\n
Ashley Kehr:
This is Real Estate Rookie episode 144. My name is Ashley Kehr, and I\u2019m here with my co-host Tony Robinson, and today is an episode of the Rookie Reply.<\/p>\n
Tony Robinson:
And for those of you that are new to the Real Estate Rookie podcast, Ashley and I are here to give you the inspiration, the motivation, the confidence you need to break into the world of real estate investing. Find financial freedom, really just build the life that you want using real estate as the vehicle. So what do we got going on today, Ash?<\/p>\n
Ashley Kehr:
So today, Tony, I really want to talk about short-term rentals.<\/p>\n
Tony Robinson:
Ooh, I might know a thing or two about that.<\/p>\n
Ashley Kehr:
So my partner and I have two cabins under contract that we are going to turn into short-term rentals. So I thought it was timely to go over what are some basics that investors need to know when they\u2019re getting into the short-term rental space. So I have one Airbnb now that I would consider it more of a hobby and I\u2019d like to take my short-term rental business and turn it more into a business. So the one that I have, it\u2019s actually an arbitrage where I rent the apartment, furnished it, and now it is listed as a short-term rental on Airbnb. It\u2019s gone smoothly. It\u2019s gone great. I\u2019ve had it for two years now, and I\u2019m ready to take on some more properties. So Tony, what\u2019s your advice?<\/p>\n
Tony Robinson:
Yeah, let\u2019s dive into it. Now, before I get into all the tips, this episode airs January 1st, I think. It\u2019s right around the new year, we have our Short-Term Rental Bootcamp that launches on January 24th. So if you guys want to kind of do a deep dive on the acquisition process of short-term rentals and make sure you guys sign up for that. Do you have the URL, Ashley? It\u2019s biggerpockets.com\/bootcamp.<\/p>\n
Ashley Kehr:
Bootcamp?<\/p>\n
Tony Robinson:
There you go.<\/p>\n
Ashley Kehr:
Maybe, plural.<\/p>\n
Tony Robinson:
Yeah. I\u2019m sure if you guys Google it, it\u2019ll pop up. Ash, you got a bootcamp coming up to you. Why don\u2019t you give a quick plug for yours?<\/p>\n
Ashley Kehr:
Yeah, so I am doing How to Get Your First or Next Deal Bootcamp. So if you are a new investor and you just want everything put into order for you as to the steps you can take, we all know real estate investing information is free on the internet, free on podcasts everywhere. But what this bootcamp does is it makes it concise for you and packages it all together. And you can follow the steps to get your first property, or if you need help getting your second or third, this bootcamp is great for you. This is definitely a beginner camp. If you are an experienced investor, this is not something for you. We did have one person sign up to a previous one that a couple weeks in was severely disappointed. And unfortunately I had to tell them, \u201cI\u2019m so sorry, but this is a beginner bootcamp.\u201d So I just want to makes that as clear as possible, but got him his money back and everything, so it worked out good.<\/p>\n
Tony Robinson:
And Now he\u2019s good to go. That was a really good explanation of what the bootcamp is. So listeners just replay what Ashley said, but replace\u2026 throw the word short-term rental in her plug and then you get the idea for mine too. All right. So let\u2019s talk short-term rental. So I got six tips for new Airbnb hosts that I\u2019ll run through and they\u2019re split up between a few different categories. So I\u2019ll talk about getting your listing set up, your revenue and pricing strategies. And then last is like your actual guest communication. So as I\u2019m going through, Ash, just stop me when you got a question and we can have some conversation and go back and forth on it. So tip number one of six is to study the competition. If you are a new host, it can seem insurmountably overwhelming to think about all the things you have to do to get a listing live on sites like Airbnb.
