STRSS 43 – Building the Right Team for Your Short Term Rental Business w/ Allan Cuevas

Video Transcript

00:00:00

And if you get the wrong person and it can actually slow you down like a massively, it’s going to waste a lot of your time. So people in our company, you walk into our office. It’s like, it’s a pleasure to be there. Everybody wants to help each other. They’re there because they want to be there. Not because they have to be there. That’s really hard to find that kind of setup. And you really should aim for that.

00:00:20

This is episode number 43, the Short Term into success stories podcast. Are you an investor that’s looking to have your home professionally managed, go to cohost.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 hosts. We all strive for five star reviews. So please go on over to iTunes and let us know what you enjoy. And it 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, Hey, what is going on? And as nation, I am super excited to be back again with you this week.

00:01:03

I’m still in Columbia. I’m in that Jeanne at this time. And next week I’ll be back in the U S but I’m super blessed and happy to be able to operate a business that is able to work while I am away. So even as I’m traveling, I’m still getting paid out, which is just super cool. And I can’t wait to keep on growing this, and I’m glad that I’m able to talk with you all and see all of you all growing in the host nation, Facebook group, and being able to talk with you. The emails, I actually sent a pretty funny email from some of the lessons that I learned from losing my phone and operating this type of business and some of the things that I had to be able to work around after losing my phone. So, you know, the luxury of this business is being able to travel, but when you are traveling and you’re dependent on your phone, that can be a little bit complicated when you do end up losing it.

00:01:50

So I, I took my phone for a swim, then realized that phones do not do well diving under water, and I’m not actually supposed to go in salt water or be in the water for more than 30 minutes. So I did everything wrong. Now my phone is dead. And so I shared some of the lessons that I learned on the email. So if you haven’t subscribed already to the show notes, go to Short Term Sage dot com backside show notes, and you can stay up to date with the success secrets from every single episode. There’s a lot of really good info on these show notes. So definitely go over and do that. I love being able to reply to your guys’s emails and talk to you through there as well. But let’s just jump into this episode and that I have the special honor of speaking with Alan clevis.

00:02:30

Alan is a host who manages over 50 units in Budapest, 32 being co-host properties. 18 are rental arbitrage. Now Alan has had to learn through the school of hard knocks, how to scale a business because at 25 units, Alan was almost completely burnt out trying to do everything himself with managing and scaling his properties. And it wasn’t until you realize that he needed to build a team, to be able to help him run his business so that he was able to scale and focus on growing rather than operating. Now, Alan has a team of over six people, which includes an operations manager, property manager, reservation team coordinator, part-time admin, and more. This is a great episode for scaling host as Alan shares the importance of focusing when scaling or starting this business, because it’s very easy to get distracted with all the new shiny objects like starting a cleaning business, starting a taxi service, starting a concierge service, all these different things that can come with this new niche in the short-term rental space, how to operate at scale and not get burnt out what it’s like managing a team and more, this is a great episode.

00:03:31

Don’t want to miss it as always. If you’d like my show notes for this episode to go to Short Term, Sage dot com backslash STR four, three, or if you like my show to send directly to your inbox every week, then go to shorttermsage.com backside show notes with all that being said on to this week’s conversation. Hey, welcome back to another episode of short term rental success stories. In this episode, I have the special, special honor of speaking with Alan guavas. Alan, would you please introduce yourself? Let the host nation know who you are and what inspired you to get into short-term rentals.

00:03:58

Hey guys, happy to be here. Thanks Julian for inviting me on the, on your show. And it’s, it’s a real pleasure to finally meet you. Yeah, so my name’s Allen I’ve been in short-term rentals for five years now. I live in Budapest, Hungary. I basically fell into short term rentals by mistake. I was teaching English when I started and I was moving out of my flat. I was going kind of going through a breakup and I lived in this flat with my ex and she moved away and I was like, okay, I need a fresh start. And it was a beautiful, like huge designer flat. And I decided I wanted a fresh start. So I offered the owner of the property, like to manage it for him on Airbnb. I had never done, I had never managed a property for anybody before. Like I, I knew what had to be done because I’ve stayed at a few Airbnbs before, but I never actually kind of managed a property for someone.

00:05:01

And I just kind of wrote a quick business plan on paper, a projection. I went onto Airbnb. I ton of scraped data from Airbnb and figured out what the rates were. And then I put a business plan together. It was very basic. I just basically wrote down, look, I think this is the occupancy. I can get you. I think these are the rates I can get you. And therefore, this is the income I can get you versus long-term rental, which means you will earn more money and I’ll own some money on the side as well. And that was my first property. I sent him the proposal and he came back to Budapest because he doesn’t live here and we sat down for coffee and I showed him the numbers and he was like, yeah, let’s do this. This sounds cool. So that was my, that was my first property.

00:05:43

Your first and your first property was, was a co-host property. What made you think that that was that someone would be interested in that? Cause this is 2014, a cohost thing, probably wasn’t as big of a, of a thing as that he’s like now. And, and especially in Budapest, what, what was that like in Budapest coming up with that idea was, was that pretty foreign?

00:06:05

I knew there was a few Airbnb properties around, cause I’d stayed in Airbnbs in Budapest. So I knew, I knew there was like property managers around. I didn’t really know you’re right. Like back at that time, it wasn’t even called co-hosting. It was just called, like, it’s still like, still kind of amuses me cause people go, yeah, like this, this whole co-hosting model. But for me, they’re like, you know, that was coined by Airbnb. And when I started out, there was no such thing as co-hosting it was just called managing. But at that time there was no, yeah, there wasn’t really that many management companies around. I knew there was a few property managers about, and I kind of just made it up. Like, I don’t know why I sat on 20% for the commission. I can’t remember why I was like, I think 20% is like a good number because I’m going to be doing these, these, these tasks. And yeah, I just kind of went with it. Like, I didn’t really know what I was doing. I just put it together and said like, yeah, let’s just go for it. And, and yeah. And that was my first property. So

00:07:11

Did you, when you were talking to them, did you say that this is going to cost potentially this much to be able to furnish? Like how you, how did you even come up with those numbers or was it already fully furnished? Yes.

