Our Airbnb Investing Strategy before COVID

This was recorded prior to the COVID-19 outbreak which disrupted the travel and hospitality industries (Airbnb included). We believe that long-term our short term rental strategies will remain the same, so connect with us as we journey through our current business strategy and process. 

Transcript

0:00

Hey guys, I’m Brooks and I Mandee. So we’re husband and wife, entrepreneurs and we believe that life and business are a giant adventure and we want to live it with you guys. So let’s get

0:11

To it.

0:24

Mandee, let’s talk some Airbnb, Airbnb, Airbnb. Let’s talk Airbnb. So it’s been a while since we last recorded and we were talking about Airbnb, short term rentals and kind of getting into it like we already own a property that we’ve been doing that for about five years. And we were talking about the potential of growing that and getting more units and Well, what’s happened since then is that we’ve purchased a home that we’re renovating that we’re intending to turn into a short term rental and then we also have done what is now what is called rental arbitrage and we have signed a lease on a unit with the intent of short term renting that property as an Airbnb rental.

1:17

So is that like subletting the property

1:20

Yeah multiple times over and over its calling subletting it’s um yeah so basically it’s yeah it’s leasing the property from the from the owner and now full disclosure some people do something they’ll be kind of shady in the light lease a property and like not tell the not tell the owner what they’re doing just like not just Airbnb hit Like, that’s pretty weird would not recommend you do that at all. In fact, you could probably get yourself into some hot water there if you do that. But yeah, we just fully disclose like what our what our plan was, and the landlord, the owner of the property was okay with it. And, and so that’s what, that’s what we’re doing. So we have yet two different so we have Yeah, both of those are going on right now so, so we’ll talk about that we’ll talk about what we’ve kind of learned in the process of looking to grow and we would like to do more of these. So this isn’t it’s not what we do full time, but it absolutely can be a full time business. You know, if we get to the point where we had, say 10 units, whether it was houses that we owned or properties that we were leasing or partnering with, with owners, it could be any sort of thing but if we did that, that would be a full time business and honestly, we we’ve already talked about this, we probably have to hire someone either part time, definitely part time, but maybe even a full time person that kind of helped us with that with that business because it would be its own its own thing, right. And so when you have a short term rental, each of these units I’m calling it a unit I feel like I’m kind of jumping on this bandwagon of units that like their houses like what like to our houses and one is a like a an apartment. Like a loft apartment. Yeah, but I’m calling them units like, Oh, we have this many units. It sounds kind of weird term. It’s a term. I think it’s a term. I think it’s an Airbnb thing that people are, you know, kind of talking about, but I call them units. But you know, it is easier just to do that. But everyone, every unit, I’m going to just use the term it’s like a hotel in itself. Oh, for sure. And I think if people treat it like that, that are maybe interested to do Airbnb or want to. Now this could also be VR Bo, which I have recently learned is called verbo. Get it? Right because I saw a commercial from verbo and I laughed out loud when I heard them pronounce it verbo even though I’ve been saying VRBO, but I’m like, okay, that stands for vacation rental by owner. It’s a company that was purchased by I think it’s called homeaway which is actually in the portfolio of one of those giant companies and I can’t remember which one so I’m not gonna say it. But it’s it is also a, a short term rental platform that I would advise You to also look at having your property on if you wanted to get into this business or even just have, maybe you have one property, maybe it’s a beach, or a lake house that you don’t go to all the time or all year long. Well, maybe you just want to look at it for like that one property. Right. But yeah, so I think if you treat each property or unit as a hotel, Mm hmm. I think if you start there, I feel like people will get on the right path, would you? I mean, what do you mean, would you agree with that? So, treating it like a hotel is that like when someone is renting your property they are, they could just as easily check into a hotel, they can just as easily stay at a hotel. And so they expect in my opinion, I think they expect that same type of experience that a hotel gives them with the same comforts. The added benefit in my opinion is that you have some added comforts even in a home there’s definitely no there’s some variation of decor. Maybe it’s a style of a house that’s kind of cool that attracts someone, maybe it’s the location of your home. Maybe it’s the amenities house, the fact that you have, you know, a giant fully stocked kitchen. Maybe it’s I mean, there’s a number of reasons maybe it’s a party of five, and your home can sleep that number of people whereas in a hotel, they may have to get two rooms but they can just rent your property and maybe right then it would cost them two to Lisa hotel, not least, to stay at a hotel right?

