STRSS 53 – Pivoting Your Short Term Rental Business to Survive the Coronavirus w/ Ray and Vanessa Vargas

Video Transcript

 

00:00:00

And I think, you know, we’re also talking about how we can use this time wisely. What can we do to get better going forward? Can we focus on onboarding new properties? So they’re ready to go at the point in time when people are looking to start traveling again, taking the time to learn those systems and create new processes and educate our team as a whole and, and work on getting better while we wait for the, you know, everything to, to settle down.

 

00:00:24

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

 

00:01:05

Host nation? So I wanted to apologize as last week, we did not schedule out a success stories podcast like we anticipated. And the reason being is just because of everything that has been happening as far as the COVID 19 and its effects. I didn’t think that it was appropriate to share a success story as there was a lot of stuff happening. As far as Airbnb, just allowing this extenuating circumstance policy where all of our calendars were completely wiped. I really did kind of feel a funk for the past week. Thus, the episode did not go out as anticipated, but I was reached out to, by some really amazing hosts who were prior guests on the show, Ray and Vanessa Vargas. And they actually reached out to me first asking if they could share just some words of encouragement with the host nation community right now, as times are really uncertain and hosts, you know, who are affected such as like Ray and Vanessa, where, you know, they recently quit their job so that they could host full time.

 

00:02:03

And now with all these cancellations and things that are happening, you know, they still wanted to be able to share their message with all of you. So moving forward, the success stories is gonna be changing just a little bit where we’re not gonna be sharing so much the strategies on hosting and taking on more clients. Really. I just wanna be focused on what are, what are other hosts doing in this space to be able to really kind of stay afloat during these uncertain times? I think now is more important than ever that we start communicating more. And I do wanna apologize that usually when things are happening around in the world, being an introvert myself, I tend to keep to myself and don’t really communicate that much, but I know that it’s not just me, who I’m serving now. And there are many of you that are waiting for more answers and for support.

 

00:02:47

And I do want to be able to help get those messages out to you. So moving forward with the success stories podcast, we’re gonna be featuring hosts who are going through these times. These are gonna be shorter episodes. They’re not gonna be the full hour long ones. We’re gonna try to keep them around like 30 minutes or less, just so that we can have more of the previous guests come on and share their stories. We are gonna be posting more on Vacation Rental machine though, with Jon and I, as you all might know, Jon manages over 22 properties that are Rental arbitrage. And then he has about the other half of his portfolio, another 10 or so being cohost clients. So Jon is definitely feeling this as well. So we do wanna share some of the practical things that, that he’s doing in his own business, as well as things that you can be doing.

 

00:03:29

So if you go and listen to our show Vacation Rental machine, right now, we’re going back to publishing two episodes per week, more on the subjects of, you know, what, what are we doing? What are things that you can be doing to be able to really keep your business afloat during these times? Again, I do apologize for the episode, not coming out as timed and also for our weekly newsletter, not going out as planned, but I did need to take a little bit of a break. I’ve been feeling a little bit run down recently. So please bear with me this episode. This week, we are coming back and we’re gonna come back strong. And I am here for all of your support. If you like the show notes for this episode, go to Short Term Sage dot com slash STR R five three. Or if you like my show notes sent directly to your inbox every week, then go to Short Term Sage dot com slash show notes with all that being said onto this week’s conversation. Alrighty, host nation Julian Sage here. And we have Ray and Vanessa Vargas, some of our success story guests. And I believe which, which episode were you back? 20

 

00:04:31

Was in eight or 30. Yeah,

 

00:04:34

28 or 30. So nearly, nearly we’re we’re at episode 52 right now. So what we’re gonna be doing though, is we’re gonna be doing something a little bit different with the success stories podcast. And I first I wanna say, you know, thank you to Ray Vanessa for kind of inspiring me to, I was, I was really, some of you may have noticed the last episode of the success stories podcast that did not happen in time because I was actually gonna be putting out an announcement video saying like, Hey, we’re gonna be holding off the success stories podcast, just, you know, due to this coronavirus and, and its impact for hosts. I don’t, I didn’t believe that it was appropriate to be sharing people’s success stories. So I, you know, and I was honestly kinda feeling a little bit depressed and I was like, man, I don’t know what I should be doing.

