STRSS 08 – Optimizing your vacation rental cleaning and culture w/ Charla Tomlinson

Video Transcript

 

00:00:00

So even when the company was just me, I had a procedural manual because I was always planning for the future and the future could have included something happens to me and someone else needs to run the company, or I sell the company and I can’t sell the knowledge in my head. I have to actually have it documented. And that just lends itself really well to, well, I have all these procedures, so now someone else can do them.

 

00:00:24

So number eight of short-term rental success stories. Welcome back to the short-term rental success stories. I’m your host, Julian Sage. This is 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 the practical information. That’ll help you become a better host and learn how to scale your business. Since we are a new show reviews would greatly help us grow. So please go on over to iTunes, Spotify, Stitcher, Google play, YouTube Facebook, or wherever you’re actively listening. And please leave us an Oscar view and we’ll give you a review, a rental, a shout out in the next episode today, I have the pleasure of speaking with Charlotte Tomlinson. Charlotte is a full-time Vacation Rental property manager in Canmore, Alberta, Canada, and also a professional speaker at Vacation Rental events.

 

00:01:05

Charlotte currently owns eight properties and manages an additional eight. She’s been short-term renting since 2005 and in 2010 actually incorporated her company. This is honestly one of my favorite episodes as Charlotte just lays down the knowledge of what it takes to start and build a successful team. Charlene even shares some of her secrets on how she’s able to find reliable cleaners that want to stay with her and how she’s able to maintain her high quality standards throughout her company. Whether you’re looking to hire your first cleaners or build and scale your own property management company. This is an episode you want to repeat a few times if you haven’t already done so going over to a Facebook group, Short Term, mental success secrets to talk with Charlotte and other successful hosts. If you’d like my show notes for this episode, go to Short Term Sage dot com backslash E T eight. If you’d like my show notes sent directly to your inbox every week, then go to Short Term Sage dot com backslash show notes with all that being said onto this week’s conversation. Welcome back host today. I have the special honor of speaking with Charlotte Tomlinson. Please let the audience know a little bit about who you are and what inspired you to get into short-term rentals.

 

00:02:09

Well, my name is Charlotte. I live in the Canadian Rockies, which if you haven’t been there before is a pretty amazing tourist destination. It just happens to be the place that we live. And as for what inspired us to get into short-term rentals, I had a bit of an accidental falling into short-term rentals. We had bought an investment property in 2005 with the intention of renting it long-term. And it just so happened that it had very special zoning that allowed us to do Short Term. And that was back in 2005, before Airbnb was on the, you know, on the radar. They weren’t even a company then. So it’s amazing to me that out of all the properties that we could have bought, it happens to be the one in our town that has this special zoning that allowed us to do nightly rentals. And so when we found out that it had that special zoning, why would like, Hey, I studied hotel management and school. This seems like a pretty obvious thing for me to do. I want to take care of guests my whole life since I was a kid. And that’s how we got started. One property that we accidentally bought with special zoning

 

00:03:16

Now. So you started in 2005. So you’ve been around the short-term rental space for, you know, before Airbnb, before all of this started. W how, what, what, what is, what have you seen with where you originally started and where it is now? Has it, has it become easier to short-term rent? Is it, is it a lot more challenging now?

 

00:03:36

I would say it’s become easier. All of the technology has been great. The one thing that we’ve seen change just in terms of our company, because we both own properties and we manage properties that are owned by other people, is that the dynamic of a property manager changed because, you know, Airbnb makes it very simple to, for anyone to be a property manager. So that meant that we really needed. So for example, there was a time when you absolutely needed a property manager, because a regular human couldn’t charge credit cards, right? That was a complicated, expensive, you know, to have a credit card merchant account, they needed us and well, now anybody can charge a credit card, you know, so we had to kind of change, well, what services, what value are we bringing to homeowners? Because it’s not the same anymore. Anyone with an Airbnb account to charge guests, collect money, keep track of reservations. So we had to change our, our value offering to our owners.

 

00:04:37

Now, you know, obviously with Airbnb, they’re offering this co-host experience and it’s really like anybody that has an account can become a property manager. Now, how have you been able to differentiate yourself? Because you said in 2010, you incorporated, and you started taking on clients. How have you been able to set yourself apart with this saturation of, of these new property managers?

 

00:05:01

Well, we just kept plugging along doing what, what we’re doing. I mean, there there’s something to be said for having that much longevity in the industry. We have seen lots of co-hosts and property managers come and go. And I think it’s like any industry. I mean, if there’s a big boom in construction, there’s lots of construction companies that start off and then they go away and then, you know, same with selling real estate. There was a time that everybody wanted a real estate license and then there’s a, there’s a dip in the market. And then those people go away because it wasn’t their passion for us. It’s always been our passion. So, so it’s just kind of longevity. And if, if you’re doing it long enough, I mean, you, you learn stuff, you pick stuff up and you can’t, you can’t not have the knowledge that you’ve learned over the years

 

00:05:47

Now. W w what was the most challenging part of starting your, your first property? Did you, did you do that with the intent? You said that you did that with the incentive long-term rent. When, when did you come to the realization that it was more like we should start, short-term renting this because it’s actually more, a more profitable

 

00:06:04

W we actually didn’t realize that it would be more profitable. I mean, now I can, we absolutely know it’s more profitable, but back then it was more, it was more a light. I want to say almost a lifestyle decision. We loved certain guests, my husband and I both met while studying hotel management. So, you know, it’s a different experience to when you have a different guest every week, you, you keep having the opportunity to create an experience for that guest. Whereas with a long-term rental, it’s, it’s one person for years or decades or, or however long. So for us, it was more getting closer to what our passion was. It wasn’t necessarily ever about the, the, the monetary differences between the two, even though for sure, I could sit here and tell you how much more profitable, short term rentals are it just, wasn’t our driving factor

 

00:06:55

Now, you know, in, in 2005, they, they obviously didn’t, there wasn’t as much resource available for people to be able to learn how to do their, their short-term rental business. W w what was the most challenging part for you in starting this?

