STRSS 64 – How to Sell Your Airbnb Business for Millions w/ Julie George

Video Transcript

 

00:00:00

I mean think outside the box, because it’s super exciting to know that you could continue to be running your business as you are today, but what would an extra 50,000 or a hundred thousand dollars in your bank account do for you? You know, like it’s going to change your life.

  

00:00:18

This is episode number six, four, the short term rental success stories podcast. Are you an investor that’s looking to have your home professionally managed, go to cohost it.com for more information, welcome back to short term rental success stories. I’m your host, Julian Sage. This is a show where I talk to hosts about their journeys and starting and growing the short term rental business. My goal is that you’ll be able to walk away with practical information. That’ll help you become a better host and learn how to scale your business. Like any exceptional host. We all strive for five star reviews. So please go on over to iTunes and let us know what you enjoy. Does it really help support the show if you haven’t done so already going over to our Facebook group, the host nation to connect with the community. Hey, what is going on?

  

00:00:58

Host nation? I’m super excited to be back in with you this week. So this has been an exciting week because we have seen the markets really starting to turn around. We have been getting a lot more bookings. The occupancy is going up. This is really good news for short mental hosts. Most areas occupancy is still recovering, but we’ve seen a lot of progress in, in our last episode of the Vacation Rental machine podcast. Jon and I actually looked at some of the tools that are available for host, and we’re looking at the market recovery index and how to be able to identify if a market is recovered and what are some of the key indicators that we need to be looking out for. So if you’d like to see that episode, go to Short Term, Sage dot com slash VRM seven nine, where you can actually see us taking a dive into the markets.

  

00:01:42

And if you’d also like to see us doing some market research, as we’re actually starting to look to invest in new markets with cohost that and our turnkey master lease business, you can follow us as the next episode. We’ll be actually doing some market research together and showing you guys the process that we go through. So as things are starting to turn around and look a little bit more positive, I actually wanted to share this episode that we recorded pre COVID 19. Again, this was an episode that I did hold off from releasing just because of the situation at hand, but as things are starting to turn back around. And I think that this is a really good time now to start looking into how to position your business, to be able to sell for a big or ultimate payday as Julie likes to call it.

  

00:02:22

So in this episode, I had these special honor of speaking with Julie George Julie was actually on episode number 30 of the show. So you can go to shorttermsage.com slash STR three to be able to listen to that episode. But Julie is the author of the million dollar host. And the founder of host my home on Australian based short-term Rental management company that she grew to over a hundred properties in three years, and then sold it to another company called Hometime, which was looking to grow and expand in the area that she was in this episode. Julie talks about how other people can build their short Rental businesses to be able to sell to the right buyer. So this is a really unique episode that because Julie’s actually gonna revealing and discussing the whole idea of this concept called the ultimate payday. As she likes to call it, we discuss how to value a short Rental business.

  

00:03:07

And she also shares the process of building a business to sell. If you like my show notes for this episode, go to Short Term Sage dot com slash SDR six four, or if you like my show notes sent directly to your inbox every week, then go to shorttermsage.com slash show notes. I know that there’s a lot of real estate investors that like to listen to the show. So we actually have a surprise. In the next episode, we will be releasing we’re super excited because John and I are gonna be starting another secret project. So next week we’ll be releasing a very special surprise that I’m excited to be able to share with you all. And also, if you are interested in selling your short Rental business, we actually created a website for you to be able to advertise and market your properties for free go to SDR, broker.com.

  

00:03:50

And this is just something that we’re putting together so that you can be able to list your properties and let people know that they are available. We’ll be promoting the listings to our audience through our website, as well as our email list. So this is just another way for you to be able to get some publicity for your properties, with all that being said onto this week’s conversation. A welcome back host nation to another episode of short term rental success stories in this episode, I, these special honor, again, speaking with our favorite Ozzie from down under miss Julie, George, the million dollar host, Julie, would you please introduce yourself and talk about who you are, what inspired you to get into short rentals and what we’re gonna be talking about today?

  

00:04:27

Yeah. Hi Julian. Hi. Hi listeners. Thank you for having me back again. This is my second podcast with Julian and super excited to return and be, have a second interview. So Julie, George I’m based in Australia, as you can tell by the accent. And I only started with short term rentals three years ago. So two thou, well, sorry, just over four years, sorry. Nearly four years ago. Now 2016 started with a little one bedroom unit in Australia, made a lot of money on that little one bedroom apartment and decided that there was an business opportunity in managing other people’s properties Bulls list. properties listed. Finally got to the point where I listed over 130 properties on Airbnb, 5.5 million income on Airbnb, which blew my mind, never, ever did. I think that we would get to that stage. And I guess with my management company, there was such a success story that I wrote a book, the book million dollar host has gone best seller around the world and talk talks about my story, but also encourages other people to jump into building a business in the sharing economy and gives different ideas on how you possibly can do that without any owning property yourself and without much money up front.

  

00:05:48

So books gone very well. I then sold my business six months ago. And so today, Julian, what I’d like to do is talk to you about the, the well, how other people can build their business up, sell it, who the buyers are, how to value the business, what the process entails and, and achieve what I call the ultimate payday, where, you know, it’s very good to make money throughout the journey, running an Airbnb business on a daily basis. I can tell you it’s even better when you sell the business and you get a big chunk of change in your pocket.

  

00:06:25

You know, Julie, that, that last episode, I, I think we actually talked to you, I think that was episode number 30, about a couple, about a month or so after you just sold the business and you actually spill the beans on a lot of things. I recommend anybody that is listening to that, that wants to find out more, go, go back and listen to that episode because Julie talks about her whole process of her management company, how she grew it and then how she was able to sell it. So in this episode, we’re gonna be talking about, you know, the, that whole process of actually selling it because nobody’s else is really talking about that in this space. So I think that this is gonna be really invaluable for, you know, like, like what you said that, that big payday, one of your options of starting this type of business is the ability to sell it. And so that’s what we’re, that’s what we’re gonna be covering. So Julie, talk about, you know, let’s, let’s, let’s go back to, you know, you have this, this company that this management company you’re making a lot of money, I guess the first thing would be like, you know, how, how much, how much were you able to be pulling in from that company? And was it like, was it not enough that selling, it made more sense? Like, what’s the reason if you’re, if you have a company that’s doing well.

