Alvin Cavalier:                    00:00:00               You can’t have a successful investor without that investor understanding taxes or having someone on the team that really understands taxes.

Julian Sage:                         00:00:09               This is episode number 35 of short term rental success stories podcasts. Are you an investor that’s looking to have your home professionally managed good at co-hosts, that.com for more information. Welcome back. The short term rental success stories. I’m your host Julian Sage. This is a show where I talk to hosts about their journeys and starting and growing the short term rental business. My goal is that you’ll be able to walk away with practical information that’ll help you become a better host and learn how to scale your business. Like any exceptional hosts. We all strive for five star reviews, so please go on over to iTunes and let us know what you enjoy because it really helps support the show if you haven’t done so already. Go on over to our Facebook group, the host nation, to connect with the community.

Julian Sage:                         00:00:49               Hey, what is going on? Host nation. I am excited to be recording this intro from sunny Florida. So I was actually in Florida from 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 on to, you know, this new, this new man and my mom’s life who I really I really care for. I really loved. 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, and just renting out of basement unit in my house has taken such a big chunk of getting towards that financial freedom and now also taking on clients is also really impacting.

Julian Sage:                         00:01:45               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’ve spent more time with my dad, where I could have taken him out and created more memories with him. You know, I, I cherished every moment, but I just wished that I could’ve done more and been 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. I’m not the kind of guy that likes to do things alone though.

Julian Sage:                         00:02:25               So 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 we 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 own 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 building your vacation rental machine 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.

Julian Sage:                         00:03:21               So that’s what we’re doing with vacation rental machines are creating these steps in 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 are 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 and that’s really what 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.

Julian Sage:                         00:04:08               So if you do want to become an early adopter, then go to vacationrentalmachine.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 so if that does interest you go to vacationrentalmachine.com fill out an application there. You can also go to the site and if you are looking for co-hosts, contracts, rental 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.

Julian Sage:                         00:04:52               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 ruling 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 cohostit.com fill out an application and you can find out more information on the site. I want to take a moment to thank all of the veterans that have served as this past Monday was veterans day and in this episode, I had 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 term renting since March of 2018 and is now remotely managing over 24 properties which are located in 10 different States in 14 different cities.

Julian Sage:                         00:05:47               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. 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. I 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.

Julian Sage:                         00:06:30               So this is an episode you do not want to miss and be like my show notes for this episode. You go to shorttermsage.com/str35 or if you’d like my show notes, send directly to your inbox every week. Then go to shorttermsage.Com/Show \notes. All that being said on this week’s conversation, a welcome back host nation to another episode of short term rental success stories into this episode. I have got these special special honor of speaking with the one and only Mr. Alvin 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.

Alvin Cavalier:                    00:07:02               Hi everybody. I’m Alvin has 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 what is 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 and more recently, so short term rentals and like everything else in life. I stumbled upon it by towing across a, a real estate agent in New York city who was, who was doing Airbnb. And she opened me up to, to some opportunities to, to get into the short term rental market. Didn’t take much to, to convince me. Then the numbers look good. I saw the opportunity was there, understood what the market was doing and the direction it was going and that was it got into to the first property there with her and then, and then just started to expand out. Oh, from there. And it’s been a pretty, pretty decent ride, a lot of experiences team to to share since, since then.

Julian Sage:                         00:08:15               All right. And I, and I know you’re trying to be humble, so I’ll brag a little bit about you, but you’ve got 24 properties right now that you are managing. But the pretty amazing thing is that you’re an active duty army. Is that something you not want to share?

Alvin Cavalier:                    00:08:28               I, I’m, I’m completely okay with it.

Julian Sage:                         00:08:30               Okay. I thought you were, I thought you were saying that you’re making noises. I was like, Oh, should I not be sharing there? No, I am going to be talking. I’m talking about that because that is just so cool. 18 years active army, you’re managing 24 properties. I mean, I don’t even know where to start with that. I guess, I guess just to start, how long have you been doing this, managing these properties?

Alvin Cavalier:                    00:08:50               So roughly 18 months. Our first property went in around March last year and, and it’s just been a, a race to the finish since then.

Julian Sage:                         00:09:01               So 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 start managing was 17 months ago.

