Today I had the honor of speaking with Adam & Asury Johnson, a power couple coming out of Clarksville Tennessee who owns 41 properties which they’ve acquired through subject-to financing.
Adam and Asury have been converting these properties into short term rentals since 2017 and are now operating 13 units which they own due to creative financing.
Adam and Asury share their journey of transitioning from active duty military and medical technician to full-time real estate investors, how they have been able to grow a portfolio of 41 properties, and how anyone can acquire properties through creative financing.
Video Transcript
00:00:00
I had to acquire $60,000 every time to buy a new house, I’d buy one house every 10 years. He just doesn’t throw that weight that fast. But if I can be creative, like I said before, create solutions avenue. Those every month I literally can afford a house. Every month we had bought seven homes before in one month using creative financing
00:00:20
Is episode number two for short term rental success stories. 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 if you haven’t done so already going over to a Facebook group, the host nation to connect with the community and other professional hosts that have been featured on the show. Hey, host nation. If you’re finding value from the show that I highly recommend that you go to Short Term Sage dot com backslash store, because we have just officially launched our first store and you can find on there things like co-host contracts, we’re going to be including a lot more stuff such as like rental arbitrage contracts conversation.
00:01:03
So like message templates that you can send to guests. Just really good stuff that you can apply towards your business. So we had another review coming in on iTunes that I wanted to highlight. This is coming from the guest room. They said five stars, always informative. I’ve learned so much through these podcasts. The topics are relevant with guests sharing information. I can apply to my situation. Thank you so much for leaving the review. It’s so nice to be able to know that the show is relevant to you, that you are finding value that lets me know that you are definitely taking away from the show. So thank you so much for taking the time to leave that review. They have the honor of speaking with Adam and assery Johnson. They’re a power couple coming out of Clarksville, Tennessee, who own and operate over 41 properties, which they’ve acquired through subject to financing.
00:01:47
Adam and Assyria have been converting these properties into short term rentals since 2017 and are now operating over 13 units, which they own due to create a financing Adam and a series, share their journey from transitioning from active duty military and a medical technician to full-time real estate investors. How they’ve been able to grow and scale a portfolio of over 41 properties and how anyone can acquire properties through creative financing. If you like my show notes for this episode, go to Short Term Sage dot com backslash STR two four, or if you’d like my show notes sent directly to your inbox every week, you can go to Short Term Sage dot com backslash show notes with all that being said onto this week’s conversation. 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 this power. Couple we’ve got Surrey and Adam, would you please introduce yourselves and let the audience and the host nation know who you are and what inspired you both to get into short term rentals?
00:02:44
Hi, my name’s SRA Johnson and what inspired me to get into the short-term rentals was a personal experience. We went on a family trip a few years ago and we heard about Airbnb and decided to go ahead and try it. And we realized that it was 10 times better than getting a hotel from then on. We kind of, we were just kind of inspired and decided to try it out. Just kind of go on a whim,
00:03:10
Alan Johnson. And what inspired me was we live in a military town and me being military myself. I’ve picked up the move many times. We have so many people coming and going from our town with no place to stay. Those short durations waiting for housing. So those three, 10 day duration they had, they were in hotels, you know, paying one 20 to one 50 a night. We were able to, we are able to create, you know, an opportunity for them to stay in an entire home or 60, 78 hours a night. They love it. Or kids can run around in the backyard. They have all the amenities it’s just, it’s home away from home and wedding for their loophole. That’s what inspired me.
00:03:45
And I will thank, thank you for your service. I know it is. That is a very nice niche to kind of fulfill, you know, you’re serving your military members. You’re serving people that are transitioning. I think that that’s awesome. What would you play? What’d you mind story telling a little bit about your backstory and what led you into getting into real estate?
00:04:06
So we’ve been married since 2016 before we met. I was in a medical industry. I was a medical tech for a couple years. And when I met him, he had already started the real estate journey, maybe about a year into it, maybe in a year into being married. We started growing our business and I realized that he couldn’t do everything. So I kind of quit my job, jumped in, didn’t know what I was doing, but kind of figured it out together and just figured out ways to help him when he wasn’t available because he was working. Full-time obviously,
00:04:41
You know, I, I just think that it is, I wanna, I want to dive a little bit deeper into that because you, you both were leaving, you know, these full-time careers that you invested your whole lives into as a, you know, an Adam doing, you said you did 15 years in the special forces. I mean, that’s five years away from a retirement. And then you leave to, to do this. If what, how did you, why would you leave your guys’s jobs to do this? And when did it really kind of scale up? Because right now you have 41 properties, total 13 of those are short-term renting, you’re converting, but you’re converting your portfolio right now. So when did it kind of, when did you guys quit your jobs in order to really expand this?
