In this episode, we have the special honor of speaking with Kyle Stanley. Kyle is a real estate investor and a full-time Airbnb host in Fresno, CA. Five years ago, he started renting out rooms in his house which covered his mortgage, and it was in May 2019 when he went all in and rented out full houses. Kyle currently has 7 properties, 3 of which he owns, 2 are rental arbitrage, and 2 are cohost units.
Kyle shares how a “Mother-in-law” hack is done and also talks about how he has slowly let go of complete control of his business and how that has really helped him scale his business.
Video Transcript
00:00:00
You know, I was getting at that point $35 a night for room. So I was like, let’s just throw out an astronomical number. I’ll be crazy about this. How about $119 a night for the room? And Julian had booked out all three nights that I was gone plus cleaning fees. I made 450 bucks in three days and I was like, what just happened?
00:00:18
This is up episode four, seven, 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. I’ll help you become a better host and learn how to scale your business. Like any exceptional host. We all strive for five star reviews. So please going over to iTunes and let us know what you enjoy has really helped 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? Host nation?
00:00:59
I am super excited to be back again with you this week is just so much stuff happening right now. One of the big things that I am super excited to share is that the empire builders mastermind group, the B and the empire builders is gonna be opening back up again. I know a lot of you guys have been applying and are registering to join the group, and we do have some more information about that. That will be coming out very soon, but we are gonna be opening that back up towards the beginning of March. One of the other things that’s gonna be coming in March is that we are gonna be opening up our program. So for those of you that are interested in learning about the Vacation Rental machine Formula, and really just having everything given to you, Jon and I have been working really, really hard and trying to provide this really next level content that we’ve been talking about for a while.
00:01:42
We’re gonna be including everything in this program, such as like all of our contracts, memorandum of understanding, operating agree, service, tiers, everything that we use, checklists, all of this stuff, as well as some custom built things. So like we had a calculator that John and I, we went in and we tried finding what’s the best way that we can have people to be able to come up with their Rental arbitrage numbers, their cohost numbers, and what are the gonna be the numbers that your clients are gonna be seeing. So we have this really unique calculator that we developed. And when I say that we developed, I mean, we, we took our ideas and then we worked with a developer. There’s just so much cool stuff. We also have a really cool thing that we’re gonna be rolling out such as like a certification program. So if you’re interested in becoming a certified Vacation Rental property manager, that is maybe the, a part of the program.
00:02:27
So man, I’m just super pumped for that. And I just kinda wanted to share it like my own personal success story. So you guys have been following for a while now and you know, that I started, you know, nearly just given up on entrepreneurship. I, I just wanted to find a way to get outta the rat race and to be able to, you know, have more of that time freedom when my dad got cancer. And I was just trying to find a way to be able to reclaim my time back. Airbnb, I, I saw was the way out and nearly after a year of being in this and stumbling along the way. And, but then I just found my calling, which was being able to talk with you all and be able to share these other success stories and to be able to partner with and work with John.
00:03:02
I really found my place, but still I wasn’t seeing the types of returns that I was looking for. And I wasn’t scaling the business the same way that I thought, you know, when I came into this business, I thought I was gonna have, you know, a hundred properties by now, but really to have like my own property and a co-host client, I really felt like I was a fake, like, talk about this stuff. I’m always, you know, every day I wake up and I’m just excited to keep on working on this business, but I really never saw that exponential growth or even some of the really great returns, like, like I’ve been able to see some really good numbers off of the properties that I do have, but nothing that was like really, really life changing. But since I’ve partnered with John and we created this property management company, cohost it, and we started offering this thing, which we call the turnkey Rental arbitrage program.
00:03:42
This is completely changed. Come March. We’re gonna be picking up an additional 10 properties. And these are 10 properties that John and I are gonna be managing together. So going from two properties to 12, just like that, you know, it’s, it is life changing as far as the type of returns that we’re gonna be able to get and that our investors are gonna be able to get, but I’m just more excited for the potential because now we really are striving to become, you know, something big. We, we believe that we have something really, really good, but even more than that is just the idea of creating something even bigger than ourselves, to be able to create a brand and a company that is just really kind of like our baby to be able to provide that next level service that we teach people how to do.
00:04:21
There really is no other feeling like this. And I wake up every day, just super excited to be able to talk with you all and share this. So I’m, I’m excited to share my success story. Maybe, maybe I’ll do another episode where we just talk about the business and talk about that. But I like talking with people so much. And one of the people that I really had a pleasure speaking with this week was Kyle Stanley. Kyle is a real estate investor and a full-time Airbnb host in the Fresno California area. Five years ago, he started renting out rooms in his house, which covered his mortgage. And it was in may of 2019. When he went all in and rented out all of his houses, Kyle shares his mother-in-law hack and how that’s allowed him to be able to grow as an investor. He also talks about how he’s been able to let go of complete control role of the business so that he can focus on scaling.
00:05:04
This is really good if you are in that position, if you’re planning to scale this business, if you like my show notes for this episode, go to shorttermsage.com slash STR 47. Or if you like my show notes sent directly to your inbox every week, then go to shorttermsage.com slash show notes with all that being said onto this week’s conversation. Hey, welcome back, host nation to another episode of short-term Rental success stories. In this episode, I have these special, special honor of speaking with Kyle Stanley. Kyle, would you please introduce yourself to the host nation and let them know who you are and what inspired you to get into short-term rentals?
00:05:33
Hey, what’s going on, Julian? Thanks for having me on the show. Yeah. Coming from you from Fresno, California, which the first thing everyone says is why are you doing short-term rentals in no, California, no wants to be here. But honestly, the I’ve always had an entrepreneurial spirit. I’ve always hated my biggest expense, which is my living expense and renting. And so when I first heard about Airbnb from a friend, I was all in, and that’s what got me into the door in 2015. And here I am today now and going full-time with it, man.
00:06:04
And, and just to give a little pre-con you, you have your own podcast, the fearless flipping podcast. Is that just about, just about flipping homes or what, what, what is that about?