  

00:07:33

Yeah, sure. Julian and a lot of people have said to me, why, why did you sell if it’s making so much money, why didn’t you just put a manager in place, continue to promote your book, do the travel that you’re doing, because I’m doing a lot of travel around the world. Now talking to other hosts around the world, encouraging other people to do the same, what it came down to. It was just, it was the right time for me to sell because I, I guess my interests had changed a little bit to be quite honest. And, and I know that you are the master of getting secrets and all the information outta me, I do overshare way too much on these podcasts. Thanks Julian. But honestly it was the right time for me. I, it was the right amount. Someone came knocking with the right dollar figure, but it was also a choice that I made to let go of the stress of running a business.

  

00:08:26

So, you know, it’s all well and good to put a manager in place, but when you’ve got 130 properties and you’ve got thousands of people staying in those properties, there are things that go wrong. And with employees, with property owners, I’m sure I’m talking to a lot of people that are nodding their head right now, understanding exactly what I’m saying is that there’s a lot of stress. It’s a 24 7 business. So even if I was to have somebody in charge running my business, I just know that I’m the sort of person that would, you know, be worried. And I would constantly worry about is everything going okay? Has, has the, has the guest had the best possible experience? And I really needed to let that go in order to be able to a hundred percent focus on the new, the new career for myself of consulting, motivational speaking, and getting out there and helping others make a huge success of their own business.

  

00:09:26

You know, and I, I think that that’s really, really key that you found out what it is that you, you do want for, for your life. And, you know, with this company, E even, even with, you know, people get into the space, thinking that they’re just gonna be making passive income and that they won’t be able to have to do anything, but when you’re building a team, when you’re scaling a business, you’re, you’re, you’re not necessarily gonna be, you know, managing the operations anymore. Like when you first started or cleaning toilets, like when you first started. But, but now you’re now you have all these people that you’re responsible for and, you know, making sure that it runs. So you came to a point where it’s like, okay, I have, you know, I, I, I wanna do something else in my life. And that, that, that really is big. So did you even think about, or fathom the idea of selling it off? Did you know who to reach out to, how, how does that even come about?

  

01:10:14

How does it work? And, and I’ve gotta tell you that, you know, things have changed so much. I mean, honestly it was only November, 2016 that I started the business. So it happened a lot quicker than I had imagined, but I guess it was through the public or sorry, through the publicity that I had achieved with the book. So the book had really built my profile and, and people had heard of my story. I had a, I had a company in Australia and happy to talk to you about who it was. It was Hometime their a very large, short term rental company in Australia and the south Pacific. They came knocking on my door. Now they wanted to establish themselves in cans, in near the great barrier reef where I live. However, they knew that I had the monopoly. So they knew that I had already taken the biggest market share.

  

01:11:13

And they thought rather than come in as a competitor, they thought it was a smarter business move to contact me and see if I’d be interested in selling. Now, when they contacted me, it really wasn’t on my radar. I thought that I was able to be superwoman and juggle everything. So I was at that stage, not getting a lot of sleep. I was running the management company, doing the books, you know, promoting the book and trying to help others build their own business. I had to, it was a very big realization to go Jules, you can’t do everything stop, but that’s when, when they put that idea in my head and they said, look, if you’re ever interested in selling, come and talk to us, I then engaged a business broker, a consultant who was able to help me get my business ready to sell, because it wasn’t ready.

  

01:12:02

It, I hadn’t, I guess I hadn’t, I hadn’t looked at the expenses. You know, I was spending too much on silly little things. I needed to really reign in the expenses and make sure that my profits were as high as possible, because that essentially is what’s going to determine the price of your business. And so I had to get everything ready, talk to my accountant, talk to my solicitor. And then I actually put together some marketing material talking about how great my business was. And as well as going back to Hometime, I reached out to a couple of key players in the local market, a couple of real estate brokers, who I knew, wanted to get into short term rental. They just hadn’t found out the, the business model to be able to do that themselves. So I, I got my business broker to go and knock on their door and see if they were interested. They were so suddenly I had two people interested in my business and that caused a little bit of competition and created a bit of a, oh, you know, it always helps with the price. So the price went up and essentially I was able to choose my, my bias and yeah.

  

01:13:14

And so Hometime how did, how did Hometime like, how would another management company know that you are the leader in the space? Are they just going on Airbnb and look in, or was it because of the book or what?

  

01:13:28

So they are onto it, these guys, and many of the big companies out there will know what you are doing in your business. It is kind of scary to know. And I guess I, I just got the pleasure of being able to go and visit Airbnb headquarters in San Francisco. I VI I have visited their offices in Australia as well. Now they have all the data, right. They know exactly what’s going on. How many people have got, what listings they have partnerships with some of these bigger companies. So Hometime, I don’t know. I, I’m not sure if they’ve shared the information with Hometime, but certainly Hometime got that information and they are able to filter through and go, who are the biggest players in the markets? And let’s go and talk to these people about buying their business. So it’s very interesting. They they’ve got all the data, so yeah, it’s, they, they do their research. They know, and I know that they know, because now I’m helping them acquire businesses and put deals together. So it’s, and they’re able to certainly say to me, Julie, you know, let’s go and contact this person, or let’s have a chat to that person because they’ve got, they’ve got 10 properties in the Sydney region or wherever it might be. So,

  

01:14:43

So you said even just 10 properties. So these, these companies are looking at people that even have just 10 properties and will reach out to them.