00:05:24
So we saw the bigger picture probably about 18 months ago. We saw where acquiring rentals and how the rental property, you know, you have the appreciation, the depreciation tax write off in a most other things. As far as the, the pros and cons of, of owning real estate have a bigger picture of you have to stay in the military. I can do 20, 25 years retiring and maybe make about $4,005,000 a month, which is not bad by any means. But we also, I like to bet on us. We, we, we love learning. The hardships are from the hardships and business. I love going back to the drawing board and fixing everything and making it better and just potential to be able to help people. It’s great. Me serving in the military. I can’t help directly. I can affect people directly to help them with our rentals and our portfolio. And now if we teach what we do as well, and we have clients who are also growing their real estate businesses, well, we’re able to do more for people outside of the military, outside of the medical field. And that’s, that’s the rewarding factor that we love so that we saw that light bulb came on a few months ago and we ran with it and we’re enjoying it.
00:06:36
You you’ve scaled up to 41 properties. What, when did you first start with the real estate and how long did it take for you to get to this, this amount?
00:06:46
We do have a unique story. We began in 2015, we started flipping homes. Like that’s the most common thing. When people think of real estate, flipping homes made all the mistakes you can make flipping our first house. It was now a profitable again, made all the mistakes in home, everyone great, their home. The week the flip went really well, but it’s just been sales. We got expand there in the main time in an 18 month period, I got many, many phone calls from people who need to sell their house, but they couldn’t because they didn’t have enough effort. I, again, immersing ourself in the boats and learning about how can I help these people with no equity. I realized that there’s ways to do this with owner financing. There’s, there’s different variables within the owner. We have figured a way out, do the help people with no, with no equity with the need repairs. They don’t have the money to fix repairs or wherever the help them. You have more of those mortgages. We’re able to partner assets, get us for their new asset and just keep turning it over like that. Because since 2016, we started employing that strategy and we started buying, you know, one house every, every five weeks, the same line we’re buying a new property, bring it over.
00:07:57
So, so 2015, you, you started off like most people do, you know, with the vision of the fix and flips 2016, you started learning more about like creative finance, like the owner financing, lease options. And from there, you’ve just scaled up. And when, when did it transition to, okay now, cause now you’re converting these units into short-term rentals. When, when did that kind of switch over?
00:08:24
That was in 2017. We took a spring break vacation a few months prior. And again, it was completely by accident. Our original plans fell through and it was last minute we reserved this Airbnb. We had never stayed in one before. We didn’t know the process. We didn’t know anything. And while we were staying there, we were kind of, you know, looking at the place and really enjoying the amenities. And we had, it was a, it was a total of five of us. We have three kids, so we enjoy the space, the amenities. And then we started kind of doing the math, trying to figure out, we looked at the guy’s calendar. Our host calendar realized how booked out he was. And we were trying to do the math, like, okay, how much is he paying for this place? And how much money is he making?
00:09:09
Is if he’s charging this every single night. And we were like, this is brilliant, but we didn’t put much thought into, oh, there’s probably a need. Cause this was a touristy location that we went to for vacation. We didn’t really think that there was a need in our area and you months passed. We were home. And we had a long-term tenant that ended up not moving into a rental. And she went back out for whatever reason. And we were stuck with this empty home and it was a very small house. So I was like, Hey, how about we just throw some furniture in there and rent it out on Airbnb and see how it works out. And we went very minimal with putting in furniture and amenities and everything like that. We just wanted to test it. And before, you know, it, it started just booking.
00:09:58
So then we realized there’s clearly a need in the area for these. And we just started brainstorming as far as like, what houses do we have available? You know, in our portfolio that we can convert over to short terms and what, and just learning from that first home, like, what are people really looking for is, is, you know, is, are these size homes better fit for, for our clientele in the area? And we realized there’s definitely a need in this area. So you don’t have to be in a touristy location. That’s where we realize there’s definitely, if you can find a need in the area. I always say, if there’s hotels in the, in the town, there’s a need.
01:10:36
Yeah. If you, if, if, if you wouldn’t mind explaining kind of what the demographic of your, your clientele base for the, for the area that you’re in, cause you’re, you’re in a Kentucky, how many people would you say is in that area? And then what type of people are you catering towards for your short-term rentals?
01:10:52
I would say majority of our, of our clients are transitioning military families. They’re either a PCs thing where they’re relocating duty stations and their family are waiting for housing, or they’ve just sold their house or getting ready to move out of the area. So they need that window. And obviously they probably have several kids, maybe a pet, something like that. And it’s just so much easier to have a house to kind of relax in for that period of time. We also have a lot of military. What would you say trainees are military trainees? So people that are, is called TDY that are coming in the area, maybe for like a couple months or a couple of weeks. It depends, again, it’s so much more convenient because they can come with their family. So, and then the rest would be, you know, we have a college in, in the town. So college work, contractors,
01:11:53
Military, any, I’ll say midsize city. There’s great potential. And it, like she said before, there is a hotels or there is obviously a need for tours or for, for Short Term accommodations. We’re located. Now I went off the highway, highway 24, between St. Louis and Georgia Atlanta. So there’s, they don’t realize that there’s like six or seven high schools here. So there’s always a high school volleyball tournament. There’s always a recital. There’s always a you name. It there’s always something going on. And people kind of, even in our town of farcical, Tennessee, people say really in Clarksville, I’m like, you guys just don’t realize, you know, the fish we have here. And that’s just, that’s, that’s, that’s almost any mid-sized city across the country versus hotels. There’s a need whereabouts
01:12:43
45 minutes away from Nashville. Nashville’s a very, very big hotspot. So if you don’t want to spend the money or there’s just no availability on Airbnb, the Nashville of your, your people, some people are okay with the commute, you know, get a place here and just commute 40 minutes into the city.
