STRSS 27 – From 0 to 50 Airbnb Short Term Rentals in 1.5 years w/ Jeremy Schmitt

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From 0 to 50 Airbnb Short Term Rentals in 1.5 years w/ Jeremy Schmitt

Today I had the honor of speaking with Jeremy Schmitt. Jeremy is the founder of the Pasion Group, a Short Term Rental property management company servicing primarily in the Chicago area.

Jeremy started 2.5 years ago with no prior experience and partnered as a Junior Investor working with an experienced property manager in the UK.

Jeremy was able to build his first management company, Help Host, to over 50 properties in a little over a year.

Jeremy sold off his share of the company to his partner to be able to start his style of management in the Pasion Group.

Video Transcript

 

00:00:00

Me having a partner who was in it for, you know, two to three years before I got into it was just invaluable because anybody can do this at five or 10 units. Then once you get to 15 and 25 and 30, it’s a different level of scale, you know, in a different level of systems.

00:00:17

This is episode number two seven of the short-term rental success stories podcast. 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. So we had an awesome review come in on iTunes that I wanted to highlight. This is coming from little Leo, ADA, and they said five stars. I’m so glad I found STR success stories. Julian always has great guests with a wealth of knowledge to share this channel helps the beginner get started and the seasoned host tweak their listings for better reviews. This community that I’ve found from the podcast, YouTube and Facebook group have proven to be so kind and helpful to so many people.

00:01:01

It’s so great to be able to bounce ideas off of others. And here’s some other great successes. Thank you so much. Little Leo. I really appreciate that for that really awesome kindhearted review makes me feel really good. And I want to actually announce that we are doing a giveaway. So if you’re not part of the Facebook host nation Facebook group, we’re actually doing a vacation giveaway because we all are about that Vacation Rental life. That’s why we listened to the show because we want to have vacation rentals, but we need to take more vacations. So we’re actually doing Vacation giveaways. If you want to know more, it’s actually really easy to do you just leave a review on iTunes, take a screenshot, and then post that in the announcement. So this is actually going to be ending today. So you have until the end of the day to leave your review, take a screenshot and then post it in the announcement section of the host nation Facebook group.

00:01:54

And we’re doing giveaways, some really cool places that you could go. I like Bali, Cancun, even like places in the U S like Daytona beach and Las Vegas. So some really cool stuff, all you need to do for this giveaway, like I said, and yeah, that that’s really it. I’m just super glad to be able to give back to you all and to be able to do some vacation incentives and some fun ways to get more engagement and get you guys taking a break, because we are all about that Vacation life, but we need to start taking more vacations guys. Come on. So today I had the honor of speaking with Jeremy Schmidt. Jeremy is the founder of the passion group, a short-term rental property management company servicing primarily in the Chicago area. Jeremy started two and a half years ago with no prior experience, but found a partner and went in as a junior investor.

00:02:43

Working with this experienced property manager in the UK, Jeremy was able to build his first management company help hosts to over 50 properties in a little over a year. Jeremy decided to sell off his share of the company to his partner, to be able to start his own style of management. The passion. This is a great episode that you all don’t want to miss. So if you want to see the show notes going over to Short Term, Sage dot com backslash STR two seven, or if you like my show notes, then go to Short Term Sage dot com backslash units with all that being said onto this week’s conversation. Hey, welcome back, host nation to another episode of Short Term mental success stories. In this episode, I have the special honor of speaking with Jeremy Schmidt. Jeremy, if you please introduce yourself, let the audience know a little bit more about who you are and what inspired you to get into short-term rentals.

00:03:33

Sure. Thanks, Julian. And thanks for having me on my name is Jeremy Schmidt. I run a little company called passion group based out of Chicago. We’re here in Chicago, we’re in west Palm beach. We’re also in Mexico city. I’ve been doing short-term rentals for two and a half years. I had a short term rental management company about two years ago, sold it to my partners about a year ago. And I started the passion group really focusing on, you know, creating a brand, creating an operating model. That’s focused on creating freedom for my partners. So I don’t take on a ton of clients, but I take on a lot of partners and investors just because I believe in everybody thinking like an owner. And when everybody’s thinking like an owner, the results tend to be better because short-term rentals is such a hands-on business. And you know, if you’re not high touch and you don’t actually care about, you know, your asset and guests who are coming in and you know, the whole experience, then you know, it just doesn’t work in the longterm.

00:04:38

So yeah. Had the passion group for a little under a year. Now we have 25 properties, mostly here in Chicago. So I said to west Palm beach, Mexico city, and we’re also working on a new Short Term development project in Tennessee, which we’re really excited about, which maybe we can talk about later. But I started here and I studied entrepreneurship in college at Indiana university. And then I worked for a very successful broker developer here in Chicago. And it was really hard because it was a hundred percent commission, which was, you know, pretty terrible coming straight out of college. But I got to learn, I got to grow very fast and I got to learn the language of real estate, which was really huge in terms of being able to grow and scale my business here. So I worked under him, made a lot of relationship ships here in Chicago for about five years. And then, you know, I had a conversation with him and he’s like, Hey, you seem like you’re ready to go off and fly on your own. So, you know, it did, but a couple of years ago, and now we’re here.

00:05:49

And, and, and how did you hear about short-term rentals? Because you’re coming from a real estate background, very heavy. What, what, what brought you into short-term rentals and did you make like the switch entirely, or you still have the real estate stuff going on on the side?