  

01:14:51

Yeah, absolutely. So, so the beauty is, and I guess a lot of your people tuning in and listening to us today, if you are sitting on 10 properties, you’ve got a saleable asset. Don’t, don’t panic and think that you need to build up. Like I did it to 130, if you’ve got, I mean, ideally, ideally if you had around 30 properties, minimum, that’s probably a really worthwhile portfolio, but there is, there is value. In fact, even yesterday, I just saw somebody that had advertised just one property. They had a nine year lease on this property. They were running it as the arbitrage model, leasing subleasing. They have, they’ve had existing, amazing bookings and income for the last few years, but they’ve also got future bookings coming up for the next 12 months. So they’re looking to sell this business, essentially, they’ve set up a little business. They’ve actually marketed that without a price, of course, because a lot of people dunno how to value, but they, yeah. If you’ve only just have one management or one property that you are leasing and subleasing, you’ve got a saleable asset.

  

01:16:03

You said that these companies are reaching out to the, to the managers, but how, how is this person able to come onto your guys’ radar? Like what are they doing to market their property as a sellable asset?

  

01:16:15

Yeah. So I guess the they’re probably going through the traditional methods. I mean, the person that I saw yesterday was on a business broker page. So they were just, they were alongside restaurants and, you know, and normal shops that were for sale. There was an Airbnb business for sale. And so you’ll find that they’ll people will advertise their businesses in the traditional method that you would a normal business. However, even if you were to put it up on maybe a Facebook forum and say, look, I’m interested in selling my Airbnb business. Someone will catch on, but the beauty of it is these days, you actually don’t even need to do that. If you are the biggest buyers in the marketplace at the moment, are these big companies like Hometime in Australia for me, but in the states, one of the biggest ones is Vacasa in Portland, Oregon, Vacasa they even on their website have a page that talks about that’s dedicated to people wanting to sell their business.

  

01:17:22

So you can jump on there. You can type in all your information about your business. If it peaks interest, they’re gonna call you, they’re gonna make an offer on your business. So guys, you know, check that out. I mean, they’ve acquired over a hundred different businesses in the last couple of years. They’re one of the biggest players in the states. Psych’s cottages in the UK is one of the, you know, there’s some really big players that are what they’re doing. Julian. They’re all looking to get as much stock as they can. And then, yeah, it’s, it’s a real, it’s a real frenzy at the moment. So the market, I predict in my crystal ball in Australia here that in the next 12 months, we’re gonna see a huge influx of, of people and transferring businesses to each other or consolidation or merges on businesses coming together.

  

01:18:17

And it’s not just so much, sorry. And I know I’m talking a lot here because I’m really excited because if it’s happened for me, it’s gonna happen for your listeners. And I just know that this will change your life. I mean, I was able to pay off all my mortgages and debt free. I’m now not working. I’m working when I want to work. So it’s life changing, but if you’re not interested in selling the whole business, you can sell the controlling interest of your business. So, so perhaps you might do a deal with one of these bigger companies for 51% of your business to be purchased by that company. You can remain on running your business as you are right now, but you’ve got a huge chunk of change. That’s just come into your bank account, imagine what you could do,

  

01:19:04

You know? And that, that’s the crazy thing. Like how is it possible to be able to sell off? Cause we’re, we’re talking, we’re not talking about, this is your own personal real estate portfolio. We’re talking about, you’re renting out somebody else’s space. And you know, if we’re doing the arbitrage model, you’re just, you’re, you’re, you know, re renting it or you’re managing somebody else’s property. How can you sell something that you don’t own? Or that you don’t really, you know, you don’t, you could just leave. How can you sell that to somebody else?

  

01:19:30

Isn’t it crazy? Yeah, it is totally beyond, you know, is nuts. You don’t own these properties or, but what you do own other management agreements and the contracts that you’ve got in place that is gold. So people make sure that you have got really strong agreements in place, really tough, you know, like make sure that they’re water tight because that is your saleable asset. Now, the other big tip that I would give people is, and this is where my business was able to be sold very easily. Was that I had one profile on Airbnb, one profile, 130 listings under that profile. Now a lot of people will say to me, isn’t that a bit scary to have only one property and one profile. It sounds very risky. Well, yeah, but only if you’re doing the wrong thing, like do the right thing, stick by the rules of Airbnb or, or any platform that you’re on and you will not get penalized. You will not have your profile taken away from you. How easy was it for Hometime to come in? They now still, so Julie in cans, there is still a profile with a lot of properties on it, but that is owned and operated by Hometime now.

  

02:20:47

And, and, and with that, because there there’s you like what you’re saying, the risk involved with a single profile, a lot of, you know, professional hosts, you know, as they kinda scale up, they start chopping up their profile into individual little, basically portfolios. But you’re saying if you’re trying to sell, sell your business as an asset, it’s better to have everything under one. Is it still doable to have it broken up into individual profiles?

  

02:21:13

Yeah. I, I totally believe it’s so much easier to have it all consolidated into one profile because then you can also, you can show on your transaction history exactly what the, what the business has earned. It’s very easy to be able to pull up the data. I, it does make it. It’s not impossible, but it does make it more complicated when you’ve got multiple accounts. I did I share my, no, I, I don’t think I did share my secrets with you last time about this visiting Airbnb headquarters. Now I’ll probably get in trouble for telling these, but of course, as you do, Julian, you always get too much out of me. One of the new things that may be coming in wink, wink with Airbnb is that you’re going to be able to switch a listing from host to host. So that is something that’s new. That’s coming in. You’re gonna be able to switch it across. So for anybody listening right now going, oh my goodness, I’ve got four profiles. You’ll be able to consolidate them all very soon.

  

02:22:16

Wow. So you could essentially just take all of your different profiles put in under one, and then now you have one more easily sellable asset or controllable profile. Yeah. Yeah. Okay. Wow. That that’s, that’s really key. And one, one of the things that I, I did want to go back to before I forget is when, when you got, when you found your, your broker, you said, well, one thing is, is, could be any broker like any business broker or is it like a short term rental specific broker?

