In this episode, we have the special honor of speaking with Shelby Pracht. Shelby manages 13 units, all located in Mammoth Lakes, California. While she was still working full-time as a counselor at a crisis center, she and her husband started renting out a bunk in the living room of their one-bedroom condo. They were able to make enough money which completely covered their mortgage by doing that. From there, the neighbors heard how they were doing and asked them to start managing their properties.
Shelby shares how she transitioned to being a property manager full-time at three properties, how she attracts property owners without doing any marketing strategy at all, and why she is selective with the units that she is taking on.
Video Transcript
00:00:00
So I would definitely recommend for anybody looking into starting hosting that start in your home. If there’s any way that you can start in your own home and meet guests in person, then you really get to hear what they’re looking for specifically and talk to them and ask them questions and see what they’re looking for in those units. And that’ll really help you as you scale up.
00:00:22
This is episode number four, five with a short term rental success stories podcast. Are you an investor that’s looking to have your home professionally managed, go to cohost it.com for more information, welcome back to short term rental success stories. I’m your host, Julian Sage. This is a show where I talk to hosts about their journeys and starting and growing the short term rental business. My goal is that you’ll be able to walk away with practical information. That’ll help you become a better host and learn how to scale your business. Like any exceptional host. We all strive for five star reviews. So please going over to iTunes and let us know what you enjoy. This really helps support the show. If you haven’t done so already going over to our Facebook group, the host nation to connect with the community.
00:01:03
Hey, what is going on host station? I am super excited to be back again with you this week. This is so exciting because we are coming up towards the high season. So March to October is the high season, at least in the Alexandria market. I’m sure that a lot of the other markets follow very similar pattern, unless you are very fortunate enough to live in Florida or Phoenix. You could probably tell where my heart is. I’m a Florida boy. I love wearing flip flops and shorts and being out in the sun and being nice and brown in the DC area. I am always wearing sweatpants. My hands are very cold and my feet are very cold and I am very pale because I do not go outside enough, but I am really excited because we are coming up to the high season and co-host it, which is Jon Bell and I’s property management company.
00:01:51
We offer this thing called the turnkey Rental arbitrage program. And we’re coming up to this time now where we’re getting units ready for the high season. So for those of you that are interested in getting into turnkey Rental arbitrage and working with Jon and I personally then definitely wanna go to cohost it.com. You can find out more about the turnkey Rental arbitrage program. You can even schedule a time to talk for a one-on-one about if this would be a good program for you. I’m very excited for this new year because it’s gonna be really game changing for cohost it and us moving forward and for our investors and the returns. And I’m just so, so pumped and a project that John and I have been working on for quite a long time now. And we are really starting to really dive deep into it. So for the next month, we are just gonna be putting our heads down and focusing on providing this next level content to you guys.
00:02:37
So if you thought that the success stories, podcast and Vacation Rental machine were super high valuable, then you are gonna be blown away with the next level that we are gonna be providing in this next iteration of our content. Also wanna highlight a review that came in real quick. This is five stars from K stand 12. They said, love this show. Julian asked great questions and has amazing guests. Thank you so much. K stand. We always appreciate the reviews that come in on iTunes. In this episode, we have the special honor of speaking with Shelby prac. Shelby manages 13 units all located in mammoth lakes, California, while she was still working a full-time job as a counselor at a crisis center, she and her husband started renting out a bunk in their living room of their one bedroom condo. They were able to make enough money out of the spare bunk, that they were able to completely cover their mortgage from doing that.
00:03:21
And from there, their neighbors actually started to hear what they were doing and renting it and putting it on Airbnb. And they started asking them if they could start managing their properties, Shelby shares how she transitioned to becoming financially independent, to being a full-time property manager with only three properties and how she attracts property owners without doing any market strategy at all, which is crazy and why she is selected with the units she’s even taking on. So she, she even needs to push people away because they are so interested to work with her. If you like my show notes for this episode, go to Short Term Sage dot com slash St four five. Or if you like my show notes sent directly to your inbox every week, then go to Short Term Sage dot com slash show notes with all that being said onto this week’s Hey, welcome back, host nation to another episode of short term rental success stories. In this episode, I have the special honor of speaking with Shelby PR Shelby, would you please introduce yourself to the host nation and let them know who you are and what inspired you to get into short term rental?
00:04:13
Hey, host nation. My name is Shelby. I am based here in mammoth lakes, California at ski resort. And I, I got into Airbnb completely accidentally. My husband and I went on a honeymoon to Paris and traveled a little bit around Europe, stayed in some Airbnbs back in 2015 when it was pretty new in our area and came back and decided for some really strange reason that we were going, tried to rent out a bunk bed in the living room of our one bedroom condo. And that actually went surprisingly well. And we enjoyed the experience and we’re making enough from that to cover our entire mortgage on that condo. And, and from there, the neighbors heard how we were doing and asked us to start managing their properties. We’re now managing 13 other short term rental properties here in town.
00:05:08
And, and how, how long has been this journey?
00:05:12
We, we started 2015, so little little over four years now.
00:05:17
Okay. So, wow. You you’re bed in your condo, in the living room, you said yeah. Was, was, was able to cover your mortgage. What, what, what location are you? Are people, are people willing to pay that much to stay in a bunk bed in a condo?
