A Short-Term Rental Option that Won't Break the Bank AND Earns Higher Returns

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 welcome back to the short-term rental riches podcast with all the Doom and Gloom out there I know it's hard to see the bright side sometimes but believe me there are always New Opportunities especially in the short-term rental space because it's changing faster than the traditional real estate industry and today I have a really

exciting topic something that I'm very interested in and I want to find out more information about it I have two great guests on today Leon and Dave Zuck they are building this opportunity literally building so just to give you a sneak peek this is a property that you can buy be eligible for bonus depreciation and at the time this recording that's 80 in year one be eligible for financing it's a brand new property it comes furnished it's at an entry-level price that a lot of us

can afford even us just getting into short-term rentals and you don't even have to pay property tax on it I know that sounds way too good to be true but the truth is it's not actually considered a property so today we're going to be talking about park homes and to start things off I want to introduce my friend Dave Zuck who's been a big inspiration to me he's invested hundreds of millions of dollars in multiple asset classes him and his family have been in the cabin

building business for quite a long time and they're now dipping their toes in the short-term rental industry and so to hear a little bit more about that I want to welcome Leon to the show and and Dave Zuck how are you guys and Dave let's get just a quick background from you yeah so a little bit on the background we uh I was born into the modular building business my dad bought a modular building business the year I was born so I I grew up in

this business and uh I was in sort of all facets of the business in the shop and then as part of a delivery team and had my own trucks and delivered buildings and then I worked my way in the office in a monthly um as an owner became a partner and an owner with my dad my brothers now and um so then I sort of veered off and did a lot of investing outside of our module building business and started buying multi-family apartments and and accumulated

three to four thousand doors coming out of the Great Recession in 2012 and 2012 to 2018 since then I've done a lot of self storage um I've also we're also one of the top four ATM operators in the country so I've done a lot of investing outside of the modular business but I've never really strayed too far away and I've you know I've lived here in Lancaster County all my life Lancaster County Pennsylvania and so I still work here right here I have an office right

here um in our modular building facility and so never never strayed too far away from that and and now got a great team Leon's big part of the team and uh we're just excited to be here to talk about what we've uh created and what we're building and what the opportunity is for investors in this space because when I look across all of the different facets of the modular building business and we you know we build several different buildings from chicken coops the mods were dog

kennels the mods were horse barns the modular cabins the modular Park models and when I see the opportunity in this Park Model space and and and recognize uh what's been happening over the last couple years uh especially since um you know spring of 2020 you know we've sold this boom and you know the RV park the travel you know travel outside of your your normal you know conventional hotel stays and saw this short-term rental thing Blossom and now being being able to be a part of

this with a product that we're building it's pretty exciting time yeah it definitely is I'm I'm ever awake I mean every day I'm excited about short-term rentals because there's just so much opportunity with it and the way way people are living is has changed and for any of those that have listened to the show for a while we know that there's a lot of different ways we can run a short-term rental business there's a lot of different types of short-term rental properties so just to go

back a quick step here uh and talk about what exactly a park model home is because this is what we're talking about here this is the opportunity that has the tax benefits it's got entry level pricing it can come furnished there's a whole bunch of different configurations but let's just jump back for those that don't quite know what that is because I gotta admit I didn't really know what a park model home was when I first started chatting with you guys either so Leon could you

just give us a little bit more detail on exactly what what a park model home is absolutely um so everyone knows what a tiny home is right so when you when you're a tiny home you think of this little home built on a trailer so a park model similar to that concept however a park model is made to to meet the RV code so we build our Park models uh on a trailer um maximum of 400 square feet to stay under the RV code they're built

to meet the RV codes they come with a title they come with a VIN they stay on a trailer but the nice thing about it is not a permanent structure it's incredible how how well you how much you can actually get inside a park model right anything from two bedrooms to a nice living room at a LOFT at a porch so if you look at Park models if you think of what a park model is Envision that being similar to a tiny home you know the