01:13:03
So this, this portfolio 41, you, you said that you, you own the 13, but do you actually, you actually own 41 in your portfolio because these are lease options. If you wouldn’t mind explaining, because you’re actually the first guest on our show to kind of have the strategy of this lease option to short-term rental model. So if you wouldn’t mind explaining, like what is a lease option and kind of how it’s benefited you to scaling this, this business.
01:13:30
I’ll try to sum him up until three minutes. Cause there, there are books written only saw option. This often simply means that I can go to a seller and say, Hey, seller, you know, for whatever reason, the house hasn’t sold, I will give you $150,000 within five-year period for this is for example. So the seller says, okay, because the Thurman, I have enough equity to sell an outline. So I will guarantee you $150,000 in a five-year period. I will pay you rent. Let’s say $1,000 for that. Five-year duration simple as that. So I’m leasing with the option to buy in five years in my lease. I very clearly say that I will have the right to sublease, whether it be Airbnb BRBO or up to my discretion. So there I’m open with the, the, the homeowner I can go and do, I can go find either a long-term tenant or a Short Term.
01:14:25
So I’m able to acquire a home I’m able to for the seller in this case to not have to worry about having the home rented out, labile, crawl, maintenance issues, concerns, it all goes through me, whether I have a tenant or not. I still owed seller if I’m owner that monthly rent so that it gives them that peace of mind of my house is being paid for my house to being maintained. And now if he can buy it in five years, great, if he can’t, my house has been maintained. And now my appreciated in theory, over the five-year period. So it’s a great way to help people out. We do that. We do subject to similar transaction again, and book spin on that as well, but you don’t have to be a billionaire to buy houses. You have to be creative, no laws and create win-win solutions. So simple as that,
01:15:11
I just think it’s it’s, it’s so cool. How you both have built up a large portfolio in such a short period of time, especially coming, you know, medical, medical tech, you know, be in military. These aren’t like the highest paying jobs, you know, that’s very, that’s very, you know, you guys have really had to get creative with this, but what I think is just so cool about this. It’s like, I don’t know if you’re familiar with like the rental arbitrage leasing model, but you know, you guys are doing like the owner financing model, which, but it’s also kind of like rental arbitrage in a sense, because you’re, you’re renting out your you’re renting a place that you’re paying a rent on, but you’re also have the option to purchase that. So I just think that that is very cool that because a lot of people get into the space and they just think like, I have to purchase a place or I have to rent a place or I have to manage a place, but you guys have kind of found this happy medium.
01:16:01
Yeah. So I had to acquire a thousand dollars on to buy a new house. I’d buy one house every 10 years. You just throw that white that fast. But if I can be creative for fourth grade solutions, new those every month, I literally can afford a house. Every month I have about seven homes before in one month I’m using creative financing, owner financing, you know, it’s just, you can’t be limited by you should not be limited by money. You know, some of our clients, like I’ve been a millionaire just gotta go do
01:16:37
So. So when people are looking into maybe creative financing with short-term rentals, what, what, what do you, what, what are you doing when you’re going to a person? Are you just looking for people that are, are, are selling or people that are renting? Like how do you approach it with that mindset?
01:16:53
So being in the military, because you’ll have people that are here for three years, they’ll buy a house a year and a half in the roads patient, which has not really been fishing because the market doesn’t typically appreciate in the 15% that it needs to appreciate when the person moves out for them to cover closing costs. So what happens is when a person buys the house, they almost have zero closing costs because the seller pays the realtor base, closing costs on and so forth. So now he look over now buyer becomes seller. Seller’s not prepared for the 10th, 10% expense. They don’t have the money. So that’s brought in with an it solution. And like I said before, you’re leaving. You don’t want to have to deal with this home. You know, 4,000 miles away when you’re overseas, for example, we’ll get into your paycheck. We’ll guarantee you the maintenance.
01:17:45
Now, what, what is the, what is the return on a owner? Finance tome? Because with rental arbitrage, you know, you’re paying, you’re paying someone else’s rent. They own the home. You’re paying that when you own it, you’ve got the mortgage. So how what’s the return when you are just owner financing and then flipping it to a short term rental
01:18:07
Of our portfolio, we average about 1.8 return. So if our, if our expenses, you know, mortgage insurance active spending is a thousand, we’ll bring in about $1,800 for that door. But we average about 1.8 return on a phone around versus coming in. That makes sense.