Not only do you have to find the property, analyze the property, go through the closing process, maybe furnish the place. You also have to digitally gets your listing set up, which is creating the listing. Getting the photos done, putting all the little pieces of the listing, your check out time, your check in time, your amenities. So there\u2019s a lot that goes into getting a listing up and running. And instead of starting from a blank slate, my recommendation is to always study the competition to see what is popular in your market. What are the best of the best listings already doing? And how can you take the spirit of what they\u2019re doing, and implement it into your own listing? And you can do this both for the physical setup of your short-term rental, and for the digital setup, the digital experience of your short-term rental.
So I\u2019ll give you an example of both. On the digital listing side, one of the things you have to make a decision on is what time your guests check out. Check out times vary by market. I\u2019ve seen them as early as like 9:00 AM for some listings, as late as like 12 or 1:00 PM for other listings, but it\u2019s going to vary by the market by the size of the property. When we took our first listing live in the Smoky Mountains, we had our check out time set to 11:00 AM. Why 11:00 AM? I don\u2019t even know. We just kind of guessed, we thought it was the right thing to do. Our cleaners let us know that it was putting kind of a time strain on them with the 11:00 AM checkout, because if they have multiple turns throughout the day, it was just hard for them to kind of get through all their properties.
So they said, \u201cHey, can you move it to 10:00 AM?\u201d A lot of our other owners have their check out time to 10:00 AM. So we did some additional digging. We looked at all of the other comparable properties near ours, and low and behold, they all had a checkout time at 10:00 AM. So what did we do? We changed ours to 10:00 AM. And there was no negative financial impact, but we were only able to make that decision by checking the competition. So that\u2019s on the digital side. And you can apply that to so many different things. To your listing titles, to your description, to your amenities that you offer, so many different things.<\/p>\n
Ashley Kehr:
So Tony, how do you, when you\u2019re looking on Airbnb or Vrbo, any of the websites that listings are on, how are you telling which are the best of the best? What is the best way to go and look to see if a property is being rented out a lot? I know I\u2019ve seen\u2026 sometimes there\u2019s the little notification that comes up. This is a-<\/p>\n
Tony Robinson:
A rare find.<\/p>\n
Ashley Kehr:
Yeah. Rare find, yeah, I was going to say hot commodity. I was like, that\u2019s not it.<\/p>\n
Tony Robinson:
They should change that to say hot commodity instead. That\u2019s way more enticing. But yeah, that\u2019s one way to look at it. As you open up Airbnb, you see which properties are showing up on the first page for your search criteria. You see which ones have a lot of positive reviews. Something above 4.8, 4.9 range means they\u2019re really crushing it. Something that has really strong rates, a property who\u2019s calendar seems pretty much full, and if it has that little emblem on there, this little blue diamond that Airbnb will put on a listing that says, this is a rare find. This place is usually booked. So those are all the indicators you can see on websites like Airbnb to determine whether or not a property is popular or successful.<\/p>\n
Ashley Kehr:
So what would be your next advice? Number two.<\/p>\n
Tony Robinson:
So tip number two, and actually, one last thing on tip number one. So you can also use that for your physical setup of your space as well. So if you\u2019re trying to decide on what your design aesthetic should look like, you can also use the competition to help you guide those decisions as well. Now, what I don\u2019t want you to do is is to copy verbatim what another listing is doing. Because you want to have some sense of individuality to your own property. And the design is a really personal choice, but use it to see what elements or what themes are consistent across all of the other top performing properties so you can try and blend those into your own listing as well.<\/p>\n
Ashley Kehr:
I was actually watching a YouTube video this morning of your friend, Rob. Rob-Bilt on YouTube. And it was of him talking about the treehouses that he\u2019s building in the Smoky Mountains. And just how every listing around them was just the standard kind of outdated cabiny feel.<\/p>\n
Tony Robinson:
Bare cabin.<\/p>\n
Ashley Kehr:
Yeah. Bare cabin, and how they were going to make it different so they out from the competition. So that\u2019s exactly what I was thinking of when you said that, don\u2019t copy, just because the other things are doing good doesn\u2019t mean you should do exactly what they\u2019re doing. See if you can find a way to stand out to.<\/p>\n
Tony Robinson:
Which takes me into my next tip, Ashley, what a great segue. Tip number two is to try and find a differentiator. Once you\u2019ve spent enough time getting with the other listings that are in your market, start using some of that research to say, \u201cWhere is there a gap? How can I improve upon what\u2019s already working?\u201d And the example you just gave of my friend Rob is a great example, right? He knows that the Smoky Mountains is a very competitive, very well performing vacation rental market, but he also knows that almost all the cabins look the same. I kid you not, quick side story. I was on a meetup with a bunch of cabin owners in the Smoky Mountains. And one of the guys, I had to do a double take because I thought that he was in my cabin. He was in a cabin and the background behind him. And I\u2019m like, \u201cAre you at my house right now? Like, are you actually at my property?\u201d And he\u2019s like, \u201cNo, this is a house that I just bought.\u201d
So that\u2019s how similar a lot of the properties can look out there. It\u2019s like, I literally, this is a house that I bought that I own, that I thought that he was sitting in because it looks so similar. So if you can find a way to say, \u201cOkay, here\u2019s what\u2019s working, here\u2019s what people want, but here\u2019s how I can make it even more unique. Here\u2019s how I can offer maybe an amenity that the other properties aren\u2019t offering.\u201d So we\u2019ve done this a lot in Joshua Tree as that market has started to heat up, but we\u2019ve gone back and kind of started adding some amenities to our properties to stand out in ways that some of the other competition isn\u2019t. So get really familiar, find that gap and then try and capitalize on it.<\/p>\n
Ashley Kehr:
Awesome. Thank you, Tony. I do not have any follow-up questions on that advice, but I love that. So one of the areas that we\u2019re investing in for the cabins, it\u2019s a ski resort town, and there are a ton of short-term rentals. So what we\u2019re doing to kind of make it a little different is we bought a property with land, and there\u2019s a little pond, and we\u2019re going to try to make it a more of an outdoor experience than just the interior, but it\u2019s the same kind of thing where a lot of them look exactly the same in the inside. It\u2019s the two skis crossed together on the wall all the ski decorations, wish for snow and things like that.<\/p>\n
Tony Robinson:
Yeah, you got to find a way to stand out. And I think that\u2019s even more important Ashley, because the short-term rental space in general is becoming more popular amongst investors for a multitude of reasons. I think more investors are starting to see that there is good returns to be had there. I think Airbnb itself now that it\u2019s a public company has a lot more visibility. They\u2019ve spent a lot of money in the last year trying to recruit new hosts. So there\u2019s all these different factors at play that are driving more investors into the short-term rental space. And as that happens, if you want to remain competitive, you\u2019ve got to find ways to stand out. So that one\u2019s a really important point. So cool. Those are the first two tips. The next category of tips is all about revenue and pricing. So tip number three, and the first tip about revenue and pricing is don\u2019t be afraid to experiment with your pricing strategy. And I\u2019ll break this down a bit.
There are a lot of different things that you can do when it comes to pricing your property that will have an impact on your occupancy and effectively your overall revenue. So for example, you can change your minimum night stay. So how many nights must a guest book to stay at your property? Some people put it to one night. Some people put it to five nights. And depending on what minimum night day you choose, that\u2019s going to have an impact on your revenue strategy. Another thing is the actual prices that you\u2019re charging throughout the year. In most markets there\u2019s a peak season and there\u2019s a slow season. And the hope is that you know what those seasons are and you\u2019re charging appropriately. If the busy season for your ski resort town is, I don\u2019t know, January and February, because that\u2019s when it\u2019s snowing, you should be charging way more in those months than, I don\u2019t know, in July when it\u2019s the summer and no one wants to go to that ski town.