 

00:07:08

Honestly, the same challenge in 2005 is the same challenge we face today. It’s always housekeeping, finding reliable housekeepers is, you know, I think one of the number one, one of the number one concerns, we’ve, we’ve never done the housekeeping ourselves. We know that some owners do, but it wasn’t ever anything that we ever wanted to do, mostly because we travel all the time. It just wasn’t even a possibility. So still today, finding reliable housekeepers who care about the unit and, and really have a passion for what they do, because, you know, I think any, probably any guest in any host can tell you if that house isn’t perfectly clean, it’s showing up in reviews. And if it’s showing up in reviews, it’s, it’s affecting your business. So we often say to our housekeepers, you know, missing something when you’re cleaning, that could be a $10,000 mistake.

 

00:08:04

And, and that’s how we, you know, that’s how we kind of phrased it to our housekeepers, that, you know, an individual human might say, well, what’s the big deal. So I forgot to remove, there was a coffee cup left out. I forgot to remove it. And we’re like, but when it re appears in a review, that could be a $10,000 error, because everyone who reads that has the impression that we didn’t care about the property. So phrasing it that way for our housekeepers has helped. We now have our own housekeepers, which was a nice side effect of growing the business to be able to have our own, our own staff and a housekeeping manager. But yeah, even still today, even with our own team, finding reliable housekeepers is a challenge. It probably always will be.

 

00:08:47

Yeah. I, I, I really love what you said, you know, missing, missing that, that one coffee cup could cost you over $10,000 and to, you know, to help the people to understand that, you know, when you have a review that affects your listing, people are going to be reading that, and that one review could end up costing you a lot of money. So it’s, you know, it’s, it’s important to train and, and, and get those housekeepers aware of, of, you know, how important it is to do their, do their business. How have you been able to find and grow your, your housekeeping staff?

 

00:09:18

We’ve, I mean, we’ve gone through various variations of the model because every time something wasn’t working, we’re like got to find a new way. The model that we have now is one that has been really successful for us. So one thing is any of our housekeeping staff, well, honestly, any of our staff reservations agent, whoever, if you’re on our actual payroll, they get a share of our net profits, because I realized that how do you incentivize a housekeeper who gets paid by the hour to truly care about whether or not I make more money or whether or not an owner makes more money, or whether or not a guest, you know, arrives in everything’s clean if they’re getting paid the same amount. So what we did was we set up a commission structure where it’s the net, the net profit of the company gets split amongst the staff.

 

01:10:09

And that really helped because now they understand, right. They can, they can see the, you know, between the review. And if, if something happens bad in the review, it ultimately affects them as opposed to just effecting me or the owners. The other thing we did, but it worked quite well, is that we changed the model to work specifically with people that had housekeeping companies, as opposed to people who were choosing to do housekeeping as a necessity. So in most, and mostly in the hotel industry, a housekeeping job is seen as, you know, the entry level position. You start off as a housekeeper. Maybe you move into front desk. Maybe you move somewhere else. And because people always have their eye on a different goal, they weren’t working in what their passion was. So we changed that and said, okay, so we’re going to work with housekeeping companies, because these are the people that actively chose this for their life. They said, I love cleaning. It brings me joy. I love doing it.

 

01:11:15

This is what I want to do. Full-time forever because it’s mine. And I love it. And do we pay more for that? Of course we do. However, if you look at the flip side of it, the cost of it is way less like we have, we have higher guest satisfaction. We have less stress in our office. We have more reliability. And because people are managing their own companies, they have a vested interest in keeping us as a client. Like we’re both in it together. When, when my company is successful, their company is successful and vice versa. So that was one of the big models that we changed. And that’s been going really well.

 

01:11:49

That’s really interesting. I’ve never heard of the model where you actually incentivize your, your, because I think most people, they just say, it’s, you know, either $20 an hour or, you know, $30 a clean, how, how do you structure your, your incentive to be able to pay, pay the cleaners?

 

01:12:07

I’ll tell you what inspired me to do it. So my, my office manager, when she first started working for us, the company hadn’t grown yet. So she was working maybe 20 hours for us. She had another job and she was working retail. And she had come into work and was, they had a really busy weekend that weekend. And that means the staff are hustled off their feet. They’re putting in tons of hours, they might be staying longer. You know, they’re, short-staffed like all of the, that stress is coming in. And, and she told me that she only gets paid by the hour. And I was like, wait a minute. So the more successful your owner is the harder you have to work, right? Hustle, stress, you name it terrible day at work. I was like, so you have no incentive to encourage people to come back to that real tail space.

 

01:13:02

I mean, really, if it’s busy, the look on your face might be like, oh no, someone else is coming through the door. So when I had that conversation with her, I was like, wait a minute. This is exactly what our housekeepers are feeling like if it’s high season and they are hustling, right? It’s high season, people are checking out 11, new guests are in at four. You know, that was where we got, I got the inspiration to be like, no, we need to change this model. This is silly. So I did put a lot of thought into it, consulted with some major consultants. We specifically made it a percentage of our net profits. And the reason we did that was I not only wanted this staff to encourage sales, sales are good. I also wanted to encourage them to save money. If we had a commission structure that was only based on gross sales, then, you know, if you’re, if you’re talking from like a financial point of view, right?

 

01:13:57

Like income and expenses, if it was only on gross sales, then everyone’s incentive would be to sell, sell, sell, sell, sell, but maybe not deliver right. Sell that property at the highest rate, but then discount it or have something bad happen because a discount or an expense doesn’t affect their commission. So I explained it to them. It’s going to be part of the net, which means you get success on both sides of it, just like a business owner does. If our sales are good, that’s great. But we also have to keep an eye on our expenses. So the staff are incentivized to, if they find a better way to do stuff, a way to save time, a way to save money. It’s the same as being a business owner, all of that ends up back in their pocket.