 

00:05:15

But Ray, Vanessa, they, they, they reached out to me. They said, Hey, you know, I wanted to say, you know, this is what we’re doing in our business. You know, I wanna share with the community with the host nation and that really kind of instilled a new fire in me. I was like, man, what, you know, we have to pivot in our business and, you know, Ray, Vanessa from home sweet Hudson, they are pivoting their business and I’m, I’m pivoting as well in mine. And I’m pivoting with the podcast. So what we’re gonna be doing is we’re gonna be talking about hosts, success, host, pivoting, what they’re doing in their business, how they’re able to either increase bookings, what they’re doing to be able to change their business. You know, Ray and Vanessa now they they’ve scaled quite a little bit. We’ll talk about, you know, where they were when they first were on the podcast and where they are now, what they’re doing to be able to change. And what are some of the things that this virus is impacting and how are they trying to, you know, increase that, that business again. So thank you so much again, Ray, Vanessa, for coming on the, the short mental success stories podcast, please introduce yourself again for those of, for those of you that, for those of them that don’t know who you are yet, definitely go check that episode. I’ll include a link in the, in the description, but if you guys wanna introduce yourself and where you guys are at

 

00:06:24

Sure. Yeah. We own a short term rental management company. We’re based in the Hudson valley, which is about two hours north of New York city. We’re about a year and a couple months into our business. And you know, it’s been really interesting ride. We started, sorry, wants to part of the conversation.

 

00:06:44

The last episode,

 

00:06:47

You know, we started out this time last year with about, I’d say six properties and really quickly due to a lot of different factors, but obviously we’re finding ourselves in, in a similar boat, as many other hosts and, and managers right now where we’re trying to figure out what things are gonna look like in a week, in a month, in two months. So definitely really interesting time for

 

00:07:09

Business. Yeah. And I’m Ray, I’m originally from the Hudson valley region from the new Highland area. And like Vanessa mentioned, we’re about two hours north of Manhattan. So we’re dealing with some really unique challenges with all of the changes happening on a city and state level. And that’s kind of what’s us to reach out to you, Julian, because we felt like, you know, we were experiencing some stuff that, you know, we could share with other people that, that could help them during this difficult time.

 

00:07:41

Awesome. Now with, with you guys, you are doing just the traditional property management model, so you’re very asset light, just managing other people’s properties. You don’t have any arbitrage units, correct?

 

00:07:50

That’s correct.

 

00:07:51

We do not. Yeah. OK. And so, so can, can you kinda walk through like, you know, right before this whole COVID 19, you know, this black Swan event happened that that caused all these bus, you know, that caused all these, these bookings to cancel. Where were you guys before that? And what are you guys doing now?

 

00:08:10

Yeah, so, you know, I would say the January through March time is a relatively slower time for us. This year was a little bit interesting because we’ve had lack of snow, which usually prompts people to wanna get away and enjoy a nice, beautiful snowy weekend in the country. So things were, you know, moving along, but on the lighter side, I think we were anticipating an increase in booking coming in the next, you know, so it was a little bit of a extra shaky time when we started to get some cancellations come through.

 

00:08:46

Yeah.

 

00:08:47

Right. So, so you know, you, you’re going through that slow season where typically most people are not getting those really high bookings and you’re kind of depending on March to really start to, so when, when those cancellations started happening, like, you know, you guys, I think in the last episode that we were talking like you guys more recently like quit this full, you know, how is that impacting how this

 

00:09:14

Kinds nerve nervewracking, I think we really don’t know where we’re gonna land financially, just because we’re having so many different cancellations sprinkled with some bookings. Some of our clients who live primarily in New York city that have a second home up here that we manage for them have opted to take over their fam their house so that they could be there with their family. We’re not sure how long this is gonna last. You know, luckily we do have a couple of properties that we were able to help people use to sort of quarantine and, you know, socially distance themselves. And so I don’t know yet. I think we’re just taking it one day at a time, but you know, luckily we have a great team and everyone’s been on board and doing a really good job.

