STRSS 35 – Managing your Vacation Rental Properties Remotely w/ Alvin Cavalier

Video Transcript

00:00:00

You can’t have a successful investor without that investor understanding taxes or having someone on their team that really understands

00:00:09

This is some number three, five, and a short-term rental success stories podcast. Are you an investor that’s looking to have your home professionally managed, go to cohost.com for more information. Welcome back to short term rental success stories. I’m your host, Julian Sage. This is a show where I talk to hosts about their journeys and starting and growing their 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. So we all strive for five star reviews. So please go on over to iTunes and let us know what you enjoy really helps support the show if you haven’t done so already going over to our Facebook group, the host nation to connect with the community. Hey, what is going on in host nation?

00:00:50

I am excited to be recording this intro from sunny Florida. So I was actually in Florida for my mom’s wedding. She, I was able to pass off that responsibility to this awesome, awesome man. And if you guys didn’t know, my dad actually passed away about three years ago to stage four lymph node cancer. So this was a really, really impactful time to, you know, pass this onto, you know, this new, this new man in my mom’s life, who I really, I really care for. I really love, he is such a awesome, awesome person. And for those of you that didn’t know, I actually got started in the short-term rental space because of my dad. You know, I’ve been looking for a way to be able to reach financial freedom and just, you know, just we’re renting out a basement unit in my house has taken such a big chunk of getting towards that financial freedom.

00:01:41

And now also taking on clients is also really impacting. So I know within a short period of time, I am going to be able to reach that, that place that I was trying to be at, you know, three years ago, when I, when I could have spent more time with my dad where I could have taken him out and created more memories with him, you know, I cherished every moment, but I just wish that I could’ve done more in there more, but when you are stuck to a job, when you do have these commitments, when you don’t have the financial ability, you’re either paying with time or money. And I didn’t want to be in that position or I had to pay with time. So that’s really what inspired me to start the show and to get into this space was because I was looking for that way out.

00:02:22

I’m not the kind of guy that likes to do things alone, those, so I, I enjoy bringing people along with the ride and that’s what we’re really doing with the BNB empire builders mastermind group is we’re trying to provide as much value as we can to you all. And you know that we provide a lot of value. There’s an episode coming out every Monday, Wednesday, Friday, I’ve got two full-time people that are helping me guys, just because I, I, I love what I’m doing. I know that there’s so much value there and there’s some awesome really people like John Bell, who’s helping me on Vacation Rental Machine, create that content and be able to make it very easy and digestible for you guys to be able to follow a process, to be able to start your business. And that’s what really, what we are doing is we’re finding ways to be able to provide this type of really systematic approach to billing your Vacation Rental Machine.

00:03:08

Because so many people start things like this wedding, this wedding was started and there wasn’t really too many systems or processes in place. And it was, it was really messy and it was a lot of work and a lot of headaches that didn’t have to be there. So that’s what we’re doing with Vacation Rental Machine was, are creating these steps and these processes, and we’re working with our mastermind members to be able to find out how we can help them at every step of the process. So we have people that are just starting off looking for their first property, people that have their first property or people that have, you know, multiple properties and are looking to scale is that there are systems in place to be able to scale and to be able to grow and to be able to track your progress. And that’s really what we’re doing in the group in the mastermind group is answering those questions, helping people grow.

00:03:52

And that’s really what our early adopters is. This is going to be closing off within the next week. Guys, we are reaching that cap that we were talking about before, and we do want to keep it small initially until we’ve worked out all the kinks and then we will be opening it back up and we will also be raising the price as well. So if you do want to become an early adopter, then go to Vacation Rental Machine dot com, fill out an application. And I highly recommend that you do this as soon as possible because we are approaching that cap where we will be closing the doors. And we don’t know when we’re going to open it up back again until we’ve really kind of refined our processes, but you guys can spend a lot more one-on-one time with John and I, you can help us be able to grow the group and figure out how we can provide that best value to you.

00:04:34

So if that does interest, you go to Vacation Rental Machine dot com, fill out an application there. You can also go to the site. And if you are looking for co-host contracts or until arbitrage contracts, you can also go there because it is our store. There’s a lot of really good resources that you can use to be able to help scale and grow your Vacation Rental short-term rental business. If you’re an investor that is looking to get into the space, but doesn’t want to be an active manager, then you can also invest in our turnkey, Airbnb arbitrage properties. That is a really cool thing that we have just recently started rolling out. And we’ve gotten a lot of interest from people that are looking to get into this space. If you do want to find out more about turnkey arbitrage properties, then go to cohost.com, fill out an application, and you can find out more information on the site.

00:05:19

I want to take a moment to thank all of the veterans that have served as this past Monday was veterans day. And on this episode, I have the special honor of speaking with Alvin cavalier. Alvin is a super amazing person. He’s a full-time active duty army guy. He’s been in service for 18 years, and Alvin’s been Short renting since March of 2018 and is now remotely managing over 24 properties, which are located in 10 different states in 14 different cities. This episode is one of the kindest. Alvin walks us through the process of looking for properties that are looking to be rented, creating an attractive offer to homeowners and landlords, setting up the processes to manage your properties and people remotely structuring your short-term rental business so that you can maximize the tax advantages of the rental arbitrage model and monetizing on the shared economy.