00:06:15
Yeah, so I started that back in July of this last year, 2019. And I had gotten into real estate investing back in January of 2019. And I’ve always been a fan of the mic, a fan of video. I was a sports anchor before I ever went into any other career. And so I knew whatever I was passionate about. I wanted to share with people I wanted to be vocal about I’m doing. And so when I started this, I was like, oh yeah, I’m gonna talk about flipping houses and interview experts. And then I found this whole Airbnb thing to be really like the main thing that I was passionate about, but I was in the beginning kind of hiding it cuz I was worried that, oh man, if I tell people about it, it’s saturate the market. And like this thing that I think is this huge secret is gonna be let out, I’m gonna have all this competition.
00:07:04
Well, a friend of mine started talking about an abundance mindset and how, you know, he was worried about the same things sharing. But then when he started to share everything came back to him tenfold and was like the universe, God was just like, you know, you are to be blessed because you are sharing all this information. And so I just trusted it, adopted that mindset, started throwing it out on my podcast, started telling people throughout, you know, the, the area that I’m in, what I’m doing and he was right. It’s come back to me, tenfold. And honestly, I had no idea how many people would be wanting to learn about this Airbnb. I thought I was the crazy one and it turns out that everyone else wants to be able to do something like this. So it’s been a really great platform for me to share. And yeah, like you said, podcast and YouTube channel people can find it on feels flipping.com or just search and Googleing awesome.
00:07:56
Well, yeah. Thanks so much for coming on the show and, and reaching out Kyle, I, I know that you reached out cuz you, you know, you have this abundance mindset and this is what the show’s all about. I love sharing the success stories of all these hosts and all these people, all these different backgrounds. Everybody has such an interesting story and that’s what I like highlighting. So can you tell a little bit about your story when you first got started in real estate investing and then how you, you know, kind of discovered short rentals in Airbnb and how this has kinda changed your, your business and your life?
00:08:25
Yeah, I guess you could say the official start of real estate investing was January 6th, 2019, but the unofficial start was February of 2015. When I opened up my first home to Airbnb, I, you know, we call house hacking today, essentially, you know, a room outta your house being used for either a roommate or, or a short term rental like Airbnb. And so a friend of mine had told me, I had just bought a house in 2014. I was worried about paying the mortgage. You know, there’s all these things they don’t tell you about when you are a new homeowner with the, you know, inspection, the appraisal, all these points that you’re gonna pay on the loan. And suddenly there was like three to $4,000 that I no longer had and wasn’t expecting to spend. And with my mindset, I wanted to earn that back as soon as possible.
00:09:14
So I was just kind of venting to a friend about that. And he was like, man, you gotta list your room on Airbnb. And I was like, what is Airbnb? You know, 2014, 2015, no one really knew what Airbnb was. And so I, he told me straight up, these were the exact words he used. You basically just rent a room out to a complete stranger and you just make of the bed sheets are made and maybe even make ’em breakfast. And I was like, dude, that sounds sketchy AF and, and he was like, well, you can call it sketchy, but I’ve done this with my place over in Vegas. And in the last five months I’ve made seven grand just running out one room. I was like, all right, well now you sold me. So I went and tried it, man. I was so happy.
00:09:57
I did I to this day when owning a house since 2015, I have not paid a single dollar on my mortgage. And that’s a combination of roommates and Airbnb. And then it was like, this, this thing happened in 2018 where I was like, man, like I wonder if people were running out entire places and by the way, it, that started in Scottsdale Arizona. But then because of health reasons with my dad, I moved back to Fresno, California in 2016. And I was like, well, no, one’s gonna wanna do Airbnb in Fresno. I was totally wrong. It’s actually more popular here in Fresno than it is. And Scottsdale Arizona, believe it or not. If you look it up on air DNA, Scottsdale is like a C plus B, whereas Fresno’s like a it’s crazy. But anyway, so I started running out a room in Fresno and then one day in 2018, I just got this itch where I was like, man, I’m outta town all the time on the weekends.
01:10:48
Maybe if I lock some of my things away, maybe I can do the entire house. We’ll see what happens. You know, I was getting at that point $35 a night for room. So I was like, let’s just throw an astronomical number. I’ll be crazy about this. How about $119 a night for the room? And Julian had booked out all three nights that I was gone plus cleaning fees. I made 450 bucks in three days and I was like, what just happened? So that’s when the itch happened for me to start, you know, looking and educating myself. I started listening to podcasts like this one. I started to hear about this whole Rental arbitrage thing and not having to own a home. And that’s when the light bulbs really clicked. So fast forward to may of 2019, I went all in and I I’ll share this story cuz I think it’s a good learning experience with people.
01:11:36
And I think we’ve gotten to the point today where people people know that this is a bad idea, but when I was alone and trying to figure this out on my own and I bought a course and I spent a bunch of money on a course and then the course taught me how to do it the right way and then do it the wrong way, which you know, if you’re listening right now and you’re like, what’s the wrong way? Well, the wrong way is to go to an apartment complex or a property manager or a landlord and tell ’em that you’re gonna live there, but then you don’t live there. So I did it the wrong way because that’s the way that I learned and I paid for it. But in doing it the wrong way, I also saw that this thing really worked. And so from may of 2019 until now today, so basically six months, I’ve added one property per month. And in Fresno here, that means at least $1,200 of cash per month on average. So you can do the numbers there. I’ve basically hit financial freedom. That’s after expenses through, you know, six properties in Fresno, which is a wonderful thing.
01:12:32
Wow. That, that is, that is so powerful. Six, six properties, financial freedom. I mean, and this is all because of short rentals because you, you do have a background, you started investing in flipping homes. Yep. Did you kind of transition from the flipping homes to the Airbnb more strictly?
01:12:50
Yeah. So in the beginning I wanted to really master full up in homes and, and I have, and I still am doing that, but I kind of just saw this whole passive income beast of Airbnb and said, man, if I can put my time into this and create I’m, I’m a systems person. I love systems. I love having things either done for me because I’ve created the right systems. I brought on the right teammates. I’m treating people the right way. And so with Airbnb, you know, I’ve got managers, I’ve got VAs, I’ve got all these things that help me to be able to not have to be so hands on with it. I tell people all the time, the only time I’m really touching Airbnb is when I’m either accepting or to client a guest or having to file like a claim through the host guarantee.