00:07:19

So this flat was already fully furnished. So that was, that was done. Like I knew that this flat could sell well on Airbnb because it was, it was already designed and furnished. It was a beautiful, huge flat. So later on when I got started getting other cohosting gigs, you know, we, we got into kind of doing design work and renovation work for owners, but that first one, it was ready to go. So it was just like, it’s ready to go. Okay. I need a budget to buy like towels and things like that. Maybe a few lamps put up some pictures. Yeah. There was a few things that needed like a few things that needed doing on the property, but generally it was like ready to go. And so when, when the owner was ready, I just started, I got professional pictures done, and then we put it up on Airbnb and it was super exciting, man. Like getting your, getting your first booking on your first property is like super exciting. Like, oh man, his first guest is arriving in two weeks and you’re pairing everything it’s it was awesome. Like

00:08:21

You were at, you were scraping certain data, you were trying to find like occupancy, how much the rental rate could be. How, how close were you on the info that you were scraping to, to where the property was actually renting for?

00:08:33

I’d say like 90 to 95% accurate. I was looking at similar properties in like downtown. So I, I found similar, you know, comps, we call them comps like competitive sets. So I’ve found similar properties, which I could use as comps and say, right, this, this property that I have looked similar to this one, but this one’s more central in downtown and then charging, I dunno, what is it? 60, 70, 70 euros per night in the, in January I think because it’s, it’s a similar category or level, but it’s a little bit further out. Probably I’d get like, I don’t know, 30 to 40% less than that. And I just kind of base the numbers around there and also looked at similar properties in the area and just looked at the rates and kind of looked at calendars ahead and to see how, how, how booked out the other properties were. And it was pretty accurate. The, the rights that we were getting well, we’re on par with what I’ve kind of forecasted. So, yeah.

00:09:36

And when you, when you did this first property, did something must a light bulb must’ve went off cause you went from having one property. The now you have over 50 properties that you’re managing. W what was the progression of your next property is like?

00:09:52

So it was really organic actually. You know, I w I, like I said, I was teaching English at the time. And for me, it was just a kind of like a side gate just to get some extra cash. I never imagined starting a company and getting 50 properties, managing a team and going through all that stuff. It just never kind of popped in my mind at that time, the way I got my second property was a good friend of mine. I was telling a good friend of mine about this property that I was managing on Airbnb. And I had Xcel records. Like I kind of put together a basic spreadsheet of like, these are the bookings, here’s the sales. So we could calculate the owner’s kind of end of month statement and the percentages and the commission rates, etc. So I had this kind of Excel table was all nice, nice, neat, and tidy.

01:10:40

And I was showing my friend and he was like, wow, this is fascinating. Like, I’ve actually got a property which is sitting empty. It’s like a second studio and it’s totally, it’s a bomb and it needs to be renovated a one in a renovate it, and you can, you can manage it on, on Airbnb for me. And I was like, yeah, that’s cool. Let’s, let’s do it. And took him like two, three months to renovate. And that, that was my second property. And then I got like two more through, through a friend on, on arbitrage. So was telling a friend in London about it. And he was like, Hey man, I’m interested in this too. Like let’s, let’s partner up in LA, you know, let’s get a few arbitrage properties and then it was four. And then just kind of, it’s a small city and being in an ex-pat in Budapest, the network is quite small.

01:11:31

So you can, you can kind of connect with people very, very quickly. And people would kind of spreads around quite quickly. And then, yeah, my people were just talking about, yeah, like Alan’s managing and properties doing well and getting like pretty good money and takes care of everything. And then it was like five and then, and then somebody else was telling me somebody else. And then I got another three. And then when I got to eight, I remember when I was on five, it was super exciting. I was literally in English class. I had my students like, you know, sitting at the board table cause I was teaching like business English at like companies. And I just remember my phone going off all the time. I was like, oh man, you booking your booking. And like, the students were like doing their tests and stuff and I just totally wasn’t interested.

01:12:19

I was like, oh man, I can’t wait to get home. And like, you know, check all the bookings. Right. So the, yes, it was just like, so exhilarating, just seeing the bookings coming in. And it was by that time at five, like doing teaching English full-time and then managing five properties, it was getting pretty difficult to juggle things. Like I remember going to bed, my, my, my, my fiance right now. She she’s, she saw everything coming. She was there from the beginning. Like when I, even before I had my first property and I remember she, there was times where we be going to like family dinners or family events, like an Easter family thing. And I was just on my phone, like changing prices on calendars. And I was like, oh, I have to do this. And there was like till 11 o’clock. And she was like, when are you going to put your phone down? And I got to do it. I got to it. It was just super exciting. And yeah, w was more than full time at that time, teaching English. And then when I got my eighth unit, I was like, right, this is actually I can talk and quit teaching English now. And I can, I’ll just, I’ll get an, I’ll get these eight properties and then maybe I’ll get like five more and then, then, and I’ll stop there.

01:13:32

Yeah. That’s funny. I, I, that a lot of people, it’s actually kind of funny. A lot of people, they, they, they get into this and they think, oh, I’m just gonna, you know, do this as a side gig, get one property. You make a little bit of extra money. And then it’s like, now I have five. Now I have 13. Now I have 50.

01:13:48

Yeah. And you can, it can happen pretty fast as well. Like if you’re doing a good job, if you’re good with hospitality and good with people like you, like, you just can grow like really fast, just even organically.

01:14:01

How long was it until you got to around eight properties?

01:14:05

That was within like eight months. It was almost like one a month.