00:05:33
Yeah, so we were charging like $40 a night for that, but we were booked completely solid. You know, where, you know, the town of mammoth lakes, if anybody’s in Southern California, we’ll have a general knowledge of it. It’s a big ski destination, a lot of people from, from Los Angeles, San Diego, like to come up just for the weekends. And there was a lot of young people that were traveling and wanting to have somewhere to crash before they went speed in the morning. And, you know, it was a great way for us to meet a lot of people to build up a lot of great reviews on our profile by being there and interacting in person with people in a shared space and gave us a lot of really great, you know, knowledge and information moving forward when we started renting whole properties.
00:06:16
So about four years ago, you got, you got started renting out a bunk bed that started doing really well. And then people started hearing like, okay, Shelby is rented out bunk bed and making a killing, and then they also wanted to get involved. What, what was that progression to getting to 13 properties? What did that look like?
00:06:32
We were very reluctant to take on any other properties for a long time to just because it was a lot of work and we were doing everything ourselves and we have a lot of single or two night stays in our area, like a lot of very quick turnover, but we were making enough from renting that bunk bed that we were actually able to purchase a duplex. We moved out of that condo into our duplex, half of our duplex and began renting that same condo full-time on Airbnb, the whole property. And it was actually the neighbor in that same condo complex building that had heard, saw people coming in and outta our condo all the time and was like, I’m using a traditional property management company. And I, you know, five occupancy where we were at 90, 95% occupancy, a hundred percent occupancy during some busy months. So he found, found us, got in contact. And, you know, we kinda explained we, we don’t have any experience managing any other properties besides this one, but he was so fed up with the traditional management companies here in that he was willing to give, you know, to 20-something kids, a chance at managing his Vacation home. And from there within the next two to three years, we have had other neighbors. We actually manage four in that same complex right now.
00:08:00
And, and then just some other friends and family of that original guy that are all using us now to, to manage their Vacation homes. And it was, you know, we’ve actually had to turn down a lot of people because there’s so much demand for live person. Somebody that’s actually here and is not one of those old fashioned brick and mortar companies that doesn’t really care about people’s properties or their bottom line. So there’s been a high demand and, and we’ve had to try to grow strategically and that’s, that’s been a big, a big issue for us is figuring out how many for us is the right number.
00:08:43
Right. And, and that right number I want, I want to hit on that thing that you told me before, where you got started, but you, what, how many properties were you able to go to where you were able to be full-time into management?
00:08:54
So we do, we do have some long-term rentals that we own that are helping pay the bills. To be honest, I think I, we were probably just at two when I was able to go full-time my husband was still working a fulltime job and bringing income from that. And then we had income from those long Rental, but we were able to, I, I believe just for me to quit my full-time job and start.
00:09:19
So you, your, your, your long term rentals were probably bringing in. Yeah. You said you had six. They were probably bringing in what, two to 300 net per month for, with those
00:09:29
We’re looking at actually probably five 50 per month.
00:09:33
Okay. So, so some really good, really good units. Yeah.
00:09:35
These are money coming in from those, for
00:09:37
Sure. But, but compared to the bunk bed in, in your room, how, how is that in comparison?
00:09:43
You know, the bunk bed, like I said, we were, we were charging 40, $40 a night midweek and 50, 60, $70 a night on the weekends at literally percent occupancy while we were doing that. So we were making, making some decent money with that, but eventually just having that many people in and outta our own personal space was draining. For sure.
01:10:10
So one, one of the things about one thing that I wanna hit on was the condos condos. It’s something that is a kind of a, a sour subject with a lot of people, but it seems like your condo was, was really pro what’s. The reason is that just location or is that the types of people that are purchasing condos there? What, how, how did that end up working out?
01:10:30
So we actually, we have owned both condos multi-family and single-family homes in our town. And the biggest reason is that the short term rental laws and zonings in our town only allow condos to be rented on a nightly basis. So any multifamily or any single family home has to be 30 days or longer. And they’re just, that’s our town trying to keep housing for local in such a destination location. However, having owned all three, I would never want to do a short term rental in a home compared to our condos, because it is so much easier. And we have, and, and granted we’re in a location that all of these condos, all of the complexes, the homeowners associations know the majority of the units are for short-term rentals. And we’re not ever expecting any of those homeowners associations to take that privilege away. They’re used to that a lot of the managers of the homeowners associations specifically have been trained in working short term guests.
01:11:40
They hand out keys when it’s necessary, but mostly it’s stuff like, you know, we last winter, we had 700 inches of snow here in town. Yeah. Right. So the thought of having to go and shovel out properties or pay for people to go shovel properties, the homeowners association includes all of that. You know, the building maintenance, if there’s a problem with the roof, if there’s a problem with the windows, if there’s, you know, that’s all handled by the homeowners association. And when I have a guest, it locks themselves out. I can send them to the onsite manager and he’ll go unlock the door for them. And that’s not something that I have to go do every time. And that’s a huge benefit to me. You know, I also love the fact that all of those condo complexes have and tubs that I don’t have to maintain the guests love having, having those, you know, a laundromat and the sauna and all of those amenities right there that I personally don’t have to be responsible for.
01:12:41
Yeah. It’s kinda, it’s kinda the beauty. It’s like, it’s like the, having the apartment complex, you know, having apartments, it’s just so much easier when you are managing them. And that’s why, you know, with Rental arbitrage, it’s so much, it’s so easy cuz you have the economies of ski, you have the nice amenities. You don’t have to worry about all those little things because people are taking care of things like that for you like shoveling and all of that. But a lot of people do get into situations where they’re maybe renting out in a condo and then the condo regulations change or the HOA says, we’re not allowed to do that anymore. Is this just specific because it is a ski location and it’s, it’s very knows about short rentals. If you were to do this somewhere else, what would be the criteria that you’re looking for as well?
