Shelby Pracht:                   00:00                     So I would definitely recommend for anybody looking into starting hosting to start in your home. If there’s any way that you can start in your own home and meet guests in person, then you really get to hear what they’re looking for specifically and talk to them and ask them questions and see what they’re looking for in those units and that’ll really help you as you scale up.

Julian Sage:                         00:22                     This is episode number 45 of the short term rental success stories podcast. Are you an investor that’s looking to have your home professionally managed? Go to cohostit.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 in 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, going over to our Facebook group, the host nation to connect with the community.

Julian Sage:                         01:03                     Hey, what is going on Host Nation? I am super excited to be back again with you this week. This is so exciting because we are coming up towards the high season so March to October is the high season at least in the Alexandria market. I’m sure that a lot of the other markets follow a very similar pattern unless you are very fortunate enough to live in Florida or Phoenix, you can probably tell where my heart is. I’m a Florida boy. I love wearing flip flops and shorts and being out in the sun and being nice and brown. In the DC area, I am always wearing sweatpants. My hands are very cold and my feet are very cold. I am very pale because I do not go outside enough, but I am really excited because we are coming up to the high season and cohostit, which is Jon Bell’s and I property management company.

Julian Sage:                         01:51                     We offer this thing called the turnkey rental arbitrage program and we’re coming up to this time now where we’re getting units ready for the high season. So for those of you that are interested in getting into turnkey rental arbitrage and working with Jon and I personally then definitely, you want to go to cohostit.com you can find out more about the turnkey rental arbitrage program. You can even schedule a time to talk for a one-on-one about if this would be a good program for you. I’m very excited for this new year because it’s going to be really game changing for cohostit and us moving forward and for our investors and their returns and I’m just so so pumped. And there is a project that Jon and I had been working on for quite a long time now and we are really starting to really dive deep into it.

Julian Sage:                         02:30                     So for the next month, we are just going to be putting our heads down and focusing on providing this next level content to you guys. So if you thought that the success stories podcast and vacation rental machine were super high valuable, then you are going to be blown away with the next level that we are going to be providing in this next iteration of our content. Also want to highlight a review that came in real quick. This is five stars from case stands. Well, they said love this show. Julian asks great questions and has amazing guests. Thank you so much. Case Stan. We always appreciate the reviews that come in on iTunes. In this episode we have the special honor of speaking with Shelby Pracht. Shelby manages 13 units all located in Mammoth Lakes, California. While she was still working a full time job as a counselor at a crisis center, she and her husband started renting out a bunk in their living room of their one bedroom condo.

Julian Sage:                         03:16                     They were able to make enough money out of the spare bunk that they were able to completely cover their mortgage from doing that. And from there, their neighbors actually started to hear what they were doing and renting it and putting it on Airbnb. And they started asking them if they could start managing their properties. Shelby shares how she transitioned to becoming financially independent to being a full time property manager with only three properties and how she attracts property owners without doing any marketing strategy at all, which is crazy. And why she is selective with the units she’s even taking on. So she even needs to push people away because they are so interested to work with her. If you’d like my show notes for this episode, go to shorttermsage.com/str45 or if you’d like my show notes sent directly to your inbox every week, then you go to shorttermsage.Com/Shownotes. With all that being said, onto this week’s conversation, Hey, welcome back, host nation! Welcome back to another episode of short term rental success stories. In this episode, I have the special honor of speaking with Shelby Pracht. Shelby, would you please introduce yourself to the host nation and let them know who you are and what inspired you to get into short term rentals.

Shelby Pracht:                   04:13                     Hey, host nation. My name is Shelby. I am based here in Mammoth Lakes, California at a ski resort. And I got into Airbnb completely accidentally. My husband and I went on a honeymoon to Paris and traveled a little bit around Europe, stayed in some Airbnbs back in 2015 when it was pretty new in our area and came back and decided for some really strange reason that we were going to try to rent out a bunk bed in the living room over a one bedroom condo. And that actually went surprisingly well and we enjoy the experience and we’re making enough from that to cover our entire mortgage on that condo. And, and from there, the neighbors heard how we were doing and asked us to start managing their properties. We’re now managing 13 other short term rental properties here in town.

Julian Sage:                         05:08                     And how long has it been this journey?

Shelby Pracht:                   05:11                     We started 2015 so little, little over four years now.

Julian Sage:                         05:18                     So wow. A bunk bed in your condo, in the living room, you said?

Shelby Pracht:                   05:25                     Yeah.

Julian Sage:                         05:25                     Was able to cover your mortgage. What location are you? Are people willing to pay that much to stay in a bunk bed in a condo?

Shelby Pracht:                   05:33                     Yeah, so we were charging like $40 a night for that, but we were booked completely solid. You know, we’re, you know, the town of mammoth lakes. If anybody’s in Southern California, will have a general knowledge of it. It’s a big ski destination. A lot of people from Los Angeles, San Diego like to come up just for the weekends. And there was a lot of young people that were traveling and wanting to have somewhere to crash before they went skiing in the morning. And you know, it was a great way for us to meet a lot of people to build up a lot of great reviews on our profile by being there and interacting in person with people in a shared space and gave us a lot of really great you know, knowledge and information moving forward. When we started renting whole properties

Julian Sage:                         06:16                     About four years ago, you got started renting out a bunk bed. That started doing really well and then people started hearing like, okay, Shelby is renting out a bunk bed and making a killing. And then they also wanted to get involved. At what was that progression to getting to 13 properties? What did that look like?