5:38

And what and then you also get the opportunity to have outside space at some of these properties. So when you go to out you may or may not get the opportunity to have a balcony or an outside space with homes that that opportunity if they have a pet or if you’re pet friendly, they can bring their animal or they just go sit out have their coffee.

5:59

I can get that in a hotel.

6:02

That’s a great point. So that’s what I mean by

6:06

Variance. And yeah, so if you start there, but this is what we’ve learned, we’ve learned that and we knew this already, from having one home that we have rented for five years that we know the process. We know how it works. We understand all of that. But it doesn’t take away the fact that it’s hard work

6:28

Is very hard work.

6:30

Yes. Find a deal that works. In the first place, whether you’re negotiating that deal with an owner, whether you’re finding a property to purchase that that fits. Yep. You know, it all starts there. If you don’t have that, then you know, you don’t, you don’t have to furnish a property to the standards of a hotel right is kind of messy. I mean, you’re talking about everything. So if it’s a two bedroom property for example the apartment that we that we leased so we’re literally furnishing a fully furnishing a home like we’re moving in for ourselves a two bedroom property Yeah,

7:10

it sounds it sounds simple kind of but then you get into it and you’re like wow yeah, they need scissors and can openers and coffee and creamer and enough toilet paper for a couple of days those kinds of things like really like it’s a it’s a bigger process than I even realized it would be with these last two properties that we’ve worked with

7:32

and keep in mind we already knew this like we knew what we were signing up for yet still, it seems to be wow yeah, this is this is a lot of work but sometimes you know something on paper or something you’ve done before over time. You just need to be in it kind of trial by fire to realize but you know what, that’s also helping us realize, okay, what is what are the biggest time sucks How can we If we’re gonna grow and do more of this, what can we do in order to streamline a little bit better? Where would we get help in the process? Right? And so those are some of the things that we’re kind of kind of figuring out. So like, for example, if we’re going to streamline or if we’re going to grow that, you know, there’s things that I feel like I’m already seeing that we would need to streamline for sure, a little bit better like, so we have great relationships with a cleaner. That is, in my opinion, the most important part probably of the Airbnb experience, because when that guest checks in, if your place isn’t basically perfect, like a hotel room, you’re kind of you’re kind of doomed from the start a little bit. So you have to have a really good trusting relationship and know that a cleaner is going to do an excellent job if you’re not going to check behind that individual before the next guest. Arrives. Right. Right. So that’s huge, but I think even there Like we might have to, like if the relationship we have if they can grow with us great. But if they can’t, we may have to, like, spread our wings and find additional cleaners. I think maybe we might even have to adjust that where we can like get on a billing type cycle for cleaning rather than right, every clean per get an invoice pay. Like that’s kind of complicated a little bit.

9:24

And as far as like the cleaning goes, I feel like in the beginning, I wanted to do the cleaning. I wanted to be the one to make sure that the property was exactly the way it should be. I didn’t trust anyone else to do it. And you really pushed me to get someone else because it was one of those things where it’s like, oh, we get you know, its one property. We can clean it here and there. You know, no problem run down there. But whenever you get into those situations where you’ve got a renter leaving at 11am on a Tuesday and a renter coming in at 3pm on a Tuesday afternoon,

9:57

Same day turn Yeah,

9:58

Yeah. Those, that’s where it kind of got to be a struggle. And so that’s where the professional cleaner kind of came in and really kind of blew me away because they do know what they’re doing better than I did. So if you’re one of those people who want to do it all yourself, consider hiring that part out.

10:18

And also just go ahead and multiply your business from one unit. Go ahead and take it to five, right yeah, imagine Yeah, imagine cleaning five units yourself, I mean, and managing the whole aspect of the business, you know, you can do it but that better be what you’re doing like full time. So you know, if you want to have a business operating, it makes total sense one to one to one to outsource it. But you know, just the important part there is to build a relationship with that with that cleaning crew with that cleaning company, and figure out how to make that run a little bit smoothly like you know, so we can even improve their upon like, for example, the billing like what I talked about, so, I will definitely be looking into some software for automation at some point. Maybe trying some stuff out at least with like with guest communication and check in and that kind of stuff. There’s certain things that you do on slight repetition and Airbnb has some tools to help you with this, which is which is pretty cool. But I do you think that there are some software’s that can help with that I’m not gonna name any because I’ve only gotten to test some of those. But and then another thing that I think is kind of simple that we can do is we it’s it’s on the list, but so we’re going to create like a general house rules, basically template that we can apply across all of our units. That will that will work for any of those properties