 

01:14:42

No, that that’s, that’s a brilliant, I’ve never, I’ve never heard of a model that incentivizes it. And if I was a cleaner and I was doing this full-time, I would definitely want to be able to have a model in place that would benefit me the harder I work, because you’re just working $20 an hour. It’s like, well, I’m going to take my time. And it doesn’t matter if, if the sheets, you know, if the coffee cup gets misplaced or if I forget to do something, cause I’m going to get paid regardless

 

01:15:05

And I to pay my 20 bucks, I’m actually quite proud of the bottle. A lot of thought went into it. Nowadays. I talked to other business owners, not even just vacation rentals. I’m like all the companies, if you’re a barista at a, at a coffee shop and you’re hustling, cause it’s busy. Why shouldn’t you have a piece of that? I mean, you’re right. It’s nice. When people’s success is tied to the success of the company of the company owner, make it, you know, it makes for more invested employees. It you’re all on the same team. Whereas, you know, the typical model is that an owner of a company makes this much and the staff make the same amount, no matter how much time or effort they put in. Well, the profits of the company owner rise. So we just wanted to change that model. It wasn’t one that felt good to us and it wasn’t serving our needs. Right. How do I, how do I say to a housekeeper? I need you to really dedicate, make sure this house is so perfect. So perfect and take on all of that stress, but still only get paid by the hour.

 

01:16:07

Now, what, what’s the percentage that you allocate towards the, the cleaning incentive

 

01:16:12

Actually for all of our staff cleaning is just a big part of the department or a part of the organization. It’s 5%. So we give 5% of our net, net profit back to the staff and it gets split up.

 

01:16:23

And when we spoke, before we hit record, is that you also have a virtual office, which I’m just to clarify virtual offices where you have multiple VA’s working together in one unit. How did, how did you, how did, how did you, how do you kind of set those, those VA’s up?

 

01:16:41

Well, I we’ve had virtual, we’ve had virtual assistants for, I think it’s going back 10 years now. Thankfully me personally, I love writing procedural manuals. It’s a weird geeky thing that I enjoy. And so even when the company was just me, I had a procedural manual because I was always planning for the future and the future could have included. Something happens to me and someone else needs to run the company or I sell the company and I can’t sell the knowledge in my head. I have to actually have it documented. And that just lends itself really well to, well, I have all these procedures, so now someone else can do them.

 

01:17:24

So I do speak on the topic of, of having virtual assistants, because it is really important to have those things in place. You can’t bring someone into chaos and then expect them to organize your payoffs. But the virtual team is exactly what it sounds like. They work entirely remotely. They’re actually based in India, although they could be based anywhere. But yeah, we communicate, you know, through like we’re doing now, we’re on right now. We use a lot of like Google docs and online shared calendars. We communicate by email and they’re taking care of a lot of the day-to-day tasks that are, that are structured. Right. They have a procedure to them. You’re going to do the same thing every single time.

 

01:18:07

Okay. Kind of going, going back off of the incentive instead of that you use, how, how do you reach out to business owners? Are you only offering the incentive? Are you offering a base pay with the incentive on top? How, how does that

 

01:18:22

Structure work? Oh, no, you’re going to out my secret. We don’t, we don’t tell staff when they apply that there’s an incentive.

 

01:18:32

So it’s just kind of like a, like a bonus to them that they, that they’re surprised. Wow. That that’s

 

01:18:38

Now everybody knows because now it’s going to be on your podcast. I don’t know how many of our local housekeepers are scrolling through the Airbnb success stories podcast. What did they find note then how everybody will know? No, again, it was an intentional thing. We truly wanted people to be attracted to the job because they knew what they wanted. And honestly, we didn’t want that thing to be money. You know, it just, for us personally, as a company, culture, money is nice, but living joyfully is better. So yeah. So we actually don’t tell them they don’t, they don’t find out until they make it past their probation or group.

 

01:19:17

Wow. Okay. And how long, how long do you do a probationary period for

 

01:19:21

Three months. 90 days. Okay.

 

01:19:24

Now, when you’re, when you, because you said that you’re working with housekeeping teams like that already have established housekeepers that are dedicated towards this, how do you, how do you communicate with them that you like to offer this, this incentive to them and make sure that they are actually following through with that and not just pocketing the money and saying that they’re giving it

 

01:19:46

Well, for clarity, only the people on our actual staff have the incentive. So it’s only people that are, you know, the difference between hiring contractors and, and, and having employees on staff. So it’s only the people that on our actual staff that are, that are part of that incentive program. When it comes to another company, I figured they set their own rates and they, they do what they want to do. But yeah, so it’s our, it’s our actual staff. So we do have some housekeepers actually on staff, but in high season, we’ll use the contractors because otherwise it’s difficult to keep staff when, you know, high season, your, you know, your number of housekeeping hours is up here and then low season comes along. So it’s hard, it’s hard to keep regular employees that we’ve made a commitment to that are part of our team. It’s hard to keep that with the fluctuations in our business cycle.

 

02:20:37

And H how have you, how have you been able to recruit a good staff that you can reliably trust?

 

02:20:44

Well, trust is a big thing in property management, especially cause we’re managing properties for other people, right? Or we’re holding money for them. How did I recruit them? I was very specific about what our company culture was, which meant that the, the people that were attracted to that culture were the people that were going to truly thrive in this environment. So for example, when I hired my R she goes by a number of different titles cause she does our reservations. She’s our office manager, she’s our jets. It’s just, and so when I posted the ad that attracted Jess under the irregular job qualifications, one of them was, must speak sarcasm fluently, because, so those were the types of things. Like the entire job description was full of jokes because we’re a very funny office. We’re making jokes all the time. And if someone came in and didn’t have that same sense of humor, didn’t speak sarcasm, they would struggle in this environment. So all of our job descriptions had less to do about the actual task at hand, because we can always teach people. You know, if you have a passion for office administration, I can teach you how to process reservations, but I can’t teach you to thrive in an environment where people put, put humans before money and put joy before anything else. So all of our office staff love camping. They love going to thrift stores. They love playing board games. They love connecting with friends and all of them speak sarcasm is a second language.

