You Only Need 2 Doors to Maximize Profit as a Real Estate Investor | Dr. Rachel Gainsbrugh (Ep. 506)

Airbnb is in fact such an impactful brand that it has way more market share than Marriott, Hyatt, IHG, than Hilton combined. So if you're looking to run a real estate business and you're not thinking about adding Airbnb as one of the pillars of that real estate business, truly you're leaving a lot of money on the table. This is truly what I'm seeing as one of the most profitable approaches.

Welcome back to The Investor Podcast.

I'm Liz Faircloth, and I am your co-host Andresa Guidelli.

So Andresa, so many investors think that if you have more doors, it leads to more success. But what if there's an alternative way to achieve your goals with less doors?

And that's exactly what we're talking about today. We have Dr. Rachel. She is a midterm rental and short-term rental expert, and she's going to be dissecting with us her safer formula where you will be able to get the highest profit in your properties. Stay tuned. Dr. Rachel, I'm sure you heard this question before: how many doors do you own? And the women are listening, when they go to meetups and conferences, they hear that as well, as if that was equal success. And we want to present a different approach when it comes down to profitability. When was the time that you realized that owning less could also be a high profitability and less stress?

Thank you so much for that question, Andresa, and I'm so grateful to be here with you ladies today. As far as the aha moment for me when I realized, okay, less is actually more, was sitting around masterminds with fellow investors, and they were going row by row touting the number of doors that they had. Some had 100 doors, some had 1,500 doors. And I'm sitting there in a room at the moment I had 4 doors. And when we ran the numbers, we spoke about the numbers because at the end of the day, for me, it's, are these doors meeting my personal needs? Are these doors meeting my family's needs? And we compared apples to oranges and we recognized that my meager doors were outperforming those who had 15 doors, 30 doors, 60 doors. And they touted at the moment and they said, wow, Rachel's fewer doors are doing much better than ours. And I started to see the shift in the room and recognize, okay, I think I have figured something out, but I always suspected it, Liz and Andresa, when I ran the numbers. I ran the numbers. I am a spreadsheet jockey. I love me a good spreadsheet. Okay. And so prior to investing, I spent 2 years, unfortunately, in analysis paralysis, just analyzing and analyzing and analyzing. And I quickly recognized that there are some key metrics that really made a property profitable. And I hear a lot of people talk about saturation here and there, but it may not necessarily indicate that that's a problem. It may indicate demand. Demand depending on the revenue that's coming to a specific market. So all in all, running the numbers, identifying exactly what are the key metrics, those amenities, those things that draw your clientele in, that is how I identified, okay, this is going to be profitable.

So let's, let's dissect that for a second, right? Because the women that are listening is like, okay, what are the true, the metrics that you used? Because I have in my head a couple of, a couple of thoughts, but What, what are the metrics that you prioritize when you are analyzing a property?

I love that question. And I want to take a step back and just kind of walk you through it real quick. Okay. So if I say the word soda, most people think Coca-Cola. If I say hamburger, most people think McDonald's. And if I say furnished housing or housing in general, most people will think Airbnb. Airbnb. And I know, hear me out, hear me out. I know Airbnb is a very controversial platform. However, that is the first thing that comes to mind for consumers. And Airbnb is in fact such an impactful brand that it has way more market share than Marriott, than Hyatt, than IHG, than Hilton combined. Each of those have market share of 3 or 4%. Airbnb has 42% market share. And the people who are looking on Airbnb to find furnished housing are not just vacationers or travelers. They're families who are displaced from their home due to a hurricane or a water pipe that burst. They're families. They may be in your backyard or they may be in a state away where it's more profitable to invest. So if you're looking to run a real estate business and you're not thinking about adding Airbnb as one of the pillars of that real estate business, truly you're leaving a lot of money on the table. And I said what I said. I know I'm going to get some backlash for that, possibly. But this is truly what I'm seeing as one of the most profitable approaches. So again, one of those approaches is thinking about how do I implement a strategy where I'm putting my property out there so that those who are looking on Airbnb can, can lean in and find my property as well?