  

02:22:41

Yeah. It’s so the person that I used was dealing with resort sales, hotel sales, that type of thing. She had never, ever dealt with a short term rental sale before. So it was new for her. One of the things I’m doing is I’m actually offering that service now, as part of my consultation service is to help people prepare for sale and broker a deal. So that’s well, sorry, I can’t say broker because I’m not officially in the states a broker, but I can say that I’m a consultant and all you’re needing is somebody to help you get everything together. So you want to be able to make sure that your profit looks as, as attractive as possible. You want your expenses down, you want your income up. You want to be able to get the reviews looking as, as squeaky clean and as, as attractive as possible.

  

02:23:40

You want to, you know, be able to have a manual written up. So your, your business might all be inside your head. You know exactly how to run things. You’ve gotta put it down on paper. You’ve got to be able to train somebody to take over your business. So, so put it all together. So there’s little secrets and tips like that, where you need, I would say, please, if it’s not a broker in your area that specializes in short term rental business sales, please contact me. I do a free half hour consultation. You might get it all in half an hour, what you need to do. But if not, you pay for a little bit more consultation time. We put it all together for you. You can package your business up, you can sell it. So just consult a professional because it’s gonna be worthwhile that investment.

  

02:24:28

And with that, what, what are the things that, because you said, you’re you like, like you were spending too much money, your, your business didn’t look all night nice and tight to be able to sell it off. What, what are the things that, that, you know, us as hosts, if we’re preparing for that, what can we do to be able to better straighten up our business?

  

02:24:48

Yeah, it’s mostly in my case, it was, oh gosh. And the Australian tax department, hopefully they’re not tuning into this interview right now, but you know, when you’re putting through personal expenses into your business. So if I was, well, you know, at the moment everyone’s got a toilet paper shortage, but look, if you are, if you are using your supplies for your Airbnb property in your own home, there’s one, you know, that’s, that just adds, looks like your you’ve got a larger expense bill than what would be there if someone was to purchase your business. So, so I guess start, start running for the next few months. If you were planning by the end of the year that you wanted to perhaps list your business for sale for the next few months, I would be making sure that you are not spending on excessive conferences.

  

02:25:41

I E going to the pub with your mates, or you are not, you know, putting all your groceries through, on your Airbnb expense bills. So, so it’s just about, you know, making sure that you, you are really running the business as somebody else would be able to come in and take over and giving people a realistic expectation, but making sure that you’re concentrating super hard on getting occupancy levels up, review level reviews, as high as you possibly can. And yeah, and just making sure that there’s no outstanding disagreements with Airbnb on a property or guest problems. So just, you know, lift, lift your socks up for the next few months

  

02:26:25

And, and what, what you said with the reviews, how, how important are reviews, cuz if you have, you know, if everything’s underneath a single profile, you know, it’s hard to be able to keep that super host status, you know, maintain that if you have everything broken up into individual profiles, it makes it a little bit more controllable, manageable. Do these companies, do they look at your reviews as an aspect of how they’re going to be paying for the business or is it all strictly profit?

  

02:26:51

Yeah, look, the reviews are quite important because of course they do wanna buy something that is attractive is going to, you know, gonna be a successful profile. But here’s the thing. So 5.5 million in income is what I made on Airbnb, 130 properties. I was only a super host for the very first month of my business. It is super hard to be, to keep that super host badge when you’ve got such a big portfolio, but it did not harm my business in any way not having it. So please don’t overthink the super host status people. It’s not, it’s lovely. It’s a pretty little badge to have, and yes, it does put you higher up the list and all that sort of thing, but it will not impact your business and it will not affect your saleability. So, so make sure you it’s probably profits first it’s and it’s review second would be the, the things.

  

02:27:51

And you said in order to help, you know, create some, some competition, you, you went to a real estate company and you were, you were offering your management business to them as well, just for them to take a look at how, how do you, how do you even approach someone like that? Do you just knock on the, the, the owner door and say, Hey, I’ve got a, got a company that manages property. You have no experience, but do you wanna buy it?

  

02:28:15

Exactly. You know, everybody wants to get in on the, the trendy topic at the moment, which is short term rental space, everybody, everyone, everyone would love to do it. However, the logistics, we all know that this is, it’s not as easy as people think. And so if you can actually go to somebody with a packaged up successful business, future bookings in place. Yeah. Literally that’s what we did. We knocked on the door of the, the real estate broker that I particularly thought had. Firstly had the money to buy the business. Secondly had the capacity and third was quite innovative and had the, the foresight that I thought would like to go down this road. So they weren’t part of a big chain of companies. They were somebody that, but my goodness, if you could, if you could hook into a chain of companies or a chain of agencies that you could actually say here, buy my business in Boston or buy my business in New Jersey and then be able to say, and then once you buy my business, I’m going to go to all of your offices and I’m going to teach you how to replicate that business in all of the offices.

  

02:29:28

Imagine then what the payday would look like. So don’t be afraid. Get out there, knock on the doors, tell people what you’re doing and ask what’s the worst that they can say, no, thanks.

  

02:29:40

So you’re, you’re basically creating, you’re saying, Hey, I’ve got a bus, I’ve got a portion of my business that you can, you can have. And if you’d like, I could sell you that. But I’d like to also, you know, like add on to the business is like you being their consultant there. Yeah. And, and that’s basically what you did with, with Hometime. Hey, this is Julian. And I wanted to be able to give you our newest book. Airbnb secrets revealed how to build a fortune on Airbnb without owning property. In this book, we talk about the concepts of Rental arbitrage investing as well as cohosting and how you can build a business, leveraging other people’s properties. This book is perfect for the new short term rental investor. And it’s something that I wish that I had when I first started as it would’ve saved me a lot of trouble and helped me to understand how to be able to leverage the power of short term rental investing in your own real estate portfolio. If you’d like to get our newest book completely for free go to Short Term Sage dot com slash freebook now back to the show.

