Well, welcome back to the Short Term Rental Riches podcast. I’m really happy you’re here again. A really important piece of investing in short-term rentals is finding a good short-term rental to begin with. And then for a lot of you that are potentially wanting to sell your property, it’s important that we find the right buyer.

And to do that, we need someone that specializes in helping us find and sell our short-term rental deals. So today, I’m really excited to have Tyler Kuhn on. Tyler is the founder of Savvy STR Agents.

They are currently the largest exclusive STR agency in the nation. They’ve got a ton of experience. They have a lot of agents, and you better believe they’ve gone through a lot of deals. So welcome to the show today, Tyler.

Hey, Tim, thank you, uh, for having me here. Yeah, really, really excited to have you here, and there’s a lot of great things that we could dive into.

Uh, you know, it’s always great just to get a, uh, a state of the economy, you know? And, and probably no one better than, than a massive group of agents specialized with short-term rentals. But before we get into that, why don’t you give us just a little bit of background for, for those that haven’t worked with you guys before?

Yeah. So I started Savvy in, uh, 2022 after selling short-term rentals here myself in Asheville, North Carolina. That’s where I’m at, uh, and where Savvy launched out of. And in, uh, 2020, I personally decided to niche down into short-term rentals and make that my, my baby, my thing, kind of stake my flag on that.

And, uh, ended up doing so well that all of my past clients kept asking me, “Where can I find you of the Poconos, or of Virginia, or of Florida?” And so I started hiring for the team, uh, all the way to t- today, where we’re just about 50 agents in around 25 markets. And Savvy is today the number one short-term rental team for short-term, uh, rental buyers and sellers all over the nation.

We don’t just work with, um, individuals, but all the way up to family offices and private equity, institutional buyers nowadays. Um, everything is fair game.

 Well, Tyler, uh, I’m really glad that you guys exist because there’s a big difference between a traditional real estate agent, maybe someone that’s helping someone find a home that they’re gonna live in for the rest of their lives, and helping someone find a short-term rental investment that makes sense.

Can you talk a little bit about the distinctions there and some of the things that really are, are important for someone to understand if they’re either buying or selling a short-term rental? Yeah. There’s been a lot of news the last few years about the value of a real estate agent. Are commissions too high?

They continue to scale with purchase prices, but maybe the business is getting easier because you have access to more information online. You can go on Zillow and find every listing imaginable, and all of the previous history and sales data. And, um, I couldn’t be more pleased to be in an industry where I can really show people value, where people call me afterwards and they say, like, “Thank you so much.”

We didn’t just help them find a house that they like to live in, right? Which is always a great feeling for someone when you find a great house to live in, but nowadays buyers and sellers can do so much of that work on their own for so little time, money, and effort, and they can educate themselves with things like AI.

Um, that, you know, for me, I think the biggest difference is in the value that we can create. Most times my investors here in Asheville, and I know the rest of the team feels this way as well, they’re not from our area. Most of the time they never come to our area. They never tour houses here. They may not know why tourists come here, or what the best season to rent the properties is, or what the makeup of our guests and, and tourism is in the area.

Those are all things that they lean on us for. Even the data analytics online for short-term rentals is still so new that having somebody that has a pulse, that’s boots on the ground, that likely owns and manages properties in that local market, and then obviously does this every day, buying, selling, helping 50 to 100 people a year buy and sell in that area, we know the numbers better than the analytics platforms.

We know the trends better than the analytics platforms. And so for me, I can feel really good about waking up and knowing, like, “Wow, I’ve got something that’s truly of value to people,” to where we end the transaction and we’re truly changing lives. Not just putting somebody in a nice house that they appreciate and their family loves, but something that changes their life and their trajectory in terms of the wealth that they create.

So I really feel good about our value prop, especially when you compare it with the other one million real estate agents out there that exist. It’s so easy to get licensed, and, and people have to show so little value to actually sell houses nowadays that- I think it’s the opposite for us. We truly figure out how can we lead with more value?

What more can we do? What more could we provide, um, that becomes helpful to our clients and, and beefs up those services and makes life easier for them? And, uh, that’s a little bit of the distinction there. But honestly, it’s just something that more than anything when people ask me about it, I just feel really proud and really good about what we do Yeah.

Yeah. There, there’s a lot of details when it comes to, you know, finding the right investment, and I think that’s one of the challenges for maybe a traditional real estate, uh, agent. And this goes for, like, long-term investments as well. You know, if you’re working with someone that’s not used to working with investments, they’re maybe just looking for different things, or maybe they’re overlooking some things that they should actually be paying attention to.

You know, short-term rentals are different, right? We’re gonna be paying utilities. We’re, we’re paying a lot of expenses that maybe we, we don’t look at, like, with a traditional investment. Can you talk a little bit about that side of things? And when you guys are, um, on the buying side, uh, what are some of the things you help your buyers, um, keep an eye on?

Yeah. I think I can split this up almost into two categories. There is the first-time investor, and the first-time investor, typically what they’re looking at is, um, where would I like to vacation, or what would I like to do? What would me and my husband like to do? And it’s almost never the, the real answer, right?

Like, you wanna figure out, where is my money best spent, on what sort of amenities, on what size house, how close to town? You know, one thing that we hear people talk about a lot when they come to Asheville, for instance… And I use Asheville as an example a lot, not because I think it’s the number one short-term rental market in America, um, but because I have the most experience here.

So for instance, people come here and say, like, “Oh, well, you’re in the mountains. You have got to have a view. You have to have a view.” And in fact, my view of it is the opposite. I really don’t want a view. And it’s not because a view wouldn’t come with more revenue, but it’s because a view comes with more expense than the revenue that you actually get.

So if you have to pay another million dollars for that house just because it has a view, but it only bumps revenue up by 10 or 20%, is it worth it? So for me, honestly, seeing a view almost rules the property out for me. I know it’s not gonna have the size or the proximity to downtown Asheville to actually make that a really good rental.

Because I know that the number one thing that’s gonna affect revenue is the size of the house and how many people you can sleep, more than anything else. And so for first-time investors, we’re kind of having that conversation a lot. For multi-time investors, a lot of times they’ll come to us and they think they know everything, ’cause they own three or four short-term rentals, they’ve explored some markets, they really start to feel like, “I have a grasp on things.

I’m managing properties. I’m dealing with this every day.” And for them, what we find more often than not is we’re kind of dealing with people being jaded, thinking that because they’ve had one issue happen to them, that that’s, like, a big major thing that they need to focus on, not really understanding that every time you buy a new property, it’s gonna be something new.

It’s very rare that you’re gonna have the same major problem, like, over and over and over. I’ll give you a good example. Um- In, in Western North Carolina is we’re heavy on septics and things like that here. Well, at the beach, I have a client, and she had two houses there. She ran into really big problems with the city sewer system, and she just pegged everything while she was looking for problems on, like, are we on city sewer?

We don’t wanna be on septic. We don’t wanna deal with these issues. When in reality, I’ve had more trouble with wells than I’ve ever had with septics in Western North Carolina. So I think with multi-time investors, we’re kind of getting that jaded sense of like, “Well, I already own these things. I know exactly what I’m doing.”

When in reality, we’re going like, “We get that. You own four short-term rentals. That’s really a big portfolio.” And we are buying and selling, we have 87 deals under contract right now at Savvy right now, at any given time, and this is early in the year. In, in December, it is highly likely we’re gonna close somewhere between $150 and $250 million in real estate in that month alone, and we share that experience amongst all the agents.

We constantly are meeting and saying, “What issues are you running into? How are we solving these issues for people? Can we pull in experts that can educate us on these issues?” And you’re, you’re really benefiting from an economy of scale there. Sure, you may own, as a multi-time investor, four or six short-term rentals, but I’ve got 15 under contract today, and I’m going through all of those issues at a much faster pace and a much faster clip.

That’s why you’re working with us is for that value that we bring. So listen to us, trust us, and sometimes that’s kind of, you know, we’re, we’re, we’re, we’re really… That’s an obstacle. You know, it’s something that we really have to overcome with these multi-time investors because we don’t wanna tell them, “You don’t know anything,” because they do.

Um, and we have a lot to learn from our clients, but they also have a lot to learn from us, and they need to really remember that. So that’s more of an obstacle with the multi-time investors than it typically is with the new investors.

Uh, yeah, those are great points there. The first one on, you know, return on investment, does it make sense to buy the ocean front property or the one that’s three blocks back, you know?

Uh, a lot of times it doesn’t, right? Like as you- Yeah … pointed out with the mountain view. Uh, I think one of the challenges for first-time real estate or short-term rental investors is that they have a personal component tied to it, like you kind of mentioned there. Like, maybe they want to stay there at the property a little bit, and they’re letting the desire for the mountain view run the whole investment ship.

So do you have any just, like, quick advice, or is it really just as simple as someone just needs to decide is this more important as an investment or more important as a personal, personal property?

Yeah, that’s the first thing that we determine with somebody. Um, typically for a multi-time investor, we’re seeing that less and less that’s for personal use.

Uh, for a first-time investor, definitely an obstacle we want to get through with them. And what we’ll find is, you know, when we start talking with them, they’re saying like, “Oh, we want to vacation there. We want to do this, we want to do that.” Over time, what it ends up morphing into is I can actually make more money by renting my place than vacationing in it, and I would actually rather stay next door because that person doesn’t know how to do their pricing.

So I could stay there for cheaper than I can stay at my own house, so I’d rather rent that out and stay over there. Um, but it is something that we have to get through because people do come in with their personal biases, and it is their money ultimately. And some people do truly buy for, um, lifestyle reasons, right?

They want a vacation at the beach. They want to have this, they want to have that. Um, but I find most times it does end up, people do end up morphing to, like, pure investor, and they’re seeing the economics of things and, uh, and really realizing… You know, what I have found so many times is people say like, “Oh, we, we want to go to Asheville.

We’re gonna come there every year.” And then they call me back three years later, and I’m like, “How many times did you come?” And they go, “One. We actually decided we want to go to the beach, and we wanted to go to Hawaii, and we wanted to go to Italy, and we wanted to do all the, those things instead.” It’s, uh, very rare that you find a family that vacations in the same exact place every single year.

Um, even if they do, that situation ends up changing. Kids grow up or they have kids. Um, family dynamics change. Um, personalities change. Uh, travel trends change. And ultimately, um, we almost always find that somebody that buys for that reason, “Hey, we come to the area a lot, so we want to have something there,” almost never ends up using it nearly as much as they thought they would.

So really look at it from that investment lens first, would be my typical advice for people. Of course, it’s their money. They’re gonna do what they want with it It’s, it’s hard sometimes to, uh, envision what things will actually look like, you know, two years or three years or four years from now. Uh, but it’s very likely, you know, if you found a good investment, you’re gonna have that property for a long time.

You know, 10 years, you never know. Um, but, uh, okay. Great, great advice. Great advice, Tyler. Uh, the other point you made was really on, like, velocity. You know, you have these velocity of transactions. You know, you have these investors that have made four investments, and maybe they’re not all in the same place.

They’re, like, four totally different markets. Um, can you tell us a little bit more about your team structure? ‘Cause I know you’re in a lot of different markets, and you’re getting that velocity of transactions basically in all of those individual markets, which truly does make you guys experts. Yeah. Um, I think that that has been, um, the best part for us.

Um, when it comes to those velocity of transactions, we’re understanding short-term rental insurance, short-term rental lending, short-term rental regulations at just such a higher level, um, than, than any especially regular real estate agent ever could. Um, right now I’m in conversation with, uh, Alex Bland from Airbnb about working on regul- the regulatory environment in North Carolina.

Um, no residential real estate agent is gonna have that kind of access, right? Um, I was- had a call last week with Airbnb’s real estate department, which most people don’t even know that they have a focus on anything like that. Um, so it’s that velocity of transactions that truly just puts us at another level, and ultimately we’re really excited to be able to pass that down to our clients.

It’s just, is the client gonna trust us or not? The most successful clients that I’ve ever had are the ones that come in and they ask the right questions and they trust us. I’ll give you a good example. Last week I had a transaction, uh, that terminated because the client just did not believe me for inspections.

You know, there was some water intrusion, things like that. The way that I look at things like inspections, almost everything is fixable. Unless the house is coming off the foundation or falling down the mountain, everything on a home inspection is fixable. What it depends on is, is the seller gonna play ball?

What sort of deal did we get on the property in the first place, and how does it affect the investment in the long run? Is this CapEx that you have to put right away? Are there things that you can defer until later? Uh, and one question that I always have for my investors is, if we did a home inspection on your home today, how many items do you think they would find?

Do you think it’s gonna come back perfect? And if not, then do those items absolutely have to be fixed today just because you did the home inspection, or likely can some of that stuff go for 10 years before it actually ever even starts to become somewhat of a significant problem, right? And so we look at everything from an investment standpoint, and that’s what makes us different as short-term rental realtors is we’re always talking from that lens.

Does this actually change the mechanics of the deal? When it comes to these, um, properties that have water intrusion, I’m telling my clients it’s incredibly likely that the n- if you terminate on this one, the next house you buy is gonna have the same problem, so you might as well just start attacking it here since we’re already in this deal, right?

Um, so that’s how we look at things, and it’s different. I think it, it is a different lens on how we look at things. But that velocity changes things and, uh, you know, I have certainly gone out there and I talk about my production, I talk about the production of the team. It’s never meant as a boast. Is this something to be proud of?