But understand what those different seasons are and play with your prices to make sure that you\u2019re reflecting that. There are other minor things like how much you charge for your cleaning fee, whether or not you charge more on the weekends than you do during the weekdays, there\u2019s so many different levers you can pull to try and see how it impacts your pricing. So I\u2019ll give you two examples. First example, for our bigger properties, we have longer minimum night stays. So typically we\u2019re between three days during the regular season, up to seven days during the busy season. For our smaller properties, we might go a one night day during the week, Sunday through Thursday. And then we\u2019ll do a two night stay on the weekends, Friday, Saturday, Sunday. So we play with these different things to kind of find what\u2019s been most beneficial for us. So you\u2019ve got to be able to do the same for yourself.<\/p>\n
Ashley Kehr:
Tony, question on that is, so the first year that we had our Airbnb, I didn\u2019t go in advance and make the price higher for 4th of July weekend. And we had somebody book it for probably half of what they would\u2019ve paid at any of the surrounding ones. So what are some tools that somebody can use to make sure they\u2019re staying on top of the pricing? I know that Airbnb has their pricing software where it kind of fluctuates and you set the minimum and the maximum, but what\u2019s some other features or software that people can take advantage of so you don\u2019t get into that situation and you\u2019re always on top of the pricing?<\/p>\n
Tony Robinson:
So yeah, Airbnb does offer what they call their smart pricing kind of feature that\u2019s baked into Airbnb. I mean, a lot of hosts rely on that. They use it and it works for them. What a lot of the more sophisticated hosts do or host a lot of listings, they leverage dynamic pricing tools. It\u2019s a software that\u2019s labeled as a dynamic pricing tool. Some big ones out there, there\u2019s beyond pricing, there\u2019s PriceLabs, which is what we use, AirDNA has recently launched their own kind of pricing software as well. There\u2019s a lot of different platforms you can go to, but the general sense is that you use these dynamic pricing tools to do a really in-depth research into your market, understand your competition, and then they will dynamically and automatically adjust your prices every single day. So you just kind of set the framework of how you want your pricing strategy to work, and then it\u2019ll go through on a daily basis and adjust it.
So like, for example, I can set, and I\u2019ll keep this one brief, because we can get really, really into the weeds on this one. But I have a two night minimum stay for some of my properties in Joshua Tree, but I know that as I get closer to a certain date, the likelihood of someone booking goes down. So if I have an open date over the next 10 days, I\u2019ll automatically adjust that two night minimum to a one night minimum. Because hopefully there are more people searching for a one night stay over the next 10 days than there are people searching for a two night stay over the next 10 days. So a dynamic pricing tool allows you to set rules like that and then it runs on autopilot on a daily basis.<\/p>\n
Ashley Kehr:
Awesome. Very cool.<\/p>\n
Tony Robinson:
Yeah. Let\u2019s move on to number four, which ties in pretty closely to number three, but a big part of getting your revenue and your pricing strategy right is having good comparable properties. So in the same way that when you are analyzing a long term rental and you\u2019re trying to figure out what you should charge for rent, you\u2019re looking at other comparable properties in the neighborhood and you\u2019re using that to gauge your decision on the pricing for your property, the same holds true for short term rentals. You want to identify a good comp set of properties, a good set of comparable properties. You can consistently grade your property against to see whether or not you\u2019re moving in the right direction, if you\u2019re pacing in the right direction or if you need to make adjustments. So we keep a concept, we have a broad concept to recreate.