I love that. So let's take that step further. So they do that. Right? What are those key metrics? Because, you know, you can go on AirDNA and, and these different tools and it's a little overwhelming. What should I look at? You know, what, what, what matters more? You know, those sort of approaches. So what are the key metrics that you look at? Does it depend on the market? Does it depend on the type of, you know, property strategy? I know you, you're into luxury, so how do you approach that?

So the way that I approach that is my two-door strategy. So I love the two-door strategy. I have an acronym, I call it SAFER.

You can trademark that, by the way, Dr. Rachel.

I love that.

You should.

You guys should be saying that behind the scenes. Now everybody's just like listening, just going there. So before this goes live, Dr. Rachel, just do that. Otherwise people that are listening like, oh damn it, let me go there.

Thank you. Thank you for the pointer.

Yeah.

So the two-door strategy is a SAFER approach and it came about when, again, I was sitting in these rooms And I saw a lot of people investing their mother's and grandmother's life savings and giving it to, say, a fund or a syndication where the money or the capital raiser may not have that much experience. And I feel as though we as women, I want to empower them. You can do this. You can do this with just 1 or 2 doors. You do not need to give your hard-earned $25,000, $50,000, and in the hopes that someone else is going to save you. No one's coming to save you, sis. You totally can do this. And so SAFER is the methodology behind the Two Door Strategy that I think is very important for busy professionals in order to get started with investing in real estate. And S stands for it's scalable. When you start smaller, you start building your systems around it. And we have a lot of amazing resources inside of InvestHer to build our systems, to build our resources, uh, with our one property, right? We get there and then we can add that second property. Autonomy— you know where your dollars are going, you have taken control of it. And I think this is also very important— F stands for flexibility. With a two-door, I love to implement a short-term and a midterm rental, so there's some flexibility around that, and we can define what those mean in a moment. And I truly believe in my heart it's an ethical approach, because with the midterm rentals, I'm helping a family who is encountering one of the most devastating times in their lives. They are displaced from their home. Their home may have caught on fire. They may have lost everything. They may have lost a loved one. And imagine you're, you're pairing a business strategy where you're helping someone in their most desperate time of need. I, I just think there's, there's no other win-win than that. And, and the returns are maximized once you run your— those numbers, those returns are definitely maximized. But as far as the actual structure, if we're going to go tactical and, and strategic, the structure is I do like properties that are a little bit larger, 4-bedroom plus, although My members have been wildly successful inside of investor side of Strive with 2 bedrooms or, or 1 bedroom or even a condo. But 4 bedrooms plus is going to maximize your returns for sure. And we love properties that are near great schools for our midterm rental strategy, which is your 30-day stay, which is the strategy where we're helping displaced individuals and we're getting paid by the homeowner's insurance. Those properties have higher value and therefore they have a higher opportunity to generate more revenue.

So, just, I just wanna continue the, the acronym, right? So, S is for scalability.

Yes.

And the A?

Start small. Mm-hmm.

What is the A?

Autonomy.

Autonomy.

Yes.

So, when you, when you say autonomy, are you saying, I am evaluating all the risks that I have around and I am strategically putting my egg on this basket for diversification, or is there a different approach?

No, for sure. With autonomy, you get to make the decisions, Andresa. You're not sitting around waiting for a distribution check per se. And that's okay. That's— it depends on what level you are on your investing journey. But I have a lot of members who come to me who say, hey, I gave $25,000. I'm just waiting for a distribution check. But now they're saying there's a capital call. And I feel the ecosystem is one of my hands are tied. I can't make decisions in this particular situation, and I don't have the autonomy. I don't have the authority to shift things because of the way that particular deal is structured and my relationship in that deal structure. Again, passive investing is definitely a pillar that's very important to look into depending on where you are in your journey. But I'm going to be honest, I have control issues. I want autonomy. I want to take control. I want to know that my, my money is coming in because of my effort. I'm not waiting around for a check.