01:13:21
I would definitely have to. It would, it would be a whole different decision making process if I were outside. And I understand that are a lot of to homeowners associations in other areas. And you said, it’s, it’s really just the specifics of the legalities and the technicalities in our town that has decided that these condos are going to be what we’re renting short term. And so none of those, I think out there’s 20 something condo complexes in our city. And I think there are three that don’t allow short-term rentals. So I don’t, I don’t imagine any of those going anywhere. You know, the majority of the people that own property in our town don’t live here were way more, second homeowner based than we are primary homeowner. And I think there would be a lot of very unhappy people. Any of those home associations try to change those regulations.
01:14:19
Now I’m, I’m looking at the prices of these units and you know, one, they, they look, they look beautiful. They they’re really well fit. It looks like a place that I would, you know, someone that’s looking to go skiing and, and, and something really cozy would go to, but the prices on these places for the condos is, is also crazy. These are some, some price places. I mean, granted it is California and it is a ski ski area, but I can just imagine, do you mind, do you mind sharing, like how much on average are you able to make with, let’s say per unit,
01:14:48
You know, it’s, we’re pretty all over the board. So the largest unit that we have is a two bedroom we’ve found here that the smaller units are easier for us to manage and just are better for us. So a one bedroom, a studio, two bedrooms, we, we have, we have a two bedroom this month, December that’ll be grossing more than $10,000.
01:15:15
And, and your management percentage is
01:15:17
25%,
01:15:18
25%. Wow.
01:15:20
I mean, and that is including everything. All of, you know, we have to pay a local tax, transient occupancy tax and the fee and all, but you know, an average, an average month for an average studio, one bedroom, we’re looking, you know, four to 5,000 that, that unit’s bringing in total.
01:15:40
Yeah. That, that is just crazy. And, and I wanna, I wanna talk on that a little bit because you have, you have six single family or you have six units that you long term rent out of and compared to these properties that you don’t, you didn’t have, you didn’t have to furnish them and you’re just managing them compared to long-term rentals and what you’ve had to do, investing and fixing them up. What, what, what is that like?
01:16:03
It’s really just the, the difference in, in the workload that, you know, we, we have of the, the duplex here that we bought. For example, we have tenants that moved in the week that we closed on that duplex and they’re still there six years later and we’ve had no issues. We’ve been over there once for maintenance call in the last six years. It makes significantly less money than our Airbnb units, but it’s way less work. So it’s just something that, as we’re growing the income from this business, we’ve been funneling it back into long Rental that are something that we can be very hands off with as a more passive, you know, obviously we’re still managing those but much more passive source of income to help, you know, we’re here for the snowboarding. So
01:16:56
What, what did your first cohost client look like when, when you entered into that relationship about four years ago, you know, was it, was it a really hot market still for like Airbnb and short rentals? And did you, how did you even know how to price and do everything? Were you just using the market data that was already there?
01:17:13
Yeah, I mean, I was literally just pulling up Airbnb and searching as if I was trying to come stay for the weekend and seeing what all the prices were I, you know, was, was sitting down and doing research constantly just to make sure that our prices were on par with what everything else was. And then, and then lowering them a tiny it so that we could be booked. Whereas we had a lot of, you know, and that’s, that’s have been been the, of those large brick and mortar companies that we have so many of here is they’ll say, okay, the winter rate is $300 a night. Summer rate is $200 a night and they that’s just what they put it at. And they never, you know, move it up or down because of demand. And I think that’s why so many people in our town were getting really frustrated using those companies is they would end up with very low occupancy rates because they weren’t doing any kinda price adjusting. And that was something, you know, because we’re in such a micro microcosm of that little market, you know, 40 miles away, the prices are gonna be completely different. So I have not been able to use any kinda, I’ve looked at different pricing softwares, and I really haven’t had any luck with those even today. I’m still just, you know, on a regular two, three times a week, pulling up Airbnb as if I was a guest and looking at what prices are to make sure that we’re in line.
01:18:36
So, so for your 12 properties, you’re, you’re going in there and you’re adjusting the prices. Like you’re the dynamic pricing. Wow. That’s, that’s a lot of work
01:18:45
What’s enabled us so successful and keep that high occupancy rate. I feel like,
01:18:50
Because if, what, what if you set it up as dynamic pricing, what, what, what is it telling you that you would be charging?
01:18:57
The dynamic pricing on Airbnb is just a mess in our area. Right. You know, we’ll have, like, I don’t know if you were looking new year’s week is gonna be our biggest week of, probably of the year. The, we have, we have a two bedroom that rented for like $879 a night, just a little condo. And we had a brand new listing that went up and the price tips for that weekend was like $150 or something. It was like, well, I know we’ve already rented these, you know, between 600 and $900 a night. I’m not gonna list this one at a 50.
01:19:40
So you said a lot of this grew by word of mouth, but were you, what, what did that relationship look like when you were interacting with those potential clients? Were you telling them like how much you would be able to bring in or how, what, what were you presenting to them so that you would be able to take them on?
