On the show today we talk… Short Term Rental Deep Dive with Avery Carl!
Listen on: Apple Podcasts | Stitcher | Spotify | Amazon
Show Links:
- Avery’s website https://theshorttermshop.com
- Property management software https://www.guesty.com/
- AirBnB & VRBO
- Rental Management Software – Guesty for Hosts https://hosts.guesty.com/ – IGMS https://www.igms.com/ – Owner Res https://www.ownerreservations.com/
- Pricing manager – Price Labs https://hello.pricelabs.co/ – Beyond Pricing https://www.beyondpricing.com/
- How much your properties should make – Air DNA https://www.airdna.co/ – Rabbu https://rabbu.com/ – Key Data https://www.keydatadashboard.com/
- Annual PNW Short Term Rental Conference- https://www.nwvrp.org/attend-the-2022-conference
Show notes for Short Term Rental Deep Dive with Avery Carl!
The Vantastic Life is…
– is in Kauai Hawaii!
Where to buy
Regional – Drivable – Short term vacation destinations
Rentals should be 5-10 hours away.
Avery is in Destin FL right now, where vacation rentals have been forever!
Regulations
Call city or county planning or zoning department to find out if you can have short term rentals.
Local tradition management companies are against short term rentals, unless they’ve adapted.
The number one thing for short term rentals is tourism! Beach markets, mountain markets, National Parks, etc.
In Destin there are more short term rentals than people that live there.
DATA
Key data, price labs – you should use several
Enemy Method – Zoom in on map to find enemies and get data about price, images, etc.
Due diligence steps
- Regulations first. No regulations is not a good thing.
- Check tourism data. Being close to a National Park is very helpful because they keep great data. Look for a big attraction or theme park. Stick to real estate investing for dummies areas. Don’t overthink it.
Returns
Cash on cash is the best return indicator for short term rentals. A minimum of 15% cash on cash is what we look for. You can get well into the 40%’s. Avery started The Mortgage Shop so they could put everything under one roof.
Lending
2nd home loan option – you have to stay in it a certain amount of time per year. You have to keep control of the property. You have to self manage it. A lot of lenders need to to be around 65 miles away from your primary residence. It has to make sense. You cannot put these in an LLC.
DSCR Loans – You can do whatever you want based on what the property will make. You have to prove that the property will make the same amount or more than the mortage every month. Visio is lender. The Mortgage Shop can do it for 15% down. These are portfolio loans
Performance
Air DNA – Data company that measures the performance of short term rentals. It tells you what you should make. Stick to market wide data.
Price Labs Market Function Dashboard
Performance – Typically 4 bedrooms and up is the best return.
Bedrooms vs. how many you can sleep – If people are feeling cramped they are going to be more sensitive about the house. Avery likes to stay away from partiers.
Getting Started
Getting started – Buy what you can afford. It’s a fast market right now. You can wait yourself out of getting anything.
Condos – Great in vacation markets. In markets with a lot of residents… not good. Make sure condo fees are covering essentials (like utilities).
Expenses
Expenses – We self manage all of them with 2-3 pieces of software on your phone. Short term managers take 25% of your income. Internet, utilities, AirBnb is 3%, VRBO is 8%, state sales tax (paid by AirBnb), local occupancy tax. Capital expenses or maintenance – 1-2% of income. She spends more on long terms than short terms because there’s someone in there cleaning every week, so she knows when it needs things right away. Cleaning is per cleaned charge and charged to guest, however you want to charge the guest more than the cleaning fee for a little bit more income.
Apps
Guesty for Hosts – IGMS – They pull all of your different listings into one dashboard. You can make an edit in one place. It streamlines your communication. Blocks all calendars. Sends auto messages. Syncs calendars with your cleaner.
Pricing manager – Price Labs. Syncs with property management software. Dynamically prices your property to get you the highest price possible.
AirBnB is 85% of bookings. VRBO is better for disputes.
Reserves
Reserves – 3 months minimum, but ideally 6 months. For your budget.
COVID – Was actually a good thing for short term rentals.
Underwriting
Quick underwriting – For now, I don’t do any calculations anymore. I eyeball everything. For people listening… You’re looking at netting 40% of your gross annual rent.
Short terms don’t fit really great into a spread sheet like long term rentals do. There’s going to be a variance based on how you manage it.
Minimum night stay – Depends on the rental/market
Quick and dirty – You want it to make 10% of the purchase price and 20% is a home run!
Partnerships
Partnerships – They can work great. Have an attorney write up an operating agreement for that.
Do you need to offer amenities – Pools are great. Fire pits we don’t like. Beach properties offer bikes. Mountain properties offer hot tubs. Having one extra cool thing will go a long way.
Insurance
Insurance – Not hard to get. There are several short term rental companies. Make sure you get short term and umbrella policy.
Reviews
Reviews – Send an auto reply that says we gave them a 5 star review and ask if they can do the same. You need to get over asking for reviews.
Screening Guests
Number one question to screen bad guests – Don’t slam a lot of people into a small property. The questions they ask will tell what they will be like.
Starting capital for furnishing – $10k per bedroom is about what you can expect. But you can buy short term rentals that are already furnished.
All about Avery – The Short Term Shop – If you use them they give you back end education. They are in 10 markets.
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