Shelby Pracht:                   06:32                     We were very reluctant to take on any other properties for a long time to be honest, just because it was a lot of work and we were doing everything ourselves and we have a lot of single or two night stays in our area. Like a lot of very quick turnover. But we were making enough from fermenting that bunk bed that we were actually able to purchase a duplex. We moved out of that condo into our duplex half of our duplex and began renting that same condos, old-time on Airbnb, the whole property. And it was actually the neighbor in that same condo complex building that had heard, saw people coming in and out of our condo all the time and was like, I’m using a traditional property management company. I met, you know, 45, 50% occupancy where we were at 90, 95% occupancy, 100% occupancy during some busy months.

Shelby Pracht:                   07:24                     So he found, found us, got in contact and you know, we kind of explained, we don’t have any experience managing any other copies besides this one. But he was so fed up with the traditional management companies here in town that he was willing to give, you know, two 20 something kids, a chance managing his vacation home. And from there, within the next two to three years, we have had other neighbors we actually managed or in that same complex right now. Mmm. And, and then just some other friends and family of that original guy that are all using us now too to manage their vacation homes. And it was, you know, we’ve actually had to turn down a lot of people because there’s so much demand or live person, property management, somebody that’s actually here and it’s not one of those old fashioned brick and mortar companies that doesn’t really care about people’s properties or their bottom line. So there’s been a high demand and we’ve had to try to grow strategically. And that’s, that’s been a big, a big issue for us is figuring out how many properties for us is the right number.

Julian Sage:                         08:43                     Right. And that right number. I wanna I want to hit on that thing that you told me before we got started, but you w how many properties were you able to go to where you’re able to be full time into the management?

Shelby Pracht:                   08:54                     So we do, we do have some longterm rentals that we own that are helping pay the bills. To be honest, I think I, we were probably just at two when I was able to go full time and my husband was still working a full time job and bringing in income from that. And then we had anytime from this longterm rental. So we were able to, I believe we’re just two properties for me to quit my full time job.

Julian Sage:                         09:19                     So you’re, you’re, you’re, your longterm rentals are probably bringing in yet you said you had six, they were probably bringing in what, two to 300? Net per month with those

Shelby Pracht:                   09:29                     We’re looking at actually probably five 50 per month.

Julian Sage:                         09:33                     Okay. So some really good, really good units. Yeah.

Shelby Pracht:                   09:35                     These are money coming in from those for sure.

Julian Sage:                         09:37                     But compared to the bunk bed in your room, how is that in comparison?

Shelby Pracht:                   09:43                     You know the bunk bed, like I said, we were, we were charging 40, $40 a night midweek and 50, 60, $70 and I don’t know, weekends at literally 100% occupancy while we were doing that. So we were making, making some decent money with that, but eventually just having that many people in and out of our own personal space was draining for sure.

Julian Sage:                         10:10                     So one of the things about one thing that I want to hit on was the condo condos. It’s something that is a kind of a, a sour subject with a lot of people. But it seems like your condo was, was really pro it. What’s the reason? Is that just location or is that the types of people that are purchasing condos there? W how, how did that end up working out?

Shelby Pracht:                   10:30                     So we actually, we have owned both condos, multifamily and single family homes in our town. And the biggest reason is that the short term rental laws and zonings in our town only allow condos to be rented on a nightly basis. So any multifamily or any single family home has to be 30 days or longer. And they’re just, that’s our town trying to keep housing for locals and such a destination location. However, having owned all three, I would never want to do a short term rental in a home compared to our condos because it is so much easier. And we have, and, and granted we’re in a location that all of these condos, all of the complex is the homeowner’s association isn’t, you know, the majority of the units are for short term rentals and we’re not ever expecting any of those homeowners associations to take that privilege away.

Shelby Pracht:                   11:32                     They’re used to that. A lot of the managers of the homeowners associations specifically have been trained in working with short term guests. They hand out keys when it’s necessary, but mostly it’s stuff like, you know, we last winter and we had 700 inches of snow here in town. Yeah. Okay. So the, of having to go and shovel out properties or pay for people to go shovel properties. The homeowners association includes all of that. You know, the building maintenance. If there’s a problem with the roofs, if there’s a problem with the windows, if there’s, you know, that’s all handled by the homeowners association. And when I have a guest that locks himself out, I can send that to the onsite manager and he’ll go unlock the door for them. And that’s not something that I have to go do every time. And that’s a huge benefit to me. You know, I also love the fact that all of those kinds of complexes have pools and hot tubs that I don’t have to maintain the guests love having, having those, you know, a laundromat and the sauna and all of those amenities right there that I personally don’t have to be responsible for.

Julian Sage:                         12:41                     Yeah. It’s kinda, it’s kind of the beauty. It’s like, it’s like the having the apartment complex you know, having apartments, it’s just so much easier when you are managing them. And that’s why, you know, with rental arbitrage, it’s so much, it’s so easy because you have the economies of scale, you have the nice amenities, you don’t have to worry about all those little things because people are taking care of things like that for you, like shoveling and all of that. But a lot of people do get into situations where there may be renting out in a condo and then the condo regulations change or the HOA says we’re not allowed to do that anymore. Is this just specific because it is a, a ski location and it’s, it’s very, it knows about short term rentals. If you were to do this somewhere else what would be the criteria that you’re looking for as well?

Shelby Pracht:                   13:21                     I would definitely have to, it would, it would be a whole different decision making process if I were outside of this area. And I understand that there are a lot of risks to homeowners associations in other areas. You said it’s, it’s really just the specifics of the legalities and the technicalities in our town that has decided that these condos are going to be what we’re renting short term. And so none of those, I think out of there’s 120 something condo complexes in our city and I think there are three that don’t allow short term rentals. So I don’t, I don’t imagine any of those going anywhere. You know, the majority of the people that own property in our town don’t live here, were way more second home on our base than we are primary homeowner. And I think there would be a lot of very unhappy people if any of those homeowners associations tried to change those regulations.