Hell yeah. I’m super proud of where Savvy is, what we’ve done, where we’ve come from. Um, but the greatest thing for me is this treasure hunt of finding great short-term rentals for our investors, landing it, and then getting that feedback from them six months later that it changed their life That they made so much money, that they’re net positive, that it’s better than they could have anticipated before.

Um, and, uh, and that just… It’s such a rewarding aspect of what we do. And I have people tell me like, “Well, are you just a saint? Are you… It’s just altruism. What is it?” No. Like, we’re also in the game. Like, we’re benefiting here as well. But the greatest thing that I love so much about Savvy, about what we do, is that we can help ourselves win while we help other people win.

And it’s funny because w- you, you see short-term rental consultants, there’s a lot of these short-term rental consultancies that have popped up and they say things like, “Oh, well, you gotta watch out for your real estate agent because, like, your real estate agent is just gonna get paid on a completed transaction.”

I already know that I’m gonna do 50, $70 million in sales this year. I don’t need to sell one bad property to somebody to make my next paycheck. We don’t need to do it, right? In fact, I think that that would work against me. I sell one bad property to somebody that I really thought was gonna be a bad property and, and I didn’t think was gonna work out well, I…

You can believe that person’s gonna be online, in all the forums, on all the Facebook groups talking about it all the time, and, uh, and that’s gonna cost me more than two clients. So when we niche down in an industry like this, we really have to focus on doing the right thing for the client first, knowing that that comes back to us tenfold.

And so that’s one thing I can wake up feeling really good about, is like I am certainly looking out for myself, but by looking out for my clients, that is the best way I can look out for myself. That’s how you can really trust what we’re doing. That’s what I’ve always done. That’s what I’ll always do. I will never put somebody in an investment that I have any doubts about without telling them, “Hey, these are my doubts about this investment,” and they make their decision, right?

Um, because ultimately that will follow me around. It’s not gonna be good for business, and that’s how you can trust us. Yes, we’re incentivized by commission, but why would I sell you a bad one when we can just wait and then I’ll sell you a good one, right? Um, those short-term rental consultants I think have it in for themselves because they get paid no matter what.

So why do they care? Why do they care at all if they get paid no matter what? So a little bit of, a little bit of bickering back and forth in the industry going on about, uh, about things like that. Yeah. Yeah. No, great points. And I, I used to be, um, a commercial broker as well, like on the commercial property side of things, and I’ve always highly recommended working with good, qualified, and experienced agents.

I’ve certainly worked with my fair share that, you know, didn’t end up working out. But I think one of the things you said is what distinguishes good agents or brokers from others, and it’s basically building a good reputation and it, you know, it takes a lifetime. Forget where this quote comes from, but they say, you know, it takes a lifetime to, uh, to build a reputation, but you can ruin it, you know, one day or something.

And so obviously with your guys’ growth and, and expansion, that’s not the way you guys operate. Um, so a lot of value, a lot of value working with, uh, experienced people. Um- I’m curious to get your on-the-ground, uh, you know, how is the market today? Well, before we jumped on, I asked you just, you know, what was the split between how many properties you guys were selling versus buying, because there’s still a lot of gloom and doom out there, you know, that, you know, the Airbnb bust and all that.

But I think we both know that that is not true. It’s, it’s true in some places, but not in a lot of others. So how are things down there o- on the ground in the markets you guys are working in? Yeah. I think what we see is a really big shift to experiential Airbnbs, right? Um, places that people come and they can create core memories at, long-lasting family memories, memories with their friend groups, memories with coworkers.

Um, that’s really what we’re seeing. Um, you can really see this in what happened in Asheville with Helene. Uh, we had a market and a city that was pretty much trashed. It was a disaster. Um, a lot of disaster relief efforts going on, entire neighborhoods wiped out, difficult to get around the area, and that happened at the end of September, um, of 2024.

And, um, uh, immediately after that, I still had guests that came in October because they were just coming for the house. So I had this great experiential Airbnb, pickleball courts, um, sauna, cold plunge, outdoor dining, indoor game room, indoor movie theater, and they’re like, “Honestly, we weren’t coming just to stay in Asheville.

Like, we really booked this just for the house itself.” And I’m not saying that that’s the case everywhere, but we’re seeing things like that more and more. Airbnb is not just a place to stay. Go to a hotel room for that, go to a resort for that. People are really looking for an experience where they’re creating these core memories.

So that’s where we’re seeing hosts excel, is when they’re willing to put in the money, the time, and the effort that it cr- that it takes to create those experiences and, and those sort of large scale places. But it’s not just heads and beds. Um, I bought a small two bedroom with great views, and I put, you know, $300,000 into designing that really well as an amazing couples retreat or a small family, and that property has done really, really well for me.

But it was because I did it really well. We put in amazing wall features, great furniture, a sauna that hangs out over the deck so it looks like a 360-degree long range mountain view. Um, doubled the size of the outdoor deck so that people could really take advantage of and hang out outside. And, uh, so that’s what I think it- things are morphing to.

So when you hear about the Airbnb bust, uh, I think ultimately what it, uh, pertains to is this kind of, like, bottom 50% of people that bought during COVID. They put a bunch of Amazon furniture in a house. You know, plastic tables, plastic chairs, $500 couches, 32-inch TVs, and, uh, no outdoor amenities- And, uh, and, and, and they have not done well, especially moving into this kind of era of experiential short-term rentals.

I’m not seeing them do well. I don’t think people should buy them if that’s what they’re gonna do. And I think the budgets for great short-term rentals are going up more and more. And, uh, and, and so when people come to me and they say like, “Well, I have a $50,000 budget,” I tell them, “I don’t know if this market is made for you anymore.”

Um, and, and that is pricing some people out, which is unfortunate, but I don’t want people to come in thinking that they can spend 50K anymore and lose it, and then lose money ultimately the entire time that they own the property Yeah. Yeah, some excellent points there. And certainly we can’t talk about the industry as just one segment.

You know, there’s, there’s a lot of different segments, experiential properties or commodity type properties in the middle of a city and, and, and they operate really differently. Um, that said, um, everyone like, likes to get a good deal, you know? And, uh, I’m, I’m curious, what are some of the things that you guys do to, to help, uh, win deals or, you know, get the most for a property?

Um, yeah, can you, can you speak to any of that? Yeah. I think like so many things of what we do, it’s about the right perspective. And so, you know, I think that it’s important to buy the property right. I don’t think anybody should overpay for properties. Um, we’re not paying over appraised value. We’re not recommending anything like that, um, even though that was kind of big during the COVID era.

Um, and ultimately, I think nowadays what you’re really looking at is what is that property gonna be able to produce in terms of revenue, and then what is it actually… If we’re putting money into experiences and, and upgrading, making more people fit in the house, maybe it’s more bedrooms, more bathrooms, things like that, then is that gonna be worth it on the return for the value of the house, some forced appreciation?

And so, you know, we’re looking at those two things. But ultimately, if we’re talking about great experiences, then we’re talking about premium properties, and those are not gonna be cheap. And so, like, we wanna get a good deal on those properties if we can, but also, I have not hesitated. I have paid almost close to purchase price for everything that we’ve bought in the last couple of years.

We’re paying almost close to purchase price. Maybe if we’re getting a little bit of a discount, a little bit in credit, but we’re looking at what can be the best Airbnbs, then that means you’re gonna pay premium prices. And so, um, it does kind of go against some longstanding, like, real estate advice, which is like, “You make all your money on the buy.”

Well, that’s true, and it’s a long-term rental, and your cash flow is 100 bucks a month, and you have to renovate it, and you have to force some value add appreciation there, and every dollar matters so much. It doesn’t as much for these large experiential Airbnbs, and, uh, and I’ll tell you why. You know, we bought a place in Asheville for $905,000, and we spent about 410,000, both in carrying costs and renovation costs for that property, and we pushed the value of that property to $1.95 million.

It’s about a $600,000 gain in the value after what we had already put into the property, and that’s what we were able to cash out of that property. So we were able to cash out more on that property than we ever put into it, and it’s still cash flowing somewhere between five and 10 grand a month, depending on the month of the year.

It’s depending on seasonality. Um- So, and we paid $10,000 more than list price for that house, right? Um, so what is a good deal ultimately, I think is the question. And sometimes that means it’s the purchase price. Sometimes properties are definitely overpriced, but go into things with a totally open mind.

Look at every single deal, not as I just want as much off the list price as possible, but is the list price fair? What does it comp out to? What is the price of the property gonna be after you do this value add? And then what’s the revenue? What’s your cash on cash return? You have to take into account the entire financial picture, and I think including the tax benefits that you get for short-term rentals.

Um, take everything into account and then make your decision from there. Is the property worth what you’re paying for or not? Um, but certainly I don’t think the only question is how much money are we getting off list price? Yeah, of course. Um, yeah, it’s all, it’s all about the potential returns and, and really underwriting the property properly.

I, I think a lot, especially the, the first-time investors though, don’t really know how to do that. Uh, is that… How far do you guys go in the analysis of a potential property with your guys’ agents, or is that something that, um, they need to handle mainly on their end? Yeah, we go really deep with them. Um, we’re looking at pro formas, we’re looking at comparable properties with them, we’re using all of the data analytics tools.

We’re, uh, partners with Airbnb, we’re partners with BnBCalc, we’re partners with Raboo. So we talk to all of the data in the industry. Um, not only that, but we’ve helped develop half of those tools. Um, I’ve sat with the CEO of AirDNA. I was on the phone with the CEO of Raboo last week. Um, I was heavily involved in the development and the startup of BnBCalc and, and work with the developers and the CEO there all the time.

Um, so we’re really, really involved at that level because we wanna understand what is the data saying today, how correct is it, what sort of variances do we need to include, what are the tourism trends, how many new listings are there, how much new ADR is there, um, and what are the trends of all those things?

So we go really deep into that with our clients. We, uh, every time that we have a tre- a retreat, uh, with all of our savvy agents, we bring AirDNA, we bring Raboo in to come speak to us and talk to us about the trends. We’re always looking at it from a, both a micro and a macro econom- e- economic lens. Um, we want to be there for our clients, and we want them to make sure that they can rely on us.

Of course, it doesn’t eliminate the due diligence that they need to do themselves. They ultimately need to make the final decision. Our job is to give them options, give them recommendations, tell them where the market is headed, and tell them what’s working today. Is it gonna work tomorrow or not? Well, we can rely on some historicals, we can rely on some trends, but we don’t know what’s gonna happen with Iran.

We don’t know what’s gonna happen with interest rates. We can always give it our best guess, um, and tell them based on historicals what is likely to happen or what are all the options and potentials, but ultimately everyone has to do their own due diligence for themselves. What I would say, and what I always say to my investors that come here to Asheville is, “I’m there investing alongside you based on all of this info myself.”

So just this year, you know, we’ve bought about $4 million in short-term rentals, me and my partners, just in Asheville this year. And, uh, so we are investing on all of the investment thesis that I know about, all of the data that I can see and know about. We feel comfortable doing it. They have to make their decision if they feel comfortable doing it or not, and that’s totally up to them.

We don’t make decisions for our clients. We make recommendations, we give options, we trade on historical data, and that’s the best we can do. But ultimately, there’s always a risk in real estate investing. I just happen to be of the belief right now that short-term rentals has the least risk of any sort of real estate investing out there, and the most potential upside Certainly.

I am a believer, uh, always have been, probably always will be, uh, barring any large governmental changes or- Yeah, that’s right … you know, regulation. Um, a, a big piece of having good investments, so you, you’ve sort of mentioned it here subtly a couple times, is the financing piece. You know, most people aren’t going out and, and buying a million dollar property with cash.

There are those, uh, people out there of course. But one of the powerful benefits of investing in real estate is that we get to leverage it. Yeah. Uh, and we get to borrow money. Um, and that’s always changing. You know? It’s, it’s nice that we can buy investments today, and if it, if it makes sense today or, you know, with our calculations it makes sense, we get to kind of renegotiate it down the line with a bank.

Yeah. Um, but how, how is the lending scene right now? ‘Cause I know it’s changed a lot over the years. Obviously short-term rentals are much more common these days than they were a decade ago. What, what does that side of the equation look like? It’s difficult and it’s easy. Uh, and I’ll start with easy. Um, sometimes I see people online say things like they wish that short-term rentals were more recognized as commercial property, that they could trade on cap rates and trade on revenue and things like that.

I hesitate when I see things like that. Uh, we are incredibly lucky to be able to have fixed rate residential financing for short-term rentals. We’re incredibly lucky at a regulatory level that in most states short-term rentals are still considered residential property, like in North Carolina, um, or Arizona, and we s- are able to stand on that residential property classification, uh, to be able to get great financing, um, with really, um, stable, you know, historical data that the banks can rely on in the residential property market.

I would, I would hesitate there. Be very, very careful asking for commercial valuation, commercial loans. Uh, you’re gonna get lower terms, you’re gonna get variable rates, you’re gonna get, uh, like, you know, uh, five-year balloons. Uh, that’s putting a lot of people in bad positions in commercial real estate right now where people thought rates were gonna go down and they aren’t.

Where your short-term rental is cash flowing just as much as it was four years ago because your rate is exactly the same as it was four years ago, and you don’t have to worry about it going up in the next four years. Um, so I think that’s the easy part. Um, difficult part is rates. Rates are not going down like a lot of people thought they would.