01:18:30
Now you’ve built up this portfolio and a B before, prior to the short term rental mindset, have you, when you’re approaching properties now, are you just trying to focus more on converting and how does that work with properties that maybe they weren’t really well-suited for a short-term rental because you were thinking more, just like, you know, just finding those deals. How do you, how do you approach the portfolio that you have now?
01:18:55
We do acquisitions are just the same. We have a blueprint of what we’re looking for in any short-term we have, and it doesn’t fit the blueprint. I will acquire it. We’ll hold it for long for us. Everything is we have a 10 year model. We don’t expect to be rich today, but we’re definitely building for the future. So if we’re going to, if I can get five more homes in the next month that fit the Airbnb criteria, we’ll convert those as well. I don’t want them as longterm, then just let them work for us.
01:19:25
So you guys are not just managing short-term rentals, but you’re, you’re managing long-term mental. So you’re, you’re managing a bunch of different types of people. How do you, how do you manage that many properties and that many people, how do you do
01:19:41
Being in the military? It definitely helped me understand systems. You know, this actually gets into reaction so on and so forth. So, I mean, we, we have, we have both the rental software to be obviously the software books, everything is automated with rules and that kind of stuff is not that hard. I, I don’t jump off to, we spend about 45 minutes a month with our long I, I try and pay in a pay off. I expect that work orders. There’s a workload restaurant after the handyman, we don’t spend a lot of time with long time. So we have 23, 27 of those. So it’s systemizing. It just like the Short Term rules we don’t spend. We spend more time on those, but we spend, I would guesstimate a month, eight hours a month about what we spend on checking things, checking Airbnb majors or time. Because even, even we have the auto response that we have. We have a little man, a manager that helps us respond as what else. So we don’t be in a lot of time dealing with the rest.
02:20:49
So w what type of systems do you have to have in place for scaling this owner finance model and then transitioning to like a short-term rental model? So what, what, what, so what do you need in order to acquire these, these properties? Are there systems in place to reach out to these people? They have like virtual assistance or anything like that?
02:21:11
We have not used any virtual systems because what we’re developing. I think it’s E I, I haven’t come across, I guess, all encompassing third party that knows what we do. There might be at minimum. I tell people, you have to build your team, whether it be for the long-term portion, or you have to have a CPA, you have to have a real estate attorney. You have to have these things in order, you have to have a handyman. You have to have to build those people around you. What we see the reason for most entrepreneurs failing, because they want to be a one man show. They want to go clean. They want to change the light bulb out. They want to kick this off though, and are taking themselves away from growing the business. Have you heard of the E-Myth the book E-Myth it talks about the hardness, how we built and they want it.
02:22:03
So systems is not only having your computer in front of you with heartless software. It’s also having a team around you as well, to be able to delegate and lean on for people to help you, because I’m pretty good at a lot of stuff. I can’t be the best at everything. So I hire out for people to help me to stuff I’m not great at, as far as transitioning over to the Short Term, I’ll let her tell you about the systems that we use. Like the price, Laos, dynamic pricing. We use price labs in particular. We have Smartbnb with that. And we also have a digital guidebook that we use, which we use host Billy for that. So we have all these systems and we, we also have a task managing app that we use our website. And that’s where we delegate, who does what, when they do it, that type of thing, any special instructions with the homes. So when that’s the Monday, it’s Monday, Monday app. So we have those four systems in place that kind of help us keep everything together so that we’re not constantly kind of missing something, or we didn’t see, you know, a glitch or something like that. The problem we see with entrepreneurs is that they don’t wanna spend that.
02:23:30
You’re going to get that money back. Tenfold makes your life easier. Every penny we popped again, because no one did better than me. That’s not true. You know, there’s two, others are the newest, certain aspects. Let them do their job, let go out there and make your business better for you.
02:23:48
So, I mean, you, you guys have just been scaling it like this rapid pace. How, how do you, so you, what type of, what are you primarily doing now? So what, what systems have you put in place so that you don’t have to do those anymore so that you could focus your strengths on these certain areas?
02:24:07
Focus now is refining our operators. Like you said, we did grow really fast. Only downside to that is certain small things you do come and get you, you overlooked small thing, and we’re kind of going back and making those better. So with, with the buildings, you’re never, you, you, you never conquer one object and thank you, haven’t figured out because everything is always evolving. So with the 41 houses, now we’re looking to go back in and really make our Airbnb most efficient as possible. We’re updating some of the ones that we acquired first. I’m always be finding my, my lease agreement with my long-term tenants, and I can not stop refining, you know, laws and regulations change every single year. So I’m always making sure that we’re protected in certain ways and this and that. So I would say right now is refining and being more efficient.
02:25:02
I’m just curious, I’m just throwing this question out here, but do you find it necessary? Like you don’t have a real estate license or anything? These are just, you’re just managing this portfolio without like any real estate experience.
