from using that when I was a host.

And so it was that combination of. Uh, you know, working on products and working for companies that are serving the underserved, uh, and the, and the mission of Lofi really helping these hosts and small scale property managers become independent. That drew me, drew me to this opportunity. Yeah. Awesome.

Awesome. Uh, yeah, I think, you know, you’re totally right. Like. A lot of, like, there’s just so [00:05:00] much to do in the short term rental space, and if we’re not using software that helps facilitate all of that, like we’re really at a disadvantage. And so I know you guys have just tons and tons of features and things that Log helps short-term rental operators with.

Uh, but curious, what, what does your user base look like right now, Sean? I mean, how many properties are, are you guys serving? Um, what’s the average user kind of look like? Yeah, sure. You know, one, one of the things, um, as I, as I started earlier this year, one of the things that I’m asking. Um, a lot of external folks that I meet with, you know, like yourself and other folks that have been in the industry, uh, is, you know, what, what do you know about lofi and what, what are what usually come, comes to mind?

And what’s interesting, one of the takeaways that I’ve, I’ve had this year speaking to folks is, um, a lot of people don’t know about lofi, you know, that aren’t really in ingrained in the industry. [00:06:00] Usually they think of a few other brand names in our, in our category that come up. And Lofi is usually further down the list.

Um, and we, we kind of like fly under the radar. And when I start to share some of the stats on the company, I. People are like shocked. They’re like, whoa. Like you, you’re like one of the top three in, in the space, right? When you, when you speak about the customer base that you’re serving. And definitely look, this is a reflection of, uh, we’ve been hard at work for a number of years.

The founders have done an incredible job with the company getting us to this point. But one of the things that we wanna do differently going forward is. To get our name out there much, much more than we have in the past because we’re proud of what we’re building, what we have built, and what we’re building going forward as well.

And we want this, the industry to know about that. And so some of the, the stats to, to answer your question, we have over 25,000 customers. All around the world. And, um, [00:07:00] you know, what’s really unique about us is that although we are born and raised in Barcelona, um, I’m taking this call here from Barcelona, um, we’ve got an incredibly internationally diverse customer base from all around the world.

Uh, you know, whether it be in North America, south America, Europe, uh, or even in, in Southeast Asia. So incredibly diverse from a, a geographic footprint standpoint. And then when we look at the customer segments that we serve, they’re primarily two, two big segments that we serve. They’re the independent hosts, uh, that really have a handful of properties, usually less than three.

Um, and this is our primary segment. And then the, the second segment we serve are the small scale property managers. They have less than 15. Look, they’re, they’re looking to grow, um, but really kind of stay in that small scale range because they wanna maintain their independence. Um, now look, we’ve got customers that have many [00:08:00] more properties than that, uh, and, and don’t fit the mold.

And so they’re, but these are, I would say the, the two primary segments mm-hmm. That we’ve got. Awesome. Awesome. Well, 25,000 uh, users is an awful lot and I think one, one of the exciting things about the industry and as you mentioned is that. It doesn’t matter where the properties are. You know, you guys were founded in Barcelona, but you could have a property in Indonesia, or you could have a property in California, and you still have all of the operation side of running a short-term rental, which we’ve found, you know, from, from our end, working with lots of owners as well.

It’s pretty much the same, you know? I mean, you’ve gotta make sure that you have a really good guest experience. Yeah. Maybe the, the language changes or the market changes, but there’s lots of data now to help us with all that. Uh, so streamlining operations is essential really to success with the short-term rental these days.

Tell us a little bit more about Lofi and, and how [00:09:00] you guys help, uh, owners or investors or managers streamline their operations. Yep. Absolutely. So the, the way we think about everything we do is customer backed, and we think about ultimately there are three primary areas of customer benefit and value that we’re here to provide.

And it ties to that point about independence, right? And the three flavors of independence. So ultimately the financial independence. So what are we doing to help our customers become more financially independent? And that breaks out into a few areas. Number one is their occupancy rate, right? How can we help you?

Increase your occupancy rate. One of the primary ways that we do that obviously, is to, um, help get you cross listed across as many OTAs, predominant OTAs as possible, right? In addition to your own direct booking website and channel as well. The other component of financial independence, in addition [00:10:00] to the occupancy rate is when it comes to price and revenue.

So how can we help you maximize, uh, you know, the, the nightly rate that you’re getting for, for your property? And we do this through a combination of our own kind of, uh, uh, pricing tool that we provide from Lofi. But then also we’ve got a marketplace where you can connect to. Uh, whatever pricing tool that you have the best, you know, experience with, you can do that and connect that with, with Lofi.

So that’s what we do when it comes to helping you with a few examples when it comes to financial independence, when it comes to operations, this really fits into the two other flavors of independence, which is around, you know, independence of your time, and then independence of location. And so on the time piece of it, look, there’s the top areas we know that where our customers are spending the most amount of time when it comes to managing the operations, the number one offender is the guest communications, right?

The back and [00:11:00] forth guest communications that happen. This is a clear one where we’re automating and, and have AI all over helping our customers. Uh, you know, streamline, save a lot of time. The other one is when it comes to task management. Uh, so we’ve got a great. Capability around task management that helps you automate whether that is with you and your cohosts, whether that’s with you and your partner, whether that is with you and external teams that are helping support your property, whether it’s a team of maintenance providers or a team of cleaners as well.

Uh, and then location wise and independence on location. One of the things. That customers love about Lofi is the mobile app. Uh, and, you know, we get really high marks on our MO mobile app from, you know, industry, uh, evaluators out there. And this, it gives you a lot of the same capability and functionality that’s in the web app.

So when it comes to streamlining operations and being independence from location to be in Brazil and manage a property in, in Sacramento, [00:12:00] like our customers are doing this all the time via our mobile app. Uh, and, and that helps ’em quite a bit. Yeah. Awesome. Yeah, pretty much everything is going mobile these days, isn’t it?

I mean, people are making the reservations on the mobile platforms versus the desktop, so that’s really important. Uh, we, we’ve used multiple different PMS programs over the years and. I know none of them are perfect. You know what I mean? There’s just so many. Pieces to tackle. Uh, but I’m, I’m curious, you know, and, and some, you know, some programs maybe have a little slight edge on another one in a certain area, but then, you know, you guys have an edge on, on the other company in a certain area.

I’m curious, kinda what do you. What do you think is gonna keep Lofi competitive like three years from now? Or a property management software platform like your guys’? What, where are you, where are you thinking, uh, that you’ll need to be to, to continue to lead the market as one is one of the industry’s top providers.

Yep. It’s a, it’s a [00:13:00] great question. Um, yeah, I, I, there’s basically three things that differentiate us today that are gonna be the, the key things for us going forward as well. Number one is that for the last 13 years, we’ve been exclusively focused on a specific customer group within the short term rental market, as I shared before.

Mm-hmm. And we’re gonna continue to be exclusively focused on that. In the market going forward. Now, why does this give us an advantage versus others that are out there? Because we can obsess about a narrow set of customer use cases, it increases our ability to serve those narrow use cases incredibly well.

We’re not trying to be something for everybody in the market. From a independent host to a large scale property manager. We can’t do either of those things very well, but we can really focus on the segments I mentioned and absolutely knock it out of the park for [00:14:00] that. And so we’re gonna continue to obsess about a narrow set of customer segment profiles.

That’s number one. The second one is around ease of use. You know, we track customer feedback and sentiment in a number of ways. The number one thing that customers love about Lofi, whether they’ve used PMS before, or they haven, uh, or they haven’t. Um, is our ease of use. And, um, you know, this is incredibly important.

It’s an easy thing to say. It’s a simple set of words to say. It’s really hard to execute and deliver on ease of use. And I know from my experience at Intuit working on QuickBooks and TurboTax and pipe drive, it is difficult. But once you have it, it’s incredibly special. And the origin story of, of Lofi and where the name came from was that the founders were inspired by Shopify and what Shopify did to what you can do to create your own website.[00:15:00] 

And they said, we wanna be the Shopify of lodging, hence Lofi. And that like part of our DNA has been there since day one around simplicity, ease of use, and serving the needs again of those that want to do it on their own. And then the last piece that is a core part of our differentiation and will be going forward is the level of service and support that we offer our customers.

This is whether it’s an engagement with our sales team, whether it’s an engagement with our onboarding team if you need it, or an engagement with our support team, we fully recognize that we’re gonna continue to make the product as easy as possible. But there are cases when you’re gonna want that extra like support or that safety net of like, Hey, am I doing this right?

Or, Hey, I’d like to get. Input or advice on this particular area of my direct booking website and how I can maximize SEO on that. You’ve got a team of of experts here at LOFI that you can call on or you can reach out to and [00:16:00] get that level of service and support, which customers love about lo lofi. So these three things are, would differentiate us today and we’ll continue going forward.

Yeah. That’s awesome. And it, that’s such a great point about usability. I mean, you can have the, the most advanced, sophisticated platform in the world, but if people only know how to use 10% of it, it doesn’t really help you a whole lot. You know, and we, we see this all the time working with a lot of different owners.

It’s like a lot of times, uh, they’ll be using software maybe that we use ourselves or, uh, that we’ve used in the past. They’re like, oh, I wish it could do this. And you’re like, oh, it actually can do that, you know? Exactly. Um, so, such an important piece. I’m curious, you know, you guys have access to a lot of data with so many users.

Do you have any interesting insights you could share about your, your users, you know. You know, maybe, uh, we, I met with, um, some of the other PMS, uh, [00:17:00] founders and CEOs recently, and one of ’em just shared the fact that you guys can see what your users are connected to through your, your marketplace. Uh, anything you can share there that you found on, on the back end about your users?

Yeah, I mean, I, I think there’s, um, there’s a ton of insight that we get from, uh, from that, but then also just qualitatively speaking to, to customers and learning what’s, what’s going on. Mm-hmm. Um, I think, you know, one of the, definitely the kind of main takeaways from this past year of, of Insights is that for a lot of our customers that are in urban areas.

The competition competi is, is fierce, right when it comes to the number of, uh, short-term rentals mm-hmm. That are in their, in their neighborhood or in their city. Um, and especially when you’ve got regulation. That has heated up in some of their locations. When you have the [00:18:00] combination of those two, it makes for, um, competition, you know, making it much harder to get the occupancy rate that you were achieving, uh, before.

And so then the, the key question is how do you stand apart, right? In a competitive short term rental market that you’re in, how do you stand apart? Um, and there ultimately. Where we, uh, are looking to support our customers and where we support our customers today is through a combination of things.

Number one is. How are you gonna differentiate yourself and your property in this market? You know, are you wanting to be a premium stay? Are you not? Are you looking to be a discount stay? How do you think about, given the amenities that you have, given the property that you got, the work that you’ve put into it, the investment you put into it, where you wanna stand, you?

Are you gonna be a premium brand or not? And it’s [00:19:00] okay either way, right? There’s no right or wrong, but you need to be intentional about it because then ultimately from there. Everything flows. Your pricing decisions flow from there. The type of guest experience that you want to, uh, provide flows from there.

And so if you are have made the conscious choice where it’s like, Hey, you know what? I’m gonna be a discount play. Nothing against like the Walmarts of the world, but I’m a a Walmart, right? I’m a discount play. You know, when you come in here, it’s gonna be a like no frills. You got a bed, you’ve got everything you need, right?

It’s gonna be in good condition, but you’re gonna get the best price. And that’s my conscious decision. I’m gonna make a choice of on. And my pricing is gonna reflect that. And then everything from there is gonna reflect that as well. And so this is the key thing. And so our customers are looking at, you know, their guest reviews to, to provide insights on where they can improve relative to.[00:20:00] 

Strategy that they’ve, they’ve lined up on this. They’re looking at their pricing to understand when they’re above and below market to calibrate that versus this, this decision that they’re making on premium versus discount play. Um, so these are a few areas that we’re seeing as just competition, especially in the urban areas and intensifying.

Yeah. And so the need to differentiate, uh, is even, even more important. Yeah. Great points, great points. And we’ve, we’ve definitely seen that as well. Um, I, I actually started my short-term rental journey in a lot of urban areas and some of them have become very, very, uh. Competitive for sure. Um, and, but one of the things that lets you stand out as you said, is really understanding your guests, knowing who you’re marketing, just as you guys do with Lofi.

You know exactly who your, your user, your, your ideal customer is. The guest experience is crucial and, and we see just the massive difference [00:21:00] in revenue potential between a property that’s operating well and has good reviews and one that doesn’t. I mean, it really is, is is, it’s just crazy sometimes. Uh, you mentioned AI and we love ai, you know, uh, for so many reasons, but one is because it can make the guest experience a lot better.

Um, can you tell us a little bit more about AI and how you guys at Logier are incorporating that? Yeah, absolutely. We, we’ve got ai, um, throughout the end-to-end customer experience right now. You know, one example of AI that’s there today is when you sign up for lofi, we offer you the ability to speak to an AI agent, to give an overview of the product experience.

’cause we know a majority of our trialists and new signups have not used. Property management software before. And so the terminology, the orientation of the user experience, these are all things that you kinda want somebody to walk you through it. At the same time. [00:22:00] You don’t wanna wait for an onboarding call with somebody.

You want it like right then and there. So we offer the ability to right then and there, speak to an AI agent that fully understands your needs and what you’re looking to get out of the software. And then we will give you a personalized overview of the software based off of that. Cool. Uh, we’re seeing a ton of great engagement from that.

We’ve got AI helping you when it comes to guest messaging, which we know is obviously a hot area we spoke about earlier. Uh, helping you save time when it comes to crafting messages, which is incredibly important. We have AI in the product today when it comes to. Hey, how do I do this in Lofi? Or I’ve got a question on this, how do I get this answered?

Um, we’ve got AI to, to help you with, with that as well. And then a number of areas that, uh, are in the pipeline to help in these customer benefit areas. I mentioned earlier. Where, you know, again, we, everything we do is customer backed technology is a means to an end. Uh, and AI is [00:23:00] one of those hows of how we can solve those customer problems in magical ways.

But there are other ways that we can solve that as well. And I’ll give one, one, you know, short example on this. This is from, uh, a customer of ours in Florida. Dominic, who’s an amazing, amazing guy, um, who’s actually building, uh, an app. Uh, to support short term rental owners. That’s gonna be in our marketplace as well called host, host iq.

But, um, Dominic was telling me, you know, one of the things that stands out about him is the guest experience he provides. And so I wanted to understand from him, like, what, what does he do? What is the, how does he. And he was sharing a story about, um, a family that was staying with him. It was the mother and the two kids, and they had an incredible stay and the kids.