00:06:08

This episode is just jam packed. And you’re going to note that I don’t go off of the traditional questions that I usually go off of. Usually there is some type of format where it’s like, I’ll follow, you know, a certain amount of questions, but this one was just way off because I was just so interested with Alvin had to share, because it is just so unique. There are so many takeaways from this episode that you can start applying to your own vacation rental business. So this is an episode you do not want to miss and be like my show notes. For this episode, you go to Short Term Sage dot com backslash SDR three five, or if you like my show notes sent directly to your inbox every week, then go to Short Term Sage dot com backslash show notes, all that being said on this week’s conversation. Hey, welcome back nation to another episode of short term rental success stories. In today’s episode, I have got these special, special owner of speaking with the one and only Mr. Alvin, Calvin cavalier Alvin, would you please introduce yourself? Let the host nation know who you are and what inspired you to get into short-term rentals

00:07:02

Everybody. I’m a I’m Melvin as introduced by, by Julian. It’s a pleasure and an honor for, for me to be on to, to speak to not only Julian, but, but his audience and share some of my experiences. And in short term rentals over the past 18 months, long story short, I’ve been into real estate over the past seven or eight years more recently. And so short-term rentals and like everything else in life, I stumbled upon it by coming across a, a real estate agent in New York city who was, who was doing Airbnb. And she opened me up to some opportunities to, to get into the short-term rental market. And didn’t take much to, to convince me that the numbers look good. I saw the opportunity was there understood what the market was doing and the direction that was going. And that was, it got into to the first property there with her. And then, and then just started to expand out from there. And it’s been, we’re in a pretty, pretty decent ride, a lot of the experiences team to, to share since since then.

00:08:22

All right. And, and I know, no, no, you’re trying to be humble. So I’ll brag a little bit about you, but you’ve got a 24 properties right now that you are managing, but the pretty amazing thing is that you’re active duty army and you’re you’re. Is that something you not want to share?

00:08:39

I’m completely okay with it.

00:08:40

Okay. I thought you were, I thought you were saying, I thought you were making noises. I was like, oh, should I not be sharing that? I am going to be talking about, I’m talking about that, because that is just so cool. 18 years active army, you’re managing 24 properties. I mean, w I don’t even know where to start with that, I guess, I guess, just to start, how did you, how long have you been doing this, managing these properties?

00:09:03

So roughly 18 months, first property went in around March last year. And it’s just been an, a, a race to the finish. Since then.

00:09:16

You, you were saying that you, you, because you also property managed, but you are also actively investing the first property that you got was 17 months ago, or the first property that you started managing was 17 months ago.

00:09:29

Yes, there is. First property was actually a 17, maybe 18 months, March, March or so of last year was the very first, first short-term rental investment.

00:09:41

Are you like purchasing these properties or are you doing rental arbitrage? What’s your kind of model with acquiring these, right.

00:09:47

So, so great question. And I get this a lot talking to investors that are interested in, and they’re being B, but, but I do not purchase. And, and one, because understanding the, the tax benefits and then to reducing the risk and liability that goes along with owning, as I say, I like to own the taxes, but the, not the toll it’s. So, so my motto under the guys, property management, I rent homes from homeowners and sub-let him. And then what’s, what’s unique about, at least in my mind, what, what we do is that I offer our homeowners what I, what I call a, a lucrative offer. So a minimum of a 36 month lease. And in some cases, most cases, the leases are five years. In some cases, location dependent, homeowners they’ll get a seven, seven year lease agreement. And in exchange for that one, they get to focus on building the equity and appreciation in their home.

01:11:12

And then we manage the property and understand that a lot of what property managers do it’s inherent within the short-term rental business. So you’ve got a platform, whether it’s PBR Adro or Airbnb, and a lot of those services are right there. Right? So, so the second key point to that is you, you say the homeowner anywhere from eight to 10% a year and property management fees. So a long-term lease agreement followed by in-house property management allows homeowners to essentially eliminate rental and tenant and efficiencies and, and get some stability. And then also the prospect of having a home that’s clean two to three times a week. It’s also very inviting because they know that the backbone of a short-term rental business relies on its ability to, to be clean. It has to be as advertised in order for it to work. So we’ll, once you, you tie those three things and together, and then that’s essentially built into now a script or an email that goes out, it becomes a very attractive offer for, for homeowners that are looking to, to run through.

01:12:43

I mean, that, that you are a smart guy, Alvin, you know, that, that, that is pretty unique because as part of like a rental arbitrage business, you know, you’re going out there, you pitching landlords and kind of one of the things that maybe thinks is like, okay, well, if they’re not open to rental arbitrage, maybe they’re open to property management, but from the property management standpoint of, Hey, if you’re looking to increase your income and kind of like, my pitch is like, Hey, if you’re looking to increase your income, then I can help you do that by managing your property for you. But what you’re saying is, Hey, I’ll manage your property for free under the condition that I can sublease it for you.

01:13:18

Absolutely. And that’s, that’s what sweetens the deal, in my opinion. So, so one, you get a long-term lease agreement and then to what, we’re not going to nickel and dime you because we’re going to manage the property. And then anything that causes significant damage to the property, then that would affect, in my opinion, the properties value then becomes an issue that the, the homeowners get involved with. And rightfully so, but anything under that, and really to two, to $300 in nature, we, we will take care of it immediately. And in due course, because even if it’s a refrigerator issue and you’ve got guests lined up and they may be staying for 10 or 12 nights, what are you going to do?