02:25:17
Ah, my opinion, there is no need for go get my license. In 2015, I went to hang my license with a broker and he saw my truck that said we bought a house. They told him to had taken off the why he said, because you are from me now, I would say, but that, that company is not me, Adam. You said, no, thank you, dude goes through me. I said, sir, I appreciate your time. Let me give you an extra 24 hours out in the next day. He said it wasn’t me. That was the best decision either. That’s when we had nothing with, we own nothing. Again, I saw the bigger picture. So there there’s absolutely no quote, unquote need to have a motor license within your company. Yeah, I have, I have, I have very strong feelings about a realtor license, but notes, but no need my opinion.
02:26:08
So w what has been the most challenging part of scaling your short-term rental and just long-term rental portfolio?
02:26:15
I think right now the most challenging thing is trying to figure out, you know, w work as far as like the turnover rate. I think that’s what we’ve been trying to figure out lately. What we’ve been working on. When we first started, we didn’t really pay attention to how frequently we were turning over. We had like a one night minimum and we were just honestly, just happy to get booked. Well, we started rowing and then our cleaning team was getting very overwhelmed because there’d be times where we’d have seven turnovers in one day. And the, there were two options, either minimize or turnovers, but still stayed off to stay occupied or hire on more cleaners. Well, we all know that hiring how can be challenging. And once you have a good team, you just want to hold onto it. So we started playing around with, with the well, the occupancy stays.
02:27:10
Yeah. And just kind of figuring out like, okay, can we generate those longer stays? And we started creating different rules and it’s, it’s worked. So now we still can keep our team happy and still stay a hundred percent occupied. Well, I wouldn’t say a hundred percent, almost a hundred percent occupied and just less wear and tear. You know, we didn’t really put much thought into it. Like, Hey, if you have, you know, 15 turnovers and one month you’re talking about utilities, laundry, just, you know, replacing stuff constantly. And we realized that maybe these longer stays are much better for our, the amount of homes that we have. And our team
02:27:56
Now cleaning is something that is always kind of the biggest concern with, with hosts. What have you guys found to be like the optimal situation with, because like, are, are you just, are these like payroll cleaners? Are you hiring out contractors and how do you keep those people engaged in your business when you do have maybe those odd times? Like, it’s not a consistent thing.
02:28:19
We are independent contractors. We think, I would say that they’re stay at home moms. So they don’t have that. This isn’t like their career or anything. It’s just their, their husbands work full time. They have kids, they, they need a flexible schedule. So this kind of works for them to make a little bit of extra money. And I think that they just love the flexibility. Honestly, they love the flexibility. They work, you know, just a couple hours a day and they make a little bit of extra money
02:28:53
Wasteland the house for the first, probably three or four months before we hired on help. So, and in doing so, we learned from the feedback from, I guess, for, so we trained our thing, you know, what, what to be expected and offering what we can. We had nothing but positive feedback from our clients and that improves.
02:29:20
And, and what, what are you doing to, to find your cleaners and get them into your systems?
02:29:26
Our main cleaner right now, we actually found her by accident. We found her on care.com. We needed her to help us out with our kids. And, you know, just kind of talking to her, we needed someone to kind of help us. Actually, it was more of like a backup cleaner. And we say, Hey, you know, would you mind being on standby? We have these houses, we cleaned, do you do cleaning? And she said, yes, she jumped on the opportunity. And she was just a dedicated, hard worker from the beginning. Some things took place. And then we ended up giving her more responsibilities and just wait, she’s been with us for over a year now. And each time we’ve just, we’ve given her a lot of responsibilities. Now. She, I mean, she really doesn’t need us anymore. She doesn’t need our guidance. She knows the home.
03:30:12
She knows the procedures well enough to take action if necessary. And obviously she was getting, we were, we as a team decided, Hey, we want to continue growing. How do you feel about it? And, you know, can you handle this much? And she was on board. We hired backup helpers that help her to help her and gave her some administrative responsibilities too. So she’s the one who actually delegates, who cleans what she tells them exactly how many people are going to be staying for how long, all that stuff, any special instruction. She does all of that. So with the, having the backup cleaners have helped kind of minimize her cleanings so that she can do those, those administrative jobs. And, but yeah, we pretty much found them by accident. They just needed some extra money and we provide all of the cleaning products. We provide any everything.
03:31:20
So that also takes away, you know, from them having to go and purchase this and that sort of thing. They just show up, they do what they need to do and, and leave. And that’s it. So we try to make it as easy as possible because I mean, we did it for the first few months. So we know we kind of learned through trial and error, like what works, what’s the easiest way to do this and we’ve made it happen. And we listen to the feedback, we get their feedback pretty frequently. And if they have any better suggestions, then we go with it. We don’t second. Guess it.
03:31:52
Now I’m looking at your units and man, these, these are some beautiful places. I mean, who, who do you have systems in place or what do you, what are you doing in order to turn over these units and make these like, you know, they’re, they’re, they’re really good. Good looking properties.