Julian Sage:                         14:19                     Now I’m looking at the prices of these units and you know, one, they, they look, they look beautiful. They, they’re really wealthy. It looks like a place that I would, you know, someone that’s looking to go skiing and, and, and something really cozy would go to. But the prices on these places for the condos is, is also crazy. These are some, some pricey places. I mean, granted it is California and it is a ski ski area, but I can just imagine, do you mind, do you mind sharing, like how much on average are you able to make with let’s say per unit?

Shelby Pracht:                   14:48                     You know, it’s, we’re pretty all over board. So the largest unit that we have is a two bedroom. We’ve found here that the smaller units are easier for us to manage and just are better for us. So a one bedroom, a studio two bedrooms. We, we have we have a two bedroom this month, December, that’ll be grossing more than $10,000.

Julian Sage:                         15:15                     And your management percentages

Shelby Pracht:                   15:18                     25%, 25%. I mean, they’re not including everything. All of, you know, we have to pay a local tax to transient occupancy tax and the cleaning fee and all of that jazz. But you know, an average, an average month for an average studio, one bedroom, we’re looking, you know, four to $5,000 that that unit’s bringing in total.

Julian Sage:                         15:41                     Yeah. That is just crazy. And, and I wanna I want to talk on that a little bit because you have, you have six single family or you have six units that you longterm rent out of and compared to these properties that you don’t, you didn’t have to purchase them, you didn’t have to furnish them. And you’re just managing them compared to longterm rentals and what you’ve had to do, investing and fixing them up. What does that like?

Shelby Pracht:                   16:03                     It’s really just the, the difference in in the workload that, you know, we, we have the duplex here that we bought. For example, we have tenants that moved in the week that we closed on that duplex and they’re still there six years later and we’ve had no issues. We’ve been over there once for maintenance call in the last six years. It makes significantly less money than our Airbnb is, but it’s way less work. So it’s just something that as we’re growing the income from this business, we’ve been funneling it back into longterm rentals that are something that we can be very hands off with as a more passive you know, obviously we’re still managing those, but you much more passive source of income to help fund our lifestyle. You know, we’re here for the ski and snowboarding too. So

Julian Sage:                         16:56                     What is your first cohost client look like when, when you entered into that relationship about four years ago, you know was it, was it a really hot market still for like Airbnb and short term rentals? And did you, how did you even know how to price and do everything? Were you just using the market data that was already there?

Shelby Pracht:                   17:13                     Yeah, I mean I was literally just pulling up Airbnb and searching as if I was trying to come stay for the weekend and seeing what all the prices were. I was sitting down and doing research constantly just to make sure that our prices were on par with what everything else was and then, and then lowering them a tiny bit so that we could be booked. Whereas we had a lot of, you know, and that’s, that’s have been bending and all of those large brick and mortar companies that we have so many of here is we’ll say, okay, the winter rate is $300 a night. Summer rate is $200 a night. That’s just what they put it at. And they never, you know, move it up or down because of demand. And I think that’s why so many people in our town were getting really frustrated using those companies is they would end up with very low occupancy rates because they weren’t doing any kind of price adjusting. And that was something because we’re in such a micro microcosm of that little market, you know, 40 miles away, the prices are going to be completely different. So I have not been able to use any kind of, I’ve looked at different pricing softwares and I really haven’t had any luck with those. Even today, I’m still just, you know, on a regular basis, two, three times a week, calling up Airbnb as if I was a guest and looking at what prices are to make sure that we’re in line.

Julian Sage:                         18:35                     So you, so for your 12 properties, you’re, you’re going in there and you’re adjusting the prices. Like you’re the dynamic pricing. Wow.

Shelby Pracht:                   18:42                     Yeah. That’s a lot of work though. What’s enabled us to be so successful and keep that high occupancy rate. I feel like [inaudible]

Julian Sage:                         18:49                     Because if w w if you set it up as dynamic pricing, what, what, what is it telling you that you’d be charging

Shelby Pracht:                   18:57                     The dynamic pricing on Airbnb is just a mess in our area. You know, we’ll have like, I don’t know if you were looking, new year’s week is going to be our biggest week of probably of the year. The, we have, we have a two bedroom that rented for like $879 a night. It’s just a little condo and we had a brand new listing that went up and the price tips for that weekend was like $150 or something. I was like, well, I know we’ve already rented these, you know, between 600 $900 a night. I’m not going to list this one at 150.

Julian Sage:                         19:40                     So, well you said a lot of this grew by word of mouth, but were you, what, what did that relationship look like when you were interacting with those potential clients were used? Telling them like how much you would be able to bring in or how, what, what were you presenting to them so that you would be able to take them on?

Shelby Pracht:                   19:59                     It was really more about occupancy rate. They were looking at how frequently we had people in there compared to what they were getting. And they said, you know, even if you rent it hassles what the other company is renting yet we’ll be making more money in the long run. You know, that that was a big thing that very first tenant or owner that we took on was really concerned that he was not getting a lot of good one-on-one communication from the company that he was working with. It was like we had a dining room chair go missing. I don’t know why one guest would take one dining room chair, I’m assuming it was broken and they just threw it away and didn’t say anything. And the property management company didn’t tell them that has happened. So the next time he came up there was one less dining room chair and he was just really unhappy about something small.