01:14:12

Wow. So, so you try to make it as hands-off for the property owner as possible. It’s kind of what you’re saying.

01:14:19

Absolutely. And that, that was the goal to, to, to give them complete confidence that, that the property will be taken care of for the next three, five or seven years. And, you know, the only time they’ll hear from me is if there’s a significant issue that, that I can’t handle,

01:14:37

Gosh, I am just so excited. And man, they’re the two things that I kind of want to go from. This is a one big question is with rental arbitrage, obviously there, there is an issue like if regulations change and if you’re getting into these for five to seven years or three years, I mean, a lot can happen in that time. You know, regulations changing all the time. Isn’t that more of an, like how, how do you handle a situation where maybe you’re getting into a property and regulations do change? Do you have like some type of clause or, you know, amendment that allows you to pull out?

01:15:10

Yes, absolutely. So, so there’s a clause. We add several addendums into, into each lease agreement. And one being, if, if policies ordinance has changed within either a neighborhood concern in HOA or city in their ordinances, that we’ll, we’ll, we’ll revisit essentially the, the terms of the agreement and then potentially do a, a buyout of the, the leasing agreement. But the first course of action with that, like any other real estate investor, we always start with an exit strategy in mind. So, so the first course of action really becomes to, to go from a short term rental to a long-term rental. And then there to, to a degree has gotta be an understanding that short-term rentals will never become illegal. W what becomes illegal, maybe how long you can rent them for, or maybe who has to be home at the time that the property is being rented. But, but to a degree, you can always change the numbers and still conduct short-term rentals. And then the exit, the exit strategy is really to, to go long-term rental furnished or unfurnished place. And then if that doesn’t work out, then we just revert to me to the addendum in the lease agreement to, to rectify these.

01:16:45

I mean, that, that, that is just a, such a sweet deal. And I love what you said is like, you’re, you’re a property manager underneath the guys, which are you’re, you’re, you’re really kind of doing rental arbitrage here. It’s a sweet offer for the, for the property owner, but, you know, it’s even, you know, it’s pretty sweet for you. What, what exactly is it? Because like, if you’re taking this full on, are you like paying for like lawn mowing? Are you paying, like, if the toilet gets clogged, are you doing all of that stuff, but like how much, how invested does a homeowner have to be? Is it more like a similar traditional property management or what’s the extent that you offer this?

01:17:20

Oh, they’re completely hands-off so, so, so one wants, wants the properties in my possession, then all those services, a handyman, a landscaper, if there’s a pool, a pool guy, cleaning services, all those fall up under, under the contract. And then they’re also included within, within the adenda on the short term rental agenda that I will provide these as needed to maintain the property.

01:17:54

Wow. And, and you just kind of, you just take that as like that that’s the cost of doing business. So whenever you’re analyzing a property, are you covering what the expenses would be into how much that that property will re rent for? So, are you, are you really strict about the properties that you are taking on them?

01:18:14

It depends. And, and the thing I’ll tell ya, every market’s different. So, so whether it’s New York, DC Charleston, so then, or smaller towns, like, like Columbus, Georgia, or Montgomery, Alabama, they, they have unique aspects about them that differs them from, from Charleston, not as popular locations, but they do better be because the, the cost of rent cheaper. And then, but both the cities, for example, Montgomery’s outside of Mexico air force base all, all of the air forces schools, or at my school air force base. So-so those homes in Montgomery rent for about nine 50 for three bedroom expenses come up to about 1200 a month. But I house SOS students for, for 14, 10 to 14 weeks at a time, the per diem is around 6,000 a month. I’ll only charge him a little bit over half of that for, for their, their stay in, EFU just sort of peel the, the numbers back then. That’s, that’s a significant profit on, on a onstage. And, and that area in Columbus, Georgia, it’s very similar with the U S army basic training here, along with a number of other schools, ranger school, Pathfinder school officer candidate school. I associate, you’ve got a constant influx of families that, that come to Fort Benning on a weekly basis. And it allows again with the market, having a low rental rates for a three or four bedroom home, it allows you to, to really monetize the area without, without having a high expenses.

02:20:22

Now, I want to go back to what you’re saying before about the tax advantages of rental arbitrage, and a lot of the people that I speak to in the space, they say, you know, you know, it’s, it’s, it’s more of a tax safe Haven to be a property owner because of all the ways that you can, you know, depreciation the equity, you know, you can pull that, pull that out a bunch of different ways that all these people say, you know, property ownership is, is the way to building generational wealth and being able to be at attack saving. You know, the people say it’s, you know, properties for the rich, and that’s how they use it to move their money around. But you’re saying that there’s, there’s more tax advantages to, to not owning and just using rental arbitrage. Can you explain that?

02:21:02

Yeah. So, so a bit of a disclaimer, look, I still own properties that are traditional Reynolds. I think wholeheartedly not having all your eggs in one basket is, is a good thing. So, so not that it’s bad to, to have traditional rental properties and, and gained appreciation over time for, for, for those properties. However, in short-term rentals, there’s something very unique about the structure of, of a short term rental. And I’ve got a, I’ve got a great CPA from shared economy services that, that has really taken me under his wing and helped me understand some of the benefits. And I’ll just explain it here shortly. So, so what short term rental is, right? Guests can leave you a review after each day, will, they may have an option to leave your review after each day that that guests can complain about anything fried green tomatoes.