03:32:10
Yeah. So, so early on we did probably what everybody does, you know, who is on a low budget, buy everything secondhand. It took us almost a month to get the first house ready because we were chasing like, you know, trying to find good deals. We just didn’t have the budget. And we didn’t know if it was gonna work or not. And I think by the third house, we realized that it’s probably quicker if we just order everything online and build it and have it done within just a few days. And so now we just pretty much, we pretty much copy and paste each at each house. I mean, with, as far as the furniture, maybe once we find something that works, we try to stick with it. You know, we use the same mattresses in every home. We use the same bed frames. You know, the only thing that changes is the decor. We use TB everything. So that’s what we do. I just go back to my orders list and I just reorder everything. And that’s pretty much it.
03:33:07
Yeah. Maybe she’ll do some decor shopping locally, and we have everything. We can get an Airbnb up and running in three days, but it’s a pretty weak.
03:33:20
Yeah. If everything is boxed, you can transport a much easier than everything being built. And you’re trying to find a trailer or, you know,
03:33:28
How, how much would you say that is not able to just be shipped and sent directly to the home? Like how much shopping or how much outside of the, the, the, the systems that you do have, do you have to do on your own?
03:33:41
So we do our, obviously we do our washer and dryer locally. We do the couch and then just the decor pieces we, we do at a local place. It’s just much easier. I like to see it, you know, upfront, it can be kind of deceiving if you’re shopping online for, you know, maybe like a camp, this picture or something like that. So those things I’d rather have in front of me versus online. So I would just say that the everything else, as far as the bedrooms furniture, everything. Yeah. The linens, we purchased them online. We just reordered. We, we get the feedback from the gas. If they love it, we stick with it. If they hate it, we know to get rid of it. So by, by now we know exactly what the guests like in it. And it’s really great because we do have some guests that are returning guests. Maybe they won’t stay in the same home, but they’ll stay in, in another house. And they’re essentially staying in the same house because they’re, they’re experiencing the same bed, you know, it’s just different location. So we try to tell them whenever they come back, like, Hey, you know, the house isn’t available, but a very similar one is, and you can expect the same amenities.
03:34:48
How much, how much would you say that it costs to be able to get a unit fully up and running? Because with the owner financing, I don’t know, like, because every situation is going to be different. You know, maybe someone needs to need, they may be the new, like $5,000 to move to their new place and you know, or they need like so many months of the, the payment upfront. How, how much would you say that with an owner finance model, does it cost to be able to get a unit up
03:35:13
My model? It calls me, I know that sounds crazy. Maybe reviewers, the way I approach the songs, it doesn’t cost me a painting in my I’ve been, I’ve been linked option. My primary function of acquisition object to was painting. I live purchase homes, the loan thing, and we sell them today and I pay that mortgage directly to the bank. It costs me nothing not to have that. Occasionally I’ll come across a home that needs a small repairs here and there. But the majority of the homes that we’ve purchased or acquired are zero down, zero for the parts. And they’re, they’re, they’re profitable, passive income in 25 days.
03:36:04
That, that, that’s crazy because I’m looking at these, these, these units. And it’s just like, wow, these are beautiful places. And when I think of like subject to, or owner financing, I’m usually thinking a little bit more rundown. It’s usually someone that’s kind of like, not in the best of, not in the best position they need to get out of it. But it looked from these places. These, these look like, like luxury units.
03:36:23
Yeah. I mean, that’s what you’re seeing. We have the 13, we probably have painted six
03:36:31
And maybe half, half of them we’ve actually painted, you know, kind of updated the fixtures. I mean, it’s really more of a facelift that we have to do with these houses, you know, making it boring, like you were saying painting, and that’s pretty much it,
03:36:44
But even that was after the unit, you know, created income for nine and 10 months. So that paid for the, but no, I mean, we, I noticed sounds weird. We don’t, I don’t want to pay money to get into a new house.
03:36:58
So w w what would you say is kind of different because I’m just super curious, like, there’s so many people that are getting into the space and they, they, they maybe feel like they have to go slow because they have to own it, or they have to co-host or they have to rental do rental arbitrage, but you’re, you guys have the best of both worlds. You own it, and you’re also subletting it. So it’s like you, what is different about your approach as compared to maybe everybody else that is doing maybe the more traditional or finance model
03:37:26
Where we’re solutions. So you have problems and we’ve been able to help these kids. So I’m able to help a person that can’t afford a mortgage because they moved out. I’m able to cover the property and maintain. I’m able to provide availability for any incoming soldiers are going. So I would say, if I can, if I could give anybody any kind of advice, it would be not to be here. You can talk yourself out of any opportunity to let yourself talk. You really can, but if you find the positive and magnify the positive and Ingo towards that great thing, if you’re going to have,
03:38:01
I actually wrote a quote and I never seen a spoke. It is that fear is a reaction and courage of the decision. And I was like, that was really powerful because it’s true. Naturally people are scared and it takes, you know, you have to make your mind up. You have to decide to be courageous and jump into a situation. So that was, that really stuck with me when I read that things last night.