Shelby Pracht:                   20:47                     But he was like, it’s not about the chair. It’s about the communication. I want somebody that’s actually going to be in the unit that’s going to be watching over my stuff and making sure that, that the unit is doing well and that the best interests of both me and the owner were taken to heart on a regular basis. So being able to say, you know, I live right here. I live down the street. I lived at that point downstairs from you. I’m going to be in there personally making sure that things are going okay and letting, you know when they don’t, just communicating better. That was something that they were really looking for. And, and moving forward from there, he was able to then share the amount of money that we were making him to all of his friends. And they were so thrilled to see the difference in the income that they have started trickling to us as well.

Julian Sage:                         21:42                     Do you know that in these like in this location, was the majority of these vacation homes managed by like professional management companies, like longterm rental management companies that were just doing a vacation style or so the majority was doing that and then compared to, let’s say Airbnb because that, that’s the beauty of, you know, what you were able to do, you’re able to offer your services, you’re able to say, Hey, I’m not this, you know, this big conglomerate head. You know, I’m a person and you know, I’m going to be going in there. I’m going to be changing the prices. I’m going to look over the unit. Have you noticed now though, that a lot more people have come in and a lot more people are trying to offer the same things as you?

Shelby Pracht:                   22:21                     Just the number of actual properties on Airbnb is probably doubled in our area since we started. And I think a lot of people have seen the success of, of having a privately managed. There’s actually a lot of people that are attempting self-management from generally from Southern California, which we’re six hours from Southern California. So that’s been, we’ve had so many people come to us and say, well, I wanted to take on self management, but I just need somebody there to handle the cleaning and the emergency stuff and have, you know, we’ve had to make that decision multiple times. Is this something that we want to take on? And for us, that answer has been again and again know that we, we really love doing the full service, having everything in our own systems and not just being the one that gets the phone call with stuff sitting fan. So but that’s definitely been, it’s been interesting to watch the market shift over the last few years and seeing the difference and, and how that’s affecting the whole market.

Julian Sage:                         23:29                     So, so prior, it used to be people coming to you because they didn’t like the management company and how they, they weren’t really in tune with, with the market. They didn’t, they didn’t look after the property the way that you would. So you were just able to start getting that business. But now for people that are coming in a lot of people are trying to self manage because they think that they’ll be able to make a lot more, but they still, they still need that body. They still need people that are local. I’m curious w you, you, you’re very selective with who you’re taking on though and a lot of people that maybe are listening to the show might feel like, well, you know, there’s so many people that are doing this. You know, let’s say like in your market there’s so many people that are doing this. I just need to pick up people. W why, why are you so selective though with who you’re taking on as clients?

Shelby Pracht:                   24:13                     Mostly because, well, I mean because we can leave, we have, we have the opportunity to pick and choose because we have so many people approaching us and asking for management that we’re able to decide what units are going to work best for our style of management and what I’m looking for and, and also finding help. Cleaning has been our biggest challenge is once, once we scaled past our two units that I was cleaning myself every day I need help. And I have two amazing full time leaders right now that are actually, I’m going to be, they’ve been just contracted in the past come January one they’re actually going to be hired as full time employees and taking on more management duties. They’re amazing. But even with the three of us at 13 properties that are turning over so frequently, we need more labor and I’m not willing to grow further until I’m sure that I have amazing cleaners that are trained and in place that I know are going to stick around. I don’t want to hire some mediocre cleaner who does a decent job. That’s just okay. And then we ended up getting mediocre decent reviews. That’s not what I’m after. I am not going to grow any bigger than I have the ability to keep those units in pristine condition and I have the help that I need to get from turned over.

Julian Sage:                         25:36                     Yeah. I want, I want to talk about the cleaners in a little bit, but I want to go back to what you’re saying with the criteria for the properties that you’re looking for. What, what’s that criteria look like when you’re going to be onboarding a new client?

Shelby Pracht:                   25:48                     So we absolutely will not take a unit larger than two bedrooms. Which I know is, is opposite advice for a lot of people. I know a lot of people are all about getting these big properties of sleep time and people and that’s just not been what has worked for us. We’ve taken on a couple of larger properties back when we first started and ended up off supporting them because they were more hassle than they were worth. The larger the property, the more you know, we have a families with lots of small children that are making a mess or you know, people that, you know, we never really had any partying issues, but that are just, there’s just a lot more mess. It requires so much more time and energy to clean. And again, my cleaners are my most valuable resource. So having those larger properties is just sucking too much of their time and energy to get all of the linens done and all of that. So we’ve gone back to only two bedroom properties and we’ve also found that the occupancy rates for us are much higher for those one and two bedroom properties than they were for the larger properties. So it’s a whole lot easier for a single person or a couple who want to make a quick trip up to mammoth from Southern California to stay in a little studio, one bedroom that’s more affordable than a three, four bedroom property.

Julian Sage:                         27:10                     And, and with the, with people that are approaching you saying like, Hey, can you do this more selective service? A lot of managers do offer like, you know, tier services. Why, why choose to only do well, you know, full-service and not take on those, those lower tiers.

Shelby Pracht:                   27:28                     That’s more for my own peace of mind. You know, it’s something that we over the years have created good systems and I have found that being in charge of the whole process is a whole lot easier than just being in charge of the little bits and pieces. When you have somebody that’s, you know, calling and needs boots on the ground. But I have no information. I haven’t seen the conversations that are going on in the past. I’ve no idea what condition the property was in before they checked in because I wasn’t the one that cleaned it or checked it. That was just, it was too much up in the air for me to want to take on. I was not ready to, to take on that much. You know, variants. I like having control over the whole process. And that brings me a lot of peace of mind to know from start to finish exactly what a guest is experiencing.