02:22:13

You didn’t have any milk, eggs, you didn’t have ESPN the magazine. So, so their review directly impacts your ability to make money period. So, so that’s a gray line, or it’s a gray space, but, but because when you understand the principles of taxes, one, it’s either ordinary, everybody’s doing it or it’s necessary in order to make a profit, right? So, so that’s when that impact of short-term rentals come in, right? So, so now I can provide milk, eggs, and honey and fried green tomatoes, Netflix and ESPN, the magazine too much short short-term rental service and everything. Everything becomes a tax, a tax deductible, expense, everything. So you go into a, an investment and you understand your fixed and operational costs, utilities rent your housekeeping services, your pool services, your landscape and services. Everything is a necessary expense in order to make a profit. So, so understanding that you, you move with passive income from schedule E which most of us did with, with traditional real estate to, to schedule C taxed a little differently.

02:23:49

However, the passive income reduces your W2 income, right? So, so therein lies the tax advantage. And then you, you purchase items, especially with, with multiple property, these that are depreciable items, all of your furniture, right? And it gets spreads out. It spreads out over, over time. So, so when totality, I won’t go through through tax numbers for that I had for last year, but I had a significant amount of earned income reduced through short term rental losses. And as my CPA put it that the key is volume volume, volume volume, and then helps you understand once you hit a threshold, it, it also helps to understand structuring being structured correctly. Most, most people will just start off with an LLC, but, but you’ve got to understand depending on where you are and your goals, when’s the best time to, to become an escort and what are the tax advantages to, to that.

02:25:05

So, so several things there to, to dive into and to peel back, but on the surface that that’s, that’s where the big tax advantage comes in. And by no means, would I ever see that with traditional real estate and less, you know, I’m doing a, a full-on fixer or flip, and I’ve got a lot of expenses to, to go along with it. But on average for three bedroom, one bath above the average size of, of the homes that I rent, I’ll estimate out about a $45,000 loss, just to start it. So, so that’s accounting for all of my start-up admin costs, furnishing the place, and then estimate note, most fixed costs over the course of a year. And then you’re going to get your miscellaneous costs that come in over time to, to maintain a property. But, but again, so, so it fits into the second rule of taxes. It’s necessary. It’s all necessary in order to make a profit and you can justify it because I’m guessing leave your review, that will directly impact your ability to, to, to make money.

02:26:15

So you believe that that short-term renting is, is, is potentially even a better tax saving than just like purchasing a property to long-term rent.

02:26:28

I think so. And if, if it’s one, two or three properties and maybe not, but, but again, so so-so volume kind of gets you there. All right. And then depending on how much gross income, if you have a passive income earned from those investments, other than you start to have a different conversation around the, the, the tax benefits and whether one’s better than the other, I think there are a lot of factors that go into it, but you can certainly do, do, do very well from a tax perspective with what short-term rentals.

02:27:07

I think, I think for a lot of people that including, including myself taxes, when you hear taxes and you hear about write-offs and depreciation and all this stuff, it really goes over a lot of people’s sides, but you really made it a point in this one week before we even started talking, was that the tax advantages of the rental arbitrage model. And I’ve, I’ve heard it, you know, I was just at a convention with finance people and they’re like, oh yeah, you know, I don’t know about that, you know, purchase property, purchase property, and that’s how you’re going to build, build wealth. But you think that it’s, it’s even a potentially better investment to do the Short Term model because of how much you’re able to write off if, if that’s what I’m understanding.

02:27:46

Oh, absolutely. Absolutely. And, and, and, and again, so, so on the surface looked at the 24 or so listings are w what’s managed directly or indirectly right now, but, but, but there’s been about a total of 36 investments that I’ve been involved in, in total. So, so understanding all of the costs, the expenses that go into either monetizing a listing as an investment, or doing an end to end set up for, for property and, and remember, so, so estimate out about 45 grand per, per place, right? That that’s, that’s a lot of loss and, you know, quite, quite frankly, it, it, it it’ll reduce your taxable textbook income pretty significantly when you, when you have that much loss and in one calendar year.

02:28:47

And are you able to actually get a return on your taxes or is this just really kind of helping cut, cut the blow of what you could be potentially making?

02:28:57

Absolutely. I still, I still received a return. So, so the way I see it is my, my, my loss is offset my, my taxable income. And then my net profits essentially were not touched. And then I still received a, a, a tax return. So, so at the end of the day, you know, I, I, I think I walked away in pretty good shape after a year one sales a year, two should, should be

02:29:35

Now. W w where would you, because I mean, taxes is such a thing that like, it, it almost seems like, you know, money magic, you know, there’s all these wizards wizards in the back that are crunching some numbers and figuring something out, but you you’re, you’re basically kind of, you know, telling the audience, it’s like, you, you can run this business and you can, it’s not going to put you in the hole. Where do people maybe start to be able to learn? Or how do you even find someone, like you said, you found someone that could kind of take you under their wing to help help you with this. How do you, how do you learn about this stuff to be able to best set yourself apart? So

03:30:10

I think now there are a number of online resources learn Airbnb, Airbnb automated, they’ve got, is some good content on, on YouTube. And even with myself, I’ve hosted a couple of meetups to, to talk to people, but a part of it becomes, how do you essentially cross the line? So, so you’ll have investors that are cash ready. They, they understand real estate, but it sometimes, or most times I find it hard to, to talk, to talk to investors about the concept of hosting a place remotely and setting up service services, systems, and processes and services to, to make the business run. It becomes a daunting task for a lot of people to, to, to get past,

03:31:14

Well, I want to get into the remote hosting because that’s something that, that you are doing, but I wanted to touch on the tax on the tax specific, because with short term rentals, you said that you did find someone that understood about the short-term rental model and how to be able to, you know, maximize your tax savings on that. Where, where do you find people in this space to be able to help you with that? Because we’re, did you have all this prior, prior to getting into this business that it would be so tax advantageous?