01:14:09

Yeah. Wow. And at that point you knew that your, your, your passion was kind of moving towards managing properties and you wanted to do this full-time what, what did you, because you said that your, you, you had a full-time job, eight properties. What did your system look like back then? When you were first managing those eight properties to where it is now?

01:14:28

I wouldn’t really call it a system. It was just me. It was just me. I had like a few cleaner. I think I had like a couple of cleaners. I had a driver who was doing airport transfers for the guests. And he was kind of helping me on the side doing a few check-ins. It was just like a little bit rough and ready and just, you know, there was no system. It was just like me and like, okay, there’s a lock broken. Okay. I’m going to go bring my toolkit and go fix it. And I think that’s how it is for most people in the beginning. You’re just, there’s enough stuff for you to do, but there’s not, it doesn’t, it’s not, there’s not enough stuff where you’ll just go crazy. You just kind of, you just kind of do it, but that was a setup. It was just me being the kind of property manager and the housekeeping manager, the pricing manager, like guest communications service, like everything. Like you just do, you, you wear all the hats basically. And that’s how it was.

01:15:28

Yeah. I definitely want to get more into the structure routine because that, that’s pretty interesting, but I want to go back and hit on something real quick. You said that a friend came up to you and they said that they actually wanted to get started in the rental arbitrage space. 2014 was, was around when this happened. Yeah. And so that rental arbitrage it’s, it’s blown up recently. Everybody wants to get into the rental arbitrage space. What was that concept like back in 2014 and especially in a place like Budapest where, you know, it was, it wasn’t probably as popular as maybe just like managing other people’s properties.

01:16:03

Yeah. So that’s another phrase which kind of amuses me like toasting and arbitrage. Cause they they’ve been around for ages actually. And now it’s called a thing like, you know, with like Brian Page out there and this whole arbitrage thing, but it has been around in Budapest for a long time, a lot, like, like probably not, not many people know this, but the biggest players here in Budapest who run 200 to 250 units, they all arbitrage guys. They don’t, they don’t do any kind of hosting at all and they are killing it, man. They’re just, they get like whole buildings, they got blocks and buildings, they get 30, 40 flats in one building and they arbitrage the whole building, essentially like a hotel it’s been around in Budapest for ages. Like I think one of my good friends here who does, I think he’s got, he’s got like 180 units on arbitrage. I think he started like in 2000 and yeah, like 2010. So like 10 years ago almost. And they just did the arbitrage model. They weren’t managing for other people. They would go and find units like that. Don’t find like 10, five or 10 units in a building, pay a fixed rent, put it on Airbnb and then just pocket all the, the difference. So, yeah.

01:17:24

Wow. That’s pretty interesting. But your first deal with your partner, where w how, how did you structure that? Were they the one that was upfronting the cash and you were just doing the managing, or how did you, how did you structure that?

01:17:34

The way we structured it was that I would still get like a management fee, but like 20% or something like that. And then the, whatever was kind of leftover that were coming back to be like his passive income. But there’s one that we learned from that. Not all arbitrage deals are equal. I know that a lot of people get into it and we, we don’t do, I would trash now, unless it’s like an amazing deal. So the first arbitrage deals we did there were, they made money in the, in the summer months, but we didn’t realize that, that we would take massive hits in the, in the winter time. So it can be really, really, and we had to shut those, those properties down a few of those, those early arbitrage units, because we thought we thought there would be enough margin based on the data that we had from the, you know, two or three units that we had, the market data that we had with. We’re like, yeah, like, it looks good. The numbers look good. And then it just came to winter and w like, it was just dead. And, you know, you’re, you’re forking out money to pay rent. So these units, and then you’re like, holy shit, man, this is, this is not good. So we only take arbitrage units. We still have 18 now out of the 50, or we only take arbitrage units if they’re a really good deal and are only if, usually they’re like, multi-units, so there’s like three or four units in one building

01:18:58

Good and bad arbitrage deal.

01:19:01

It’s really to do with the rent. Like, I, I see a lot of people out in the community and, and for me, it’s, it’s mind boggling the risk that some people take paying like really high rent. I just wouldn’t take that risk. Like for us, a good arbitrage deal is let’s say the rent is like a third of the revenue. So if the rent is like $500, then the revenue should be minimum kind of 1500, 1500 to two K, then you’ve got enough buffer.

01:19:37

And you see a lot of people getting into the space where they’re the revenue that they’re making is too close to the rental price.

01:19:43

Yeah. Yeah. Like, I don’t know. I just remember seeing a few people around and they were like, yeah, my rent’s like a grand a or like 1500. And then my projected revenue is like 2200. That’s like, that’s crazy, man. You know? Cause if you do hit like a bad season, you’ve got rent, you’ve got bills too. Sounds too risky to me. So,

02:20:11

So you actually prefer the co-host model over the arbitrage model.

02:20:16

I wouldn’t say that there’s, there’s pros and cons with both co-hosting in itself is, can be very difficult because you’re dealing with many, many clients and you’re managing the expectations of the climate, which can be almost like the hottest part of the job is managing client expectations. It really depends. Like I like both models. That’s why I always recommend to people who are starting out to start out with co-hosting because it’s, it’s virtually zero risk on your part financially. Like you just, you just start marketing the property, you get a percentage of the revenue and that’s it. Like, you’ve got no costs. Like if it’s a bad month, it’s a bad month. Okay. You get less share, but you don’t have to fork out anything after that. So, yeah.

02:21:03

And you said dealing with clients is one of the most challenging parts. W so going back to the progression, now you have 32 co-hosts clients and you’ve built up a team of about six people. When, when did you realize it’s like, okay, I really need to start finding ways to be able to replace myself or to be able to take the burden off of this because you were scaling it at the time.