01:19:59
It was really more about occupancy rate. They were looking at how frequently we had people in there compared to what they were getting. And you, even if half of what the other company is renting at, be making more money in the long run. You know, that, that was a big thing that very first that we on was really concerned was not dining room, go dining. I’m assuming it was broken and they just threw it away and didn’t say anything. And the property management company didn’t tell them that has happened. So the next time he came up, there was one less dining room chair. And he was just really unhappy about it, something small, but he was like, it’s not about the it’s about the communication. I, somebody that’s actually gonna be in the unit. That’s gonna be watching over my stuff and making sure that, that the unit is doing well.
02:20:59
And that the interests of both me and the owner were taken to on a, so, so being able to say, you know, I, I live right here. I live down the street. I live at that point downstairs from you. I’m, I’m gonna be in there personally, making sure that things are going okay. And, and letting you know, when they don’t just communicating better. That was something that they were really looking for. And, and, and moving forward from there, he was able to then share the amount of money that we were making him to all of his friends. And they were so thrilled to see the difference in the income that they have started trickling to us as well.
02:21:42
Do you know that in these, like in this location was the majority of these Vacation homes managed by like professional management companies, like long-term Rental management companies that were just doing Vacation style or so the majority was doing that. And then compared to, let’s say Airbnb, because that, that’s the beauty of, you know, what you were able to do. You were able to offer your services. You were able to say, Hey, I’m not this, you know, this big Congo LA head, you know, I’m a person and you know, I’m gonna be going in there. I’m gonna be changing the prices. I I’m gonna look over the unit. Have you noticed now though, that a lot more people have come in and a lot more people are trying to offer the same things as you
02:22:22
Just, the number of actual properties on Airbnb has probably doubled in our area since we started. And, and I think a lot of people have seen the success of, of having a, a privately managed. There’s actually a lot of people that are attempting self-management from generally from Southern California, which we’re six hours from Southern California. So that’s been, we’ve had so many people come to us in say, well, I wanna take on self management, but I just need somebody there to handle the cleaning and the emergency stuff. And have, you know, we’ve had to that decision multiple, is this something that, and that we doing the full service, having everything in our own systems and not just being the one that gets the phone call when stuff’s hitting the fan. So, but that’s definitely been, it’s been interesting to watch the market shift over the last few years and seeing the difference in how that’s affecting the whole market.
02:23:29
So, so prior it used to be people coming to you because they didn’t like the management company and how they, they weren’t really in tune with, with the market. They didn’t, they didn’t look after the property the way that you would. So you were just able to start getting the, that business. But now for people that are coming in, a lot of people are trying to self-manage because they think that they’ll be able to make a lot more, but they still, they still need that, that body, they still need people that are local. I’m curious, you, you, you’re very selective with who you’re taking on though. And a lot of people that maybe are listening to the show might feel like, well, you know, there’s so many people that are doing this, you know, let’s say, let like in your market, there’s so many people that are doing this. I just need to pick up people. Why, why are you so selective though, with who you’re taking on as clients?
02:24:13
Mostly because, I mean, because we can, we, we have, we have the opportunity to pick and choose because we have so many people approaching us and asking for management that we’re able to decide what units are gonna work best for our style of management and what I’m looking for. And, and also finding help. Cleaning has been our biggest challenge is once, once we scaled past our two units, that I was cleaning myself every day, I need help. And I have amazing time cleaners right now that are actually, I’m gonna be, they’ve been just contracted in the past, come January one. They’re actually gonna be hired as full-time employees and taking on more management duties. They’re, they’re amazing. But even with the three of us properties that are turning over so frequently, we need more and I’m not willing to grow further until I’m sure that I have amazing cleaners that are trained and in place that I know are gonna stick around. I don’t wanna hire some mediocre cleaner who does a decent job. That’s just, okay. And then we end up getting mediocre, decent reviews. That’s what I’m after. I’m not gonna grow any bigger than I have the, to keep those units in Christine condition. And have I get over regularly?
02:25:36
Yeah. I wanna talk about the cleaners in a little bit, but I wanna go back to what you’re saying with the criteria for the properties that you’re looking for, what what’s that criteria look like when you’re gonna be onboarding a new client?
02:25:49
So we absolutely will not take a unit larger than two bedrooms, which I know is, is opposite advice for a lot of people. I know a lot of people are all about getting these big properties of sleep ton of people, and that’s just not been what has worked for us. We’ve taken on a couple of larger properties back when we first started and ended up off boarding them because they were more hassled than they were worth the larger the property. The more, you know, we have big families with lots of small children that are making a mess or, you know, people that, you know, we never really had any partying, but that are just, there’s just a lot more mess. It requires so much more time and energy to clean. And again, my cleaners are my most valuable resource. So having those larger properties is just sucking too much of their time and, and energy to get all of the linens done and all that. So we’ve only properties. And we’ve also found that the occupancy rates are properties person or mammoth in California to stay in a little studio, one bedroom that’s more affordable than a big three, four bedroom property.
02:27:11
And, and with the, with people that are approaching you saying like, Hey, can you do more selective service? A lot of managers do offer like, you know, tier services. Why, why choose to only do, you know, full service and not take on those, those lower tiers?
02:27:28
That’s more for my own piece of mind, you know, it’s something that we’ve over the years have created good systems. And I have found that being in charge of the whole process is a whole lot easier. Just being in charge of the little bits and pieces when you have somebody that’s, you know, calling and needs boots on the ground. But I have no information. I haven’t seen the conversations that are going on in the past. I idea conditioned I wasn’t one that cleaned it, checked it. That was just, it was much up in the air for me to wanna take on. I was not ready to, to take on that much, you know, variance. I like having control over the whole process. And that brings me a lot of peace of mind to know from start to finish exactly what a guest is experiencing.