 

01:10:03

Do you have any, any, any full-time people that you’re paying now? I think on the last episode, you said you actually hired a full-time maintenance guy that was kind like doing everything for you. How is that impacting when you have employees to be able to pay,

 

01:10:18

You know, right now we we’re. Okay. You know, we’re still able to afford salaries. They still have been working. We’ve added another fulltime employee since then name is Brenda a she’s a property manager. Absolutely wonderful. She oversees housekeeping, hiring, scheduling, quality control. Even now she’s doing some guest messaging. So we’ve been able to sort of delegate a lot of the day to days that we were doing the last time we spoke with you where we can just focus on growing the business and, you know, we’ve, everything’s been great in that regard so far now that we’ve seen some bookings come in that are couple weeks long, maybe a month or two, you know, we’re gonna see what our day to day looks like at that point and, and figure it out from there.

 

01:11:06

So what, what are some of the, the things that you’re actively doing right now? Is there, you know, if you could kind of explain what the market is like in, in your particular area in New York and what are the, the things that you’re actively doing in your business to be able to keep it, keep it afloat

 

01:11:24

Over communicating with, with guests. Right? So for example, we’ve had some bookings that are in, towards the end of the March, early April that were just two or three day reservations. And so we proactively reached out and said, Hey, look, we understand the circumstance. If you want to cancel, we, we totally understand that. And we’ll give you a full refund. And we support that. I think the, the, the reason why is because we wanna make sure that a we’re just doing the right thing, be leaving a good impression so that when we get through this and people are ready to travel again, that hopefully they’ll come back and visit us in the future. And if they’re interested in extending their stay, because maybe they don’t wanna go back to New York city, you know, we can have that conversation. And we’ve had a few opportunities where people have said, Hey, you know, extend my reservation for another two weeks or, Hey, I’m getting outta here, but thank you very much. And so we’ve also been getting a lot of direct bookings.

 

01:12:25

Yeah, we are. I think, you know, seeing a lot of people that are, you know, families that are looking to say, Hey, you know, we have to homeschool our kids for the next few weeks and we’d love to have more space and, you know, access to a yard versus being in an apartment. So to be able to take them sort of transition from an Airbnb, you know, booking to a direct booking where there is a savings for people that, you know, didn’t necessarily plan for this to be where they are, is that it feels good to be able to help people, you know, make these decisions and, and not break the bank so to speak. So that’s been, you know, really, I think helpful for and believing for a lot of people.

 

01:13:09

We, yeah, I think another good thing to point out is that a lot of people are losing their jobs, right. Including our clients. And so, you know, most of them are trying to get creative in the way that they can, you know, still sort of generate income. In fact, we had this one gentleman who we were about two months ago and right as we were gonna sign a contract, someone decided to make him an offer on this property to purchase, even though didn’t have on the market. And so decided move forward with that and recently called and said, Hey, I lost my job. I live in Brooklyn and I’m not gonna sell. I’d rather just help other people that are looking for places to quarantine and try to generate a little bit of income to, to kind soften the blow with losing a job. So I think that’s another way that we’ve been kind been able to help.

 

01:14:02

What, what is it, you know, what is it like, or how are you guys handling your clients? So all your clients have these properties and now, you know, with this virus and, and all the cancellations is, is this causing them to reach out to you more? Are they expecting more out of you? Or is it, are you guys just, what, like, how are you guys handling your clients?