02:21:27

I think it was at around, I think it was around 20, I think, around 25 units. And it was just, I was in, I was almost burnt out. Like I was in total, total overwhelm. It was like, clients were calling me the team. I only had a smaller team at that time as well. The team were like, what should we do with this guest? Then there was like, no maintenance, the maintenance, maintenance guy’s not available. So I’ve got to go. It was just like, it was crazy. It was chaos, total chaos. And I, we, I was almost, I almost got burnt out and I was like, there’s gotta be a better way to doing this. Like, cause you remember I told you I was supposed to stop at like 12 and that would be enough. And then it was like, no, I gotta get more. And then I was like, I don’t want more than this. This is crazy. But funnily enough, it’s easier running the 50 now than it was running the 25, just because I didn’t have the experience. Like I think around 25 properties, that’s when I realized like this something’s gotta to change here. Like something’s not right. Like, why am I stuck in the middle of everything?

02:22:34

Yeah. I see you on Facebook a lot. And you’re very active in the groups, which is really, really awesome because you do have a lot of experience. What are some of the biggest mistakes that you see new hosts getting into? Because a lot of, a lot of, a lot of hosts typically the start, you know, they they’re stuck at around one or two, but then there’s those people that are trying to take this a little bit more seriously and scale it. And you know, for the majority of the people that they might get around five to eight, but to get past that the people that have multiple, it starts to change the change. What’s keeping people from being able to scale up to 50 because a lot of people get stuck at around five to eight. But then you said that you said yourself that it changes when you are scaling up past that 1520.

02:23:15

Yeah. So when you get to 1520, it really does start to change all the, all the challenges and issues and problems that you have managing those properties start to compound. And they, you know, it’s, it’s like it does, it’s not like one plus one equals two. It’s like one plus one equals like 10 at that stage because you’re dealing with multiple issues at the same time, multiple clients at the same. And I think this is actually what I teach on, on my, my, my consulting program program. So when I teach, some of my students is you need to, you need to develop, you really, really need to develop the right mindset when you start to scale. So what I see is a lot of people get into the business and they kind of approach their business like an employee. They don’t really approach the business like a business owner.

02:24:15

It’s, it’s a very, very difficult thing to do to it doesn’t happen overnight, but you’ve really got to have a shift in mindset that, okay, I’m the business owner. I try to explain it like, like football team or something, you know, you don’t want to be one of the players on the field. You want to be the owner in the blocks, kind of strategizing like, okay, which players are we going to put? So the team can win next season. You know what I mean? You got to really develop that mindset. And I see a lot of people getting in and doing a lot of kind of low level stuff. They think they need to do it, or they think they need to solve everything. And it’s, that’s just not true. I know I w I went through it myself. It took me out, took me a while to develop that mindset.

02:25:01

But once you do, you really start to look at your business differently. So I think in answer to question, there’s a few things I see. So if you want to go from 20 to like 50 or something, you know, whatever it is to get the next 10 30 units or whatever, 10, 10, or 20 units is a few things, which people I think get wrong is the mindset. Like I said, and the second thing is simplicity. Like people just don’t keep things simple. I’m a, I’ve made, I’m super guilty of this when I was doing my property management business. And I see, I see like some of my students and some people that I talk to, they’re not keeping things simple and they tend to over-complicate things and they don’t stay focused. So they’re like, all right, I’ve got this property management business. Wouldn’t it be nice to start like a cleaning business?

02:25:59

Wouldn’t it be nice to start like a tour business. They start getting into all these other tangents and I’m super guilty of this. I did this in the past as well. It’s the whole shiny object syndrome that entrepreneurs suffer from. They start going off and getting into side projects and not staying actually focused on the core business, which is managing the clients and the client’s properties and, you know, providing an excellent service for the guests. And it’s, you can get distracted really, really easy. It’s like, for me, for example, that slowed me down a lot. Like I was just, man, I was just getting into like stupid things. Like I was overseeing, cause I’m quite creative and quite a visual person. I used to draw when I was younger and everything. So I loved getting into design work. I loved when, when, when owners were like, I can, I need my property designed.

02:26:53

I was literally going out to pick like the tiles for that kitchen, for the kitchen and, and dock. Now, when I think about, am I doing this mentally stupid or what? Like, or, you know, we have like a, like a, a partner who does like airport transfers. And I was like, okay, I’m going to start like an airport transfer company. Cause that’s going to bring like a, you know, an extra stream of income. And, and literally I spent, I think I spent two weeks doing business plans for like a transfer company, trying to work out costs. And in the end it was just like a total waste of time. Like I could have done it, but you know, I got roped back into my main business. And then that turned out to be a, just a huge distraction. I was trying to, I even, I remember I even had a meeting with some software developers and saying like, right, this is the app I need for the airport transport.

02:27:41

It was totally, I mean, it’s in a, in a small way, it’s related to the property management business, but it’s just, it was big, massive distraction. So that’s one thing I see people who want to scale up the, of that’s one of the mistakes that I see is like, they don’t keep things simple and they turn, stay focused. I think if you stay focused and you work on, on the core business and just super good at that. And then when you’ve got solid operations and then when you’ve got the free time and you don’t need to be there every day and you don’t need to oversee things, then you can kind of start your sidekicks, your side businesses attached to your main business. So keep things simple. Like, you know, if people who are thinking of like doing like a tool business as well, like just find a partner to do that, just find somebody who’s doing tours, they’ve got every, their whole operation set up and then you just send them customers and then you just get a commission. Like it’s just like super simple. Just keep it simple guys. So yeah,

02:28:40

I think that that’s the first time that I’ve actually heard this on the show, but I think that really spoke to a lot of people. It spoke to me because being an entrepreneur, you see all these things and a lot of, a lot of entrepreneurs fall into that shiny object syndrome. And so I think, I think you really spoke to a lot of people that are getting maybe distracted with all the other potentials with it, you know, starting a cleaning company, starting up, maybe a luggage service company, the taxi service. There’s, there’s a lot of ways that you can make money in this business. But like you said, if you’re focusing on all these other things you’re taking away from the core thing, that is your business, being the management of other people’s properties or your own properties.