03:38:22
I mean, you, you guys are in the trenches, you’re, you’re doing this. What would you say is the biggest, like the, the, the most important things, when you’re looking at a property that you’ve kind of learned, like, what are the biggest mistakes that, that you’ve you, you could avoid now having, having acquired 41 properties. So when you’re looking at a new property to take it on, what, what are those things
03:38:46
Not let emotions, can you help your bond is home. You’ve been changed, your family, you can’t put on a hardship to help a person. It won’t help themselves. So that’s the big thing for us is having that blueprint, having that criteria and you stand firm and not a bad deal is not hurt you and your family and your business. It’s not gonna hurt them because what you have to be.
03:39:12
Yeah. I mean, set policies is stick with them. If you have policies in place and you, you know, you make your mind up that these are the policies, just stick with it. You know, don’t, don’t bend on, like you said, only motion, or just because, and this and that. That’s, that’s where I think that people respect. When you say, Hey, this is my policy. This is what I stick with. You know, they’ll respect that.
03:39:34
And are these policies when you’re acquiring a property, are these policies that you have for your renters?
03:39:40
Well, yeah, we have our limits. What we like after this certain point, I’m not okay with my ratios or my return. We have a limited risk that with credit score, and this is not an income property. And this amount of tests we have are our limitations. When they’re in there, they’re black or white on a website. It is what it is. If you don’t abide by our guidelines or rules and regulations we can do.
04:40:15
So, what, what would you say is like the one house rule that has maybe saved you before your biggest policy?
04:40:20
The one will send us the most, in my opinion, our guests, we have a very strict policy, no more than X amount, but we have the ring doorbell camera that has prevented so many parties things happening. So I think, I think that gets counted as Bannerman. Number one, savior, protecting us, or potential bad, bad things happening
04:40:47
That that definitely has people, you know, people forget that these houses are in residential areas and there’s neighbors. And we have to keep them just as happy as we want to keep our guests. So there’s a reason why we have things in place. It’s not because, you know, we don’t want to be flexible with guests, but there’s other people we have to look out for it as well. You know, if neighbors are getting upset because there’s too many people at a house and things are happening and their driveways being blocked, and they’re going to go complain to the city or the county. And next thing, you know, people aren’t going to have the privilege to be able to stay in Airbnbs in our, in our community. So it’s more than just, you know, us, there’s other people that we’re looking out for too.
04:41:27
And what would, what would you say is your, your number one policy when you’re looking to acquire another property?
04:41:35
I would say every city then no, one’s going to go to, you have to, no matter how good the deal change or no one wants to be at.
04:41:59
And are there any things that you put in your units that help save you time and money?
04:42:04
Yeah. So the August keypad is a lifesaver. The rain is right. We knew the wildfire thermostat allow us to put parameters. They put it up to down because, you know, we may care less about your bills than you do. So I went down to 65 in the summertime to leave all day school rappers, where they keep it manageable.
04:42:28
We also, we also, we have, we lock up our supply closet. You know, if we all our extra supplies, all of our supplies is at each location. We, we convert one of the, either, whether it’s the bedroom closet or the pantry, whatever has enough space, we converted into our supply closet. So that no matter who shows up to clean, you know, something happened to our cleaner when they show up everything is there. So we keep that locked sort of way so that, you know, we don’t give the Liberty to guests to just from, I guess, go through our stuff and take out extra stuff. You know, next thing you know, there’s no detergent or there’s not, you know, all the sheets are gone. So we in, we try to keep duplicate everything. God forbid something happened. There was a backup to everything. So that’s definitely become a lifesaver.
04:43:17
I was going to add that real quick. All those things cost a lot of money on, on the August, the ring and the well, well worth it. And I had heard Mandela or something sounds similar system to those, all the people that watch this, you gotta have ALS in your property, you gotta have be able to monitor certain things to keep your costs down. And also for the safety of your clients. Because if something happens at your, at your property, your unit, that ring, or some sort of surveillance, it could be a liability, you know, it could help you
04:43:48
And keep everyone accountable. You know, I think so. It’s not that, you know, we want to spy and we want to see what’s happening or anything like that. It just keeps everyone accountable. If something does happen, we do have some sort of record to go back on and double check and confirm. I mean, things do happen. And sometimes, you know, you have to protect yourself and you have to be able to prove exactly what happened.
04:44:08
And you guys have some, some really nice reviews on your, your listings. What, what are you doing in order to, or what are you doing that helps your guests leave positive reviews?
04:44:19
So we, the Smartbnb, which is the automated messages really do help. They keep us at a hundred percent response rate with great, the very next day, we have a automated message that out to them, the day after they check in to say, Hey, well, we have a message that goes out to them before they check in. You know, if they have any questions with special instructions, a quick video on how to use our smart lock, just confirming that they have everything that they need to be able to arrive. You know, whenever, because we, you know, the, it is a self-check and so they want to check in at one in the morning, they can. Now I want to be able to answer any questions within a reasonable time, instead of them arriving and no one’s answering the phone and they can’t get in the house.