Left him a handwritten note, uh, when they left and he, he joked about it. He was like, [00:24:00] one of these, like, the letters were all like in different font sizes and it almost felt like a ransom note that you see in the movies like that the kids had done. And they talked about how. They had such an amazing stay, and they wanted to, when they grew up, they wanted this to be like their dream house, and they had just the best time.

And so he was just like blown away by this to get these notes from these kids. Um, and so the family had booked a, a repeat visit, and so he asked the mom, he said, Hey, what are the favorite sports teams of the kids? And so she told ’em and she said, Hey, they’re really big into soccer and these are the teams that they’re into.

So the next day they came, he had a goal set up in his backyard so they could shoot the soccer ball, and then he had put the mascot and all this, um, like posters and stickers of the favorite sports teams in the kids’ [00:25:00] rooms. So when they stayed, they could have that, you know, much better of an experience.

Wow. So if you think about like, what did Dominic do that separated that experience, that made it magical. He listened. He was empathetic, and he kept that in mind, right? For the next time we did. You don’t need AI for that, you know? Yeah. Yes. AI could help you keep track of these things, and we’ve got things in the works that are gonna.

Help you with this, but ultimately asking a simple question like that, listening to, to your guests, understanding where they’re coming from, their stories is, is can separate you right now today without ai. Yeah, for sure. Listening such a powerful skill, right? Yeah. Um, yeah. And that, I mean, you can, you can win guests over for the rest of the life as you mentioned, you know, come back.

That’s how you fill up your direct booking, uh, calendar [00:26:00] and, um, that’s awesome. Yeah. Well, let’s see. The other thing, you know Yeah, go ahead. I was just gonna say the other thing I’ll, I’ll say on the, on the, a Ai, AI front as far as how we think about it, um. You know, we’re in this incredible shift right now, um, as a tech industry and in particular for us in the short term rental industry.

What’s so exciting about what’s going on around us is we are moving from a world of software as a service. To a world of service as a software. Right? Right. If you think about the products and companies that were started the last 10, 20 years mm-hmm. We created products and tools where customers and users had to come to, to do a bunch of work in, to get benefit outta.

We’re moving to a world where. The software is gonna do the work for you in a lot [00:27:00] of those major workflows, right? So we go from this kind of system of record to the system of action. We were in a world where you had these user experiences and menu driven UX where you had to learn how to navigate, and it was sometimes unnatural.

To a world where the experience with software is gonna be just like, as if you were talking to a friend like we’re experiencing today, which IGBT, right? Mm-hmm. It’s multimodal, it’s conversational. Um, and then the other big area that is changing is, is the kind of value exchange, right? Software as a service was traditionally a monthly subscription or annual subscription type of business model.

It was, it was like a utility. You, I, you paid. You pay to get access to a software, to a tool. Mm-hmm. That is shifting to a world where you’re gonna be paying for outcomes. Right, because if I am providing a service, which is to increase your occupancy rate, to increase your, you know, [00:28:00] your revenue, to help you save time, then I’m going to charge for those outcomes achieved, not necessarily just access to a software.

And so this is a massive shift that’s happening around us, which is so exciting for us in this space to think about not only pushing. The boundaries on what we can do to deliver those benefits, but then ultimately completely shifting what software experience is gonna look like in the next five, 10 years.

Yeah. Such great points. And exciting too. You know, uh, I mean that’s similar to, to what we’re doing at Cosley here is, uh, we’re offering the service, you know, um, so with, given that I’m. You know, I’d love to hear what does that look like for you guys in Lofi like five years from now? Do, can you give us some insights?

I mean, where, where do you guys see yourselves with that service model, [00:29:00] um, in the future? Yeah, absolutely. I think, you know what, what you doing at Cosley is, it’s a great point on this, right? And what we see, um, from property managers and property management companies that are out there is in a way. You all are the gold standard, right?

So if a, if a, if an owner says, I don’t wanna do it on my own. They’re most likely coming to a service like yourselves or a property independent kind of property manager, uh, to outsource the work ’cause they don’t wanna deal with it. Right? And it makes sense for, for many, for many hosts and owners that are out there today, uh, because the technology’s not where it’s at because they just have decided this is not an area they wanna invest any time in.

Which is all good. I think over time as the technology gets better, as software gets better, there’s more of those workflows that can, um, be much more automated, can [00:30:00] deliver much greater benefit than they’re able to deliver today. And, and so what that looks like for Lofi is. Today, something as simple as what may seem as simple as, you know, connecting to multiple channels and figuring out what is the pricing that you want to, um, charge for your property.

Is not that simple. Right? Right. There’s a lot of steps. There’s a lot of steps in that and, and you know, it should be. It should be. And that’s the, that’s why, you know, companies like yourself and property managers, you know, do incredible work. ’cause there’s value, there’s service, there’s benefit there.

There’s a lot of pain. And you all solve that. And you know, we’re trying to do that from, obviously from the software side, but there’s more that we can do. And so as the technology gets better and better, then our ability to deliver benefit in these areas will increase. And so you [00:31:00] can look to solidify in the future to be, you know, your co-host when it comes to your virtual.

Co-host when it comes to mm-hmm. Providing you services, um, that are like a property manager, but via technology now, you know, we’re never gonna get to the level in the, in the short and medium term to the level that you all are, are providing or property manager is providing. But you know, definitely significantly better than where we’re at today.

Uh, but the great thing is you all are the gold standard. And so there’s a bar that’s been set in the industry on the kind of like, get it off my, get it off my mind, get it off my chest. And so our, our job now in the, in this category that’s do it yourself. Is, how do we continue to make that as easy as possible, uh, so that those are thinking about, Hey, I wanna do this on my own.

I can do it. Then they’ve got a, a service partner in Inify that can help them with that. [00:32:00] Yeah. Yeah. That’s awesome. Yeah. If you, you know, if there’s a hundred steps and the, the more steps you help your user eliminate, the easier it is for ’em, the happier they are, and the happier everyone is. Right. Um, absolutely.

I think there’s, there’s, you know, a benefit for, for, for you all as well, and, and the property managers, right? Like in, in, um, the analogy for me was in like with QuickBooks and in the accountant space of small business, right. For when QuickBooks came out. Uh, there was all this fear that accountants jobs would be displaced, right?

Like, hey, now all of a sudden, all the small businesses are gonna do their tax, do their taxes, and do their finances all on their own. And what ended up happening was like accountants didn’t go to school to do data entry. Accountants went to school to be business business advisors. What ended up happening [00:33:00] was they were spending a lot of their time on manual work because the technology and the software wasn’t great.

Uh, and so they were having to do a lot of that like low value work for small businesses at the trade off of higher value. Work. Work that they did go to school to go to school for, right. And so the way I view that in our industry is like we as a software and as a future, as a service are gonna take a lot of that work off of our customer’s shoulders.

But there’s still gonna be a lot of high value advisory needs that are gonna be there for these owners that, you know, folks like yourself and other property managers can provide. Uh, because ultimately, you know, the channel management, the pricing decisions, uh, a lot of the automation should be fully auto, auto automatized in, in the future, right?

Mm-hmm. Uh, and in that way, the, the value of work. Can [00:34:00] be at a different level for, for those involved. Yeah. Excellent point. And I totally agree. Um, well, Sean, I, we have limited time. I know, uh, there’s always so many questions I want to ask, but limited time. So, um, lofi is helping. Tens of thousands of users out there, you guys are at the leading the pack, you know, in the industry.

How does, how does someone get started with Lofi? Uh, what’s the easiest way to do that? Absolutely. So, um, go to lofi.com, L-O-D-G-I-F y.com. Uh, you can sign up for a free trial and, and, you know, play around with it yourself. There’s no better way than to jump into the product. Uh, you see, you can start connecting your channels, uh, in the free trial, uh, to see what it’s like and you can experience the AI agent, uh, giving you an overview or if you wanna speak to human.

Uh, one [00:35:00] of our, our people from our, from our team. Uh, you can get that overview as well. Uh, if you’ve got any questions at all, if you do that and you’ve got questions, please reach out to me directly. Uh, my email is sean dot ian@lofi.com. I read every piece of email. I read every piece of customer feedback that comes in through our channels.

We’ve got a Slack channel. I’m reading it all the time. Team knows this. And so I care a lot about what you think, uh, where we’re doing well, where we’ve got room for improvement. Uh, so that’s what, that’s what I recommend. Awesome. Well, thanks Sean. It’s been a pleasure having you on. I’m really excited to see where you, where you take things and uh, to stay in touch and we’ll touch base soon, hopefully.

Thank you so much, Tim. Appreciate you having me on board.

Well, we all know that the listing platforms like Airbnb and VRBO and booking.com, they just continue to evolve and change. And one of the things that’s changed a lot over the years is Airbnb’s review dispute process. It used to be a lot easier and now it can feel impossible, but there are still some very good actionable strategies that you can take to help you get.

Unfair reviews removed from your listing, and that’s what we’re gonna dive into today on the Short-term Rental Riches podcast. Welcome back to the show. Let’s jump right into it.

The impact that a negative review can have on your listing performance or your property performance in the short-term rental world is massive. We know that most all of us know that it can tank our visibility. Meaning if you have a bad review that the amount of people that actually end up seeing your property after that bad review.

Goes way down, and we can see that in Airbnb’s insights and their listing impressions,

but it’s not just the negative review that really impacts performance of our property. because there’s a bit of psychology that goes on behind the review scores and what future guests leave.

 if a past guest has left a bad review, then unfortunately yes, future guests are more likely to leave bad reviews. And now this really hurts. This really stings when you have a review. That is not fair. That is not true. It’s not accurate. It, so getting that review removed is super important.

And yes, this is possible. So in today’s world, Airbnb still has a lot of policies that if they’re broken, you have a much better shot at getting these reviews removed.

And some of those things are, I’m just gonna read off my list here, but hate speech, anything like that, any sort of threats, discriminatory language, any sort of bribe like, Hey, uh, you need to give me a discount, or I’m going to leave you a bad review. Anything that’s not relevant. And so this could be your neighborhood, for example.

Remember, the review has to be specific to your property. And if someone doesn’t like your neighborhood, well that’s out of your control.

And then we also have some times, and I know this sounds a little crazy, where you have guests that have left reviews for your property that haven’t actually stayed in the property, and I have a personal story of my own. I’ll break that down here in a second. And also how we got that review removed.

Let’s talk a little bit about the evolution of Airbnb’s dispute process. First, our team’s managed tens of thousands of guests over more than a dozen years, and we’ve. Typically had a really good success rate at removing negative reviews. So around 2023, we were getting about 40% of all of our review disputes removed.

So taken off our profiles and we of course disputed all kinds of reviews. Anything less than five stars, really. We know if you have less than a five star average or the lower you go, the more your visibility drops, the less people find you and the worse your property does.

So yes, we tried to get every review removed that we possibly could. That wasn’t a five star, and we had a good success rate at that. It was about 40%.

Now from 2023 to 2024, quite a few of the rules changed with Airbnb, and we realized that we weren’t getting as many reviews removed, and so we stopped submitting as many requests. But the requests that we did make, we were still getting about 40% of those removed.

And then this big change came along in 2025 and Airbnb introduced their AI dispute process. you are no longer speaking with a support agent. At Airbnb, your dispute goes in the hands of the ai.

So what does this mean in 2025? Well, it means that much less reviews are getting removed and you’ve gotta cut straight to the facts. No storytelling, no emotional involvement. Just cut straight to the facts.

So you or your team or your property manager who, whoever’s helping you with your property, you’ve gotta learn to speak ai.

Today our team is still disputing reviews each and every day. We manage a lot of properties, so we have a lot of reservations coming in. And remember, we’re disputing anything and everything we can. That’s not a perfect five star. But our rate has dropped a lot. Unfortunately, we’re down to a little over 7% Now, don’t get completely discouraged because keep in mind, if this is a one star review, you know how many reviews it takes to bring your average back up to a 4.9.

If you had a perfect five, it’s dozens and dozens of five star reviews. So each review that you can get removed really can go a long way with the performance of your property.

In today’s world, if your dispute is declined, well, it doesn’t come back with a lot of context, a lot that you can do to resubmit that dispute and have a better shot. It really just kind of comes back with a generic denial message.

So even though our review removal percentage rate has dropped a lot, it doesn’t mean there aren’t a lot of things that we can still do to actually prevent these bad reviews in the first place. And I have some really good tips, some you’ve probably not thought about. But before we jump into that, I wanna talk about a review that we recently successfully removed.

And this one’s gonna blow your mind. So we had a last minute reservation. the reservation was actually made after the check-in time. Now Airbnb flagged this one and they actually canceled it before we could do anything. That guest left us a one star review. He never checked into the property. He never saw it.

He never stayed there. He left a review saying that he had really bad check-in experience. Of course he did because he never actually checked in. Now. It’s up to us to still remove that review, even though Airbnb was the one that canceled it.

Luckily with proof of timestamped messages from Airbnb’s system, we were easily able to get this one removed. But isn’t that just kind of crazy, like Airbnb can cancel review on your behalf? Someone doesn’t actually stay at your property, they leave you a one star review and unless, unless you actually go in there and want to get it removed yourself or go through that whole sport process, it could end up staying on your profile, which is completely unfair and will very, very likely affect your performance.

So in the real world today, what actually works to help get these reviews removed? Well, you have to use Airbnb’s exact policy terms. You need to attach platform proof, so actual messages, any sort of insights from a resolution maybe that got filed, anything that comes directly from the platform, 

You need to match that with specific policies that are being broken by the guest.

You can use terms like, the guest lied about X, Y, Z, or the guest was pressuring us to X, Y, Z, or the guest is retaliating due to X, Y, z. And remember, your first dispute attempt is the most important one. If that doesn’t make it through, then it’s very likely your second attempt won’t either. And that is one thing that we’ve changed in our strategy over the years.

We used to save a list of all these potential things that could get a review removed, and we’d just go through the list. We’d start with the first one. If that got denied, we’d resubmit. We’d go to the second one. If that got denied, we’d resubmit and go to the third one. Unfortunately, that doesn’t really work anymore.

So what can you do today to make sure that you’re not getting these negative reviews? Well, one thing that you can do proactively is if you have a guest that’s staying at your property and things don’t seem that great with the guest. Out of your control, right? Your property’s perfect, the expectations were perfect, and this guess is just a little loopy or has crazy demands, and you’re suspecting that they might be harsh with the review, that they’re going to leave.

Well, you can call up Airbnb support and. Tell them and ask them to prevent that guest from leaving a review before they’ve actually left one. This has worked for our team. It’s a great way to be proactive. Try that out if you haven’t already.