02:29:18

Yeah. There’s nothing wrong with doing that, those standing up those things. But you know, if you haven’t got your, if you haven’t got like solid operations set up and it’s really not set up properly, like it won’t, you just won’t happen because you’ll just get sucked back into the operations. Cause something’s not right. There’s like there’s a, as a cog in the machine, which is missing and then you have to get pulled back in to fix it. And yeah, I wasted a lot of time on that. So

02:29:46

Now going back to the teams, you, because really what it sounds like is when you first starting off, it does, there’s no, there’s no rhyme or reason to what you’re doing. You’re, you’re trying to do everything yourself after maybe around two properties or some experience. You have some processes documented in place for you to be able to start having things a little bit more systematized. But then there comes a point where you’re doing a lot of the menial tasks within your systems and you need to be able to scale up. At what point did you say? Like, okay, now I have these things, these processes, now we need to find people that can replace me so I can become the person in the booth and not be the person on the field.

03:30:26

So the F the F the first thing that, like, you got to bear in mind that when I started, there was no, there’s so much software out there, and there’s so many tools out there. It just amazes me. Like, I wish I had this stuff when I was starting out. But at that time there was nothing, there was no automation or anything like that. There was no Smartbnb autumn messaging, software channel manager was really underdeveloped items and you’ve been guessed. He was out at that time, we had the first versions of like,, it was just really like, I’d still not, it’s still not fully developed. I think it’s still, the industry is still underdeveloped, but at the time there was like nothing. So the thing that ate up most of my time, which I wanted freed up was guest communications. So my first hire was just like an all rounder. She, she worked like full time and just doing a little bit of everything, a little bit of admin, a little bit off guest communications, a little bit of dealing with clients. And that was like my kind of like first hire. So just like a generalist, mainly taking my time away from guest communication. So I could focus more on like pricing or going to meet new clients to bring in more properties.

03:31:42

So the first person was the communications. So let’s say something like Smartbnb or some type of automated messaging software. What, what was the second person that you decided to replace you?

03:31:54

The second person was also also like a generalist, because the thing is, when you get one person, you don’t realize that that person needs days off and they need holidays. And they have sick days, like even at like 10 or 15 properties, I remembered at that time, we would just kind of managing between the two of us. There was so much to do organizing things. Cause we didn’t even have software at that time. We didn’t even have a channel manager. And so I basically got like a part-time generalist. I think just someone to help out when one of us wasn’t available. Cause you know, it’s hospitality as well. It’s it kind of starts the day starts like eight or nine in the morning. And then if you’ve got guest arrivals in the evening at night after seven or eight, like somebody needs to be available to respond to what’s going on. Or, you know, if there’s an issue at one of the properties, somebody needs to be able to respond. And that just, that just went on for awhile. Like I think I had just those two for, for quite a while. Yeah.

03:33:03

And the breakup of your team is, is pretty, pretty extensive. Now you have an ops manager, you said you have the part-time admin, you actually have a property manager and the reservation team. Do you mind breaking down who those people are and what are the responsibilities that they have been able to relieve yourself of?

03:33:19

Yeah, so I think when it was, I think we were at like 40, I think around 40 units, I was like, okay, it’s time to get an ops manager. And for me that was like, that was like an essential, like I needed somebody who could be my second in charge and who could take a lot of the decisions day to day operational decisions on my behalf. So the ops manager is basically the second in charge. He like, everybody goes to him first, if it doesn’t get solved, then, then it comes to me. And that I F I find that just like super important, you need, you really need somebody who knows what they’re doing as well. You know how to manage a team. I’m super, super grateful for my ops manager. He’s an incredible guy. He worked in a five star hotels. So he’s been in hospitality for a long time.

03:34:14

And the guy’s a gem. Like he, I mean, he takes care of the team. He motivates the team. He keeps them together. He worked for five-star brands like Mandarin Oriental, four seasons, I think for Intercontinental as well. So he has the hospitality experience and that’s super, super important knowing how to deal with guests and having that level of customer service, where you can deal with guests and clients at the same time, and also knowing how to manage a team. And that really helped me a lot. That took a lot of time off me. Yeah. So that’s my ops manager on the reservations team. We’ve got like kind of like a supervisor and then two agents. And they, they do office admin and guest communications and also taking care of the guests. I do some check-ins as well, mainly their, their main, their main role is, is guest comps.

03:35:15

So I know a lot of people now, which is quite new, they use VAs, but we use in-house because it adds more value. Like our people can also be here on the ground. And for us in Budapest, it’s not, it’s not a massive difference, actually. I, I think it’s like similar pricing to what a VA would cost us over. Then we actually have somebody here on the ground, which obviously is much better than having a VA. Who’s never been into our properties or knows the city or anything like that. I’m the admin. I need it. I, the admin I need, because Hungary is not an English speaking country that people speak English here. I I’ve been here for six years, but my Hungarian is terrible. My, my young, my boys like teaching me now my little two and a half year old, but I need to have like an admin person and just like to translate. And it’s, it’s tough for Hungarians administration here. So imagine as a, as a foreigner, it’s even like 10 times harder. So we need to have like some admin in the office helping out and, and yeah, and then we have a property manager as well. So,

03:36:22

And the, and the property manager’s role, they, they do, they do what

03:36:26

Property manager is doing everything from dealing with the clients. So they’re kind of like an account manager as well. I deal with the clients. If there’s an issue with guests, they’re the first person that, like, for example, the, the reservations team will contact. I’ll say, look, we’ve got an issue of guests. How do you want to escalate it? Like, we think it’s pretty serious. Or we don’t think it’s serious. Like, how would you, like it handled kind of like a step under the operations manager. And they, they also check the reviews. They do spot checks at the property. So they are basically kind of account manager. They know the properties, they know the clients, they have like a, like a closer relationship with the clients and they know what’s going on with the properties and they can, they can make higher level decisions. And let’s say the guest communications team can,

03:37:22

What are you looking for when you’re trying to build out this team to fit these specific types of roles that you were previously doing?