00:06:06

You know, I think it was a random inner party where I kind of heard about this and blah, blah, blah. And I had a friend in college. So I have a really good friend who he’s actually getting married this weekend, but we were kind of part of an entrepreneur mastermind while we were at Indiana university. And we heard our friend in Breckenridge was doing this property management company. And, you know, he was an investment banker formerly we’re like, what the heck are you doing in Breckenridge doing property management? So heard about the Airbnb stuff a little bit in Chicago, cause it was growing, but then went and just visited my friend in Brackenridge. And we just got talked, talked through the numbers, talked about kind of what it looks like. And he was managing about 70 properties at the time and just absolutely crushing it.

00:06:54

You know, he’s basically, he’s the boss of Airbnb and Breckenridge, you know, still is in my thesis, was, Hey, what if we bring this to, this was before Sonder and you know, the big boys really came to the playground and my thesis was, Hey, what if we bring this operating system, which is typical for a ski town to a metropolitan city? So we did, we partnered up, I founded it brought on two team members, found a couple of cleaning teams, you know, they became our cleaning teams and then ended up, you know, starting with one cleaning toilets and doing what I sure a lot of people have done during their own cleanings to growing it, to be about 50 units before it was my time to really leave and sell it. I sold it to my, my former partners and now, you know, that’s what I’m doing my own thing, but yeah, it was kind of happenstance, you know, and lucky and, you know, seeing the opportunity and thing where the holes could be filled in terms of, you know, professional, you know, a professional experience, but still with that high touch, you know, intimate authenticity that a lot of Airbnb travelers seek, you know, we wanted to bridge that gap and that’s, and that’s what we continue to do, you know, cause I’m not looking to bring on a hundred units here in Chicago, you know what Sandra’s doing.

00:08:18

I think it takes away from the authenticity and doesn’t allow people to really get that high touch, you know, local experience, you know, especially when the people, you know, aren’t owners, you know, are people that we work with are always the owners. So they have, you know, an invested interest in the property, you know? So, you know, like I said, we’re at about 25 now and yeah, we’re happy where we are. We’re, we’re continuing to grow, but we grow slowly, you know, and now we’re expanding into other markets like west Palm beach, Tennessee, Mexico city,

00:08:51

You know, Jeremy, I just think that this is so-called, you’re, you’re probably one of the fastest growing, you know, property managers that we’ve had on the show. You’ve only been in the space for about two and a half years. And just to kind of summarize what, what Jeremy kind of did was that he built up this property management company up to like 50 units. He had investors partners, and then he sold it and now he started his own, which is the passion group. I’m really curious though, because maybe lots of people are getting into the space and there may be, you know, they have the idea about selling their own property management or, you know, but how do you, how do you, how does that go about like how, what, how do you build up something like that and be able to pass it onto somebody else and sell it?

00:09:35

Sure. Yeah. You know, it’s funny actually, when I was at my former company, I helped my partner in Breckinridge acquire another company. So we acquired another company about 20 units. Luckily my partner had kind of that private equity investment banking background, so we’re able to do it. There’s I mean, the, the really simple answer is just meeting people in the industry who are other owners, you know, and just sharing with them, your story, sharing with them, who you are, building trust with people in other markets in whatever way that that can be, that can be forums like BiggerPockets. It can be events like Eric Mueller’s Airbnb mastery. I think those are the best channels because those people know the business, they’re passionate about it. They have number of units and you know, sometimes people are ready to move on to have kids, or they just wanna have a different career because this is so time consuming and a very busy business, or sometimes, you know, people are looking at it through an investment lens, you know, like you have your Saunders, you have your Picassos, you have those guys who are, you know, looking to just bring on more units because they need to satisfy their investors.

01:10:47

So it’s say just, you know, talk, there are a couple of private equity players, but you know, the big thing is just building those relationships with people who are already in the industry.

01:10:58

Now, you, you had this previous property management and this was a team effort. Correct. So you actually sold your, your kind of share of that partnership to your other partners. Correct. So you could start your own.

01:11:12

Yeah. So,

01:11:13

So with, with that, so do you think that it’s a good thing or a, how do you, is it better to maybe partner with people to scale or is it better to kind of do it on your own? Because now you have the experience with both,

01:11:27

I’d say it depends on your background, like anything like a person’s situation, which is why I think it’s beautiful that you’re having this podcast and having guys from so many different lenses and, you know, that’s what we do when I consult people, usually call me on a weekly basis and say, Hey, you know, how do you think I can bring on more units? Or if you’re have real estate background, I’d say, Hey, you know, you know, and, and, you know, local players, local handyman, local cleaning teams who are the most important people on your team, you know, you can try and shoot for the moon and start with one and see if you like it. Otherwise, you know, me having a partner, you know, who is, who was in it for, you know, two to three years before I got into it was just invaluable because, you know, anybody can do this at five or 10 units.

01:12:16

Then once you get to 15 and 25 and 30, it’s a different level of scale, you know, and a different level of systems and a different level of just attentiveness. And you know what, where’s your focus because you can’t just manage that by yourself at that point. So having that partner and him being already through those steps was so valuable for me. So I get to learn so much from him. You know, he plugged and played his operating system, that he had Brett here in Chicago and we had to really adapt it to, to the Chicago market just cause it’s different. You know, it’s like, they’re not so much worried about guests there, but like, you know, we don’t allow local guests here in Chicago because they typically throw parties and create trouble. So it’s like little things like that, that you kind of, Hey, you can grandfather what you’ve learned from there and kind of make it your own within your own community, whether you’re in a major metropolitan city, a ski town or each town I’d say always going with a mentor or an advisor, our partner is so invaluable and I would always recommend it, especially for the first, you know, six months to a year.