02:28:23
And, and, and with that process, when you’re going to a new unit, are you, do you have like a, a system when you’re like looking through the property or because all of these properties they look like they’re maybe designed and furnished prior to you picking them up? Or did you do the design? Yeah.
02:28:40
Yeah. So we don’t own any of the furniture, the furnishings, you know, none of the art, they’ve all been pre decorated. And most of them pre-live in a lot of these have been Vacation Rental for years and years. You know, we have, we have owners that have owned their condos here for 20 plus years before we took them on. And that’s something we’re still kind of playing with. We’ve had issues with people buying crappy and then, you know, owner guests breaking the pullout and, you know, it would be great if we could have more control over how those are furnished, but
02:29:18
Cause when, when you’re taking on clients, are these all going underneath your profile? So you’re the one that could potentially have the negative review if someone’s couch doesn’t, you know, is falling apart.
02:29:30
Yes, yes. Although a again, I, I like having that all on my own profile. We started, we have one unit left over from our very, was the second unit that we took on where we were a cohost. This woman already had her unit listed and had been doing Airbnb on her own and was not able to keep up with all of it and having her on the account as well, causes a lot of just the fact that she can see every message and she’s reading and responding. And, and then I don’t have the, to go in and offer refunds or money for repairs without to ask do that’s there’s way we have any and the become much more streamlined as far as the, the furnishings and stuff. That’s something that we’re still working around. And as we’ve been able to be more selective, we’ve had owners that are coming to us when they’re purchasing new units and asking me what I want in them. So I’m able to say, this is the exact that I love that works well, that we know guests like that is easy to, to work and you know, able to give them direction on that. And that’s been amazing. So it’s been really great to get to that point where people are asking me for those opinions and then they go pay for it all. And then I’m able to manage something that I feel comfortable with.
03:31:00
What, what are some of the things that you did with your initial clients that you started doing? Like what, what were some of the learning lessons along the way from your first to now having 13 units?
03:31:12
A lot of it has been communication. So as we’ve scaled up, I still have owners that like to use their, their condo frequently. They’ll come up from Southern California and wanna use it. The, and I’ve had to, to start telling the new, new owners that you can’t use it during new years. You can’t use it during MLK day during those are you’re using it yourself. And I’m missing out on all of that. But also, you know, I have have been giving out my cell phone number to owners that they’ve been they’ll text and they’ll call. And, you know, sometimes they’ll email my personal email and sometimes business email. And it’s very hard to get scheduling all into one place. When, when I started, I did not have any kind of streamline communication system. So that’s something that we’re working on now. Okay. Now every request for owner usage needs to go through the same channel. You can’t me and it’s gonna get lost in the mix. So those are definitely a lot of the, you know, setting boundaries for ourselves and, and we’re looking for, and the, and figuring out how to streamline the communication as that’s grown.
03:32:29
Yeah. I, I imagine that it’s, it’s gotta be challenging as you take on new people. Every person’s going to have different, you know, challenges to different things about them that you, you have to learn how to, how to work with, what is that like, you know, managing with a bunch of different people.
03:32:45
It’s interesting. We have some owners that are, we don’t hear from, I, I send a, every, and they’re and I’m happy and I don’t, and you know, it’s, it’s definitely been interesting. We’ve, we’ve started to, you know, as we’re becoming more selective about units that we’re taking on talking with those owners and seeing what their expectations are and how they like to communicate, and then choosing units also based off of that, if the it’s what we’re looking for,
03:33:21
You bring up communication a lot. And you know, one of the things that I did wanna bring up was that you did, you did have experience with crisis crisis counseling. So you do have really communication focus. You talk about communication a lot. I wanna know for this type of business, how much of it is communication? How much do you think is hospitality and how much is, is real estate?
03:33:44
You know, for us, the real estate is very small. I mean, there’s such high demand in our area that we could find a little and somebody would be excited to pay a little bit for it. I think the communication is only second to, to my cleaning staff and making sure that that unit is in good shape when guests arrive. But even then, if I don’t communicate with the guests or with the owners, well, the guests are never gonna get there in the first place. So I think, you know, having that, that swift easy communication with both the guests and the owners, you know, the guests need to be able to have all of the information that they need before they step foot in that unit. And if I don’t communicate well with my owners, what’s going on with their unit, they’re gonna leave me and find someone else. And then it doesn’t matter if I have guests in there or not, because I won’t be making money off of it.
03:34:40
Yeah. I mean, you’re doing something right, Shelby. I mean, you’re, you’re, you’ve been doing this for four, you know, a little over four years, you have your super host over 14, you know, 1400 reviews, 4.9 star rating. I mean, that, that says a lot that says a lot about the, the quality of, of, of how you’re communicating of, of the cleaners I wanted to hit on the cleaners. Now, what, what is it about cleaners? You said you found two rock stars, but you you’re, you’re looking to maybe potentially get some more, what, what are you looking for in a rock star cleaner?