 

02:22:28

Y so you, you, you, you found people that are, like-minded like yourself and that could really work together. Fluidly. When, when we, when you, when you mentioned previously, you said that you, you were finding people that were dedicated towards cleaning is that only when you are finding like companies that when, when it’s the up season that you need extra cleaners,

 

02:22:50

We do use those vendors around. Some of our properties are quite large. So even with our team, our internal team of housekeepers, nobody wants to walk into a 6,000 square foot house and clean it by themselves. So we use the vendors year round for the larger properties in the summer. Pretty much everything is a vendor running it because we, our housekeeping staff are more in tune with specifically what our guests need. So instead of actually cleaning, they might be inspecting the property or they might be dropping off gifts for the guests or some or something else. I don’t know if that makes sense, but it makes sense to us

 

02:23:25

And with your, with your housekeepers, you said that you, you have the Jess who kind of does like everything. Now, do you, do you build it into your, into your team that it’s like they have the ability to take on more responsibility or they just dedicated house cleaners?

 

02:23:41

Nope. We fully believed in redundancy. So I mentioned earlier that I travel a lot. If I attract people that are like that share that culture. That means they want to travel a lot. Jess is in Australia for a month right now. So we had to have redundancy across all of the positions. So what that means is either Jess or I can fill the role of the housekeeping manager, Diane and granted, we always joke. We never do it as well as the person that’s in the primary position. Like neither Jess or I are ever going to be as good as the housekeeping manager as Diana’s, cause she doesn’t more often. And although Diane can handle the other tasks of our office, you know, obviously just as better at it, I’m better at the things that I do all of the time. But we wanted to build in that redundancy for a couple of reasons.

 

02:24:36

One is we wanted our staff to be able to travel as much as they wanted. So we often make a joke here. We don’t have vacation time. Like most employers, you get like two weeks vacation. There’s no such thing here because I’d have a really hard time saying someone, especially working in the vacation rental industry, you only get two weeks of the year to travel other places. That’s not a great policy. Yeah. So we have redundancy built in across all of the positions and then we have procedures in place so that when you are going away, your tasks are delegated to someone else so that you don’t feel that burden when you, anyone who’s ever worked in a typical job. You know, that feeling of I have so much work to do before I go on vacation. And then I come back and I have so much work to do when I come back, that vacations are stressful. So we eliminated all of that. The operation keeps running no matter if the staff needs to go away, if they have a family emergency, if they want to go on vacation, if there’s a really cool concert going on, that they want to go to, the company keeps operating because we can never go back to our guests, our owners and say, oh yeah, we just stopped working this week because you know, U2 was on a world tour and we wanted to go. So everything, everything keeps running.

 

02:25:53

So when you, when you’re, when you’re recruiting people, you’re trying to make sure that they’re a good fit for your culture, your company’s culture, that they, that they are like-minded and have the same type of passions as you do. And, but when you initially find them, they are for cleaners, how do you structure that? Do you say, Hey, you’re investing into this company with the potential to scale up and take on more responsibility or do you start them off and say, you know, we’re gonna, you know, you’re coming into this and you’re going to be a cleaner. And then basically when, when do you feel that it’s time to allow more responsibility for your, your, your, your staff?

 

02:26:29

I don’t know that I could put a timeline on it. Everyone’s going to show them every everyone’s going to reveal what they want to do. There’s been times that we’ve had cleaners that didn’t want to move ahead. And there’s been times that we do ask it during the process, what their true passion is, so that we know how to stretch, how to, you know, to keep, to keep eyes on other activities that we think would bring them joy. But there’s never a set time. Every everyone’s on their own journey. When they’re, when they’re ready, the opportunity will be available to them.

 

02:27:03

W what has been the most challenging part of scaling your short-term rental business

 

02:27:11

Of scaling it? Hmm. Well, we own a lot of the properties financing would be a big challenge when you’re actually buying the properties yourself. That’s a big one. On the other side of it, the properties that we manage for other people, I would say establishing trust, not because we’re inherently untrustworthy. It’s that if you’re a trustworthy person, you, you probably don’t go around explaining how trustworthy you are. You just know it to be true. And trust is a huge, huge in property management. I mean, we’re in the market, in the market that we’re in the starting price would be at least $400,000 and the properties go up to $3 million. So when you’re meeting with an owner and saying, yeah, you’re going to turn over your keys to your $3 million asset, and then I’m going to hold all of your money. And you’re just going to hope that I don’t run away with it all.

 

02:28:14

So trust is huge. Trust is absolutely huge. And we haven’t actually figured out a way, how do you, how do you communicate trust when you’re speaking with people for the very first time? And the answer is, I don’t know. I don’t think you do. I think it’s a long relationship. So we have long relationships with all of our owners and it’s, it’s actually those owners that bring other owners to us because there’s trust between them. So for example, we’ll have an owner who their best friend decides to buy in this market. And because we’ve established trust with the original owner and the friend knows the original owner, and they have a trust relationship between the two of them, trust gets transferred between us. But I would say that’s the number one thing. I mean, there’s, there’s no amount of marketing message or ad space that, that I can purchase that that would ever communicate actual trust. I just realized that I didn’t tell my housekeeping manager that I was doing a podcast interview today, and she’s outside our office door. And she’s about to knock on it.

 

02:29:20

If you, if you want to, if you want to stop and

 

02:29:23

You get to choose, you either include her as part of the interview. Hey, Diane, I’m doing a podcast interview that I forgot to tell you about. Great. Okay. You’ll be back this afternoon, cleaning. Very nice. You’re about to be on video to a gentleman in Maryland who made choose to edit you out. I talked to you earlier and they introduce you. So I may just say, hi, this is Diane. You happen to stop by with stuff. Yes. Beer number, number one, perk of managing lots of vacation rentals. People leave behind a lot of fun stuff. So today syrup and tons of beer. We actually have a, we have a community. We have a community college in our office where we don’t like to waste, and there’s tons of food left at vacation rentals. So we have a community fridge at our office. So all of that food comes back for office ever wants. It takes it. If you don’t want it, it goes out. But yeah, beer, beer is always a popular one, isolated to,

 

03:30:25

Oh, that’s good. It helps, helps boost morale in the office.