Of course you can use AI to help you file these disputes from your end as well, so you can simply copy all of Airbnb’s policies. You can copy your review and you can have AI generate. A review dispute for you. If you’re new to the channel, we have a lot of resources that you can get for free. Attr riches.com.

Our AI prompt guide is one of those, and we have these review dispute prompts in there for you. If you don’t want to create it on your own, just jump over to scr riches.com and you can get a free copy.

So let’s say you did get a bad review and you couldn’t get it removed. What can we do to make sure it doesn’t crush our visibility and crush our future performance? Well, the first thing is you wanna make sure that you’re responding to that review in a very positive way.

And so what we like to do is the, the sandwich method. Let’s say that someone checked into the property and they said. The bed wasn’t comfortable. We want to thank them. So we wanna start off positive. Thanks John for staying at our property. We’re glad you had a great time. We’re really sorry the bed didn’t quite meet your expectations.

As much as we’d like to have a different bed for all the different sleeping styles, we can’t, we really look forward to having you back in the future. So that’s just silly example I’m making off the top of my head. So you wanna start positive, you want to address the actual concern.

And you might do that by, in this example, saying you have a Tempur-Pedic mattress, or the mattress is only a year old and you wish that it would’ve accommodated them something that’s not going to deter a future guest from wanting to book your property. And then you wanna follow that up the bottom part of the sandwich by saying something positive.

We’re glad that you loved your stay overall, and we’re really looking forward to having you back next time.

The other thing that we’re gonna wanna do if we get a bad review, we need to monitor our visibility, right? So on Airbnb specifically, you can do this under their insights. And if your visibility is fallen off because of a bad review. Well, then you have to adjust your prices, right? Or you have to adjust your flexibility with that listing.

Maybe you have a more flexible cancellation policy. Maybe you now allow instant book. Maybe now you allow pets. But ultimately it usually comes down to price. And we know if there’s less people viewing our property, that we have less demand and we’re not able to charge the same amount.

So you may have to adjust your prices a little bit if you’re in a market that’s seen a lot of supply increase over the years.

Another thing you might want to consider is being a little more flexible on your minimum night stay requirement. Let’s say it’s three days, or four days, or even a week. Well, the time it’s going to take you to build up a lot more positive reviews and bury that old one down in the bottom of the list is gonna take much, much longer, right?

So maybe consider lowering that minimum night stay requirement down to just one night. Having excellent service, getting a bunch of good reviews, and then you boost that minimum stay requirement back up When that negative review is buried way down on the list and future guests aren’t gonna see it or they’re not gonna put as much weight on it.

If you’re new to the show, we’ve talked about all kinds of things related to managing short term rentals. Our team manages properties in over 10 countries and dozens of cities. We have a lot of experience. If you’re interested in getting a little help managing your property, we’d love to chat with you.

You can go to str riches.com, there’s a partner with us button, and someone on our team would love to talk with you about your property and see how we might be able to help. 

We’ve also talked about reviews and the whole guest experience process a lot over the years. A couple episodes you might want to go back and check out. Number 2 86, we talked about. What prior review history is telling your future guests and sort of the psychology behind that. 

and if you go all the way back to episode 180 3, we talk about how you can earn five star reviews with a less than perfect property. 

So negative reviews aren’t going to define the performance of your property. Of course, if you’re getting lots of ’em, it absolutely will. But how you handle those negative reviews, whether you’re getting them removed or you’re proactively responding to them, or you’re. Preventing someone from actually making the review in the first place.

That’s all gonna impact your visibility a lot.

 So yes, there’s a lot we can do to be proactive and make sure we never get these bad reviews in the first place. If we are getting a bad review, we wanna make sure that we handle that appropriately. We may even reach out to support to try to prevent someone from leaving a bad review.

But when it comes time to actually dispute some reviews sometime in the future, Remember that strategy and evidence are gonna be your best bet in this AI driven world.

and until next time, have a fabulous week.

Welcome back to the Short-Term Rental Riches podcast. I’m happier you’re here again. I’ve been doing a bit of traveling.

I left Southern Brazil and I’m now back here in Meine Columbia, where we’re building a resort boutique style hotel. Uh, it’s moving along well. I’m excited to share photos. , And videos and, share the actual property once we get up and going. I’m hoping the first few units out of 20 this is gonna have 20 will be up and ready, maybe in just the next few months.

So really excited for that.

And once that’s complete, our team is of course going to be managing it ourselves. For those of you that have been tuning in for a long time, well, you know that I started this journey a long, long time ago with my own personal properties, but now we manage properties really around the world at this point in over 25 cities, and so I wanna share with all of you property managers out there, some of the things that we’re doing to help grow our portfolio, things that you can do.

I’ve got 13 strategies to help you grow your short-term rental management business in this episode.

All right, so the first step, the first thing you can do to make sure that your name is out there, this is really some low hanging fruit, is to sign up for Airbnb’s co-host network. So just go to airbnb.com/cohost. Sign up there so that your name, your property management business. Is out there in the Airbnb world, of course, you wanna make sure that your property management name is also in your about profiles.

On all the listing platforms where you have all of your properties listed.

The second thing they’re gonna want to do is just make sure that you have a CRM system set up. So a place where you can take notes on potential owners that might want to join you. These are big decisions, right? And so you may have quite a few conversations with someone and they decide later on that they want to join you. We know that a lot of owners out there sometimes contemplate changing management companies, or maybe they’re managing the properties themselves and they’re sort of deciding if they wanna join a management company. maybe something happens where they get a bad review or they have some, uh, really challenging guests and then they throw their hands up and they’re gonna reach out to you,

So keeping track of all those notes. It’s gonna be very, very helpful. Make sure you don’t forget any details about the potential properties that might be joining you. Now there are some services set up to help you find people proactively. And so I’ve sort of bucketed this all into step two, which is having the CRM system, but also doing some proactive searching.

We had Brooke Fouts on this channel a long time ago. He started a company called Ventry, V-I-N-T-O-R y.com. He built a property management business. In the past, he discovered some of the things that really helped grow it.

One is outbound marketing, and so he’s got a company set up to help you do this without going through all the workload. So that’s the second piece is make sure you have a CRM program set up a way to track all these notes, and then also consider some outbound marketing through one of these third party companies.

The third step to growing your business is to have some good referral networks, right? So we know that real estate agents, for example, a lot of times they sell new homeowners or new short-term rental owners. A property and those owners don’t have a manager lined up. And so connect with local realtors in your area.

That can be a great referral source. You might also consider connecting with local interior designers. You know, especially the ones that specialize with short-term rentals.

You can talk with. Short term rental cleaning companies, a lot of times they know these owners very well and they might have some owners that aren’t super satisfied with their current management setup or maybe they’re managing the properties on their own.

So referrals are really, really important. They’re also one of those strategies that can help you grow your business indefinitely, right?

A fourth step that you can take to help grow your business is what Michael Sjogren calls the UI method. He’s from STR Secrets. We’ve had him on the show before. So discovering underperforming properties. I’m gonna go ahead and just read off my notes here, but the first one is to get air DNA. We’ve talked about this tool before. It has access to all of the Airbnb listings across the world.

You’re gonna want to use. Their map section to narrow down on properties within your market.

You can use the filters within air DNA to search for properties that have. Less than stellar reviews, you could say. , And this could indicate owners that are having a hard time with the existing management company. Then you’re going to find that property on Google Maps. That’s gonna take a little bit of, kind of filtering around, but you basically are gonna zoom in on air DNA.

And then you’re gonna find that same Airbnb listing on Google Maps. You can confirm the address by searching for it. On Zillow. You’re gonna use a tool called prop wire.com to find the owner’s name and their mailing address. I realize there’s a few steps here, but this definitely works. Uh, and then number six, you’re gonna use another tool called True people search.com to actually get that owner contact info, and then you’re simply going to reach out to them

if this owner has a property that’s with another property management company and those reviews are suffering, well, then it’s very likely that they’re open to other options. So get in touch with them. This can be a great way, but yes, it does take a little bit of work.

The fifth step is to make sure that your presence on Google is really good. So you wanna optimize your Google presence. You want to get reviews from all of your existing management clients. So that the more reviews you have, the more visibility, the more you show up in your local market.

Of course, having more reviews is gonna help build credibility with future clients. So all of these steps really compliment each other, right? You don’t want to do just one or the other. If you’re doing all of these steps, then you’re gonna grow much, much faster with better results.

Now growing is one thing, but growing efficiently without all the stress is another thing. So if you’re out there and you’re already growing, well, congrats to you if you’re looking for help, if you’re feeling some of these bottlenecks.

Well, our team at Corley loves working with other smaller property managers. We have a really big team on the backend. We’ve got over a hundred SOPs that we help implement in all of our management partners, processes and operations. And so we handle everything from revenue management to the guest experience, to listing and all the technology piece so that you can focus on growing your business.

So if you’re interested in chatting with us, we’d love. To meet with you, you can go to t riches.com. There’s a partner with us button there.

The sixth step is that you want to create brand visibility. Through your existing properties and through your existing website, so not Google, but your direct booking website where you’re showcasing all of the properties that you’re managing.

That of course means that you want to have a very nice website, right? If a new potential partner or owner wants to join you and they go to your website and it looks kind of hacked together, then it’s not gonna be that great. , You can also advertise your services within each of your properties,

the more your name is out there, no matter where it is in your properties, on your profiles online and Google and your direct booking website, this is going to help build your presence and this is gonna help build your company.

The seventh thing you can do is either create or join existing Facebook groups or other social media groups and really contribute value to them. Let people know that you know how to manage properties, that you have great results, and people will naturally see that they will reach out to you. And after meeting with them, you’ll be able to prove your knowledge in the industry and in your specific market.

To help acquire new partners.

The eighth one, and this is one that I know really well. Is to create content, free content, just like this channel. It can be a podcast, it can be a YouTube channel. Share your expertise. That’s what we’ve been doing here on this channel for the last six years now, almost. So I hope that you’ve been finding value in all of our content.

We’ve talked about all kinds of things. It’s been a fun journey. If you have been enjoying the content, please, please leave us a, a, like a thumbs up or subscribe to Spotify or Apple, wherever you prefer to listen to the content. These things take a lot of time to grow a channel, but if you put out good content and you put out good value, then that channel will grow faster.

And it’s a really, really good way to, , show credibility and show your expertise, uh, and to reach a really wide audience.

Step number nine, after you’ve grown your business a little bit and you have quite a few owners in your market that you’re helping manage their properties well, you can have some homeowner appreciation days, and the better connection, the better relationship you have with your clients, the more referrals you’re going to get.

If you’re doing a really good job managing their properties, then naturally they’re going to tell their friends, they’re going to tell their family, and through word of mouth, you’ll be able to grow much, much faster.

Okay, and step 10. Now, this one’s not going to be for all of you out there, but if you’re in a market that has some really prime properties, maybe you wanna identify some that are generating over a hundred thousand dollars, for example, and you’re actually going to send them personalized gifts. So you can either use that owner’s direct address that you would’ve uncovered in step four, or you could send it right.

To the vacation rental property address. We know that the short-term rental guests aren’t gonna be going through the mail, and so you can leave it right there in the mailbox. Now, you’ll want to send a nice handwritten card along with it, but good news, you don’t have to actually hand write out all the cards.

You can use A company called Handwritten. Written is spelled with A-Y-W-R-Y-T-T-E-N. It’s a really cool company that will custom write any message you put in there. With actual ink, and it looks like it was written, but you can send them out in bulk. Remember, you wanna reserve this just for your target properties because sending out personalized gifts could add up.

But when you send that gift out, make sure that it’s something memorable. Have your branding on there in some sort of subtle little way. Let them know that you have a lot of experience in the market. Consider sending something like custom luggage tags, for example.

All right. Step 11. And this one’s a little bit different. This is lease arbitrage. Now I know you’ve heard a lot of negative things about lease arbitrage out there. Uh, and this isn’t exactly. Management, but it does help you grow your portfolio, right? And there’s a lot of owners out there that maybe have great properties that aren’t yet short term rentals, and they don’t want to go through all the work of furnishing and doing and all that.

Well. This is a good opportunity for you to partner with them. You don’t own the properties, right, but you lease them from them or you create some sort of partnership where you ultimately are managing these properties. You have full control and then you’re growing your portfolio. For those of you that have tuned in for a long time, you know that I’ve done this with, uh, some properties.

I have 10 properties in our portfolio that I signed a seven year lease with. It’s worked fabulously well, uh, and it’s also given us a lot more credibility in that market because we have 10 more properties than we otherwise would’ve had.

Step 12. This is a bigger step, but I think a lot of you property managers out there, if you don’t already own properties, you are hoping to own properties one day. And being a property manager is a great natural progression into that because you can own a thousand properties, but if you don’t know how to manage them well, well then they’re not gonna do well.

You’re not gonna have good returns, and the whole thing doesn’t work. And so ownership is a great way to grow your management portfolio. Most of you know that’s how we started. We started with my own portfolio that I’ve been growing since 2010. And that automatically helped us earn the trust of a lot of our management clients, knowing that we manage my properties alongside all of our partners.

Now, of course, , owning property has a whole bunch of other things that go into it. We’ve talked about all of those things on this channel. Times are a bit different than they were several years ago, but there’s still great opportunities out there.

Another great side to being a property manager is that a lot of times your partners, your management clients at some point wanna sell their property and. You are the first one to hear about it. And so sometimes you can work out some good deals. You already know how to manage the property, of course, and it’s a win-win for both sides.

A step 13. I saved this one for last ’cause this is really. further down your growth journey. This is to actually acquire another property management business. Now, that might sound like this huge undertaking, but there’s a lot of property management businesses out there that aren’t that big, right?

Maybe they have 10, 20, 30 properties and they’re just burnt out. They’ve been doing it for a long time. their owners love them, but they’re just done with it,

And so this can be a really good way to increase your portfolio really quickly. Of course, this does require you invest and purchase that company in the management business. Usually the valuations, how much someone might sell their property management business for. It varies, but it can be anywhere from one to three times what they’re earning in revenue on an annual basis.

We know as property managers that if we do a good job managing properties. We should continue to manage properties for years and years and years, right? So we have this sort of lifetime expectancy from our clients.

And if you’re doing a really good job that that can easily be seven to 10 years And so if you invest today to acquire maybe a smaller company, knowing that you can expect to earn revenue from these properties for the next 3, 5, 10 years. Well, of course that all goes into the calculations, but it can be a great way to grow your portfolio quickly.

So there you are. There’s 13 strategies to grow your short-term rental business.