And I was never a fan, and I thought that this was just a bunch of, uh, uh, marketing jargon, um, uh, when people were saying, “Marry the house, date the rate.” Mm, I’d be really careful there. Who knows exactly what rates are gonna do? You’ve got political environment, you’ve got economic, you’ve got world, uh, uh, you know, wars, potentially wars happening and just all of these things, oil and things like that that are affecting interest rates and, and the outlook on the economy.

Inflation has been a big, big, um, conversation the last few years ever since COVID happened. Um, so it’s difficult, you know? Rates are not going down. What I will say is I don’t see rates going up If they go up a quarter, if they go up a half, it shouldn’t really affect things that much. So as you underwrite today, you can feel really confident, at least I do feel really confident, right?

You have to make that decision for yourself. But I feel really confident underwriting at today’s rates because I don’t see those going up. I think we’re at historically fairly high rates, especially on average and especially for as long as those high rates have lasted. Um, and so I think that, um, if you underwrite for today, you’re guaranteeing yourself success for tomorrow, barring, like you said, Tim, any, you know, other crazy economic factors or anything like that.

But what are you gonna do? Not invest in the best asset class I think you can invest in America? Um, I think commercial property is still too expensive. I think long-term rentals are too expensive and the rents are, are going down. Um, and so I still believe in short-term rentals. I believe in these experiential Airbnbs.

I own them all myself. We invest $400,000 or $500,000 in all of our new assets. They perform. They give us the money back and, uh, and we’re seeing that happen really well. And w- we’re, we’re doing things like re-leveraging, refinancing, and people will tell me like, “Aren’t you worried? You know, your, your, your debt service is going up so much, 10 or $12,000 a month.”

If we’re doing $300,000 a, a year on that property and our debt service and expenses are somewhere between 120, 150,000 a year, um, and a lot of those other fees are pass-throughs like cleaning and things like that, um, I feel really good about where we are ’cause if our revenues are at 300,000, then that means the Airbnb market has to crash by 50% before we’re at zero and I’m okay being at zero That would mean that if we refi these properties at 1.9 million and we bought them at 900 and, uh, you know, for me, values would have to crash by more than 25% for me to be at zero.

And so if it’s 30%, if it’s 35% values actually crash that much, that’s when I actually lose a little bit of equity. Um, I’m okay with that because I’ve already actually earned that delta in equity from my cash out refinance the first time I had it. Um, so I feel really safe in short-term rentals right now.

I think we’re really well protected. We’re really well leveraged. We’re at decent LTVs. We’re happy with where we are, and we’re looking at it from every angle, including all… If all of those things happen, and I think we’re in deeper, a deeper pot if, uh, if, if, if Airbnb revenues crash by more than 50% and home values crash by more than 25%, I think we’re in a deeper pot.

We have other things to probably worry about. Uh, I don’t see it happening. I would be very surprised. So I feel really safe here. I feel comfortable telling my investors that they should feel safe here, but of course, it’s risk, right? Investment is risk. That’s just what it is, and so you can never guarantee, um, what’s gonna happen.

But overall, I feel good about where the economy is right now. Looking at everything that’s happening and seeing how well things are still going, that makes me feel pretty comfortable, slightly hesitant about the future, oil wars, Iran politics, geopolitical environment, all of that sort of stuff, but you always should be.

If everything is feeling safe to you in the moment, that’s when I think you should be even more cautious. So I feel happy that there are things to worry about, but that things are still going so well. That to me feels like a safe environment to be in. We’re hesitant. We’re looking at every investment because of these environmental factors that are going on, um, and trying to make smart decisions, and that’s making us cautious enough to look really deeply.

If we still feel really good after that, that’s where I’m feeling really comfortable right now. Right. Yeah, great points, Tyler, and there, there’s certainly a lot to, like, making the decision to invest, uh, in a property, right? But more people have become wealthy through real estate than any other asset class in- Yeah

in the history of the United States, and yeah, I agree. I don’t see a lot of huge dramatic changes that would, uh- throw a huge curve ball in there. You know? Yeah. There’s just, there’s a lot of ways that we make money with real estate, not just the cash flow, but you- Yeah … you mentioned a lot of them there, and, uh, I know we’re, we’re getting short on time here.

Uh, another thing I just wanted to point out for anyone out there that hasn’t worked with agents before, another big benefit is that they know lenders to work with, they know insurance companies to work with, they know people in the local area that can just help facilitate the whole transaction. And so, um, I always highly recommend working with an experienced agent.

Tyler, you guys have a whole team of them. How can someone find you guys if they are, uh, looking for their next investment or looking to potentially sell one they already have? Yeah. I think a great place to start is our new website, savvy-agents.com. Um, we have got all of our inventory on there, what we think might make a good short-term rental today in over 25 markets all over the US.

Um, and that new website has got Airbnb comps, it’s got revenue ranges, it’s got as-is potential, and then it’s got fully amenitized potential, what those amenities might be, and how much they might cost. It’s got our personal take on the house, and then it’s got all the normal information that you’ll see on Zillow, like the number of bedrooms and the description of the house and all that sort of stuff.

So I think it comes with some really, really good context that you’re not getting from any other site out there. Any data aggregator or any site that lists short-term rentals, you’re not getting that local agent’s context around that exact property, what we think it can do as is, and what we think it can do if you invest a bunch of money into it, and how much that might be and what your return might be if you do all of those things, and there’s no other site like that out there, and that’s why we built it for you, and we’re really, really excited to release that beta version.

So if it’s not working, um, I’ll send you someone that you can yell at other than me, but it is brand new. We’re really excited about making it better. So if you wanna go surf it and take a look and, and send me some tips. Tell me what we could be doing better, what you as a short-term rental investor might wanna see even more of.

We wanna build a platform for short-term rental investors where they can come and buy and sell, that we can add a lot of value into that process for them that doesn’t cost them any extra money versus working with a regular real estate agent, and that’s our goal here at Savvy. So yeah, appreciate you having me on, Tim.

Thank you so much. Yeah. It’s been a pleasure, and I look forward to, uh, future conversations. You know- Yeah … you guys, you add a lot of value, and, uh, we appreciate it. Thanks, Tyler. Okay. Thank you 

There’s no question that OTAs like Airbnb and VRBO are cracking down on you getting your guests’ information so that they can book with you directly

And they take extreme measures if they catch you doing this. They will remove your account. They will even go as far as blacklisting your address so new accounts cannot be added to that address

But there’s a lot of legitimate ways that don’t violate any policies that you should be doing with each and every reservation to capture as much guest information as possible

So today we’ll be breaking down all of those options. Welcome back to the Short Term Rental Riches podcast

Let’s just get right into it. The number one rule, the thing that you absolutely cannot do, is solicit your guest information directly through the OTA channel, so directly through the message platform on Airbnb or VRBO or booking.com. This gets flagged right away.

Of course, the OTAs already know this, right? And they’ve put measures in place to make sure that you do not get your guest’s contact information. Let’s start with Airbnb. They currently mask any email that you receive on behalf of the guest, and they also create a temporary phone number that is not the actual phone number of your guest

Both of those expire after the guest’s reservation, and if you didn’t collect their information in another legitimate way, then you don’t have their contact info

vRBOBooking.com do share the guest’s name and email after the booking, but you gotta make sure that you save it

Now we’re gonna go through all the steps pre-booking, during the booking, post-booking to capture as much guest information as possible. But we’ve also put together a little handy guide.

You can grab it in the link down below

So before you can get any value out of having your guest’s direct contact info, you need to have a direct booking website, right? We’ve talked about that a lot on this channel. If you’re new here, we’ve been running for over six years, quick actionable episodes to help you with your short-term rentals or your portfolio.

My team and I manage two hundred and fifty-plus properties in over forty cities and quite a few different countries now, so we’ve learned a lot over the years, and I hope you find all of our insight helpful

You can catch all of our prior episodes at strriches.com. Okay, so in order to capture some value from this guest contact list, you need a place for them to book.

A direct booking website is a requirement. Most PMS programs luckily have this built in where you can create at least a easy template version really in just a few minutes. But if you wanna take it a step further, well, then you can go to a third-party company, there’s lots of those these days, that will integrate with your property management software, but create you a much more custom website

I was recently interviewed on another podcast, Book Solid, with Gil Chen, and he runs a company called Crafted Stays. This is all they do, is create custom websites for all their customers that integrate with the property management software that they’re already using There’s another company out there called Host AI that are making some really cool direct booking websites.

So if you’re not happy with your existing one, I’d suggest reaching out, seeing what’s currently available

All right, so there’s really three times, three places where you can get your guest’s contact info. The first place is before they actually make a booking, when they’re visiting your direct booking website. So you wanna make sure you have a pop-up on there, for example, something that pops up. Maybe you’re offering a discount.

You capture their email and their phone number. I know Host AI, the website company I mentioned, even has a way for their potential guests to bid on future reservations if they didn’t like the price that was showing up. So there’s some really clever ways out there to capture guest information before they actually make a decision to book with you at your property

Now, your direct booking website’s not gonna create demand on its own, right? So oftentimes this is the place where repeat guests go back to, but you can also drive that demand by doing your own social media

People browsing on Google, I hope that you have your properties listed on Google now. You can also include your website on Google so it shows up on Google Maps. And again, make sure your website has something that you can offer the potential guest, like a guidebook or some sort of future value

okay, so that’s step one. You got a direct booking website. You have some creative ways to capture guest contact info or potential guest contact info. Really, the big one is when you have guests at your property, you wanna make sure you’re capturing all that, and there’s several ways to do that The first one is you can have a pre-arrival or check-in form.

We highly suggest having a rental agreement for every property where your guest is signing, maybe they’re entering their name and their email, and then you simply capture it on the back end

Most of the industry leading PMS tools now, like Hostway or Guesty or OwnerRez have these rental agreements built in. So make sure you’re taking advantage of that if you’re not already

We use another company on the back end called Charge Automation that creates our guidebooks. It also handles our payment processing. Another note on that in a second. But we use this for our guidebooks and our rental agreement, so it’s a really easy way for us to capture all of our guest contact info

A lot of you out there have probably heard of guest verification tools. So these are biometrics or running some additional security on the back end

Companies like Truvy, which was previously Superhog, or Enso Connect or Safely, these companies can all do some additional security pre-check-in requirements that protect your property a little bit more, but also get that guest’s info for you

All right, now for a big one that I think most people probably overlook is that every time you process a payment through Stripe, you’re capturing that guest’s email and their name, and you should be saving that contact list

We recently brought on some really luxurious properties. One of them actually has 23 bedrooms. Yeah, way past Airbnb’s guest limit. They can sleep over 100 people, and so they have these massive corporate events, weddings, you name it. But you better believe that adds up to a lot of guest contacts, and luckily they were collecting them because

and they were able to use that list really easily. So their calendar wasn’t looking quite as full. They sent out some mass messaging using a company called Quo or previously OpenPhone. They got a whole bunch of responses, and they booked up their calendar. Of course, if they didn’t have devices in the property or ways to capture that guest info, that would not be an option

So if you’re operating a luxury property or any sort of vacation rental, especially where you have guests coming back time and time again, it’s really essential that you are collecting their info. Now with AI and the tools that we have available, it’s a lot easier to reach guests or potential guests as well, But we have to have their contact info to have the option

So those are a few options before the guests actually check in. You have a rental agreement, you have some sort of additional background check that you might be doing, or you’re processing that payment and capturing the contact info on the back end

Now, once the guest is already at your property, we’ve talked about StayFi a lot. This is what creates a splash page in your property. So it’s a device that connects to your internet router, and when the guest shows up for the first time, what’s one of the first things they do? They connect to the internet.

This basically creates a splash screen between your guest and the internet. They need to put in their contact info first, and then they have internet for the whole time they’re there at the property. The beauty behind this is that you get to collect not just the person making the reservation, but essentially everyone there at the property, or at least everyone that connects to the internet

But you wanna go a couple steps further. You wanna make sure that you have some printed documents in your property. You wanna make sure you have a QR code printed out that links to your digital guidebook. Again, when that digital guidebook opens, you can ask for their email

We like to put magnets right on the fridge. Most people end up seeing the fridge, right? It’s also a reminder that they can book with you directly and also book with you at the best rates

So there’s a few options during the stay, and lastly, we have some options after the stay, after our guests have checked out

Remember, you don’t wanna be soliciting their contact info directly through the message platforms, but you can send links through the platform. So after a guest has checked out, you wanna of course send a message and say you hope that they had an amazing time

Now you have one last opportunity after your guests check out, and that’s in a post follow-up message. So you should be just checking in with your guests regardless to say, “Hey, I hope you had a really good time.” Maybe you want to mention something about the review process or let them know that you’ve already left them a five-star review

You have to be really careful again about asking for any sort of contact information in any message that goes through the platform

But you might do something a little bit more subtle and just remind them that the guidebook is theirs to keep, and next time they’re back in town, they’re welcome to use it again. Of course, that guidebook’s going to have links to your direct booking website, right?

So the OTAs are tremendously helpful, right? They spend millions of dollars to help us market our properties, but it’s our obligation to make sure that we get our guests’ contact info so we can build that relationship. And like our newest partners that just joined us, it creates an opportunity to help fill those calendars if they’re not looking as occupied as you want them to.