03:35:12
My favorite thing about the two girls that I have right now is that, you know, while I have have that cleaning process streamlined and they have a checklist and they know what they need to do amazing at communicating with me when there’s any kinda issue or even going and handling it themselves, just stuff like, I don’t know, the, the light exterior light bulb needs to be changed. And that’s something that would be easy to let go and, and not notice, but I have, you know, my cleaners are coming in and checking every light and flipping every switch to make sure that everything is working before we have guests coming here. Really the fact that they’re, they’re going above and beyond and letting me know, oh, Hey, you know, the, the unit here is running low on coffee beans. You, you don’t have any left in the supply closet.
03:36:08
You probably need to order some more. Great, thank you. Like I would hate to get there, you know, if I’m Jo the ball and don’t get an order in on time, they’re there to help help me on the management side as well. We also do all of our laundry and linens in house. And so that doing, doing laundry for that many S on a day to day basis is lot. And so they’ve both stepped up and have started doing laundry with me. So I have you, you know, days that we’re all in charge of laundry and it’s been a huge help to have that taken off my shoulders. Just, just being, being aware of how, how the look and feel of the unit affects my business and, and really being cognizant of that, letting me know if there’s anything that I could be doing better to make the guest experience better and therefore have better reviews
03:37:06
Transitioning from, from a contractor to full-time. How, how, how long have you been using full-time cleaners? Now?
03:37:13
They have been cleaning for me, full-time for about two years now, both of them, but just cleaning just this past year, they’ve started taking on some more of those management duties. They’re helping me a couple of days a week, answer messages. They’re doing the taking over the linens and some supplies and inventory kinda stuff. And that, so just over the past few months, we’ve been growing that way. And so January 1st, 2020 will be the first time that we were actually putting them on payroll as opposed to paying them as contractors. So we’re really excited about that transition with, and kinda terrifying.
03:37:54
I was gonna say, because that’s, that’s one of the things, I mean, having, having full time, you know, having people that you can call your own, this is, you know, you get to train them. It’s not, it’s not a contractor with, with a contractor in full-time there, there’s obviously there’s different ways that you can handle that. You can’t train, but because you’re hiring full-time, you also do have to account for those like slower months. How, how are you going to manage that? So, you know, when, when things slow down, still have people that you’re paying, what, what is that going to look like?
03:38:25
That’s something that we’ve talked a lot about. My husband and I have gone back and forth on the finances of, of this. And we’ve decided that, you know, we really only have two slow months. We have, you know, may and we have, you know, late October, early November. And I think to have the rest of the help through the entire year, it’s worth us personally taking a little bit of a pay, cut those two months of a, we may not make much money. We may be breaking. Even those two months are only making a little bit, but it’s gonna be so worth it for us to have the help that we need the whole rest of the year. And we’ll be making enough the whole rest of the year to make up for those two slow months.
03:39:08
What are, what are some of the, the things that you, you had to weigh when transitioning from factor to fulltime? Because, you know, with, with 13, with 13 units, you’re doing this full-time, I mean, you’re, you’re, you’re doing some really awesome things, but there there’s gotta be, there’s what, what’s the reasoning behind going contract to full-time? Is it just the pay or what, what are some of the other reasons
03:39:34
It’s really taking on those activities? So the, the cleaning I’m able to give them a 10 99 and keep them as a contractor, cause they’re able to do that on their own time. You know, I just say it needs to turn over today between this time and this time, and they can do it on their own. And the fact that they’re are both able to occasionally take for are people. So legally it’s fine. I believe I’m not a tax professional. From what I understand, it’s fine to just 10 99 them and pay them as contractors. But when they’ve started to get into the management activities, doing the laundry for me, answering messages, doing the supplies and the inventory and that kinda stuff, that’s not contract work more. And I think legally we have to employ them. So it was more, you know, the fact that we wanna keep in compliance with, you know, the business and our, and our tax liabilities to make sure that we’re doing everything right.
04:40:32
How big of a difference is it? Is it going to be like, because when, when you think of full-time you think, oh, well it, you know, now I’m not paying, you know, $90 for a clean, you know, now I’m paying someone, you know, whatever the price is, you know, 15 or whatever you’re gonna pay them for their full-time work. Is it a big difference pay wise or is it, is it pretty nominal?
04:40:53
I, I we’re we’re to keep the pay to what we’re going to attempt to keep it close and keep it comparable, keeping in mind that, you know, when they’re 10 99, they’re paying much higher taxes and now we’ll be paying taxes as the business, the payroll taxes. So we’re hoping that it evens out to be about the same amount or, or a little bit more in their pocket at the end of every month. And, and as we grow, you know, again, we’ve added on new units just recently. So we wanna up their compensation as well. So as we grow, they’re, they’re the biggest part of our business and we couldn’t be running a business like this without them. So when we’re bringing in more income, we wanna up their income as well.
04:41:39
And, and what has been the most challenging part of scaling your business?
04:41:44
I mean, just the part of the problem is that we didn’t on getting to this ever on purpose. All of this has been like, well, it’s really hard to turn down this opportunity. We have to wanna give us all this money. Like it’s really to say no, but also, you know, we have had to say no, because we, that we have overwhelm or the cleaners and have us be hating life, cuz we’re so busy and the phone is ringing off the hook or, you know, blinging with Airbnb messages or not being able to get the cleans done well in the appropriate amount of time. So it’s really just been finding the help to keep up with the demand.
04:42:30
Wow. I think, I think you you’re, you’re gonna be perking a lot of people’s ears, Shelby. I think, I think a lot of people are gonna be like, oh, ma mammoth. I gotta check that place out. But what, what are you doing to be able to set your place apart? Because you, you, you really are a super host. You’re doing things really awesome. What, what are you doing to be able to, you know, basically have so many people that wanna work with you when there are so many new people, new hosts that are coming into the market?