Then we have a more kind of narrow concept. So like for example, say I have a two bedroom property. I might look at all the two bedrooms in that market. So I can see what are the different ranges of prices that we\u2019re seeing for those kind of properties. But then I\u2019ll create a very specific subset of properties. Maybe it\u2019s like 10 to 15 properties, where I go through and I hand select and I say, \u201cOkay, this one\u2019s a really good comp to my property. Let me look at this one. This one\u2019s a really good comp to my property. Let me look at this one.\u201d And when I have the kind of broad strokes in that more narrowly defined comp set, that allows me to make some really good decisions on how we should be pricing our property. So creating a good comp set is tip number four.<\/p>\n
Ashley Kehr:
Very cool. Thank you. With that is when I look at listings on Airbnb, what\u2019s the best way to show the vacancy rate when you\u2019re pulling those comps. Is it just like not putting in a date into Airbnb and then hitting search? So you see all of them. Okay. I didn\u2019t know if there was a better way.<\/p>\n
Tony Robinson:
Yeah. So Airbnb doesn\u2019t make it super easy to do this kind of competitive research. A lot of the other tools out there, the dynamic pricing tools that\u2019ll assist with this in different ways, but if you want to do it the free way on Airbnb, all you have to do is open up the comparable property that you want to see. And then you can literally just open up their calendar and see what dates are booked over the next 30, 60, 90 days. And that\u2019ll give you a sense of how you should be pacing for your own property.<\/p>\n
Ashley Kehr:
Okay. Thank you.<\/p>\n
Tony Robinson:
All right. So those are the two tips on revenue management. My last two tips are all about guest communication. So if you guys didn\u2019t know, a big part of being a short-term rental host is actually communicating with the people that come and book your property. We\u2019ve learned a lot. We\u2019ve hosted over a thousand people at this point across our different properties. Some have been amazing. Some have been terrible and everything in between. So I I\u2019ll break down just a couple tips on, on what we\u2019ve learned there. Tip number five is understanding that a refund is better than a bad review. Reviews are the life blood of your business as a short-term rental host. One bad review, especially for a new property can really derail your progress and ultimately your revenue. So if we are ever in a situation where we feel a guest has had less than an optimal experience or less than a five star experience, we are very quick to send some kind of refund. Sometimes it\u2019s small, maybe we\u2019ll send 20 bucks, 25 bucks. Sometimes it\u2019s big. We might refund an entire night.
It all depends on the severity of the incident and what happened. And it doesn\u2019t matter whether or not it was our fault. Sometimes things break and there\u2019s no way we could have planned to prevent that, no reasonable way. But regardless, whenever a guest experience is something that\u2019s less than a five star review, it\u2019s on you as the host to make that right. And what we found, and I read this in a study. I used to study marketing when I was in college and brand\u2026 I don\u2019t know what the phrase is, what\u2019s it called when you\u2019re a fan of a certain brand, like brand allegiance? I don\u2019t know what it\u2019s called, but your favorability of a brand can increase, if you have a negative with that brand, but that brand then does a lot to make it right. So for example, if we have a guest that checks in and I don\u2019t know, like the hot water heater, all right, let me give you a real example. So we had a guest that checked in to one of our properties last week.
We\u2019re in the winter time right now. So things are really cold in Joshua Tree. Guest checks in, they try and turn on the heater, and the heater is not working. We\u2019ve never had that problem before. We\u2019ve had that property for almost a year. Guests come in and out, never had that problem. This guest checks in, heater\u2019s not working. We can\u2019t get any HVAC company to go out to make it right. So we call up our cleaner. We say, \u201cHey, can you guys stop by the property?\u201d Actually, we asked our cleaner to drive to the store, buy a space heater, and then drop it off at the property.