I hope that this episode gave you a couple other ideas and some good insights. Until next time, I hope you have a fabulous week

Today we’re tackling something that most Airbnb hosts have an opinion on, and that is their Air Cover program. The marketing sounds great, right? Three million dollars in coverage. But the reality is a lot of hosts don’t know the right way to actually file claims. A lot of hosts lose claims even on the ones that they should definitely be winning.

There’s a big gap between what’s advertised and what actually gets paid out. So in this episode, we’re gonna break down everything you need to know. Welcome back to the “Short Term Rental Riches” podcast.

So what exactly is Airbnb’s- Air Cover program and not to be confused with their resolutions. I’ll get to that in just a second. Their Air Cover program is three million dollars in property protection and one million dollars in liability protection. Now, this is potential limits, right?

It’s included with every Airbnb booking, no additional signups, no additional costs. It is definitely not, though, a replacement for your property insurance.

So the standard flow is really to request a resolution first, but if the guest denies this or they just don’t respond, then it’s gonna get escalated to an Air Cover claim, And then you’ll have fourteen days to close that Air Cover process.

So what’s actually covered with Air Cover? Well, property damage. That’s good news, right? Theft, if anything goes missing in your property and you have proof of it. Extra cleaning costs, so sometimes a guest might leave the place a little bit too dirty. Any sort of structural damage, any sort of just real damage to your property.

Most hosts don’t know, though, that it can actually cover lost income. So if you have to cancel specific reservations due to that guest’s damage, then that can potentially be reimbursed

Now, what does it not cover? Well, most of these things are pretty obvious. It doesn’t cover the normal wear and tear of your property.

It wouldn’t cover potential loss of revenue, and so if you have damage and you end up blocking your calendar because you’re repairing it, but you never had a reservation during that calendar block, then they’re not going to pay you out for what could have been a potential reservation.

Now, they’re also not gonna cover items that you can’t accurately document. If you can’t prove that the item was there at your property beforehand, then they’re not going to cover it.

Quick suggestion there, if you haven’t already, take a video of your property, a walkthrough, and talk into an audio clip as you’re doing it. So you can use an AI tool like ChatGPT or Claude to organize all the items that you have in your property. Of course

these details with photos can help, but it’s not gonna guarantee that you’re going to win the claim. Ultimately, if push comes to shove, you’re going to need a receipt and proper documentation for these items. So if you just furnished a property and you have all those receipts, make sure they’re organized in a nice clean place.

And again, you can use your AI tools to sift through all those receipts for you if you need them for an AirCover claim.

Now we’re gonna break down exactly the way our team handles Air Cover claims with all the little details that you’ll need to know. There’s actually quite a few steps there too, so we’ve also put together a quick guide for you. You can grab it in the link down below.

Before we do, I wanna break down just a personal story from a large Air Cover claim that I had not too long ago, almost seven thousand dollars worth. And so again, you gotta make sure you get this process nailed down because you could potentially have some big damage. Now, if you’ve been listening to this show for a long time, you know my team and I have managed tens of thousands of guests now in over fifty cities and multiple countries.

It’s been an amazing journey. We’ve certainly learned a lot, and so I hope this podcast has provided some value through our hard lessons. Some of those hard lessons in the early days were damage claims. We now have a lot of processes in place to prevent those, but sometimes accidents just happen. And so I recently had someone drive their car into a brand-new air conditioning unit.

It was actually a packaged unit, so it was the heater and the AC, almost seven thousand dollars. And unfortunately, it was basically brand new. It had been installed just a few weeks prior.

Now, we had messages from the guest telling us that they accidentally did it. We had it on our camera footage. We had documentation for the actual unit and cost. And so this one we won without too much struggle.

Airbnb paid us out six thousand seven hundred and twenty-three dollars within just seven days, and now we’re actually able to recoup some loss of income, not through Airbnb’s Air Cover program, but through the guest’s insurance policy.

They happened to be using Progressive Insurance, and we did have to block the calendar for a couple weeks to get the new equipment in to make the changes, and we did recoup some potential loss of income. If you don’t already have this in your existing insurance policy, well, I’d recommend talking with your agent.

If you’re relying heavily on your income from your short-term rental and you have some sort of big maintenance issue or maybe there’s a natural disaster and you get stuck without income potentially for months at a time, that could be really challenging, right? And so insurance… And so there is an option to include on your insurance policy loss of business income.

You get to choose the amount you wanna put on there, and you get to choose how far in the future you can go. Of course, within the insurance company’s limits, but oftentimes this might be six months or so.

So fortunately, that HVAC claim was pretty easy for us to win. The guest was totally honest, and we had all the documentation. But not all claims are that easy, and so let’s run through the exact process that our team has been using to win hundreds, if not thousands, of air cover claims.

Here’s our policy, and I’m just gonna read through the steps here because we’ve got quite a lot of them. So a lot of times these air cover claims happen after a guest has left, right? And so our first step when a guest leaves is to immediately inspect that property. Uh, everything needs to be checked after checkout.

Are there any missing items? Are there any damage? Anything like that. We have these all built into our custom housekeeping checklist. It makes it really easy for our housekeeper to take notes, to take pictures, to provide any evidence that we might need

If we do uncover some sort of damage or something was missing or broken, well then we’re gonna proceed directly with filing a claim. We used to not do this in fear of getting a bad review, but I’ve got a note on that in just a second. So we’re actually not gonna contact the guest if they’ve already checked out.

We’re just gonna go right to the AirCover claim process and involve Airbnb.

Any future guest communication is going to occur within that AirCover process with Airbnb’s help.

Now, if there is some sort of damage or smoking or something that happened while your guest was actually staying in the property, well then that’s a little different. You need to reach out immediately and communicate with the guest. Of course, you want the communication to be professional and clear and documented.

The idea is that you’re able to capture that conversation and use it as evidence if you discover that there is in fact damage.

So let’s imagine that there was actually some damage at your property or something was missing. We have four documentation standards that we use every time we submit a claim. We wanna make sure that we have some sort of timestamped visual. So either that’s a photo our housekeeper took, maybe that’s timestamped footage from a video.

We wanna use our cleaner or inspection checklist that’s already been completed.

We need some sort of cost validation, so we’re going to include either ideally the original invoice or a comparable item on Amazon, something like that. Uh, and then we also many times take it a step further and create an invoice directly underneath our company name. So you can do this as well using ChatGPT or one of the AI tools.

Just create an invoice. This could include things like the time it takes to swap that out, to find the new item, shipping, whatever it happens to be.

We wanna double-check that there was no platform communication, so no messages that are relevant were coming through Airbnb.

And then with all that, you’re going to get a claim reference or transaction ID for your AirCover claim.

Now, of course, if you’re missing any of that information, your chances of winning the claim are going to go down. We used to file our AirCover claims basically at the end of the allowable window in fear that we might get a bad review. But we flip that around now, and we submit everything as soon as we find it.

We do do this before posting our review, but if the guest ends up leaving a bad review and there was some sort of retaliation or something in there that had to do with your AirCover claim, well, then that is grounds to have that review removed.

You will have to escalate that with Airbnb. Getting reviews removed is not as easy as it once was, but it is still certainly possible.

And then you’re always gonna wanna leave a public response to those reviews too. And of course, you wanna make sure that it’s a professional response,

You want to make sure it’s free of accusations or any sort of assumptions.

So that’s really the process, and it’s great that Airbnb has this. Booking.com has just released their equivalent damage program, and our team is filing claims over there as well, and we are winning them as well. And so we’ll have to do a separate episode on that process as we really perfect it. But in a nutshell, AirCover, great to have.

The more documentation you have, the better, but this is not a replacement for your insurance policy.

We’ve talked about insurance a lot on this channel before. You can check out policies with proper insurance. They’re one of the leading insurance companies for short-term rentals. There’s also a lot of other ones out there these days, like Safely or Generali. And there’s also other ways to protect your property, like using damage waivers or collecting deposits.

Remember, we’ve got our full guide with all the details in the link down below if you want to just copy our process or give our process over to one of your team members helping with your properties. Remember, AirCover is not a replacement for insurance, although it can help as long as you’re filing those claims correctly.

I hope this gave you a little bit more insight, and until next time, I hope you have a fabulous week.

Cameras at your short-term rental property do a lot more than help you just prevent damage. They can also help you recoup costs or charge guests that are maybe trying to get around your rules. But there are a lot of camera options out there, and so today I’m gonna give you four that I think are worth taking a look at, the one that I actually use, the features that you must have, and all the things in between.

Stay tuned as we dive into all the details.

Welcome back to the show. I’m happy you’re here again.

There are a lot of camera options out on the market today, more than there have ever been, and there’s also a lot of features that come with those cameras.

But the reality is, most of those features don’t really do that much, and so let’s talk about the ones that actually matter, and then I’ll give you my camera recommendations. So the first one is you need some way to have cloud storage, right? We can’t rely on a security camera at our property that runs on an SD card that we need to manually download.

That’s just very old school, right? Fortunately, most options these days have that, but you also don’t want it to be recording twenty-four/seven because then you got a whole bunch of footage to go through. So you wanna make sure that your camera has a good motion activation feature in place where it only records when it needs to.

You also wanna double-check how far that motion activation goes. One of the cameras we installed recently at a new property was just too far away from the front door, so even though the guests were showing up, it wasn’t picking them up on the video.

You also want a camera that’s easy to connect to other cameras and has a nice online dashboard.

When it comes to installation, wireless is always going to be better, but I know a lot of you have some tricky installation spots. And so the camera that we recommend does have a wireless option. That can go a long way, but again, make sure that it’s not mounted too far away from where it’s going to be picking up motion.

Before we get into my top four camera picks, just a side note, if you have cameras at your property, which you 100% should, make sure that they don’t face on the interior of any of your property. This includes having one near your front door that looks in when the front door is actually open. That’s a big no-no.

We, of course, have to mark- or disclose this when we create a listing on Airbnb or the different platforms these days. But just double-check because that can get your property banned or delisted online.

Okay, top four cameras. You’ve probably heard about most of these, but the one that we like to use is actually a little less common. So we of course have the Ring camera. We of course have the Google Nest camera.

And these are great because they probably connect to your existing Google account if you have one already. Most people do, and so the actual setup is really easy.

And they do have various options these days, but I would say that their cloud storage online is quite expensive compared to some other options.

The Arlo camera is also a good option. This is one you can find at places like Costco. It’s one that can easily be expanded, so if you have a really large luxury property and you need five or six cameras to cover all the entry doors, which I highly recommend you have a camera covering every entry door at your property.

If that’s the case, well then the Arlo cameras can be a good option for you. What is the camera that my team and I refer to almost everyone? That is the Reolink camera.

What we like most about it is that it’s easy to install and it’s affordable, and we’ve had good results with it. And so we’ve got literally dozens of these things connected all in one nice little simple dashboard where we can see them. It’s got all the things we talked about, like the motion activation.

It has infrared at night. It also can pick up sound

And it has a really inexpensive online storage option, just a few dollars per camera. And so if you got a whole bunch of these, you’re not gonna be racking up a big bill. I also like that there’s the wireless option with the solar panel. That’s the Reolink Argus Pro model, and you can put it around a tree.

You can put it basically wherever you want, not have to worry about all the wiring. Now, one caveat, if you are in a cold place where it’s very seasonal and it’s very dark, then you’re gonna wanna find a wired option because it’s probably not gonna hold up that well.

Luckily, the Reolink cameras also have the wired options, so just grab the one that fits best for you.

So a lot of reasons for having the camera are obvious, right? We wanna try to prevent any sort of party or unwanted guests or unwanted pets, but what a lot of hosts are not doing is handling the backside of that. A lot of times guests show up with maybe one extra guest. Maybe they show up with their dog, and they weren’t supposed to.

This is when your camera can truly shine and help you earn some additional revenue with your property. It’s really quite simple. If your property accommodates six people and eight people show up, you can charge for those extra guests if, and this is an important if, you have it in your house rules or your rental agreement.

If you wanna just copy our house rules, which we have all of these things in place, well, you can grab a copy of that in the link down below.

We also have a quick STR camera checklist you can grab down below. It’s got links to the cameras that we’ve mentioned, but also those really important reminders on camera placement, how to set it up for your team, all that good stuff.

So with the camera in place, there are certain things that you want to check, right? You always want to verify your guest count. You always want to verify if guests are showing up with pets when they shouldn’t be.

There’s some other benefits, though. You get to know when your guests actually check in, and you get to know when they’re actually checking out. We always ask our guests what time they think they’ll be leaving, so we can help accommodate the cleaning schedules. Of course, they don’t always tell us, and a lot of times they tell us, but it doesn’t actually end up being the time that they’re checking out.

But when you see them walking out the front door with their luggage and getting in the car and driving away, well, it’s a pretty good sign that they’ve just left your property.

So make sure you have your house rules set up properly. Make sure it accounts for pets if you don’t allow pets. If you do allow pets, well, we highly encourage charging a pet fee, and not everyone always discloses that they have a pet. So again, use the cameras to verify that. Use them to verify the guest count, and then if you do have some sort of issue at the property, well, you can handle it as soon as possible. You can also use the footage to send to the OTAs like Airbnb or VRBO to help your case.

Let’s recap just a couple quick tips

the more properties you have, the more likely people are gonna be sneaking by, and the more potential revenue you can recoup from having these cameras, but you gotta make sure you have a good system on the back end.

If you’ve got a property up already and you’ve been letting some of these things just sort of slide by because you don’t want to do it yourself or you don’t have the time, well, our team at Corsi would love to help you with your property.