Julian Sage:                         28:23                     And, and, and with that process, when you’re going into a new unit, are you, do you have like a, a system when you’re like looking through the property or because all of these properties they look like they’re maybe designed and furnished prior to you picking them up? Or did you do the design?

Shelby Pracht:                   28:39                     Yeah. Yeah. So we don’t own any of the furniture. The furnishings, you know, none of the are, they’ve all been pre decorated and most of them pre-lived in. A lot of these have been vacation rentals for years and years. You know, we have, we have owners that have owned their condos here for 20 plus years before we took them on. And that’s something we’re still kind of playing with. We’ve had issues with people buying crappy couches and then, you know, owner guests breaking the pullout and you know, it would be great if we could have more control over how those are furnished. But

Julian Sage:                         29:18                     When you’re taking on clients, are these all going underneath your profile? So you’re the one that could potentially have the negative review if someone’s couch is falling apart?

Shelby Pracht:                   29:30                     Yes, yes. Although again, I, I like having that all on my own profile. We started we have one unit from our very was the second unit that we took on where we are a cohost. This woman already had her unit listed and had been doing Airbnb and was not able to keep up with all of it. And having her on the account as well causes a lot of drama. Just the fact that she can see every message and she’s reading and responding and then I don’t have the ability to go in and offer refunds or request money for repairs without having to ask her to do that for me. Since you, the primary host on that, there’s just way more communication than we have with any of our other units. And so the other units have become much more streamlined.

Shelby Pracht:                   30:24                     As far as the, the furnishings and stuff, that’s something that we’re still working around. And as we’ve been able to be more selective, we’ve had owners that are coming to us when they’re purchasing new units and asking me what I want in them. So I’m able to say this is the exact house that I love, that works well, that we know guests like that is easy to, to work and well, you know, able to give them direction on that. And that’s been amazing. So it’s been really great to get to that point where people are asking me for those opinions and then they go pay for it all and then I’m able to manage something that I feel comfortable.

Julian Sage:                         31:00                     W what are some of the things that you did with your initial clients that you started doing? Like what, what were some of the learning lessons along the way from your first to now having 13 units?

Shelby Pracht:                   31:11                     A lot of it has been communication. So as we’ve scaled up I still have owners that like to use their, their condo frequently they’ll come up from Southern California and want to use it themselves. And I’ve had to start telling the new new owners that you can’t use it during new years. You can’t use it during MLK day, during president’s weekend. Those are our biggest moneymakers you’re using it yourself, then I’m missing out on all of that income. But also, you know, I have been giving out my cell phone number to owners that they’ve been, they’ll text and they’ll call and sometimes they’ll email my personal email. And sometimes my business email is, it’s very hard to get scheduling all into one place. When when I started, I did not have any kind of streamline communication system. So that’s something that we’re working on now. Okay. Now every request for owner usage needs to go through the same channel. You can’t text me and it’s going to get lost in the mix. So those are definitely a lot of the, you know, settings and boundaries for ourselves and what we’re looking for. And then figuring out how to streamline the communication as that’s grown.

Julian Sage:                         32:29                     Yeah. I imagine that it’s, it’s gotta be challenging as you take on new people. Every person’s going to have different you know, challenges, different things about them that you, you have to learn how, how to work with what does that like, you know, managing with a bunch of different people.

Shelby Pracht:                   32:45                     It’s interesting because if we have some owners that are, we don’t hear from, I send them a check every mail in the month, then they’re happy and I’m happy and I don’t hear from them at all. And then I have some that I’m here once a week and, you know, it’s, it’s definitely been interesting. We’ve, we’ve started to, you know, as we’re becoming more selective about units that we’re taking on, talking with those owners and seeing what their expectations are and how they liked, and then choosing units also based off of that, the communication style fits what we’re looking for.

Julian Sage:                         33:21                     You bring up communication a lot. And you know, one of the things I did want to bring up was that you did, you did have experience with crisis, a crisis counseling. So you do have really communication focus. You talk about communication a lot. I want to know for this type of business, how much of it is communication, how much do you think is hospitality and how much is real estate?

Shelby Pracht:                   33:44                     You know, for us the real estate, it’s very small. I mean there’s such high demand in our area that we could find a little shack and somebody would be excited to pay a little bit more. It, I think the communication is only second to my cleaning staff and making sure that that unit is in good shape when guests are at. But even then, if I don’t communicate with the guests or with the owners, well the guests are never going to get there in the first place. So I think, you know, having that, that Swift easy communication with both the guests and the owners, you know, the guests need to be able to have all of the information that they need or they step foot in that unit. And if I don’t communicate well with my owners, what’s going on with their unit, they’re going to leave me and find someone else. And then it doesn’t matter if I have guests in there or not because I won’t be making any money off of it.

Julian Sage:                         34:40                     Yeah, I mean you’re, you’re doing something right, Shelby. I mean, you’re, you’re, you’ve been doing this for, for, you know, a little over four years. You have your Superhost over 14, you know, 1400 reviews, 4.9 star rating. I mean that, that says a lot. That says a lot about the, the quality of, of, of how you’re communicating and the cleaners. I wanted to hit on the cleaners now though. What is it about cleaners? You said you found two rock stars, but you, you’re, you’re looking to maybe potentially get some more. What, what are you looking for in a rock star cleaner?