04:45:01
So we have a message that goes out to them before they arrive message the morning after they’ve checked in, just confirming that everything is good. Are there any concerns, any issues that you want to bring up to us, let us know, let us fix it now, you know, instead of waiting, and then we send, ’em a message right before they leave. And then the day after they leave, we send them another message thing. Hey, look, you know, thank you for staying you work great guests. I hope that you had a great stay. You know, again, kind of if there were any issues, let me know through here, but I hope that you leave us a great review or something like that. So those messages really do encourage those positive reviews and allows them to tell us any little issues or concerns via the message thread instead of the reviews. So those are things that we, we do try, and if they bring anything up to us, you know, if there’s any major issues, we try to fix them immediately and we try to be responsive and understanding. So that’s what we try to do.
04:46:03
And w w what would you do differently if you had to start from scratch?
04:46:08
And we would have probably done a lot more market research? Honestly, I would have, we didn’t know that there, like I said, we didn’t know there was a demand here, so we kind of get towed into it and just kind of said, well, let’s be, instead of saying, no, there’s a demand here. Let’s do the research. Why, what are people paying? What is the average nightly rate out of hotel? All these things that we should have done on the front end, we would have probably done and done it the right way. Initially dynamic pricing is I think a must. Yeah, we, we didn’t, we didn’t realize how much money we were leaving on the table by not using, you know what I mean? You know, Airbnb always encourages less nightly rates, you know, because they want those people to book. And obviously everybody wants everything at a bargain, but if there’s a demand, obviously you can bump up your prices are a little bit more money. So that definitely has allowed us to see when the high and lows are. Because again, we’re not in a touristy location, there’s not a high season and a low season. It just kind of varies throughout the year.
04:47:09
Are you guys going to be focusing primarily on just this type of model, the owner finance, the Short Term rent, or are you guys going to be diversifying what, what’s your strategy with this?
04:47:20
And I’m a firm believer of finding your niche. This is what we do. And we’re really, really good at it. It’s very, very profitable. A lot can be said for focusing on one thing, too many investors, they shop, they, they track down every lead, every possibility, every flail, every wholesale, every new commercial, whatever it is, you know, so we’re, we’re great at this. We’re getting better every day. We’re getting more and more profitable every day. And this is what we’re going to be doing for the next, probably five years, at least
04:47:53
What would be a, a question that you would ask another professional hosts, maybe someone that is doing something different or someone that’s maybe the next level from you guys. What, what would that be?
04:48:02
I would, I would love to learn more about the bells acquiring at the acquisitions. I’ll watch a lot of guys will need to do that. And they know that doing sometimes five units in one apartment complex at one time. And I think it’s super interesting. It’s not far off of what we do. I think that’d be an easy transition, but something we can add to our little toolbox. That’s interesting to me.
04:48:35
Okay, great. And, and, and you guys are really big readers. I could tell when you brought up the, the E-Myth, what’s another great book that you could recommend that has kind of changed your business or your life
04:48:45
Audio. You ready for a list of 20, let’s say next role band card down on the emails, obviously how to make friends. That’s not the whole title, but how to, how to make friends on the road down. There’s so many good ones aren’t brave. And I would take a bit, the foundation is rich, rich. They afford a series of like six or seven initial books. Read them all. They’re all fantastic. And they’ll put you where you need to be if you’re not there yet, as far as understanding tax and understanding, working for your stuff and where to spend your time and fairs the flower workweek I’m going in. I love those. I love those selves, you know, business promoting books. I love those.
04:49:28
And what about you? Sorry.
04:49:31
Well, as far as short-term rentals, forgot what his name is. Danny rusting with optimize your Airbnb. That book is actually what I, everything that he said, I plugged into play, you know, I took it, whatever he said, I tried it out. It worked. I was like, oh my gosh, go to the next chapter, try it out. It worked. So that book was very simple to the point, you know, no extra fluff on or anything. You just honestly just follow the book. It tells you, I mean, and all of them. And he offers promo codes on all of them. So you actually get them at a discounted rate. You know, some of those systems that he suggests
05:50:13
For your, for your clients, you’re ordering the real estate. I wrote a book at Amazon and I’m really well. It’s called first starting your real estate business is taking off right now. And it’s helping people begin one, starting there, entity building their team. What documents are needed, low of negotiations, if it’s something people thought or business and what we’re very happy about that. Very proud.
05:50:38
I’ll, I’ll, I’ll include that in the show notes. I’m excited to, to read that as well. I think what you guys are doing is so awesome. Dan, he’s actually going to be one of the next, next guests on our show. So excited for that as well, but, but awesome. Thank you. Thank you. Just so much for you guys for coming on the show. You guys have just a wealth of knowledge and I’m excited to, to read and share your book and learn more and see where you guys are going. I’d love to get you on the show. Maybe once you get to a hundred units, I’m sure that’ll happen, but we’ll, we’ll see, we’ll see what type of systems and things you have in place that have allowed you to scale up to that. But until next time, host nation, keep on hosting Hopi hosts, benefit 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, the host nation, talk to your hosts and the next step. So to keep on hosting.
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