We work with hundreds of properties in dozens of different markets. You can reach out to us. Just go to scrriches.com. There’s a little partner with us button, or you can check out our company website at Corsi, C-O-R-Z-L-Y.com.

Okay, some last things to remember just to recap. Make sure that your cameras cover every entry point. Make sure if it is a wireless camera that it’s not too far from the entry points so that it still picks up the motion. Consider your region. If you’re in a place that’s very seasonal, dark, and cold, then you want to make sure you have a wired option.

Actually, that’s always the first option if you can is make sure that it’s wired.

Make sure that the recording starts when there’s motion detected and it’s not just recording 24-7. Make sure that your cameras are disclosed on all the rental platforms like Airbnb. That is a requirement.

And lastly, don’t put cameras in any place which invade privacy. Again, a big requirement and a reason that your listing can get taken down and deleted. I hope that gave you a couple tips. Remember, we’ve got our getting started checklist down below. We’ve also got a copy of our house rules where you can just duplicate them and adjust them the way that works best for your property.

Until next time, I hope that gave you some good insight and I hope you have a fabulous week.

Furniture can either make or break your short-term rental success, and a lot of hosts either well overspend or they dangerously underspend. So today we’re pulling back the curtain on a recent project I just furnished. Gonna break down the whole process, what I actually spent on this property, and a few tips that you need to remember when you’re furnishing your next property.

Welcome back to the Short Term Rental Riches podcast. I’m happy you’re here again. I’ve been traveling a lot. Actually, I haven’t really been home-home, where I am here today in Brazil, for months. It’s been since– It’s been about four months, and I’ve been to a lot of places. One place that I’ve spent a little over a month is in Orlando, Florida, where I recently acquired a new property and renovated it and furnished it completely.

So let’s go ahead and get into the details. The reality today, just as it’s always been, is that your design is everything when it comes to your short-term rental returns.

You can have the best property on the block, but if it doesn’t look nice and it doesn’t attract guests, well, then it’s not going to perform well. The good news is that you don’t have to overspend on your furniture.

This doesn’t mean, however, that you have to spend a ton of money on your furniture to have a good return and to have really good guest experiences.

Both underfurnishing your property and overfurnishing your property hurts you financially, just in different ways.

Most hosts assume just naturally that if they spend more money on their furniture, that they’re going to have a better design, they’re going to have a better experience, but that is definitely not the case. And so today we’re gonna break down all the details With the property I just furnished in Orlando, Florida.

But just to give you one really quick example, Orlando’s a place where a lot of people theme their rooms, right? It’s a very family-friendly vacation rental market because of Disney and all of the theme parks. And so a lot of people create entire themes for their room. And so we did this with our property.

We didn’t get carried away, but we did have a girls’ room and we did have a boys’ room, and each one of those rooms has wallpaper. One of the wallpaper sets we ordered off Amazon, I think it was $150. This is for a eight by 12 wall, nothing huge. And the other wall, we couldn’t really find something that we really wanted for the girls, so we had a custom wallpaper made.

And that wallpaper, instead of being around $150, was around $750. We also, of course, did not– we didn’t put the wallpaper on myself. I’ve never done that, and I know you gotta do it right, and so we had a couple options when it came to that.

We worked with a really good handyman that’s done a lot of these things, including putting on wallpaper. He charged us about $250 per wall to put this up. But we also got quotes from professional wallpaper installers that charged us $750, or would have charged us. So just in that one example, you can see the Amazon wallpaper with the $250 installation, we’re looking at four– $400 roughly, versus a custom wallpaper and someone else installing the same thing in basically the same way would’ve been, what, three times the cost just for one specific thing? So imagine if y- that happens to you over the course of a– furnishing a whole property.

So you could see how your property budget could go up two, three, four times just based off your approach and some quick research.

A lot of times hosts also forget some of the hidden costs with furnishing a property, talking about linens and consumables. The larger your property is, the more you need of both of those things. I’ll get into a few details in just a second, but before we do, I just wanna break down the furnishing process from start to finish, the steps you need to take to end up with a good design and to end up on time

The very first step, you need to know your avatar, right? So in Orlando, Florida, we’re not furnishing for working professionals staying at a property. We’re furnishing for families because they’re coming to visit the parks.

That’s primarily what they do. In fact, seventy-five million people a year come into Orlando to visit the parks. It is the number one tourist destination in the US.

So that’s the first thing. You need to make sure you understand who you’re furnishing the property for. And remember, as an investment property, you’re not furnishing this for yourself, right?

So your personal likes should not be part of the equation.

So step number one, you need a plan. And the plan when it comes to furnishing a property is creating a floor plan. Luckily, that is way easier to do than it ever has been. And no, you don’t need to go out and pay thousands of dollars for an interior designer. There are lots of affordable options.

You could sign up with Wayfair Professional, for example, which is a free program. They have lots of furniture there, and they will help you create a design specifically for your property. Today with AI, you can simply take images of your spaces, go on ChatGPT or go on Gemini or Claude and ask for professional interior design assistance and have the AI put in photos of actual furniture in your space so you can visualize it. Of course, you do want to know the dimensions. You don’t want to put a really large couch in a small space, for example. You don’t want a really tiny rug in a really large space. And so all those things are important.

But today with AI and all of our resources, coming up with that plan should not take you more really than a couple hours.

After you have your plan together, you’ll need to decide if you wanna make any renovations. We don’t wanna be renovating the property after we have the furniture in, right?

I’ll talk about a few of the renovations I made with this property, but just a couple quick tips. Remember, we’re looking for durable, wear and tear-friendly items, right? So if you’re changing the flooring, make sure you don’t go with some sort of soft hardwood or carpet or anything like that. Vinyl plank or tile, those are gonna be your best friends to withstand the test of time.

You wanna use stronger paints like satin finishes or semi-gloss,

And you wanna make sure that you allocate enough time. A lot of times when we do renovations, they always tend to take a little longer than we expect.

Okay. With your plan out of the way and with your renovations out of the way, now you can start to order furniture, and there’s lots of resources where you can do this much easily. All right. With your plan out of the way and those renovations out of the way, now it’s time to start ordering some furniture.

Of course, you could be ordering furniture and storing it in a place like the garage or if you have a place to store it while you’re finishing those renovations, ’cause it does take some time for furniture to arrive. But the reality is today, it arrives way faster than it ever has, and there’s lots of sites that can facilitate the whole process.

If you go way back to episode 225, we did an interview with the founder of a company called Minoan, M-I-N-O-A-N, Which is a site to help you furnish your property. It goes out to all the biggest and best furniture providers, organizes it in one place, helps coordinate the shipping, just makes the whole process easier

If you’re new to the show, well, thanks for joining. You can catch all of our prior episodes at strriches.com. We literally have hundreds. We’ve been doing this for a long time, and we also have a lot of free guides and e-books to help you out along your short-term rental journey, including the one that we’ve set up just for today’s episode, which is a complete furniture checklist, spreadsheet, and everything that you need to know about furnishing your short-term rental.

If you want a copy, you can get it for free. You can grab it at our website or you can grab it in the link down below.

So a company like Monon’s going to help. Of course, you– if you’re handy with AI these days, you can also have AI help you. You could go on Perplexity, for example, give it a list of items that you want, and have it do your shopping for you.

But if you want to go the old school way, I guess you could say, well, jump on Amazon, jump on Wayfair, jump online and most furniture items are available pretty quickly these days.

With your list of furniture all together and your items ordered, well, then you’ve got to put it together. That is the next step.

Depending on the type of furniture you purchased, stuff that comes in a box is going to be a little cheaper than stuff that comes already built together. A lot of times the quality is going to be cheaper as well, but not always. There’s lots of great products out there. A lot of people curse about Ikea, but I think they happen to have some really good products as long as they are put together well in the first place.

So you need to make sure that you allocate enough time for this. Hiring a handyman or hiring someone that’s put a lot of furniture together will save you a lot of time, but of course, that’ll increase your budget as well.

Make sure that you leave some time for all the finishing touches like curtain rods and wall decor and all those types of things because the little details are often the things that take a lot of time. But regardless the size of your property, if you have a plan in place and you have all of your furniture items ordered and all your renovations are out of the way, you can get basically any property furnished within a week.

Yes, the larger it is, the more help you need, but the more time we give ourselves to accomplish a task is usually the time it- That it ends up taking, right?

Of course, if you don’t have all the furniture items in place or you’re waiting on renovations, then this whole process can go from what might be just a few weeks to a couple months or even longer. It depends on your renovations. One big tip, pro tip, things that people always forget about is you’re going to have a lot of cardboard at your property.

My recommendation, what we did for this property, we ordered a dumpster. Now, we happen to be doing renovations, and so the contractor needed a dumpster already to get rid of all the old tile. But you’ll see the pictures here. We filled this thing with cardboard from all the furniture, all the consumable, all those linen packages, everything.

There’s way more stuff to dispose than you probably think of if you haven’t done this before. Ordering a dumpster makes it really easy. You don’t have to stuff stuff into a trash can. You don’t have to go find a place to dump it. You just put it all in the big dumpster.

Someone comes and grabs it and hauls it away.

All right, so that is the process in a nutshell. And yes, the time it takes can vary greatly depending on the type of property, the renovations you’re doing, all those things. But let’s get into my actual property, real-world example that I just completed. It took about a month, and this was not with me doing this full-time, right?

This is basically doing this in the evening hours and on the weekend.

I did, of course, have some help, and I have, of course, done this lots and lots of times before.

So real quick, the details on the property. This is a four bedroom, two bath. It’s about sixteen hundred and twenty-five square feet. It was built in nineteen ninety-two. This is actually in Davenport, Florida, which is an area where lots of tourists stay in short-term rentals because short-term rentals are permitted in this area, where they’re not permitted in most of Greater Orlando.

There’s a lot of reasons why I purchased this property, but I don’t want to get into all the investment side of it today. If you want to hear about all the reasons why I purchased a property in what’s arguably the most competitive, uh, short-term rental market in the US, well, I’d be happy to do another episode on that.

Just leave a comment down below and let us know

So as I’ve already mentioned, Orlando is a big market for families. Again, you gotta remember and know who your guest avatar is. But there are literally thousands of properties in Orlando that are pretty much the same. And yeah, they all have theme rooms. So if you also have a theme room, are you standing out?

Not so much. So this particular property I was really attracted to because it is a little unique in the sense that it has some private lakefront access, and it has a large lot, almost a half acre, which gives a lot of flexibility for creating a- an outdoor experience in a place where most of the homes are very cookie cutter.

They look basically identical.

Now, we didn’t have time to really fully design the backyard while we were there, but it does leave a lot of opportunity in the future.

I talked about the couple little theme rooms that we did, one for, one for the boys, one for the girls. One’s pink, has a bunch of flowers and castles. The other one is a dinosaur-themed room with lots of dinosaurs and stuff like that. I think they turned out pretty well, especially for the amount of money that we spent on them.

So how much did I actually spend on this property? How much does it cost to furnish a property in today’s world with all the inflation and things that have been happening?

Well, I’m gonna read off my list here, and then I’ll break it out a little more in detail afterwards. So in terms of furniture and decor, spent $18,903 on the property. If we break this out on a per square foot basis, then it was roughly $12 a square foot.

Now, this didn’t include linens, and remember, you need quite a lot of linens. You need to have extra sets.

So in our case, we have three sets, and this is what we recommend to everyone. You have the set that’s there in the furnished property, the towels in the bathroom, the sheets and the linens on the bed. Then you have a backup in case something gets stained, and then you have the set that the housekeeper can use to change the moment they get there.

So if it takes a long time to wash all the linens, they don’t have to hang around waiting for the washer and dryer to finish. Worst case scenario, they could take it with them, and all the beds are ready to go for the next guest. So we had three sets of everything.

We actually went a little further and bought lots of extra towels and hand towels because those are things that are going to get stained. For linens, we spent $2,374. This was about 6% of the total cost. And then for startup cleaning and consumable items, we actually spent quite a lot there as well, $1,676.

Now, this did include some supplies for the housekeeper, and so it depends on your housekeeping setup. If they’re providing all the supplies, then this part could be lower for you.

This also included a steam cleaner, vacuum, things like that that we want at the property to make sure if something comes up, we’ve got some quick and easy ways to make it clean.

All right, so all in with furniture, linens, consumables, startup materials, about $23,000. Now, this didn’t include the renovations, which were about another 18,000. We didn’t go wild on the property, but we did change a lot of flooring out to tile.

We added some new baseboards, and we added some new paint to the living areas. Uh, I think we got a pretty good price.

Before we even got started on this, we asked for referrals, and our realtor gave us a really good referral for a Brazilian contractor that’s living there in Orlando. Side note, there are tons and tons of Brazilians in Orlando, and so it helps to be able to speak Portuguese. I think we were able to get some pretty good prices on all of our renovations, the light renovations that we did do.

So grand total out the door, $40,983. Now that also included $500 that we spent on photos. We got drone photos, we got evening photos, and that costs a little bit more money, but remember, we need to make sure that we’re standing out.

This also included the home automation devices like a Schlage lock and Reolink cameras. We installed a Sensi thermostat so the AC and heat can be controlled wirelessly. And then we also installed a Wi-Fi power switch for the pool heater so that the heat on the pool can be turned on and off when there are no guests there.