bathrooms are bigger hallways are bigger when people think tiny homes they think tiny like really compact like tiny bathrooms you're sleeping on a sofa that type of thing um you know our part models range anywhere from 14 by 30 all the way up to 12 by 40 four in size you can buy anything from something that's modern trendy to anything that's rustic or lock we do meet a lot of different themes hopefully that answers your question Tim uh you know most importantly it's a vehicle yeah

and I think that helps sort of explain some of these excellent opportunities we have too like for example a lot of Dave's Investments and things he got started with and and just grew these huge huge funds were had a bit of a tax initiative to them is that right Dave and can you talk about why investing in a park model home has some excellent tax benefits yeah so one of the things that uh Leon mentioned and and I wanted to come back to was that idea

that you know it's run under that RB license and and that's important because now it's not considered real property unlike a home that gets fastened to a footer and you know maybe has a basement under it you know it's very different from this type of an asset because this type of asset is is more along the lines of equipment you can write it off you can take the depreciation much more aggressively like you could a piece of equipment so for the last five years we had

100 bonus depreciation in year one obviously this year we're at 80 bonus depreciation in year one so it's very aggressive on the tax side so you get the right uh 80 of your investment off in year one and that when you pair that to some income that's not protected on anything you know from an investment perspective you can quickly get some momentum because many times as an investor your tax savings you know when you pair that up to the income that's where the magic happens yeah

absolutely I mean if if we make a million dollars a year and we pay a million dollars in taxes we're not we're not doing too well are we it's uh so it is a real big piece of the picture and one of the things that I think is really exciting about it we've talked about bonus depreciation before on this channel for anyone listening out there if you don't quite know what that is go back and check out the episode with with Tom wheelwright we broke that

all down uh but it is really an important piece of the picture and for our returns another thing that really helps our returns though is financing right and taking advantage of financing options and and so from what I understand there is also potentially some financing options available yeah yeah is that right we're almost there uh we're doing a pilot run right now just to test it we have to have everything lived on it we're probably live by the time the podcast airs uh which we're really

excited about and I want to I miss one thing talking about what a park model is so a lot of tiny homes they'll hook it up to their Jeep and they'll go from different site to site right that's not what a park model is built to do the park model we when we deliver we typically deliver with a semi they're oversized loads so you need special permits to take them across the country the advantages are is what they've just talked about with you know it's not

it's not a permanent structure um it's not to go from not to treat it as a camper to go from campground to Campground right it's mainly uh made to have the tax benefits of what they've just talked about right and I think a lot of people are probably thinking out there they're probably like envisioning a mobile home had I never seen one which I did get the opportunity to go out and actually visit you guys and see the factory part of the factory and walk through

some of these and I thought they were amazing like you would not picture a mobile home like and most people you you can expand on this Leon but a lot of the ways that I've seen is someone's actually building this in the ground you can't it looks like a tiny home but it's got all these opportunities on the back and from the tax perspective yeah it's not a mobile home there's that's that's a tiny home mobile home and a park model are three separate things um

so when you when you think of mobile home you think of a mobile home park right when you think of Park models you can you can think more of a lot of people do get them confused with the different certifications but you can't put you know Park models and substitute them for a mobile home that is two different things yeah you guys have some excellent models I I think it's really exciting space and also because a lot of times when we talk about short-term rentals someone

pictures you know the 20 bedroom Villa on the side of the ocean that costs three million dollars these park homes are affordable for a lot of people out there and a great way to get started with short-term rentals I know the price is vary quite a lot and we'll we'll make sure that everyone can get in touch with you guys and find out everything they need to know but can you give us just an idea of what one might potentially cost so like I mentioned earlier

you have anywhere from Modern to Rustic so price point 80 to 100K maybe 120 depending on you know the higher end more modern with a little bit more glass but yeah you can get you can get a very nice power model for under 100K delivered to your door yeah that's that's awesome because one exciting thing about short-term rentals is that what I found with my own personal portfolio is it doesn't necessarily depend on the size of the property that doesn't necessarily determine how much revenue you're