Alvin Cavalier:                    00:09:13               Yes, very, very first property was actually a 17, maybe 18 months March, March or so of last year was the very first for short term rental investment.

Julian Sage:                         00:09:25               And are you like purchasing these properties or are you doing rental arbitrage? What’s your kind of model with acquiring these?

Alvin Cavalier:                    00:09:31               Right, so, so great question. And, and I get this a lot talking to two investors that are interested in, in their 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, but not the toll it. So, so my motto under the guys property management, I rent homes from homeowners and sublet them. And then what’s, what’s unique about [inaudible] at least in my mind, what, what we do is that a, I offer homeowners a what I call a, a lucrative offer. So a minimum of a 36 month lease. 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.

Alvin Cavalier:                    00:10:41               And in exchange for that one, they get to focus on building an equity and appreciation in their home. 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, PBR or airbnB, and a lot of those services are right there, right? So, so the second key point to that is 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 Oh, to be clean. It has to be as advertised in order for, for it to work. So, Oh, well, 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, [inaudible] becomes a very attractive offer for, for homeowners that are looking to, to rent their homes,

Julian Sage:                         00:12:09               Man, 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’re pitching landlords and kind of one of the things that may be things 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.

Alvin Cavalier:                    00:12:43               Absolutely. And that’s, that’s what sweetens the deal in my, my opinion. So, so when you get a longterm lease agreement and then to what we’re not gonna 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. Oh. And rightfully so, but anything under that and really two, two to $300 in nature. We, we, we’ll take care of it immediately in, in, in due course because even if it’s a refrigerator issue and you’ve got guests lined up and they, they may stand for tenants world nights, what are you going to do?

Julian Sage:                         00:13:33               Well, how so, so you tried to make it as hands off for the property owner as possible is kind of what you’re saying?

Alvin Cavalier:                    00:13:39               Absolutely. And that, that was the goal, 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 you’ll hear from me is if there was a significant issue that I can’t handle.

Julian Sage:                         00:13:54               Oh my gosh, I’m going to, I am just like so excited. And man, the two things that I kind of want to go from, this is a, one big question is with rental arbitrage, obviously there is an issue like if regulations change and if you’re getting into these contracts for five to seven years or three years, I mean a lot can happen in that time, you know, regulations changing all the time. Right? 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 a, you know, a amendment that allows you to pull out?

Alvin Cavalier:                    00:14:26               Yes, absolutely. So, so there was a clause where we add several addendums into and each lease agreement and one being yes, 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, a buyout of the the lease agreement. But the, the first course of action with that, well, like any other real estate investors, 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 longterm rental. And then to a degree, there’s gotta be an understanding that a short, short term rentals will never become illegal. Well, 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, that extra strategy is really to, to go longterm rental furnished or unfurnished place. And then if that doesn’t work out, then we just no revert to, to the addendum and the the lease agreement to, to rectify these.

Julian Sage:                         00:15:49               I mean, that is just 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 really kind of doing rental arbitrage here as a sweet offer for the, for the property owner. But you know, it’s even, you know, it’s pretty sweet for you. 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? Like how much, how invested does a homeowner has to be? Is it more like a similar traditional property management or what’s the extent that you offer this?

Alvin Cavalier:                    00:16:23               Oh, they’re completely hands off. So, so, so one wants wants to properties in my possession then all those services, a handyman, a landscaper, if there’s a pool, a cool guy cleaning services, all those fall up under under the contract. And then they’re also included within, within the [inaudible] the short term rental agenda. I will provide these services as needed to maintain the property.

Julian Sage:                         00:16:54               Wow. And, and you just kind of, you just take that as like, 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 then?

Alvin Cavalier:                    00:17:13               It depends and, and the thing I’ll tell ya every market’s different, right? So, so whether it’s New York, D, C, Charleston, Savannah, or smaller towns like, like Columbus, Georgia or Montgomery, Alabama they have unique aspects about them that differs them from, from a Charleston, not as popular locations, but they do better because the, the cost of rent is cheaper. And then but both these cities, for example, Montgomery’s outside of Maxwell air force base, all of the air forces schools or at med school air force base. So those homes in Montgomery rent for about nine 54, three bedroom expenses come up to about 1200 a month. But I housed SOS students for for 14, 10 to 14 weeks at a time that per diem is around 6,000 a month. Oh. I’ll only charge him a little bit over half of that for their their stay in the, if you just, you sort of peel the, the numbers back then that’s, that’s a significant profit on, on a onstage. And that area in Columbus, Georgia, it’s very similar with the U S Army’s basic training here along with a number of other schools, Wranglers, school, Pathfinder school offers a candidate school. Oh, so, so you’ve got a constant influx of families. I come to Fort Benning on a weekly basis and it allows, again, with the market having low rental rates for a three or four bedroom home. It, it allows you to to really monetize the the area well without a, without having a high expenses.

