HI 163 - Self-Managing Your Short-Term Rentals with Julia Spencer

Welcome to the Heroic Investing Show. As first responders, we risk our lives every day. Our financial security is under attack, our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant and we need to take care of our own financial future. The Heroic Investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Hello and welcome to episode 163 of the Heroic Investing Show. This is a podcast for first responders, for members of the military, for veterans, and anyone looking to improve their financial future and gain some freedom with their time. We teach America's heroes how to build passive income, build their startup business and safely grow wealth through real estate and other alternative investments. We help current and prior first responders put protections and systems in place to enable them to build a life where they can focus on their passion, that service or product that they are uniquely gifted to share with the world. My name is Gary Pinkerton and I co host this show with Jason Hartman. And it is our goal and our intent, our hope that you find this podcast inspiring, that it gives you ideas on how to raise your game, how to reach and achieve your goals and share that unique genius you have with the rest of the world. I personally think most of us aren't doing that in our W2 job. Some of us are. And that's pretty awesome if you found a good fit there. But if you're not and you want some more freedom with time and you want to be able to focus on that thing that you just know deep down is that genius of yours, then you need time and you need financial capability, passive income to make that happen. And that's what we try to talk about on this and the many other shows that we have that cover the concepts of passive income, of building a strong financial foundation on this show, this is the second, maybe I'll take a break, this is actually the third, discussing short term rentals. And this is Jason interviewing his very first actually Short Term Rental podcast guest, Julia Spencer. And Julia, I think is a longtime friend and has purchased quite a few properties and used to have them all as long term rentals. So you can imagine they're not, as she mentions, they're not in vacation spots, they're just kind of in urban or suburban areas. And she liked the model, liked the lifestyle of self managing on Airbnb and VRBO and other sites and just took them over and started doing that. And sometimes she'll do you know, a few days, sometimes she'll do a few weeks. And the reason, as you know, listeners, that I'm talking about this is that sue and I recently got short term rental. Actually ours is in a vacation spot and was actually built specifically for that. There are properties all around it that are longer term that the owner is living in and also that longer term rental. But ours was specifically built to do a week at a time or a weekend, something like that. We've had some really good experience. We're still kind of in startup mode with it. So I think you start to see the higher occupancy and the higher rents coming in when it's multi year, right. When people start to return and there's less vacancies so you don't have to offer those last minute lower deals. You know, we're happy with what we have so far. We have a great team in place down there and looking forward to seeing what, you know, the longer term performance of the property looks like. We actually rented it out for all of January through March for a longer term kind of thing here. Beginning to give us time to get marketing out there, get some good positive, initial higher feedback. So Julia talks about some really interesting stuff. She has seven different properties. One of them is in Europe and the rest are here spread across the United States. And only one is in a deep urban area where you would normally think about doing Airbnb and hers were, as I mentioned, long term rentals that she just converted over. So the things I think you'll get from this podcast, a little bit different from the other two that I've ran recently on short term rental focus is a discussion about adjusting the prices really like airlines do. And that's what we're seeing with our properties, that if you've ever stayed in an Airbnb, you know that the prices adjust wildly depending on demand and how quickly it's being filled up, how early and often you get really, really good deals real close to the turn. Another thing that doesn't so much come off, I think in this they do talk about passing on the cost of cleaning and how to retain those services, but you'll see it's becoming very trendy now to pass on the turn cost or the cleaning and short term rentals to the tenant. Right? And also the taxes, the hotel fees and taxes and stuff that the state typically charges pass those on as well. So it's a much different mindset, much different model even. For example, she doesn't use property management, but I do. And our property manager, you know is more on the 18, 20, 25% range, which seems totally crazy, right? On a long term rental. But if you think about it, there's no turn costs with this. I mean you have to replace the furniture every few years, but there's no $5,000 to repaint and do all that stuff after each tenant annually or more frequently if somebody leaves early. That's really what has bit into our returns, our profits on many properties. And that's just not here in this case. You also don't have to pay a month's lease up fee because it's all in the marketing. And at the same time you have to realize that the property manager has some substantial marketing costs with all of the advertising they're doing. And then they got a lot more oversight and overhead managing the people who are going in, doing the cleaning, any maintenance and then they're doing all of the contact with these vacation or short term tenants that are in there when they're asking where's the remote and how do I turn this on? Do you have any extra of these things and do you have recommendations for dinner? All of the stuff that you see with short term tenants, there's somebody managing that. I didn't want to be that person. Julia does. And I think getting both perspectives is really, really important. So finally I'll also say that there's a great discussion at the end of this one on how to successfully retain maintenance people, cleaning services and then technology that you can use to your benefit. And that is similar to a couple of the other ones that we ran here. But technology is really what's enabling you to be a self manager from another continent away. As Julie was doing during the recording of this. I found it to be fascinating. I think it's a really good final addition to my focus on short term rentals. And we'll be back with a bunch of different, more traditional topics here coming up real soon. Thanks so much for listening to Heroic Investing and please go over to our website and give us a rating or on itunes. Thanks so much.

It's my pleasure to welcome Julia M. Spencer to the show. She was on one of my other shows a couple of years ago. She is a friend and is going to be sharing a case study with us today on her short term rental business and how she does very well with it through Airbnb and she really inspired me. You know, we had a good talk. We, we've met up before but the last time we saw each other it was in Luxembourg in Europe. Julia was with her family in Germany and I came over from Paris and we met up and hung out for a day and just had a great time. And us real estate people, we love to talk shop because is such a great business. And so we got to talking about short term rentals and that's what I want to share with you today. Julia, welcome back. How are you?

I'm great. Thanks for having me back.

It's good to have you and give our listeners a sense of geography. Where are you located?