going to make I can tell you that I have properties apartments that are smaller than your Park mobile homes that do better than some of my two two bedroom larger units so it's not always the size of the property that matters in fact a lot of times when people look on Airbnb they don't even see the size they just look at a bedroom count so I love that and that really helps the return side of it so Dave I I know I've heard you talk about

your example of an investment return comparing this to a more expensive property can you give us just a little more insight on that yeah so first off I'm a big fan of the short-term rental from a user perspective and then also from an owner the owner's perspective I personally own short-term rentals in eight different states now so I'll give you an example we have this forum in south central Pennsylvania that's got a cabin on it that sleeps about 20 the replacement cost on that cabins probably

around a million bucks that cabin Nets us on a monthly uh basis that cabin Nets us around eight to nine thousand dollars across the farm a same form same property and it's pretty good sized piece of property 300 acres about a half a mile away on the other end of the farm we have a park model and it's kind of a unique stay it's got a you know it's set up one still it's kind of we call it the tree house and it's got a nice

little deck out the front but it's a it's a 400 square foot unit all in cost of that is around 100 grand so on a monthly basis we net between 4 500 and 5500 a month so almost right about half the amount of net revenue coming from a product that costs you know about a tenth amount of much money as the as a cabin across the other side of the farm so when you look at a return uh cash flow cash return basis uh these things

can make a lot of sense and really the other thing that we found you know the price ranges that Leon talked about going from you know 80 to 120 Grand you know as well as anybody does Tim that unique stays over the last couple years has been all the rage and and um you know short-term rentals and so we've tried to really create something special I mean we're talking not only your typical rustic log-sided Park Model with your typical two bedroom one bath and a loft

but we tried to really get creative with our design and make make it as unique as we possibly could we added a lot of class and and really some different designs that you know kind of catered to that unique static crowd and so we've been having a lot of luck with that and it's just been a lot of fun to see that materialize you're absolutely right I mean the design you guys did with some of these units is amazing the returns can be amazing people are

looking for Unique stays and we know that people don't need a lot of space I mean I I talk a lot on this channel about how my smallest Investments a lot of times return much more than my larger ones for lots of reasons including utility costs for example but that that brings up another question and Leon maybe you can help us with this one is how does the utilities work and what's required to actually install one of these Park Homes sure so going back to the

RV certification these are compatible with RV hookups so for your water um it's a hundred I'm sorry for your water at the garden hose for your electric it's 100 amp hard wire into the panel box and then for your sewer you have a three inch PVC pipe stubbed out so you can either do a holding tank or tap into an existing sewer you know the beauty of the park models it it comes I'm sitting in one right now uh it comes with your mini split heating

cooling units your hot water heater your microwave refrigerator cooktop all the lighting fixtures I mean they're they're Plug and Play after you get it delivered to the site you should have it up and running within the next 24 hours if you have a crew there waiting to get everything set up that's awesome it brings up you know a lot of people are staying longer in short terminals now too do they have the option to add laundry in there that's something I haven't asked before so some

of our models we do offer the laundry dryer or laundry you know washer dryer hookup um so that is possible and most of our models actually but it is an add-on that we can do for them oh that's awesome because yeah a lot of people you know 400 square feet is enough space for people to rent for months and we're just seeing that all across the World especially if you happen to have a chunk of land that's nice and secluded and someone can get away I

mean we saw a ton of that after covet of course when people are leaving cities but it stuck around I mean it's it's and it's going to stick around and people just appreciate some of these new spaces so I know Leon you work with lots and lots of different investors and you've guys you guys have built a ton of these things and you've sold a ton of these what does the typical investor look like that comes you guys so it range from a beginner investor buying

one of them and you know let's say Mom and Dad own a farm where they can put one in the corner of the property you know startup investor first time all the way up to you know people like Dave and a lot of other customers doing RV parks um and they just they buy them every year just for tax write-offs so it's not just a beginners it's also the uh Pro investors that are buying a ton of these units um so it's it's a broad range