 

01:14:24

Yeah. We, you know, sat down last week and said, you know, let’s, let’s let them know where we are, what we’re doing and you know, what things are looking like for us. So we sent email all of our clients, just letting them know that, you know, we’re aware of what’s going on. We’ve proactively figured out what the best practices are for making sure the houses are safe. They’re disinfected and sanitized. You know, we sort of let them know that we are seeing cancellations, but we’re doing everything we can to try to maximize whatever revenue we can generate for them and sort of just, you know, have full transparency with them. And I got immediate responses from so many of our clients saying, thank you for letting us know, we’re thinking of you, you know, and, and, and really just banding together, you know, and being partners in this whole situation. So I think it was really important to just reach out to them, you know, acknowledge that we’re all dealing with this together and kind of give them our, you know, best recommendations on how we can move forward, you know, as a team,

 

01:15:30

Are there, are there particular things that you’re doing in your business now that you weren’t doing before, has anything that maybe has happened, you know, caused you to maybe shift to try to get maybe more creative or find ways to be able to increase your bookings?

 

01:15:46

I mean, right now, I think that we’re looking to sort of find the best opportunities for the inquiries that are coming in. I think that we’re thinking about calling all of our future guests that are maybe scheduled for April and may and see where they are. See if they’d like to extend, see if they’d like to reschedule and just sort of take the, the pulse on that so that we can really plan for, you know, where we need to fill in the holes and what we can do in those cases. I think we’re still sort of feeling out where everyone is in terms of guests for the future.

 

01:16:22

Yeah. And also educating people on the ability to book our properties through our website everyone’s to save money right now, rightfully so. And we’re to help make affordable for people. So, you know, just communicating over, communicating people that we’re here to help. We’re gonna get creative. I’ve had scenarios where a homeowner says, Hey, look, I know we’ve got bookings in the month of April, but I need to use the property. So we need to cancel those. So rather than just cancel without any notifications, like I email the person and say, Hey, look, I’m sorry, this is, this is what’s going on. They understand obviously, but we have other properties, so we can move you into another spot depending on availability. And we’ve successful with that. A number of, so that’s helped us retain some of the revenue and also give other people a place to stay.

 

01:17:25

Yeah.

 

01:17:26

With, with, with a decrease. You, you said that people are actually coming back to their homes. Is it, was it your guys are in I, is it Ithaca, New York?

 

01:17:36

No, it’s well, we’re based at Rosendale New York, which is near Kingston. People are probably more familiar with the Kingston Poughkeepsie area. So we’re about an hour and a half, two hours north of New York city.

 

01:17:49

And, and those people that they’re kind of retreating back to their homes to, to stay. And that means reservations that you did have, you have to, you’ve been having to cancel on those

 

01:18:01

In some cases cancel in, in other cases, we’ve been able to move them into other properties that have availability.

 

01:18:08

Yeah.

 

01:18:09

Okay. And, and kind of what what’s, what’s your guys’, is there anything that maybe you’re gonna be doing moving forward? Like there’s a bunch of, you know, I know that there’s like different strategies out there, like, you know, changing the title or, you know, offering discounts or all these different things. Have you, have you done anything, have you noticed any direct impact on your, on your business?

 

01:18:30

Yeah, I think, you know, definitely offering discounts, also creating minimal stays. And the reason for that is because most of the inquiries we’re getting right now are for either two weeks, a month, even up to two months. And so rather than having several one night reservations sort of get in the way of those other bigger opportunities, we put minimums so that we can avoid losing up on that kinda revenue. I think something we’ve learned too is like our contracts, right. I think we realized moving forward that we need to protect ourselves better in the event that a homeowner says, Hey, look, you gotta cancel all these reservations. And, you know, we worked hard to get those reservations. And so now we’re without any revenue

 

01:19:22

And it’s, I think it’s tricky because, you know, obviously they own the home and we want them to, you know, we don’t want to feel like we’re in a combative situation because I can understand if I were in their shoes, I’d probably wanna do the same thing. But I think, you know, we’re in a new world and there’s a lot of lessons to be learned. And I think just having set protocols before you come to a place like this, makes it easy for everyone to know exactly what should be happening.

