Welcome to the Money Tree Investing Podcast.Stock market, wealth, personal finance, value stocks.Invest in your life.
Hello, Smart Money Tree Podcast listeners.Welcome to this week's show.My name is Kirk Chisholm and I'll be your host.So today I'm joined with Mark Lumpkin.How are you doing today, Mark?
Hey, Kirk.I'm doing great.Thanks for having me on, man.
Yeah, thanks for coming on.Well, we're talking about an interesting category.Haven't had anyone talk about this yet and wanted to fill it and thought Mark would be a good person to do that.
So Mark, maybe you could tell us a bit about your background and what you're doing.
My background is mostly in business to business sales, and I've kind of worked in a handful of different sectors.It's in the automotive space.I did about three years in the cannabis world, which was super interesting.
And so I've kind of been around, but I've always had this kind of knack and travel bug.I've always loved to travel around the U.S.or internationally.And me and my wife have done a bunch of traveling.
As we started to get older and had kids and did more traveling with the family and animals,
hotels hostels those kind of accommodations became not great for us and we needed our own space and so we really fell in love with like the airbnb traveling model.
Because of that is we love to travel and stay at short term rentals we realize that we could probably do a better job than some of these hosts and property owners and so we started investing in short term rentals were super host and we had a really good time doing that.
I don't fall into the airbnb world and do that day-to-day and sales in the short-term rental space you say you're super host resuming airbnb and some of the other online platforms reserve a title for only a select.
Group of people that just do it very good job.
You have to have a hundred percent response time you have to have perfect or dang near perfect reviews from your guests and you've got to meet some certain criteria to go from being a normal host to a super host.
It's something that we're pretty proud of and so when you do that to the boost your listings in the algorithm there's all kinds of benefits to being a super host if you can accomplish it.
Talk a little bit about your business model, because I've noticed in the last, I don't know what it was, 10 years, when Airbnbs really became a thing, or short-term rentals, I'm going to probably call it Airbnb most of the time because that's how I think about it.
But I've noticed it became much of a thing and it allowed uneconomical properties to become all of a sudden economic because they're renting them out by the day or the week instead of by the year.
So can you talk a little bit about that model, like why it makes sense, like what's going on, like what are the trends been since you've been involved in that?
It's obviously taken a huge jump and a very large evolution in just a small window of time.And so Airbnb came out in what, 2008, I think, it's a really young industry.
And it's drastically changed from what it used to be, which was just an air mattress and a hot plate in your spare bedroom, or an empty apartment that you weren't using anymore, you can rent it out for a few $100 a night to
Really an experience and what we're seeing is a lot of these air bnbs are part of the vacation and so people are going to gatlinburg tennessee but they're also going to gatlinburg tennessee to stay in this big beautiful cabinet.
How's the bowling alley and has a great view of the smoky mountains and it's part of the vacation that them and their family are taking.
And so because those trends have really shifted from it's just a cheaper version of a hotel, because it's someone's spare bedroom, to it's part of our vacation, it's a really great experience.
And groups and families are traveling to the house, not just the destination, not just the city.
And so because that shift has happened, we've seen a lot of people like you said, how do you take a property that's unprofitable, maybe as a long term rental,
Well, a million-dollar cabin and broken boat is never going to pencil as a great investment as a long-term rental.It just doesn't make sense.It doesn't pencil out when you start doing the math.
But if I can charge $500, $600, $700, $800 a night on that property as a short-term rental, well, then it really starts to make sense as an investment.
And so we started to see some large institutional money funds reach start to invest in short term rentals and we've seen a lot of just everyday retail investors say hey i've got this property that i love that i would like to visit that i'd like to purchase but there's no way i can buy it and it can cashflow as a traditional rental.
If i invest some additional money and if i run it like a business like a hospitality business then i can see some returns as an airbnb. So that might have been long winded, but I think that hopefully that answers the question.
No, it does.And I've always been curious because here's a question that kind of I've always thought about is so if you're buying property to make it an Airbnb, are people buying it to find rental properties?
They're buying it specifically to be a short term rental property.
I would say pretty much everyone that I deal with is buying it with the sole intent of it being a short term rental property in Airbnb.
I mean, obviously that squeezes the economics so that the yields, if everyone does that, the yields become lower and lower.So what happens if maybe travel dries up?I mean, take COVID for example.
I don't know what you guys did during COVID, but that obviously impacted people in a lot of ways.
Like what do you do in a situation like that where there just aren't any, or let's say we go into recession where people just aren't traveling or renting to the same degree.How do people handle that?
And then you've also got the regulations, the potential unknown regulation, where you might have had an Airbnb business in New York City, and your dozen properties just overnight are no longer legal properties.
And so there is an inherent risk that's a little bit higher risk profile than maybe some different investments that people might go into.
And so I think that's why the returns have to be much higher as well, because you have higher risk, higher reward.How I say you can mitigate the risk is by just having the top property in your market.
And so if you have the best property in Nashville, Tennessee, and the travel numbers get cut in half next year.Well, everybody at the bottom is going to suffer, but you're going to still do well because travel is never going to completely shut off.
Even during COVID, there was a small blip where there was very little travel.And then right after that, the travel industry went nuts and really had its best couple of years.And so to me, that's how you can mitigate your risk.
You make sure that your property is the best property in the market.You make sure that you operate it better than anybody else.And if there's a downturn, you're okay because you're still on that first page of Airbnb.
Got it.Okay.So that explains, that's why you put so much effort into being, what do they call it?A super.Yeah.Being a super host.Super host.Yeah.
Yeah.And having the best property and building your book of business and having repeat clients.It's really just like any business that you run.