 

03:30:29

Toiletries. I don’t know the, when the last time anyone here, but, but shampoo was five years, five years, at least who needs to buy salad dressing when you audit, wash all of the things. You’re welcome to leave that in part of the interview.

 

03:30:47

Well, we’ll include that in the, in the video portion. I’m sorry, what was that? So, w we’ll include that in the video portion, I’ll cut that out of the, the audio. So going, going off of, you know, what, what, you know, having the company office and kind of going back to that question with scaling. When did you, when did you realize, and when did you feel that it was appropriate to make this into like a company, like an incorporated company? You said that you did this in 2010. How did, how did that come about

 

03:31:19

The, the incorporated the incorporated company was more for tax purposes. Any, anytime you’re making more money than you need, that’s when you incorporate that’s the secret to incorporating. I just really loved it. Why once I started managing the first one we bought, the second one we bought the second one around the same time that I’m an owner that was 2009, an owner approached us about managing his property. He’s still one of our clients today. And it just kinda snowballed. It became a thing. And the more I was involved in it, the more I loved it, the more I loved learning about it, the more I loved finding new and better ways to do things. So we’re, we’re always looking to up our game. We’re always at Vacation Rental conferences or whatever it is that we can create better experiences for the guests, but it truly is our passion, no different than anyone else that has a, you know, a doctor has a passion for medicine and the lawyer has a passion for the law. This one is ours

 

03:32:21

Now with, with, with the, with the company. I, I imagine that, is there more responsibility when you, when you’re incorporating it? Like, I think for the people that are just starting off, it’s a, you know, they’re all they’re always questioning. Should I do with an LLC? Should I do an S-corp? Should I do a C Corp? When, when did, when do you feel that it’s appropriate to start to think larger scale than maybe just like an LLC?

 

03:32:48

Well, I will add two disclaimers, one I’m Canadian. So our laws are slightly different. So keep that in mind with anything I say, and two, I am neither a lawyer or an accountant, so this should not be construed as legal or accounting advice, of course, but the two, the two models between Canada and the U S are quite similar in a number of ways. I mentioned a moment ago about how this is how it works in Canada. If you don’t incorporate your income gets taxed as personal income, which is at a higher rate. Most people talk about liability when you’re incorporating, and this is something that might be different in America.

 

03:33:29

Most people talk about liability that you should protect those assets by putting them in a corporation so that if something terrible happens, they don’t come after your personal assets. However, when people are starting companies, even if they’re incorporated, they often have to sign a personal guarantee, which means if something happened, they could come after your personal assets anyway, whether or not you had a corporation. And so I had a really good lawyer. I also have a very good accountant, which is something I would list to like the things that, to be successful, have a really good real estate agent, lawyer, accountant, the whole team, because they’re all going to help you be successful.

 

03:34:08

Our lawyer explained to us that don’t incorporate for liability, have insurance for that. You, you can be a personal company and have insurance for liability. And so what we were looking at it was from a tax perspective, anytime that your income gets to the point that you make more income than you actually need to live on in an average year, depending on the tax structure, where you live, you’re probably better incorporating. And that was what the situation was for us. Once those, once those income levels started to rise to a point that I don’t need that money, it can sit inside of the inside of the corporation and I could get taxed at a lower rate, all legal, by the way, in case that sounded like I’m secretly evading tax. I pay all my taxes a hundred percent, but there’s ways to structure it so that you pay less.

 

03:34:57

Now, now how much of your bookings are direct bookings and on the various platforms?

 

03:35:03

Oh, I’ve actually never looked if I gave you a number, I’d be totally guessing.

 

03:35:09

W would you say that the majority is direct bookings while the other is on the platforms? Or

 

03:35:15

If I had to even just make an educated guess? Cause I do check it every now and then I just don’t know it right off the top of my head, I would say about 80 to 85% off of online travel agents and at about 15% ours, but it does grow every year. So every year when I check it, our direct bookings has grown and the platforms has gone. The trend we’ve seen recently is a lot of referrals and referrals take a long time. I mean, if we create an experience for a guest, the same thing goes for owners, right? If we create an experience for an owner, it’s not as though they go home to their, you know, their, their social circle and their friends or family are immediately ready to buy or go on vacation. So, so we always call the referrals a long game. I mean, we, it, it took time, but the companies now have been around since 2000, well, 2010, we incorporated so nine years, that’s how long that can take. So every year our direct bookings increases and our Alliance on online travel agents decreases.

 

03:36:28

And what, what are you, what are you doing in order to generate those, those direct bookings?

 

03:36:34

We, we have our own website. We stay in touch with our guests, but honestly the number one way is to just create an experience that goes above and beyond because people recall those experiences, you know, like there’s studies that I, I’m not going to be able to reference them exactly how they’re written, but there’s, there’s studies that show that people will remember both the best and the worst. And they don’t remember a lot about what happens in between, right? So if you think about your own vacation, if you’ve ever been anywhere where something either bloody remarkable has happened or terrible, those are the only two you remember. So we make sure that, or do our best to make sure that all of them are on the side of amazing, because those are the stories that people recall. They’re not going to recall in the middle, in the parts, in the middle that like, well, I showed up and the towels were folded and they were clean. No one goes home and tells that story, but they will tell the story if they show up and it was unclean and they will tell the story about how they showed up and it was above and beyond their wildest imagination.