01:13:40
That’s the only time I’m really doing anything. And that allows me to go find more properties for Airbnb. But then on the real estate investing side, I’ve created these relationships and not to like throw out a bunch of terms, cuz I know most of your listeners are going to be Airbnb, not necessarily real estate investing, but I created great relationships with wholesalers in real estate that when they find a deal, they bring it to me. So I’ve created these two different sides of the business where a lot of things and systems are being done for me. So I can focus on my podcast, my YouTube channel, my course, my, my masterclass, all these things that allow me to spread the word a little bit more, having some more passive streams of income. And it’s a beautiful thing.
01:14:20
What does it look like from a, from a flipper to short-term renting is, is your strategy when you’re looking for homes now for the sole intent of being able to flip them and turn them into short-term rentals because out of your, right out of the, the, your portfolio, you have three that you own, two arbitrage and then two that’s your cohost thing.
01:14:41
Yeah. So basically what I look for is multiple exit strategies. So I evaluate everything as a flip and as long as my numbers are there, like, Hey, I’m gonna make X amount of dollars. Cool. It’s good to flip. If I’m not gonna make those X amount of dollars and it’s more risky, then the plan B needs to be that this will be able to turn into a short term rental or even a long term Rental. So I just think the idea there and I evaluate my Airbnb deals that way too. Like whether I’m arbitraging or owning, I wanna know, Hey, what if worst case scenario happens? What if it gets saturated? What if there are sudden regulations and I gotta turn this into a traveling nurse place, a corporate Rental, or just a regular long-term Rental, either furnished or not furnished, is the yields still gonna work that way? So in my ideal world, yeah, I keep finding flips where I can go ahead and flip it, refinance, get all my money back, essentially own a place for free and be able to turn it into an Airbnb. But most of the time, I like to get that 30 to $35,000 check on the flip and just keep on focusing on doing more arbitrage or doing partnership deals with other people.
01:15:56
One, one of the things that, that when you’re talking about the arbitrage space and trying to scale that exponentially is, you know, when you’re purchasing a property, you have to put a lot of money down. There’s also a lot of risk with, with flipping a place. You have to find the deal. You have to be able to, you know, undergo that, that, that time period, you know, you can be looking at, you know, tens of thousands of dollars and months, which you know, is potentially, you know, which is opportunity cost. Have you found, you know, being a flipper that the opportunity cost is, is not maybe that big of an issue when you are flipping, compared to let’s say Rental arbitrage, where it’s that low startup cost you can get started, like right. You know, right away.
01:16:36
Right. Really the answer to that is creative financing, especially with having a podcast on YouTube channel, people are asking, how can I be a part of your deals? So I’ve created programs where if someone wants to be a passive part of a deal wants to invest, and I find the right deal where there’s enough meat on the bones that thing’s gonna cash flow for me at least 2020 $500 a month for Airbnb, you know, and I’ve got maybe a thousand dollars to be able to give up of that every month. You know, someone might come in and say, Hey, I’ll, I’ll help fund your rehab or I’ll help fund your conventional purchase. Sometimes even I’ve find a place that I’m like, man, this place is awesome. It’s but the down payment’s gonna be 40 to $60,000 with repairs and furnishing. So I gotta bring a, a partner in, I’ve got, you know, an idea that it’s gonna cash 2000, $2,500.
01:17:29
If I can give up a thousand bucks of that, that’s a great return for the creative or for the, the lender and, and allows me to be able to be in a place for free essentially. And now I get to get that remaining, which is a thousand $1,500 a month. So I like creative financing. I like being able to bring other people in on the deals on the ownership side. And then of course on the arbitrage side, my whole thing is if it’s a one bedroom, one bath, I’m gonna finance that myself. If it’s bigger than that, I’m gonna bring in a financing partner and give them a great return.
01:17:59
So, so when you are planning on purchasing properties, you’re, you’re, you’re not investing your own capital into these because you’re taking the money that you have into arbitrage units.
01:18:11
Yeah. I, I wanna stay as liquid as possible and real estate investing. That’s the biggest thing that I was coached on early on, you know, you hear a lot of things out there about, you know, getting into real estate investing with no money. And there are some creative ways. I mentioned the term wholesaler early on, on that that is a great way to have, I wouldn’t call it no money because you gotta spend money on marketing costs and buying these lists to target for people. But when it comes to flipping, you know, let, just for example, you know, I’ve got two projects going on at the end of December and they ended up seen both of them about five to $10,000, more for the rehab than expected while my lenders are not expecting to pay for that. So where does that money come from? Comes from me.
01:19:01
So I’m gonna always be that person that fronts the money, if there’s any issues so that I can keep a great relationship with my lenders and not ask them for more money. And that way, the next time that they’re coming into a deal, they’re they know, Hey, $40,000 means $40,000. It doesn’t mean $40,000 with maybe another 10 to 20. So I stay liquid for that reason. And then that, again, even the arbitrage deals, I don’t like putting my own money into it unless it’s a one bedroom, one bath, and I know I’m gonna under $5,000
01:19:32
With all your deals. And even because you’re even taking on some cohost clients yourself now out, out of all these different types of models, which one do you think is maybe the best for people that are just starting off? Cause when I think of flipping, I mean that that’s, it, it can be pretty intimidating. You know, you’re finding a place you’re having to put, you know, a lot of money or your own money down know, you said you have to come outta pocket a few thousand dollars is the return on that as great. Is it worth it for new people that are just starting off? Or is it arbitrage or cohost thing? Yeah. What’s, what’s your perspective,
02:20:03
You know, to give a, a black and white answer cause I hate giving vague answers. I’m gonna, I’m gonna really say that arbitrage is the best way to start off because you’re the only person that’s gonna lose if you lose. So for ex I would start with arbitrage and I would say, if you don’t have money, go to someone who has an excess of money, that’s gonna be able to help you. And maybe it’s a family member who knows that like, Hey, you are a trustworthy person. You’re going follow through on this. And at the end of the day, if I lose, you know, a couple thousand dollars, at least I tried to help you, which shouldn’t happen as long as you’re doing this, the right. I haven’t any money in Airbnb. I don’t people that have. So I like it that way though, because I want to, I always teach master automate scale.