 

01:19:51

So, so you’re gonna be, you’re gonna be modifying your, your contracts moving forward in that if the homeowner wants to cancel all reservations or stay in a particular property, what’s gonna be like the plan of action for those guests that did say,

 

02:20:06

Yeah, I think it would be something along the lines. If we can’t alternative accommodation for that, we would retain, take it from that’s already been generated for that or future revenue

 

02:20:19

And going back to employees because a lot of, you know, you guys are pretty unique in that you guys do have full-time full-time people. How, how do you communicate with your teams about something like this that’s happening and the, the impact that this is having on the business?

 

02:20:37

Most of it’s been remote, right? Like we’re practicing social distancing. Usually we meet here at the house, but we’ve been doing everything remotely and just being positive and keeping an optimistic mindset and being supportive of each other. I think we all realize that there’s a lot of uncertainty that’s gonna happen over the next couple of months or so right now we are in the process of looking our, at our finances and seeing how long we can last, the way that, that we’re set up right now. So, you know, we’re just taking it day by day. I mean, if it weren’t for them, we wouldn’t be where we are right now. So I’m not really of the mindset to just say, Hey, you know, we’ve gotta create layoffs. Maybe it’s, you know, some sort of a reduction or something like that, but we’ll, we’ll figure it

 

02:21:28

Out. Yeah. And I think, you know, we’re also talking about how we can use this time wisely, you know, looking at our processes. I know it’s hard to concentrate because we keep looking at the, but sort of trying to recenter and say, you know, what can we do to get better going forward? Can we focus on onboarding new properties? So they’re ready to go at the point in time when people are looking to, you know, start traveling again, we actually just decided to add breezeway as, you know, a new way to help with maintenance and housekeeping. So taking the time to learn those systems and create new processes and educate our team as a whole and, and work on getting better while we wait for the, you know, everything to, to settle down is I think a good way mentally to deal with it all, you know, sort of refocus a bit. So that’s another thing that I think we’re, we’re trying to move the focus on

 

02:22:22

Just a little bit of house cleaning, you know, just focus on pasts. And if there’s information there that inform a better job with some of these properties, which we’re doing both our employees, right. So there’s plenty of work to do, you know, in the meantime. So I, I think you feel good about that.

 

02:22:43

I think, I think a lot of people when, when the booking stop that the traction really slows down when you’re sitting on your hands for a while, you start, you know, like, you know, that you can start to eat away at yourself. So, you know, I like, I really appreciate what you said about finding different things that you can start doing in your business. You know, learning a new, a new, you know, maybe a complex system like breezeway and trying to, you know, taking the time to really understand it and how it can impact your business. But I think that what you guys are doing is, is a really positive, positive thing. What, what you said kinda moving forward though, you know, let’s say, you know, how are you guys planning for future for the future? Like if we don’t know how long this could last, we don’t know the lasting effect on the short-term Rental market. How, how are you guys trying to position your business or yourself so that you, you can be best prepared for whatever’s to come?

 

02:23:36

Yeah, I think that that’s gonna be an ongoing conversation for us. I, I think in the next few weeks, hopefully we’ll have an idea of where things are going, you know, just from an overall financial perspective for the country and for consumer trends moving forward. I think that what’s going be, is being nimble and think being able to sort of think on our feet and be creative, but I think, you know, a positive mindset’s important remembering that people will travel. You know, this industry will continue. I believe very strongly that it will. And just being prepared to make those quick decisions, you know, as things develop. I can’t remember a time when we’ve ever, you know, all been sitting in sort of waiting like this. So it’s, it’s an interesting time and I think we’re just gonna have to kind of wait and see a little bit,

 

02:24:26

What are your thoughts? You know, I’m, I’m just curious, what are your thoughts with Airbnb and kinda what they just did as far as the extenuating circumstance? Are you, are you guys listed on multiple platforms or were you majority of all your bookings coming through Airbnb, Airbnb, you said that you do have direct bookings, but about how much, how much of Airbnb has impacted your business?