Got it. So let's go to the F. What the F stands for?

Flexibility. And so with short-term and midterm rentals, especially say you have a property— we have properties in some of our markets that are a hybrid, right, of short and midterm rentals that we could use and leverage for business purposes and once in a while for our own personal use. If I determine, you know what, I'm blocking the calendar, Grandma's coming over, family, let's head on out there— I, I just want to encourage our members to build businesses that serve us, right? We work so hard. Why not build a business that serves us? And so building a business around, you know what, I want that flexibility where I can use it when I want to— not all— not during pink season. I will say, do not use it during pink season, but off-season. Now you've built something that you could look forward to as well.

Awesome.

The E, ethical approach. With the midterm rental strategy and with leveraging two doors, we're not, you know, taking down thousands of doors like some of those larger corporations. It just is, is such a strategy that has served our community well. I'm known in my community as someone who has housing just in case a house catches on fire. I'm known in my community as, as, you know, the lady who has the houses that could help someone else out. And it's just there's something about about that. There's— it's just, it— I don't know, it, it's a win-win-win. Because with the midterm rental strategy, unfortunately, due to contract contractors not showing up or supply chain, these individuals are living in our homes for month after month after month, sometimes 11 months, 13 months. And imagine a community rallying around them, understanding their story, because I introduced the families to our neighbors, understanding their stories, bringing baked goods. By the time we're done, the new guest is best friends with the neighbors on the left and the neighbors on the right. It's like, Rachel, we don't need you. And so you see a community coming together, and I think that's a great way to build community.

And the last one, the R, what does that stand for?

The R stands for returns maximized. So with the short-term rentals, you of course have the higher profitability if you are running the numbers and you're looking in the right markets. And the midterm rentals working with corporations like companies like insurance companies, Progressive, Allstate, State Farm, you can return, you can maximize your return as well. However, you're encountering longer stays. So the returns are maximized. I don't know any other strategy with single-family homes, real estate investing that could maximize your returns like this two-door strategy.

So let's take another step further, right? You got the midterm with the short term. That's, you know, as we call, those are strategies, right? Those are exit strategies. How does then the person, you know, the woman listening right now say, okay, great, love that. What's my next step in choosing the right market for those strategies? Or, you know, what's a hack to ensure the market you're choosing is going to align with these two strategies? Since you're starting with the strategies, you know what I'm saying, versus the market. So how do you go backwards to ensure your market is aligned with what you're trying to do?

What's great about these two strategies is that first and foremost, as long as you are in a market that is not extremely rural, meaning there's not enough density and not enough properties to serve, you're in a good position first and foremost. So Avoid extreme rural markets, number one. And number two, avoid extreme seasonal markets. Like, for instance, in Cape May, that market is open maybe 12 months out of the year. Those homes are all secondary homes. Therefore, they all have primary homes. So if the secondary home catches on fire, they can go to their primary homes. So we're thinking about markets where there is density, there are multiple owner-occupied properties because we love to work with owner-occupied avatar because they have that insurance policy in place, most likely, more than likely. But outside of that, where have you seen there are no natural disasters? Where have you seen that there are no accidental disasters? So there are two types of disasters from the midterm rental side of things. There's natural disasters and there is accidental disasters. 80% of my personal clientele in the Georgia suburbs where most of of our clients live are due to accidental disasters, water pipes that burst, kid caught the house on fire. However, the other 20% is a tornado. It's— those are your natural disasters. Every day, just turn on the news, there's a disaster happening, and those families need temporary housing. And because of a protection inside of their homeowner's insurance, the insurance is willing to pay for them to stay in a home for an extended period of time while their home is being renovated and rebuilt. So I hate answering this question like this, but it's everywhere. It's everywhere.

I like that. Not that we want people to have to get through accidental, you know, situations, but if 80% of my customers are coming from accidental, how do I control that? Because in my head I'm like, I want to, I want to mitigate risk. Right? I can't necessarily account for an accident as an investor. So how do you mitigate that risk?