02:20:56
My acronym is mass. So you gotta master something. And if you are pressured with other people invested in this to master this, you start putting unnecessary press. Sure you start getting fearful and you start looking for ways to either get out of the deal. Or if you fail, you know, you’ve failed multiple people. So I got into arbitrage for the entire place is right away, cuz I said, okay, I’ve already got furniture. If I get an apartment and I, and it doesn’t work, you know, all I do is break the lease and maybe I’m out a couple grand and that was a very low risk option for me. Then I built up the confidence to say, okay, now I know this works. Now I know if I go purchase a place that this is going to work so that bigger capital upfront is less intimidating.
02:21:45
And then as I built up my knowledge and learn how to automate, learn how to systematize things and now I’m ready to scale all these people view me as the expert and they’re bringing their properties to me. And now, you know, they’re very confident in the cohosting model. However, I will put a little twist on that, get with a mentor, get with someone that knows what they’re doing. Go to someone who already has a property. Hey, I’ve never done this before. But what I can tell you is that I’m being mentored by Julian or by Kyle or whoever it is. And they’ve been doing this for, you know, three plus years, five plus years. And they’re gonna help me step by step until I have mastered this. And here’s, you know, all the benefits of doing this and here’s all the, you know, risks that you take. And I just, I like to be as transparent as possible with people so that they know what they’re getting into. And I, I never make promises that I can’t keep.
02:22:38
So, so your strategy, you’d say for people that are just starting off into real estate would be, you know, go the arbitrage model because it’s, you’re assuming the risk yourself. Once you’ve proven that you can start taking on, maybe some investors are some partners for cohosting their properties. And then at, at which point would you say it’s a good, maybe a good idea. Let’s say someone does say, I wanna purchase a property. Maybe they don’t wanna purchase a turnkey property. Maybe they, you know, they wanna, they want get into flipping. When do you think is a good point for people that get into flipping
02:23:07
Time? I, I don’t think you have to wait for that. You know, the only, the only thing that I would say it I’ll, I’ll switch your terminology there and I’ll just say real estate investing because flipping in itself, you know, market cycles right now, I think we’re in a market cycle for me that this is the last year I’ll be flipping for a while because I just see us being at the top. I see these deals getting thinner and thinner and I see the opportunity to be able to make a great profit on a flip being less likely in 2021. So for me, I’m still flipping right now, but I’m educating myself on other exit strategies and how I can leverage myself to, for education to learn how to start developing relationships, to have a similar business model where deals are coming to me. But at the same time, like I’m storing away cash.
02:23:59
I’m not the person that’s gonna be flashing the, the car or the, the Rolex or any of that kind of stuff, because I’m always like, Hey, how, how can I make sure that if that does happen, if suddenly this 10 to $20,000 that’s coming in every month is now gone, that I’m okay. And you know, that’s a very real thing when you’re in real estate, how, how many people have you heard in 2008, lost their shirts? It’s because they were over levering, they were refinancing their houses and buying stupid stuff. They were refinancing to put more money into the house or to buy the car or to go on the Vacation. And I believe in, you know, those things in moderation. And so my short answer there, Julian is that get into real estate investing now, but don’t have this mindset of, oh, it’s gotta be flipping, have the mindset of learn the market cycles. We actually just had a guy on the show who I’m gonna be airing in a couple weeks. His name’s Lee Harney. He’s a big name in real estate. And he talks about how, you know, he definitely sees a market cycle at the top right now and what to be that and what types of strategies you can that from losing real.
02:25:07
I think you brought up a good point that I want to touch on with market cycles where, you know, you said flipping it’s, it’s one aspect of real estate investing. You know, we have this real estate investing spectrum flipping is, is one part of that cycle. Where do you see Rental arbitrage, Airbnb cohosting in this whole market cycle.
02:25:24
Yeah. You know, I’ve thought a lot about that. And again, that’s why I do the deals to make sure that a long-term renter is going to work with that as well with an arbitrage deal. You know, you’re not really looking for a long-term renter. If, if for some reason you’re in a 12 month lease, you know, and something happens with Airbnb, Airbnb. Sure. You can put a long-term renter there in make another hundred or $200 and make sure that, you know, your lease isn’t broken or whatever. But to me, you gotta look at your, your market. And I love my market of Fresno because we’re not a destination getaway. What’s the number one thing that people stop doing when a recession hits when they’re short on money. Yeah.
02:26:08
This stay home.
02:26:09
Yeah. They stop traveling. They stop doing the vacations, they stop doing the luxury types of things. But in Fresno and I tell people this all the time, people come to Fresno because they have to, not because they want to. And so that’s a very positive position for me to be in, because I know that when a recession hits the traveling nurse is still gonna come to Fresno. The, the employee is still gonna be sent out to Fresno, the granddaughter or the, the daughter who has her, you know, two kids and a husband now is still gonna wanna visit mom or grandma. And those are nine 80 to 90% of my, my business. Then every once in a while we have that person saying, Hey, I’m coming in from outta town. And I wanna go to Yosemite and the Sequoia national park or LA and San Francisco.
02:27:01
And Fresno’s a good middle ground. I’ll probably lose a majority of those people during a market cycle or a recession. But luckily for me, I do my deals to hit my break, even point right around the 50 or 60% occupied rate. So if I lose 10 to 20% of my business, I still have a gap there where I’m going to be profiting. So we, with that being said, I just say, look at your market. And you know, I do think that people who are in the, you know, Southern California markets, the, the Vegas markets, I know Vegas has regulations now, but you know, all these places that are going to be hit when there’s some sort of recession, I think are going to need to make sure that their margins are really good. If you getting to a place that’s $2,000 of rent and you’re gonna gross $4,000, you’re gonna be in trouble when a recession hits. If you’re getting into a place that costs thousand dollars, but you’re grossing 8,000 you’re OK. So that, that’s my theory on it. I’m, I’m not a hundred percent sure on it, but I definitely have taken a lot of time to think about it.