I know that was a lot to take in, especially if you’re, you’re driving or you’re multitasking, you’re handling guest questions. So we put together an ebook that goes in much more detail on all of these 13 steps. You can get it by going to st riches.com, or you can grab it down in the show notes.

I hope you found those helpful, and we will of course have lots of tips on how to actually manage all of these new properties effectively coming in the near future. Stay tuned and we look forward to seeing you on the next one.

Air, DNA is tracking data for over 13 million properties worldwide, and they’ve been doing that since 2012. So that is a lot of data. A lot of data in regards to what amenities you should have with your property, how your supplies doing, how your average booking window is trending, how are different channels performing in your specific market.

I sat down with Jamie Lane, the chief economist for Air, DNA, recently, and we dove into a lot of these topics. Topics that you won’t wanna miss. So stay tuned as we jump into all of the above on the short-term Rental Riches podcast. Welcome to Short-Term Rental Riches. We’ll discuss investing in real estate, but with a specific focus on short-term rentals, quick actionable items to acquire, manage, and scale your portfolio.

I’m your host, Tim Hubbard.

Jamie Lane, welcome to the show. Yeah, thanks for having me. Yeah, awesome. There’s a lot of ways we could take this conversation today because Air DNA has a lot of data. That’s what you guys do. But I’m curious if someone asks you, Jamie, what do you do at Air DNA? Like what do you say to them? I, it probably depends on the day on in terms of what we’re working on, but I lead a couple teams at Air, DNA, one being the research team.

So we’re just trying to understand what are the trends that are happening in the sector? What’s happening with supply? How’s it growing? What type of supply? What markets are people sort of growing inventory in? What’s happening in terms of occupancy levels? Are they going up? Are they going down? Is it because more people are traveling, more people adopting short-term rentals relative to hotels?

How are people pricing those units? Are hosts able to get higher prices or lower prices? What makes most sense for investment today? What are the attributes of. I’m top host, top property managers, things like that. And then I also manage the data science engineering team at aird NA. So we’re very focused on sort of bringing the data in how we model demand, how we’re sort of scraping and collecting the rates, and we’re processing almost a tete of data a day.

Across the global short-term rental industry, so 12 million properties around the world that we’re collecting data on. So it’s a massive data operation. There’s changes being made across Airbnb, vrbo, booking every day that we gotta stay on top of and making sure, I mean, we really understand every data point that we’re collecting off the major OTAs.

And then how to interpret that and how to bring it into our platform to make sure that we’re describing and representing it correctly for people that use their DNA’s platform. So that’s a lot of fun. And then more recently I’ve gotten really involved with the product team, making sure that the products that everyone uses and loves within Air DNA are sort of evolving and they sort of answer the right questions for what people come to Aird for.

Wow. Okay. So. Why don’t we start off maybe on kind of the high level. You mentioned you guys have data from 12 million properties and I know that you’ve been getting this data for a really long time. Mm-hmm. Which means you have a lot of history as well, and you’re able to uncover trends and see a lot of the things that I think maybe the average Joe investors maybe not looking at.

Would you mind high level trends, maybe some things that you guys have been seeing with the data, and then I’d love to jump in. How air DNA can help the investor make smarter decisions. Yeah. One thing that’s really interesting for me to sort of analyze in terms of looking at a long time series of data is just how short-term rentals in general have evolved in terms of, I mean, seeing adoption in sort of the general public.

So if we go back to, we started collecting data on short rentals, 14. So we now have more than 10 years of data, which is pretty crazy to think about now. And ’cause I was one of the first customers of Air DNA, I started as a customer back in 2015, subscribing to the data, and the industry looked a whole lot different.

It was primarily urban, it was primarily sort of people doing private rooms. A bit of rental arbitrage. But if you looked at the inventory back then, it was almost, and half of us inventories was in sort of the large sort of major urban centers across the US And now you fast forward to today, a lot of that urban inventories disappeared.

During the pandemic. There was not people traveling to major urban areas. A lot of the part of people were renting out transitioned back to long-term rentals. A lot of the rental arbitrage companies went out of business. So you think back to big companies in 2019, like Stay, Alfred Lyric Doo all sort of went under.

Then we’ve really seen subsequently the rise of travel outside of urban core, really even outside of traditional vacation rental markets and people just looking to explore the country traveling to small and mid-size cities, really around the world. And it’s really opened up investment opportunities into areas that people would’ve.

Never really thought of using Airbnb for back in 2015 or 2016, and that’s been driving a lot of growth over the past few years. And we classify things like mid-size cities, small city, rural areas, and now there’s more listings now in small city, rural areas. There are in the sort of urban core of major cities when just six or seven years ago, like urban had eight x, the number of listings and sort of these small and midsize city areas.

So it’s areas where hotel investors aren’t going into, a lot of times there’s not other lodging options. And now. People sort of think, oh, if I’m going to this area, like let me check Airbnb, let check vrbo, and it’s really opened up areas to travel and really created new investment opportunities today.

We’re in a couple dozen markets and they’re just spread out all over the place. And I started way back in the day, uh, as well, 2015 was my, my short term rental. And pretty sure I was diving into air DNA back then. But of course, your guys’ platform was way less developed than it is now. I mean, there’s so many ways that someone can go in there and really dissect a market.

Look for what might make the best performing property sector in that market. I mean, all these features that you guys have added, but there are a lot of features there. So what would you say maybe to someone out there that’s either planning on expanding in their local market, or maybe they’re looking for a new investment market, what are maybe two or three of those top data pieces?

Yeah, we’ve created this new section. I like to think about it as like market explore, like air DNA back in the day was all about like, know your city. Go search that city, get the data on that city and you can sort of understand the investment opportunity. It was built around this notion that most people were investing in markets that, that they know, maybe that they used to travel to or the city that they’re in.

And there wasn’t a lot of, I demand for I open to any market in the country. Just show me where to invest. Now we see that so much more today that people don’t know where they wanna invest, but they want a platform to help them uncover those areas. So now that we have this whole section of the site that breaks the entire country up into markets or sub-markets, and there’s roughly, there’s about 317 markets that we divide the country up into.

So the traditional markets, like let’s say in Atlanta where I am today or Denver, but also sort of defining out what is Breckenridge in the market, what is that or Index, what is the lower Hudson Valley? Coachella Valley, sort of these traditional vacation rental areas. But then taking. All these and sort of subdividing them into the submarket.

So in cities, it’s neighborhoods in more destination areas. It’s sort of the beach versus outer areas. And what you can do is sort of hone in on the types of locations you’re looking to invest in and then start. Filtering down to the type of properties that are maybe good investment comps. So I wanna look at just the performance of properties that have, that are maybe operating fulltime more than 270 days throughout the year and have good reviews.

And then you can start ranking markets like I wanna see like the top submarkets in rural Georgia by occupancy. And maybe look at that for just three bedroom or four bedroom or five bedroom type properties. So I can start to see where our pockets of demand, where properties are just really crushing it, then dive deeper and figuring out.

Okay, like Macon or Columbus is, and Georgia is doing really well. And what are the property types that are generating the highest returns? And maybe those are areas that I wanna go and start replicating what I’m seeing top investors doing in that market. Uh, it really lets me uncover hotspots where before just be impossible to click into every city around the country and try to see where there’s performance happening.

Yeah. That’s awesome. It’s, it’s amazing what you guys have set up and the data that we have. Quite a few of our listeners on for this show are, we’re kind of both worlds. We’ve been in the traditional long-term real estate world, and we’ve also been, uh, we’re also in the short term rental world. And sometimes I feel like the data we have now for the shortterm rentals is so much more comprehensive than it is sometimes for long-term rentals even.

I mean, of course there’s, there’s a lot more pieces of data, the reviews and amenities and all these different things that really segment properties out, which is also one of the things that helps. Some properties earn a lot more money than others, and I think that’s one of the things that I’ve liked most about Air DNA recently is really market and seeing the difference between what a top performing property can do versus one that’s not performing well.

You know? And of course management play. Their reviews have a massive on. What would you say to that? You know? Yeah. Let’s say you decide on these markets and you’ve ranked them out. Maybe you have like three markets, but then you know, within each of these markets that there’s just a big gap between the top performers and the.

Yeah, it’s a way I actually think about investing in markets of if there is that disparity between top performers and low performers, that really gives me the opportunity to go in and like actually differentiate my property and where doing things well can generate outsized returns. And then it’s also really important when sort of analyzing.

A potential investment. Like let’s say you’re going in and using our rental tool, you’re sort of putting an address in a property you’re interested in investing in, and that tool goes out and selects comps. And as we all know, like every. Comparable property out there is has a different owner, has a different operator, has different reviews, different amenities, and it’s really incumbent upon the investor on the analyst sort of digging into the deal.

And what are all the comps sort of being used to generate that estimate. And then that’s a lot of the sort of changes we’ve made to rental recently are letting you see all those comps, letting you evaluate each of those comps individually and see, okay, is this actually comparable to the investment that I’m gonna be making to the market?

What are the amenities associated with each of these properties? Where is it located? Is it on the beach versus off the beach? Does it have a pool or not? Have a pool? And then the ability to remove comps. The report. And then if you wanna go out and find your own comps that are sort of more representative of the property you’re gonna be investing in, there’s this whole new tool to actually like and filter by amenities.

Filter by sort of pro core property attributes, and then add those new comps. Into your, your report and then be able to save it and access it down the line and then generate a PDF of that report. So we’re really trying to change the way people think about sort of using air DNA to find their investments as our number is sort of a starting point.

And then you really need to. Edit those comps. And then once you get done with that, and depending on the complexity of the market, depending on the complexity of the property, it could take an additional 10 minutes. It could take an event a couple hours to really go through each of those properties. But when you get to the end of that process, now you’re gonna feel really confident.

One with like what are sort of the attributes of high performing versus low performing properties, and then what your investment is. What are the things that it’s gonna cause it to sort of earn the additional revenue that you think it will earn and then go into that investment with much more confidence than just saying, Hey, this is, this is the number that Air DNA spit out, versus like, I actually analyzed, here’s all these properties, here’s what they’re earning.

I think we’re gonna be competitive with them and that as long as I perform well as a manager, then we’re gonna be able to hit those numbers. Points. If we’re comparing apples to oranges instead of apples to apples, then we’re not really, uh, starting from a good place, are we? I get a lot of questions from people asking, should I self-manage or hire a property manager?

It’s a big decision. So to help you out, I put together a free guide that will cover all the pieces you need to help you. Self-manage your Airbnb like a pro. It’s called your STR handbook, walks you through the real numbers, time commitments, pros and cons. It’s also got three really helpful checklists for every step of a guest reservation.

You can grab it for free@sstriches.com or just click the link in our bio. You know, a lot of people, maybe they haven’t used Air DNA for the. Or they’re new to and they’re in this process. They’re in there, they’re looking at, they’re a market where they’re know. I’m not sure if it really makes sense for me to add any property.

What are the things that maybe you guys see people doing incorrectly when they’re comparing other comps? And I’ll just give one example possibility. I see quite a few people sometimes filtering out like negatively reviewed properties and maybe just segmenting like the highest, uh, review properties, which doesn’t really show there.

Thoughts on what people are doing incorrectly or want keep an extra eye out for, yeah. A lot of ways that you can filter down the data in air DNA, and that’s one of the superpowers that we’re trying to give you. This, the ability to slice and dice the data to generate, I mean, alpha or beta are like ways that you can really dig in and find outperforming underperforming, like ways that you can generate outsized returns.

But let’s say you’re analyzing supply and you wanna limit it to just properties that have 20 plus reviews. And then let’s say you’ve applied that filter and now you’re looking at supply and supply’s coming down and you’re like, oh, this is great. I’m gonna be able to get into this market. Where supply’s coming down.

There’s not as much competition, but the sort of notion of looking at reviews, like it takes a long time for a property to get 20 reviews. There’s generally a significant amount of churn happens in.

Then going and looking at supply like you artificially bringing down supply growth.

20 plus reviews. So I always like to start with my supply analysis of getting a sense of how supply is going. And yes, you can use bedroom count filters, you can use property manager versus non-property manager. There’s sort of these notions of property attributes that like, absolutely you can use those and still analyze supply.

But once you start getting into sort of performance metrics or listing things like days available price tier, like things that where we have to actually look at the performance, uh, categories of the property. I wouldn’t use those when sort of analyzing supply. And then there’s other sort of great ways that I don’t see people doing enough.

Segmenting, like let’s say you wanna look at occupancy and look at how occupancy is trending in your market, absolutely. Start segmenting that by like price tier because how occupancy might be trending in your market for. Lower priced or budget properties versus upper tier luxury properties can be wildly different, and that’s actually one of the things we see is very differential today in terms of industry performance is budget properties are just getting crushed.

With expectations of higher inflation and people on the lower income spectrums sort of blown through their COVID savings, and they really are pulling back on discretionary spend of which travel is usually one of those discretionary spending items where on the luxury end. People’s got have savings, they’re doing well in their jobs, they’re seeing in continuing to increase, and they’re absolutely continuing to travel.

So you might go in and look at a market and like, oh, occupancy’s down. Like, I don’t wanna be investing in a market where people are pulling back and these sort of segment that to maybe larger homes. On the luxury end, they’re like, these properties are like at six or seven year highs in terms of occupancy, like they’re doing really well.

Maybe this is a segment I can invest into and continue to see outsized growth. Great insights there. Great insights. And it’s interesting to see these things just changing all, they just change with time. Great point with the reviews there. That’s a great point. 20 reviews can take a long time. Especially let’s say you’re in a market where the season’s only half the year, you know, and maybe could average length of stays a week or something like that.

You know, that could take a lot of time. So great point there. Great point with segmenting. Just how this data’s changing. Are there other industry changes that you’ve seen? I know after COVID, you guys had some really interesting data as well, and one of the things we see in our portfolio is shortening booking windows.

Do you have anything to to add to that? Any other insights? Yeah. I think that’s one of the most important sort of things to understand in your, in your property today is how booking windows are changing. There’s a chart within Air DNA, it’s sort of the bottom of the market overview and actually shows within the market and you can like segment it to one bedrooms or five bedrooms or filter it down to see sort of how it differs across different property types.

Is the share of bookings coming in. By booking window. Window. So like what percent is coming in within the week, within two weeks, what percent is getting booked more than 90 days in advance? And sort of how that’s changing and how it’s sort of changed through the seasons. Because if you look at summer pacing today, and we’re sitting here in sort of early June, demand looks.