  

03:30:37

Yeah, absolutely. And so I guess what you’ve gotta think about is if you’re going to sell your business, what’s next for you? What is your exit strategy? And as you are, you know, you’ve been running this Airbnb short term rental business for the last two years. What do you wanna do next? Because it’s all well and good to sell your business, but you’re probably still gonna need an income, but yes, you could go on to be a consultant like I’m doing, you could help people establish businesses or in quite a few of these circumstances where these larger companies are acquiring businesses. They are asking the owners, the former owners to stay on as employees and stay on managing the, the business as is. So at the moment in Australia, Hometime who purchase my business are looking to acquire more businesses. They don’t want people to leave. They want people to stay on with their business and, and keep running it as is. In fact, not even changing the name of the business, not changing the structure of the business. So how cool is that? Nothing could change. Like if you love your business and you don’t want to leave still an option to sell,

  

03:31:50

You know, but the, the thing is with, with all these different management companies, we’ve all got different systems. You know, some of us, you know, like some of us use like Hostfully and then we integrate with a bunch of different tools. Some of us use just use guest. The, some of us are, you know, making hand contracts with our, you know, with our investors or some of us are doing everything online. So we’ve got this, a bunch of individual people that have a bunch of different ways of operating their business as a larger company. How can they pick up another company that basically, maybe they don’t have everything in place. Maybe it’s just a macaroni plate and they’re just throwing everything on there and just kind of, you know, trying to manage it. Are they still going to be picking those companies up or are they only looking for the people that have everything, you know, automated systematized and, and really thoroughly gone through.

 

03:32:38

It’s certainly those businesses that have got it all together. So they’ve got all the systems in place are certainly gonna be more attractive. They’re also gonna get a higher valuation. They’re gonna get a high sale price, but it’s no problem what these companies are after the, the larger businesses acquiring smaller businesses. They’re, they’re just chasing the stock to be perfectly honest with you. They just want the numbers. They really want the, they wanna be able to count that they’ve got 10 more houses on their books. So they, and if they see value in your business, it’s probably because you are doing something right. So they will want you to stay on, keep running it the way you are running it. Now, if they can tweak little things here and there, they possibly will, they might bring in some software for you to use, to, to help your staff. They might, they might just introduce some things to you, but nine times outta 10, they’re probably gonna want you to keep running the business as you’ve got it.

  

03:33:37

And what, what are some of the different, the different options. So like, is there, is there a way to be able to grow, continue to grow your portfolio, or once you sell off the company and now you’re just an employee, are you just basically, you know, you’re working for a salary, so you’re maybe not looking to help them. Yeah. You’re not looking to like, you know, oh, let me help grow your company now. It’s is, is what’s what’s the position after that?

  

03:34:01

Yeah. So, so these guys are smart. If they’re going to keep you on, there’s gonna be an incentive for you to keep growing that business. And I guess, just to give you a bit of background on what I did personally, so I sold my business. The deal was that they would give me a bulk amount of the sale proceeds, sorry. They would gimme a bulk amount of the, the, the price that I sold it for on the settlement day. However, over the next five to six months, they had an earn out period. So what that meant was that I had to keep managing the business. I had to then split the profits with the new owners until I earned enough to make up the final amount of the sale price. So they were smart. They wanted to make sure that they, by simply by selling, sorry, by purchasing this business and me selling it, that I wasn’t gonna walk out the door and leave them high and dry.

  

03:35:01

They wanted to make sure that my, the owners, the property owners were going to be retained. They wanted to make sure that the, the business continued to grow. Now, I kept running the business exactly as I did before I sold it purely so that the profits were as high as possible. So I could get as much money out of it as possible. Now, the other very smart thing that these guys did was offer me as part of the, the, the sale. They offered me a share portfolio in the business. So I now am a shareholder of Hometime and it means that I am always gonna be loyal to those guys. And I’m always gonna have an ownership sense over the business. So if anybody is coming to can, or anybody contacts me in can saying, I’m looking to Airbnb my home, of course, I’m gonna forward their inquiry to Hometime.

  

03:35:55

So it’s, so guys, yeah, you will. I guess people are gonna come to you with creative options, but you can also approach these businesses with creative options. You might go to someone like Vic, Casa, or Sykes cottages and say, hi, I wanna sell my business. However, I’d like to stay on as an employee. And I’d like an incentive and we’ll do a profit split. I mean, think outside the box, because it’s super exciting to know that you could continue to be running your business as you are today, but what would an extra 50,000 or a hundred thousand dollars in your bank account do for you? You know, like it’s going to change your life. And I guess the industry is hot right now. So the time to think about this is now jump on board, prepare your business. You know, you’re, you’re building up a saleable asset. So you’re building up something that’s worth a huge chunk of change while you are earning or, or replacing your income. It’s exciting.

  

03:37:00

You know, I, I, I actually met some of the, the Casa had a booth at the bigger pockets conference that I went to. And, and I was talking to some of the, the people that were there, there was another person that sold off their company. VA Casa approached them and they, they sold their, their management company, but they stayed on as an employee, but really as like a salesperson. So they still are acquiring properties and they’ll reach out to, you know, they, they have like a, a list of people that they call. And basically whenever they acquire more properties into Vaco’s portfolio, they get a commission. So, you know, it, from what it sounds like there’s so many different ways that you can approach this business on just on the back end. You know, you can, you can be a salesperson and just grow the, another management company’s portfolio and, and make sales.