01:13:22

So how, how do you, how do you kind of build, cause I’m curious, when you first started, you had this partner that had this experience, so you were able to kind of work together and use him as kind of like a mentor, but also as a partner, how do you being, let’s say for the new people that are getting into the space and want to partner with maybe someone else that already has properties, how do you split up those responsibilities if you don’t have that maybe experience in the, in the industry?

01:13:47

Yeah, that’s a tough sell, you know, cause people who already are doing it and have properties, it’s like, okay, for me it was bringing the units to him, you know, and say, Hey, you know, I know you have your business. They’re like, I’m going to grow this business. And you know, he took a little bit of a leap of faith on me, but I mean, you know, the hardest part is finding clients, you know, and finding deals in this industry. And so having the relationships that I had, being able to speak the language was invaluable. You know, for people who are kind of going into a management company, I would say, you know, just start, you know, offering to work for free, you know, or just for, you know, they always need help. You know, even if they have their own cleaning staff, you know, maintenance staff and whatnot, you know, they can always use inspectors that have better quality control, you know, so you can always offer do that.

01:14:40

You know, they could always use an extra hand in messaging the guests because the guests, you know, are most guests, you know, are easy depending on how you automate the system. But you know, there’s some guests for high, it can be very stressful for the owner. You know, it’s just having a conversation and being man to man and being like, Hey, what are your big problem points? You know, how can I help you take care of them? And then, you know, from there you got to deliver, then you got to execute. And I think that’s the big it’s, you know, the toughest part is, Hey, we want to do this. We want to do this. But you know, most people don’t know how much work it really is. Especially starting out, you know, at our point now it’s like we have systems where we can plug and play people in and they’re like, oh my gosh, I can’t believe it’s this easy. You know? And it’s still, it’s, it’s, it’s actually pick that back, how simple it is. You know, we always say, it’s, it’s super simple, but it’s not easy because you know, it’s hospitality, you need to know how to take care of people.

01:15:34

But yeah, that’s, that’s what I would recommend, you know, just having a man or a, you know, a woman to woman, man, to man conversation, you know what I’m saying? Hey, how can I help? What are your biggest challenges? You know? And it’s just like, you know, this is what I think I can bring to the table and I’d love to help you.

01:15:49

And so now that you’re kind of, now that you’re, you’ve, you’ve got this property management company that you you’ve taken, what you’ve learned from having this partner that was managing multiple, multiple units much on a much larger scale. What would you say would be the biggest thing that you kind of learned from working with someone that is managing at a much larger scale operation and how you’ve been able to apply that to your, a new management company?

01:16:16

It’s all about systems. You know, it’s Airbnb is a great platform and it allows you to, you know, automate a few things, but, you know, on the backend, having the channel manager and then having a backend internal company system that allows you to automate, you know, house manual check-in docs, you know, guest communications, those are so invaluable because they allow you to focus, you know, on, you know, the 80% that really matters, which is the guest experience. You know, it’s, those are the things that matters because you know, one, you want to give guests an amazing experience in your hometown or your city, or if you’re doing it remotely, you know, wherever you choose to make your second home, but to, you know, you want to make it, you know, as great as possible because you want to build up those reviews. So you have a longterm mote within your property. Continuous, especially in Chicago is getting much more competitive. So you’re not getting consistent five star reviews. You’re going to get lost in the chafe. And you know, you’re probably better off doing something else because these professional guys are coming in and you know, they’re no joke. You’re not going to be able to, if you don’t have a full package, you’re not going to be able to compete, especially, you know, right now we might be okay, but you years in a way Jose

01:17:32

Now, can you kind of walk through the makeup of your, your current property management team? Like H what does that consist of now?

01:17:39

Yeah, so I have a city manager you’re in Chicago. We like to think of it, you know, based on my past experience, you know, city manager can take on, you know, up to 20 units and be very intimately in touch with those units. And we kind of changed our strategy. You know, my former company, we kind of took on one-off clients. Now we only take on landlord partners. And by that, I mean, you know, we only take on buildings that, you know, or owners who have, you know, millions of dollars worth of assets. So like they have multifamily properties that are, you know, 50 to 200 units, large. So we’re looking solid date and really focus on, you know, having our, our little chunk of space within those buildings. It’s easier for our team. It’s easier for our cleaners. So city manager, and then I have a cleaning team who freaking rock and they’re the most important part, you know, having them on board, being able to not only clean, but also to help you track inventory and stock the units.

01:18:41

So they’re a team of five and they’re just, they rock and roll. And then, you know, I have a secret police just to give our clients peace of mind. I don’t take on many clients at all. I, I turned more, more clients than I, than I actually accept, but I’m taking on two clients just because they’re landlords who own a lot of real estate in Chicago. So it’s like, we want to partner with them for the longterm. And then, you know, we have our contractor. So I have a really great designer here who worked for the team. And then I have a photographer who world-class, he’s one of Airbnb’s go to photographers, but he’s a friend of mine and that’s our team. You know, I have a few partners on the side too, who we’ve invested capital alongside with each other. And I do that strategically to say, Hey, you know, if, you know, I don’t really want to go above, you know, 30, 35 units here in Chicago, but if they do, and you know, I have, you know, people coming to me offering the units, I know my partners are competent.

