Interview w/ George You: Rental Property Management

In this episode, Bill talks to George You, owner of several successful property management companies that have offerings in both the short-term and long-term markets across several areas including Big Bear, Mission Beach, and Cabo San Lucas. Listen as George shares his strategy for keeping both investors and customers happy, and how he has mastered the art of spotting properties ripe with potential.

 

Time Stamped Show Notes:

  • 00:09 – Bill introduces George
  • 00:53 – Bill and George met in the Entrepreneur’s Organization
  • 01:13 – George’s vacation rentals are in Big Bear, Mission Beach, and Cabo
  • 01:20 – George works a lot with investors
    • 01:30 – “We make sure we can get the income they’re expecting on their properties”
  • 01:42 – Most of George’s long-term rental properties are in San Diego
    • 01:49 – They have 40-50 long-term rental properties and 80 short-term properties
  • 02:19 – George charges a management fee of 5-10% depending on the number of units on the long-term rental side
  • 03:05 – The advantage of having a property management company for a long-term rental property
    • 03:15 – No hassle
    • 03:25 – Be able to look at market rents constantly
  • 03:50 – Short-term rental property management fee ranges from 20-30%
  • 04:33 – 3 phases to get a good review from guests
    • 04:35 – Booking stage, arrival stage, and post-booking stage
    • 04:42 – George automates everything so guests can have a pleasant stay
    • 04:57 – George started an amenity program
      • 05:13 – Guests can enjoy one free amenity per guest per stay
    • 06:00 – Booking online is through their software or different channel partners
      • 06:15 – 50% of the guests book online and 50% still call to book
    • 06:30 – What would you say to an investor who thinks that the charge is too much for them?
      • 06:43 – Most investors don’t have a software where they can push a property out to all channel partners
    • 08:12 – Investors can actually save money by going through a property management company
    • 09:26 – George’s software recommendations for those who want to manage their own property
    • 09:54 – For investors to be successful in short-term rentals, the biggest thing is to research and talk to people who have been in the field
    • 10:43 – How to find the best ROI
      • 10:54 – Find a property that has the potential to stand-out from the usual
      • 11:54 – “The more occupancy, the higher rents you can get”
    • 12:26 – George has designers that can recommend for furnishings or be available for design consultation
    • 12:48 – Coordinate the colors of furnishing to enhance the ambiance of the place
    • 14:15 – Short-term versus long-term?—it depends on the property
    • 14:36 – In Mission Beach, George has 80 vacation rentals, 60 in Big Bear, and about 100 in Cabo
    • 15:02 – George will accept properties close to Mission Beach
      • 15:20 – Charge is 20% on short-term rentals
    • 15:37 – Team size
    • 15:50 – Get in touch with George through his email
    • 16:03 – “We offer investors customized proforma and guarantee what we’ll be able to do for them”
    • 16:27 – Revestor.com is a pre-due diligence tool for users to run the numbers and kick the tires
    • 16:47 – How do you handle a bad review?
      • 16:53 – Handle it publicly. Respond and be real
      • 17:10 – Handle it directly with the person. Reach out and ask what you can do next time to help take care of them
    • 18:10 – “Do your research, talk to the professionals and learn the business”

3 Key Points:

  1. Over correct the problem and take care of the people.
  2. Figure out a way where you can add value to the property.
  3. Never discount your price; just add value and bonuses.

Resources Mentioned:

Credits:

Show Notes provided by Mallard Creatives

Interview w/ Adam Dailey: Investing in Short-Term Rentals

In this episode, Bill talks to Adam Dailey, an entrepreneur and AirBNB investor/host. In addition to his love of entrepreneurship and AirBNB, Adam owns a beer marketing company. Listen as Adam shares his strategies for becoming a successful Airbnb host, identifying properties with true earning potential, and side-stepping those cumbersome HOA fees.

(SIDE NOTE: The audio quality is not the best but please bare with it because it is WELL worth it!)

Time Stamped Show Notes:

  • 00:09 – Bill introduces Adam Dailey
  • 00:10 – Bill and Adam met at Entrepreneur’s Organization
  • 00:20 – Adam’s background is in marketing and he now runs a beer marketing company
  • 00:30 – Adam has three properties available on AirBnb
  • 01:25 – Adam started with his place in Austin, which he rents out for South by Southwest
    • 01:40 – Adam bought and found everything he needed for the house in Home Depot
    • 02:30 – Adam’s place is good for 5-7 people
  • 02:45 – There are guests who won’t clean the place after their stay
  • 03:20 – Rent Like A Champion
  • 03:58 – Adam doesn’t use a management company
    • 04:10 – Adam wants to manage the place on his own
    • 04:20 – Adam’s son was born in one of the houses so it has a sentimental value to him
  • 05:18 – Adam’s stand regarding HOA fees
    • 05:24 – None of Adam’s properties have HOA
    • 06:00 – “There’s a way around it and as a business model, there’s a lot of people doing that”
  • 06:27 – Adam’s recommendation on people finding properties
    • 07:05 – Adam likes the downtown properties because of the businesses coming during the week
    • 07:35 – Guests would normally limit themselves between beaches and downtown
  • 08:08 – “Don’t look at the city. Look at the neighborhood and know your niche”
  • 09:10 – Ideal price per unit is $500 per night
    • 09:20 – “If you have a higher starting price, you get a higher level person as a guest”
  • 10:15 – Bill talking about Pablo who has a motel and turned it into Airbnb
  • 10:40 – When you have a hotel turned into an Airbnb, it is easier to run and control everything
  • 11:23 – Adam has a system for smaller scale properties that automates everything
  • 11:38 – Reviews are important
    • 11:56 – Adam has a welcome basket for the guests
  • 12:37 – What the host is getting will depend on how big the transaction is
    • 12:44 – In San Diego, the guest is going to pay an extra 10% of the hotel tax
  • 13:29 – Adam charges the guests whatever he charges the cleaning people
  • 13:57 – Adam will only stay in San Diego for now
  • 14:33 – Short-term rental is a good business model
  • 14:40 – Short-term and long-term rental properties rates can be seen at Revestor
  • 15:48 – “Research and be a sniper”