There's always the risk that there's some economic downturn and things that you can't control, but if you operate your business well and you keep your margins healthy and you keep your costs down and you take care of your clients, you should be fine.
You mentioned before the show, you also love travel.So have you built this into your desire to travel more or how do you design where you're going to purchase property to be a short-term rental?
There's definitely two trains of thoughts behind this.
There are the retail investors that I talked to and that we worked with and people I know, myself included, where they're buying a property because it's a place that they like to visit, and it's where they're going to take their vacations.
And it's almost like a second home, but it doesn't come with all the costs of owning that second vacation home because it's still pencils as a short-term rental, and you can still get some return and some cash flow on it.
And so there's those people that are thinking about that i want to go travel to blue ridge because it's eight hours away from where i live it's in the mountains it gets us away from the beach i'm buying in blue ridge and if i can still make a pencil i can still make a little bit of money.
And then there's the other group of people that we know that are only looking at the numbers and if i gotta buy in cheyenne wyoming i might never ever ever want a vacation there or visit there. But the numbers work out.The cost of ownership is lower.
The real estate values are lower.The returns are higher.And so it really just depends on the person.I see both kind of mindsets of people thinking about this.
So do you have to buy a trophy property to have it make sense from the standpoint you're talking about?Because to me, like what you're saying is that's great if you have a really high end property and that'll make sense.
But does it work for normal properties as well?
Absolutely.I would say a lot of times the trophy properties actually pencil out worse than just your standard properties.
If you look at a beach market, it might cost you a few million bucks to get that trophy property on the beach, but you're not going to generate enough additional revenue to cover the additional insurance costs, the property taxes, all those things.
To me, it doesn't normally pencil out to have a trophy property.So going after those B properties, I'm just 10 minutes from the beach.And the cost to own this house is a third what it is to own at the beach.
Well, I could rent it for half of what they rent at the beach.And so then my numbers seem to make sense.
I also see there being kind of a gap in the market where you have a lot of trophy properties, a lot of really low end properties, condos, studios, inexpensive places.
And I see kind of a miss in the middle where there's not a lot of just standard real estate that is optimized for short term rentals.And I think that's a great opportunity to do well. And that's what I do.
Those are the properties that I buy is in the middle.
So let's talk about your strategy just to kind of share.Obviously, you're targeting the gap in the middle.What else?Like what else are some strategies people can consider?
I think you want to start with the market that you're going into and then the guest avatar.And so what we try to do is look at the market that we want to be in and then who's traveling to that market, why they're traveling, how long they're staying.
Are they coming with their pets?Are they coming with their kids? just who's my ideal guest and then build the property around that with your accommodation.So your furniture, your decor, your essentials, your house rules.
Like if you're in a mountain town that everyone's coming to hike and bring their dogs and you have a property that's not dog friendly, well you're not going to do nearly as well as someone who is dog friendly.And so really thinking about
Your guest demographic, to me, is number one in any market, and then tailoring your property around what will make them the most comfortable.It's just hospitality 101.So for me, that would be one of the top things.
I also look at the cost of the real estate and then the cost of ownership.Florida, we just got hit with these two huge hurricanes.Homeowner's insurance is through the roof already, and it's going to be even higher after this hurricane season.
And so maybe a property in Florida might pencil out well, but then when I start adding in all of your additional costs, the cost of labor for cleaning, the cost of your essentials, the materials that you're swapping out every time guests come and go, the cost of homeowners insurance, HOA fees, pool cleanings, landscaping, like you want to factor in the whole picture.
And I think what a lot of people start to realize is that maybe the really hot tourist destination is not the best market to invest in because the cost to operate in that market is so much higher.
Obviously the hurricanes just went through, we just had two big hurricanes go through Florida.It kind of brings up that question of what are the unknowns that are going to happen?
Like if you just bought a property in Florida and it just goes through and just get wrecked, how should people be thinking about that?Should they just not own property in a place like Florida?
Or even though one of the hurricanes went a lot further north, what should people be thinking about?Like what are the other risks that could impact people that
Obviously, if you're not getting the cash flow you expect, that's a big problem if you're stretching to make it work.
I don't know if any of us can predict natural disasters, and I don't know if natural disasters should really be in your underwriting model.I think it's something to be cognizant of.
But if you buy in California, Oregon, the Pacific Northwest, you're going to have fires in the summertime.And if you buy in the Northeast, you're going to have crazy blizzards and snow.
And so I don't know if you can get away from the natural disasters.But what I do think is something to be really cognizant of is the regulations.We always recommend not going into a market that's really highly regulated.
and also not going into a market that has no regulations.Because what will happen is you might go into a market that has zero regulations.There's no rules.There's no permitting required.It's the Wild West.
You can operate as many short-term rentals as you want.And then one day, you wake up, and there's a whole bunch of new regulations, and your business model has just been flipped upside down.
And so we like to go into markets that are established, that already have some rules and regulations, and that we can reference those and make sure that we're going to be compliant, and we're going to be able to get a license and do that.
So I don't like markets that have no regulations, not a big fan of markets that are really highly regulated as well, because those are hard to operate in.
But at least some rules on the books that have been seasoned and people can operate within, that's kind of what we look for.Because the regulations are something that could totally kill you if you're not cognizant of it.
That makes sense.What about types of houses like condo versus single family home?Or do you have kind of a preference, you know, the type of home?
You can definitely make them all work.I like to look at properties that are unique in nature.
What I mean by that is like, I don't want to buy a Hayden home in the middle of a community that's surrounded by another hundred Hayden homes that are all built exactly the same and looks like just every other neighborhood in America.