01:19:44

They know the system and, you know, I can hand this off to them and they can, you know, take it and run with it. And then we can both benefit together. So I’ve, I’ve just a couple of partners on the side who are either capital or operating partners. And they’re, they’re fantastic. They kind of, they have their own LLC. So it’s kind of like a joint venture and they do their own thing, but they’re good friends of mine and they rock at what they do. So I like just having those until just in case, Hey, what if somebody is out of town, we can watch each other’s backs, you know? And for the long-term, you know, depending on how big they want to go, we can help each other.

02:20:20

Now you said that you have a city city manager in a rockstar cleaning team, but you also have properties in more out of reach areas. Like you said, Mexico city, west Palm beach. How do you apply your systems towards those more isolated units?

02:20:37

Yeah. So anytime we think about entering into a new market, we think about one regulation, which is most important, which are kind of transient. So that’s kind of hard to gauge, but we think we do a pretty good job, but, and then two is just the boots on the ground. You know, I’ve said it three times already, but you know who you have, you’re playing the game, your maintenance team, people who are boots on the ground are the most important. So for Mexico city, we’ve been there for about six months. I have a partner who his family is various need. This in Mexico city is very deep into real estate. So they owned a bunch of stuff kind of across American Mexico. And he’s got that real estate background. We said, Hey, you know, let’s partner up. So, you know, he’s leading my partners, leading the charge there, you know, he has a cleaning team relationship with the laundromat owner, you know, and then a maintenance team.

02:21:31

So it’s like really key, you know, that they kind of, they kind of already had those kind of relationships preset. And then in west Palm beach, it’s an investor base actually based out of here in Chicago, but they own stuff across the country as well. And they’ve already owned the building. They’ve just seen like, Hey, you know, we want to maximize cash flow. So they reached out to me and then we had a conversation. So they already had a maintenance team and, and cleaning team down there. So it’s like, I went down there and visited them, took them through the steps, talk to them about what we’d expect. And we built a good rapport together. So just having those, you know, going there, you know, blind eyes kind of hard, you know, it’s, I wouldn’t recommend that, but you know, be, have relationships, you know, especially with landlords and owners. That’s, that’s how I best recommend.

02:22:25

Now you brought up partners quite, quite a lot. When, when you said you are going to like Mexico city now, are these more like business partners or are these like strategic partnerships like working with like landlords that have multiple properties just to clarify,

02:22:42

Well, I know we don’t need to take on partners. We have enough, sorry, there’s a plane in the background. It’s air and water smoke Chicago. We don’t really need to take on capital partners. So for us, any partner we take on is either one family and friends, people that I love and I trust, or two strategic partners who, you know, own the land and or buildings. And we know we can grow with them in the longterm. So, you know, we don’t really need capital mean, you know, even though it’s always nice, we, we like to go into a new market, grow real low and slow. And once we grab our foothold in there, we know we have the boots on the ground to take care of our skilled units. Then we really, you know, press the green button and go,

02:23:33

So now let’s say you’re going into a market that you don’t have any friends or family that you know of, but you are trying to reach out how do you go about creating those, those good partnerships with like those landlords or those complexes when, when you don’t know the area?

02:23:51

So that’s actually what we’re doing in Tennessee with our short term rental development. So we’re purchasing the land. We’re gonna be developing about 25 modular homes with one of our construction partners. And then we’re going to be operating with the goal of it being a franchise model, kind of the McDonald’s of short term rental. So no more operating partners, maybe some people who are listening to this who want to do it in their local community, say, Hey, we want to do that. Can you help us, you know, develop this land and then they can plug and play into the community. So for that, you know, it’s just being there, you know, we’re going into, we’re going to Tennessee. It’s like one we’re going to meet and talk to the local cabin owners who are doing this already to say, Hey, you know, what’s the landscape, what does it look like?

02:24:40

How does it work? And then too, you know, we’re just going to reach out to, you know, a number of cleaning, cleaning people, maintenance people, you know, and we’re just going to take them through the ringer. You know, a lot of the people you don’t really know until you actually see their work. So of course you got to ask them for references. It’s really important. But you know, initially I’d say, you know, working with the cleaning company to start, it’s a little safer, but it’s going to be a little bit more expensive, but it’s worth it. So, you know, work with a cleaning company in those new markets. And then, you know, as you spend time down there and develop relationships with other owners or just cleaning companies, you know, you’ll bump into people because you know, doing this, I love it because we’re able to pair cleaners for really good wage, like a lot more like double the minimum wage, you know?

02:25:29

And we tell them then, especially if they do a good job, we reward them for that, you know, above and beyond with bonuses. So you just gotta be there. You know, you, you know, start making the calls, get on forums, go through, you know, Google search, who the top people are, you know, and have conversations, but have conversations with people face to face because you really don’t know. That’s what I learned from my old, when I worked in real estate before this, you know, you have to be face to face and always have backups too, because you never know, you know, someone can not work out. Someone can maybe, you know, have a baby. They can maybe have to move somewhere else. So having backups, you know, it’s, the engineering principle of redundancy always helps to.

02:26:14

So with those locations, like, let’s say Mexico city, west Palm beach, where you’re not present, but you have, you know, these business partnerships that you do have these landlords, do you, when let’s say something doesn’t work out and you need to find another cleaner, you need to find someone that can be dependable. Are you personally going down there or do you have your business partner kind of be the media mediator?