03:31:46

No. So I won’t say I went in blind, but asked her about the third or fourth property. One of my business partners, we started to, to talk about taxes and we just upon doing some, some online research, we came across a company that specifically focused on short to shared economy. So the folks that are out doing Uber, Touro fiber Upwork, Airbnb, and then we reached out and got into to their program. And, and that was essentially it. So, so paid for an on-ramp program, which is sort of a one-on-one deal to, to really deep dive into, to, to your efforts in, and do some accountant work ahead of the upcoming tax season. And that was it. So, so, so those personal one-on-one, one-on-one, it really brought light to something I’ve always believed in that that taxes are the center of gravity period, and you can have successful, or you can’t have a successful investor without that investor understanding taxes or having someone on their team that really understands taxes, because it’s as simple as if, if you’re not structured properly, then you won’t get the tax advantages that come with it. So, so if you don’t understand that, then you’re going to be given away more money than, than you should be. And that’s, that’s where having a dedicated and good CPA comes in and pay dividends for, for me.

03:33:37

Yeah. And that’s really that really, you know, turns, you know, turns the ball because a lot of people, they just, they think, okay, I’ve got a profit. And then I’ll think about the taxes when I get to that point. But you’re saying, no, it’s all about the taxes. And then you figure out how you’re going to profit

03:33:53

Before any, any, any new investment comes a fireside chat with, with the CPA to, to understand I was gonna have a position down the road. So, yeah, absolutely.

03:34:12

Okay. And then I want to, what, what would you say for someone that is getting started into this space? How much of the, of the tax work are you currently managing? Do you, do you pass it completely to the CPA or are you still using like these like tax tools to be able to, you know, find out what your expenses are, you know, deduct, you know, take the expenses, like there’s like a mileage calculator apps and, you know, accounting software that, you know, put stuff to different credit cards. What, what are you currently using for your systems with taxes?

03:34:46

No. Great, great question. So we’re all LinkedIn through, through, through QuickBooks, right? So, so my account and everything that goes through it for, for tax purposes and the bank accounts or the business account itself, the CPA has visibility on that. So, so they see everything, every transaction that comes in and then as we, we prepare to do quarterly taxes and any fireside sessions that we, we have, they have all the data that they need to, to help make an informed decision.

03:35:23

Okay. And what else are you, are you using to be able to track all these things?

03:35:29

I’m sorry, can you

03:35:29

Repeat that? What else are you using? Are you taking into account like mileage and all these other minor expense are, you know, it could add up to major expenses.

03:35:39

Right? I do use a QuickBooks has a mileage tracker feature and pretty much anything outside of the services that are set up, it’s tracked through, through QuickBooks. So between the two, you know, it really just provides a one to one to a effort to, to capture everything.

03:36:04

Okay. And the sharing economy, I know that you were talking about that at that’s how you kind of learned about the tax tax advantages from getting into the sharing economy. Can you talk a little bit about how you are utilizing the sharing economy and that analogy that you explained to me before the interview about how, how you’ve used short-term renting?

03:36:33

When I, when I think of there being B in short-term rentals, I equate it to being the quarter pound meat on a hamburger. And, and to me, the, the, the central question really becomes how do you tie in a shared economy services to Airbnb, and really start to monetize, monetize the other platform within the shared economy? So, so we had a property out, out in Atlanta and, and just, just an experiment of sorts. But the idea was we wanted to, to make a guest trip, a preponderance of it in the shared economy. So, so what we did was provided a lift from the airport to, and from the airport for the guests two row rental car at the property for the guests and business credit to, to Peerspace for them to, to, to get out into town and do some work outside of the outside of the home, and then a lift back to the airport. So, so although an experiment, it really helped validate the, the whole idea and question that you, you, you really can make a hamburger out of an air with Airbnb being sort of the central point of, of the sharing economy and, and with all, all of the other shared economy tools and platforms that exist, the question becomes, how do you, how do you tie those into and say, Airbnb? And I think we’re just starting to stress the surface of where this can go and, and I’m excited for one to, to, to venture off into it.

03:38:31

Yeah. I think that that is, you know, just a super unique cause I, I definitely that being the future, you know, people that need to do work, they’ll go, they’ll get a place, the car, everything will be, like you said, that you’re, you’re utilizing Turo, which for those that don’t know, it’s basically like us, the rental arbitrage model, but for, for, for cars. And some people are really diving into that business model, like a full-on, but you use that as another, another aspect of what makes your property unique. But I guess the big question would be that, that seems like that’s a lot of work, you know, scheduling the drive, you know, getting the car there. Now you’re getting into a whole nother business where you’re subleasing cars and, and now you have this like space, this coworking space that you’re also giving credit to. Those are all expenses that do add up. So how, how does that work into your profiting model? Are you, I mean, how does that work?