The renovations and improvements budget also included about $2,500 that we paid to a handyman to help us, basically just by the hour. Again, this is a good way to build a relationship with people there on the ground that you’re going to need going forward as well. So I highly suggest, even if you want to put everything together yourself, that you hire some handyman around town that preferably live nearby to help you with just a few tasks so you can build that relationship and you have someone to call on when you need them.

So those are the numbers on my recent renovation and furniture budget. I will say that you could easily have spent twice as much as I spent. You could have easily spent twice as much time or three times as much time if you didn’t have a plan in place, and of course, if you weren’t getting help from other people.

And so there is a big range here. I was at a conference recently, and there was some designers there that fly out and furnish other short-term rentals. They handle the whole process, but their quote was about twenty dollars per square foot. So imagine four thousand square feet. The bigger your home gets, the more those costs go up.

I spent about half that, and the proof is in the pudding, right? The property’s up, it’s renting well.

Based on my projections, it’s right where I thought it would be, and one of the most important pieces, the guests are loving it.

So a couple quick notes just on furniture, and then we’re gonna talk about how to track the financial side of furnishing or renovating a new property because there’s a lot to track there. Make sure that you don’t cheap out on your beds. I’ve already mentioned this, but it’s a place where people spend most all the time.

I’ve already mentioned this, but this is where people are spending an incredible amount of time, and if they don’t get a good night’s sleep, well, they’re not gonna leave you good reviews either. If you can, see if you can spend a little bit more on the master bedroom or master bedrooms because the person that made the reservation is very likely staying in that room.

Save on decor and those art pieces. That’s one place where you can spend a ton of money, but it doesn’t really have a big impact.

Uh, when it comes to linens, make sure you use all white linens, make sure you have some backups. Okay, let’s get into how you can easily track all your finances now today, and actually not even just your furnishing finances

What is a tip? Well, it’s to use AI. I know I talk about this all the time, but specifically Claude has some really awesome tools for tracking finances, and it can do a really good job at it. I mean,

You can literally just give it all of your credit card transactions, all of your purchases, all of your bank statements, give it some notes, let it know that you are furnishing a property, ask it to categorize all of that, and then it will break it down just like I broke it down for you today.

You want to make sure that you’re saving receipts for all these, right? These are tax write-offs. And if you have some receipts that don’t show up on your credit card statements, well, you can easily scan them with your phone now. You can give all those PDFs to an AI tool like ChatGPT or Claude, and they can read and take all the information off the receipts for you.

This is also helpful because when items start to break, and they definitely will, then you have an easy reference to go back and find them. You can just search through what AI has already categorized and cleaned up for you.

So that is a wrap on the whole process. I hope you found this helpful. Again, if you want to see the investment reasons for this property, then let me know in the notes below or the comments below. I’d be happy to do a separate episode on that.

Well, furniture isn’t just a cost. It is literally a direct revenue driver.

No matter what type of short-term rental you’re furnishing, having a budget, having a plan, those things will all greatly impact the amount that you spend, the amount of time that it takes, and the ultimate design, which is going to impact your occupancy, your guest reviews, and your overall revenue

So make sure that you are spending with intention. I hope this episode gave you some good insights for your next project. Until next time, I hope you have a fabulous week

​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.

​Most STR owners, operators, investors focus a lot on the photos of their property, the design, the amenities, their pricing, hopefully. And their housekeeping connection, but they don’t focus on the housekeeping organization and the actual operation as much as they should. And we all know that you can have the best property in the neighborhood, but if you start getting bad reviews because of cleanliness, well your revenue will certainly drop.

So today we’re diving more into housekeeping, how you can stay organized and the things that you need to consider working with any housekeeper.

Welcome back to the Short-Term Rental Richest podcast. I’m happy you’re here again.

After all these years in the short-term rental industry, one thing remains the biggest predictor of your guest reviews. That is housekeeping and your property’s cleanliness.

Small changes in your cleanliness score or your review score translate into massive differences in your revenue. I’ve gotta say that again. Small changes in your review score because of cleanliness, the number one culprit. They translate into massive changes for your short term rentals, potential and revenue.

We see in markets across the nation that the worst performing property can be earning three times less than the highest performing property with the same size property, the same size amenities, and most of that is attributed to reviews.

Now a lot of you have good housekeepers or you have good help that have the potential of ensuring that you never have bad cleanliness reviews, but you’re maybe lacking some of the organization or you maybe haven’t set the right expectations upfront with your housekeeper.

So we’ve talked about finding housekeepers before. Actually, that’s been a recurring theme throughout the last six years of this podcast because we know just how important it is. If you go back to episode 243. We have some great ways for you to find a housekeeper, but I’ve also got a new one for you because I just found a new housekeeper for one of my personal properties, and I gotta tell you, it didn’t take more than just a few minutes.

So here’s what I did. I went to Perplexity. Perplexity is an AI tool similar to chat GPT, or similar to Claude or Gemini. But it does a really good job at sifting through online websites. And I simply asked, where can I find a housekeeper in Davenport, Florida? That result.

Pulled up a Facebook forum, great place to find housekeepers and referrals. There was already a post there, someone looking for a housekeeper in Davenport, Florida. I simply copied it and reposted it with my contact information, and I got so many leads, I just couldn’t believe it. I actually had to take that post down later in the day.

Instead of include my contact information, , I included a Google form on there with some really important questions that you always need to be asking your housekeepers.

We’ll make sure you have a link to that Google form in the show notes here. But we’ll also be reviewing it in just a few minutes.

I wanna make a case for hiring your own housekeeper versus using a company. Now, this isn’t across the board. This isn’t a hundred percent, but there is a correlation in cleanliness, reviews, working with smaller providers. Versus working with bigger companies. And I’ll give you just one big example. If you are working with a property management company, a large national property management company, they exclusively work with large companies, right?

If it’s not in-house, because they need more staff, they need more backups.

But a couple challenges that come up working with companies is one, if it’s not the same person going back to your property each time, then they don’t really know if some little details are outta place. If the copy. If the coffee table was supposed to be on that side of the couch versus that side of the couch, they don’t have that eye like a individual housekeeper or a small team would have if they’re the one consistently seeing your property, and they also don’t feel as strongly about your property.

When we work with smaller housekeeping companies or individuals, they actually grow a, a sense of ownership with our property, right? They’re there, they’re the ones cleaning it, and they take pride in that.

So if you have a different person going back each time, that level of detail is a lot of times just not there.

The other thing that happens with large companies is that some of their housekeeping team. Maybe it gets overworked. If we think about it. We’ve got, most of our checkouts across the nation are usually on Sundays. Mondays, you know, people staying on the week. And of course, it really depends on the type of property.

If you have a business property, for example, well then it could be all during the week.

But the more units a property manager adds, the more housekeepers they need to add and the more systems they need to have in place to be able to coordinate that. Now we’re gonna talk about some of those systems, and I don’t wanna say that this isn’t doable, but I just want to give you the reality, the the correlation between negative reviews.

And really large housekeeping teams, and I think we can see that pretty easily if we go to tools like Air DNA and we look at some of the nation’s largest property managers, uh, like Evolve Vacation Rentals, or Red Awning, or Vac Casa, what now is Cago, right? They have really bad reviews across the board.

And as we mentioned in the beginning of this episode, the number one culprit for bad review is cleanliness.

So I already made the case for hiring smaller housekeeping teams. Or individuals, of course with the backup, they take more pride in their work, they notice more of those small little details if something is outta place, and that all leads to better reviews and it also leads to a better relationship with that person, right?

You’re in communication with them much more often than you would be a larger housekeeping company that’s got various people coming in and out. And I’m happy to say that one of the very first housekeepers I ever hired over a decade ago, over 11 years ago, is still working with me today. She still helps clean some of my short-term rentals, but she also manages all the other housekeepers for my portfolio in various cities.

And so if you’re working with an individual, you have these sorts of opportunities as well.

So if you don’t have your housekeeper yet, make sure you go back and check out episode 2 43 if you’re in the process of hiring them. Well, I promised I would give you my questions off the Google form, so here we go. This is certainly not a hundred percent comprehensive. I didn’t wanna scare people off by having too many questions, but these are the most important ones.

The first one is their preferred method of contact. So sometimes that’s on WhatsApp. A lot of times it’s just normal text message. Phone call, whatever it happens to be. Our team uses Slack on the backend. You want to ask them how big their team is, or is it just them? Are they just an individual? Do they have backup?

Do they allow for same day turnovers? How far do they live from your property? And now I’m not asking this question. To find out how close they are in case there’s an emergency they need to run back, although that’s helpful. But the idea is we have things organized beforehand, so those situations don’t arise. I’m asking this question because I wanna know how realistic it is for a housekeeper to want to come to my property every day if they’re 45 minutes away, but then there’s traffic sometimes and it takes ’em more than an hour to get to my property.

Well, they’re less likely to want to continue working for me than someone down the street, right? So ideally they don’t live too far away. And also, just a side note, most housekeeping salaries are not like the upper echelon. You know, they’re not high income earners, so sometimes they might have car troubles and repairs are really costly. So the closer they are to the property, the less they have to spend on gas, uh, and the more likely it is that they’ll stay with you for a really long time.

Do they include cleaning supplies in their charge? This one is of course, negotiable. If they do, what do they include? Sometimes cleaning companies include everything. Sometimes they include nothing. Do you have a problem cleaning up after pets? So this is important.

Not all housekeepers like to clean up after pets. Uh, if they don’t have a problem, how much more would they be expecting to charge? Now it’s my recommendation, especially if you have a lot of housekeeping options. Maybe you used one of the methods. That we mentioned in the prior episode, or by searching online these days, if you have a lot of options, you can know pretty quickly what the going rates are in your market, and I think it’s better that you set these rates.

You know, if your rate to clean your house was $200 and they say they’re okay with pets, then you say, great, we’ll be happy to pay you an extra $30 per visit. Keep in mind, we don’t allow more than two dogs.

We don’t allow cats and uh, they’re not over this certain weight size. So the more you can offer up front, the better. But of course, it is a little bit of a negotiation.

You of course need to know how much they’re gonna charge for your size of property,

and you’ll want to know how much notice they need in order to clean your property. If you’re someone that gets really last minute bookings and they’re not currently on the schedule, you don’t wanna block your calendar. Because you’re waiting for housekeeping. And so if this person is not available with short notice, then you need to have multiple options and you need to let them know that upfront.

If someone’s not available, then you’re gonna go to someone else, but you would prefer to build a long lasting relationship and work primarily just with them.

Okay. So with a housekeeper in place and with some good expectations in place, it’s really important that we manage the turnover properly. And now there’s a lot of tools out there these days that help you create checklists. There’s one called Turno that a lot of people have used. We personally use breezeway.

We create a custom checklist for every property. We require photos before and after,

and then we also take it a step further. We let them know that if a prior guest mentioned something during their stay or after their stay, or it showed up in the review, we’re gonna grab it from any of those resources and we’re gonna include that item in their next checklist. And sometimes this just pops up in the private feedback, right?

Maybe the guest checked out and they said, Hey. Love the property, but you might want to check under that guest bedroom one more time. There’s a couple little dust bunnies there. Well, we’re gonna transfer that over to our housekeepers so that they know the next time they need to double check on that. And again, this goes back to working with smaller companies or individuals versus larger companies.

Uh, of course this is helpful for anyone, but if it’s a smaller individual, they’re gonna take a little bit more pride in that and they’re not going to forget those dust bunnies again. The other thing that we do is we let them know upfront that we’re really transparent with all of the reviews, both good and bad.

So it’s always nice to receive positive feedback, right? We want to show them that we want to send it over to ’em and we do. So if there’s something that mentioned cleanliness specifically, we’re gonna send it over. Uh, and that is a feel good opportunity, but we’re also gonna send the negative feedback, which is really crucial.

And I would say if you have a housekeeper that has the same issue three times, then you need to start looking for another housekeeper.

Of course, it depends on how long they’ve been working with you, right? Uh, if there were three times back to back, that’s much different than three times over the course of three years, right?

But the more often these issues are happening, even with all the feedback, then the quicker you need to be looking for a new team member.

Remember, poor cleanliness is the number one culprit for a bad guest review, and you cannot afford to have negative reviews back to back because of cleanliness. It will lead to a massive loss in your revenue, and it could even lead to you needing to redo your listings entirely and start from scratch.

So make sure to set these expectations up front. I know a lot of housekeepers don’t like technology, but the reality is it’s not hard to use these applications. If we go back to my manager that’s been with me for over a decade, she was very resistant to using breezeway, which we currently.

But I would tell you that now she could not live without it. It shows them the schedule very cleanly. It keeps everything organized, and it really only takes a few minutes for them to understand how to use it. Uh, breezeway also has different languages, you know, so if you’re working with someone that speaks Spanish.

Then you could do that as well. So highly recommend using a tool like that. If you don’t want to handle any of this, well our team at Cosley would be happy to do it for you. We already have all these processes in place.

You can reach out to us@strriches.com. There’s a little partner with us Button, and everyone on the team at Corley would love to partner with you.

Okay, just a few more expectations. So you’ve already negotiated your rate with your housekeeper. You’ve included other potential rates for a pet, for example. Or maybe if the property is really dirty, then you pay them an extra amount. But I would leave those to a case by case basis because the reality is sometimes guests leave the property really clean, uh, and then sometimes they’re not so clean.

So it really does average out. In the middle, right? And you don’t wanna set the expectation up front that you’re gonna be paying more for every little thing.