02:26:38

Both. So, you know, if my partner’s already down there, you know, he, he naturally knows the local landscape more, which is the most important part of our hospitality business, you know? And I let him run with it. The same thing in west Palm beach, you know, we have a risk, good team and they rock and trustworthy and they have a vested interest in the property and properties that they own. But if it comes down to it, yeah, you got to go down there, you know, on an, on a, less than a week’s notice and just fly down there and see, you know, fix the problem. Even, you know, cleaning the toilets, if you need to, you know, if they’re not going to be there and that’s just, you know, that’s the Matt easy part of our business. Like I said, it’s simple. Yeah.

02:27:24

Now what would you say is the difference? Because when, when, when you say partner, usually I think that there’s some, you know, there’s, there’s, I usually think of like a financial vested interests are a, and w are you just like renting out their units and they just are partners with you because you’re able to fill their occupancy or is there some type of like financial partnership that you do enter into to maybe sweeten the deal so that if in case something does happen and they need to kind of mediate that they do kind of have more vested interest and don’t just like, say, oh, well, you know, it’s, this is your, this is your job, you know, I’m just providing the housing.

02:28:00

Yeah. I may think clear to them, like in the beginning before, you know, I don’t, I don’t need to take on it. We, our stance is, you know, we don’t want to be in bed with, you know, sorry, my French assholes, you know, so we make that clear in the beginning. Like, I don’t need your business. I don’t care. We have a fine business, like, like, but if we’re going to do this, you know, we’re going to be partners together. So to answer your question, you know, we only want to partner with people who, you know, have that vested interest. So sometimes we prop the chair or, you know, sometimes we take out a lease, you know, and just collect on the upside. And sometimes we do management contracts. So we kind of have those three options. And based on my conversations with the owners, depending on how vested they want to be in the project, you know, whether they just want to collect a check at the end of the month, be happy and fat cool.

02:29:00

Whether they want to be kind of be more hands-on and learn the business. I kind of, you know, that’s my role in being, you know, a relationship mediator in between this and saying, Hey, you know, what makes the most sense? You know, what’s going to make us, you know, the most money, you know, and then what’s going to make us the most important question. It’s like, what’s gonna make this work most for both of us in the longterm, you know? So we just have that conversation, figure it out. But yeah, we kind of do a mix of all three models.

02:29:29

Now with the other w with the first company that you guys started with your, with your other business partner, you said that you were taking up more individual units, but now you’ve kind of, you have more of like a, you take multiple units within a specific area. Is there like a minimum that you have with those types of units,

02:29:50

Minimum by number you mean? Right. So in Chicago, they, they are very tight compliance, like a lot of large major metropolitan city. So they allow a maximum of six units per building, per address. So usually it’s we take on, you know, just a chunk of six within the building, usually they’re on the same floor or, you know, similar on floor plates on a floor above or below, you know, some, one of our new owners, you know, they own a whole complex near Wrigleyville, so they own kind of the block. So they have multiple addresses. So, you know, we can do up to 12 or 14 there, but typically just because regulations allow it at six here in Chicago, it was up to me, we’d be somewhere, you know, just depending on the profit margin would be somewhere in the, you know, 15 to 20 unit range per building.

03:30:46

That’s what a lot of people here are doing. And I was actually looking at a boutique here for hotel here in Chicago, in the gold coast for a little bit. But then I, I, that was about a year ago when I was with my former company and then I left, but I think that’s, yeah, but the ideal number, because then you can be boutique-y, which is what Airbnb is looking for. You can be high touch, but everything in terms of operations on the back end can be consolidated and all your supplies can be in one place. It just makes it a lot easier for my team with just really my goal is you think about, Hey, how can I make this as simple and easy for them? Because it’s fat eating.

03:31:22

And, and if you are getting multiple units within a, in one building, how are you kind of keeping the comp, how are you not competing against yourself? Like, what are you doing to attract different types of customers for your units?

03:31:36

Yeah. We want to compete against ourselves because competition breeds, reads better units, you know, so we see, you know, we’re lucky to have the data on the back end of Airbnb. So when we have units facing, you know, within each other, which are basically identical, we can say, Hey, this unit, you know, is 85% lease. This is 70% lease and we have this title that’s different. And maybe we can switch up the title. Maybe we can switch up the cover photo. We always want to split test. So we want, we actually want the competition and we thrive on competition because it allows us to learn, you know, and then grow them together. And when they’re in the same building, we can typically attract larger groups. So we have people attract us online on the platform and off the platform saying, Hey, we need all replaces. Or we need all six places. You know, what’s the best deal you can give for us. So we welcome the competition, you know, and it helps us get better because if we’re not getting our units better, making the guest experience better as on an ongoing basis, then now we know that we’re losing competition.

03:32:43

What would you say would be the number, like the best thing from the other partnership that you had, the other business that you built up, what would you say would be the best thing that you kind of took away from that? And then one of the worst things that maybe they were doing that you were trying not to apply into your business,

03:33:03

Initial inspections before we take on a client, you’re doing an initial inspection just to take on inventory, furnishing everything, detailing, check-ins exits garbage parking, et cetera, doing that to a full basis, even though it’s mundane and takes a lot of time, initially that upfront work of systemizing, every step of the process before, you know, a guest even arrives with, you know, checking doc’s house manuals, everything is the most important part, because then it allows you to potentially delegate it in the future because everything is taken into account. You know, it allows you to be accountable. You know, if something happens within no glass breaks or, you know, there’s damage to you, furnishing item, it allows you those to be documented, runt the documentation and then inventory tracking, and then being able to plug that into the system is invaluable. You know? And I think that’s what a lot of initial hosts miss out on because they’re like, Hey, let’s wing it.