The way I mitigate that is I focus on markets that can leverage both short and midterm rentals.

So you're shifting strategy to mitigate the risk?

For sure. For sure. And so for those who are in our suburban markets that are coming to our homes on a short-term basis, say they're visiting family, they're coming for a wedding, or say they're coming to work at the local plant. We had a huge infrastructure bill that was just, um, passed not too long ago. And so in between those guests, we're leveraging, um, serving a secondary midterm rental avatar. So your primary midterm rental avatar is that insurance clientele. Your secondary midterm rental avatar, depending on the market— say you're in a capital city or near a capital city— it can be, um, political campaign staff, Say you're near university, it could be higher education. So there, there are over 56 midterm rental avatars, Liz, meaning there are people coming to your city for a variety of reasons, not just traveling nurses. Oh no, no, no, no, no, no, no. My sister's a traveler, so, um, no dig on travel nurses. Travel nurses, they are on a tighter budget, so I'm looking to work with a little bit more of an affluent corporation that has the resources to put into these 4-bedroom, 5-bedroom homes, because travel nurses, they need a 1-bedroom or studio more than likely.

So my question is, I have worked before with corporations and I have worked before with insurance companies. They're the best. Oh, well, they found me.

Yes.

I want to be more in control of like finding them or I feel there is a, maybe I don't know this, right? So there's a lack of resource for them. Say, okay, this is where the corporation go. This is where the insurance come. I don't know where we are. Are they all hanging out looking for it or they are just hunting on Airbnb? We need to facilitate this communication here because it's a win-win for everybody. But the, the— let's break down for insurance company. It happened to me twice, and it was really, really a good, um, long-term relationship because my point of contact used my property twice from— for different clients. And it's, it's really like I step back, like, go for it, right? They're paying a higher price. The family is in a location where they have everything. They're not too far from where their, their own house, and construction for repairs take much longer for sure, right? So that, that's that. But Dr. Rachel, what have you done in to find, to, to be more proactive versus just waiting for them to come to you? Is there any hack?

Yeah, that's a, that's a really, really great question, and I love that question. So let me walk you through how I would position myself to ensure that I'm more visible. Because when disaster strikes, sadly, you have 2 to 3 different entities looking for your property. Number 1, the insurance company is looking. Number 2, the guest is looking. Let me tell you something about us women, right? We may, you know, our house is destroyed, but we're still picky. We don't want you to just put us anywhere. We're looking. We're looking for a place.

Sending the insurance person all the links.

Here, here, let me do your job for you, right? Let me do your job for you.

Let me do your job. Yes, that's us.

That's us. That's us. Because some of us have very specific special situations that we just don't know. We have families who are caregivers to special needs children. We have families that are caregivers to the next generation, the generation before us, right? We're that sandwich generation. We may be taking care of mom and we're taking care of kids. So you don't know my needs. I want to make sure that this place meets my needs. So when we're putting ourselves out there, when we're putting our precious 1 to 2 doors out there, we want to make sure we're speaking to both the insurance company as well as that, you know, provider who is looking for that place. And like it or not, again, I keep going back to Airbnb is the Google of furnished housing, period, point blank period. And so you want to make sure that your property is listed on Airbnb in a way that speaks to that particular guest avatar. And sometimes it does require creating a separate listing that features those separate things that has a calendar that is wide open. It burns my biscuits when I send someone a resource in the community, in our community, and we're like, oh, I've got an opening for a 3-month midterm rental. And they said, oh, you know what, my calendar is blocked because I have these 2 nights booked in, in October. It's like, oh, you're not going to be found. You will never be found if you have bookings peppered all over your calendar. So that's step 1.

Ooh, that's great. And how would you have managed the two different calendars for the same house though? Because you want to make sure that you're not canceling and losing the host. Yeah. How do you toggle between one and another?