02:28:04
No, I think, I think that’s a really good, you know, good way of analyzing and that, that just shot, shot some ideas in my head about, you know, when maybe people should be looking at markets, not just from the perspective from a Vacation traveler, but for, you know, let’s say in DC, lots of people travel to DC because like you said, they have to come to DC. They have to work by hospitals. Nurses have to try a by co college towns. People have to go see their kids graduate from college. Absolutely. But there’s might be places like, let’s say, you know, Cancun, or, you know, maybe other areas where it’s like, it’s more for the destination for the, for the travel experience. Those are probably gonna be the places that are gonna get hit harder. But one other thing that you brought up that I is really important was you said people still do travel. People still are gonna be going to Yosemite and traveling. It’s just, it it’ll be less. So what are you doing to be able to set your units apart so that you can try to still attract those types of clients?
02:28:58
Yeah. Well, the first thing I’m doing and I’m actually, before I go into this, I do have a question for you. Have you tried furnish finders?
02:29:06
Yep.
02:29:07
How’d it go for? You
02:29:08
It’s hit or miss, you know, just because of my location, but it really just depends on how close you are to the, to the hospitals.
02:29:15
Yeah. So I’m, I’m in preparation mode. One of my units I’ve put on furnish finders and you know, it’s been on for like four days. I’ve gotten three hits, which is fine. I, I do like knowing that, that out, one’s a four bedroom. So if I do have nurses, I can do $800 to a thousand dollars per room and be making close to the same as what I’m making with Airbnb, just with a little bit more management. And, you know, you start getting personalities in the home. Sometimes that kind of scares me a little bit too, but so I’m, I’m trying to prepare right now with backups of traveling nurses. I would like to eventually create relationships with outta town businesses. So I continue to get these employees. I’m gonna start asking them, what business do you work for? I wanna reach out that way.
02:29:59
They have a streamlined to me in case I actually have a friend that’s doing that exact thing in Georgia. She was on my show and she’s transitioned completely to corporate rentals. Not because Airbnb is not working, but just because she finds it to be a little bit more stable for the long term. So, which I understand, again, it’s all speculation, right? So we don’t know if Airbnb is gonna be around for another year or another hundred years, but competition wise, I am really excited about this one. That’s opening up on February 1st and it’s going to be a national park themed Airbnb. So again, we get so many people coming to Fresno that are looking to have, you know, a, a, a middle ground to, to these national parks or they’re coming to Fresno and they’re like, Ugh, you know, I gotta get a place in Fresno.
03:30:49
It’s gonna be boring, you know? Okay, cool. This one’s luxury. Okay, cool. This one looks nice. Well, oh, wow. Look at this one. It’s got like this whole national park. I, I told my interior designer, I’m like, I literally want you to make this place to feel like an national park came in here and just vomited in the apartment. So the we’ve got so many rustic, like very cool cabin type of features that are gonna be in there. And we’re developing relationships with other Airbnb experience hosts who are doing hikes of those places. We’re trying to create relationships with in town that have Sequoia or Yosemite in the name so that we can offer more value to our guests. And, you know, as that continues to be something that I think about, then I start thinking about, well with my other Airbnb, you know, maybe I can develop other relationships with businesses in town where I can offer special discounts or get them in the door with a great restaurant at a great price. And it’s added value to my, to my guests. So those are things that I’m looking at right now. I haven’t mastered that yet, but it’s definitely something that is running through my mind a lot.
03:31:55
No, I think, I think that’s really, really smart and very cautious of you, Kyle, you know, you’re, you spit off just a bunch of different ways that you are trying to the have air surprised for yourself. You’re trying to get more of those corporate clients build up your email list, even find back doors into those businesses so that you can create those relationships. So that way, when the business is traveling to that area, you can you be like, Hey, I’m the guy that, that, you know, your clients have already stayed with. You know, you can come and keep on feeding people to me. I like what you said about the themed place, having a place that is know it’s like the, like the Tesla with, or not the te the new cyber truck with Elon Musk. Like some people hated it. Some people loved it, but the people that loved it, they were, they were crazy about it, cuz it was different. And like you said, when you’re scrolling through all those listings, you know, another luxury, another, you know, another style and then you just see like, wow, that place is different. You know, that is gonna help you stand out. So that way, when people are traveling less, let’s say things do change. Your place is gonna be, you know, sticking out like a sore thumb because it is so different from everybody else.
03:32:54
Exactly. Yep. You hit it on the head. So I, I just think that especially, you know, here in Fresno, three years ago we had 150 Airbnb listings. Now we have close to 500. So, you know, there’s more competition, more people are coming into town and seeing the same thing again and again, and getting probably, probably eventually going to get tired of that. You know, it’s still a better experience because they’re not going to hotel, but at the same time, at some point you’ve gotta start making yourself different with Airbnb. And we’re trying to innovate all the time.
03:33:27
You mentioned something that is, is pretty, we don’t hear too, too much on the show, but you’re actually working with an interior designer. How, how much of this are you doing yourself? Because if you’re flipping homes, I, are you the person that’s going in there with a hammer and, and doing everything or no. How much involved are you in the build of, of properties or in the build of your units?
03:33:45
Yeah. You know, I’ll, I’ll say this. When I finally adopted the mindset of working on your business and not in your business, that’s when things blew up for me, Julian and that goes for any business model. This last year was finally the first time that I was on my business and not in my business. And to be able to just focus on getting the right people in place and hiring out those things. It created two things. It created more income, but it created so much more freedom for me too. It’s funny. A lot of people who were, you know, of watching my stuff, they’re like, man, you’re working hard. What do you take any days off? I take Friday, Saturday, Sunday off guys. I don’t, I probably worked less this last year than I did in my entire working career and made more money and helped a lot more people and was a lot more fulfilled than any other time in my life.