For July and August and for a lot of properties, July and August, uh, that’s peak season. That’s when you’re making your money and you look at pacing, you’re like, oh, we’re down 2, 3, 4, 5%. And then we sort of look at some of the near term historical data and it’s like, oh, well, demand’s coming in. Like it’s, we’re still growing occupancy sort of flat, slightly positive.

So you look at pacing and so there’s a disconnect there. And what is the disconnect? It’s an extreme shortening of lead times. So guests are just waiting to book and it makes sense with the uncertain times we’re in and we don’t know what tariff rates are gonna be. We don’t know the impact that tariffs are gonna have on inflation.

There’s a lot of people worried about economic prospects for the market. Whether the stock market’s up on any given day or down 10%, and it really volatile. So what do people do if there’s uncertainty in the. They’re waiting to book their summer travel, but so far what we’ve seen is they’re eventually booking.

They’re just waiting a week, waiting two weeks longer than they normally would to book a trip for that same time period. And as an operator, that’s worrying, right? ’cause you’re used to a certain amount of bookings as of a certain amount of time. And if you don’t get that. Then you start to worry like, do I need a discount?

And what are my competitors doing? Are they starting to discount? If they’re starting to discount now we sort of get into. But then if you’re able to have some confidence of knowing, okay, like yes, people are booking, they’re just waiting longer, and I sort of need to hold the line and know that those bookings are coming and that, and we’re gonna get the demand that my market’s used to.

That all takes data, that all takes conviction and knowing that people are booking, they’re just waiting and bringing those data pieces into your strategy and can separate. And sort of operators that are gonna get to the end of the year and like, all right, overall market demand was on par and I was actually able to grow my revenue.

Verse, oh man, overall market demand was on par, but I shrunk revenue because I sort of panicked and started discounting. And you can really get to entirely different outcomes based on how you’re reacting to what’s happening in the market. Yeah, great points. And that’s just speaks to the importance of data.

I mean, you basically can’t do revenue management unless you have data, right? You have lots of data. You’ve had it for lots of years. It’s primarily from Airbnb, DRBO data as well. Yeah, so when we scrape data and we’re, we’re collecting data off of the major OTAs, so we’re looking at the calendars on Airbnb, vrbo, booking.com, and when we see calendars change, we’re sort of modeling those calendar movements into a guest’s booking.

Or an owner is sort of blocking that calendar and there’s really important blocks to get. Like if I’m an operator in Cape Cod and we’re getting into October and I’m gonna block my calendar for the winter because I the property down. We gonna make absolutely sure we’re not modeling that block as a booking and we’re modeling lead times length of stay.

All these things cause us to like, okay, this looks like a booking. But what’s really important to understand is because we’re looking at the calendar, if someone’s booking sort of direct, that booking is gonna cause the calendar on Airbnb to go unavailable. We’re gonna see that movement in the calendar and model that as a booking.

So it doesn’t matter what the books act, what channel it’s coming through, whether it’s Airbnb, vrbo, booking.com, as long as you have your calendar synced, and we’re able to see that calendar on one of the OTAs. We’re gonna model that data and sort of capture all the bookings that are coming through those properties.

So it really, yes, and we’re limited to properties on Airbnb, vrbo, booking, but we’re capturing all the bookings that are happening for listings that are on those platforms. One of the things that I find interesting about the different platforms, you know, like Booking and is that they have slightly guest profiles.

They have slightly different booking windows. There’s these differences between the channels. I think it’s left a lot opportunity for someone with a typical vacation rental, for example, that’s been on VRBO and they’ve been on Airbnb and maybe hasn’t been on booking.com. They’ve seen a lot of supply where a lot of other Airbnbs have come on in that market.

I think it leaves more opportunity for some of the other channels sometimes. So I’m curious, do you have any into some of the differences that you guys see with the channels? Absolutely, and it, it’s part of our bet around channel management. That, and channel management listing on multiple channels is the future of the industry.

We just don’t think that people should only be single channel listed. It opens you up to a lot of risk and then addition and the ability to drive direct bookings, drive repeat, bookers. Direct to your platform and saving on platform fees is a real big opportunity for your property. So we bought a property management system about a year and a half ago called Uplifting.

We’ve now have that under the DNA umbrella and are making a lot of improvements to there, but it is. Crazy how different the sort of guests are. That book through the different platforms like booking.com, can actually be a great way to get exposure to international guests because if you go and look at the data and up listings very big in both the UK and the US in terms of hosts that use it.

In the uk, almost 50% of bookings are coming through bookings.

Or 5% of overall demand, but it’s growing. And guests, just like if they’re in Europe, they think of booking.com. Like we think of Airbnb. It’s just the spot that you go to book your vacation rental. So when those guests are now traveling to the us, they’re using booking.com. Just like they would in Europe.

So it can be a great way to attract more international guests to your property. Vrbo guests do tend to be more older generation booking in traditional vacational markets. Like you’re going to the beach, you’re going to the mountains, you’re traveling with your family. You book a vrbo, they’re typically longer stays, five plus stays.

You see a lot more week long booking on VRBO than you see through Airbnb. You see longer lead times and you typically see much higher sort of total checkout value, and a lot of that has to do with the larger homes and sort of beach, mountain markets. Airbnb still trends, shorter booking windows, shorter average length of stays.

Still trends more urban, but has absolutely dominated the small and mid-size rental market. Like VRBO almost has no exposure to those areas. Uh, VRBO has also had almost no inventory in the urban areas, so Airbnb still dominates that and depending. On the type of guest you’re looking to add to your property.

Like I launched a property in North Georgia last year, um, listed on Airbnb, vrbo booking.com Expected that most of my bookings would come through Airbnb, given that it was sort of I near Atlanta. And you’d see a lot of domestic guests sort of booking through there. I’ve been astonished by the amount of bookings I’ve gotten through booking.com, and then the long sort of week or two, long week long bookings I’ve gotten through vrbo have been massive and also coming out of, uh, off peak time.

So layering all those channels in together could really make, like if I looked at my performance and what I’d be doing if I was only on Airbnb, it would not nearly be as successful as if now that I’m on multiple channels. And yeah, again, uh, you wouldn’t know these things. And so really important to be looking at all this.

You’ve brought up some really interesting things, Jamie. Some big industry changes, you know, like economic segment of short-term rentals, kind of really getting crushed, shorter booking lead times. The differences in some of these channels. I know you don’t have a crystal ball, but if anyone did have a crystal ball, I think you would be top of about this.

Can you give us any sort of, and we know the past data doesn’t predict future data, right. But any sort of predicts the coming one, two years? Yeah. I mean, I like to look at a lens of overall travel. I travel is a sector is gonna outperform other sector. We’re seeing really strong domestic travel right now.

I think that’s gonna continue. We’re seeing really strong sort of outbound US international travel, so that’s something that has really exploded post pandemic and we did a lot of travel around and domestically, now people are wanting to explore the world and they’re using short-term rentals for it. So if there’s ever a time that you’ve thought about sort of investing outside the US there are ways to do that and ways to sort of capture that demand and do interesting investments outside the us.

I think that is gonna be a trend that continues, and I get excited every time I sort of see the numbers coming out of India, China, Brazil. Like there’s so many new travelers sort of being created every day. The rise of the sort of global middle class that I.

It’s something that AI can’t replicate and technology I think is only going to enhance of people’s desire to get out, explore. People wanna spend on services. I think they’re tired of spending money on goods, even longer term, like the travel sector’s gonna be one that really continues to outperform in the economy.

And yes, there’s gonna be hiccups here and there and whether or not we go through a recession. And over the next year is still probably 50 50. I’m still on the lower end of 50%. I, I don’t think we’re gonna go through a recession the next year, but I think even that we come out of it probably as an industry stronger.

1. So I’m continuing to invest in the travel sector. I think it’s one that is a long-term good bet. And there’s not new investments being happening in hotels right now with the sort of mm-hmm. Commercials, debt crisis that was happening post pandemic banks just don’t want to finance construction for new hotels.

So if we think long-term travel’s gonna continue to grow, two or 3% like it has over the past 20, 30, 40 years. Hotel development’s only happening at half a percent growth per year. That sort of growth of inventory’s gotta happen somewhere, and if not, it means higher occupancy and ADRs for those existing operators.

So I think we’ve got a lot of great tailwinds in the sector. There might be some sort of near term headwinds, but looking at. Great points and the supply, it’s such an important thing, right? And these things take time to slow down or speed up. And because interest rates are high and things aren’t lending, like you said, to hotels or really to apartment buildings, any of the commercial sector, that whole supply and demand equations really getting, it’s gonna have some big changes coming.

So exciting stuff. I also agree in a lot of international opportunity. A lot of listeners know from the show I spend most of my time. We’re doing some fun stuff down here, but of course we wouldn’t be doing it without good data, and that’s where you guys come in. And so for anyone out there, what’s the easiest way to get started with Air DNA and get good access to data?

And you can go to aird.co. We’ve got data covering every country around the world so you can leverage it. One subscription get you access to every country. So you can start with a free account to just upgrading to pro. We’ve got great annual subscription options, which relatively low cost gives you access to all the data you need to really get going in short-term rental investment.

And then once you buy that property. We’ve got a great property management system for you, up uplifting that can get you listed on all the channels, automate your messaging and get you operating efficiently. So really trying to make this one stop shop for helping you find an investment and then operating long term in the sector.

Awesome. Thanks Jamie. There’s definitely a lot more questions that I would love to.

At conference then. Thank you if you got something valuable from today’s episode, I’ve got just one small favor to ask. Please leave us a review to show your support. I’d also invite you to share this episode with a friend or family member or anyone you think would find value in it. I’m here each week to help you build a better, smoother, more profitable short-term rental or boutique hotel business.

And by sharing and implementing these ideas, you’re not just helping yourself, you’re helping move the whole community forward. Hearing your feedback really means a lot to me too. This podcast has grown into one of the industry go-to shows, and it’s all thanks to you, our listeners from around the world now tuning in every week.

Seriously, thank you a lot. This would not be possible without you. If you’ve got a story, idea, or tip you wanna share with the community, I would love to hear from you. Just send me a. Quick message on LinkedIn and let’s connect and before you head out, make sure you’re subscribed on Apple Podcast, Spotify, or YouTube, wherever you like to listen or tune in.

That way you won’t miss any of the actual tips we drop in here every Tuesday for your short-term rental success. Successful investing happens just one step at a time, and so until next time, I hope my content helps you keep taking those steps. And cheers to your success.

Welcome to Short Term Rental Riches.

We’ll discuss investing in real estate, but with a specific focus on short term rentals.

Quick, actionable items to acquire, manage, and scale your portfolio.

I’m your host, Tim Hubbard.

Well, welcome back, everyone, to the Short Term Rental Riches podcast.

I’m really excited for our guest today.

He’s one of the co-founders of one of the companies that we talk about a lot on this channel, because they handle dynamic pricing.

So today, we’re with Anurag Verma.

He’s one of the co-founders of PriceLabs.

How are you doing, Anurag?

I’m good, Tim.

Thank you so much for having me here again.

Yep, fantastic to see you.

I was searching my email just to get a little bit more about your bio, and I found an email between us from 2017, actually.

So we’ve known each other for quite a while.

I know we’ve seen each other and met up at a bunch of the conferences.

We’ve been users of PriceLabs for a long time.

Tell us, where is PriceLabs today?

I mean, you guys are massive.

You’re worldwide.

Just give us the background.

Where are you guys at today?

I’ll go there, but before that, 2017 was eight years back.

It’s been a ride for, I think, the entire industry, right?

A lot of the companies that are out there today barely existed back then, including us.

Things have changed so much.

They have changed so much, yeah.

And I’m excited to dive in today to see where you think things are headed as well.

But we’ll get to that in a few minutes.

Absolutely.

So in terms of where PriceLabs is, we started in 2014, I want to say.

So like you were one of the, started in 2014, built out a beta, put it out in the world to see, is anybody interested in pricing their short term rentals dynamically?

Turned out they did.

And when that happened, we were like, oh, maybe you should register a company and do this for real.

So 2016 is when we actually started a paid product or paid volume of the product.

When you showed up, you were pretty happy.

The price, about 450,000 properties around the world or units around the world, which if you had asked me or anybody else in our team back then, the number just seems crazy now.

But we integrate with like 150 different property management systems.

I think back then, I didn’t even know that many property systems, property management systems exist.

There weren’t that many.

There weren’t that many now.

I mean, there were that many that we didn’t know.

You get to know about some of them.

Of course, a lot of new ones have also come up.

So that’s totally the case as well.

Yeah.

And our team is spread out around the world.

So we started out in Chicago and was like pretty vehemently.

The entire product team needs to be in one place, philosophy folks, to go with it.

And then we were like, oh, now that we’re doing remote, might as well spread around everywhere.

And so now we have presence in US, a little bit in, I want to say, a couple of folks in South America, in Europe, a lot of folks in India, a lot of folks in Philippines, so spread all over the world.

So we started out just as a pricing system.

And over time, we’ve been adding more and more layers with the philosophy that our core expertise is in one, revenue management, and then two, the data that powers revenue management.

So we scrape a lot of data, we collect a lot of data.

So even if it is adjacent to revenue management, if the data is helpful, being able to say, okay, how can we solve a problem for a customer?

Started with dynamic pricing.

One of our big push was dynamic pricing by itself is not enough.

Like everybody has preference of what they want out of pricing, so you should be able to make the algorithm work for you if you want to.

So went through that, then rolled out internal reporting, rolled out market dashboards, and then last year, rolled out revenue estimators as a product.

If you’re looking to invest in, or if you’re in a management company and owners are coming to you to say, how much can I make here?

Like instead of that process taking four hours, can we make it take five minutes?

So well, okay.

So yeah, way back in 2016 when you guys started, fast forward to today, 450,000 properties using PriceLabs around the world.

A team spread around the world, and a tool that does so much more than it did back then, including the revenue estimation, which you just mentioned, and I know our teams used quite a lot.

I’m just curious, how big is your guys’ team now, Anurag?

I mean, how many people are supporting PriceLabs?

We have about 250 folks.

One of our biggest teams is customer support.

I think we have about 50 people in that team.

About 100 people between engineering, data science, and product development.

So, like a pretty large team there as well, given how many moving parts there are to everything involved.

So yeah, like a much larger team than I.

Yeah.

And your background, or before you started PriceLabs, you were working in the airline industry.

I mean, a lot of times, founders, they start companies to solve problems where they see them.

So, it sounds like you sort of were working in this area and you brought it into the short term rental space when it didn’t exist.

So, that’s, I had the benefit of having co-founders, I want to say.

My background was strictly in statistical modeling, dynamic pricing, those kinds of things.

And I was doing it for United Airlines.

And I had no intention of starting anything.