03:34:10

You know, let’s take photos and let’s go do it. And then, Hey, whatever happens happens, which is cool, you know, and you can do it for one or two units, but you want to do this for real you. Can’t the toughest thing I learned was, you know, not having a quality players on my side, you know, and in order to do that, you need to give them some sort of ownership, stake, you know? So whether that’s, you know, in the unit, in the company through bonuses, through, you know, whatever way you need to do it, you know, all, all of our partners own, or have a vested interest in the property. And they’re a players, you know, this business just doesn’t work in the long-term like you can’t keep super health status. You know, we still have superhero status after two years. Like, it’s, we’re very proud of that, you know, and who knows it can go away, you know, get, you get a number of units.

03:34:56

And Airbnb’s kind of tough on that, but knock on one, but not having a partners, which I have now. And I’m very thankful for is your law. You know, it’s simple, you know, it’s a people business, you know, and it’s all about the people. So taking the time to find the right people, you know, and making it clear, you know, Hey, these are our expectations. It’s five star hospitality, or it’s bust, you know, you can leave, you know, we don’t, we don’t accept anything less. That was really the difficult part. And why, you know, I left, you know, because, you know, you gotta have a players on your team and now that we do, I’m so grateful and I, you know, I’m super to grow, you know, continue to create, invent and create our brand and help other people, you know, big financial freedom for themselves.

03:35:45

What has been the most challenging part of scaling your, your short-term rental business?

03:35:55

I think it’s for everybody finding deals, you know, lucky for me, like I have a lot of relationships and I actually tell people no more than yes, just because you’re very, very selective about the, our goal is to be the most profitable Airbnb company in Chicago. So we’re super, super, super selective just because the supply continues to increase, which means my profits are going to continue to strength, but, you know, we want to focus on that profit margin. It’s really just being patient to be able to find the deals and having the boots on the ground aligned with you. So, you know, you’re giving a consistent five-star experience. It’s, it’s, it’s simple, but it’s not easy, you know, and especially on a consistent basis where, you know, you want to go out on a Friday night. I had this happen two months ago. You know, I was out with my friends, my really, really good friends.

03:36:48

And we were going to a concert in Chicago. And then I get a call at 1230 saying, Hey, we’re locked out of the apartment building system just stopped. And luckily we had, you know, an emergency lock box Bob, so they can get in and be taken care of. But, you know, I had to step outside for 30 minutes, you know, to just walk them through and make sure they were okay. And, you know, it’s just like being able to do that on a consistent basis, you know, cause a lot of people who do Airbnb love to travel too. So, you know, a lot of the times you’re not even onsite not, and luckily we have a city manager, so we kind of bounced back and forth. So we always have somebody here, but you have the relationships and then being consistent is always a challenge.

03:37:31

Now you’ve mentioned also because like, you’re, you’re very strategic with who you take on as being a client and business partner. What like for the people that are maybe just starting and they’re just trying to get like any deal that they can have any type of relationship that they can have. Do you, do you maybe not recommend people just kind of taking whatever it is and what’s your criteria for like a really good partnership? Like how, how, what is your selection process?

03:38:03

I mean, going back to your question about people starting, I’d say for the first one that you get in the door, do whatever you can. That’s what I had been two years ago. You know what, I don’t even know how it happened, but you know, I was cleaning the toilets, getting, just getting to know the business on a very intimate basis is key. And after you know that business, you know, then you can go to owners who have multiple properties, you know, or management companies who just do long-term rents. And maybe you can add value by providing this Airbnb as a, as a different, you know, value add once you have the language and the know-how down and people know that you’re actually doing it, you know, it’s one thing to, oh, I read all these articles and it’s nice, but you have to actually be in the trenches, you know, after you have that, then you can be more selective.

03:38:54

So I’d say at the beginning, you know, get what you can maybe, and start your own, do a shared room, do whatever you can just to kind of get a feel for the platform, understand it, you know, touch base with people like you or other experts to say, Hey, what are, what are you doing on the backend systems? Like how do you, how do you find tune them to really get them some of their automated and, you know, rev par is maximized. But then after that, it’s like, you know, for us, you know, we look for owners that own a minimum of $15 million in assets and, you know, have larger buildings across, you know, you know, this city or cities across the country. Cause we’re not looking to go small anymore. You know, we know our system, you know, can plug and play. We can do a hundred units.

03:39:39

We know the system’s great, you know, but for us, you know, it’s, it’s that. And then, like I said, I don’t, I don’t want to work with assholes. So I, I look for good people, you know, and people who care and, and sometimes, you know, older guys who, you know, want to help the younger generation, these old white guys or women, whoever, sorry, whoever, you know, they have no idea what Airbnb is, but they love mentoring people, you know? So it’s like, they love hearing about it. And when somebody has their stuff together and they’re young and you know, they’re willing to learn and listen to the owner, you know, and then give their value through their knowledge of Airbnb. Like those people love that, you know? So you can approach owners, you know, and move forward that way. So yeah, that’s, that’s what I would say, you know, start with whatever you can get. But then as you build knowledge and know how, you know, start to get picky, be selective, you know, that’s what the rich do they say no to more things than they say, yes. It seems, you know, worked pretty well for them

04:40:42

Now with, with managing this many guests. Is there anything that you do that helps your guests leave positive reviews?