03:34:38
And so, yes, I source everything. I, I talk about it a lot too. And I even have an entire episode on this, you know, outsource the things you suck at. I get people all the time being like, oh, what would you do with this kitchen? Or, oh man, do you think a good, this couch would look good? I don’t know. I have no idea. You tell me my contract. One of my contractors, you know, I told him, I was like, I don’t wanna make any decisions. Here’s everything I want changed. You go pick the colors and she comes back to me and she’s like, what color do you want the trim? I was like, I dunno. I just, I dunno, talk to someone else about that. I have no clue. So yeah, I, I make less decisions. You know, I think it’s bill gates and mark Zuckerberg wear the same shirt every day.
03:35:21
And the, apparently there’s some sort of theory behind this, that if you make too many decisions, then you’re not gonna have the energy to make the big decisions. And so I want to eliminate as many decisions as possible, even if it costs me money. But here’s the cool thing about interior designer is most, if you get the right interior designer, which I definitely have, she works for extreme home makeover. And so I know I’ve got the right one on my team. She gets all these wholesale deals with beautiful furniture that I know is gonna cost me like top dollar, but cost her a fraction of the cost. So what I’m paying for her in work is really being made up for, in cost of furniture. So we are able to furnish a three bedroom, two bath for right around $7,000 with her work included. I think that’s pretty good. So, and that’s with, you know, a lot of new stuff. That’s not with many used things. There’s some used things, but most of it’s new.
03:36:16
Yeah. That, that is a, that is a super deal. Usually. I mean, for, for one bedroom, one bath, you’re looking at around five to 7,000, but you’re, you’re able to do a two, two bedroom, two bath in Fresno, California, which is really expensive with the cost of labor because usually the designer itself is like 1,015 hundred bucks, but you’re getting everything. That’s, that’s a sweet. Where do you find someone like that?
03:36:36
I, I just network, man. I, I throw things out on Facebook that my top teammates so far have all been found through. Since I started in this business. I didn’t know these people before I started my manager. I threw a thing on it on Facebook asking if anyone know, knew someone that was gonna be flexible between the hours of 11 to three every day and could take on some real estate related deals. I had her lockdown within two hours after posting that I had my interior designer lockdown after a couple hours of posting that I needed an interior designer, my repairman, I have multiple repairmen, you know, just being in the industry, going to meet up groups, meeting people, asking for referrals. You know, I I’ve got four repair on, on call, but I’ve got one that is my go-to every time because you know, networking, that’s, that’s really all it is. It’s very, very simple. It’s and there’s no like key there there’s no secret. It’s just networking.
03:37:32
You said you posted this on Facebook. Are you like posting in certain types of groups or where, where would even someone start looking for this?
03:37:37
No, I, I just posted on my regular, my regular wall, you know, I think if you’re from somewhere else and living in a new place, you gotta go venture into those groups a little bit, but I I’m living in the hometown that I grew up in Fresno is a big city, but it’s actually a small town feel. So if you know someone, they probably, you know, that whole term six degrees away from Kevin bacon. I, I think you’re one degree away from whoever you need, if you’ve up in Fresno.
03:38:02
Awesome. I want, I wanted to hit on the flipping aspect cuz that that’s, that’s kind of your, your expertise. You, you brought up something as far as like being able to fund these deals and it being a little bit, not as, not as much risk for you, but you’re, you’re able to get a really good return for your investors. How do you structure those deals when you are, let’s say flipping it and then turning it into a short term rental.
03:38:25
So you’re talking about in terms of how I’m paying back my investors,
03:38:30
Correct? Yeah. How, how do you structure a deal like a, for a partner when you are also short-term renting
03:38:34
It. Okay. And so there’s two different sides of that. There’s the arbitrage side and then there’s the owning the house side. So which one would you like me to
03:38:43
Start with? The, the own side.
03:38:45
Okay. It really depends on the deal and how much meat there is on the bone. So like I’ve got one right now that I’m looking at that could cash flow me 20, 2500 a month. And so for me, I see that, you know, if someone’s gonna be a partner with me on this, they’re gonna put forward probably $50,000. Now that’s with, this is actually conventional purchase. This wouldn’t be a, a flip. So if with $50,000 that’s gonna be the down payment, that’s going, going to be some repairs. And that’s also going to be furnishing. This is actually one that I would house hack. It’s really cool. It’s this four, four units on one lot, but it’s used to be this large single family house, but this guy has essentially turned it into one big house. And then 3, 1, 1 studios, which is really cool. So 50,000 all in, on a slow month, I should make $2,500 while living there.
03:39:40
And so I’ve gone straight to investors and said, how would you like to get a 20% return year after year? And so 20% return on that is basically right around a thousand dollars a month. So they’re protected when they’re a part of a real estate deal. They’re protecting in a few ways, they’re on the, the deed they’re on the lean. They’re one of the lean positions in case something happens. They’re protected by hazard insurance. And they’re protected with a promissory note, which is basically a contract of how long this, this note will last, how long this real estate relationship will last. So that’s how I, it, and again, that’s case to case, if they’re, you know, $2,500 on the bone, I know I can give away a thousand bucks. If there was only $1,500 on the bone, I’d start looking at how can I give away 250 to $500.
04:40:28
It just depends on the deal, but I just make sure I structure it in a way that they’re gonna make way more than they would in the stock market, more than they would with any regular, real investing deal. You know, grant Cardone is out there talking about his Cardone capital. I’ve actually got a video on that and I’m a part of Cardone capital, but this was before I was educated on real estate investing. And so there’s all these, you know, investment opportunities out there with guys like grant and talk about, Hey, I’ll go find the deal and you’ll get a great, it returns six to 8% and they don’t talk about these fees. They don’t talk about oh six to 8% is the goal. It’s not the guarantee. And so I try to set myself apart by saying, you know, this is gonna be exactly what you make. We’re not gonna do a certain amount of the rent. You’re just, you’re going to make this month after month. And it’s gonna be two to three times is better than anything else out there. So I just try to basically craft an irresistible deal.