Shelby Pracht:                   35:12                     My favorite thing about the two girls that I have right now is that, you know, while I have have that cleaning process streamlined and they have a checklist and they know what they need to do, they’re amazing at communicating with me when there’s any kind of issue or even going and handling it themselves. Stuff like, I dunno, the, the light exterior light bulb needs to be changed and that’s something that would be easy to let go and not notice. But I have, you know, my cleaners are coming in and checking every light and flipping every switch to make sure that everything is working before we have guests coming here. Really the fact that they’re, they’re going above and beyond and letting me know, Oh Hey, you know, the, the unit here is running low on coffee beans. You, your don’t have any left in the supply closet.

Shelby Pracht:                   36:08                     You probably need to order some water. Great, thank you. I would hate to get there. You know, if I’m dropping the ball and don’t get an order in on time, they’re there to help. Help me on the management side as well. We also do all of our laundry and linens and house and so that doing doing laundry for that many turnovers on a, on a day to day basis. So they’ve both stepped up and have started doing laundry with me. So I have, you know, days that we’re all in charge of laundry and it’s been a huge help to have that taken off my shoulders. Just, just being, being aware of how, how they’ll look and feel of the unit affects my business and, and really being cognitive of that and letting me know if there’s anything that I could be doing better to make the guest experience better and therefore have better reviews.

Julian Sage:                         37:06                     Transitioning from, from a contractor to full time. How, how, how long have you been using full time cleaners now?

Shelby Pracht:                   37:13                     They have been cleaning for me full time for about two years now. Both of them, but just cleaning. Just this past year they’ve started taking on some more of those management duties. They’re helping me a couple of days a week, cancer messages. They’re doing the, taking over the linens and some supplies and inventory kind of stuff. And that just over the past few months we’ve been growing that way. And so January one of 2020 will be the first time that we were actually putting them on payroll as opposed to paying them as contractors. So we’re really excited about that transition.

Julian Sage:                         37:54                     I was going to say, because that’s, that’s one of the things, I mean, having, having full time you know, having people that you can call your own, this is a, you know, you get to train them. It’s not, it’s not a contractor with a contractor and full time there. There’s obviously there’s different ways that you can handle that. You can’t train. But because you’re hiring full time, you also do have to account for those like slower months. How, how are you going to manage that? So you know, when, when things slowed down and you still have people that you’re paying what is that going to look like?

Shelby Pracht:                   38:25                     That’s something that we’ve talked a lot about. My husband and I have gone back and forth on the finances of this and we’ve decided that know we really only have two slow months. We have, you know, may and we have, you know, late October, early November, and I think to have the rest of the health through the entire year, it’s worth us personally taking a little bit of a pay cut those two months of a year, we may not make much money. We may be breaking, even those two months are only making a little bit, but it’s going to be so worth it for us to have the help that we need the whole rest of the year and we’ll be making enough the whole rest of the year to make up for those two slow months.

Julian Sage:                         39:08                     What are some of the, the things that you, you had to weigh when transitioning from contractor to full time? Because you know with, with 13, with 13 units, you’re doing this full time. I mean, you’re, you’re, you’re doing some really awesome things. But there, there’s gotta be, there’s what, what’s the reasoning behind going contract through to full time? Is it just the pay or what are, what are some of the other reasons

Shelby Pracht:                   39:34                     It’s really taking on those management activities. So the cleaning, I’m able to give them a 10 99 and keep them as a contractor because they’re able to do that on their own time. You know, I just say it needs to turn over today between this time and this time. And they can do it on their own. And the fact that they are both able to occasionally take cleans for other people. So legally it’s fine. I believe I’m not a tax professional from what I understand, it’s fine to just 10 99 them and pay them as contractors. But when they’ve started to get into the management activities, doing the laundry for me, answering messages, doing the supplies and the inventory and that kind of stuff, that’s not contract work anymore. And I think legally we have to employ them. So it was more, you know, the fact that we want to keep in compliance with the business and our, and our tax liabilities to make sure that we’re doing everything right.

Julian Sage:                         40:31                     How big of a difference is it? Is it going to be like a, because when, when you think of full time, you think, Oh, well, you know, now I’m not paying, you know, $90 for clean, you know, now I’m paying someone, you know, whatever the prices, you know, 15 or whatever, you’re going to pay them for their full time work. Is it a big difference a pay wise or is it, is it pretty nominal?

Shelby Pracht:                   40:52                     I think we’re attempting to keep the pay pretty close to what it was. We’re going to attempt to keep it close and keep it comparable. Keeping in mind that, you know, when they’re 10 99 they’re paying much higher taxes and that we’ll be paying taxes as the business and they roll taxes. So we’re hoping that it evens out to be about the same amount or are a little bit more in their pocket at the end of every month. And, and as we grow, you know, again, we’ve added on new units just recently, so we want to up their compensation as well. So as we grow there are the biggest part of our business and we couldn’t running a business like this without them. So when we’re bringing in more income, we want to up their income as well.

Julian Sage:                         41:39                     And, and what has been the most challenging part of scaling your business?

Shelby Pracht:                   41:43                     Okay. I mean just part of the problem is that we didn’t plan on getting to this point ever on purpose. All of this has been like, well, it’s really hard to turn down this opportunity. We have people coming to us, they want to give us all this money. Like it’s really hard to say no, but also, you know, we have had to say no because we want to make sure that we have the staffing in place to not overwhelm myself or the cleaners and have us be hating life because we’re so busy and the phone is ringing off the hook or you know, blinging with Airbnb messages or not being able to get the cleans done well. And the appropriate amount of time. So it’s really just been finding the help to keep up with the demand.

Julian Sage:                         42:29                     Wow. I think, I think you’re, you’re going to be parking a lot of people’s ears, Shelby. I think. I think a lot of people are going to be like, Oh man, mammoth, I gotta check that place out. But what do you, what are you doing to be able to set your place apart? Because you, you, you really are super host. You’re doing things really awesome. What are you, what are you doing to be able to you know, basically have so many people that want to work with you when there are so many new people, new hosts that are coming into the market?

