October 2019 Q & A #5: How Long Does It Take To Get Started In Short Term Rentals

Questions and Answers   Does AirBnB work the same globally?    The idea is the same, but some of the functions will be different. For example, payment systems will be different depending on the country you live in. Same with cleaning services. The basic idea of offering someone a place to stay in exchange for a fee is the same.   I have a landlord concerned with a privacy issue regarding a camera on the door, what should I do?   Since the unit already has cameras pointed at the hall in the building, there shouldn’t be any issues. The important legal idea is where there is an expectation of privacy you can’t place a camera, but that doesn’t apply in this case. You would just be adding what is essentially another security camera to a hall that already has them. From a privacy standpoint, having a doorbell camera pointed at another unit’s door can be a problem since the camera could potentially see into the other unit when the door is open. This could lead to complaints from the other tenant which is why J tries to avoid those kinds of units. If you can control both sides of the hallway, that removes the issue so that’s a good strategy if you can swing it.   How long does it take to get started in short term rentals?   This is a hard question to answer because of all the variables involved. Some markets are more difficult than others, but in general for most people it won’t take too long to get started. Cashflow Diary students get a big advantage because they get the knowledge to select the best properties for their business, so they can earn the most money and continue growing. Having had the privilege of teaching a variety of real estate strategies, short term rentals is the one that has allowed people to learn the most the fastest and get their business up in running very quickly. It is possible to go from lease signing to operation in 72 hours if you have the systems in place.   Can you talk about your process for finding and training cleaners?   Finding the right cleaners is a big piece of the puzzle. Ideally you don’t go looking for cleaners, you make them find you. One way to find a cleaner is to make a reservation at a short term rental you don’t own, and when the check out happens just wait until the cleaner shows up. Another method is to join your local BNI, because that organization is referral based and a cleaner is likely to already be vetted by the person referring them. Chances are you will have to work with a few different cleaning companies before you find one you can rely on.   How do you recommend I leverage the leads I’m getting from a real estate broker with other local businesses?   It’s a great idea to try to leverage your existing leads with other local businesses, but it really depends on the size of your business. The simplest way is to just go into the store and tell them who you are and what you do. If you can show them that you can help lower their customer acquisition cost, you’re set.   When is a good time to start a new unit?   It’s always a good time to start a new unit. When you start a unit into the low season you are building up a profile so that in the high season you will have enough reviews to maximize your profits in the high season. The flip side is that starting the unit in the high season your transition to the low season won’t be as low. It’s more important to start a unit around the 22nd to the 25th of the month than the time of year. Keep in mind that certain holidays can actually make certain items harder to find when starting a new unit as well.   What is the best way to sync our calendar so we don’t have to manually block them out on different websites?   The systems you have to have on board changes as you grow. The reason you’re having trouble with Home Away is that you’re going from one unit to five. Ultimately you want to have Lodgify working to avoid manual bookings, but the big issue here is trying to get so many units going so quickly while also building the systems you need at the same time.   What are your thoughts about a unit I have in the mountains where there are definite slow seasons?   Don’t listen to someone who doesn’t have any experience with short term rentals tell you what’s going to work with short term rentals. You may not have to worry about the 30 day rental restriction in that area of Colorado. J recommends for the caller to narrow down her customers to three target markets, not just the obvious ones like ski enthusiasts. There is a good chance she will be able to recoup her down season by expanding her target market and appealing to a broader swath of people. Side note: It doesn’t matter how much you put on paper or how prepared you think you are, you aren’t. You have to get comfortable being uncomfortable and roll with the learning process. You will eventually develop a different response to the fear of action that will allow you to build the business you are dreaming of.   How soon should you start your own corporation? What about credit cards?   As a general rule of thumb, it’s a good idea to have your first unit in the name of some entity. Whatever that is, consult with your attorney. If you have a credit card where you earn points, take advantage of it. Depending on the retailer it may make more sense to act as a consumer rather than a business.   I used to get a number of bookings from Booking.com but now I’m not getting any, is the drop in bookings unique to my area?   Before you blame a platform you need to compare your performance year over year. Remember the formula: Leads x Customers x Margin x Frequency = Growth Potential. You need to know that info in order to diagnose your issue.    How often do you use air purifiers in your units?   We use them as frequently as our cleaning crew suggests it needs to be done.   What is the best way to market and position this home?   Answer the question of who you want to serve first. Once you answer that, the rest becomes clear. Before choosing a path, do your due diligence and understand your customer.   I have a studio on my primary residence that I’m thinking about turning into a short term rental, should I?   Being in Hawaii, someone is always going to want someplace to stay but when the unit is on your primary residence it is a completely different system. J always wants to avoid the situation where the tenant knows that he’s the landlord, and that’s pretty much impossible if the unit is on or in your primary residence. Episode 120 of the Cashflow Diary podcast is a good resource if you do want to go this route. If you’re already comfortable with the situation then go for it.   Do you recommend operating across the border?   The biggest challenges working across the border are the legal system and language barriers. If you understand those then it shouldn’t be an issue.   How would you approach a private money lender when you are just starting up?   Refer to episode 548 of the Cashflow Diary podcast to learn about the Slicing Pie model of funding your business.   What are your thoughts on obtaining a real estate license?   You don’t need a license to operate a short term rental business. It depends on whether you are going to use the license to sell homes, if that’s what you want to do then sure.   Links: cashflowdiarypodcast.com cashflowdiary.com/star Thank you for listening! If you enjoyed this podcast, please subscribe to the show on iTunes and Stitcher Radio!