  

03:37:46

You, you, you can, you know, like, like kinda what you’re doing is you can help broker deals for other companies. And now you’re getting a split based off of, you know, helping solicit that. So there, there’s so many different ways that, that you can go about, about that. But I think the big thing like that, that probably a lot of people, if they are building this up, you know, it’s, it’s just, how do you get that ready? Is it, did you, could you have done this yourself? Could you have really been able to sell off a business? Cuz a lot of these people that are coming into the space, they don’t have any, this might be their first time doing a business. Yeah. You renting, you renting out your home and then now you have a couple properties cuz people are throwing them at you. Yeah. Now all of a sudden you have, you have a business. It’s like, I didn’t, I didn’t, I didn’t expect that. And now, you know, a company that might be reaching out to you saying, Hey, I wanna purchase all your properties that you’re managing. I mean, this might be your first time. Could you sell off a business by yourself or is it only through working with like a broker or only through other people’s experiences selling businesses that you’re you were able to sell it off?

  

03:38:55

No, of course. Yeah, absolutely. You could do it yourself, I guess. I guess it’s just good business practice to be able to consult a professional before you, I mean you’re only gonna get one shot at this. So make sure that even if it’s only the, a free half an hour zoom call with me or, you know, talking to someone like yourself, Julian, that just, I think it’s really good to be able to just make sure that the valuation is right, because I guess that’s one thing is how do you value your business? Like, you know, that’s the scary part and, and we can talk about that if you like, but you can definitely do it yourself. I mean, we’ve all become instant hotel operators in the last couple of years who thought that that would happen, you know? And now, you know, you’ve, it’s like investing in real estate.

  

03:39:44

Yeah. You’ve got a commodity that you can sell and people are chasing it at the moment. So why not, you know, jump on the bandwagon, make the most of it and, and, you know, really make sure that all that hard work and that time and the effort that you guys have put in 24 7, I know how hard setting up these businesses are. I remember doing 17 beds in one day, which I still have nightmares about making those beds. You know, like it’s had a lot of hard work, but it pays off. And this is one of the ways that if you are building a business in the Airbnb or the short term rental space here is your option, make sure that you achieve your ultimate payday.

  

04:40:26

And, and with that ultimate payday, how, how do you, like, like you said, how, how do you, or evaluate value that? Is it like a standard? Is there like a standard that people evaluate businesses? Is, is it the same for short-term rentals or is it different?

  

04:40:40

Yeah, sure. So I, I guess that is the other thing. There is no industry standard at the moment. This is such a new concept selling off these businesses. It’s been happening a couple of years, but so you’re gonna have the likes of the, the vicars, the psychs cottages, you know, the bigger companies will have a, they will have an idea in place. So you just wait for them to make an offer to you. However, in, in Australia, our industry standard, because I guess I’ve started that in industry standard and others are following suit. The way that you work out, your valuation on your business is you look at your profit. So your yearly profit and times that amount by three. So that is the multiplier at the moment. So yearly profit times three. Now here’s the secret real estate brokers will pay more for your business and real estate brokers will view it as what we term as a rent role.

  

04:41:41

I’m not sure if it’s the same term in the states yet. So it is what your management income is, your yearly management income. And usually they will times that amount by about 2.4 to 2.6. So somewhere, so maybe two just for, just to make it easy. 2.5 times the management income is usually what people in the real estate industry will pay for a rent role. So yeah, you’ll find it’s a lot more. And that’s what happened when I was looking to sell. Yes, I got offered a lot more money from the real estate agents than the short term rental company that came knocking on my door, but I didn’t choose to go that way. And the one reason I didn’t choose to take the bigger payday was that I had put a lot of heart and soul into this building, this baby, this business, and I didn’t want it. I wanted to see it continue to be run the same way that I had set it up. I didn’t have that confidence with the real estate industry that that would happen because I thought if it doesn’t work for them, they will change it into long term leasing properties. They’ll sell off these properties.

  

04:42:58

And so I chose a, a, a smaller payday, but to be able to keep my business exactly the same. So, but yeah, 2.4 times the management income for the real estate industry, if they’re looking to buy your business, or if somebody else in the, in the short term rental industry is looking, it’s usually three times the profit, the yearly profit. So after all expenses, that’s what your valuation of your business should be.

  

04:43:26

Okay. And, and year yearly profit, you’re not talking about like your, your, your gross profit on Airbnb. So if you’re making three, 3 million on, on Airbnb, they’re not gonna be, you know, evaluating your business, you know, times three, that

  

04:43:41

No, you’ve gotta take away all of your expenses. So you’re, you’re looking at what you’ve earned as your management income or your, your profit with the leasing and subleasing less all of your expenses. So, so, and if anyone’s needs that clarified, please contact me. I’m happy to talk to you about it, but, but basically, yeah. What do you end up with in your pocket at the end of the day, if you work for a year, time’s that by three and that’s what people should be paying.

  

04:44:11

Can you give maybe some example, like, let’s say you have those 10 properties, maybe you built up the 10, you realize, okay, this really isn’t isn’t for me, you know, I, you know, something in my life changed or I’m just not looking to keep on doing this. Can you walk us through like how much a, a person would be able to make off of their portfolio of 10 if they decided to sell?

  

04:44:35

Yeah, sure. Well, let’s, let’s say, and I’m getting my calculator out because maths, isn’t my strong point, but that’s okay. We’ll figure that out. And someone will pick us up if we make a mistake here, but 10 properties, let’s say that we make a thousand dollars profit just, just to make that easy a month off each of those. So, so we’ve got $10,000 for the month times that by 12, you’re making $120,000 profit for the year, simply times that by three. So a buyer should be coming in with an offer to you to purchase your business of at least 360,000. So, so guys work out what’s in your pocket at the end of the year, and you’ll be able to do this with your accountant. So you you’re taking away any of your running expenses, your, your vehicle, your internet, you know, your, your consumables that you’re, you know, you’re buying for the properties.