03:39:24

Right. So the, the, the, the, the weird part of it is because they’re all separate platforms everything’s separated. So, so again, each, each line of efforts captured under the business account it’s captured through, through QuickBooks and then seen and managed by the, by the CPA team for, for bookkeeping purposes. So, so for me, really, it, it, it’s about making sure the systems and processes are in place to, to make those efforts seamless. The, the backside of it, it’s all handled through, through one account and integrated through QuickBooks, and the CPA has visibility for bookkeeping purposes. So it really is allowed a stress free way to, to take care of those things on the surface, without having to worry about the, the, the backside implications,

04:40:26

But, but for a system that you’re trying to scale and make automated, did you see that doing that type of sharing total sharing economy for that property? Is that something that is easily scalable or is there a whole lot more coordinating? Is, is it in the end? Was it really even worth it?

04:40:45

I think so, because right now you’ll have guests that stand a preponderance of their time in a shared economy, but, but they’ve got to use different platforms to do it. So, so even though they had to use different platforms in a sense, we, we, we sort of eliminate some of that by, by providing some of those services internally with, with the scheduling and, and the management of it, at least initially on the, on the surface, but it didn’t, it didn’t require a lot of, a lot of work because obviously the vehicle was there. The keys were inside the place, the, the credit was, was there and it was passed digitally. And of course lists you schedule it, it shows up, you hop in and that’s it. So, so you, you know, on the surface, I’d probably say an extra 10 minutes or so worth of, worth, of, worth of work to, to tie everything in.

04:41:49

So, so I can, I can see that, that, that being pretty basic yet you have this property that you’re, you’re, you know, renting out subleasing, you have a car that you’ve, that you are probably subleasing, I imagine. And then just re renting that on, on Turo. And it just sits at the property, but what do you do about, so, because now that’s like two separate businesses almost because obviously if the guest isn’t going to be staying, if the guest isn’t going to be driving anywhere, or maybe they already acquired a rental vehicle, now you’re having to manage a, a car as well.

04:42:28

Well, I wouldn’t say having to manage it, if it’s, if it’s not used, then, then it’s not used, but, but, but guests get a, a, an automated guest form when, when they booked. So, so they have an opportunity to, to, to say whether they’re gonna come in with a rental car or they need one. So that’s known ahead of time and is the, if the guests for, for that period of time, didn’t need a vehicle, then, then it would be open for, for public use just, just for that period of time. But it’s easy to align the calendars that you have availability at least first availability for, for, for guests that are coming in.

04:43:14

And obviously, ha is this something that you, as a, I’d love to maybe get you on another episode and talk about the Turo aspects and how you’ve been incorporating that, because I’m sure that there’s a whole lot more to it, especially when you’re trying to maybe do this at scale. Is, did you just do that on one property, or do you have multiple properties that you’re also subleasing vehicles?

04:43:35

No. So, so it, it, it was just on a, just on one property there in Atlanta, but, you know, an honest, honestly, we, we haven’t really looked at it any further in any other markets. And, and it’s just due to some of the smaller markets like Columbus and Montgomery St. Petersburg, Savannah, Charleston, but most people drive in to, to the location. So, so proximity to airports and T and then key features of the city are also key. But, but if you look at Atlanta, it’s a perfect, it’s a perfect location to do something like that. And it’s just due to the sheer number of travelers and events that people people get around to. And the lack, the lack of public public transportation plays a part.

04:44:37

So, so now not only are you maximizing profits on a property that you are managing now subleasing, but you’re also the maximum, you know, maximize profits on a car that you are also. So, and that’s kind of where going back to where you were saying that sandwich, you’re, you’re looking at, you know, the, the home as being the, the hub where you’re going to be getting the majority of your business and then the business, it kind of, you can add to that different, different layers through these different services that you’re offering. So, so you’re managing multiple properties in these remote locations. How, how many locations would you say that you have properties in?

04:45:15

So, so right now, about 10 different states, about 14 or so different, different cities.

04:45:23

Now, one of the, one of the things that comes to mind is like a lot, a lot of times when people are getting into new markets, they want multiple properties in specific locations. Are you just picking up anybody that is looking to have their property manage and you’ll go into that market even just with one property?

04:45:42

No. So, so there’s some research and analysis that goes into where the, the messages go out to, to homeowners and after that’s done, then those targeted messages go out. And then once, once homeowners respond, then, then we’ve got essentially a pool of, of, of selectees. And then, you know, you, you, you sort of deep dive a little bit into the, the specifics of, of that location and then some specifics of, of the home before, before making a selection. But, but a lot of that’s driven also by price. So we’ll, we’ll get a range of acceptable rental rates that we can potentially negotiate on what was a long deal.

04:46:39

So, so walk me through the process of when, because are you, do you have a, like a VA or someone that’s sending out these messages, are, are you identifying the location first? Are there like specific areas that you’re looking for? Kind of walk me through the process of, from that one that you’ve identified that location to you acquiring this property, and then, you know, finding, finding the people that can also, you know, maybe manage that or clean that unit.

04:47:09

Right. So we’ve got a small team, also army buddies and, and, and a good buddy of mine mirin, as well as a virtual assistant that assist the other team. So, you know, there, there was an initial analysis and in terms of locations, and there’s so many out there, but, but some of the focus has really been a military town was that, that has a very unique events schools that, that bring in a consistent population. So, so after that, w what happens is, again, so there’s a, there’s about three messages. They all say the same thing, but one’s like super long. It includes like frequently asked questions that we’ve kind of garnered over time to help answer some of those questions upfront that there’s a mid message. That kinda, it gets a little bit into the why and the how, and then there’s a shorter message that just sorta puts a teaser out there for, for, for homeowners.