3 Key Points:

  1. Don’t look at the city. Look at the neighborhood and know your niche.
  2. If you have a higher starting price, you get a higher level person as guests—eliminates potential problems before they start.
  3. Research and be a sniper.

Resources Mentioned:

  • Rent Like A Champion – One episode on SharkTank that is similar with Airbnb
  • Revestor – Bill’s website where you can find short-term and long-term rental rate of properties

Credits

What Kind Of Investor Are You? Part 2 of 3

Last week I talked about approaching real estate investing from a long term buy and hold strategy. If the long term strategy is the most common then this week’s strategy is certainly the up and comer. Let’s go over some advantages and disadvantages to short term buy and hold real estate investing. Often referred to as short term or vacation rentals.

The National Association of Realtors has only collected data on vacation rentals since 2003 and in 2014 a record number of sales were made. The vacation rental industry has given birth to companies such as VRBO (Homeaway) and AirBNB just to name a couple. Furthermore the feedback we’ve received from our users, has caused us to adapt and develop new tools which will be coming to Revestor this Fall.
Screenshot 2016-07-27 15.01.05

With all of the users, investors and agents I polled for this week’s post there was one piece of advice that each gave. And that was to know your numbers. With all of the variable and unexpected costs that come along with buying a vacation rental it’s important to due your homework.

#1. Know the area

You need to be familiar with the area that you’re looking to buy in. I’m talking year round. Let me give you an example. I can rent out a 3 bedroom / 2 bath townhouse in Palm Springs from January 1st to April 30th for $5,000 / month and have people lining up to occupy the unit. From June 1st to September 30th it isn’t uncommon to have a 90% vacancy rate. Vacation destinations have seasonality and rents that coincide with those seasons. There are other cities such as New York, San Francisco and Chicago that may not be exposed to such a change in demand but the bottom line is that you must know your market. All 365 days of it. (Well New York can get really hot and really cold regardless there is demand but not so much so in Chicago)

#2. Know the rules

If you know the area then you must know the rules. Your neighbors may not be thrilled with the idea of living next door to a new tenant every few days, few weeks or few months. Perhaps there is something stated in the HOA, CC&R’s or local laws. The explosion of owner occupied vacation rentals is still a relatively new market and laws will be changing as a result.   

Screenshot 2016-07-27 15.01.43

#3. Know the numbers

Revestor can help you locate properties and run the numbers as a valuable due diligence tool. It’s up to you to understand those numbers. Here are just a few items you need to consider when understanding the numbers for a potential vacation rental.

  • Furnishings – You need to develop a budget for furnishings. Know ahead of time that your future tenants likely won’t care about the beer they spill on the couch.
  • Cleaning – Depending on your length of stays, vacancy rate, your proximity to the property, your willingness to clean etc. You’ll need a best case / worst case scenario in place.
  • Utilities – Running the A/C 24 hours a day may not be what you had in mind but it may be what your tenant has in mind. Or perhaps they prefer your pool be heated to 85 degrees. Those unexpected utility bills can wreak havoc on your bottom line.
    *You can manage utilities from afar on your smartphone nowadays.
  • Effects on neighbors – Your tenant is on vacation so they are likely going to do what others do on vacation. Stay up late, make noise, drink etc. This can have a negative impact on your neighbors and can make management difficult for you.

#4. Decide who will manage the property

Sites like VRBO & AirBNB are great resources to help monetize your vacation rental but what is the best solution for you? If you’re considering one of these methods I would highly recommend looking for a MeetUp or local event hosted by AirBNB where they will walk you through their platform. I would also recommend (just in the beginning) renting your place below the market price. The reason for this is two fold.

  1. You’ll get it occupied quicker saving you the expense of vacancy
  2. You can get more people through and get better reviews faster

If you decide to go with a property management company understand that they will likely take a higher percentage. Cuts as high as 20% are commonplace in the vacation rental market. There are advantages however to working with management companies that focus solely on the vacation rental market. Companies such as Pillow Homes and Mission Sands are good examples.

Vacation rentals can be a very lucrative strategy when it comes to real estate investing. IF, you know your market. If you’re searching for that starting point for getting started then Revestor is the place for you. Being able to run investment calculations over live listings will help familiarize you with the market and help you to make better decisions. When you’re ready, we also have a network of professionals to help you complete the purchase process.

Happy hunting,

Teevan