and you know we talked about financing earlier the financing program that we're looking around you put ten thousand dollars down with your credit card and then you finance a balance over 15 to 20 years wow which uh which is quite impressive because it's very little uh very little investment out of pocket and uh should cash flow pretty well no that's amazing I mean especially in the way in the current state of the economy where we still have really highly inflated prices but now we also have

really high interest rates so they're just not unfortunately a lot of good real estate deals now every every Market's different there's always opportunities but it is much harder to find a property that actually cash flows so the lower our purchase price can be the lower acquisition prices and the lower amount of capital that we can put in if we can still earn those nightly rates a consistent rate I think it I think it's a home run a home run for a lot of people so I'm

excited about it Dave's story is one of many I mean so many of my customers have the same story that Dave does um we shook the one out in Utah last year um you know they have about 100K and on that one as well and their goal is to pay it off under a year and it is going very well for them so you know Dave's story you know that's that's a personal testimony but I hear that all the time from our customers and so we

have a lot of people you know start with one or two and we have some RV parks that are doing multiples but they keep coming back and they keep adding on so that's uh tells you it's awesome well I know there's also always two sides to every story right and so what might be a potential concern that someone might have getting into a park home appreciation for example is because it's not necessarily property right uh well I guess it is property but it's not technically real

estate so what do you think in terms of appreciation on a on a park home Dave I'll let you answer that one yeah you know you know it was we've noticed uh coming out of spring summer of 2020 with the supply chain disruption with the you know just the demand cash into system and demand for a consumer to go out and spend that cash uh it became one of those things where not only can I get it period but like how quickly can I get it

and you know are the companies even able to deliver if I give them my order you know because of all those you know challenges in the marketplace so it depends it depends I mean it's it's Supply demand can be one of them but you know with asset classes you know some of these asset classes if you can show the income associated with that asset class right there's a ton of value so really for an investor it can be net operating income they can look at that

asset and say okay what's that asset bringing in on an annual basis and then okay can I justify spending x amount of dollars on that value because the income is bring so I would say from an appreciation perspective it would probably be built around the noi and what that property is delivering as far as the unit itself you know we talked about 80 bonus depreciation in year one this asset is going to depreciate over the next you know 6 8 10 12 15 years 20 years

um you know and it's going to reflect a lower value probably in a decade or 10 years from now than it is today and the asset itself but if you can build that business around it numbers justify if you go to sell that that's where your real value is yeah I think you're totally right I mean maybe maybe five years ago if you were trying to sell a short-term rental asset to someone that it might be a little less certain right but now I think enough

people I mean millions millions people all over the world are completely familiar with short-term rentals they're living in them and they understand that this is not going away and so that net operating income I think becomes a a huge piece so I would agree so okay in terms of the actual depreciation though you know with a normal single-family home for example we need to replace the roof occasionally maybe every 30 years or so how does the maintenance on a park home kind of stand up well

it's it's built with you know from from scratch with that you know two by four construction some of our models are made with real stackable log I know when people hear the word RV they think you know lightweight and expensive that way it's easy on gas mileage why are units weigh 15 to 20 000 pounds because they're all made with real wood you know they have closed cell spray foam so the quality compared to a park model from from an RV or a camper is compare

that you can poke your finger through a wall of a of a camper but if you try to do that here with a park model it's going to be a bad day because they're they're so well built the only difference is from a structure that is placed on a foundation is that this one's built on a trailer yes we build these to meet the RV code right so it's not to your local residential code you know for your uh you know if you're in Florida for

a hurricane I'll uh you know for things like that but they all meet RV code so it's built on a trailer that's how it's an RV but it's not that we use RV materials to build them because these are some of the things we we build these without using uh you know in any other property or any other home yeah that's awesome well gosh just to summon because I think this is an exciting space ex especially in today's economy where you can use financing to put