04:42:55
You know, I think a lot of it is the fact that a lot of those new hosts in our area don’t actually live in our area that they’re trying to manage remotely and maybe work a full-time job. And so they’re going hours without responding to messages or, you know, not able to come physically respond when there’s an issue and taking, you know, you know, having to call a handyman a plumber instead of, you know, I can go up and repair a garbage disposal while they’re out skiing. So having, having an actual boots on the ground that’s fulltime so that I can respond timely and communicate well with our guests makes a big difference. But also, you know, like I said, my cleaners are rock stars. They always make sure that our units look amazing and that they have everything they need in here to have a good stay. We provide little things like hot chocolate mix and whole bean coffee and a grinder so that, you know, it’s a scary resort. People wanna come up and have their warm averages and not have to go fight the lines at our little grocery store here. So the fact that we keep those little things, people love, and that’s such an easy thing for us to provide hot chocolate mix and a little Mason jar. And, and that really sets us apart just because people are excited about that. Tiny,
04:44:18
Have you noticed with the, with the growth in, in the market, what are, what are the things that is, is different with your units compared to what everybody else is doing
04:44:28
When we were first growing? I think the biggest difference that we had is that we were allowing one night stays and all the traditional property management companies were doing two day minimums. You know, we, we are a ski resort and right now we’re all about the snow and the, but in the summer, we’re away from Yosemite and almost all of the business all summer long are foreign tourists that do this exact same loop. They fly into Las Vegas, they drive through death valley up to us, stay one night, go to Yosemite national park the next day. And then out to San Francisco and home. It’s really funny because they’ll like where coming from? And I’m like death. How did you know cause you and every other person ever doing the same anyways. So these all summer, we have people that are only here for one night and these traditional property management companies were letting units vacant all summer long because they weren’t that so much of the demand was for single night stays. So we were able to really capitalize and stay super busy all summer long and then filling in those gaps during the winter seasons that the, the property management companies, the, you know, the large traditional ones were letting those units sit empty frequently. So just the fact that, that we made that change, that we started offering one night’s days, made a huge difference in, in our income and our occupancy.
04:46:04
Is there one house rule that has saved you before?
04:46:08
That’s a great question. Not really. Definitely. We have lots of issues. You know, the one downside of being in homeowners associations with condos, we do have homeowners associations that don’t allow renters to have pets. And even though we have those units have, you know, very explicitly, you know, pets allowed, we still have people try and sneak pets in all the, and then we get fined by the homeowners association for that. And that’s been a big pain because Airbnb, Airbnb, Airbnb, doesn’t like to help us on that end.
04:46:46
And who’s, who’s responsible in, in that situation. Is it you, because you didn’t, you know, maybe screen the guests enough or is it up to the, the homeowner to those? for pay
04:46:55
Technically the homeowner is responsible for paying for that. And normally I’ve actually gotten to be pretty close with a lot of the homeowners association managers here in town. So I’m normally able to go and explain I’m so sorry. You know, they know me, they know that our units say no pets and that when speaks one in it’s not because we were being negligent. And so a lot of times we’re able to get them waved other times, you know, I’ll, I’ll normally chip in some money into the, to the homeowner’s account for that just because it’s cost of doing business would be great if Airbnb would back us up a little more and stuff like that. But it’s what it’s,
04:47:37
You’re, you’re a communication wizard, Shelby, what let’s, let’s say you had to start from scratch. You don’t have any units, but you wanna get into the space. Do you think that one, do you think that is still a good market for people that are just starting off? And if you were to start over, what would you do differently?
04:47:55
I definitely think there’s still lots of room, at least in our market or great local hosts. I know that that’s something that people are really wanting and, and starting on. I, even though it was very difficult for us to start off the way that we did, having all of those people in our own home. I’m so glad that we did it that way. And I would not do that differently because it gave us such valuable experience and also built up alls that we renting property. So definitely recommend for anybody looking into starting hosting that, you know, start, start in your home. If there’s any way that you can start in your own home and meet guests, perfect in person, then you really get to hear what they’re looking for specifically and talk to them and ask them questions and see what they’re looking for in those you, and that’ll really help you as you scale up. You know, I think if we had known when we started that we would be growing to this size, we would have started to streamline communications a whole lot sooner. We would have probably picked some of the units that we have a little differently, but it, you know, we wouldn’t be where we would be today. If not,
04:49:16
You know, not, not, everybody’s going to be having people knocking on their door saying, Hey, take my unit, take my unit. But if you are a new host and you don’t have that reputation, you don’t, you’re not a super host. You don’t have all of this experience. How would you go about acquiring those types of clients?
04:49:33
Again, if, if there’s any way that you can find a space to start on your own, start in your own home, rent out a room, or, you know, the other half of a duplex, that house hacking idea and, and build some presence on Airbnb before going out and trying to solicit other clients. Think the fact that we had a super host profile with, you know, a couple hundred great reviews before we went to any other owners made such a big difference and the it’s, it’s just building your own credibility. And if that’s not an option finding some other way to build credibility before approaching other owners, you know, I don’t know what that would look like if you’re not able to, to rent your own space in some way, shape or form, but there’s gotta be some kinda way that you can build credibility by, you know, showing owners that you have a plan that you’ve run the numbers that you’ve worked, the math and, and, you know, however you are going to approach them, making sure that you’re doing it in incredible way and that they believe that you, they have, you know, the owner’s best interest at.