Julian Sage:                         00:19:02               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 more of a tax safe Haven to be a property owner because of all like the ways you know, that, that you can you know, depreciation the equity, you know, you can pull that, pull that out. The a bunch of different ways that all these people say, you know, property ownership is as the way to building generational wealth and being able to be at attack. Savan you know, the people say it’s, you know, property is 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?

Alvin Cavalier:                    00:19:42               Yeah, so, so a bit of a disclaimer. Look, I, I still own properties that are traditional Reynolds I think wholeheartedly not having all your eggs in one basket. [inaudible] 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, and 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 for the shared economy services that, that has really taken me under his wing and helped me understand some of the benefits and yeah, I’ll just explain it here. Surely. So, so what’s short term rentals, right? A guest can leave your review after each day. Will they have an option to leave your review after each day that, that guests can complain about anything.

Alvin Cavalier:                    00:20:47               Fried green tomatoes, 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 a 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 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 landscaping services, everything is unnecessary expense in order to make a profit.

Alvin Cavalier:                    00:22:04               So, so understanding that you move with passive income from scheduling, which most of us did with with traditional real estate two, two, schedule C tax a little differently. However, the passive income reduces your W2 income, right? So, so therein lies a tax advantage. Huh. And then [inaudible] purchase items especially with, with multiple property is 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 a, that I had for last year, but I had a significant amount of earned income are reduced through short term rental losses. And as my CPA put it the, the key is volume, volume, volume, volume, and then it helps you understand a, once you hit a threshold, it also helps you understand structuring being structured correctly.

Alvin Cavalier:                    00:23:18               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, when’s the best time to to become an escort and what are the tax advantages [inaudible] to that. So so several things there are 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 a would I ever see that. What traditional real estate and less, you know I’m doing a a full long fixer or flip and I’ve got a lot of expenses too to go along with it. But on average, four, three bedroom, one bath, about the average size of, of the homes that are rent I’ll estimate out about a $45,000 loss just to start it. So that’s a count for all of my startup admin costs, furnishing the place and an estimate now my six costs over the course of the 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 unnecessary in order to make a profit and you can justify it because, and guests can leave your review that will directly impact your ability to, to, to make money.

Julian Sage:                         00:24:41               So you believe that short term renting is potentially even a better tax saving then? I’m just like purchasing a property too longterm rent?

Alvin Cavalier:                    00:24:50               I think so. And 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 want ones better then 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 short term rentals

Julian Sage:                         00:25:26               I think. I think for a lot of people that are included, 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 sides. But you really made it a point in this one before we even started talking was the, the tax advantages of the rental arbitrage model. And I’ve, I’ve heard it, you know, I was just at a convention with for, 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 potentially better investment to do the short term model because of how much you’re able to write off if [inaudible] if that’s what I’m understanding.

Alvin Cavalier:                    00:26:05               Oh, absolutely. Absolutely. And, and, and again, so, so on the surface, look to the 20th floor. So listings are well what’s managed directly or indirectly right now, but, but, but there’s been about a, 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 remember. So, so estimate out about five grand per per place, right then that’s, that’s a lot of loss. And you know, quite, quite frankly, it’ll reduce your taxable taxable income, procreate significantly. When you, when you have that much lost and one calendar year [inaudible] and the, are you able to actually get a return on your taxes or are, is this just really kind of helping cut the cut the blow of what you could be potentially making?

Alvin Cavalier:                    00:27:11               Oh, absolutely. I still, I still received the return, so, so the way I see it, my losses all set, my taxable a income, and then my net profits essentially were not touched. And then I still received a, a, a, a, a tax return. So at the end of the day, I think I walked away in pretty good shape. After a year, one sales a year to shit, it shouldn’t be even better. 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. Literally they’re crunching some numbers and figuring something out. But 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. We’re, where do people maybe start to be able to learn or how do you even find someone, like you said, you, you found some that could kind of take you under their wing to help help you with this.