04:48:22

But, but once those messages go out, it will, we get responses back what happens, what we’ll schedule a 15 minute consultation call, just to answer any questions. But what, what I’ll tell you is nine times out of 10, if someone’s read the message and they respond th that they moved the ball inside the red zone, right. So, so then it’s just a matter of how do we get them across the goal line and, and again, so, so that comes with helping them understand what we’re doing, what we’re asking for, and then a short conversation on, on the numbers to, to make sure things make sense for both parties. And then once everything’s agreed upon what we’ll do an initial look at my short-term rental agenda, and then their, their, their lease agreement. And then, and then once that’s agreed upon, and the start date, you know, everything else sort of gets into, gets into motion in terms of the logistic, the logistical aspect of, of, of setting a place up from starting to, to, as a premier services in any one of those areas.

04:49:40

Now, are you because these are a lot of locations. I don’t imagine that you’re flying out to every single place and building these units at yourself, how are you doing this?

04:49:49

Right? No. So, so again, another aspect of having dedicated teammates in interior designers, and, and implanters, we also use stages home stages in a given area, typically sourced or Thumbtack, do a little bit of research, background check, and then just get them the information they need to, to get started access to, to the property. And then they, they just work based on, on a schedule and a automated to new tasks lists that we set up through, through Microsoft to do. And early, it becomes that simple, we’re working off a shared document, and then they’re sharing progress all the way down to, down to completion. Then typically we’ll have someone on the team, that’ll go, go out and do what we call sort of the level three checks, which is tying everything in together. And really it’s just a one day look to, to make sure everything’s, everything’s working it’s right. And, and the place is primed and ready for a professional photo shoot video shoot. Before, before going hot, you’re

05:51:05

Doing video shoot and photo shoot with these properties.

05:51:08

No, absolutely. It’s a must for marketing purposes. W w we get, get a store 30 to 60 minute video out of that admirable or usable, I’m sorry, on social media to, to, to get out. So

05:51:29

How you keep throwing out things that I could just keep on going. We can just go deeper and deeper down the soil, but I, we don’t, we don’t have enough time for that. So man, but we’ll have to get you on another episode cause that, that is wild, the whole video and, and your, your marketing efforts. But I want to go, what about cleaners? How, how are you vetting cleaners? How are you getting reliable cleaners remotely?

05:51:51

Yeah. So, so initially all work is sourced through, through Thumbtack. And what we found over time is we, we can interview 10 different house cleaners or 10 different professional services, but, but at the end of the day, the, the, the quality of, of the housekeeper in my opinion, and based on my experience really, really comes down to a T question is if they’re doing it to, to pay bills and to earn a living, then they’re willing to, to become a part of the team and do a good job. So, so now we, we source locals to, to be the primary housekeepers and then a professional service or, or another local housekeeper to, to there was an alternate. So, so there’s some redundancy built into to the housekeeping aspect of it. But the, the other part of it too, is so, so you hire a housekeeper, but, but then you change, you transition them into essentially a property manager and the teammate, right?

05:53:05

Because they get the first look at the property, we set up a very specific task list with housekeeping guidelines that they give them sort of a, Hey, when you walk in the door, you’re going to go through the living room and a lot of check for ABC and D walk out the back door, check the pool deck for a D and F and so forth. So on. So, so we get that full on property manager walkthrough before they start cleaning. And then what wants to clean is complete photos of, of each of the main areas. Did they send back a completed report through, through the, your quarter task app, and then that, that, that initiate the payment through, through Venmo cash app or whatever, whatever they’re using

05:53:58

And, and how much, how much are you paying your, your cleaners, who, who you put them into the roles of property manager? What’s the property management field look like for them?

05:54:08

So there are house cleaners with the property manager’s role, but that’s not necessarily, I won’t say that that’s on the surface of, of what a they understand their role to be. But, but again, so, so this becomes more about being, being a teammate and being invested vested in the success of the property and the reviews that come along with it. So, so my market’s very right. So sales, Savannah, it’s got a housekeeper that, that only gets paid $60 per claim into New York, where he’s got a a hundred dollars per, per clean and so forth. So on. So, so each market, each market varies that they differ. And then those that, that have booming short term rental markets, you’ll typically find a lot, a lot of stiff competition for good housekeepers, and you’ll, you’ll typically pay a premium, but they’re really, at the end of the day, you can’t really put a price tag on, on having a good housekeeper that, that that’s dedicated to, to what they’re doing for, for the team. And, you know, th th the smallest things like any, any business, and I’m sure you, and a lot of people have done done small things like this before, but, but just sending out gift cards, thank you notes. Thank you cards for, for their work. And their service always pays, pays a huge dividends when you’ve got to give them a call on a day off to, to, to rectify an issue as need be, then they’ll come out and, and help take care of things.

05:55:54

So, so you’re finding your, your, you find a primary cleaner and a backup cleaner, and the primary one, what do you have them going full time, or is it just like a part-time thing?

05:56:03

So initially the first 90 to 120 days, what will happen is we will alternate between the two and then one moves into a primary role. And the idea is really that they both get a real time experience and enough experience to, to understand all the nuances that associated with that property. And then what, what comes out of that and what they help help us bill is a frequently asked questions, automated message for, for that particular property. So, so that typically happens after about 90 days where through either what the housekeeper see or, or, or, or get, and then questions that we get, we’ll build out a, a frequently asked questions, we’ll throw it into the automated messaging tool. And it’ll go out with the initial message before the guests guests check in.