04:41:24
What are you doing? So you, you, you, you find a property that is, that needs to get flipped. And let’s say you have to put down, you know, 40, 50,000 for the, for the cost of rehab. And you source an investor. When, when you’re pitching this investor, are you pitching them from the perspective like, Hey, this is how much it’ll be as a short term rental or as a, as a long term Rental. What, what’s your, how do you, how do you present that to them?
04:41:50
Yeah, I present them all the, basically all of the exit strategies. So here’s what it should produce on a, and I’m always conservative with my numbers and I’m always using words like it could potentially possibly I’m not using guarantees, but the one thing that I am guaranteeing them on is here’s what you are going to earn guaranteed. So I’m pitching them as here’s what it’s gonna go as a short term rental. Here’s what happens if we stop doing short-term rentals, you’re still gonna get covered. And here’s what happens when we refinance or sell, because you’re part of the equity. We are going to be rewarding. You based on the amount of equity that you have in the property.
04:42:29
So if you do decide to sell it, they, they do get because with a lot of flips, a lot, lot of time, their exit strategy might just be to kind of, you know, cash out right away and then give the, you know, give the equity back to the, to the investor. But for you, because you are, you know, sometimes house hacking, you are turning it into a short term rental and long-term Rental because you own the place. Now, typically you’re, you’re able to see those, those, you know, $2,500 returns just off of long-term Rental.
04:42:58
So not that kind of return, but it does cover me still. So if I gotta turn this into a long-term Rental, you know, I’ve still got a, a thousand dollars, at least on the bone to where I know that I don’t owe that. If I owe everything to everyone that I’m still either in the green or at the black where I’m breaking, even, which I don’t even like to do those deals, but that could be a worse case scenario. But yeah, to answer your question, most flips are just a quick in and out, but I let them know, Hey, I’m doing this as a flip, it could turn into a long term or short term rental. At that point we would renegotiate the term. But yeah, the flips are just like, Hey, you’re gonna earn X amount of percent for X amount of time, super passive. You write a check, you get protected by a promissory note by hazard insurance. Your name’s gonna be on the deed. And if anything goes wrong, if I die, you own the property, you can go sell it. But with the, the long term stuff. Yeah, it it’s, it’s definitely more intricate and I’ve gotta restructure the terms a little bit.
04:43:59
Okay. Awesome. Awesome. And is there, is there anything that you do kind of moving forward that you, that saves you a lot of time and money, because you said that a lot of this stuff you’re, you’re trying to back away from the business, you, you have a property manager that is managing the properties for you. What else are you using in your business that saves you a lot of time and money?
04:44:17
Oh man. The obvious stuff Smartbnb that has been a game changer beyond pricing. I just started using it. That is a no brainer. I didn’t even know about that until recently. My one of my friends and mentors, Nate told me about that. And after being on it for day one, I got something booked like 12 months in advance. That definitely wouldn’t have been booked. Cause I was only doing three months in advance manually. And now that I’m doing 12 months in advance automatically through, beyond pricing, this person booked for double the price that I would’ve even had it listed at. So that’s really cool. And then other automation. So I would say my manager right now, because we have a small amount of properties is acting as she wears three different hats. She is the communications manager. She is the operations manager. Essentially, if something goes is wrong, she’s the one making the call to the repairman appliance company, the cleaners, all that kind of stuff.
04:45:17
She’s managing the cleaners. And then she’s also cleaning one of the properties too, just for some extra income. When we start to get bigger, she is going to take on less of the cleaning roles and more of the, you know, managing side of things. And eventually we’re gonna have to bring on a second person as well. And I know I was just listening to your episode with Allen and, you know, he brought up a good point with, Hey, these people need days off. Yeah. Kind of forget about that too. So I need to start looking for a second person, which I think I’ve got someone in mind and, and I’m always that that’s, what’s great about this. And, and I know Alan talked about this in the episode too, so it won’t harp on it too long, but when you bring an employee mindset to this, it, it fails.
04:45:59
Or it doesn’t scale when you bring a business owner mindset to this and truly work on the business. And just even the things that seem so small, these innovative ideas that I now have time to think about a national park themed Airbnb have time to think about, are we doing our cleaning as efficiently as possible? Should we be outsourcing the laundry, things like that, that I wouldn’t have had time to think about. Had I been trying to do it all my own or I’m an OCD person. So I try to not show up to my properties. If I show up to the properties, suddenly I’m there for an hour and I’m doing things that aren’t even in my control. And so I, I see you shaking your head. I know, I think a lot of us entrepreneurs are kinda like that. So removing myself from as many decisions and removing myself from as many working in the business opportunities has really helped out.
04:46:50
I think brought a good point. The, you know, entrepreneurs and people that are, are in this business, you know, we’re, we’re, we’re the best cleaner, we’re the best, you know, communicator, we’re the best at all these things, but that that’s really holding us back from being the best at what, you know, what, whatever it is, if it’s scaling your business, you’re, you’re depriving yourself of that, that position. And you’re depriving yourself of being able to help more people find beautiful places to stay. You really like used it’s it’s being a connector.
04:47:16
Yeah. And well, and, and most of the time, Julian, that’s a, that’s a false thought, which is, oh, I’m the best person for this? No, you’re not. You might be for one of those things. I know for myself, I’m the best person for communication timeliness. But in terms of the peppy, like customer service type of talk, I’m the worst person for that. If someone asks me where to find the remote, I’m like, look on the instructions. Don’t bother me. But, but if, if I have someone in place there, maybe they take 10 more minutes to respond, then I do. But they say, oh my gosh, I’m so sorry. You can’t find that. Here’s where it is. I know I’m not responding that way. I don’t have the patience for that. So I need to remove myself from those things and outsource and you know, I’m, I’m trying to get to the point where I can just erase the Airbnb app from my phone, because I’m that O C D about some of this stuff and I need to not be. But again, that OCD side is taking over. And I’m kinda like, do I really wanna erase that for my phone right now? And so that that’s probably the next step in my business is letting go of complete control.
04:48:22
And, and how, how are you trying to cause many lots of people like you, I mean, that, that might be like the dream. Like you just have something that’s on auto, you have the right people in place and you’re still making money. What’s the next step. So you have this person that is doing all these different things in your business, what would be the next person or the next thing that you’d need to do to be able to remove yourself even more?