 

02:24:48

Well, a lot of our bookings come through Airbnb, so it’s hard to say how the new policies have impacted our business so far. I think, you know, from a, from our standpoint, we really want to be as flexible as possible because people are put into tough situations, right? They need a place to stay, but you know, every day there’s a new announcement by the governor. And, you know, so people are making drastic changes in real time. And so we’re just trying to be able to accommodate as, as best as possible without losing too much revenue. But if someone needs to cancel and they need a full refund, I think we’ve been pretty open to doing that.

 

02:25:31

Yeah. And I think, you know, it’s easy to think about how it impacts us, but I think that you also have to realize that I, I think their strategy makes sense in terms of, you know, how they’ve gone about it. I, I understand that they want to just sort of do the right thing for people right now and sort of look at the larger picture. You know, we do get a, probably nine, I would say 90% of our bookings came through Airbnb. So it’s, you know, significant source of lead generation for us. But I think even if they hadn’t, we would probably be doing it ourselves

 

02:26:08

And let’s face it. A lot of industries are dealing with the same challenge, you know, airlines, restaurants, bars, everyone’s losing a lot of people losing their job. So, you know, I think we have to be focused on what’s important from a, a moral standpoint and, and just, you know, be sort of nimble and save our money. You know, we load it up on a lot of rice, pasta beans, you know, we haven’t really left the house much, to be honest with you, you know? And so just trying to do our part

 

02:26:46

Awesome. Well, you know, I, I appreciate you for taking the time and, and coming out here, you know, I think, I think it’s really inspiring what you guys are doing. You know, that’s, you know, during these uncertain times, you, you guys are keeping a positive mindset. You wanna share your message with the community. I love that. I think, I think now is not the time to, you know, as we are inside now is our time to, you know, be vocal and, and communicate over, communicate like what you said with your, with your clients. We should be over, over communicating with everybody and letting them know like, Hey, we’re, we’re healthy, we’re safe to our guests. Hey, we’re taking care of our properties. We’re making sure that they’re sanitary, you know, to our clients, we’re doing our best to be able to make sure that your places are trying to get occupied as well as take care of ourselves. That it’s not just about profit in this time. It’s about, you know, the safety and wellbeing of everybody. So really appreciate you taking the time to, to jump on here. Is there anything else that you wanted to share with the host nation? We’re all in it together,

 

02:27:43

I guess, keep your head strong and, you know, identify kinda costs or business expenses that you of at the moment and just try to get to you when you first started the business and doing everything yourself. You know, I think that for us has been super important, so just keep head up and we’ll get through it.

 

02:28:06

And what, what are those, those types of expenses that you have identified in your you’re cutting out?

 

02:28:12

It’s a combination of personal and, and business stuff. We were using key data, but right now we had to put a pause on that, just because if didn’t was that useful for the circumstances, what everything that we can sort of minimize on. I think’s important to cut back right now.

 

02:28:41

Well, I appreciate it. And you know, we definitely wanna stay, stay in touch and, and see how you guys are kind of going through your journey. I would love to, you know, get you back on when, when we are further down the line and see you guys still thriving and growing and, and, and you guys are making a serious impact.

 

02:28:55

Yes. Thank you, Julian. It’s always a pleasure talking to,

 

02:28:59

So Vanessa, take

 

02:29:00

Care,

 

02:29:03

Say goodbye for the puppy too. The

 

02:29:07

Buddy

 

02:29:10

Hosting everybody hope host benefited from the show. If you found value, please going over to iTunes, leave us a review and let us know what you enjoy about the show. If you’d like to talk to hosts that have been featured in these episodes, as well as the community, going over to our Facebook group, the host nation.