Another thing in regards to payment is the actual time timing of your payment. So how often are you going to pay your housekeeper? How are you going to pay them? There’s lots of easy a CH transfer options available with online banks today. We use a bank called Mercury. There’s another one set up for real estate called Base Lane.

If you’re using Turno, well then they’ve got that built into their system. They do charge a little bit more for that, and turnout does require that you’re only working with housekeepers in their network. Right? And so it can be a little bit more expensive, but it can be a good option as well.

So how often are you paying them? I personally pay all of my housekeepers every other Friday

how are the supplies handled on the property? If you’re responsible for that, do you have a locked cabinet? That’s what I would suggest. They sell these little digital door locks now that just replace the knob. It’s not like a deadbolt, like the sage lock, but it has a little code right on the doorknob that you can easily set for your housekeeper to get in and out.

That way, no one needs to hold any keys or potentially lose keys. Another option these days is Amazon and Amazon ships really quickly. Now, depending on where you’re at, you could either ship directly to the property, have it ready when your housekeeper shows up, or it’s usually a little easier just to send to the housekeeper in advance and they bring it to the property for you.

Another benefit to working with smaller teams or an individual is that they can keep an eye a lot of times on the little maintenance. So maybe that’s just changing light bulbs, for example, or changing batteries in your door lock.

A lot of times they also have a preferred maintenance person that they like working with, or maybe their husband or maybe someone in their network is a handyman and they can do some of that communication for you.

So those are my suggestions for now. I hope that gave you some insight, and I hope that helps you out a little bit. I can’t stress enough the importance of having good reviews because it really affects your revenue. And again, the number one culprit for not having a good review is bad housekeeping or poor cleanliness,

and there’s multiple things that lead to that, right? It’s not just the housekeeper, but it’s also the organization and the expectations that you’ve set up front.

Your housekeeping team isn’t just cleaning. They’re protecting your reputation. They’re growing your revenue, and they’re helping you scale.

So take some action today. Audit your cleaning process and decide whether a direct hire housekeeper could be the best thing you do for your short-term rental this year.

Until next time, I hope you have a fab this week.

I just got back from the Level Up Your listing summit in Phoenix, Arizona. Some of the brightest minds in our short term rental industry space, some people doing exceptionally well. A lot of common themes throughout the week.

In this episode, I’m unpacking everything. The boldest strategies, the biggest themes, and the one theme in particular that kept coming up no matter which workshop I went into are which person I talked. In between sessions,

let’s jump into what people are actually doing at the highest level. Quick tips for you and your short-term rental portfolio. Let’s get into it.

The Level Up. Your listing is hosted by Natalie and her partner, Tatiana. Between them, they’ve got a lot of experience and different experience. One of them is a designer. One of them is an. Operator, an investor raising funds and operating some really successful short-term rentals. If you missed my episode with Natalie, you can go to her podcast, which is the No Vacancy podcast.

It was episode 1 76. There we talk about Corley, our company, and all of the things that we’re doing to operate are over 230 properties now in over 40 cities.

And if you miss the episode where I interviewed her, well, you can go back to episode 3 28 on the short-term Rental richest podcast, and you can hear more about the properties that they’re acquiring for three to 400,000 that earn annually $150,000. Make sure you check it out.

So between Tatiana and Natalie, they have an amazing following. They attracted a lot of really great speakers and sponsors and just attendance in general. There were over 300 people actively working in the industry, and as always, there’s lots of little good conversations that come up even outside the session.

So we’re gonna break all those down today.

This conference was set up a little bit differently than most the ones I attend. It was very designed forward and we know how important design is in our short-term. Rentals just happens that one of the hosts is actually a designer, so there were lots of presentations on the way people are currently designing today.

The outcomes that they’re getting with their short term rentals.

But let’s take a step back first and just talk about some of the big themes in the industry today. We’ve talked about ’em on the show before, but every time I go to a conference, it just cements them in and makes them more.

A lot of people out there today are earning less with their short-term rentals than they were a couple years ago.

There’s, of course, a lot of reasons for this. There’s way more supply than there has ever been, and competition is higher than it’s ever been. At the same time, guests expectations are higher than they’ve ever been.

But nonetheless, there are still operators that are doing very, very well owners and investors that consistently exceed the market. In fact, if we look at the numbers for any given market, there’s usually up to or even more, a 300% difference between the bottom earning property and the top earning property.

And I’m not just talking about a small, one bedroom versus a five bedroom. I’m talking about equal properties, competitive properties in the same style, same space that are performing drastically different than the others.

So that’s a major theme. There’s a lot of question marks with you out there just in terms of revenue management. We’re gonna get into that a little bit, but the reality is people are searching for ways to earn more with their properties, and that’s led a lot of people into creating. Properties that really are the destination instead of having a property that’s already in a destination.

And a lot of that requires some really good design helping you stand out. A lot of people have also taken it a few steps further and actually gone into the development arena where they’re building boutique resorts, Airbnb, resorts, glamping, you name it. It’s very trendy right now. Uh, and I would say that you gotta be careful with that because there’s just like a lot of people added short term rentals.

Well, there’s a lot of people adding these boutique type resorts, but they can be a really good opportunity.

And one of the opportunities that they have more so than sort of your typical vacation rental is they have more opportunity for branding because they are unique. And if you can build your brand, which again is one of the industry’s leading topics right now, how do we get more direct bookings and go away from Airbnb or VRBO and bring everything onto R Turf. It’s a, it’s a major, major theme today, and that’s one of the things that these boutique type experience properties have an upper hand on.

Okay, so we’re gonna jump into more depth in each of those topics, but before we do, I want to talk about how to find the best opportunities out there.

For those of you who haven’t quite taken the leap and jumped into your first short term rental, well, I’ve got a five step framework to help you get a little bit more clarity on that, and this was put together by Matt Sanderson, who runs STR iq. I’m excited to have him on an upcoming podcast in the near future, but what they do is basically break down all of your short-term rental options across the nation.

And help you identify which ones could potentially cash flow the most. Now, you don’t have to use their software. There’s lots of data sources out there, but theirs is specifically designed to help you uncover that property. But before you can even use one of these tools, you really need some clarity in your mind.

So five quick steps for you to help you find your next property or to find your first one. The first one is you need to ask yourself whether this is a hundred percent investment or if there’s going to be a personal. Component to it. Do you plan at staying at the property? Well, if you do, then that changes things drastically.

If it’s just going to be an investment, then really it comes down to the numbers, right? We look at all the numbers, we analyze them, and the numbers tell us where the best returns will be.

So number two, you need to define what Matt would call your buy box. There’s a few elements that go into this. One would be your cash on cash return. There are some markets that the purchase price is simply much too high to have a cash on cash return. The other would be your budget.

How much can you actually spend on this property? How much will you need to invest in the property to get it ready as a short-term rental?

A third element would be how far away are you comfortable operating this property? If you’ve been tuning in this show for a while, then hopefully that’s not something that discourages you. As you know, our team manages over 220 properties in over 40 cities and in multiple countries, and we’ve been doing it.

For years and years. So I hope this show has helped provide some of those tips for you to give you the confidence.

If you have been tuning in for a while and you haven’t yet left us a review on the podcast or a like or a subscribe on YouTube, if you’re finding the content helpful. Well, that really goes a long way, and I would really appreciate it.

So step number three. Hmm. Step number three, we need to verify with comps. And now we don’t want to just look at what the most potential in the market is, right? We need to be realistic. So the best way to do that is to pull comps, not just at the top tier, what we call like the 90th percentile. The properties are running better than all the others, but also at the 75th, and then the 50th percentile.

And the 50th percentile would be your average, right? If you had a hundred properties in the market. And you average out all their annual revenues, 50 percent’s gonna land you right in the middle.

Number four, you need to run the pro forma. If you haven’t heard this term before, it’s basically an analysis of the property and that accounts for everything, right? That accounts for what your mortgage will be, what your property taxes are, your insurance, your housekeeping fee, how often you expect to have turnover, your supplies, your utilities, all of the normal expenses and income that go into your short-term rental.

We’ve talked about this quite a few times. In fact, we have an episode specifically on proformas.

If you go all the way back to episode number 60 a long time ago, I know we talked about proformas and these types of analysis. You can also find a lot of helpful information on our website, attr riches.com.

So after you’ve run your analysis, the last step is to execute on the property, right? But we want to do this with confidence and one way to be more confident about a purchase is to talk with trusted advisors and talk with local professionals. So this includes your real estate broker.

This includes people in the area, property managers.

Your lenders, you need to know that, first of all, you’re able to close on the property, so always a good idea to talk to your lenders beforehand,

and I highly suggest that you find a broker that has some experience with the investment side of things versus a traditional long term. Versus a residential only broker.

If you wanna streamline a lot of that process, well you can head over to STR iq. They’ve got a lot of those steps in place for you.

All right. Let’s get into one of the biggest themes, biggest takeaways from the conference, and that was on design. There were probably, gosh, I don’t know, 15 different designers or companies. The whole thing was sponsored by Wayfair. If you haven’t considered Wayfair before for some of your furniture, I just furnished a property recently and we certainly got a lot of things from Wayfair.

So check that out. But before you go into designing your property, you really need to understand your avatar, right? Who’s staying at your property?

Designing for multi-generational families is much different than designing an inner urban city apartment for a business traveler.

You want to focus?

Here’s a few practical tips. If you’re designing your property or if you’re in the furnishing stage, focus on things that actually get used and not so much decor and things that are gonna get broken or maybe get stolen.

Anytime you’re purchasing something, keep in mind is this product going to perform well? So think the bed, the couch chairs, things get used regularly. But also, is this product or is this furniture going to photograph? Well, we know our photographs are really one of the most important pieces of getting reservations, and so it’s a great idea to know in advance what your top five or your heading photos are going to be.

These are the first photos that show up on Airbnb and all the listing sites and really put a little bit more money into what goes into the design for those photos.

Another practical tip, try not to really mix designs. So having an industrial with farmhouse or modern

Try to keep your colors somewhat consistent, maybe focus on three main colors. Of course you can add in accent walls and things like that, but if you’re walking into different rooms and the colors aren’t part of the same theme, then it just seems, it feels a little bit chaotic.

Another practical tip, if you’re going to spend more, spend more on your master bedroom, because we gotta think who’s booking these properties most of the time. Usually the parents, usually the person staying in the master bedroom, right? So make sure your linens are better there. Make sure that it’s more comfortable and that will lead to better reviews.

Another practical tip. I’ve said this a hundred times on the show before, but use white linens. Guests know that they’re clean, you can bleach them. There’s reason most all the hotels in the world are using white linens, and so should we.

Now those are some practical tips for design, but a lot of people at the conference were actually creating experiences with their properties. Versus just furnishing them. And now you gotta be careful with this because your budgets can go up extremely high. You gotta do your due diligence. Uh, and I would say this gets a little riskier.

If you guys have been tuning into the industry shows for a while than you’ve undoubtedly seen Rob Built,

he has one of the largest YouTube channels in the industry. I was fortunate to go to one of the houses that they designed recently in Scottsdale. After the conference, it was a bit of like a house party. It actually reminded me of like my high school days, but they had designed every corner of this property.

Bright walls, an amazing backyard setup. Of course, they did this knowing who their guest avatar is, but these things are not cheap. Right.

So even with an amazing design and truly knowing our guest avatar. There’s some foundational pieces that are gonna help us earn more money with our properties, right? And so let’s get into revenue management. The first thing is you have to set those expectations perfectly, and you have to have a good guest experience, which leads to good guest reviews, so you can continue to have visibility.

But with those things in place, it really becomes a story of pacing. How are you doing against the market? Are you pacing ahead or are you booking ahead of the market? Are you booking after them?

If you’re using a tool like Price Labs or Wheelhouse, then this is data that’s readily available. Of course, you need to be monitoring it closely and you need to be looking at not just this month or next month, but really your whole booking window as far out as you need to go, where people are actively making reservations.

Now if you’re booking up equally with the rest of your market and you’re in a market with lots of data, well

your historic bookings can help act as a guide, but they certainly don’t tell the future, right? We know a lot of markets have seen a lot, a big increase in supply. So the ideal thing is to have a a range in your pacing.

For example, if you’re 5% behind the market or you’re 5% ahead of the market, maybe that’s the range that you look at to decide if you need to adjust your prices or not.

I know this gets a little complicated, and again, we’ve done a lot of episodes on revenue management in the past. If you’re looking for help with your revenue management and all other aspects of your short term rental, well our team would be happy to help you out. You can head to st riches.com.

There’s a partner with US Button. I’d love to jump on a call with you personally, talk about your property and see if it makes a good fit.

All right. Moving on to branding. I know this has been a really trendy topic in the industry lately. Most all of the PMS programs out there today are offering direct booking websites, and they’re also improving them at the same time because people are trying to move away from the heavy commissions of Airbnb and booking.com, the 15 plus percent that you have to pay each time someone makes a reservation.

But getting direct bookings isn’t that simple. The more unique your property is, the easier it should be, but there’s still a strategy to it.

So I’m just gonna run through my notes. This was a presentation done by Ben Wolf who was getting amazing results with his short-term rentals. A lot of them were set up very unique properties again, so they lend themselves a little bit better to social media and capturing demand. His big point was that our direct booking engines are for capturing demand, but social media is actually what creates it. So of course you can do that across Instagram, Facebook, YouTube. There’s lots of avenues today,

but it’s not something that happens overnight, and you do need to put in a lot of effort.