One of my close friends from undergrad was managing our short-term rental in Chicago.

And him and I were talking, and he’s like, hey, AirBnB is going to be a big thing, but there’s nothing doing pricing here.

You know how to do pricing, like should we figure out how this can be done for AirBnB?

And we got talking and it does look like something should exist here, so let’s give it a staff kind of a thing.

From that sense, there was somebody who was in the industry as a reason for us to have this problem, my co-founder.

And then we found a third person who used to work at Orbitz, so like had the travel technology experience.

At Orbitz, okay.

And engineering background to say, okay, how does distribution work?

How to make the platform work so that it’s connected to everything?

All of that.

So it was neat from the industry and then some skills that were useful for the industry.

Yeah, it’s definitely a useful tool and you know, that’s evident in the 450,000 properties that are currently using that.

And I know that it’s changed a lot since we first started.

You guys are just releasing new features all the time, but it’s because things are getting more advanced, they’re getting more detailed, the industry is getting more competitive.

And so I know that someone can turn on PriceLabs and it can certainly help them in a lot of ways.

When we first got started, the dynamic pricing was amazing.

You didn’t have to adjust weekend prices every week and do all that.

But now there’s so many settings that it almost could be overwhelming sometimes.

What would you say to people out there that are maybe just using it, like turning it on, but not really getting to the settings, versus the super users?

I want to say there’s probably a happy meeting somewhere in between.

Because we see both ends of the spectrum, like we have customers who set things up and then don’t log in again for a couple of months.

And then we have folks who are in there every day and making small incremental changes up or down, like you said, for every weekend.

And our general thought process is, okay, you should not have to go in every day and do this tech.

And again, it depends.

We have customers who have 2,000 properties and three revenue managers, and they are in the system, like their daily jobs.

So we expect them to be in the tool all day, every day.

But if you have one home, for example, you shouldn’t be going in every day, but it should be more of once every couple of weeks, and of course, if you have 50 homes or 100 homes, then you will be in the mall.

But the hard part of pricing is you never know what’s the right answer.

So if there is a date in future that’s, let’s say there is some event happening and you haven’t gotten booked yet, you can start thinking, oh, maybe the price is too high.

Like, let me see if I can lower it.

And maybe you lower it by 50 bucks and you get it booked three months out.

And then you’ll start thinking, did I lower it too much?

Did I get booked too quickly?

You can very easily argue for both sides to say, hey, it’s okay.

So the thing that we want to do, like we have made a lot of data available in the platform, to be able to be a better judge of is this too high or not?

Should I change it right now?

Most cases, the answer is maybe not.

But if you have compelling evidence, like human beings have information that no computer might have or no algorithm might have.

So there are going to be times where you know, absolutely know, I know exactly what’s going on and I hate to trade this price.

But in most cases, when you look at the same, and I guess this price is too high, when that question comes up and some folks email us to say, hey, why is the price here so much higher than every weekend around it?

We essentially go into your account and look at the same data that you have access to, to say, hey, look, we are seeing this spike that is unnatural for this time of the year.

This far out, these many bookings indicate something big is happening.

Also, for this time of the year, three months out, 80% of the demand is yet to come.

So being priced a little higher than the market is okay.

Like if more than half the demand was already booked and you were priced quite high and worried, that’s a different story.

But when most of the demand is still yet to come and we are seeing a spike, maybe it’s okay to hold.

So what we have been doing, I want to say in the last three, four years, one, we have been improving the algorithm, but two, we have been making a lot of this data available, to say, how can you answer that question of like, should you worry right now or not, essentially?

Yeah, that definitely makes sense.

We’ve seen that on our end, like your market dashboards, for example, do a really good job of presenting data in a really great way.

I think if you want to be like a super user, you still have to know what data to look at, and you have to understand it.

And it seems to me, correct me if I’m wrong, but PriceLabs helps out tremendously.

Like it’s an essential tool, in my opinion, for any short-term rental owner, vacation rental owner, boutique hotels.

But the job of a revenue manager is quite complicated.

I mean, people dedicate their careers to it, and it’s one of the positions that a hotel will pay more for than almost every other position in a hotel.

So, how much extra revenue would you say?

I know this is a really hard question.

How much more do you think like a professional could squeeze out of this tool?

Just really understanding the data behind it.

Before I get to this question, I want to go back to the previous one.

So, any pricing system, like it doesn’t operate in vacuum.

We know quite a bit about the market, of each market and how demand fluctuates and things like that.

But each property is unique.

There are going to be things that you know that you set up in PriceLabs and give it as an input.

And then you fine-tune those inputs over time.

That is one of the things that when you are starting off, that is required that you do come in a little more frequently.

And if you have 50 Homes, then you’re probably adding one and losing some, all of that stuff is happening.

So you’re probably in the system quite a bit.

And it is totally okay to be in the system all the time, if you have a larger portfolio.

Or in the beginning, when you’re setting this up, when you’re learning it, right?

When it comes to professional managers, definitely there are two ends of the spectrum, where we have some revenue management partners where they understand the system really well.

Their first thought is not to say, how can I make the system do exactly what I want to do?

Their first thought is like, okay, why is the system doing what it’s doing?

Once they figure that out, then they go in and say, okay, the system is doing this because of that, but I know that that’s not happening.

Let me bring in my own insights, opinions, and in the form of settings to make it work better.

In those cases, we see revenue managers can bring in quite a lot of value.

Like, good revenue managers might have to modify.

I don’t know how to put a number on it, but a good revenue manager, I want to say, is as important as a good revenue management system.

Give us some numbers just for fun, just a range.

We did a study where we looked at new customers who are joining PriceLabs.

And then we said, and we have all kinds of customers joining PriceLabs any given month, larger ones, smaller ones.

Across the board, we saw something by month three.

On average, the rev power was up by somewhere between 20% to 25% for folks who were small hosts.

On the larger host or larger PM side, I want to say the number was smaller.

It was more in the 15%, 10% to 15% range.

But you could also see that they were already doing some dynamic pricing.

Even before starting PriceLabs, they were doing something in the PMS or Pan Airbnb directly.

So one thing you can say is like, okay, the reason why they didn’t see the lift of 20% to 25% is because they were already getting some lift just because the revenue manager was there.

So you can kind of say maybe that’s the value that they bring, like 10% to 15% is automatically the value that the revenue manager is bringing.

But I also want to say a good revenue manager with a good tool is probably going to be doubly effective because especially as a portfolio grows, doing it manually is like the revenue manager spends more time keying numbers in than sort of using their smarts to get the most out, right?

So, what should I say?

20%?

I had to do some random guess.

Right.

There’s no exact science for sure, but…

Definitely, there are a lot of very good revenue managers in the industry.

I want to say, if you went back 10 years, the revenue management tools didn’t exist, and revenue management as a discipline in short term rentals was almost…

It was there, there were people who were doing it, but even the distribution was so difficult.

A lot of PMSs, you would say, here’s my summer rate, here’s my winter rate, here’s my snowboard rate.

And revenue management, that was possible.

If you go back 20 years, you had to send out…

Like nobody was booking online.

For larger PMS, bookings would come from travel agents.

You would print out your rates for each week and send it out to travel agents to say, here are my rates.

What do you do in that case?

The revenue manager gets to decide rates once in the beginning of the year, and that’s it.

Now, as technology is getting better, distribution is not even a question.

They can change rates multiple times a day.

They have all of the tools available to be able to see what’s happening in the market, what’s happening in the root 40 or so.

Just both the human part and the technology part have exploded in the last 10 years, I would say.

We’ve been enjoying all of the new features that you guys bring on.

Obviously, you’ve brought them on for reasons, and there’s good use for them.

I’m just curious, do you know how many features are in PriceLabs if you had to guess?

I mean, settings, there’s got to be just tons and tons.

So feature, like, is a checkbox to start showing some data or features?

I would say more of like setting configurations, you know.

I think we have somewhere between 20 and 30, what we call customizations.

So for example, by default, last minute, you want to discount rates, given the structure of the industry discounting assets.

We come up with what the right discount should be for your market, but you can say, hey, maybe you don’t want last minute bookings for whatever reason, or you don’t want to discount as much last minute.

That’s a setting rate.

What happens when there is a gap?

Does the gap fillers come in for minimum stays?

That’s a setting.

Do you want far out prices to be slightly pumped up, pumped up a lot, not pumped up at all?

That’s a setting.

These are like price settings, and there are cosmetic settings.

There are folks who say, I don’t want prices being all over, just round them out to the nearest 10.

It just makes my day work a little better.

That’s a setting.

So something like that, we have about between 20 to 30 settings.

But we don’t want you to be using every one of them.

It should be, I have this need, and so I’m doing it.

What we don’t want is for you to go in and say, oh, there’s a toggle, let me turn it on.

In most cases, I want to say those settings are not, you don’t need to do anything with those settings.

There are five or six that we highlight to say, hey, here are the basics.

If you want to play around to see what exists, this is what you can play around with.

You guys have done a really good job on the platform with education.

I mean, if someone wants to, they can really, really dig into things and learn them really well.

But those sort of essential settings, you guys have done a really good job at just laying those out and explaining why things are happening.

The education pays 100%.

If you think about revenue management systems, pricing systems, the other place that they exist is hotels, airlines, and in both those cases, it’s somebody’s full-time job to be sitting on that revenue management system.

They are trained for it, they get degrees in statistics or whatever else to be doing those roles.

Whereas in this industry, in our industry, if you’re a homeowner who’s listening on Airbnb, you still want to use.

And so that somebody’s job, then to be able to give the right training.

So like I think that’s where we said, okay, we have to do this.

Because if we don’t do the right training, then revenue management systems can be complex or really daunting.

So as much as we do on the education side, we want to.

Yeah, you guys have done a really good job.

If you’ve been listening to the podcast for a while, then you know that I’ve been managing my properties virtually for years and years.

My team and I have managed thousands of guests.

We’ve learned a ton, and I’m really happy with the progress and the growth we’ve made.

In fact, we’re now big enough to help manage your properties as well.

Our team has a ton of experience from the inner city apartment to the large lakeside retreat.

We’ve worked with all types of properties across the nation.

We’ll help to take the management workload off your plate while earning top revenue and excellent guest reviews, all while charging an industry low fee.

If you’d like to find out if your property fits with our program, just head strriches.com.

There you’ll see a property management button.

Again, that’s strriches.com.

Just click on the property management button, and we look forward to chatting with you soon.

Question for you, Anurag.

I know there’s a wide range of people that tune in to the show.

Some people are just getting started.

Some people haven’t gotten started.

Some people have large portfolios or boutique hotels.

What’s one feature or setting that you think more people should take advantage of that maybe they don’t?

So if everybody who comes to PriceLabs, if I could tell them one thing, and we try to tell them that one thing in many, many ways, is, of course, you know this, get the base price.

The base price, think of it as your average price per night across the year, around which we will say what to do when there’s an event, what to do when there’s high season, when there’s low season, last minute, far out, and all of that.

The question is, like, how do you get, every home is unique.

How do you get this right?

There are multiple places where you can look at data.

If somebody comes and asks us, we say, okay, how does the market price for homes that are similar to you?

You can use that as a starting point.

If you are an existing short term rental, we also pull in your reservation data.

And there’s a tab in our next to our calendar called neighborhood data, where we show you with your current settings, what are your prices looking like in a chart?

What are the market’s prices looking like?

You can also add, show me how my last year’s bookings will look like on this chart.

And then you can say, okay, if this is the base price I go with, I would be like 40% higher than my last year’s bookings.

And at that point, most people should say, okay, either I was under selling, in which case I should have sold out everything.

But if I wasn’t selling out everything, then maybe this base price is too high.

There’s a lot of data available in neighborhood data and in base prices for you to be able to say, okay, what’s a good starting point?

And then, like you said, don’t leave it there.

Look, don’t set in, forget it.

Come in every week and say, am I getting enough bookings or not?

If I’m not getting, there are indicators in the system to tell you that you have not been getting enough bookings, but you also know that you have not been getting bookings.

So like you can say, okay, maybe I set this base price too high.

When a new property comes in, we automatically try to include all of this information and come up with the right base price, but there is enough available that I would say if everybody could go look at that, they’ll perform really, really well.

Those are great features you guys have added.

Again, all this stuff you guys have just been adding and adding, and it’s been really, really helpful.

So, okay.

So making sure someone has the base price is a massive first step there.

I think I said it more because you said there are folks who may not have their first short term rental yet.

The biggest lift you’ll get is from getting the base price.

And nobody gets it right in the first go, but knowing that you fight your net over the first few weeks, to get to the sweet spot where you’re getting just the right number.

Awesome.

Good stuff.

What would you say to someone out there?

You guys just have access to so much data.

It’d be amazing to see the back end with these there sometime.

But what would you say to someone that is out there?

We work with a lot of different properties in a lot of different places, and sometimes our partners that join us, they have their own opinions on their prices.

What a minimum should be and things like that, which of course, what’s their property at the end of the day, we’ll listen to what they say.

But what we found is that the more variation you can have in your prices, the more flexibility, generally the more money you’re going to make.

Would you agree with that?

And if not, what would you add to that?

Generally speaking, very true.

If you try to set a minimum price that is too high compared to the base price, for example, our system will give you a sort of warning to say, for last-minute bookings, for low season, this doesn’t give the algorithm the flexibility to go around enough.

Now, people have an opinion on their prices because they know something.

Those opinions don’t come from vacuum.

They know something and it’s okay to have those opinions.

What I would say is also look at evidence in some case.

So let’s say you said, I have a two-bedroom in Chicago and I never want to sell below $400 a night.

And maybe this is coming from some knowledge that I heard some friends say that they sell their two-bedroom for $500 a night all the time.

So I said, if they sell it for $500, why should I sell for anything below $400 at all?

It’s okay to start there.

But if you’re going through February right now and your occupancy was 10% or 20%, if at all, February is pretty lean in Chicago, all the code, then use that as evidence to say, like maybe this $400 number was too aggressive.

Let me see if I lower it, what happens?

So go in there with your opinions, but also with an open mind to learn from experiences.

And you don’t have to wait for time to pass, like for February to pass to realize that.

You can also look at your forward-looking calendar, like hey, March is coming up, all my prices are sitting at the minimum price because I set the minimum quite high.

I don’t have too many bookings.

The market seems to be at 30% occupancy.

Looks like I could be gaining something by lowering my minimum price.

It’s okay to start with those opinions, but maybe you have that fantastic property that sets 400 and keeps getting booked across February and March, in which case you say, I actually see what I said was true.

Like I’m still getting bookings, I don’t need to change a thing.