Because there's nothing special about that real estate.There's nothing different.There's no wow factor to it.
I'd like to buy a cabin out in the middle of the woods that has a little creek view and maybe has a cool backyard that we can put some tire swings in and some hammocks in.Just something that's a little different.And it could be weird.
And it could be unique.And it could be niched.And it could be, I don't even know.Just something that's different and not duplicatable, where
If the neighbor across the street decides to open a vacation rental, now I have to compete with them and we have the exact same product.
And if the people to the left and the right of my house do the same thing, now I have to compete with four properties that all are the exact same product.So I want to find something that's a little different and unique.
And I think that will give you a competitive edge because the real estate is not duplicatable.
Now, are you finding the short term rentals are more based around people seeking out an experience or are you finding it's more somebody has to travel for some reason and they're just looking at short term rentals as as an alternative to like a hotel?
There's both.The people that are seeking the experience are going to pay a much higher nightly rate and going to give you way better return.
So I'm looking for people that are my guest avatars, people that are looking for an experience and tailoring our properties to look like that.
All right.That makes sense.
There are other niches that you can get into where there is the midterm rentals, which maybe are like traveling nurses.
or we talked about the hurricanes, you have all those workers, the linemen coming in, the emergency response folks, they all need a place to stay.
And so there's definitely that option to set your property up to be more accommodating for the travelers, the traveling nurses, people staying 30 days to six months.
That's more stable because you have longer lease times, but it doesn't have quite the returns that I like with the nightly stays. And so I set up our properties to make a premium on the weekends.
People are coming to the beach on the weekend and they're willing to pay three, four times the nightly rate for the weekend days.That's what I'm looking for.
Yeah, I would imagine the longer they stay, the lower the yield.I mean, furnished properties obviously come with a premium anyway.Correct.And I wonder, do you ever look at like the executive market?
Cause I know that once I was looking at properties years ago and I looked at a unit that was fully furnished and they're like, oh, it's actually, we designed this for executives who are coming in for short term, for midterm rentals that are furnished, but just it's more specifically for that kind of marketplace.
So do you get any of that at all?
So I don't personally.But like I said, that's definitely a niche, right?That's a niche you can get into in the furnished real estate industry.You can also get into insurance placement housing.
So families that are displaced and the insurance companies placing them.There's kind of all different strategies to take.I happen to be in the family vacation business model.I would think that a lot of those pencil out really well.
And I'm sure that you make way higher yield on the real estate than you would renting it out one year leases unfurnished.
I think it's really cool that you've kind of segmented different niches here.Family vacation versus displaced housing versus traveling nurses.
Like, I like the fact that you've thought about this because I think most people just get in real estate and like, oh, I'm just going to go buy a property and just see who gets in there and let's hope it appeals to somebody.
But you've really kind of taken this to a whole nother level, which I think is great.Is this a common approach with short-term rental people or just you just take a different approach the most?
I think that a lot of people just get into it because they've been told by some guru or some coach online that it's quick money and they have way higher yields if they get into the short term rental space versus long term renting.
And I think that they're not being strategic and they're not really thinking through the entire process and what it actually takes to get those higher yields.
And so, yeah, I would encourage anybody that's getting into the space to carve out your niche, figure out what you're going to do, and do it really well.And you know the term, if you market to everybody, you market to no one.
And so I know a guy that he markets only to elderly people coming to stay in cabins, and he has them wheelchair accessible and has all the extra stuff.And he does really, really well, because he knows every time
Grandma and grandpa come to stay in this market and then you're looking for a cabin, I'm going to capture them every single time and they'll pay a premium because my property is designed and set up to make them as comfortable as possible.
And so you can get so ridiculous in your laser focus, but if you do that really well and you have enough guests that are willing to pay a premium on that specific type of property, I think that you can make a great return on it.
Yeah, that's great.I hadn't even thought of that.Just little things like that.Wheelchair accessible.I mean, amazing.
There's so many things.You got a family coming to travel.Well, do you have a pack and play for a little kid to sleep in?Do you have a high chair in the dining room?Do you have toys?
And a lot of times those additions, those extra add-ons in the property, how you set it up and furnish it are not expensive.
And so you might only spend a few thousand dollars and you could see a two, three, four hundred percent return in the first year because a family was willing to pay a premium because you have the home set up to make them happy and comfortable.
No, that's great.One more question.I want to talk about the process a little bit.So when you're looking at properties, do you typically are you looking everywhere?
You're just looking to space properties all over the place or you're looking to concentrate on like a property management perspective?
Density definitely helps with property management and definitely helps with turns.I think that is the advantage that hotels have and probably always will have over the short term rental Airbnb industry is that one cleaner can turn 30 rooms a day.
And I have to have a cleaner for every single one of our properties because it takes three or four hours and then they have to travel to the next property.So you might only get one cleaner that can turn two properties a day.
And so density definitely helps reduce cost and that's why hotels are you know there's way more hotel rooms the hotel industry makes way more money than the short term rental industry because they have the advantage of density from a personal opinion.
We like to do a lot of traveling, and so we are trying to space our properties out into markets that we like to travel to and visit to.We also like the seasonality differences.
If you own all your properties in a mountain town that's very, very busy from December to March and has slower summer months, well, you better be ready from a cash flow perspective to handle your slow months because you've got all of your money made in just a short period of time.
versus owning a property that does really well in the summer and then one that does really well in the winter and kind of spreading that out and having your busy peak seasons not all happen at the same time can be a cash flow advantage.
And so it really just depends on who you are.There's benefits to both business models.