 

03:37:45

Now, now, what do you, what do you, what do you do to be able to set your units apart and to be able to create that experience that is remembered for a person? Because think of what a lot of the new hosts is, they think like, oh, I just need the sheets. I need the towels and I’ll set this room up and then I’ll be making money and it’s a cash machine. What do you, what do you do to be able to set your units apart and create that experience that is really kind of making your units stand out? Well,

 

03:38:08

The challenge with the model that you just mentioned is that there are going to be hundreds of other units that offer the same thing, clean and as expected. And if everything is the same, then the next factor that people are going to choose on is price. So if you have a commodity and you’re all the same, then whoever drops their price first gets the reservation and then it’s a race to the bottom. So there’s a, there’s quite a few things that we do. I mean, it would be hard to sum them all up. We specifically set up our units and, and we’ve tried to have a company culture, not even just with our own staff, but beyond in our properties. That is really uniquely us. So for example, I don’t know if you can actually say that those are all board games and they’re not just typical board games.

 

03:39:05

It’s not monopoly and Scrabble. Any board gamer would be like, oh, I’ve always wanted to play that. Well, that’s who we are at a core. So we’ve actually attracted people who love playing board games because when we set up our properties, we made sure they all had big dining room tables so that you could hang out with your friends and play board games. We put super fun board games in them. We’re also foodies. So we made sure that the kitchen was super well-stocked. You know, we wanted it to feel like home. And when you’re at home, you don’t only have four glasses for four occupants, right? You have a ton of glasses. You have a ton of silverware, you have things too. We just had received a guest comment the other day that they were surprised that we had Muslim hands, because most, most vacation rentals aren’t stocked with them because the standard is, you know, forks and knives and dinnerware and pots and pans, and who thinks of muffin pans or a garlic press or any of those things.

 

04:40:08

So we ended up just being really true to ourselves, attracting the market. That was most like us because it’s, it’s, it’s easier to both meet their expectations because we have similar expectations and it’s also easier to go above and beyond for them because we know the experiences that we would enjoy. So another thing that we do at our properties, and again, it is uniquely us. I don’t know that I’d recommend this for everybody. Cause you have to kind of be a board game where your geek, their secret doors at all of our properties, once you’ve thought that was a bookshelf the whole time, it’s actually a door to another room. So we, you know, and again, it was just something that was very uniquely us. And, but I will say that if you ever stayed in a Vacation Rental that had a secret door, would you not be posting that all over social media? So yeah,

 

04:41:03

I, I would definitely, I’d be, you know, highlighting that. I’d be putting that on my Instagram stories saying, Hey, you know, check out this place

 

04:41:11

When we put, so we have them in about half of our rentals right now. Cause usually we wait until they’re being renovated and some of the properties were new. They didn’t need renovation. I’ll give you an example, a regular door, right? Regular filler door, maybe between a hundred and $200 to install. If you needed to put a new door somewhere, those are about a thousand. And when I put them in, I promise you, there was lots of people say, including myself, I’m frugal by nature. There’s lots of people saying you’re going to spend a thousand dollars on a door. And I said, yes, I am. Because which Vacation Rental are you going to remember? Are you going to remember the one that has the standard doors? Or are you going to remember the time that your kids stayed in a room behind a secret door?

 

04:42:00

Even the adults, the adults love it. We actually have a meme that floats around it. We posted on our social media every now and then it was someone else’s name. We didn’t come up with it that said like, if you’re a millionaire and you, and you don’t have secret doors in your house, you’re spending your money wrong, but we have them they’re all over the place. So our next iteration of that is that we’re actually building that each of our properties is a self-contained escape room. So if you’re familiar with escape rooms, some people are, some people aren’t, but each of our properties we’ll have clues hidden amongst the artwork and in the cabinets and wherever else. So that instead of just being a place to sleep and eat and gather with family, well, now it’s a place that you’re like having an experience and you’re doing something and you’re laughing, we’re thinking. Or so, yeah, we thought we do lots of little things. They take time though. I mean, they, you know, you adapt them over time. We didn’t do all of these things right out of the gate. But

 

04:43:00

No, that, that, that’s really interesting that you, you have, you have a proposition that it’s like, you, you stay at this place because you know, you’re, you’re, you’re a foodie. You, you love board games. You love escape rooms. You love, you know, magic art, you know, the, the, this, this whole world of, of adventure, which you know, is, is shareable. So people are going to want to tell other people like, Hey, if you’re going to be staying somewhere, stay at this place because it’s unique. And it’s like me. And so you get that referral business. I think you’re doing an awesome job.

 

04:43:27

So perfect example. Oh, I think I have it on these guests left us this really lovely card. I think I moved it. I moved it somewhere to get ready for the, anyway, we, we had a group that I think they’ve come like three or four times to play, to play board games. And that’s what they do. I mean, they come and explore the Canadian Rockies, but what do you do at night when you’re not hiking or skiing? You hang out with your friends and that’s what you do. Or at least that’s what we do. But we pack that some of our more like premium games, there’s some games that are really expensive that are like in our personal collection, we packed it up, put a note on top and said, hope you enjoy these. And, and they did. I mean, oh, it’s right here. Sorry. It’s right next to me. I moved it off. How many guests leave you at like personal card that says, can pull this arrays review and all the guests at the property signed it and left it. Oh, nice. And did I do it for this? No, although that was very nice.

 

04:44:28

I did it because we knew that we had access to resources that would create an experience for the guests. And it would make them smile. I mean, that was really the only incentive that we needed. I had these games, we weren’t using them for that weekend. I knew that these other people would appreciate them. They use them done like, so we do lots of stuff like that. If there’s, you know, sometimes there’s groups coming in and they need additional, we have an email that goes out that asks people, is there anything additional we could do? So for example, it’s, it’s not, you know, it’s not cost effective or to, to, to be able to have all the different things that all the properties. So at our office, we have extra stuff that guests could borrow. So instead of having to have 18 massive crockpots when a normal sized Crock-Pot is good enough for a whole family. So we send out a message that says, you know, if there’s anything you need, we literally have an office where, and guests borrow stuff. So we have a procedure in place that, you know, if the guests are like, oh, actually we’re having a big chili. Cook-off we’re like, yeah, we’ll drop off extra. Crockpots no worries. And I dropped them off. I was keeping, puts them back up.