Alvin Cavalier:                    00:28:10               How do you, how do you learn about this stuff to be able to best set yourself apart? So I think now there are a number of, of online resources learning, Airbnb, Airbnb, automated that guy. There was some good content on a, on YouTube. And even with myself, I’ve hosted a couple of meetups too to talk to people, but a part of it, how do you essentially cross the line? So, so you’ll have investors that are cast ready they, they understand real estate, but 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, ah, systems and processes and services to, to make the business run. It, it becomes a daunting task for, for a lot of people too to, to get past, 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 techs on the tech 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, your tax savings on that.

Alvin Cavalier:                    00:29:32               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

Julian Sage:                         00:29:41               Into this business that it would be so tax advantageous?

Alvin Cavalier:                    00:29:45               No, so I won’t say I went in blind, but ask her about the third or fourth property. What one of my business partners, we started T to talk about taxes and we just upon doing some, some online research w we came across a company that’s specifically focused on short does shared economy. So the folks that are out doing Uber, Touro fiber of work, Airbnb, and then we reached out and got into a, to their program and and that was essentially it. So, so page four an OnRamp program which is sort of a, a one on one deal to you to really deep dive into, so your efforts and, and do some accounting work ahead of the the upcoming tax season. And that was it. So, so, so those personal one on one on ones, you know, really brought light to something, I’ve always believed in that tattoos are the center of gravity, period. You can have successful or you can’t have a successful investor without that investor understanding taxes or having someone on the team that really understands taxes. Maybe because it’s as simple as is if you’re not structured properly, then, 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 giving away more money then than you should be. And that’s, that’s where having a dedicated and good CPA comes in and paid dividends for for me.

Julian Sage:                         00:31:24               Yeah. And that’s really, that really, 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.

Alvin Cavalier:                    00:31:39               Right. And now, before any, any, any new investment [inaudible] fireside chat with, with the CPA to understand cool. I was gonna have us position a down the road, so

Julian Sage:                         00:31:56               Yeah, absolutely. Okay. And then w w what would you say for someone that is getting started into the 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 a, 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, and you know accounting software that, you know, puts stuff to different credit cards. What, what are you currently using for your systems with taxes?

Alvin Cavalier:                    00:32:28               No. Great, great question. So we’re all LinkedIn through a, through QuickBooks, right? So, so my account and everything that goes through it for, for tax purposes and, and the bank accounts or the business account itself the CPA has visibility on that. So, so they see everything, every transaction. Oh, that comes in. And then as we prepare to do quarterly taxes and in any higher sessions that we, we have, they have all the data that they need to, to help make an informed decision. Okay. And what else are you, are you using to be able to track all these things? I’m sorry, can you repeat that? What else are you using? Are you taking in account like mileage and all these other minor expenses or you know, could add up to be major expenses? Right. I do use a, Oh, QuickBooks has a mileage tracker feature and pretty much anything outside of the services that are set up, it’s tracked through, through QuickBooks.

Alvin Cavalier:                    00:33:32               So maybe between the two. All right. You know, it really just [inaudible] provides a one, two, one, two effort to, to capture everything. Okay. The sharing economy, I know that you were talking about that that’s how you kind of learned about the 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. Yes. So when I, when I think of their being be in short term rentals I, I equate it to being the, the quarter pound meat on a hamburger. And to me, the, the central question really becomes how do you tie in a shared economy services to Airbnb and really start to, to monetize monetize the other platform within the shared economy.

Alvin Cavalier:                    00:34:34               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 and this shared economy. So, Oh, so what we did was provided a list from the airport to and from the airport for the guests, a Turo rental car at the property where the guests in and business credit to appear 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, and questioned that you really can make a hamburger out of a, and there with Airbnb being sort of the central point of of the shared economy and with all, all of the other shared economy tools and platforms that exist. Oh, the question becomes how do you, how do you tie those into and to Airbnb? And I think we’re just starting to stress the surface of, of where this can go. And I’m excited for one to two a to venture off into it

Julian Sage:                         00:35:51               Now. Yeah. I, I think that that is a, you know, just a super unique cause I definitely see 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 were utilizing Touro, which for those that don’t know, it’s basically like us, the rental arbitrage model, but 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?