04:40:49

We only ask for one, that’s a good start. You know, we, we make sure everything’s as simple as possible. You know, you, you know, you want to go down, you know, if you, if you’ve never traveled with Airbnb, you have to, because then you can see it from the guest perspective, what five star ratings are. Now there’s a check-in rate, which is key. You want to make your check-in as simple as possible. You know, you know, there’s a cleanliness, there’s a value, the value one’s kind of tough, you know, because you want to maximize revenue, you know, and people have their own idea. It’s not, you know, that one’s tough, you know, but all these amenities, you know, the whole experience, you know, you want to think about those from the guests perspective, from an empathetic space, you know, and then provide on those, you know, and hit upon those and, you know, your house manual or, or your description, you know, and, and everything within your listing to say, Hey, we’re here to give you a five-star experience if it’s not let us know, because we want to improve it with your help, you know, and you know, next time you come back, you know, as a 10% discount, you know, just cause you’re a returning customer and you’re helping us.

04:41:58

But yeah, I mean, just thinking about it from the guest perspective, rather than your own, you know, rather than thinking, Hey, how, how can I make this as easy as possible? Which is an important question, but it’s not the first question. You know, the first question is just like, how can I make this a five-star experience for the guests and from the guest perspective.

04:42:14

And is there anything that you do that you would maybe say that it’s kind of like your unique selling proposition with your units? Is there like a something special that you do for your guests or for the people that you manage? What, what, what, what is that?

04:42:28

That’s our brain, you know, so if you see our listings in Chicago, we’ll see it’s all of them end with, with, and then a red heart emoji it’s with love. Cause that’s what we do. You know, it’s passion group, it’s, it’s what we do. Everything is with love. It’s heartfelt, it’s authentic, you know, and we really live to, you know, our brand is our baby, you know, and as we build it and continue to build it, you know, we want to give guests that full local, authentic experience. As you know, I’m from Chicago. I love this city and I’m so grateful to be able to share it with so many people, you know, but also give them that professional hospitality. It’s like, Hey, here are the amenities, here’s your coffee, here’s your tea. You know, if you need cleanings in between, if you need anything else, like we’re here to take care of you.

04:43:16

If you need a private chef, we can help you connect you with our private chef. Like whatever the amenities are, you know, for us, we don’t try to get too fancy and say, Hey, this is our thing. This is our thing. You know, for us, it’s just always providing guests with just, we don’t do that because every guest experience is different and everybody has different expectations. Whether they’re coming from brands or China or, you know, somewhere in America, we want to make it especially special for them. So we, we asked them initially, you know what that might be, and then, you know, tune the experience according to what they want.

04:43:53

Now, is there anything that you do for like marketing? This is a new question that I’m going to start asking hosts on the show, but is, are you trying to get off of the platforms? Are you trying to do more direct bookings? What, what is your guys’s brand marketing strategy?

04:44:12

We originally created like an, an off, off platform off Airbnb site on where we could accept bookings. And it was fine, you know, for us, it’s like Airbnb has more hotel rooms than anybody, more than Marriott, more than Delta, more than higher. So people cult, you know, and you want to respect their trust and security system because it helps a lot, you know, in terms of having high quality guests, you know, that’s what we pride. When we talk to landlords, don’t for your guests, know you want to pride yourself on having very high quality pets, you know, so it’s like, they’re not this isn’t a hotel and they know that it’s clear through your house rules and through, you know, just the lines that you set. We do have our properties on Airbnb, on our website. We’ve, we’ve experimented with everything. You know, we have a Yelp page of a Google page and on Facebook, it’s done the ads, you know, experimental with Google ads, you know, for us it’s, those are great.

04:45:17

But given the, you know, we’re not at a Tunney, you know, we’re only at 25 when we were at 50, that wasn’t even that many either, you know, you can start, but that’s why we’re creating the brand with the bash group, you know, and to really attract one operators and partners, I quality across the country and world, but then two of the guests, so they can contact directly. And then we give guests who stay with us, you know, you know, little messages that, Hey, next time you want to reach out directly, give you a 10% discount. But yeah, that’s kind of the extent of how we do our marketing. You know, that this is marketing for us. You know, we also have a YouTube channel and Instagram page that, you know, my city manager and brother rushing right now and is, you know, doing really well. So, you know, we’re getting our brand out there, you know, sharing what we care about, you know, and how we can best provide for the guests, but then mostly keeping it consolidated through their platform right now.

04:46:18

And w w what would you do differently if you had to start from scratch?

04:46:23

Oh, wow. I don’t think anything. I would continue just to build relationships, you know, I’m very lucky. It was kind of a smooth transition from former company to this company. I didn’t have a non, I did have a non-solicit, so that made it a little tough. Cause I built all the relationships in that company. Like I couldn’t even talk to my friends, like who are mean ones. It was so sad kind of, but you know, they can have them, I don’t care, but just continuing to build those relationships, be attempt to, to, you know, the true value that you’re adding.

04:47:02

Yeah. Maybe I wouldn’t have started my own firm in the wintertime because that’s kind of, Chicago has the highest range of hotel prices on fact, but from winter to summer, it’s nobody comes here in winter time, but everybody comes here during summertime. So, I mean, I almost went bankrupt in February. You know, we were bringing on new units, furnishing them and investing in them. But you know, we are only making back, you know, either our rent or we are a little laundry. It just cause we didn’t build up that review momentum and our locations will be good now for winter time just because of people that we focus on and where they are. But yeah, that’s probably maybe the one thing I would change.

04:47:44

And is there a, that’s a really good question because that’s, maybe that’s something that so many people think about. Are you doing anything to be able to offset that low season?