You’re going to need to experiment a lot. And there’s lots of other YouTube channels out there that talk about social media marketing.

And it can get really detailed, right? Identifying your conversion rates, how many people are visiting your pages, how many people are going to your direct booking website, seeing it. If they’re not booking, why are they not booking? So all this is is pretty similar to the way it is on Airbnb, right? If you pull up your Airbnb listing, you can see that there are views.

You can see how many people viewed that page. You can see how many people clicked on it. You can see how many people actually converted. And so when we take that off Airbnb, and we do that on our own, there’s a lot that goes into that. Again, the more social media you have, the better the content. The higher the chances, you’ll drive more traffic to your website.

And then once you’ve figured that out, depending on your property, you can go as far as creating paid ads. If you have a very high priced a DR or average daily rate with your property, and you’ve figured out some of the social media marketing to drive traffic to your website, well then you can calculate pretty easily.

What your paid ad spend is returning.

So there’s certainly a lot that goes into this. This is something our company is exploring as well, and as we get more deep in the weeds, we’ll surely be back here with more tips for you.

One last little quick section for any of you out there that aren’t in a great position with your short-term rental, another opportunity.

This is actually one we talked about way back on episode 257 and that’s pad split. If you’re in an area that has a ton of competition, you don’t have a way to stand out, or you’ve identified that you can’t invest more into the property and expect to earn a lot more, maybe by creating a really unique experience, or maybe by investing in social media or investing in new photos or whatever it happens to be.

Well, you could look at pad split where you still have your furnished property. Larger homes are gonna do better, six to eight bedrooms.

But this is a way to have midterm reservations. I think their average guest or midterm tenant is staying for six months plus buy the room. Right? Earn more than you would as a long-term rental, and potentially more than your short-term rental is earning right now.

So that’s a wrap for now. I hope this gave you some insight into where the market’s at. Really today. We’ve talked about these things before, but it is the reality. People are. Investing in design. They’re investing in unique experiences. They’re investing in social media marketing to drive more direct bookings and more demand, and they’re really honing in on their revenue management.

Until next time, I hope you have a fabulous week.

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.

If you’ve been tuning into the show for a while, will you know that I’ve been investing in a project in meting Columbia, been building a boutique hotel resort for the last three years, and I’ve been teasing at some of the details.

Well, today I want to give you some insights, pull back the curtain and talk about some of the opportunities and some of the risks. ’cause I’ll tell you, it has not been a smooth ride. But there is light at the end of the tunnel.

So for any of you considering a new construction project or considering investing in a foreign country, well, stay tuned and welcome back to the short-term Real Richest podcast.

Well, you know what they say no risk, no reward, right? Well, I don’t think it’s any different. For a foreigner investing in another country, especially on a new construction project. So today we’re talking about my boutique hotel resort project in Meine Columbia that I’m currently building with a partner.

I am excited to say that we’re very close to launching the first units, but it has not been without a lot of struggles.

Lemme start off with the pros, the reasons why this project was appealing. First of all, I’m no stranger to Columbia. I’ve been going there for the last 10 years. I purchased my first property there back in 2017, where I lived pretty much year round for several years.

A lot of things have changed since then, and I now spend most of my time in Brazil, actually. And so this project is happening from a distance. But we do have a really good team on the ground. So some of the pros that attract, I mean, first of all, I was familiar with this area. I knew all of the market because I’m a real estate guy and I can’t help just understanding the local real estate markets, especially where I’m living.

And so I did see a lot of opportunity.One of the things that has been obvious is the amount of tourism coming into Columbia. Millions and millions of tourists are coming into Columbia and specifically ine each and every year. A lot of them from the us, a lot from Canada, a lot from Europe. You name it all over the world, people are showing up in Columbia because it’s a beautiful country and there are beautiful people there, And the cost of living for most of you, living outside of South America is considerably lower

Well. If you’re a US citizen, like most of our audiences, although we do have listeners in over 125 countries, so want to thank all of you for tuning in over the years. It’s been a fun journey. Uh, it’s definitely had its ups and downs and we’ve learned a ton, but we’re sticking with it and we know that professional operators in this space will continue to prevail and that there’s a lot of opportunity left.

So that’s the first thing. This market has more people visiting it each and every year, and it’s been like that since the last 10 years where I’ve personally been visiting the property now as a US citizen that earns most of my money in US dollars. The US dollar has also been at an all time high over the last few years.

Yes, over the last year. It’s come down considerably. And this is one of the risks with investing internationally.

But while your dollar is high, that means that if you’re buying construction materials in Columbia, for example, that it’s actually costing you less because they’re not adjusting their materials based off what the dollar’s valued at. Right? It also means that labor costs are less, even though labor costs are drastically lower in South America than they are in the us.

Another one of the reasons why I got excited about this project.

So strong demand, strong dollar and strong revenue potential because these short term rentals we’re building 20 are going to be rented to foreigners that are used to paying in dollars. So we’re actually able to build in Colombian pesos construction materials and run our operation using Colombian pesos, But many times receive reservations priced in American dollar prices.

But before we get into too many more details, let me start off by saying that I would not recommend an international investment for someone, first of all, that isn’t familiar with the country, that doesn’t speak the language, and that doesn’t have a local team to help accomplish the project that you’re set out to do.

I have a partner on this project. He’s lived in Meine for, gosh, I don’t know, 12, 15 years. He’s already worked with the same architect that’s building our project, and our architects also built other successful projects in the past, which I’ve personally visited. And so I had a lot of trust going into this deal before I got started.

If I didn’t have that team on the ground and I didn’t live in the area, well, I definitely wouldn’t have ventured out on this project

I know for a fact that my favorite thing in life is not to manage. A construction project. Uh, and so luckily we had a great person on our team that’s been helping us and has helped us through these last three years.

As I record this today, several years later, the US dollar has gotten considerably weaker. I did a podcast episode, actually, if you go way back to episode 79, where I purchased a property in Brazil. That was almost about five years ago, and that was at that time the highest exchange rate between the US dollar and the Brazilian real almost in history.

So I really lucked out with that one, and I’m happy to say that project has gone really well. That’s a property where I personally stay a good part of the year, and that city BA has grown to be the highest cost per square meter in all of Brazil.

So I really lucked out with that one. Of course, I don’t earn money back on appreciation unless I actually sell the property. Right, and I’m still living in it. But it does create some more opportunities, so just keep that in mind. The opportunity to have the exchange on your side can also go the other way.

So if you’re interested in purchasing a property internationally, you can go back and check out episode 79. I talk about a lot of the basic, fundamental things that you’ll want to keep in mind when looking for a property, working with a lawyer. All those sorts of fun things. But for today, let’s get back into the Metagene project, and I wanna talk about the supply and demand because just as all of the tourism has been growing really rapidly in Metagene, it’s also attracted investors.

And so we have new hotels entering the city at an incredible pace. There are literally thousands of units being added to Metagene for short-term rental approved buildings. And now if I rewind back three years ago, this was not as prevalent and the regulations were also ticking up. So a lot of properties in the area were getting pulled off the market.

So just as we’ve seen all across the US, as supply goes up. Well, if demand is not keeping up, if there’s more options, then prices go down.

So we always gotta keep an eye on supply and demand, and if it’s a new construction project with a really long timeline. You need to be prepared for that now, I feel really lucky because this project, this boutique resort, is very unique. It’s not a traditional hotel style setup. It’s not a tall building.

Actually, there’s three different designs on this lot. So the, the lot itself is a hectare, which is a little over two acres, and it’s situated right on the side of the mountain with a beautiful view of the city, 20 minutes or so from the airport, but also a quick Uber ride to some of the areas best restaurants and most trendy neighborhoods.

For those of you catching the video, we’ll make sure to put lots of images and videos of our progress and the construction over these last few years in the background so that you can follow along.

So this project is unique for multiple reasons. The location for sure is unlike most locations in all the city, you get the peace and tranquility while being basically in the city, and that is not very common.

The other thing is the actual design. And so our architect has done an amazing job. He brings a lot of nature elements into the project, and I observed this in his last project. For any of you that have maybe visited Meine, he built a beautiful project called Bosco out in Guap pe.

That’s this place that has all these beautiful lakes. And a lot of people visit when they come to Metagene for the first time. So I, I’ve seen his work before. And he’s brought that to our project as well. And so for our first phase of rental units, they’re sort of like cabanas, but they’re luxurious. They have kitchens, they have laundry, they all have jacuzzis overlooking the city.

And this is a type of property that really just can’t find

and so while there’s lots of supply coming onto the market, I do feel very confident that these properties are gonna do well because, and we talk about this all the time on this channel, and they’re going to stand out.

Now, getting these first eight units up, which are almost complete now, almost three years later was not that easy. There was a lot of struggles along the way. In fact, when we first bought the lot, which was about 3.25 billion pesos, and before you go out screaming and saying, Tim, this sounds absurd.

Billions of pesos. That’s not as much as you think. Yes, it’s still quite a lot. Depends on the exchange rate, but roughly $800,000 for these two acres. Remember, this lot is in town. It’s in a prime location, so it is likely more expensive than you were imagining.

And while I do know that I am an expert at all things short-term rentals, I’ve literally lived and breathed short-term rentals with my portfolio and taught about it on the show for over a decade. I don’t have an exact number of how well these properties are going to do because they are unique and because supply is changing every month.

So if you were to look up Air DNA, yes, it’s helpful. It gives you some good insight. But what we’ve done is basically come up with a range, and I expect these properties to rent anywhere from 150 to $350 a night. Obviously, that’s a big range. And so if you’ve got a project out there with a big range like that, you need to be comfortable with the conservative side, the $150, in which case we are with this project.

Now, there was a lot of infrastructure that went into this project. There was no sewer, there was no water, there was no electrical. And to go through the permit process and the licensing, we had lots of hiccups because this was a agricultural lot zoned commercially. We purchased it with an existing license.

Hoping to modify the license. That’s what we were told. And long story short, we weren’t able to do that and it took us about 18 months to get a new license. And so again, just like in the US new construction projects can take a really long time before you even start building because of the planning, because of the infrastructure and that infrastructure is also costly.

So at this stage of the game, we’ve got almost eight units built. We have an entrance building, which is very lovely. It’ll have a 24 hour security person. It’ll have reception, it has backup electrical. It has a spot for our it, it has a laundry facility. We have eight cabanas up and we have the infrastructure for the whole lot.

And we’re into the project almost about $2 million. Now, of course, the, the exchange rate has been fluctuating over the last few years,

but up until now we have had zero return. So you better believe, I’m excited to get these first units up and going. If we look at the cost of the actual units themself. They’re around $65,000. Now, you’ll see in the photos, these are unique properties, and if they rent for on average $200 a night at maybe a 65% occupancy, these eight units should bring in almost around $400,000 a year.

That is, of course, before expenses, but remember, labor in South America is a lot cheaper, so we’re really just looking at electricity, utilities, and some light supplies. 

Now, because of all the infrastructure, the time this took, the licensing, if you look at those numbers today, and mind you, this is all cash because as a foreigner it’s not very easy to get a loan outside of your. Your home country, if you look at those returns right now, they’re not that great, but they could be as much as 20% per year.

And again, that is not considering a loan. So if we were able to leverage the project. That return would go much higher. Now, where our opportunity lies is that we already have the licensing. We already have the infrastructure for 12 more units. So you can see our potential return can go up massively from here.

Now, a cool thing about this lot as well is that we have it licensed for a restaurant, and I am not a restaurant entrepreneur. I don’t know much about restaurants at all, but fortunately. I do have a partner that already has a restaurant, and I’m excited for him to bring in his expertise and for me and our team to bring in our expertise on the operations.

If you’re new to the show and you’re looking for help operating your property, well, my team and I have managed properties in over 40 cities and yes, in various countries. You can check us out@triches.com or our company website, which is corley, C-O-R-Z-L y.com. There’s a partner with us button up there.

We’d love to schedule. Quick call, see if your property makes for a good fit with our team.

Okay. So those are the basic numbers. There’s a lot of opportunity for this property. It is truly unique. And so I’ll be reporting back maybe in another six, nine months, let you know how these first units are going and how the new construction is coming along.

I don’t wanna say any of this has been easy though, even really intimately knowing the city and being a real estate guy, this has taken much longer than anticipated. So a few words of wisdom for you out there if you’re considering a new construction project. Well. Make sure that you’ve got the budget for it or you have options, and understand that the timelines could take much, much longer.

So really take a hard look at that project and ask yourself, if this took a year or two years, or three years longer than I anticipated, would I still be interested in the project?

Would I still see the opportunity?

The other thing to keep in mind, if it is an international property, do you plan on spending a lot of time there? Because a project like this does require some involvement, right? It’s not like you can just pop up a 20 unit hotel and be off to the races.

All right, so there you have it. There are some insider details. Yes, the project’s taken longer than expected, but it is turning out very nicely. It is truly unique.

You wanna stay in the property or have someone that you trust stay at the property and work out the kinks. I know for sure there were a lot of kinks that we’re still working out with these units. After having stayed in them. So stay tuned. In the near future, we’ll come back with the numbers and yes, where there is a lot of risk, there can also be a lot of reward.

It’s a little too early to say, but I’ve got my fingers crossed and I’m staying positive, and I think this project is gonna be a really, really amazing project for the long run. Until next time, I hope you have a fabulous week.