11:46

That give me an example of some house rules that we currently Yeah,

11:50

well, so this is gonna sound kind of funny, but I think for five years, I think our house rules have said, hey, these the golden rule, yes, treat it. Treat it like you want to be treated but here’s the thing. The problem with that is that if you now we have not had an issue in five years at Airbnb at our property. There’s a lot of news right now if I don’t know if people are paying attention where there’s like these party houses and people are trashing properties and stuff, on one hand, like it scares me I’m like, Oh my gosh, what’s going on? But you know, it’s a growing platform, right? It’s been around like 10 or 12 years now it’s kind of mainstream. So on one hand that scares me on the other hand, I’m like, hey, maybe this will scare the landlords away or people that want to Airbnb, their properties. And so it’s a supply and demand thing, right supply supplies a little bit lower than your occupancy rate goes up a little bit or you can keep your rates higher. But with that said, Airbnb, from my understanding, if you have an issue, where maybe you have obviously like an you know, no smoking policy, if this happens, you have to do X, if there’s If y happens, you owe us x if there’s whatever so you have to have that apparently stipulated apparently in your, in your listing in your rules that the that the guest is basically agreeing to. And so if you were to call Airbnb and say, Man, we had this big issue and none of that’s in your house rules you’ll have a much tougher time dealing I think with Airbnb and trying to get them to side with you with the, with the with the homeowner or the you know, the person that’s providing the guest experience, they’ll most likely side with a guest.

13:39

Out there up front. Yeah,

13:41

Yeah, that’s an excellent tip. So that’s something we don’t have, like we don’t have that. But yet now that we’re at three units, like the intention is to have a working document that can be used across all properties. I see no reason why it wouldn’t be the exact same house rules for all all properties, right. It’s not like one you’re gonna allow Party and the other one you’re not or Oh yeah, we allow smoking I mean, you know, I think your rules are going to be are going to be across the board right so inside now let me go ahead and say this if you have not used Airbnb or you want to look at being a host or even stay if you want to check it out and you haven’t done that, we have a deal like you’ll get some discounts if you want to stay for the first time or whatever but you can hop on our website and check out our resources section so just go to destroyed the box with.us so www dot destroyed the box with.us without us so but let’s move on. So let’s say some of the lessons that we have learned right now I would say just in these first three units is so furniture we’ve learned a lot, right so Mandy’s been our go to Queen for like spinning the deals, you know purchasing our furniture. It’s very important people that have mean bees by a wide range of stuff that people will go to like yard sales and buy stuff? That is not our strategy at all No it is not our strategy with Airbnb is to provide kind of pricing similar to hotels like sometimes we could even be higher than a hotel. Sometimes we may be a little bit lower yet we offer you know a different experience that’s kind of better but we’re gonna we want nice things in our van how that can make money or be profitable. I guess if you buy a $2 seat or a $30 couch or something. I mean, I don’t know. I mean, but there’s like, there’s the there’s the gauntlet of that pricing model for Airbnb and we are just trying to go to the higher end of that pricing model right. So on the on the furniture front, though, you know, we’ve learned a few things. One, you’ve been killing it on Facebook marketplace.

15:57

Facebook marketplace kind of came out of the woodwork for me I personally have never used it up until we started looking for furniture like I was in some, like selling groups for some things, some local little selling groups that I had never tried it out. And I was pleasantly surprised with all of the amount of furniture though. Some blogs and some things that tell you what it costs to furnish a two bedroom home or a two bedroom apartment. And those numbers were really high. And so I was trying to do my best to come in at least you know, 75% of that, if not, if not less. So anyway, so yeah, so that I’ve had a great experience with Amazon and with way fair. Those two companies and there’s even this thing with way fair. We’ve heard professional, that they will actually do some staging and do some furniture shopping for you. So that’s those are the places that I have found the best luck with.