Alvin Cavalier:                    00:36:40               Right? So the, the, the weird part of it is because they’re all separate platforms, everything separated. So, so again each, each line of efforts captured under the business account it’s capture through through QuickBooks and then seen and managed by the by the CPA team for bookkeeping purposes. So, so for me, really it’s, it’s about making sure the systems and processes are in place to make those efforts seamless. Then 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.

Julian Sage:                         00:37:37               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?

Alvin Cavalier:                    00:37:55               I think so because right, right now you’ll have Jess that scan a preponderance of their time in the shared economy, but, but they’ve got to use different platforms to do it. So even though they had used different platforms in a sense we, we, we sort of eliminated some of that by, by providing some of those services internally with, with the scheduling and the management of it, at least initially on the on the surface. But it didn’t, it didn’t require a lot of lot of work because obviously the vehicle was there and the keys were, were inside the place. The credit was, was there and it was a pass and of course list. Yes. You schedule it, it shows up. Oh, you hop in and that’s it. So, so, 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.

Julian Sage:                         00:38:52               So, so I can, I can see that, that being pretty basic. Yeah. [inaudible] Yeah. You have this property that your, your okay. Renting out subleasing. You have a car that you’ve that you are probably subleasing, I imagine. And then just re renting that on Ontario and it just sits at the property. But what do you do about, 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 or anywhere, or maybe they already acquired a rental vehicle, now you’re having to manage a, a, a car as well.

Alvin Cavalier:                    00:39:28               Well, I wouldn’t say having a manage it of it’s, if it’s not used then then it’s not used. But, but guests get a, an automated guests for one 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, so that’s known ahead of time. And if the guests or for that period of time didn’t need a vehicle, then it would be open for, for public use. So just, just for that period of time, but, but it, it’s easy to align the calendars that you’d have availability at least first availability for for for guests that are coming in

Julian Sage:                         00:40:09               And, and obviously is this something that you have I’d love to maybe get you on another episode and talk about the Touro 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 a sub leasing vehicles?

Alvin Cavalier:                    00:40:29               No. So it, it was just on a, just on one property. They’re in Atlanta. But, and 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, a Savannah, Charleston, most people drive in. It’s, it’s an old location. So, so proximity to airports and T and then key features of the city are also key. But, but as you look at Atlanta it’s a perfect, it’s a perfect location to, to do something like that. And it’s just due to the sheer number of travelers and events that people people get around to in aleck, the lack of public public transportation. I’ll also play plays apart.

Julian Sage:                         00:41:26               So now not only are you, you know, maximizing profits on a property that you are managing now, subleasing, but you’re able to 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 you’re managing multiple properties in these remote locations. How, how many locations would you say that you have properties in?

Alvin Cavalier:                    00:42:03               So, so right now about 10 different States, about 14 or so different, different cities.

Julian Sage:                         00:42:11               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?

Alvin Cavalier:                    00:42:28               No. So, so there’s some research and analysis that goes into where the, the messages go out to Oh, two homeowners. And then 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 a, of select these and then you know, you, you, you, you sorta deep dive a little bit into the specifics of, of that location and then some specifics of, of the home before before making the selection. But, but a lot of that’s driven also by my price. So well we’ll get a range of acceptable rental rates that we can potentially negotiate on a, what was a long term deal.

Julian Sage:                         00:43:24               So walk me through the process of when do you have a, like a VA or someone that’s sending out these messages, or 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, ah, finding, finding the people that can also, you know, maybe manage that or clean that unit.

Alvin Cavalier:                    00:43:48               Right. So, so I’ve got a small team also army buddies and and, and a good buddy of mine miring as well as a, a virtual assistant that assists the other team. So, you know, there, there wasn’t an issue 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 have a very unique events schools that bring in a consistent population. So, so after that what, what happens is, again, Sosa, there’s about three messages. They all say the same thing, but the ones like super it includes like frequently asked questions that we’ve kind of garnered over time to help answer some of those questions up front. There’s a mid message that kind of, it’s a little bit into the how and then there’s a, a shorter message that just sorta of puts a teaser out there for for for homeowners.