03:37:30

It’s not really skillsets that we’re looking for. I think skills can be developed. This is something which I would like, I teach on my program as well. Like this is probably, I don’t know if many people like realize this, but the people side of the business is one of the hardest parts of the business. Like if you get the wrong person in, if you get the, like, you know, we’ve been, we’ve our, team’s like amazing now, but we’ve had like different people come in. And if you get the wrong person and it can actually slow you down, like in massively, because you know, if that person needs to be managed or if they’re the wrong fit, if they don’t have the right kind of strength for what you want to put them in it, it’s just going to take you. It’s going to waste a lot of your time because you’ve got to find another person you’ve invested time in that person.

03:38:28

You know, you invest the time, training them. And yeah, just if you don’t get the right person from the, and build the right culture within your team from the beginning, there’s a few things that can happen. Number one is that person will just leave. And then you’re like kind of left high and dry. Then you’ve got to find somebody else. You’ve got to retrain them. So that’s time and money. And the second thing is, if you don’t have the right person, it can like almost destroy your team. Like it was close to us like where there was a few times, like it was, it happened in my company where people were just like bickering, you know, like, and I couldn’t understand it. And I was like, I read all like a whole bunch of like leadership books and everything. And I figured out what it was was the, it was just the wrong, wrong people, wrong.

03:39:16

Like somebody who didn’t have to fit the fit, the culture of the, of the business. So like, our culture is all about like the people in our company, you walk into our office, it’s like, it’s a pleasure to be there. Everybody wants to help each other. They they’re there because they want to be there. Not because they have to be there. And that’s gold. If you can find people like that, if you’ve got a process in place where you can find people like that, that’s just gold. Because when that’s why I’m not there that much anymore, because those people are there and they’re there running the show and they, they want to do a great job. Not because they have to, because they want to do it. And they enjoy each other’s company and they want to go in the office. They want to help each other. It’s really hard to find that kind of setup. And you really should aim for that. Obviously in the beginning, you know, it’s a little bit more difficult because you might not have the budget to get the people that you want. But if you, if you kind of patient, if you’d be patient enough and wait for the right fit, it’s, it’s gonna save you way more time. And it’s going to be a lot easier for you in the long run. So

04:40:21

Is there like something in your questionnaire or when people are applying to the job, like, what’s the one thing that you’re looking for that will kind of click and be like, oh, this is, this is the right person.

04:40:32

It’s not one thing. So we actually have a process. There’s like seven key ingredients. There’s a whole section, which I like teach you about that. I spot, I would say one of the key takeaways, the key things that you need to look for is one of the person’s strengths. So there are like multiple things that you need to look for. Like, you know, are they a good fit? Are they hungry? Are they humble? All these kinds of things. But there’s, there’s one thing when you’re placing somebody within the team, like understanding what are their natural core strengths kind of like, I always use this analogy, like, don’t ask a fish to climb a tree. Like, you know what I mean? Like, there’s a little cartoon it’s on the internet. I think I did a video on it before where, you know, there’s the headmasters there at the table and there’s all these there’s five different animals.

04:41:28

There’s like a, there’s like a monkey and elephant and like a fishing pole and the guy saying like, okay, for a fair test, like everybody, I want everybody to climb that tree. And it’s just, you’ve got to understand that, like, people have different strengths. Like, I’ll give you an example. I hate administration. Like, it just gives me a headache. It totally, totally drains me. I love sales and meeting people and marketing, that kind of stuff. I’m like vision guy when it comes to admin. Oh, like, it’s just like, I feel sick. Just like saying the word. And there are people out there if you like, there’s a test, which they can do like a personality test and you can tell like, it’s super, super accurate. Everybody w like we’ve hired with, we put through the recruitment process and they do this personality test and they go, and we go, right.

04:42:16

This person’s super high and admin and we get them on the team. And it’s exactly right. Like the fit is a hundred percent where like, do you want to do this admin with it? Oh yeah. I love doing that stuff. Give it to me. And if you’ve got clarity on that, that saves you loads of time as well, because you’re not kind of putting somebody in some way, just kind of guessing, like, I think they might be good at this, but you know, if they’re going to be good at it or not, and then you don’t waste your time going, oh, why aren’t they doing it? Like, you’re trying to push them and like motivate them. But it’s just like, if they’re not naturally in tune with that, you know, that path or that, that responsibility, like you’re never going to get them. They’re never going to be good at it. Just put your, probably they’ve got a strength in something else, which you need and you need to move them. So

04:43:03

No. And Alan, you are sharing just so much golden information in this. So this, this was, this was really, really good. One of the things that you brought up earlier that I want to touch on again, is you said as the business kind of grows, there’s different opportunities. So like, one thing that you said is that you, you have the opportunity to work with people, developing properties, to be able to get them up to scale. And I’ve seen your website, I’ve seen your properties and wow. Those are beautiful places, but what, what are some, because you also brought up that it’s not maybe a good idea to take on too too much, and you should really focus on the core business as all these new opportunities come up with like property development, maybe working outside of Budapest and to other, other, maybe more remote locations. What, what, what do you feel having over 50 properties, do you think, is, is it too much to start going and trying to do other things like property development, remote, managing, or is that just an entirely different ball game with, with managing a business at scale?