04:48:42
Yeah. I, I, I kind of mentioned already. I think I just need a second manager, someone who’s gonna co-host and know that they’re the backup, Hey, you know, you’re by the phone, you see that, no, one’s responded for 30 minutes. It’s your turn to respond. You know, the answer. And, and I really, for those that are like, Hey, how do I find a good manager? You don’t have to go out and get a company. You don’t have to go out and like, train them on anything. You just need to have them cohosting with you and watching what you’re doing for a couple months, or maybe not a, in a couple months, maybe it’s a couple weeks and now you tell them now you are gonna respond. And when you don’t have the answer, you ask me, what’s the answer. And now, you know, my manager has been managing with me for three months and cohosting, and the only times that she even reaches out is, Hey, you know, someone just said, Hey, they wanna check out at four o’clock. Should I allow them to do that? That kind of stuff. You know, I, and she’s getting even better at that stuff. I mean, I’m getting my point is I’m getting very few messages from my manager anymore because she has seen how I respond. And I’ve given that control past that Baton, just one step at a time.
04:49:48
And with, with the manager, is this a person that you’re paying like to fix rate or are you paying a percentage and, and how much?
04:49:55
Yeah, I pay a salary and I just make sure that if it’s a light month, let’s say for example, someone books for two or three weeks, and I know that they’re not gonna have to manage as much in terms of turnover. Now I’m gonna give her other things in my business that are related to taking you some time or giving some time back to me that could be email responses that could be tracking receipts. That could be a lot of different things. So I, I just make sure that they’re fulfilling their 20 hours a week is what we’ve kind of laid out. And if they’re not, then I’m giving them tasks to be able to, to fulfill that.
05:50:30
And are you, are you sourcing this from the us or are you going outside the us?
05:50:35
Oh, I, I believe in an, on an instate in city manager, I really want her to have a pulse on everything that’s going on. So she goes and does inventory checks, even though we have all our maids do inventory checks. And here’s one thing that really helps out if you’re not doing this already have a laminated checklist for your maid. And at the bottom, it says, you know, it place was dirty. Place was clean. Guests did great guests, you know, left a mess, whatever. So they know how to review you. And then under that inventory needed. So it’s just an erasable little checklist every time. And they just take a picture, send it to our emails so that we can reference back every single time. If someone says, Hey, this place looks like it hasn’t been clean and we don’t have a cleaning report from you, then you’re paying for that. So what I’m getting at there is even though we have inventory checks from our maids, I have my manager go to a property once a month and make sure that the doors are working. The water’s working, the lights are all on the things that the maids don’t have the keen eye for that my manager will,
05:51:46
You said that you pay a salary, is, is there a, a reason why? Cause usually with co-hosts you, you give like, you know, anywhere from like 15, 10, or up to 30%, what about the fixed salary made you go that route?
05:51:59
Mainly because this person wasn’t a company, it’s not like you and me, you know, it’s not like, Hey, I’ll go manage your place. It was more of like, Hey, I’m looking for a part-time job. Can you help me make some money? And so with me taking that person under my wing and showing them the ropes, they basically become a part of my company. They’re essentially an acting employee of my company. So I’m going to pay them as if they’re an employee, not as a company that’s managing it.
05:52:27
And, and with that, because there, the difference from the contractors to the employees, are you, are you paying them like all the, all the employee benefits or because they’re working part-time you don’t have to do that or are you paying them as a contractor?
05:52:40
Yeah, part-time I don’t have to worry about that. Yeah. Yeah.
05:52:44
What would you do differently? Let’s say you had to start from scratch. What, what would Kyle do?
05:52:49
Oh, man. I, I would educate myself in the process. Get a mentor, take courses back in 2015. I know that those things probably weren’t in, I don’t even know if there were any courses in 2015, but I would definitely have found someone. I would’ve started looking on Airbnb and looking for the super host and asking what they’re doing and just learning quicker. Because at the end of the day, Julian, I was leaving thousands of dollars on the table. I mean, when you go from making your best month, $1,800 gross in Airbnb, before expenses to now my best month. And this happened under six months, my best month has been $15,500. And under six months making that change, I look at four years ago and say, what if I started that right away and where I’d be today? You know? I mean, that’s, that just is really in the back of my mind of like I would, I, that would be, what I would do differently is just educate myself and find a mentor.
05:53:49
What question would you ask another professional host that’s maybe at a similar level or the next level from where, where you’re at.
05:53:57
That’s a good question, man. Probably the question that you asked me earlier, which is just, you know, what are you doing to separate yourself? What are you doing to prepare? I’m always looking worst case scenarios. And when I don’t have the answer for worst case scenario, that always kind of like makes me uneasy. So those are questions that I would probably be asking to someone who’s above my level.
05:54:21
Do you have a, a favorite favorite book or something that you’d recommend for people that are just starting off in love? Say flipping
05:54:29
A favorite book in flipping man. I’m such an audio book guy and course guy, I would say. I mean, you’ve got, I think just real estate investing overall. It’s rich dad, poor dad, everyone that I interview when they talk about books, that’s always the one that they’re talking about. And then recently one that I’m gonna be reading here in a little bit, because so many people have told me to read this book, never split the difference by Chris boss. That’s a negotiation book. I would say those two, the one is a definite read with rich dad, poor dad for any real estate investor. And then it sounds like that one with Chris boss, the never split the difference is what I’m definitely gonna be reading.
05:55:12
Yeah, definitely. You know, with people coming into the, into this space and maybe just their first entry point is Airbnb there. There’s a whole other world of real estate investing and, and rich dad, poor dad definitely helps you to, you know, change your perspective on, on what’s possible. But thank you so much, Kyle, for, for coming on the show, you’re just a wealth of knowledge and you know, really appreciate your abundance mindset and everything that you’re giving back to the community. And, yeah, thanks so much until next time, host nation, keep on hosting. Hope you host benefit from the show. If you found value, please going over to iTunes, leave us a review and let us know what you enjoyed about the show. If you 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.