Alvin Cavalier:                    00:44:54               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 I’ll tell you is nine times out of 10 if someone’s read the message and they respond th th 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, what we’re doing, what we’re asking for. And then, Oh, so our conversation on, on the numbers too, to make sure things make sense for both parties. And then once everything’s agreed upon we’ll do an initial look at my short term rental addendum and then their their, their lease agreement. And then and then once that’s agreed upon and a start date, you know, everything else sort of gets into, gets into motion in terms of Oh, the logist the logistical aspect of, of of setting the place up from from Antigua and starting to, to other per year services in any one of those areas.

Julian Sage:                         00:46:13               Now are you, because these, 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?

Alvin Cavalier:                    00:46:22               Right? No, so, so again, another aspect of, Oh, I love having dedicated team mates in interior designers and, and implanters. We also use stagers on stages in any given area. Typically sourced through Thumbtack. We’ll do a little bit of research background check and then get them the information they need to, to get started access to, to the property. And then they just work based on, on a schedule, in a automated to do tasks lists that we set up through, through Microsoft to do and early that it becomes that simple a, we’re working off a shared document and then they’re sharing progress all the way down to down to completion. And 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 in there. And really it’s just a one day look to, to make sure everything’s, everything’s working its right. And the place is and ready for a professional photo shoot and video shoot before before going hot,

Julian Sage:                         00:47:36               You’re doing a video shoot and photo shoot with these properties.

Alvin Cavalier:                    00:47:39               No, absolutely. It’s a must for marketing purposes. W w we get a get a store 30 to 60 minutes video out. That’s a admirable or usable, I’m sorry, on social media. [inaudible] Get out. So yeah,

Julian Sage:                         00:47:57               You keep throwing out things that I could just keep on going. We can just go deeper and deeper down the soil. But we don’t, we don’t have enough time for that. So, ah, man, but we’ll have to get you on another episode cause that, that is wild. The whole video and your, your marketing efforts. I want to go, what about cleaners? How, how are you vetting cleaners? How are you getting reliable cleaners remotely?

Alvin Cavalier:                    00:48:18               Yeah, so, so initially all work is source through, through Thumbtack. What we’ve found over time is weekend 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 where it really comes down to a key question. Yes. 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 for you. So, so now we, we source locals to to be the primary housekeepers and then, Oh, professional service or, or another local housekeeper to to boxes. There was an alternate. Oh, so, so there’s some redundancy built in to, to the housekeeping aspect of it. But 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 a teammate, right?

Alvin Cavalier:                    00:49:23               Because they get the first look at the property. Well we set up a very specific task list with, with housekeeping guidelines that might give them sort of a, Hey, when you walk in the door you’re going to go through the living room and check for ABC and D a walk up the back door, check the pool deck for a D andF and so forth, so on. So, so we get that full on property manager walk through,ubefore they start cleaning. And then what wants to clean as complete, ah, photos of, of each of the main areas,uthat they send back a completed report through. It’s really your quarter, a task app. Uand then that, that, that initiate,uuthey met through a, through Venmo or cash app or whatever, whatever they’re using.

Julian Sage:                         00:50:13               And how much, how much are you paying your, your cleaners, who you put them into the rules of property manager, what’s the property management field look like for them?

Alvin Cavalier:                    00:50:22               So there are house cleaners with the property managers role, but that’s not necessarily a, I won’t say that that’s on the surface of, Oh look, [inaudible] 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 interviews that come along with it. So Mark is very right, so, so Savannah it’s got a housekeeper that that only gets paid $60 per claim and into New York where he’s got a a hundred dollars per per clean and so forth, so long. So, so each market he’s market varies. They, they differ. And then those, that the AV booming short term rental markets you, you’ll typically find a lot, a lot of stiff competition for good housekeepers and you’ll, you’ll typically pay a pay a premium, but, but 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 what they’re doing for for the team. And, you know, th th the smallest things like any in 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. A always a page, a huge dividends when you’ve got a give him a call on a day off to, to, to rectify any issues as need be. Then they’ll come out and he’ll take care of things for you.

Julian Sage:                         00:52:02               So, so you’re finding your, your, you find out 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?