 

04:45:35

That’s great. You’ve been at, you’ve been able to incorporate your culture, your personality into each of your units. What would you do differently if you had to start from scratch?

 

04:45:47

Not much, actually. I did actually write it down. I tried to think of what we, we really believe in like learning. So I don’t mind learning from mistakes. Oh, I know what, I know what it was. I wrote it down. I would start staying in our vacation rentals earlier. So staying in our Vacation Rental was a practice that we added about five years ago. And I would have done that from the get go. And there’s a couple of reasons for it. One reason is it’s a really nice perk for our staff. I mean, they’re staying in them when it’s low season or they wouldn’t rent otherwise. I mean, we’re not, I mean, obviously we’re, we like renting properties. That’s what we do for a living. But our staff are able to stay at our vacation rentals if they have family visiting. And we started to stay at our vacation rentals, we worked it into all of our owner contracts.

 

04:46:44

So if you read our owner contract, it says that we’re allowed to use them for up to three nights per year and the owners don’t need to pay anything. And we S we strategically choose a time that it wasn’t going to rent anyway, but there’s so much to be learned about actually staying in the property that you will never get out of a guest review. So when our staff stay at the property, they are like, they’ve got their eyes on anything. That would be a mild annoyance. So these are things that a guest is never going to contact you to complain about because no one would like it would just be so petty that it, yeah, but there’s little things like, you know, the door of a silverware drawer is just a little bit loose. And every time I go to open the silverware drawer, it’s awkward or the garbage can is too close to the, whatever it is.

 

04:47:38

And so we have our staff, including us stay in our Vacation Rental so that we’re doing that type of review once a year, literally anything in that unit that could have gone better. And it’s stuff that a guest would have never reported. And because of that, we’ve learned a great deal. I mean, some of our best ideas come out of those come out of those stays and the staff are happy. They stay in these beautiful properties, or if they have family visiting, they get to kind of, you know, show off for their family show what they do for a living. And we get these incredible reports back of this one seems silly. We had never thought about it though. We didn’t have notepads at our properties. So our guests were always like ripping the back page out of our guests book. Cause you need a notepad. I mean, it was a silly one that we had overlooked and it’s not until you, it’s not until you stay at a property. And you’re like, dang it. I just had to call somebody. And I had nowhere to write down a phone number. Like, so we S you know, so that was one of the ideas. All right. Custom note pads at all the properties, custom pens, highlighters, markers, you name it. But yeah, a lot of our ideas came from our staff staying there. I would have literally done that from day one.

 

04:48:51

Very cool. Yeah. That’s, that’s a, that’s really a cool thing that you put in your owner contract saying that you can stay at the property three nights per year. Not only is it beneficial to you, to you and your, your staff, but it’s also a way to be able to work on how to improve the properties that you’re managing real quick. I wanted to ask, do you, do you put the, the, the custom work and everything into your, the properties that you’re managing as well? Like the, like the secret doors and everything?

 

04:49:17

Absolutely. Yeah. I mean, the only thing with the secret doors is that there’s a large cost to them. So we won’t make an owner do it, but, but they know we’re always recommending it. So, Nope. Any, anything that we learned about our properties? It’s the same experience for our owner. We are owners. I mean, I, I get to experience both sides of it, so, Nope. There’s no. If everyone gets access to all of the knowledge,

 

04:49:44

Is there anything that you do specifically that has helped guests leave positive reviews?

 

04:49:54

I don’t know if I can put a pin in it. I mean, it’s just, it’s just a series of all of the things well-stocked kitchen appears in our reviews all the time, responding to guest concerns super quickly. And I think, especially with Airbnb, you know, they’re big because Airbnb in technology makes it so easy to manage a property remotely. There, a lot of guests have had experiences where something is, let’s say a coffee pod that happens. That’s common. If you’re not local and able to replace that coffee pot immediately. And the answer is just like, oh, well just go buy one and we’ll reimburse you for it. Or, oh, my housekeeper will be by, in a couple of days, our response time shows up in our, in our guests reviews all the time because people aren’t expecting it. Right. It’s another one of those things that it’s like, it wasn’t expected. They understood if they, you know, when you’re staying at a hotel, you expect their response time to be really quick. When you’re saying in a Vacation Rental, you understand that the response time is slower, but it matters who wants to not have coffee on their vacation. That’s terrible.

 

05:51:10

So, yeah, the response time, because honestly trying to Matt and trying to do anything in your life where you’re not going to have problems is impossible. Like something’s always going to come up that we couldn’t predict. So what happens in the reviews is how we handled it

 

05:51:27

Now kind of going off of that. Are there any tools that you use specifically to be able to help manage and automate your, your business? Are you doing everything yourself?

 

05:51:37

Oh goodness. No. We’ve automated everything, not everything. I’ll retract that we automate everything that makes sense to automate so that the humans can do what they’re better at, which is being human, making decisions and creating experiences. So we have a property management system that automates most right. I mean, guests messages and sending out access codes and blocking calendars. That’s all automated. The, we have a task management system that, you know, keeps on top of maintenance issues. Obviously humans still need to do the task, but it’s nice to have a system that keeps track of what we should be doing and when we should be doing it, oh, we have like, we all have, we’re all linked to a calendar so we can all see the calendar at any given time and we can see who’s coming and who’s going and all the things. Yeah. So I’m probably known most for my automation and stuff, but the reason we strategically did that, it wasn’t so that we necessarily could work less it’s so that we could work smarter, not harder. And it makes the humans be more available to do things like drop off a set of custom games. Like if, when people are too busy taking care of tasks that computers should be taken care of and they don’t have time to do stuff like that, they don’t time to write handwritten notes or give thought to new ideas. So yeah, no, we automate as much as, as much as possible.