Yeah, and that actually brings up an interesting point is have you seen number wise, does it make sense?Let's say you have like a beach town.It's pretty much good for five months out of the year, let's say.
Do you think it makes more sense to niche in like a beach town or like a mountain town market?Or do you think it makes sense to have more of a all season property?
I definitely like the all season properties because it's more stable, but you're not going to have the highest highs.
And so we've got a property in Florida that the three summer months, it's going to make more in those three summer months than it will make in the other nine months out of the year.
And we were just looking at it, we were 100% occupancy for three months, we didn't have a single empty night for three months, it was people coming and going, coming and going, coming and going.
There's benefits that because we made a whole bunch of cash in that property will yield more than maybe one would in a four seasons market because we could charge a huge premium in the summer months.
But you've got more stability with those four season markets and it doesn't have the highs and lows.It's a little bit more stable.
So the seasonal markets definitely over a full year will make more.It's just maybe not as reliable.
Yeah, there's a lot of nuance to that, but I would think so.Yes.
And I believe that a lot of other investors believe that as well.And so that's why you get a lot more competition and a lot more properties in those seasonal markets, because they know that
The summer months you can crush it orlando there's more short term rentals in orlando and phoenix than in any other city in america and it's because they know that people are coming during the summer and the spring to visit disney and they can charge a huge premium on those families that are coming into town to go to the park.
When I think of short-term rentals, I'm not thinking about Joe and Susie Lunchbox, Middle America.I'm thinking about like, where do people actually want to go?
How do you determine, because you're obviously a good marketer, so how do you determine a good average place people want to go that's not
the seasonal exclusive like everyone wants to go to disney world kind of place how do you find those and take advantage of that so there's enough volumes you can make sure that you're getting people want to go there.
Good question i think it comes down to the individual and i would say like where do you like to go where are your favorite places for you and your family to vacation and travel does your sister or brother go to branson every year for their three weeks skiing vacation and just use the knowledge that you have.
and start to identify markets that you would like to go to and you'd like to vacation and then see if they pencil out.There's a lot of relatively inexpensive or free resources.
There's like AirDNA, there's Raboo, there's some different online tools that can help you identify different markets, give you some high-level numbers of what the returns are on those markets and what the revenue is on properties in those markets.
But for me, it's always been like, hey, We love to go to this lake every summer and spend two weeks with our kids on the 4th of July and our family likes to come and we know there's other families that like to go there.
And we've stayed there and the properties we stayed at sucked.And so can we go into that market, do a little bit better and crush it?Yeah, definitely could.
Yeah.Okay.That makes sense.That makes it easier.It's a little bit more. easier lift for people.What are some processes people should be thinking about if they're looking to get into the short-term rental market?
Let's say they're starting out and they're saying, hey, this sounds like a good idea.
What are some things that people should be thinking about beyond the demographics that they should say, all right, here's a good way that I can do this well without making a lot of mistakes?
One of the biggest things is your team, your boots on the ground, and how you can actually operate the property. This is the hospitality industry.You have to clean the property between each guest.You will have damaged and ruined items.
You will have blood and throw up and nasty crap on your sheets.And you need to think about this as operating a hotel.
And I think that's the biggest mistake we see a lot of investors that are first-time short-term rental investors make when they get into the industry, is they think this is like operating a long-term rental, or their apartment complex, or their mobile home park.
And it's very different.It's very hands-on.And so who's my team that can help me operate that?Is that a couple of VAs?Is that a full-time property management company that I hand the property off to?
Is my wife or my partner going to do that daily guest communication, which mine does, which is great?It's a full-time job for her.She likes it.
but how are you gonna operate who's your boots on the ground i need a handyman i need a cleaner i gotta take care of the trash think about that you have a house that no one lives in people come and go who's taking your trash out to the curb every week and then we on the barrels and because you're guessing gonna want to do that on vacation and so really operationally thinking about how this thing can actually run and operate who's gonna do it making sure you got some systems and processes in place
for when something happens.I think there's a great analogy is the guest experience is a lot like flying on an airplane.All we remember is the takeoff and the landing.It's very similar in the short-term rental space.
If their check-in is easy and they know the door code and it works and they open up the door and it's clean and they can log into the Wi-Fi quickly, you're golden.The rest of your experience is going to be great, right?
And is the checkout super easy and simple?If the takeoff and landing are easy and simple, your guests will be happy.If they're rocky, the whole experience is going to be bad.You're going to set yourself up for failure.
So kind of think about those things.
What are your favorite markets?I don't know how big your portfolio is, but what are your favorite markets?
It's not massive at the company I'm with.We do about 30 different markets.And the ones I really like, I do still think that Florida is a great market.It's very short term rental friendly.
There's a lot of great places in Florida, the Emerald Coast, Tampa area, even down in West Palm in Miami, just a lot of tourism that comes to the state of Florida.
And it seems to be almost all year round, because a lot of people come in the summer and a lot of people come in the winter.
I'm a big fan of a lot of different mountain towns, the Smoky Mountains, whether you're in Asheville, or you're in Blue Ridge, Georgia, or you're in Sevierville, Tennessee, that whole area is very tourist heavy, is short term rental regulations friendly.
And is a great place to invest in i haven't seen a lot of investment to be honest with you and like the tougher markets to be a real estate investor and which is california new york.
Those big cities seem to slap in regulations at the blink of an eye and completely change things on you.And then I also like the B market.
So I like to think about like Huntsville, Alabama, or Branson, or the Bourbon Trail, Louisville, Kentucky, just start think about things that are still great tourist destinations that people visit, but are not necessarily San Diego, California, where a house costs
$2.4 million for a three-bedroom, two-bath, because that's a hard way to get any return on your investment if you're operating it as a short-term rental.Hopefully, that's helpful.I think each market can be successful.