05:57:04

So your cleaners are actually managing the messages as well.

05:57:07

No, they’re there, they’re just helping contribute to those frequently asked questions that are built just, just based on their feedback.

05:57:17

W what type of feedback are your cleaners getting? Are they getting it from like the guests directly, or are guests leaving notes, or how does that work?

05:57:25

Yeah. And, and in some cases is Aries like in New York, the housekeeper typically gets in, right, right. As the, the guests are leaving. So, so she, she has sort of a small script that she she’ll ask very specific questions about any issues or concerns, and that small interaction helps feed, provide feedback for, for us. And that’s, what’s sorta encourage the, because the guests are gonna leave. And then they’re gonna provide you with a review. If you can have some of those questions or concerns, maybe answer prior to, to them to party it, it always helps. And, and, and what they’re doing when, when they’re behind the keyboard typing, typing review, and then sometimes you can, you can potentially interdict with a message based on feedback from, from the, a housekeeper prior to, to the review period.

05:58:29

And, and how are you going about finding these, these people that are looking to have their properties manage? Are you just going on like Zillow and finding everybody that has rentals and picking out the ones that you like, are you sending out a mass email? You send them putting out ads on Facebook. What, what what’s, what, what are you doing for that?

05:58:46

Yeah, so, so Facebook marketplaces has, has provided some, some very unique opportunities, Zillow, hot pads. Each of those, you can get into a, a filter that allows you to search specifically for, for rent by owner. And then once you get into to that population, then you set your filters based on what you’re looking for, understanding on market averages, in terms of rent, understanding what, what exactly you’re looking for. You set the parameters in terms of how size that you you’re looking for. And once you narrow the field down, then the message goes out to, to those homeowners.

05:59:36

Well, you know, Alice, I can keep on just asking so many questions, but I’ve taken up a lot of your time. So we do have to wrap this up would, would love to maybe get you back on in a future episode to talk some more cause I can, you know, th this is for the people that are listening to this, this is, is a very unique episode with, from a very unique strategy, a very unique standpoint, you know, coming, coming from a guy who’s, full-time definitely, you’re going to want to listen to this episode again, take the there’s so much that you can take away from this to be able to apply that to your business and just the uniqueness of this space. I think Alvin you’re one of the first people that has kind of applied these different strategies into this model, because usually a lot of people, they just go in and they’re just like a co-host thing, or they’re just like rental arbitrage, or they’re just like, you know, whatever, you know, however they’re acquiring properties, but you you’ve done, you’ve blended this all into this very, a unique way. And for the people that glean over this episode and find it that they are really finding a golden opportunity here. So, so really last question that I really kind of want, want to ask is I’ve gone completely off the script, all the questions that I did have, I didn’t even ask one of them. I didn’t even ask any one of my questions, but one question that I do want to ask that I think is really key is what, what would you do differently if you had to start from scratch?

06:00:55

That’s actually a great question. And I think as, as I talked to to my partners, Austin, it, it, it really comes back to building systems and processes to support the, the things that are, that are happening every day. And, and to a degree first, for any host out there, you, you, you can understand that things can become overwhelming if you’re involved in it. So, so the thing I’d tell you is to, to, to set up and operate one as this year, operate in a hundred, if you do that, it forces you to, to build systems and processes within, within your one that when two, three and four come along, it’s just a, it’s just plug and play at that point. And then I’d get you to, to a point of view efficiency. And then once you, you begin to, to get the right help, T2 support that, then, then it allows you to focus out in terms of more, more in terms of acquiring, then, then actual day-to-day work.

06:02:07

Okay. And just out of curiosity, to w w what’s going on in your brain, Alvin for the scalability of this, where you plan on taking this, what, what, what, what, what do you have in the future in mind?

06:02:20

Yeah, I think really cracking the code on, on the shared economy, because I, I think it’s, I think it’s so interesting all the different aspects of, of the shared economy and how people are monetizing, shared economy services and, and really the, the thought of, of, of a single platform that allowed you to provide reasonable shared economy services to, to a, a short term rental state. It’s really something that I’m itching to, to figure out. And, you know, it’s exciting to, to think about it. It’s exciting to, to, to at least scratch the surface of it. And I’m dedicating a lot of, a lot of brain power and, and, and time into to thinking about how to, how to, how to make it right and, and provide some, some value to it.

06:03:20

Very cool. Very interesting. Very super interesting love this conversation. Very unique, very different, but I thank you so much, Alvin for coming on the show, just so much to be able to take away from this. Again, if you go back, listen to this episode again, there’s so many things that maybe you can apply. Maybe you don’t have to apply everything. You know, Alvin is doing very unique things in a lot of different aspects, you know, managing properties remotely, the way that he’s acquiring properties, but you, you don’t have to do everything. You can take certain pieces and apply it to your business and see if that works. But again, thank you so much, Alvin for coming on the show and until next time, host nation, keep on hosting. Hope he hosts benefit from the show. If you found value, please go on over to iTunes, leave us a review and let us know what you enjoy about the show. If you’d like to talk to hosts that have been featured in these episodes, as well as the community, going over to our Facebook group, the host nation.