04:44:05

I think that, like, if there’s opportunities there, which you can take, like go for, but I think if you’re not kind of coping with where you’re at, like right now, if you’re finding that, you know, you’re just always being pulled into the business, always being pulled in and then, you know, your, your hours all over the place, you’ve got irregular hours. Like, I don’t know, finishing at 11. So I’m like three days a week finishing it seven, two days a week. And then it’s just all over the place and you haven’t got solid, solid, solid structure and foundation. I think it’s, I think it’s dangerous to get into new opportunities. Like if you’ve, if you’ve got like a solid ops and a stable structure, then I think, I don’t think there’s any reason why you can’t go for it. But I just know from my own experience that I tried different ventures, I tried to take on other opportunities.

04:45:05

Cause that’s what I do. I, I spot opportunities. And like I got, I want to take advantage of this. And I, I did that too many times too early on, and I should have been in hindsight, in retrospect, I should have been focusing on really building out the structure and the foundation and the systems of the business rather than going off because you, you it’s, you know, you, you kind of convince yourself that everything’s all right. You’re like, yeah, I think everything’s fine. I’m going to go and do this off this project and then see you see your team. See you guys see you later. And then you start focusing on one thing and then all of a sudden the shit hits the fan. And you’re your main thing. And you’re like, ah, man, this is okay. Maybe now is not the right time to be working on this other thing. And so you’ve got, gotta be careful with that. That’s why I say like, keep it simple, focus on the core things really, really focused on your business and make sure it’s set up properly and, and yeah, just stay away from temptation and distraction in the beginning, I think

04:46:10

W were there any types of opportunities because as you get your name out there, as people recognize what you’re doing, people are going to come up to you and they’re going to pitch you a lot of different ideas and a lot of different types of projects. Was there any ideas or projects that maybe you kind of went into and then realized that this is maybe a waste of time or this really isn’t going to get anywhere?

04:46:31

I don’t think so. I think, I think like, like I’m pretty good at spotting. If, if something’s not going to, if something’s not going to work, I mean, there’s a lot of, yeah, there’s a lot of opportunities came up and kind of just looked at it and went, I dunno if that’s gonna, I dunno if that’s gonna work, but I think maybe on, in the earlier days, yes, probably. I can’t think of anything off the top of my head, but probably there are some opportunities where I thought like, I mean, that’s a classic example of this airport transfer thing. I was like, okay, I’m going to open up at an airport transfer company. Now, if, you know, at that time I was kind of like, you know, fresh and cocky and being like, wow, yeah, I can, I can totally do like a side business and looking back, like, even if somebody now came up to me and said, you know, do you want to start an airport transfer business?

04:47:21

I’d be like, hell no, I don’t know. I don’t want to, like, I’d rather just deal with the owner of that business and then work out kind of partnership deal. That’s like way easier than me trying to set up a whole other team, managing a whole nother company. And I just don’t want to get into that. So I think with experience as you, you get more experience, you start to filter out and you start to understand like, is this gonna be, is this really gonna help me achieve my goals over the next year or not? Or is this totally like, is this a distraction? So

04:47:57

Yeah. What have you noticed now? You know, having done this for about, for about five years over 50 properties, and you’ve seen the progression of Airbnb and short-term rentals in Budapest is there is H what’s the competition like now and what are you doing to set your units apart?

04:48:16

We’re trying to just provide like a really good service. Like there is a lot of competition out there now when I started, yeah, like five years ago, there was, there was two market conditions, which made it easy for us to get units. Number one was there wasn’t many other management companies. And number two was there the state of the real estate market, real estate properties like buying like a new property was relatively cheap compared to what it is now. Like property prices have increased 3, 4, 4 fold in some areas. And obviously when property prices go up, you get less and less investors coming into buy and putting on an Airbnb. And so, you know, it changed the market conditions a lot. So I’ve seen it over the five years that this change a lot. The other thing is like restrictions. Like I know it’s not as, it’s not as strict as some states in the us, or we’re getting like restrictions here as well.

04:49:17

Like this all affects the market and then obviously management companies as well. So people have more, more choice. They can go to like where they were before there wasn’t, there might be like kind of three or four companies they might be thinking about. Now there’s like 10, 15, 20 companies that can think about, so this, this does make it tricky, but what can you do? You just have to try and like serve your clients as best as you can. Obviously, we you’ve seen like our website. We tried to keep our branding apart, like have a very distinct design look and feel and, and kind of provided like a unique stay for our guests to kind of separate us from the market. But yeah, it’s, it’s, it does. It is, it is interesting to see like what’s happened over the past kind of four or five years and the market’s changing. It’s still changing a lot. So

05:50:14

Do you think it’s still a viable business going forward into the future?

05:50:18

I think it is. I think it definitely, it is. I just think it’s going to be, I think what’s going to happen in the next two to three years. There’s going to be some kind of market consolidation. I think a lot of people will exit the market. I think maybe the restrictions or kind of ease down a little bit because now they’re super harsh. Like here in Budapest, we just found as a rule in one of the districts that there’s going to be an, like an increase in this virtual parking fee. Like it’s just some rule that they made up. Like, if you want a permit, you have to pay like a vet for a virtual parking space. I have no idea how that is related to Airbnb because most of the people that come to a bit of has come in by plane and the local government is saying like, yeah, you need to pay for a parking space because there’s not enough parking space. It’s like, okay. So I think there’s going to be some market consolidation. I think it’s going to be good for operators like, like us who are professional operators, because it’s going to be more difficult for the smaller operators. I don’t know if that’s, that’s probably not a good thing for the smaller operators, but there will be some kind of market consolidation. So the more pro you are, if you’re, if you’ve got really like, like a pro-business then you probably can like do do well through this whole transition as the market kind of matures. So,

05:51:43

And, and if you could go back from scratching and re restart what you are, what you’re doing, what, what would you do differently if you did have to restart from scratch?