And that’s okay.

When you said the revenue managers or professional revenue managers, I think the number one thing they do and know is they know something.

But every day they are trying to gather more evidence to say, okay, if I change this rate, lower it by 5% across my portfolio, do I suddenly start seeing a lot more bookings or not?

If the booking page doesn’t really change, they go back and understand, okay, by lowering by 5%, it’s not like I got new bookings.

I got the same bookings, but not 5% lesser.

This was not a good move.

So those are the kind of things that revenue managers take a look at and learn every day from what they’re seeing in the system.

Yeah, that’s a great point.

Just using data to back up whether the decisions were good or not.

Unfortunately, we see sometimes when people are just getting into managing their prices, trying to hold out for the best Thanksgiving price or the best Christmas price, for example, where they actually risk not getting booked at all.

And if they don’t get booked at all and they look at their overall profit kind of year over year basis, maybe just not booking that New Year’s Day makes you performing worse than the whole year before because we were trying to hold on to time.

The other thing, like with new homes, and I think there’s common knowledge in some ways, with new homes that are coming on to an OTA, you haven’t built the reputation on the OTA yet.

Like the home might be great, the property might be great, but the listing is still new.

The listing doesn’t have reviews.

So to recognize that there is in the guest mind, there is a distinction between the property.

Maybe they fall in love with once they see it, but all they get to see is a listing, and the listing has zero reviews.

They can’t tell if it’s a luxury property that they pay a lot more for.

So understanding those pieces as well to say, okay, you’re selling nights on a physical home, but through a listing, what’s happening on the listing is also important.

That’s a great point.

And we see that it’s highly correlated between the performance of a property, the review performance and how much money it can charge.

And you guys have done great by adding the ability for us to make some of those filters and adjustments between properties so that we can compare properties are more similar, much more similar versus just against the general market.

Awesome.

I could chat with you for hours.

There’s, you don’t know this, but we talk about PriceLabs all the time on this channel or I do, and pricing because it’s just really important, you know?

It’s super, super important.

Yeah.

And it’s always changing and it’s changed so much since you guys started.

So I’m curious to know, I really want to ask you where you see the industry in five years, but I feel like that’s too far from now because, so why don’t we go with three years?

Like, where do you see the dynamic pricing industry, what you guys are doing in three years?

So one, access to data has become a lot better.

I think over the last many years, kind of data that’s available across the board in the industry is just a lot better.

And that’s what’s driving a lot more of the improvements that we have been coming in with, right?

That improvement in available data, just algorithms should keep getting better and better.

That’s one piece, like, for any of the systems, like, how good are the recommendations?

The other is, okay, how easily can somebody interact with the systems, right?

I want to say there is always in the last 10 years, we have revamped our UI twice.

I think in the last six months, we rolled out sort of a new UI to improve speed and everything.

But one of the things that we are seeing a little bit is also with the whole generative UI or chat-based interface, there is potentially an opportunity where a lot of interactions that somebody has with the system can be made easier by allowing them to be typed in to say, they could increase my base price for all three-bedroom homes by 10%.

So you don’t have to go to each three-bedroom property and do it by yourself, but potentially you could do that.

So in three years, maybe that becomes a thing, maybe sooner, like I don’t know the answer.

And this is not necessarily about our industry and pricing.

Where is user interface going or UX going in the next three years?

Because broadly in the web software is TBD, I want to say, based on what we have seen.

The other things that we are beginning to look a little more closely at is not just looking at, and I hinted on this a little bit, not just looking at prices in vacuum, but also saying what is happening.

There are two parts to revenue management, setting the right prices, setting the right restrictions, but then also making sure your distribution is fine.

If you are not showing up on the right channels, you are not showing up on the search, so we are not going to get into channel management.

But can we help you audit how good your channel management is right now, or how good your listings are set up right now?

Those are the kind of things that we are beginning to look at to say, okay, it is a part of the whole story, and we have a lot of data to support.

What’s good, what’s not good, and help our customers figure out those kinds of things as well.

Yeah, that’s awesome.

Well, we will be excited to see those changes.

We know that if you have 55-star reviews on Airbnb and you have 21-star reviews on BRBO, that you should be pricing differently on those platforms.

So, I’m excited to see those changes and…

The sad part here is that the 21-star reviews on BRBO will mean that changing your perception of BRBO gets so much harder because it’s hard to get bookings.

All the bookings will come via Airbnb, if you have reviews on that far apart.

Yeah, your BRBO will just completely fall off.

Well, Anurag, I can’t believe we’re almost up on time here.

It’s been awesome to see just everything you guys have done, so congrats to you and your team.

450,000 properties under using your software is no small task, and we’ve been happy users, so we appreciate everything you’ve done.

We’re excited to see where it goes.

As your algorithms get better, we’ll have better tools, so we’re really excited for that.

One last quick question for you.

The name of the show Short Term Rental Riches, and so a lot of people naturally just think about the financial sense behind the word rich, but we know there’s a lot more to life than that.

So curious if you’ve changed something or a new habit or something’s changed in your life recently that’s enriched your life in a non-financial way.

The first thing that came to my mind was being paying more attention to exercising in the last two weeks.

So it’s almost like you start seeing a benefit almost right away.

That’s one.

I’ve also, as a New Year’s resolution, been said to myself no more than one drink a week.

So I didn’t go completely zero.

I said, okay, one week is good.

Don’t know if that’s having any effect just yet.

I’m not missing it necessarily, but also waking up with all of this.

So TBD on that one, how that goes, but exercising is definitely helping.

I will say I have two young kids, so I don’t really have time for a lot of hobbies or anything.

So.

You’ve got your hands full.

You certainly got your hands full.

Well, hey, thank you so much for coming on, and yep, would love to have you back on.

Things are changing quickly.

Until then, take care, Anurag.

Thank you so much.

If you’ve been listening to the podcast for a while, then you know that I’ve been managing my properties virtually for years and years.

My team and I have managed thousands of guests.

We’ve learned a ton, and I’m really happy with the progress and the growth we’ve made.

In fact, we’re now big enough to help manage your properties as well.

Our team has a ton of experience from the inner city apartment to the large lakeside retreat.

We’ve worked with all types of properties across the nation.

We’ll help to take the management workload off your plate while earning top revenue and excellent guest reviews, all while charging an industry low fee.

If you’d like to find out if your property fits with our program, just head to strriches.com.

There you’ll see a property management button.

Again, that’s strriches.com.

Just click on the property management button, and we look forward to chatting with you soon.

Welcome to Short Term Rental Riches.

We’ll discuss investing in real estate, but with a specific focus on short term rentals.

Quick, actionable items to acquire, manage, and scale your portfolio.

I’m your host, Tim Hubbard.

Way back in March of 2023, I recorded an episode titled, Why Virtual Management is the Future of All Property Management.

And here we are years later.

I not only still believe that that’s true, and it’s more clear and evident than ever, but I’m also more passionate about it than I’ve ever been before.

But it’s not just me that’s passionate about it.

I’m excited to have our guest on today, Justin Winfield, who has a fascinating real estate background.

He’s owned property in China.

He owns a property in Vancouver that’s been hosted on TV shows.

And he also built an 11-story boutique hotel in Medellin, Colombia, where we met years and years ago.

I’m also really excited to call Justin my partner because we have joined forces.

He shares that passion and vision just as I do.

We both truly believe that virtual management is the future of all property management.

So I’m excited to jump in the details with him today, talk a little bit about his backstory, how we came to be where we are today, and provide a little bit of insight for all of you out there.

Welcome to the show, Justin.

Thanks, Tim.

It’s great to be part of the team and it’s an exciting future ahead.

Definitely.

Justin and I have actually known each other for a really long time, like seven or eight years.

We met in Medellin, Colombia, years and years ago.

But it seems like the more I get to know Justin, the more I find out about him.

Just has a truly fascinating story.

So, Justin, why don’t you give us some background and how you got to be where we are today.

So, I’m a Canadian living down here in Medellin, Colombia.

My journey is a little bit varied.

I was a management consultant for quite a long time.

In the 2000s, a little bit past 2010.

And during that period, a side thing that I was doing was investing in property in China in the mid 2000s.

And it was sort of a random way that I got there.

But that did really, really well.

We all heard about the Chinese economic miracle and a boom and those things.

I was very fortunate to identify that early.

And I bought a few apartments there.

And then around 2009, I sold those because the stock market had crashed.

Basically, everything was on sale, 60% off.

So I’ve sold everything, got into the stock market.

And then that rebounded really well.

And because I was living all over the world, I lived in Canada over 20 years ago.

But often in consulting engagements, you’re there at a client site for six months or nine months or a year or something like that.

So I was staying a lot in corporate furnished apartments.

Yes, I actually once lived in a Four Seasons for over a year, but it’s so much better living in apartments, like a home.

But corporate furnished apartments never really had a great vibe.

So Airbnb came along and I was like, wow, this is incredible.

It feels like home.

Man, this was the early days of Airbnb.

And because I was also going back to Canada more frequently, Vancouver, where my parents are, and then I bought an apartment in Vancouver.

It’s not any kind of like a billionaire penthouse or anything.

It’s just 22nd floor of a 30-floor tower.

But I did it up the way that I wanted it, opened it up, great views.

Vancouver is beautiful.

And put it on Airbnb and did it really, really well.

And then all of these companies were booking it for marketing campaigns.

And then Netflix shot part of a series in it, one season of that series.

Anyway, so I learned a couple other apartments and they did really well in Airbnb too.

So I kind of came at it from a design point.

But when I got to Medellin, I did an apartment down here and I always wanted to build a building.

And I always thought that the best of all worlds, Jay-Z, he doesn’t stay in Airbnbs, but neither does he stay in little apartments, you know, in little hotel rooms.

He stays in like VIP type suites.

So that was kind of my concept for the hotel that I built called Neato Sky here in Medellin was beautiful, full size apartments, but with private elevator access and 24 7 reception and the rooftop and so forth.

So it was a little bit like Airbnb apartments, but within a hotel wrapper and trying to go more for like the higher end design side.

And that’s just done really, really well.

But of course, what happened with Medellin is that the city blew up in from a tourism perspective.

What we saw back in 2015, which is about when we first started coming into Medellin living there, everybody else was discovered over the last five years.

So now there’s literally millions and millions of tourists arrival, which has been amazing for the city’s economy and for folks that have AirBnBs and hotels.

But it inevitably, capitalism being capitalism, all these new hotels flooded in and then over the last 18 months, a lot of the hotels, our revenues are coming down because even though there’s a lot more demand, there’s way more supply.

Like there’s dozens of new hotels opening every year.

That brought me to you and ultimately what’s become Corsley because I was like, jeez, the good times where you’re growing 30, 40% revenue a year kind of over, and actually there started to become revenue declines.

And it was great when I went down to Brazil and you sat me down and you showed me price labs and basically gave me a crash course in dynamic pricing and optimized pricing.

And then that made me think about all of the ways that listings really attract attention, particularly hotels and really think deeply about that using that management consulting background.

So that kind of got us on this whole journey of discovery and marketing science.

How do you get listings that pop?

How do you solve these algorithms to be on the first page?

And every algorithm is different.

And then the result of that was about a 15% revenue improvement.

And that was where I basically said, Tim, we got to work together because you have the Airbnb side and you’ve created Midtown Stays, the predecessor to what’s now Corsley.

And I’ve got the hotel experience and this thing, if somebody like me who is very quantitative, very optimally oriented was able to get a 15% revenue increase, everybody is going to be able to get this.

Yeah.

So I’m just going to recap there a little bit.

You’ve done some exciting things in the real estate world, I think quite different than the traditional route, right?

Owning property in China.

I know you also lived in Laos for years.

You’ve traveled a ton and I know you’ve stayed in tons of short-term rentals around the world.

I don’t know, a hundred countries or something like that, Justin?

I mean…

I’m not sure if I’m cracking a hundred, but for sure it’s about 90.

A lot of travel experience and a lot of design experience.

From those other apartments you had, from the Vancouver one to the hotel that you built in Medellin, which is beautiful.

And so we’ll make sure there’s a link in the notes for anyone wants to check it out or for any of you catching the video, we’ll make sure to put up some images.

But beautiful 11 story building.

You did a fabulous job with it.

And yeah, we’ve known each other for a long time.

So you sort of know my background and I’ve came from the more of a individual type property background.

And a lot of the principles and actually most all of them that apply to the short term rental space or vacation rental also apply to boutique hotels and hotels.

You mentioned revenue management there, but we basically, you know, we’ve uncovered all of these things that help a property earn more money and also make the operations more seamless.

And so you mentioned Corsley there a couple of times.

Corsley, I’m really excited to share as our new name for our virtual management company.

It was previously Midtown Stays.

That was because a lot of my properties were from Midtown areas, but now we’re in eight countries, we’re in more than 20 cities, and we want to bring this to the rest of the world.

And that name Corsley, we think of ourselves as this core operating center on the back end virtually, where we’re pulling all the levers, we’re handling the operations, and we’re making partners more money with less headache.

Yeah, when you came to me and asked if I had thought about partnering, I was excited.

But you have a lot of experience that I don’t.

Your consulting experience you mentioned, which you did for a really long time, basically making really, really large corporations more efficient.

And you’ve brought that to our team with Corsley.

So it’s been great.

I’m really excited.

And we’re doing this.

Let’s just jump into it.

We’re doing this because we both believe that virtual management is the future of all property management.

And there’s some really clear signs out there why the traditional approach is broken.

And it’s not working that well.

So why don’t you speak to that a little bit?

Sure.

It’s definitely a fact.

If you’re in the hospitality industry, and as you mentioned, Tim, there really is no difference between an Airbnb or a hotel.

The problems that you have at the Airbnb are the same problems you have as a hotel.

Just the scale of those problems are a lot bigger.

And then, of course, the impacts of wise decisions and optimality.

Is that a word, optimality?

So if you have a hospitality business, whether that’s an Airbnb or a small independent boutique hotel, you have basically the choices.

You can either use a property manager, right?

And they’re really expensive.

They’re like 20 to 30 percent.

There’s a lot of nickel and diming.

There’s a lot of hidden fees.

And as we know from the reviews of a lot of these folks, they don’t do that good a job, right?

It’s not like they’re crushing it with 4.9 review scores.

No, the average score of like a Picasso or whatever is like 4.4, 4.5.

If you’re an Airbnb and you have a 4.4 review score or a boutique hotel with a 4.4 review score, you are never getting booked.

It’s over.

So as a whole company, they’re managing properties with an average review score of 4.4, 4.5.

That is not a vote of confidence that they’re doing a good job.

And getting worse.