  

04:45:42

You need to be able to remove all those expenses from the income that you are earning through short-term rentals and work out for the year times that by three, that will just give you a very rough figure. Now that’s not set in stone that figure, but that will just give you a kind of, you know, an indication that if someone comes knocking on your door and says, Hey, Julian, you’ve got 10 properties. Here’s a hundred grand. Sounds really good, but they’re way they’re getting a bargain and do not get, you know, startled by those big amounts. Do your maths make sure that you are at least getting three times the yearly profit before you walk out the,

  

04:46:26

In this example, that 360 is that you, you said kind in your scenario, it was, you got paid out half initially. And then the remainder was paid out incrementally until the full amount was, was made.

  

04:46:41

Yeah, that’s right. So it’s usually about two thirds. So you might get, say you might get 200,000 upfront and then what they will say to you is okay, for the next few months, we’re going to ask you to keep working. We’ll pay you a salary to keep working. So you, you get a salary and it’s nice to get some benefits out of that, but then also you will, then it was called an earn out for my situation. But basically you get 50% of the profits of the business for the next few months, until you earn the remaining. In this case, it would be $160,000. So there really is the vest. And it makes sense because you wanna make sure that that business continues on in a really positive light. But yeah, it could take realistically guys, if you’re looking to sell your business, you need to look at it like a 12 month, a 12 month journey.

  

04:47:40

It is gonna take you a little while to get there’s a lot of due diligence that needs to happen. So there’s a lot of exchanging of information they’re gonna wanna come and sit with, you see how your operation works. They wanna make sure that the buyers will wanna make sure that your, your business is as good as it looks on paper or on your website. I mean, a lot of us have amazing websites, but we might be working from our spare bedroom at home. You know, they’ve gotta make sure that what do is what they see, what they get. So they’re gonna be able to, they’re gonna do that. There’s gonna be the process with solicitors. So you, so you’re gonna need a very good solicitor or lawyer to, to be able to get your contracts and exchange the contracts, make sure that your interests are well looked after.

  

04:48:29

You’re gonna have to consult your accountant for tax implications of selling this business because they’re in Australia, we have to pay capital gains tax. And I just saw my tax bill the other day. I nearly fell off my chair, but that’s okay. It’s, you know, you’ve gotta be prepared that yeah, you’re gonna have to pay tax on the sale of your business, but it’s gonna be the biggest payday of your life. And it’s, it is so super worth it I’m. So I’m very happy to have sold my business before the current issue that we’re facing in the world at the moment with the coronavirus, because unfortunately that has put a bit of a dampener on, on our industry, but you know what? This might be a good time for people to think, wow, maybe it is a good time to sell.

  

04:49:17

And, and with that now, now that you’ve, you’ve sold off you get, you get this big, this big payday. Are you now? Is there a conflict of interest though? If you wanted to pick up more properties, could you essentially create another like little business? Could you keep on getting little pay days? Like I’ll pick up 10 more properties and I’ll sell it to them, pick up 10 more and sell it to them.

  

04:49:36

Yeah, that’s a really good point. Julian. I did have to sign a non-compete clause. So for 18 months I can’t start my own business again, which is okay because I don’t, I don’t want to, I personally, my, my choice is to go off and help other people start their business and, you know, and I see that there’s, I, I just get such a buzz when I can help somebody build up their business and see them sell it off. Not that I’ve actually seen anybody personally sell it off yet, but, but we’ve got, I’ve got three deals in the making at the moment for people that have done just what I’ve done. There may be about 12 months behind my, my footsteps, but I’m so excited for them because I know how that’s gonna change their lives. So, but yeah, it’s, it’s yeah, it’s a, it’s a good thing all around.

  

05:50:25

Awesome. I, I, I don’t, I I’m sure that, you know, this is, this is such a, a unique time unique space. There there’s so many new opportunities out kind of happening. I, I just, you know, before we wrap up, I just want to see, do you see like any, any big shifts, you know, or any, any new ways or, you know, cuz a lot of people that are just coming into this space, maybe this is the first time that they are learning about shorter rentals and they, they just think, okay, manage properties, make money, you know, and then they say, oh, well I can do management or I could do the arbitrage or I could purchase properties. But now we’re, we’re going into new spaces. We’re we’re, we’re breaching on this, this unknown territory and this kind of wild, wild west. What other ways do you know that we can also be, keep our eyes on for the future of short term rental investing.

  

05:51:20

There are so many exciting opportunities out there and my brain goes a million miles an hour. Can I just, I’m gonna share one of my favorite business models with you. Nobody else is doing it. I’ve never come across anybody else, but it is something that I started to do in my business. And it was a bloody gold mine. I nearly swore there, sorry. I’m very excited because, and it can be done from home and it can be done worldwide. Okay. So here we go. And I know I’m probably taking up way much, too much of your time, but honestly, so one of the business ideas that I ran was running as a booking agent. Now there are lots of hotels. There’s lots of motels. There’s caravan parks. There’s there’s people all over the, the world that would love to be on Airbnb or short-term rentals.

  

05:52:12

They don’t have the technical mind. They don’t have the logistics, they don’t have the ability and they don’t have the know how to do that themselves. So for all of you smart technical wizards out there, here’s an opportunity if you went to a hotel, so your local hotel motel on the side of the road, you went to that hotel and you said to them, listen, how would you like me to list your properties on Airbnb for you? I know I can see your Chichi. I did that to quite a few people. I took 11% of the booking as my commission. I know I can see your brains. Yeah. You wanna hang up now Julian and go to your hotel. Don’t you it’s and all you are doing is you are just working in with them. So a lot of channel managers, I love the channel managers out.

  

05:53:05

There are wonderful. The software companies are wonderful, but a lot of them are not working with Airbnb as well as they possibly could. And a lot of these small mom and dad run hotels, motels, caravan, parts are not even on these, these software channels. If you went in there and said, I will list it for you, I’m gonna get some of your photos from your website. I’m gonna take some photos myself. I’m gonna put the listing up. I’m going to run it. But here’s the secret. You run it under their profile. You need to create a profile for that person because what you are doing is you are not gonna meet the guests. You’re not going to be responsible for the reviews or the bad cleanliness of that property, right? All you are doing is cohosting. So you set up a profile and here’s the, even the, the bigger kicker, you send them a link, a referral link from Airbnb to set up as a host.