05:51:53

That’s a good question. I can wholeheartedly say I would probably just focus probably I would’ve at that time. Like, I, I think I wanted to do everything myself. I think, I dunno if it was like an ego thing or something like that, like I’m going to figure everything out myself. Probably. If I had started again, I probably would have like got a mentor or something. Somebody said, who said like, you know, do exactly this to you. Okay. You’re at this stage now go to that step because it just would have saved me a lot of time and energy I maybe if who knows, I could have got there in half the time, maybe, which is massive and, you know, time is a, you can’t get time back. So I would probably say that. Yeah. If I had the opportunity, if I found the right person, I probably would maybe got, would’ve got a mentor. Somebody who really like knew what they were doing and who’d been through it before, because it would’ve saved me like loads of time. And personally, I wouldn’t like if I was talking, like if I was having a conversation like Alan, now speaking to Alan, like five years ago, I’d be, I’d be everyday. You’d be like, dude, stay focused. Don’t don’t golf. And do that. Stay focused, stay focused, just keep it simple. Don’t over complicate things, just stay focused on what you’re doing

05:53:16

And focusing on what specifically,

05:53:19

Just focusing on the core on the core business, not going off and trying to do side projects and focusing on because you know, it’s the same thing. Again, it’s like, there’s so many side businesses you can attach to the, to the main business. Like you can do renovations, interior design, you can do transfers, you can do tours. You can do like a laundry mat. You can do luggage, you can do this, this, like, it’s like unlimited. You can, you can add a lot of extra things. And I think I probably tried to do all of them. And yeah, you just got to kind of put the fluff out and, and just focused on, on, on, on what you’re doing, which is like managing the properties and making sure they’re full and 70 gases serving your clients.

05:54:11

As, as you brought up that there’s a lot more property managers in this space right now, what will differentiate property managers that are listening to this episode from everybody else that is coming into the space? Is there, is there to be able to stand out when everybody maybe is offering similar services, how do you set your services apart?

05:54:30

Does it really good question? I don’t have like a super clear answer for you because it’s like, I mean, a lot of people can do this business. I think what’ll make you stand out is how well you can take care of your client’s properties. I think that’s something that we, that’s something key that we figured out. And in the last, let’s say six months through year, we, we set up this structure and like we’re serving our clients at a much higher level. Now I think it’s, if you look at the large companies, like the really, really big companies who have 2000 units and 4,000 units, and you look at the client reviews, they’re not serving their clients. Like you can see the reviews and the clients are leaving because they’re just not happy with the service, like a light, light bulb wasn’t changed in three months or something like that.

05:55:27

And we had the same problem because we didn’t have the right structure set up. And so that, that will set you apart, if you will providing like an amazing service. And you’re really taking care of the assets, which is the properties, property owners, and you’re taking care of them and you’re taking care of the relationship. I think that’ll set you apart from other property management companies, especially when the other companies get a lot bigger, they tend to lose that kind of personalized service. And you have to remember, the clients are almost like the clients feel like they might only have one property with you, but they feel like they own a hotel, like a 5,100 bedroom unit hotel. And when you’re dealing with a co with 20 clients, it’s, you’re kind of dealing with like 20 hotel Ernest. So if you can take care of them and you can take care of their hotels, I think that’ll set you apart.

05:56:21

Oh, that’s, that’s, that’s a, an amazing, I really liked I’m going to use that one moving forward. If you don’t mind. That’s good. The last, last question that I want to hit on, because I know you got to spend some time with your family, but you’re, you’re at a position right now that a lot of people are not at, but maybe they would like to get at where they’ve replaced themselves from the business to a certain extent. And now they’re focusing on maybe growing or exiting whatever that is. But what question would you, do you have, maybe for someone that’s in a similar position or the next position from where you’d like to be, what question would you ask that professional hosts?

05:56:56

I probably asked him like, what’s your plan for the next year or two, because it’s really about what’s going to happen for me. It’s what’s going to happen with the market. So the question I would probably ask them, like, would it be the same, same question you asked me is like, how do you, where do you see the market going? Like, what, what are your plans for your business for the next six to 12 months? Do you see it expanding? Like how do you see the market conditions affecting the, you know, the inventory out there ask you probably asked them very, very similar question to what you asked is like, you know, where do you see this going? And what are you, what if it goes this way? What, what are you gonna plan to do? If it goes that way? What are you going to do it?

05:57:33

And in regards to potentially like an exit strategy or, or in regards to what

05:57:39

In regards to, yeah. Like, are they planning on staying in longer expanding or, you know, they going to get out, are they going to exit? I’ll probably ask them something like that. Yeah.

05:57:51

Okay. Great. Well, thank you so much, Alan. You’ve just shared such a wealth of knowledge and I see you on Facebook a lot. If there is any anyone that wants to reach out and maybe has some more questions, what’s the best way to be able to reach out to you

05:58:03

So they can join. I’ve got a free Facebook group called the Airbnb empire academy and they can reach out there. They can post questions in there. I’m always happy to help people who are looking for guidance. I also have like a one-on-one consulting program. If people want to go from kind of, they want to go turn like, become like a professional host and turn it into like a company, like a real business. And they want to step out and become a business owner. I’ve got a program. I can just, you can just write to write to me on Facebook, but yeah, the there’s the free group called Airbnb empire academy. It’s totally free. You can come in there and just ask a bunch of questions and, you know, I always like helping out people, whatever level they’re at. I always like enjoy helping people. So, yeah.

05:58:50

Awesome. Well, thank, thank you so much, Allen, you know, super, super honored humbled for you to come onto the show and I’ll include everything in the links and the descriptions that’d be able to connect and yeah. Thank, thank you again until next time. Host nation, keep on hosting. Thanks Julian. Hope he hosts benefited from the show. If you found value, please go on 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, but the host nation.