It just depends on you as the individual and the property you purchase.
It's good to think about.I mean, I don't do as much travel as I used to, but certainly the travel experience sometimes can be a real headache.
When I'm looking at places to rent, whether it's a hotel or what have you, I'm frequently comparing it to Airbnb.And it's always a question of like, well, if I'm doing this, the hotel is going to be really simple and easy.
I just check in, check out, I don't have to worry about anything.Airbnb, I got this whole process, this whole checklist I got to go through, checking in, checking out.It's like, is it worth it?
Probably not for a day or two, but I guess it depends on the property.But from my experience, the few times I've done it, it's like, all right, I've got this whole checklist I got to think about.
It's like I've got a house where there's a hotel I just walk in.I can leave crap all over the place when I'm gone.I don't have to make sure it's all bagged up and do all the cleaning.Like, they'll take care of it.If I got trash, I can just leave it.
And they'll do it you know in airbnb i feel like i've got to be a good guest right i'm in somebody's house like i don't want to leave trash all the place i don't leave a mess i'm doing a lot of the cleaning it just feels weird in airbnb and it's a different experience maybe i'm just more sensitive and maybe people leave trash all the place i don't know what's kind of like the common thing do people treat it like somebody's home or they treat it more like a hotel.
I would say that you are right in your train of thought there.And most people do treat it like someone's home.There are obviously bad guests and good guests.
But I would say for the most part, people do want to treat it like someone's home and take care of the property and clean up after themselves.
And so what you just said is the exact reason that I'm not investing in one bedroom, one bath condos at the beach or studio apartments or shared spaces, because I would have to compete with a hotel.
What I'm trying to invest in is the eight bedroom house on a lake with a volleyball court in the backyard and a big hot tub and your family vacation with your brothers and his kids and your friends from college.You're going to bring 15 people.
You guys are going to pay 10 grand for the weekend.Everyone's going to split the cost and you're going to have a great time at the lake.That's the experience and property that I'm trying to invest in.
just what you said is a perfect example of being cognizant of who your guest is, what their mindset is, what they're willing to pay, what the competition is, because it's tough to compete with hotels in the Airbnb spaces.
So that's why I think you've got to do something different and unique.And that's also why I talked about the real estate that you look for being unduplicated.
If you have a tree house out in the middle of the woods, and it's a cool, fun experience, well, great. I don't have to worry about the guy that's thinking about the options of a hotel because I've got something so special and unique.
People are willing to come stay and pay a premium to come to our property.
In Boston, Cape Cod's kind of the place to go in the area as a summer place.And a bunch of years ago, we used Airbnb to find a place and we grabbed it and we've been lucky.We just keep coming back.It's just been a special place for us.
And somebody's home.Like during COVID, we actually called her up and be like, Hey, we need to get out of the city.And she's like, yeah, it's empty.Just now you can rent it for a few months.
And we stayed, we left in June when they had to rent out for the summer.But it was great to have that kind of experience and that kind of connection with somebody to be able to borrow their home when they just weren't using it.I love it.
Yeah, so I like the fact that this is a thing.So let me ask you this.So I mentioned Airbnb.It's the only one I know, but there's other ones as well.How many different places are there?Are there a lot of them?Or what are the best ones?
Or how should people be thinking about if they're placing a listing, where should they be looking to list their property?
There's a lot of them.Airbnb is kind of like what Kleenex is, the tissues.It's the name brand.Everyone recognizes it.They have a great UI UX experience for guests.
They're going to be a bulk percentage of anyone's bookings if you're getting into this space, probably north of 80% of your bookings. But there are a lot of other options.There's VRBO.
There are short-term rental investors that have built their entire business just on being on VRBO.And they're not even available on Airbnb.There's Booking.com.Google is getting into a direct booking model for short-term rentals.Expedia.
Capital One is now allowing you to start to use your credit card points to book short-term rentals through their portal.And so we talked about this at the very beginning.This is very much a new industry.
but there's always new options popping up every day.And the cool thing is you can cross promote your properties.You can have your property on both two, three, four platforms.
And then there's technology tools that lets you sync your calendar so that your property doesn't get double booked.If it books on one platform, it closes it down for those dates on another platform.
So I'd encourage people to look at some different options, cross promote.It doesn't hurt you to have your property available in a lot of different spaces. And then I'm also starting to see a real trend towards booking direct.
And so what you just talked about, which was you knew the lady, you had her phone number, you just called her up and you booked it for a couple of months, we're starting to see a lot of property owners do the same thing, build a little bit of a brand recognition, create their own website, do some social media ads, and go directly to clients and not have to have an Airbnb or VRBO in the middle of that transaction.
And that's definitely a viable option as well. And what's nice about that is you don't have to pay the fees and your guests don't have to pay the fees.So remember, these booking platforms are double dipping.They're charging me, the property owner.
They're charging you, the guest, and they're taking a percentage of the profits.So if you book direct, a lot of times you can save money as a guest and the property owner.It's more advantageous for them.
No, absolutely.Cutting out the middleman.As we kind of wrap it up here, any final thoughts on this or areas we haven't covered you think would be helpful for people to understand about the short term rental market?
Obviously, the cash flow is a real benefit.The ability to use the property for your vacations is a real benefit as well.We didn't talk about this, and I'm not an expert on this, but there are a lot of tax implications to running a short-term rental.
And I would encourage people who maybe need some write-offs from a W2 job or a business to talk to your CPA about bonus depreciation, about the short-term rental loophole.