  

05:54:01

So you can collect the kickback from Airbnb, which is about $400. In some places you set up the profile for them, you charge them a consultation fee to set up that profile. You set up the listings for them. You cohost yourself with your profile. You do a split through Airbnb because you can still do a split payout. You take 11% is what I was charging. You could take 20% if you like, depends how good a negotiator you are. And all you are doing is you are managing all of the inquiries, all of the messaging, and you are saying to that person. Okay. So now you are going to meet Bob at the hotel. Here’s Bob’s phone number. He will look after you. He’s expecting you anytime after 2:00 PM, Bob then does all the work you are in maybe daily or every second day contact with the hotel owner to find out everything running. Okay. Hey Bob, there’s somebody coming in at two o’clock. You need to be able to sync your calendar with theirs, but Julian, honestly, one of like, you’ve gotta think outside the square and that business model is something that you could run worldwide. So if you jump onto that, if you’re listening to this podcast and you start up your new booking agent business model, and you make a million dollars, can you come and talk to the girl down under that gave you that idea and buy her a glass of wine?

  

05:55:25

Yeah. Oh my gosh, Julie, you, you are way too much. I love getting you on the show. We, we gotta get you on here more because every time that I talk to you, my mind just gets blown more and more. If you know, the, the first time that you came on, it was just like you, you know, talking about that new way of, of, you know, working with, with cleaners and, and building a management company off of that and this with selling a company, but, and this, this last golden nugget man, that, that is so powerful, but I want, I want everybody that’s listening. You know, one is, is, you know, Julian and I are gonna be getting at least 1%, whenever you, whenever you create that, that booking platform,

  

05:56:01

Good two, make it 2%. Let’s have one each.

  

05:56:04

Yeah. What, what each, but, but you have to think creatively because you know, there are gonna be more people that are coming into the space. Not only, you know, the, the times where you could just list the property, you know, a furnished property and, you know, make money. There, there are still locations where you still can do that. Different markets are gonna have different opportunities where you can. But the thing is you have to think creatively, you have to, you know, come up with different ways. There there’s so many opportunities that this, this model managing the arbitrage that are so untouched, like what Julie said earlier, where you’re going to real estate companies and you’re, you know, pitching brokerages, these people, they don’t, they wanna get into the space, but they don’t know how your, your knowledge, you listening to this podcast, you, you know, following Julie or I you’re investing into yourself, which makes you invaluable and you become a valuable part of the business.

  

05:56:57

So these companies that are reaching out to you, they’re not only just buying the business because it’s, it’s a profit generator, but they’re buying because you’re providing value. And that’s what Julie’s doing right now. She’s working with these companies. She’s positioning herself to not only just be, you know, an expert in this space, but, but that she’s, she’s invaluable to these companies because of her experience. So understand this, you know, this, this, this episode we really should be charging for this, this, this is something that is maybe, maybe we’ll throw it in the course may. How about, how about that? We can, we can, maybe we’ll, we’ll get Julie to contribute some, some bonus material to the course where she can dive a little bit deeper into, into, you know, selling businesses and some of the other secrets that, that Julie is hiding from us. Because if I didn’t ask you that, Julie, you, you wouldn’t have shared that. And then all of us would’ve would’ve. Yeah, we, man, that, that is so cool. I love it.

  

05:57:48

I’ve got so many different business models. I just haven’t got the time or the energy to be able to, to put in, put them out there. But it’s all about thinking creatively, that booking agent model, I actually have done up a step by step guide. If anyone wants to buy that step by step guide, I’ve got it. You know, like it’s just, it’s, there’s some simple, super simple ideas. But thinking about where we’re headed as an industry, how and what is the problem that you can solve. If you’re listening to this podcast, you have got miles of intelligence and miles of information ahead of your local community. You are the Airbnb expert in your area. You need to have, you need to have confidence that you’ve, you are the expert, go out there and sell that skill to other people,

  

05:58:40

Man, I, and I’ll, I’ll include all the links down below to, to Julie’s book and all the other resources, if you did wanna reach out. Thank, thank you so much, Julie, for taking the time, you know, you’re super busy selling, you know, selling and, and, you know, helping create these businesses. But I appreciate every time that you come on, every time it’s just man, get blown away. Do you have any, any, any, anything else, if anybody did want to maybe meet up with you, I know that you you’re traveling a lot. Do you have any future destinations that people can be keen on?

  

05:59:09

Yeah, I guess I’m about to jump on a plane to go down to Melbourne Victoria. We’re we are doing a big conference down there for real estate agents called re edge in September. I’ll be, well, hopefully I’ll be in Tel Aviv depending on how all the travel bands go, but I’m going across for Guesty. So anybody who uses Guesty software, I’ll be one of their keynote speakers at their conference this year in September. But look, I, I will always keep people updated on my website as to where I’m going to be. Please reach out to me on Facebook, reach out to me on LinkedIn or million dollar host.com AU. I encourage people to buy the book. It’s a bloody good book, but, but yeah, but please, if, if you would ever like a, a free half hour consultation, I offer those as well on zoom. So, but thank you for having me today, Julian, it’s always a pleasure to talk to you and I always end up sharing way more than I share with any other interviewer. So.

  

06:00:11

Awesome. Awesome. Well, thank you so much, Julie, and until next I’m host nation, keep on hosting. Hope you host benefited from the show. If you found value, please going over to iTunes, leave us a review and let us know what you enjoy about the show. If you’d like to talk to hosts that have been featured in these episodes, as well as the community, going over to our Facebook group, the host nation.