Yeah, it is crazy, right?

But then on the flip side, the DIY, it’s a lot harder than people believe it to be.

A lot of YouTubers and content creators, they talk about passive income and it just isn’t.

It’s hundreds of hours a year.

You’ve got to be an expert at software.

If you want to be in front of all the eyeballs, which is being on top of all the different OTAs, you’ve got a whole bunch of work to get on all these different OTAs.

You’ve got to know all these different algorithms.

You need a software that distributes your inventory across all of them, manages, avoids any kind of conflicts.

Now you need pricing software that manages your pricing so that you’re optimal.

Then you’re on 24-7, responding to people’s inquiries.

So somebody has, can get in at 2 a.m.

and they’re calling you.

So the DIY part of it, even though a lot of owners can get pretty close to professional level results, it is hundreds of hours of work, and you can never really switch off.

So that’s why what you identified years ago, the virtual property manager is what we believe to be the solution for the future, because it solves both of those problems.

Totally.

I think you’re absolutely right.

Things used to be easier, to be fair.

When I started a decade ago with my short terminals, the expectations from the guest side of things were much different.

Like someone booked your Airbnb, they’re like, oh, I’m booking your home, your property.

They weren’t expecting it to have hotel-like service, and now they really are.

So it was easier in the past.

There were way fewer Airbnbs, but that’s just not the case today.

It’s much more competitive.

Things have changed.

So we have to change the way that we operate our properties.

And you talked about some of the big traditional options here, like FICASA, and how those review scores just tremendously affect your revenue.

And the sad thing is, is that those review scores are getting worse and worse.

So if your property is under one of these really big names, you can see that.

When they list your property, if it’s on Airbnb or wherever it happens to be, if you find that FICASA property on Airbnb, and you scroll down, you see FICASA’s average review score of 4.4.

And it’s not a good starting point from a guest’s expectation, right?

And the sad thing is that if you’re with a traditional property manager, one of the very common pieces of that agreement is that they own your listing.

Which means that you basically have to start over if you want to get out of those negative reviews, which leaves you some other options, right?

You can do it yourself, which has become a lot more challenging.

Or you can work with a virtual property manager.

Yeah, things have changed, technologies changed, the markets changed, supplies changed.

Things are much more competitive.

Luckily, there are way more tools than there ever has been.

But that doesn’t mean you can just turn them on and run with them.

Like Price Labs, for example.

I’m excited to have one of the founders on the show here in a couple of weeks.

And I’ve known them for years.

And I know way back in the day, there was probably just a handful of features.

You turned on this pricing tool, it really helped you with your pricing, and you adjusted one of the 10, 15 features, and you’re kind of on your way.

But now, I don’t know exactly, but I imagine that there’s 100 or even 200 different ways of settings and just configuring these pricing algorithms.

There’s a lot more to stay on top of.

And of course, at the end of the day, it’s all a hospitality business.

So we know that the big property managers, their reviews are negatively affected, really for three reasons.

One is housekeeping.

They’ve grown really large and they’ve tried to, they just basically grew too fast and they didn’t have the systems in place.

So housekeeping, maintenance, and then guest communication.

Why don’t you give me your side of the story on those points, Justin?

So in a nutshell, what we see is that the difference between being optimized, performing at a really high level and sort of the more typical, let’s call it average way, is at least 15%.

And we see that across our partner base, partners that come on to us.

And it’s what I initially enjoyed with Nito Sky and how we got started thinking about trying to bring Corsley to the world.

And then Corsley, as a virtual property manager, we don’t charge the 20 or 30% that a traditional manager does.

If you can get a 15% uplift, but you’re only paying 10% and you save hundreds of hours having to run and stay on top of all these different tools, which are great.

So with all of these tools, you could get much closer to optimal than ever before.

But to get closer to optimal, you have to put in this investment of hundreds of hours a year, both on the guest reception side, but then also keeping on top of these tools and algorithms and changes and they are constantly changing and evolving.

So getting to optimal has a real impact on your bottom line.

A lot of folks just don’t get there with DIY or a lot of these smaller property managers.

They don’t have the big teams.

They don’t have the expertise.

They don’t come from like deep sort of tech backgrounds like yourself, Tim, you’re deep in the weeds on the tech.

That’s what we see and that’s why the future is exciting.

And there’s a whole host of reasons why it’s hard to do all those things.

I’m not sure, for example, that housekeeping is easily scalable if you’re running a whole city, for example.

And it’s the same problem for me at my hotel.

I don’t need lots of housekeepers on Wednesday.

I need lots of them on Sunday and Monday.

We don’t have the demand levels consistent throughout the week so that you can’t have a housekeeper, you can’t have five or six housekeepers on staff just for those one or two days that you need five or six, right?

And it’s the same with an Airbnb.

You only need one on Sunday or Monday, probably none throughout the week.

And then imagine that problem if you’re trying to run like 10,000 properties.

You need 10,000 housekeepers on Sunday, but then you only need 1,000 on Monday.

There’s a lot of fundamental reasons why the traditional property manager model just doesn’t scale very well.

But then equally, on the DIY side, there’s lots of reasons that it’s really hard to get to optimal.

And we’re really trying to put together this tech-powered model that enables us to get to optimal but not charge the 20 or 30 percent.

These sort of old school dinosaur types are going after.

Right.

The way that some of these big property managers scaled just obviously didn’t work.

They scaled too big.

And as you mentioned, it’s having 10,000 housekeepers on a Sunday and then needing 2,000 on a Tuesday isn’t a very stable position for a housekeeper.

And I’ve dealt with this in my own portfolio in one of the cities where I have more properties.

We’ve kind of been in between like hiring housekeeping companies but then also just having our own individual because it is challenging, trying to keep someone employed on a consistent basis.

And then you layer on top of that seasonality.

It’s a little tricky.

So I believe it’s trickier with a housekeeping company.

If you’re working with an individual housekeeper, I’ve been working with one.

She’s been with me for over 8 years.

Almost from the very start, she helps manage our other housekeepers now.

But that’s made things a lot easier.

I actually did a whole another episode on the housekeeping, but I think having a personal relationship, there’s a lot of reasons there why there’s more benefit than working with a large company.

But just to take a step back and talk about like the do-it-yourself approach, I know this really well because I did it myself.

And I’ve been doing it myself for years.

And I know for a fact that it does not make financial sense to hire a full-blown team to run your properties unless you happen to have a really large portfolio or you happen to have some properties that you can charge $2,000, $3,000 a night and you can really afford to have more of a team.

But in my experience, we’ve managed, I don’t know, over 50,000 reservations at this point.

You really need five receptionists at least to cover a 24-7 period.

Because you can’t expect one receptionist to cover for 12 hours a day, seven days a week.

I know a lot of people that have tried this approach.

It doesn’t seem like it has a long-term stability.

It’s not as desirable for someone, right?

And so, what I found is that you really need at least five receptionists to cover that 24-7 period.

And then, one of them gets sick or one of them moves on to something else, then you have to find another one.

But it’s not just that.

You have to train them, right?

And we know that training receptionists to understand all of these different OTAs, Airbnb and booking.com and VRBO.

Like, there are just so many policies and things that they have to keep an eye out.

Yes, there’s a lot of good tools to help manage it now, but all that to say that it’s definitely doable.

You can do it on your own, but you’re going to have to do a lot of work on your own.

And it definitely doesn’t mean that you’re maximizing revenue.

And what I also see Justin, you know, in talking with a lot of our partners and just other owners out there is that they don’t actually know when they’re not maximizing revenue either.

That’s the other thing.

So maybe they did just as well as they did last year, but the rest of the market is doing 15% better.

So you really don’t know that until you really dive into the numbers and you do studies.

So any thoughts on that?

I’m kind of just jumping all over the place here.

Yeah, absolutely.

That’s exactly right.

If you don’t know what you’re missing, you don’t miss it.

But we know that you’re missing it.

Look at that hotel we brought on in Costa Rica.

And I’m almost afraid to say it, but we’ve increased the revenue 80%.

Same property.

Everything’s same.

Same team, same property.

The only things we’ve done is optimize their listings, done some marketing science on their visibility, put in the pricing models and a little bit more around the reviews management and 80% impact.

Now, you could say they were really quite far from being optimized, and that’s probably true.

They’re the first to admit it, but they have an owner who’s got several businesses.

He’s a very busy person and it’s a 16 unit property.

Let’s face it.

Yes, you can have a manager at a 16 unit property, but they’re not going to be PhD level expert at all different kinds of things.

They have to worry about running this property and the maintenance and operations and all these things, so they’re pretty busy.

And the whole point to say that basically just about every property that we come across is quite far from optimal.

But many people don’t know him, so they feel, okay, well, you know, things are working, no problem.

I don’t need any help.

And it’s a shame that people don’t see the extra lift that they can get from bringing in folks who can do those things for them, but actually charge them less than what they’re going to get.

And then also take away the hundreds of hours that they would have to invest to do it themselves.

It is a shame.

Unfortunately, there’s just a lot of people that don’t have the time, though.

And that’s kind of the other thing.

People have bought in vacation rentals, or maybe they bought a small multi-family property, and maybe they bought a boutique hotel, but it’s not their full-time job.

And unfortunately, it’s taking more and more time to get better and better results now.

And one of the big challenges about this is that, yes, we have tools, we have education now.

You know, you can jump on YouTube and you can find one of 100 channels talking about the right way.

And I did that with air quotes for anyone that’s listening to the audio-only version because there is a lot of information out there, right?

And it changes quickly.

It’s been really nice bringing on more and more partners with our virtual management approaches because we get access to that information quicker.

So when we realize that the certain way we’ve set up a listing has a much higher impact, then we can quickly change that on our other listings.

Versus back in the day when I was starting with one property and I put something up and I had a reservation a week, and the end of the year, I had 50 reservations.

The velocity is not there for the learning.

So we do have that benefit.

But one of the challenges just for everyone, everyone out there, I don’t care who you are, if you’re a larger property manager, you’re a do-it-yourselfer, if we want to see our listings, the performance on booking.com, then we’ve got to go into booking.com.

If we want to see our listing performance in Airbnb, then we’ve got to go in to Airbnb.

There is no incentive ever for these listing sites to want to give us all that information in the same place.

So I want to talk just real quickly about our vision for Corsley, Justin, because it’s really exciting and yeah, I do like the tech stuff, but it is the future.

I think people that aren’t getting ahead of it are going to get left behind.

Our vision, which we’re working on as we speak, is integrating all of these tools so that we can go into what we call our Corsley Command Center.

And we can pull up one of those properties in Costa Rica, or we can pull up a property in London or in Sacramento, and we can see the performance on all these different listing sites.

We can see search impressions, for example.

We can see review scores and why we may be able to charge more on one rental site versus another.

That’s what we’re working on.

I think it’s really exciting on the future.

Yeah, that’s undeniably the future.

There’s no question about it.

It’s bringing all the data together, all of the relevant information.

And just as you point out, there’s a lot of structural reasons why a lot of these platforms don’t want to cooperate.

They don’t want to be part of that kind of thing.

So somebody has to create a system, the command center in our company, that pulls it all together and makes everything at the fingertips of the human being, making sure that everything is optimized.

And then we all are watching the trends in AI and inevitably more and more the AIs are going to be handling certain aspects of it.

People talk about agentic AI and one agent is perfect for one particular task and you’ll have dozens of agents doing each task that each one is optimized for.

But the result of it is what we’ve already started to see with the large language models like there was a study of doctors.

They compared ChatGPT versus doctors diagnosing a medical problem versus doctors using ChatGPT.

And it was ChatGPT that beat doctors.

The AI was better than the doctors in diagnosing medical problems.

And we see that in a lot of areas like Waymo is now the robo taxi company of Google that’s now amazing.

It’s just a much better experience than taxis were and even Uber.

So the computers are capable of doing things just at levels.

You know, jet engines, nobody takes a plane that flaps its wing.

You know, jet engines and technology can get us going at a thousand kilometers an hour in a way that nature never could.

The critical thing is bringing that technology and focusing it directly on the optimization problems and the guest management aspects of hospitality and in a way that makes partners happy in a way, of course, that ultimately it’s about guest experience.

That’s absolutely critical.

Yeah, that’s it.

Yeah, a lot of good points there.

And yeah, it does come down to guest experience, right?

Which, in other words, our reviews, if our guests aren’t having a good time, a good experience, they don’t leave a good review, performance just starts to drop and drop.

I love our reception team.

They do an amazing job.

We also use AI.

Our future plan is not to replace every human in a hospitality type business.

But what we do see, and what we do want to do, is create the options for different types of property owners.

So we’ve talked before about wanting to be like the Shopify of the short term rental space.

And for those of you that aren’t familiar with Shopify, it’s a multi-billion dollar company that’s basically created a lot of applications to help businesses run better.

But those businesses don’t have to use all of their tools.

They pick and choose what works best.

And that’s really our vision with Corsley, is to continue dialing in businesses to earn better results, to save our partners’ time, so they can do the things that they love to do, and offer that set of tools to the people that need them.

So maybe someone doesn’t want to do revenue management, but they’re perfectly happy doing guest communication.

I don’t know that to be the case with hardly anyone out there, because you always can get those calls late at night.

But if someone wanted that, we want to give them that option.

So that part’s really exciting for me as well.

Just being able to accommodate more types of property owners out there.

Basically, you know, use us for what you need, rather than like before to buy like some huge software suite that does a million things, but you only need it to do one thing.

Well, we’re definitely going to have to do some follow-up interviews here as we progress and learn more.

But I got to say, I’m really excited.

It’s been amazing having you on the team.

You’ve been a huge, huge help.

Just all your experiences, again, they’re really showing up in the way that we’re doing things now.

I’m so excited to see where we are just in a year.

I mean, the world’s changing.

We’ve built this company based on these fundamental insights of being tech forward, embedded in the DNA.

But ultimately, again, it’s about humans being with humans, guest experiences, delivering amazing results for partners and great stays for guests.

And that combination is what’s going to win.

And the current options out there are not great.

It’s not that they’re impossible, but there’s a lot of room for a better solution.

And that’s Corsley.

Absolutely.

Thanks for coming on, Justin.

And I’ll talk to you soon.

Looking forward to it.

Whether you’re just getting started with Short Term Rentals, or you’ve been in the game for a while, one thing remains the same.

Your management can make or break your performance.

Our team has learned a lot managing thousands of guests, and we’ve put together a handbook just for you, with our checklist to cover our exact process.

There’s a lot to consider from verifying guests to managing reviews and you don’t want to miss a step.

You can get your free copy by going to restmethods.com.

There’s no charge.

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