There's a material participation where if you spend a certain number of hours kind of managing your property throughout the course of the year, you can get some write-offs from it.
And so I would definitely encourage people to talk to their CPA about the potential for the tax breaks if they own and operate short-term rentals.
Good to know.We don't talk about tax a lot in the show, but that's a good thing for people to understand.Mark, I really appreciate you coming to the show and you're sharing your wisdom.
Where can people find more about you and tell us a bit about more what you're doing right now?
I'll provide my email.You can share it in the show notes.I'm pretty active on LinkedIn.So you can find me on LinkedIn.I'm always there.I respond to any DMS.And then our website is FTR cribs.com.
It's a lot like the play on words from that TV show, MTV cribs.com.If you remember that from the early two thousands where they pimped out houses, we kind of do the same thing, man.We're licensed general contractors.We operate in about 25 States.
and we help people set up properties.You found a house in Scottsdale, we're going to come and paint the murals, do the furniture, do the pool tables, replace the floors, paint the walls, make the thing a really beautiful high-revenue property.
That's what we do at STR Cribs, that's what I do day-to-day, aside from investing in real estate.Yeah, man, reach out to me anyway.I'm happy to help anybody, happy to give any free advice and love to connect with other people in the space.
Hey, Smart Money Tree podcast listeners.I know you love the show.I get a lot of love mail and hate mail from people who listen to the show.Personally, I like the former, but I have a thick skin if you are sending the latter.
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So in order to claim your gift, go to moneytreepodcast.com forward slash free money and follow the instructions to get your free gift today. Now we're into the panel portion of the show where we have our very own Phil Weiss.Hey, Phil.Hey, Kirk.
How are you today?Doing great.And we also have our very own Kirk Chisholm, who's also here today because we don't have a third panelist.So just going to be me and Phil.Let's get started, Phil.
What were some of your takeaways from the interview?It was interesting to me in two ways.First, because of some of the things that Mark had to say, but second, because if
Some of your questions and comments were in stark contrast to how we do things in my family, because we use Airbnb a lot.Because I have four kids, and a lot of times we go away, there's at least three of them that come with us.
And having an Airbnb makes a big difference, because we can get two bathrooms.And that's hard to do in a hotel, and everybody gets their own bed.There's so many things like that.And we've used them outside the US.We've used Airbnb inside the US.
We've had a couple bad experiences.But overall, they've been pretty good. I love the idea of niching because that's something that matters to us as advisors too.And I never thought about it in that context, the way that he talked about it.
I thought that was really interesting as well.
I mean, hotels are just easier for me.That being said, I have used short-term rentals.I used Airbnb when I went out to Lake Tahoe in part because hotels were obnoxiously expensive when I went out there.
It was something like 800 bucks a night or some crazy number and I was like, must have been on a busy weekend, but I just couldn't find affordable hotels.So I looked, oh, I'll just look at Airbnb. It wasn't awesome.It was good enough.
I had this whole apartment to myself, which I didn't need.That's part of it.You're traveling by yourself.I don't need all that.I'd rather have a hotel I don't have to think about.
That being said, when my family and we go away, we go on usually one to two trips a year, and we go on a trip.The last two years, we've been down to Florida, down to the Keys.
And we stayed at this hotel both times and it's a great hotel, but it's basically set up like a short-term rental.It's kind of like a townhouse.
So, you got like two bedrooms upstairs, downstairs you got a kitchen, living area, you got a few bathrooms. it's got a kitchen.My family, we've got so many food issues with our family.You know, a kitchen is gold for us.
We just go to the supermarket, go cook ourselves.We don't have to worry about eating out.It's just perfect.So I think in that way, it allows us to be a little bit more customized and it allows us to do the things that we need to do.
You know, cause I was just at a hockey tournament with my son in Nashville a few weeks ago and he's got food issues and I have food issues. My other son and my wife are fine, the two food people we had to go.
And so we go down there and like, all right, well, they got a small refrigerator.
I brought my own hot plate, brought my own pans, had to go to Target to pick up a toaster oven, had to go to the grocery store to pick up a ton of groceries, and we had to go cook in the hotel room.
You know, we did this last year and fire alarm went off once.It wasn't great.Some of these places, like I've been to some hotels where they have like a little mini kitchen.It's great, but it's rare.
So, you know, there's a lot of cool things about the short-term rentals, especially if you have these customized needs that so many people have now.It can be a great way, but it's a different experience.
So you were telling me before, like you only do this now, right?
That's pretty much it.And I forgot about the kitchen aspect, but that is an important aspect.What we usually do is we will go shopping and we'll make sure we have breakfast food.
And instead of having three meals a day out when we go travel, we'll start.Usually it's me because I do the cooking in the house and I'll make breakfast for everybody and we'll eat breakfast and then we'll go out.
And from a cost perspective, that helps. And they have a dishwasher, so we just stick the dishes in the dishwasher.
And depending upon how many dishes they have, we might run it every day, or we might run it every couple of days, depending on what they give us.But it's nice to have that feature.
The nicest one I ever remember, we were in Paris, and we were in an Airbnb, and we were
Right by the Champs-Élysées, there was this great little patisserie that was right there, and I would go get part of breakfast every morning, but we would eat in our room before we went.
But we've been in some good places, and there's just more sitting space.We were traveling this summer, and I remember playing cards with... my wife and two of my sons every night.
And when we got back in at night, and it wasn't time to go to bed yet, but we were kind of done for the day.And we had plenty of space to sit and do things like that.
So it gave us that, because you don't just have the bedrooms and the bathrooms, which I said are really important in the kitchen, but you also have a little bit more space.