04:47:54

Yeah. So our business focuses on business traveling. The majority of our units are newer convention center here in Chicago called McCormick place. So we focused strictly on there because come winter time on there’s still conventions, there’s all conventions. And then the auto show in February, just a couple other shows in that time. So of course we’re going to have to lower prices because that’s what the hotels do, but we’re still gonna be able to keep occupancy high anywhere from 60 to 90%. And then we focus on that and then we’re exploring just because there’s, there’s a big nurse community here in Chicago doing the travel nurse thing. So we might open that up or properties. Aren’t exactly close to Northwestern, but kind of close to rush hospital. So we’re exploring those a little bit and you know, it’s fine, you know, 99 bucks, you can put your stuff on traveling nurses, they kind of market the crap up, but it’s okay. But yeah, those are kind of the things that we focused on in the low season to combat seasonality.

04:49:01

And w where do you, where do you see short-term rentals going in the future?

04:49:08

I think I see two kinds of ways. You know, you see all the venture capital being raised by the Saunders, by the lyrics. You know, they’re basically going to be taking on boutique hotels and master leasing, large buildings, giving people kind of more of that professional hospitality hotel, but not hotel hotel are part tell whatever the heck you want to call it experience. And that’s going to be a big chunk of the market just because Airbnb is invested in lyric. And if they’re invested in it, you know, they’re, it’s their best interest to see this grow. You know, it’s, Tishman Spire. If, if all these huge landlord turn invested in, you know, the Saunders that those are the guys who own all the real, the big, big stage in Chicago, but another side, and this is where Lee, where we focus is, you know, those mom and pop and those people who really care, want to give that charming, authentic experience, you know, and, and that’s where I think there will always be a business here giving a five star high quality hospitality experience, kind of like those are guys are doing, but making it more authentic, you know, you know, making the homes really feel like home, you know, and creating your own kind of little boutique hotel community.

05:50:23

That’s where people I think are really going to thrive. You know, the people who have you thing is now, it’s like, if you don’t have professional photos, good luck to you. Like no way, Jose, no, you have to have full, you have to have dynamic pricing. You have to have all, those are, those are just, you know, typical. Now those are default. If you don’t have those you’re losing, but you can use those to really amplify your lawful trauma experience. You know, and I see actually, you know, professional guys are kind of going to grow in these large cities, the new Yorks, the Chicagos, the Dallas says Miami, wherever regulations kind of allow, but these mom and pops, you know, they’ll be growing and continuing to grow in these, you know, just even random towns. It doesn’t even need to be, you know, ski or beach towns. It’s, it’s everywhere across the world, which is really fun. And, you know, I think that people give those cool, funky, authentic experiences are always going to win, you know, grateful. That’s all, some of them, my friends, and to be able to learn from them continually still

05:51:28

And a w it for, do you have any questions that maybe you have for another host that is maybe scaling or doing something different from you or maybe at a larger operation, or if you had any type of question, what, what would that be for the next post?

05:51:42

Yeah, I mean, my, my question right now is, you know, at what point are you bringing in-house software development and tools versus, you know, the, the stuff in the market, you know, for us, we think we have ever wanted to sell, having kind of an in-house tool. Would it be a value add for potential act choir? So it’s like, how are they thinking about their development piece in that case, this is the stage that we’re at right now and what we’re thinking about. And then, you know, how they’re, how they’re approaching other markets. We know we have a, how we’re approaching other markets, and we’re really excited about our development project in Tennessee, but it’s always just fun to learn. You know, you know, I said, relationships, is it simply numbers? Is it, you know, you found a new guy, who’s going to be a partner there. Those were always fun questions to ask and, you know, to learn from each other.

05:52:43

And lastly, if you could give one piece of advice to someone who’s planning on starting a, a, their own, maybe property management company, what, what would that be?

05:52:55

It’s simple, but not easy. And so I would say, you know, think about systems, you know, I kind of said it earlier, but it’s just like everything from tracking inventory to your cleaning team to guests experience to the check-in, to the checkout, to the serving the stage, to the review ask, and then rinse, wash, repeat all those things can be 80% automated. So that allows you to focus on the 20% that really matters, which is now your clients and your guests and your homes, taking care of the guests, keeping in five star experiences, then protecting and maintaining your homes. So you have a long-term investment is how I think about it.

05:53:36

Great. And is there any way that anybody can reach a Jeremy if they have any other questions or wanting to work with you or anything

05:53:43

Company’s passion group. So actually spelled P a S I O N it was originally Passy home, but I figured that was too fancy for a random Midwest kid in Chicago. So it’s passionate group on, you can find us at the passion group that come it’s bashing group on Instagram, also on YouTube. My local font from here is called help real estate. I brokerage firm and the management firm here. My email is Jair at Ari. If anybody has questions again, J E R at help, and then real estate’s what’s R e.com, but yeah, happy to help, or just have conversations, always curious about other markets and to, you know, share what we’ve learned. Cause it’s, you know, it’s a fun ride and it’s still changing and growing. So I love this business and planning to be in it in the longterm

05:54:35

Passion group, but, and of course I’ll include everything in the description of the show notes. So, but thank you so much, Jeremy, it’s been such a pleasure speaking with you. I wish you the best of luck and we will just continue to, to stay communicated in the host nation Facebook group, and yeah, just really excited to see where you’re going. And until next time, host nation keep on hosting, hope he 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 in the next step. So keep on hosting.

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