down very a very small amount of money buy a brand new property that's going to last like a typical property have the opportunity for bonus appreciation the opportunity for for a high short short-term rental returns I mean it's just it's really exciting for anyone out there that wants to find out more info Dave and Leon are experts and you can get to them directly by going to Str riches.com forward slash cabin we'll make sure we have links in the show notes and you can get in

touch find out if there's a good option for you or just find out more info but until then is there anything else that you would like to add I got I got one more thing you know you don't have to necessarily necessarily go out and find a piece of property put one of these on if you already have a short-term rental like Dave mentioned on you know acreage there's room for these um and they're RVs so you don't need a foundation so you don't need to

go out and find a piece of property put one of these on if you already have existing property it's just it's another way to get more Revenue off of uh what you already have it's awesome excellent point one of the things too that I wanted to mention Tim one of the one of the challenges for business owners in today's climate you know especially with all the uncertainty you mentioned a couple of them in the top of the show uh you know you're talking interest rates you

know you're talking banking issues lending issues and and some of those things that are happening in the market one of the things that a successful business owner's job really is to remove obstacles like how do we make it easier for people to purchase and so we we talked about financing and and we talked about land and and one of the things we looked at is like you know many times to get into this space and I'm talking you know maybe a a younger investor or a

first-time investor or kind of somebody that's early in their investing careers like how do you kind of remove some of those obstacles and so we're working on a project and maybe we'll talk about that uh next time a little bit more but we're working a project right now that could have up to 70 spaces 70 individual pieces of real estate to send set these Park models on it's on a very desirable piece of real estate right I don't know right on a creek and when and

when you think about um it actually this this area just got voted uh number one vacation destination for Northern Pennsylvania and we happen to be right on a prime stretch right on a creek think uh fly fishing and and some of those things and and you're sitting right on the creek so we're looking at like how do we remove the obstacles for some of these investors that want to get in on the action and haven't been able to before so if all goes as planned they'll

be able to come in and rent the land sort of like you would in a mobile home park but this is going to be not even close to a mobile home park but you you may be able to rent the piece of land monthly rental you may be able to get into the park model with five or ten percent of your own money the single big finance and you'll be able to you know tap into the systems that we have in place and and be up

and running when you take a delivery you know you're talking 24 hours later you may be up and running and ready to do short-term rentals with very little money out of your pot out of your own pocket and be on a very desirable uh location right on you know you're talking Waterfront and one of the most desirable tourist destinations in Northern Pennsylvania so we're really excited about that hopefully we'll be able to share some more of that when we come on uh a little bit later

on but it's a project that would that the whole team is working on we're excited about it and uh we're just excited to be able to bring a product with a lot of those obstacles already removed for an investor that wants to come in and tap into this short-term rental market absolutely well I mean there there is a reason Dave my your investors have successfully successfully invested hundreds of millions of dollars just you guys have figured a lot of things out and this just sounds like

another one of those amazing projects so Leon and Dave really excited to have you guys on today really excited about this space and we will make sure to have you back on to follow up on this project and to to get some more insights all right well thanks for having us we look forward to being back here sometime in the near future yep uh we will talk soon thanks for having us Tim if any of your audience has any questions I'd love to schedule a call

and uh John jump on a you know Zoom meeting with them and uh see how we can help and uh like Dave said the project that we're working on working on is beyond exciting and uh I think is going to be very well for a lot of people really exciting so for anyone out there if you're interested if you want more info you can get in touch directly with Leon just go to Str riches.com forward slash cabin and you guys can set up a zoom meeting

you can see if there's an option that works for you and I'll make sure to have all the notes in the show notes all the links in the show notes so until next time I hope you have a wonderful day and we'll talk to you soon ask track to Financial Freedom through short-term rentals what all starts with the properties you acquire but you want to make sure that you acquire the right properties I want to give you my ebook that will show you how to do

just that there is no charge it's my gift to you for being one of our subscribers just go to restmethods.com that's r-e-s-t-methods.com