05:50:43
And, and did, did you, did you tell me earlier that, that you also attempted Rental arbitrage as well?
05:50:49
We did that very first year. We did attempt a Rental arbitrage and it, we just found that it wasn’t for us. And, you know, again, the, it was a larger unit, which we have found that we don’t like as much, but property is in such demand. He year that we had to pay a decent amount of rent each month to rent this property. And then the utilities here get so high in the winter. People like to run the heat. And, you know, we had, we had a couple of months that we just, you know, we were still making money. It just wasn’t enough to make it worth all of the extra hassle that we actually have found that the management portion, we make significantly more income doing the management on a unit than taking a Rental arbitrage and having to pay that set rent every month, regardless plus the higher cost of being in charge of all of those utility. So right now all of our owners are responsible for their own utilities. And that makes a big difference in our bottom line.
05:51:56
Yeah. I, you know, I, I, I always think that it’s, it’s really interesting as right now, the hot trend is, oh, Rental arbitrage, Rental arbitrage, but I mean, the there’s there’s people like you that are killing it, Shelby, just managing other people’s properties and you don’t, you didn’t, you didn’t have to pay for the furnishing, you paying for the rent. You know, you, you are gonna be hiring, you know, taking on full-time cleaners, but,
05:52:14
But we didn’t start today,
05:52:16
But you didn’t start that way. What,
05:52:17
Yeah. And that’s the, the beauty of that management is there really is no startup cost. You know, if you have some place to do some laundry and, you know, time to do really cleaning and maintaining your listing and communicating that doesn’t cost you any money,
05:52:35
Where do you see short term rental going in the future? Let’s say specifically in your location.
05:52:40
I don’t think short term rental are going to be going away in any way, shape or form in our town, just because we’re in a tourist town that, you know, that’s where the majority of the income I do think I have seen in the last couple of years, you know, all of California’s in a housing crunch and as the prices have been going up for real estate here, it’s pushed a lot of locals out affordable housing, and we’ve seen a huge push towards affordable housing here in town for local workforce. And I definitely think that there’s gonna have to be some kind change or, you know, that’s part of the reason why we’re struggling to find really reliable cleaners, just because people can’t town and find housing that they can afford to stay in. So it’ll be interesting to see, you know, we pay right now in mammoth, a 14% transient occupancy tax on every booking.
05:53:40
It’s like double the most.
05:53:41
It’s crazy. But again, that’s how, you know, that’s where the majority of the income comes from in our town. And so that’s funding everything from like the town bus system to all of, you know, the tourism and the advertising. That’s also going to affordable housing and, you know, I’m okay paying that amount because I know that we have to provide affordable housing for local people to work in, in our town. Otherwise we can’t cater to any of these tourists that are paying our bills right now. So it’ll be interesting to see. I could definitely see a bit more restrictions going in, but mostly I could see our taxes even going up further as, as we have such a high rate of short term rental in our capitalize on that in order to build more affordable housing for locals.
05:54:31
And, and what, what about in, in regards to people investing in, in getting into the short term rental space, what, what’s your perspective on the growth and, and where you see that going are more people gonna be investing there and trying to do long distance or more local people gonna try to host? Where do you see that, that growth
05:54:49
Both. It’s definitely still growing very rapidly here. I’m good friends with an actual real estate agent here in town. And he is just every time I see him saying bananas, we just can’t keep these condos on the market. That people are so excited to swoop these up and start doing, you know, short-term rentals with them. And a lot of those are people from out of town, out of state, but there are some locals that are starting to get into that too. They’re realizing that there’s money to be had in, in taking these properties, making them available to guests and, and being to respond to those needs. And, you know, it’s, it’s great that we have people that are doing that. And, you know, the fact that I’m able to, to employ these two girls full time, that they’re gonna be making enough. And, you know, really they’re only working between 10 and four every day. So, you know, they’re able to go, you know, I have one of them in the has small kids and the other teaches yoga on the side, and they’re both happy that they’re, they have the flexibility to do that. And I’m really happy that I’m able to provide them. The income and the work that they need to make that sustainable.
05:56:02
And last, last question is if, if what, what’s a question that you have for someone that’s in a similar position than you, or maybe that next level, that if you could ask them something, maybe something that you’re working on or a challenge, what, what would you ask that professional host?
05:56:17
I mean, I think the biggest thing is just this growing so rapidly that we’re trying to figure out how, how to streamline everything. We started off doing everything manually, and I am always interested to hear in how, you know, these, these growing companies can keep a personal touch and still manage to automate a lot of the systems. So I’m trying to find that fine line between automating and saving time, but still being a real life person that is there to help people.
05:56:51
Awesome. Well, thank you so much, Shelby. Thank thank you. I, you know, you’re, you’re, you’re killing it in the space. Do you have anything else that you wanna share before we, before we wrap up?
05:57:01
I don’t think so. It’s been a real pleasure. I appreciate you have.
05:57:04
Awesome. Well, thank you so much, Shelby, until next time, host nation, keep on hosting. Hope you host benefited from the show. If you found value, please going over to iTunes, leave us a review and let us know what you enjoy about the show. If you’d like to talk to hosts that have been featured in these episodes, as well as the community, going over to our Facebook group, the host nation.
