October 2019 Q & A 8: Negotiations, Slow Seasons, and Protecting Yourself

Questions and Answers   I have a person that wants to book through February to November but I’ve already got someone with a reservation in the middle of that time. Do I offer the other guest to switch to another short term rental unit to accommodate the person who wants to stay longer?   This can be pretty common with new short term rental units or you are new to operating. When you put up a new listing it often gets promoted and for people looking for longer stays there often aren’t a lot of options. You should offer the current reservation the option to move to another short term rental unit, even if you don’t have another unit in that particular area.  The ideal situation would be to get all the days booked with both individuals while also getting the money upfront. The revenue from the long term reservation can actually be used to acquire another unit for the shorter reservation if necessary. There are also a number of incentives you can offer to close the deal.   A major cancellation issue with AirBnB   J has had a similar situation occur with a guest that said they were going to cancel but didn’t. We continually sent the person messages as well as keeping in communication with AirBnB. In both cases we were paid in full for the days that were stuck in limbo but only because we were being hyper diligent about following up and making sure the reservation was actually cancelled. If you’re at the 70 bedroom stage like this caller is in, you really shouldn’t be involved in this sort of issue. Your staff should be able to handle everything. Your business should also have an established system for making sure your guests actually arrive for their reservations. For the caller, they need to have a customer experience manager that should be able to handle all aspects of this sort of issue. When you encounter something new, create an SOP (standard operating procedure).   My fear of not being sure of where to begin is holding me back. What should I start with first?   All of our short term rental  mastermind students get a six hour kickstart session with J specifically to address this problem. Outside of that, the very first question you have to answer is “Who do I want to serve?”. Once you answer that, you can figure everything else out.   What if I can’t find a management company for one condo that’s out of town?   Remote management is challenging. If you are going to do it remotely you must have a cash management system in place to make sure that no money gets released without a verification that the work has actually been done. Find someone who can be your eyes and ears on a job site. If you can find an actual landlord in the area to assist you that has experience with rehabs that would be ideal. You can find them through the local real estate investors association or meetup.com.   If a guest leaves a review but you haven’t you reviewed them yet, can people still see it?   Nope, not until either you review them or 14 days pass.   Are the metrics you used in the SmartBnB training available to the public?   SmartBnB is great for their ability to see data and metrics and then use that to drive higher revenue. It’s not currently available to the public.   The slow season is coming, any updates on refreshing our short term rental listing to keep a higher viewing rate?   Depending on where you are geographically, the travel season is changing which means you need to adjust to the market. That may mean adjusting your discount curve. That doesn’t mean that you have to sacrifice profit, just that you need to think about new lines of revenue. Those are things that everyone should have in place in case of an occupancy challenge.   How do we suggest we deal with when a guest needs an insurance payment in order to make a booking?   Never let a guest into a unit prior to getting paid. The answer is to get paid upfront, the guest will figure out what they need to do to make that happen.   How often should I be checking pricing and how often should I be manually adjusting it?   In a 30 day market checking daily isn’t really necessary. It’s more about making sure you are priced appropriately from the beginning and understanding the platform you are on.    Where can I find info on hiring VA’s, outsourcing, managing, and fee collection?   Even though the caller is already experienced, they should try to approach things as a beginner. You need to start with the foundation if you want to build a proper business. Even at short term rental 8 units they probably don’t need VA’s yet if they’ve set up the right systems in place.   What are some tips to make it through the upcoming slow season?   Assuming you’re in a somewhat temperate client, when it comes to slow season you need to understand that your expectation of where your revenue comes from needs to be adjusted. Go to the formula Leads x Customers x Margin x Frequency = Growth Potential, which of those can be improved upon? One of them will be a clue as to what you need to build to deal with the slow season.   Can you take advantage of cost segregation when doing night rental arbitration? Are there tax advantages to controlling a property versus owning it?   Much of the furnishing can become a direct write off. For some students when they are starting off, it makes more sense to lease the furniture and preserve their capital. One of the major downsides to the whole operation is it will create a large cash flow, and if you don’t offset that cashflow with some sort of investment you will just end up paying Uncle Sam.   What factors matter in the negotiation process for additional units?   It’s often that landlords that you’re working with will begin to approach you about additional units because you solve their vacancy problem. You need to be aware of the problems that you are taking off their table for them. If you want to eventually own the property, this is when you should start leveraging what you’re doing for them to set that in motion.    Do I setup Lodgify or Wheelhouse so I can set up my own website for direct bookings?   We use Lodgify for just that.   What are the boundaries for the landlord showing up to the unit unannounced?   There should never be a situation where your landlord shows up to the unit unannounced outside of a fire or some other type of major issue.   Is okay to take a lease in your name and not your company name?   Doing business in your personal name is not something that I would recommend, especially when you’re working a public facing business because the liability is massive. You never know when something random happens and will put you on the hook. Even if you’re not guilty, you will still have to pay for the defence. Insurance is essentially prepaid legal defense. You should protect the value that you are creating in the marketplace. Links: cashflowdiarypodcast.com Cashflowdiary.com/teachme Thank you for listening! If you enjoyed this podcast, please subscribe to the show on iTunes and Stitcher Radio!