Alvin Cavalier:                    00:52:10               So, so initially the first 90 to 120 days, what will happen is w we will alternate between the two and then one news into a primary role. And the idea is really that they both get real time experience and enough experience to, to understand all of the nuances that associated with, with that property. And then what comes out of that and what they help. No, it was bill, it is a frequently asked questions, a automated message for Oh, for that particular property. So, so that typically happens after about 90 days, we’re through either what the housekeeper see or, or, or a 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 a message before the guests. Yes. Check in.

Julian Sage:                         00:53:06               So your cleaners are actually managing the messages as well?

Alvin Cavalier:                    00:53:09               No, they’re there, they’re just helping contribute to those frequently asked questions that are built just, just based on their their seat back.

Julian Sage:                         00:53:17               What type of feedback are your cleaners getting? Are they getting it from like the guests directly or are the guests leaving notes or how does that work?

Alvin Cavalier:                    00:53:24               Yeah, and in some cases it varies a lot. Like in New York the, the housekeeper too typically gets in right, right. Is the the guests are leaving. So, so she has sort of a small script that, that she, she’ll ask very specific questions about, about the stay meet any issues or concerns and that small interaction helps feed Oh, provide, provide feedback for for us. And that’s what’s sorta encourage the, because the guests are going to leave and then they’re going to provide you with a review. [inaudible] You can have some of those questions or concerns, maybe answer prior to them departing. It always helps. And, and, and what they’re doing when, when they’re behind the keyboard typing, type in a review. And then sometimes you can, you can potentially interdict with, with a message based on, on feedback from, from, from the a housekeeper prior to, to the review period.

Julian Sage:                         00:54:25               And, and how, how are you going about finding these, these people that are looking to have their properties managed? Are you just going on like Zillow and, and finding everybody that has rentals and picking out the ones that you like, or 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?

Alvin Cavalier:                    00:54:42               Yeah, so, so Facebook marketplaces as has provided some, some very unique opportunities. Zillow, Trulia, hot pads E, each of those you can get into a, a, a filter that allows you to, 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, what exactly you’re looking for. You set the parameters in terms of health, size that, that you, you’re looking for. And, and once you narrow the field down that then the message goes out to, to those home owners.

Julian Sage:                         00:55:31               Well, I, you know, Alice, I can keep on it just asking so many questions, but I’ve, I’ve taken up a lot of your time. So we do have to wrap this up. Would love to maybe get you back on in a future episode to talk some more, cause I can, you know, this is for the people that are listening to this. This is [inaudible] 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, I 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.

Julian Sage:                         00:56:11               Because usually a lot of people, they just go in and they’re just like a co 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 unique a 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 w 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 S 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 would you do differently if you had to start from scratch?

Alvin Cavalier:                    00:56:48               That’s actually a great question. And, and, and I think as I talk to my partners, Austin it, it, it really comes back to the building systems and processes to, to support does the things that are, that are happening every day. And, and to a degree for, for any hosts out there, you can understand that things can become overwhelming. Yes, yes. You’re involved in it. So, so the thing I’d tell you is too to, to set up an operate one as this year operating a hundred. Yeah. 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 us at point a and then I’d get you to, to a point of view sufficiency. And then once you, you begin to get the right help T to support that then, then that allows you to focus in terms of more, more in terms of acquiring then the next one, day to day work.

Julian Sage:                         00:57:58               Okay. And just out of curiosity, a to w what’s going on in your brain now then for the scalability of this, where you plan on taking this, what do you have in the future in mind?

Alvin Cavalier:                    00:58:09               Yeah, I’d say I think really cracking the code on, on the shared economy because I think it’s, I think it’s so interesting. Oh, all the different aspects of those, Oh, the shared economy and how people are monetizing a shared economy services and,

Alvin Cavalier:                    00:58:28               And really just the, the, the thought of, of, of a single platform that allowed you to provide a reasonable shared economy services too to a, a, a short term real estate. It’s really something that I’m itching to, to figure out. And you know, it’s exciting too to think about it. It’s exciting too to to at least scratch the surface of it. And I’m dedicating a lot, a lot of brain power and, and and time into, to thinking about how to, I don’t know how to make it right and and provide some, some value to it.

Julian Sage:                         00:59:08               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.

Julian Sage:                         00:59:46               Hope you 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, go on over to our Facebook group, the host nation, talk to host in the next episodes. Keep on hosting.