There's usually a living room or something like that, which is really nice, or whatever you want to call it.But there's some places you can congregate.We had one place, one of the worst ones I remember, that didn't exist.There were two bathrooms.
They were both upstairs. And my wife and I had the bedroom that was downstairs, and I had to climb up this big flight of steps in the middle of the night.
They don't always work, but they work well for our family just because they give us the space that we need in an easier way than we go to a hotel.
We go to a hotel, we have to get two rooms at least, and we don't have some of those other accommodations.And so having those accommodations really makes it nice for us.
It's interesting.You say international.I hadn't even thought of that.How big is it internationally?Is short-term rental is a big deal?
It is.And so usually we use Airbnb, but there are times, I think this summer we were in Prague.It was through booking.com instead, because some of those like the booking.com and Expedia, they have some of those units as well.
But it is definitely something I think every time we've gone away internationally, I think the last time that we went away that we stayed in a hotel was the year after my wife and I got married and we took a trip to Europe together and we stayed in all hotels and we had travel agents that booked everything for us.
But that was a long time ago and Airbnb wasn't an option.But now that's what we look for.And you definitely can find them internationally.So I've used them both internationally and domestically.
Interesting.I didn't thought that cuz I haven't traveled internationally since 10 15 years ago like traveling the u.s It depends what you're looking for.It's just me.
I just want a simple I don't want to have to take care of a whole apartment unit when I stayed in Lake Tahoe was like this two-story place and they were like four bedrooms and I didn't need all the space but it was all that was available and it just felt weird I was like, this is like a big space and somebody else's house.
It was just weird I felt like you know, I don't need that.I just need one room.Just give me a small room.I just need a bed That's all I need.You know, when you travel with other people, it's different.
And I was thinking about it as you were talking, like, when I was traveling internationally, one of the things I liked most, when we travel internationally, sometimes you stay in hotels, and sometimes, like, when I was in college, we stayed in a, it was a converted monastery.
So it was a monastery slash hotel.Actually, it wasn't totally converted, because it was still a monastery and a hotel.It was a little both.And it was weird, but it overlooked the form, the Roman form. I mean, it was unbelievable.
This should have cost like thousands of dollars a night based on the location.But because it was like a still a monastery and kind of a hotel, it was weird.It was definitely meant for college kids, like these long halls and these rooms.
And it wasn't a hotel.So we were staying there.It was really cool because you just kind of walk it around.You see the neighborhoods.It's not like the hotel where everything's pretty around the hotel and everything's perfect.It's like.
You're just with the people.And I just appreciated that so much more because you just get a feel for the area rather than this picture perfect, like, oh yeah, I went to Switzerland and we stayed at this beautiful hotel.
And it's like, yeah, but that's not right.Like go to other parts of Switzerland if you want to get really get to know Switzerland.So stuff like that, I just find interesting.
Like France is the kind of place that I would want to stay in a short term rental.The culture. is why I want to go there, like the people.Same thing with Italy.I want to get to know the people.
I want to sit in the piazza and just sit there all day and just watch the world walk by.That's what I want.I don't want to sit in a hotel.I want to see the people and what's the culture like.I think that part's interesting.
I was intrigued by what Mark talked about with the niching, finding a niche and be really, really good at that one thing.I had never heard that before.Maybe it's a thing because I'm not doing short-term rentals.Maybe it's a thing.
I thought that was a brilliant insight of you're going to be the unit that has like handicap accessible units or something, or like you're going to be the one that has something cool for kids, right, or whatever.
I thought that was kind of a cool, interesting perspective.So you're known for that.You get good at it.You know your niche, right?It's like marketing, right?If you're marketing your business, You're marketing to a niche.
So if you get to know your niche, you become that thing.I think that was a really cool idea.So kudos to Mark for that.Even if he didn't come up with it, kudos for telling me about it.
It's funny when you talk about the culture, because one of the things I talk to clients about when they're saying that they want to retire someplace, much time have you spent there?Is that where you really want to be?Do you know that?"
And I say, my recommendation is go to a place that you think you might want to live, but don't stay in a hotel.
Find an Airbnb in the kind of neighborhood you think you might want to live in so you can really experience what it would be like to live there.I think that's really important.So you can even use it
When you're thinking about moving, I think it's something to think about.And you mentioned niching.I have one of my clients.She has two Airbnbs that she has that are in Tennessee.One of them is this big place.It's meant to be very family friendly.
I remember we didn't go to Tennessee, but during COVID, my wife has three siblings.And we did these family trips with all the kids and stuff like that, because that was a way that we could travel and go do something, where we rented a big house.
And we all stayed together. And that's the kind of place once that she has in Tennessee is like that.And so she's got all kinds of stuff for kids.There's all different types of games and activities and stuff like that that are in the house.
And she says that one is always occupied.There's never a vacancy.She says she can't even stay in it if she wants to.
The other one isn't set up quite as nice, so occasionally there'll be times when they can use it, like her daughter was on spring break this year, and her daughter and her friends were going to use the other one.
But none of them have ever stayed in the one that's really set up.And it's kind of like that niche concept, right?
Because it's set up for a family to go, and they have the place to go and have different activities and things like that at the end of the day. So I hadn't heard about that niche concept either, but when I think about it, that's kind of fits.
And I love the idea that he talked about too, I think in particular one was the, for those that might need handicap accessibility or something like that.But he also talked about like having the pack and play and the kids' toys and stuff like that.
And I think those are really great ideas because when you're looking for a place and you know that it has those things, then you don't have to worry about traveling with it either.And so it makes your travel and your trip to get there a lot easier.