16:57

Yeah, and so that’s something that we’re waiting because so, so add all this together. So we Yeah, we probably gonna save, you know, a couple thousand bucks or so by kind of kind of hustling a bit on Facebook marketplace getting some great product that if we ever had to if we ever had to resell the items that honestly we could get probably all of our money back maybe even make money on some of the on some of the items. But you have to pick up the stuff right? So keep that in mind logistics is you got to go around and have the ability to throw it in an SUV or in the back of a pickup truck or have a trailer or you can negotiate for that person to deliver to you which we did do some as well. And if you get furniture from for example way fair that comes in a very beautifully packaged box, very tightly packaged together. There’s assembly required and that takes time, right so you’re saving money there. But if you know so these are things that we’re weighing out ourselves in the future is okay. Do we buy it from way fair and Pay them the XP to come and assemble it into the room do we buy something on you know marketplace and go get it and move it there in these are things I think we’re we are examining as we move forward. But yeah, those have definitely been our, our deal spots I guess where we’ve where we’ve ended up

18:20

And they don’t show you on the commercials, the hours that took to put together that armoire or that nightstand. They just show you pretty things in a pretty apartment

18:29

With happy people. People dancing around getting all excited. Wait.

18:33

Yeah, they don’t show the couple staying up until 10 o’clock drinking their way through assembling. I think because it’s just so miserable.

18:42

This is so hard.

18:44

Yeah. So just a little tidbit there was something I actually did not think about when purchasing off of a site like that. So

18:51

But it’s been a great learning experience. Right. So yeah, and so, a few other things to consider that I think that we’ve learned from as well. Let’s get to this one. So a storage unit. So we didn’t really have a place to put the stuff that we were buying. And we didn’t yet have the property available. But we were finding deals. And we only have so much time, when you sign a deal, you need to get rolling as quickly as possible, like so. We officially have our lease started a few days ago, two days ago, and we’re still a couple of days out from being able to even host the first guest. And so your goal is I think, and on some information that looked at a guy’s go was like, man, within a week, we want to be up and running. So the only way for us this time to do that was to be able to get permission to move some stuff in early to be acquiring stuff, put it in a storage unit. The benefit of that storage unit is also that you know, it can be a central hub for people, right? So if you had someone a trusted employee or whatever, that they can go put something in that storage unit, you can go say, hey, it’s in the storage unit. Go there, grab this. Take it here. So there is that benefit for that. And we don’t know if we’ll keep that cost going or if we’ll once It empties will we maybe we’ll cancel the storage unit and then resign back on again, when we need one. I don’t really know. But we’ll figure that out. And then the last thing, I think that we’ve learned is just like really, really look through the eyes of a consumer on how they’re going to experience that property. For example, like access is really important. Yeah, just think that all the way through, how’s it how’s a customer going to access it? Like, how are they going to get the key? If there’s a key if there’s not like a digital lock or whatever? Is there going to be a lockbox? Like, how are they going to do that? Make sure it’s possible. If you know make sure that that that’s possible. And maybe there’s something like stairs like for example, in one of our properties, one of these two, it’s got, I think, 30 stairs, it’s like three flights, but they’re kind of three like path flights, but still, you know, you have to take up everything up all those stairs every time and so

20:59

There is no elevator yes property.

21:02

Yeah, no elevator. So we’re getting, we’re getting a workout in, you know, going up the stairs, which I don’t mind. It’s a little bit, man, we got to do stairs, but then men slams like okay, like time for workout. So, but yeah, but keep that in mind if that’s not something that you want to tackle

21:16

Then don’t get a property with stairs.

21:19

Another thing. Yeah, that was really important that I don’t think either of us kind of thought through what is parking. You know some places have dedicated parking houses have driveways or place up front for parking. But what do you do when your parking situation doesn’t work? So you have to you have to kind of work around that as well. And plus, if you have a property that you say sleeps 10 people, well, they’re probably not all in one car. And so you have to think about you know, do you have space for two cars at the property? Some places have assigned parking that’s give you one spot. It’s just something to consider whenever you’re getting your properties. Absolutely.

21:59

Yep. So yeah, that’s all we have for now. That’s what we’ve learned up to this point grow into three units you know, we’ll fast forward in the future and create record another episode when either we grow to more units or we have new lessons from these. But until then, get out there and try Airbnb stayed in Airbnb become a host or stay either one just kind of get you know, get familiar with the brand because I think it’s here to stay long term. And

22:28

I’ll see you next time.

22:41

Hey, guys, thanks for hanging out with us. We’d love for you to share it maybe with a friend review it and don’t hesitate to reach out and say hello. You can connect with us and see the resources that we talked about at www.destroyedtheboxwith.us.

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