Shelby Pracht:                   42:55                     You know, I think a lot of it is the fact that a lot of those new hosts in our area don’t actually live in our area. They’re trying to manage remotely and maybe work a full time job and so they’re going hours without responding to messages or you know, not able to come physically respond when there’s an issue and taking, you know, you’re having to call a handyman or a plumber instead of repair a garbage disposal while they’re out skiing. So having, having an actual boots on the ground, that’s all times so that I can respond timely and communicate well with our guests makes a big difference. But also, you know, like I said, my, my cleaners are rock stars. I always make sure that our units look amazing and that they have everything they need. And here to have a good stay. We provide little things like hot chocolate mix and holding coffee and a grinder so that, you know, it’s a ski resort. People want to come up and have their warm beverages and not have to go site. The lines, our little grocery store here. So the fact that we keep those little things people love and that’s such an easy thing for us to provide a hot chocolate mix and a little Mason jar and, and that really sets us apart just because people are excited about that tiny little touch.

Julian Sage:                         44:17                     I have. Have you noticed with the, with the growth in the market w what are, what are the things that is, is different with your units compared to what everybody else is doing?

Shelby Pracht:                   44:27                     When we were first growing, I think the biggest difference that we had is that we were allowing one night stays and most all of the traditional property management companies were doing two day minimums. You know, we, we are a ski resort and right now we’re all about the snow and the ski. But in the summer we’re 45 minutes away from your nest, Yosemite national park. And almost all of the business all summer long are foreign tourists that do this exact same loop. They lie in the Las Vegas, they drive through death Valley up to us, stay one night, go to Yosemite national park the next day, and then out to San Francisco and home. It’s really funny because he’ll be like, we’re coming from and I’m like, how did, you know, cause you and every other person ever doing the same loop. Anyways, so these all summer we have people that are only here for one night and these traditional property management companies were letting units sit vacant all summer long because they weren’t realizing that so much of the demand was for single mainstays. So we were able to really capitalize and stay super busy all summer long and then filling in those gaps during the winter seasons that the property management companies that, you know, the large traditional ones were letting those units sit empty frequently. So just the fact that, that we made that change that we started offering one night days made a huge difference in our income. Interrupted.

Julian Sage:                         46:04                     Is there one house rule that has saved you before?

Shelby Pracht:                   46:08                     That’s a great question. Not really. We’ve definitely, we have lots of issues. You know, the one downside of being in homeowners associations were condos. We do have homeowners associations that don’t allow renters to have pets. And even though we have those units have, you know, very explicitly, you know, pets allowed, we still have people trying to sneak pets in all the time and then we get signed by the homeowners association for that. And that’s been a big pain because Airbnb doesn’t like to help us on that. Mmm.

Julian Sage:                         46:45                     And then who’s, who’s responsible in that situation? Is it you because you didn’t, you know, maybe screen the guests enough or is it up to the homeowner to pay for those?

Shelby Pracht:                   46:54                     Technically the homeowner is responsible for paying for that. And normally I’ve actually gotten to be pretty close with a lot of the homeowners association managers here in town. So I’m normally able to go and explain, I’m so sorry. You know, they know me. They know that our units say no pets and that when somebody sneaks one in, it’s not because we were being negligent. And so a lot of times we’re able to get them waived. Other times, you know, I’ll, I’ll normally chip in some money into the, to the homeowners account that just because it’s still a cost of doing business. It would be great if Airbnb would back us up a little more on stuff like that. But it is what it is.

Julian Sage:                         47:37                     Yeah. You’re, you’re a communication wizard. Shelby, what let’s, let’s say you had to start from scratch. You don’t have any units but you want to get into the space. Do you think that one, do you think that this is still a good market for people that are just starting off and if you were to start over, what would you do differently?

Shelby Pracht:                   47:55                     I definitely think there’s still lots of room, at least in our market or great local hosts. We know that that’s something that people are really wanting. And, and starting off, I, even though it was very difficult for us to start off the way that we did, having all of those people in our own home, I’m so glad that we did it that way and I would not do that differently because it gave us such valuable experience and also built up all of those amazing base reviews that we were able to be super hosts before we ever started renting a property. So I would definitely recommend for anybody looking into starting hosting that, you know, start, start in your home. If there’s any way that you can start in your own home and meet guests perfect in person, then you really get to hear what they’re looking for specifically and talk to them and ask them questions and see what they’re looking for in those units. And that’ll really help you as you scale up. You know, I think if we had known when we started that we would be growing to this size, we would have started to streamline communications a whole lot sooner. We would have probably picked some of the units that we have a little differently. But you know, we wouldn’t be where we would be today if not,

Julian Sage:                         49:16                     You know, not, not everybody’s going to be having people knocking on their door saying, Hey, take my unit, take my unit. But if you are a new host and you don’t have that reputation, you don’t, you’re not a super host, you don’t have all of this experience. How would you go about acquiring those types of clients?

Shelby Pracht:                   49:32                     Again, if there’s any way that you can find a space to start on your own, start in your own home, rent out a room or you know, the other half of a duplex, that house hacking idea and build some kind of presence on Airbnb before going out and trying to solicit other clients. I think the fact that we had a super host profile with, you know, a couple hundred great reviews before we went to any other owners made such a big difference. And it’s just building your own credibility. And if that’s not an option, finding some other way to build credibility before approaching other owners. You know, I don’t know what that would look like if you’re not able to, to rent your own space in some way, shape, but there’s gotta be some kind of way that you can build credibility by showing that you have a plan, that you’ve run the numbers, that you’ve worked out the math and you know, however you are going to approach them, making sure that you’re doing it in a credible way and that they believe that they have, you know, the owner’s best interest at heart.