 

05:53:10

And is there a particular like product, like a, like a specific, like the towel or cleaning product or something in your units that has helped save you time and money that you can’t have or not having your units now

 

05:53:24

Inside the MIPS? Hmm. I don’t know that. I’d say there’s a specific one. We have exterior cameras on our properties, which is helpful because it also tells you when housekeeping can go in early or if people are sneaking in dogs or smoking or other things, but they’re out there exterior. So they only face the sidewalk. There’s lots of stuff inside of the unit that saves money. I’m not sure. I’m not sure that I could say a specific one, but I will, I will say a specific one behind the scenes. Like not in the properties is a task management system

 

05:54:03

At the task management and which, which task manager do you use?

 

05:54:07

We use a sauna, apparently it’s pronounced a Santa and I’ve been pronouncing it incorrectly for it’s a sauna now at our company, but we specifically use a Santa there’s. There’s a number of them available, but it, what was happening before was that if something needed to be done, let’s say housekeeping emails it, but email is a pretty terrible way to keep on top of tasks. So with the new task management system, it’s instant, right. Housekeeping shows up and there’s, you know, the internet is down. Well, they can instantly notify the person that takes care of the internet or they can take a picture of it. Cause that was another one too, like transferring pictures. I mean, even if you’re going to take a picture and attach it to an email and that’s all time. So our task management system, we’re actually in our task management system, more than we’re in email because all the things are in their emails get checked once or twice a day. But the task management system we’re inside that system all day, every day.

 

05:55:09

Okay. And if you could give one piece of advice to someone who’s trying to start their short-term rental business, what would that be?

 

05:55:19

If it was just one piece of advice I would say, right? Write the procedural manual right away. If your intention is to scale your business, you’re going to need it. And the sooner, the sooner you get those processes, either automated or just really well flushed out and communicated the sooner you can add people to help you grow your business. So for us, it was a virtual office. So the first employees we had was a virtual assistant, but because I already had that procedural manual, I could just, I could just kind of cleave off specific tasks that I’m like, okay, well there’s this one, this one would be a really easy one to hand over. And then they started doing those tasks and once they got better at it, I was like, okay, well now you can have this task. Here you go. And we just kept doing it. Yeah. So if anyone who’s looking to grow or scale, I would say start there because it’s also what you sell. I mean, if you ever consider selling your business, I plan really far in the future, by the way, I’m usually planning like 20 years in the future, 20 years in the future, I’d probably want to sell this thing and I can’t sell it with the knowledge in my head. So it’s gotta be written down in communicating.

 

05:56:35

And is there, is there one house rule that has helped save, save your butt before?

 

05:56:39

Is there one, sorry, I missed what you

 

05:56:41

Said. Is there one house rule that has really kind of saved you before

 

05:56:47

House rule? Meaning specifically

 

05:56:49

Gus, like something that like is in your manual that says like you will not do this or you will do this?

 

05:57:00

No, I don’t think so. They’re mostly just procedural tasks. Like how do you process a new reservation? What are all the steps involved in scheduling housekeeping? What are all the steps involved in inspecting a property or, or, well, I don’t know if anyone else calls it. We call it stripping a property, which makes her lots of jokes around our office because someone’s always on the schedule to go strip, which is

 

05:57:22

The house rule that I was meaning like, like some people have the house rule of like no smoking or take off

 

05:57:28

Specific to the house. If there’s one that saved our butt. I mean, there’s the obvious, no smoking, no pets. Take your shoes off at the door. It was something that w w where our resort is located. We receive a lot of guests from down south where it’s not part of the culture to remove your shoes at the door. And in Canada, we always remember shoes store because normally it would be snow and mud and, you know, not good stuff for carpets. So I don’t know that I would say it saved my, but it has certainly saved maintenance, costs the properties to communicate what that expectation is. I mean, there’s certainly other countries that have customs around shoes, but yeah, we put in our, we put in our host rules, just a polite reminder that in Canada, it’s part of our custom to remove shoes at the main door, because otherwise we were constantly shampooing carpets. Our flooring isn’t meant for outdoor footwear. Right. It’s a weird one, but

 

05:58:34

Yeah, I’m, I’m, I’m, I’m the same, you know, being a Japanese, you know, R I’ve grown up just taking off my shoes. And so us renovating the basement, it’s just kind of like the idea of people walking around with the dirty feet and in the mud. And to me, it’s gross, but where do you see short-term rentals in the future?

 

05:58:57

I think there, I see a future in which it’s, it’s a normal thing to do. Like, there’s been a lot of pushback with regards to legislation, you know, municipalities trying to shut them down. I think, I think that those municipalities are going to have to look at a different model of how people travel and share space. So I only see them being more abundant. So it’s a, I dunno to me, it’s a good, it’s a good industry to be in because it it’s, it’s growing. I mean, despite all the legislation that’s trying to shut it down, it’s still pushing through. So yeah, we’re, we’re excited to be, we’re excited to be in this industry.

 

05:59:43

Okay. And is there any way that, that people can reach you Charlotte?

 

05:59:49

Yeah, absolutely. You can reach us. You can reach us through our website, www.rockiesrentals.ca for Canada, if anyone has any questions or wants any more insight. Okay.

 

06:00:03

Of course. And I’ll, I’ll include everything in the show notes, ways that you can reach Charla the summary of, of, of the show. And, yeah. Thank you so much, Charlotte, for taking the time out of your busy schedule to be able to be here. It was such an honor. You have such a wealth of knowledge being on the platform for so long, and I’m sure that the listeners of the show will have taken so much away from this. And until next time hosts, keep on hosting, hope your hosts benefit from the show. If you found value, please go on over to iTunes or Stitcher, leave a review and let us know what you enjoy about the show. If you’d like to talk to the hosts that have been featured in these episodes, as well as the host nation, then going over to our Facebook group, short-term rental success secrets, talk to the hosts and the next step soon, keep on.