Okay, so is this being recorded? Just kidding, just kidding. We, we, we have to manage it. We're running a business after all. And so So, what we have done in the past, we have— when we— before we, you know, had a very robust strategy in place, and what I've encouraged our members to do in the past who have 2 or 3 nights peppered all over their calendar is let's reach out to those individuals and let's transition them. Let's build a network of other hosts in our market. We have them create a WhatsApp channel, invite all the other hosts, hey, can you take this family for 2 nights? Can you take this family? And work on coordinating that, because if you're using a platform like Airbnb and a channel manager, a dynamic pricing tool, you can actually set up your calendar to automatically, um, de-incentivize, uh, short-term bookings further out. And every night, like, for instance, if I have a guest checking out tonight, the next 4 or 5 days I can get a few 2-night bookings, But you're not going to see anything on my calendar for 2 nights in September. It de-incentivizes that because there is a far-out booking upcharge of like 600%, and only one person has taken me up on that before. But nevertheless, there is a way to just have the calendar do that on your behalf. We use a tool called Price Labs when you go into the customizations. And so you're not going to see anything peppered all over my calendar further out because I want to save those nights for those extra juicy you know, 30-day, 60-day, 90-day bookings. So we're not going to have those two nights taken up further out. But, you know, closer to a checkout date, they can get booked and it just continues to follow that calendar booking.

Dr. Rachel, what I'm thinking about too is for those listening, right? Because I kind of use myself as the avatar, right? Meaning I'm, I'm someone who doesn't own any short-term rentals. Yeah, I don't have any midterm rentals. So I'm thinking, okay, I like this. I always like new things.

But you're a user, Liz. You're a user.

I'm a user?

Yeah. You're a client. You're a guest.

I, right, right. No, I'm sorry. I'm an investor looking to buy these properties.

Right.

So that's what, that's the quite where I'm going with my question.

Well, you as Liz Faircloth, you are also a user of the Airbnbs.

Yes, certainly. But I'm thinking about this strategically and I'm saying, okay, I get you have a two, a two-strategy approach, and if, if one's not being used, you're using the other. I, I get that. I get that kind of strategically. How do I though assess like what is the, what is the kind of what should be the goal? Meaning because you have two strategies at play, one is again 80% coming from accidental things that I can't control. Um, how do you assess like how many, how many nights should go to midterm and how many nights you go to short-term, or is that not even how you do it? I'm curious to get into your thinking because strategically people are hearing this going, love it, but what, what should I, what should be my goal? Because that's how I, that would be my next question.

I love that question. So in those markets that are destination markets, I focus primarily on short-term rentals for—

So that's the primary.

Yep. The beach markets. Unless, you know, we're in slow season, then we can do snowbirds. So the primary in my destination markets are the short-term rentals. The primary for my suburban markets where there are homes and neighborhoods, just nice homes and nice neighborhoods, it's midterm all the way, and we fill in the gaps with short-term. Over the last 12 months, we have 6 midterm rentals in this one particular market had 9 days of vacancy using this strategy in the year of the month. 9 days across 12 months. Oh God. Yeah, because as Andresa shared, if the insurance reaches out to you, you get 2 bookings, you're set, you're done. Yeah, you're done.

Yeah, I wish there was this like, okay, this is where all the insurance companies are and those are the highest.

Yeah.

Because that, and I think that which brings me to the point of like reaching out to those insurance companies and sharing what your business does and building a relationship with them because they have a problem on their hands and they, they need to, they need to solve it. Do you have a different approach with corporations or how do you attract them or you also use the same approach in terms of I'm speaking to those corporations and that, that the language in my listing, it's for them. Is there anything else that you do different with corporations?