The guest didn\u2019t ask for this, but we just went out of our way to do that to make it right for them. So we gave them that space heater. We gave them a partial refund, had someone come out the next day to get the heater fixed. But those are the kind of things you need to do to make sure that you\u2019re making things right for the guest, because a bad review, a bad review will cost you way more in the long run than a partial refund.<\/p>\n
Ashley Kehr:
So I just booked one of your properties for a full week. I can\u2019t wait to say that something\u2019s going wrong and ask for a full refund.<\/p>\n
Tony Robinson:
Yeah.<\/p>\n
Ashley Kehr:
But that is such a great point. That\u2019s just another example of that money can solve so many problems, including with having somebody that\u2019s having a bad experience in your Airbnb and saying, you know what, I would love to. And especially if they don\u2019t ask for it. Doing more than what they ask for saying, if they just want you to come and take care of the problem, or even if they\u2019re just letting you know, if they\u2019re being super nice, like, \u201cOh, I just want to let you know, the wifi didn\u2019t work while we were there.\u201d And they\u2019re not, not even asking for anything. And then you go and say, \u201cOh, let me refund some of your money for that\u201d, or things like that. So that\u2019s such a great point. I love that tip. I think so far my favorite.<\/p>\n
Tony Robinson:
All right, well, tip number six is to leverage automation within your business. There are, especially if you start to scale your portfolio, there\u2019s a lot of going back and forth with your guests that needs to happen to ensure they have a smooth experience prior to checking in, while they\u2019re at your property, while they\u2019re on their way out of your property. And then even after they leave. So you can manually send all of those messages if you want to. But that would be a nightmare. So we leverage a lot of automation software to help facilitate that process. There are a lot of companies out there, Hospitable, iGMS, Your Porter. There\u2019s a lot of different channel managers that short-term rental hosts use, but the important piece is to pick one, use one, and then load it up with a bunch of different messages that you sent out to your guests.
So we have three distinct phases of a guest experience. They have before they check in, so they\u2019ve just booked your property, but they haven\u2019t checked in yet. They\u2019re actually staying at your property, and now they\u2019ve actually left your property. So before they check in, we send them a confirmation message that goes out immediately. We send them a check-in instruction message that gives them all the details of how to access the property. So they get those before they even check in, they get two messages from us. During their stay, they get one message that\u2019s just checking in with them. \u201cHey, hope you checked in all right, hope everything\u2019s going well, let us know if you need anything.\u201d Before they leave, they get another message saying, \u201cHey, hope you had a great stay. Here\u2019s a reminder of the house rules, and what you need to do as you check out.\u201d
And then once they leave, they get another message that says, \u201cHey, we really hope you enjoyed your stay. We\u2019d really appreciate an honest review of the property\u201d, et cetera, et cetera. So all those are automated. And some guests, they get nothing but automated messages because everything that they ask is handled by those automated messages. And lo and behold, we get so many people, Ashley, they comment about how responsive and communicative we are as hosts, not knowing that the vast majority of that communication was some algorithm running on the background of our channel manager. So it\u2019s really helpful to have those automated messages to give your guests a really good experience without it being a big time suck on your end.<\/p>\n
Ashley Kehr:
And I think that\u2019s a big part of setting up those systems and processes on your first property so that you have them all set to just roll into more properties instead of having to, okay, you got 10 properties now, having to go back and implement those for each of the properties.<\/p>\n
Tony Robinson:
Yeah. We\u2019re copy and paste at this point. So we set it up one time, we bring on a new property, it\u2019s literally just copy into the next one. So that\u2019s it. Those are my six tips. I hope that that gives some insight for new beginners on how to be better hosts, and maybe takes away some of the anxiety that\u2019s related to getting started in the short-term rental space.<\/p>\n
Ashley Kehr:
Yeah. Tony, this is awesome. This is a super easy episode for me to record and I learned a lot.<\/p>\n
Tony Robinson:
All right, next one, we\u2019re going to do it all about RV\u2019s and campgrounds, or maybe running a liquor store. That way I can just lob all the questions your way.<\/p>\n
Ashley Kehr:
Or injuring your knee snowboarding.<\/p>\n
Tony Robinson:
Or injuring your knee while snowboarding.<\/p>\n
Ashley Kehr:
Well, thank you guys so much for listening. I\u2019m Ashley @WealthFromRentals. He\u2019s Tony @TonyJRobinson on Instagram. And don\u2019t forget to check out the Real Estate Rookie Bootcamp and the Short-Term Rental Bootcamp. We would love to have you guys be a part of it. It starts January 25th. We\u2019ll see you guys next time, but before we go, let\u2019s find out what\u2019s new on BiggerPockets.com and can provide you guys the most value.<\/p>\n
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