Julian Sage:                         50:43                     And, and did, did you, did you tell me earlier that, that you also attempted a rental arbitrage as well?

Shelby Pracht:                   50:49                     We did that very first year we did attempt to rental arbitrage and it, we just found that it wasn’t for us. And you know, again, the, it was a larger unit, which we have found that we don’t like as much, but the property is in such demand here that we had to pay a decent amount of rent each month to rent this property. And then the utilities here get so high in the winter, people like to run the heat. And you know, we had we had a couple of months that we just, you know, we were still making money. It just wasn’t enough to make it worth all of the extra hassle that we actually have found that the management portion, we make significantly more income doing the management on a unit than taking a rental arbitrage and having to pay that set rent every month regardless. Plus the higher cost of being in charge of all of those utilities. So right now all of our owners are responsible for their own utilities and that makes a big difference in our bottom line.

Julian Sage:                         51:56                     Yeah, I, you know, I, I always think that it’s, it’s really interesting right now the hot trend is all rental arbitrage, rental arbitrage. But I mean the, there’s, there’s people like you that are killing it, Shelby just managing other people’s properties and you don’t, you didn’t, you didn’t have to pay for the furnishing. You’re not paying for the rent. You know, you aren’t going to be hiring, you know, taken on full time cleaners. But,

Shelby Pracht:                   52:14                     But we didn’t start today,

Julian Sage:                         52:15                     But you didn’t start that way.

Shelby Pracht:                   52:18                     Yeah. And that’s the beauty of that management is there really is no startup costs. You know, if you have some place to do some laundry and you know, time to do really good job cleaning and maintaining your listing and communicating that doesn’t cost you any money.

Julian Sage:                         52:35                     Where do you see short term rentals going in the future, let’s say specifically in your location?

Shelby Pracht:                   52:39                     I don’t think short term rentals are going to be going away in any way, shape or form in our town just because we’re in a tourist town. But you know, that’s where the majority of the income comes from. I do think we, I have seen in the last couple of years, you know, all of California is in a housing crunch and as the prices have been going up or real estate here is pushed a lot of locals out of portable housing. And we’ve seen a huge push towards affordable housing here in town for a local workforce. And I definitely think that there’s going to have to be some kind of change or you know, that’s part of the reason why we’re struggling to find really reliable cleaner is just because people can’t move to and find housing that they can afford to stay in. So it’ll be interesting to see, you know, we pay right now in mammoth has 14% transient occupancy tax on every booking.

Shelby Pracht:                   53:41                     It’s crazy. But again, that’s how, you know, that’s, that’s where the majority of the income comes from in our town. And so that’s funding everything from like the town bus system to all of, you know, the tourism and the advertising that’s also going to affordable housing. And, you know, I’m okay paying that amount because I know that we have to provide affordable housing for local people to work in, in our town. Otherwise we can’t cater to any of these tourists that are paying our bills right now. So it’ll be interesting to see. I could definitely see a bit more restrictions going in. But mostly I could see our taxes even going up further. As, as we have such a high rate of short term rentals in our town that the town prime capitalize on that in order to build more affordable housing for locals.

Julian Sage:                         54:31                     And, and what, what about in, in regards to people investing in getting into the short term rental space. What’s your perspective on the growth and where you see that going? Are more people going to be investing there and trying to do long distance or more local people gonna try to host? Where do you see that grow, that growth?

Shelby Pracht:                   54:49                     Both. It’s definitely still growing very rapidly here. I’m good friends with an actual real estate agent here in town and he is just, every time I see him saying it’s bananas, we just can’t keep these condos on the market that people are so excited to sweep these up and just start doing, you know, short term rentals with them. And a lot of those are people from out of town, out of state, but either are some locals that are starting to get into that too. They’re realizing that there’s money to be had in, in taking these properties, making them available to guests and, and being here to respond to those needs. And you know, it’s, it’s great that we have people that are doing that. You know, the fact that I’m able to, to employ these two girls full time, that they’re going to be making enough and you know, really they’re only working between 10 and four every day. So you don’t, they’re able to go, you know, I have one of them that has small kids and the other teaches yoga on the side and they’re both happy that they have the flexibility to do that. And I’m really happy that I’m able to provide them the income and the work that they need to make that sustainable.

Julian Sage:                         56:02                     And that last question is if, if what, what’s a question that you have for someone that’s in a similar position than you or maybe that next level that if you could ask them something, maybe something that you’re working on or a challenge, what would you ask that professional host?

Shelby Pracht:                   56:17                     I mean, I think the biggest thing is just this growing so rapidly that we’re trying to figure out how, how to streamline everything. We started off doing everything manually and I am always interested to hear and how, you know, these, these growing companies tend to keep a personal touch and still manage to automate a lot of the systems. So I’m trying to find that fine line between automating and saving time, but still being a real life person that is there to help people.

Julian Sage:                         56:51                     Awesome. Well thank you so much, Shelby. Thank you. I, you know, you’re, you’re, you’re killing it in the space. Do you have anything else that you want to share before we before we wrap up?

Shelby Pracht:                   57:01                     I don’t think so. It’s been a real pleasure. I appreciate you having me on.

Julian Sage:                         57:04                     Awesome. Well thank you so much, Shelby. And until next time, host nation. Keep on hosting hope hosts benefited 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 on over to our Facebook group that the host nation.