Yeah. So I do want to drop a couple more hints with the listing. So number one, lowest hanging fruit is Airbnb. I would say more than 50% of our bookings come from Airbnb. However, what about the other 50% or so? Okay. So depending on the size of the property, say it's a larger property, We use a platform called CorporateHousingByOwner.com. It is a paid platform that you could use if it's a property, it's 2 bedrooms or smaller. We use Furnished Finder. The insurance companies are looking there as well. Furnished Finder is another paid platform. From there, another platform that brings in the insurance companies, there's one called ALE Solutions. So ALE Solutions is the number one temporary housing agency in all of North America. And all you can do is go to alesolutions.com. There is a link that says register property. You put your property information in there. It's not like Airbnb or VRBO where you could see your listing. And no, it looks like it just disappears into nowhere, but it's there. And they do reach out to us. From that perspective. And to be honest, we go ahead and re-up it every single month. If we don't get a hit, we'll just list it there again. And once you get ahead, whether you can serve that agent or not, I always tell my community, say yes, say yes, say yes, and reach out. You know, we— InvestHer is a huge community of women with properties. Reach out, say, hey, I've got this hot lead, come and get this, because you want to be that person That is the yes person. Yes, I can help solve this problem. Oh, this particular property, it's taken, but I've got a friend who has, you know, and then you spread the love that way and they know, hey, last time I reached out to Liz, she said yes and she was able to hook me up. I'm going to reach out again. If you're like hemming and hawing and no, I'm not sure, I'm not exactly confident this is going to— it kills the deal. Say yes and run into the community and we will figure it out together. Right. And so that has saved so many deals and that has— that continues to bring those leads in. Always say yes and figure out the rest. And from there, we list through other platforms. So ALE Solutions, number one, and there are some secondary ones that are national and there are some that are local as well. So there are local temporary housing agencies who for whatever reason cannot supply do not have the supply for the insurance, you know, letting them know that you're here listing with them, sending them a quick email, especially if you have a vacancy coming up. Whenever we have a vacancy coming up, we activate our email marketing and say, hey, coming soon, we have this property that's going to be available. And it just, it brings me back to having a business that serves me. I don't cold call, I don't do any of that extra because I'm looking for not just a return on investment, I'm looking for a return on my energy, a return on my We're building this business differently. I think the grind, like grind culture was like so 1990 or 2000. We're just over that. And that continues to bring business in.

I love that. Immediately went to, is she Generation X? Which generation is she? You know, because, you know, it's like, I'm like, oh, it's Generation X, I feel like, is the grinders. But I love that. I love that, Dr. Rachel. I love that you're saying that because it is about creating, creating a solution for the community that you're focused on and then really going in on that solution. So you are getting the leads sent to you. You're not going out and getting the leads. And I think that's such a shift in mindset and approach, but it's actually the one that really needs to be employed if somebody really wants to grow 2 doors, 4 doors, you know, what have you, and be that known entity in that community. So, I wrote so many notes down that I always learn something from you, Dr. Rachel. And I feel, we feel so fortunate that you're one of our pod mentors in our Strive Mentorship Program. So, the women in our community have, you know, connection to you, access to you. They're in a pod with you where you're not just teaching these things in a vacuum. What I love about what you stand for and what I love about our pod mentors in particular is that they're doing the strategy at which they're teaching about. And holding that woman accountable to say, okay, go list your property. Did you list your— did you do these things, you know? And really coming together as a community. So, so thank you for all you do for our Strive mentees. They're, they're so lucky, and we're so lucky to have you and the women that are joining our tribe at doing deals, 5 or 10 or more, and growing in a, in the right way, right? In, in a way that works for their lifestyle like we're talking about. So, so thank you so much. Um, where can everyone listening learn more about you and connect with you?

Yeah, I'm on all of the social media platforms, particularly Instagram. My brand is Short Term Gems. So that's @short.term.gems. You can find me there.

Awesome. All this information you guys can find on our show notes and all the links that Dr. Rachel mentioned in here. Listen, don't get desperate. It will be all on our show notes. And for those of you interested in Strive, we're also going to put the link there for you to apply if you have 5 deals or more or you're running a successful business and you did not get enough from Dr. Rachel during this episode and you want more, you want a roadmap, you want to hold hands step by step, please take a look, apply today, and our team will reach out to you. Thanks so much for listening. Dr. Rachel, pleasure always having you on our show. Thank you.

Thank you. Thank you for the community that you have built and for all the work that you put into getting this information out. It's just so powerful and impactful.

Thank you.

Thank you.