That's really interesting because I was thinking about it.It's kind of like a bed and breakfast where they're just like highly catering towards you.
I was thinking about this because when my kids were young, when they're really young, I used to think of traveling as home somewhere else without the child proofing. When your kids are like, I don't know, one, two, three, they're just monkeys.
They're just moving around.You have all the comforts of home.You travel.It's like, all right, now it's very uncomfortable with this place.You know, it's just a lot when you got kids.And I was like, oh, it's like home without the childproofing.
You got to think and make sure they're not getting into trouble and breaking stuff.But one thing I thought about, because my father-in-law used to have a place down in Florida. and we used to go down there and it was great.
It was great because one of the things, obviously, because it's free, you don't have to pay for hotels, but also because you go down there and your stuff's there.I could bring a backpack because all my stuff was down there.
I had shirts, I had shorts, I had flip-flops or whatever down there.I didn't need to bring it.I just bring my computer or something and the rest was already there.It was very cool to do.
But when I think about short-term rentals, it's similar in some ways because when you're traveling with kids,
I remember traveling down there with kids, like you had to bring a DVD player, you had to bring an iPad, you had to bring music, you had to bring toys.
We're like little Sherpas bringing around these like tons of bags to Florida just to keep the kids entertained.And if you can go to a place where that's already there, that's awesome.
So I hadn't thought of that either, but that to me is a brilliant way to solve that problem.Because when kids are young, they need to constantly be entertained and you need to have toys and you can't bring it all with you.
So the fact that it's there and it's new toys, oh look, new toys we haven't played with before.I mean, that's a great niche if you can appeal to parents and have some sort of location where it's like kid-friendly.Here's another one, dogs.
We have a hypoallergenic Labradoodle.So it doesn't shed, it has hair, so it doesn't shed, doesn't smell any more than any other dog, but it's not gonna like dirty up the furniture any more than I would. but they'll frequently say, no dogs.
And it's like, well, I know, I get it.If you've got a shedding dog, I don't want dogs at my house either, because shedding is a pain in the butt, especially if you're not prepared for it.My dog doesn't shed.
So we have to negotiate with the landlords or the owners all the time, every time we travel, because we need to make sure that they're cool with it.So we just found one that was cool with it.And she's like, yeah, you're good.
That's how we handle it now, because it's so hard to find anyone with pets. So I think that's a brilliant one.It's a little hard to implement because you got to do a lot of cleaning, but if you could do that right, that to me is really a cool idea.
If you can solve that, you can fill the hole of people that are looking to bring their pets and there's a decent amount of them too.And some of them probably just won't say anything, but they do it anyway because they need to.
So brilliant thinking around it for sure.
We were in one in Florida.We have two Shih Tzus and they don't shed either, but we generally don't bring them because of the same issue.It's hard to find a place to allow them.
But you talk about activities, it doesn't even have to be for little kids.We had an Airbnb in Hollywood, Florida a couple of years ago, and they had a pool table and a poker table. And so at the end of the day, we would play pool.
One day it was bad weather.Instead of going to the movies or go do something like that, we played pool.You get two on two, and you play pool.Or during COVID, it was a big family activity.I taught everybody how to play Texas Hold'em.
We don't play for money.We play for fun.But it can be a lot of fun.Everybody sits around, and you talk, and you play.And so it had stuff like that there.The only thing that I remember about that one, though, was Christmas time.
And it got cold in Florida and the air conditioning didn't come up.I mean, the heat didn't come up.We had to get the guy that owned the place and he had to get somebody out there to fix it because we were there.
Like that's the one downside of owning these things, right?Is that something goes wrong, you're on the hook and you got to get it taken care of.
So you had to get somebody out to come service the heat on Christmas day because it was too cold in the place.
So what are some takeaways you can give for people who are thinking of owning short-term rentals or final thoughts from you as we wrap it up?
I think it's a really interesting idea.Like I said, I have a client that does it.She always tells me the properties are killing it.I really like Mark's idea of niching, finding areas that are popular so that you really have people that occupy.
And I have another person that has one in Delaware, by one of the Delaware beaches. it's a little off the beaten path.So it's not quite as occupied as it could be, but it can work.
And if you're going to do it, if you're not going to do it yourself, you want to make sure you have a good management company, but it can be a really good idea.And I think if you're going to do it, I would do it the way that Mark did it.
I think that niching is really important because It just gives you a better chance of having a place that's occupied, because the last thing you want is you have this unit, you put all this money into it, and then it's not occupied.
It's just money that's sitting there doing nothing for you.You can spend a couple thousand dollars, as Mark said, to fix it up in a way that's going to appeal to a certain group of people.
And if you're the one that has that and there's enough interest, it can do really well.But I would make sure I did research before I just decided where to do it and what it is that I wanted it to have when I was looking for that niche.
But I really like the idea.It's an interesting way to have a rental property.Short-term rentals have pluses and minuses, but you're going to make more money when you have short-term rentals, for sure, if you can keep the place occupied.
Where can people find more about you, Phil?
I know that experiencing big life transitions can be stressful, and my job is to help empower women facing new beginnings with the financial knowledge and tools they need to make self-assured decisions.My firm's Appraised Wealth Management.
We'd love to get to know you.If you'd like to learn more about us, you can download our free ebook, How to Flourish Through Life's Big Changes, at appraisedwealth.com slash ebook.You can also sign up for our blog.Thanks for having me today.
I enjoyed the conversation, Kirk.
Great.Thanks for coming on, Phil.And that's the show for this week.Thank you again for joining us, Money Tree Investing Podcast.My name is Kirk Chisholm, Wealth Manager of Innovative Advisory Group.
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