I am mostly located in Savannah, Georgia. That's my primary residence. But I do travel the world with my kids, whatever chance I get.

Good stuff. Good stuff. Let's talk a little bit about your short term rentals. Last time you were on my show you talked about tax lien and tax deed investing and that was fascinating. But on the short term rental side, I was impressed with how you are basically self managing your portfolio of properties that are on Airbnb and you were doing that from a distance. You occasionally grabbed your phone and opened the Airbnb app when we were together in Luxembourg for a day. But you know, you sort of proved the model that you did this for. How long were you in Europe this time of month?

I was there for five weeks and then I added a couple more days out of the state. So all in all, close to six weeks. Being gone from home from the rentals.

Yeah. Fantastic. You have a certain number of units and a certain number of rooms because it depends which way they're rented. So why don't you give our listeners the just kind of the metrics on that so we get a context here and tell us where they're all located and so forth.

So while I was gone, things were actually changing a little bit. Generally I have about seven properties, six or seven properties depending on when you ask me. But the listings are close to about 30. And that's because I rent house out as a whole. But I also rent out individual rooms in the homes. If the whole house doesn't rent and I need to fill a spot during the week or something when it's not so busy, that's pretty much a summary.

Okay, so seven units and then overall number of rooms is like what, 30 or something?

It's about 30 listings. I would have to go into my brain and count how many rooms. But the point is that 60. I also rent rooms individually or as a set of two. Sometimes I rent just upstairs, sometimes just downstairs. So it just depends. All in all, the amount of listings are 30. But in all, there's only about seven houses and there are ranging from three to five bedrooms each.

Okay, good. So this actually leads to kind of my first question. Since we're on this point, we might as well tackle it now. How do you make the decision? Or, you know, sometimes with my real estate, I let the market make the decision for me. Sometimes when I'm kind of just sort of neutral about something, whether I sell a property or rent it again and, you know, sell it to a 1031 exchange or just rent it again, I'll kind of let the market decide. You know, sometimes I'll put it for lease and for sale and just whatever comes in first is what I do. But with your 30 listings, if you rent a single room and then someone comes along two hours later and wants to rent the whole house, which you could have made more money off of, you know, how do you sort of decide how to handle the listing? Our properties are always listed or the listings are. All of the 30 listings are always listed. But if someone comes along and says they just want one room, how do you decide if you want to do that deal or not? Do you allow instant booking or not?

I have a variety. And this is actually where we get into the part that I do. This is the part that I do as an individual. And there's a lot of other parts that I don't do, and we can talk about that later. But I basically have the listing set up that the ones that are most advantageous to me are obviously the full house bookings and the ones that are for a longer time frame. So what usually happens is I kind of have an idea about my area. What are the high times or the, like, hot times where people book most of the houses in the rooms. And those are the times that I don't allow individual room bookings. This is when I'll actually block my calendar for the individual rooms and only rent out the whole house listing. And this is something that will come from experience after doing it for a while. In the beginning, I had no idea, and so people were booking single rooms and I would lose out on really good, expensive bookings. But later on I realized, okay, on this particular weekend, there's an event going on. I'm going to block all the individual rooms and only rent out the whole house. Now you ask something else, and that is about what if somebody had booked a room and all of a sudden somebod comes around and they want to book the whole house for three weeks and. Which is much more lucrative.

Yeah.

So what I usually. What I usually do is I have a Set of my single room bookings set at a lower price and another set at a higher price. And so what I usually do is kind of offer the person that booked the room a different listing for single room also, but at the usual way higher rate. So they kind of think they're getting a better deal and they are usually getting an upgrade like a private bathroom or like two sets of guests in the house instead of just several more. So they're usually very happy to move. And that's how I free up in the whole house and give that to the other tenants.

Okay, good, good. Yeah, so. So that was a little bit of a sideline, but since we were on that issue, I thought we might as well tackle it right then. So thank you for sharing that. So how long have you been doing this? When did you first do your first short term rental property? How long ago?

I did about four years ago.

Okay, and what inspired you to get into the business? Did you have long term rentals, regular, you know, one year lease type properties before that?

I did, I did. All my properties were long term rentals at the time. And I just grew tired of people destroying my houses. I wasn't very good at picking long term tenants and the property managers I've chosen were just as bad. The ones that I had anyways, I've had some good ones too, but I was just tired of every time somebody turned my house around after a year and they would not even stay very long, I would have to remodel. And it was just, I was tired of it. I wanted to just quick turnarounds. I wanted people that I didn't like, that they would leave quicker, you know, and people that I liked, you know, usually vacation rentals, you think of it as vacationers and it is most of the time vacationers. But when they come stay at your home, they are usually in a good mood, they're relaxed, they're on vacation, they're chill. They're just better tenants to have.

Now see that. Okay, so let me stop you there, Julia. That is, most people listening are probably thinking what I used to think. That is really counterintuitive because most people think, well, gee, you know, how well do you treat a rental car when you're renting a car for two days? You know, how well do you treat it? Usually not very well, right? You don't care. But if you lease a car for three years, you know, you treat it well because it's like it's your car. Right? And that's the thing. But oddly, with the short term rental business that can sometimes not always be different because we've all heard the stories of people that'll rent your Airbnb place and throw a huge party and thrash it. But the thing that's interesting and you know, please comment on this. The mutual review system where the host and the tenant are both rated by each other. You know, when you get in the Lyft or Uber car, you know, the driver rates the the passenger and the passenger rates the driver. It's a two way street. And I'm thinking, why aren't all my long term tenants and all my long term properties rated, you know? Yeah, we do check their credit report and if they have a criminal record and unlawful detainer notices. But I would like to just see a rating like how many stars they get, you know.

Yeah. So speak to that for a moment if you would.

Oddly enough. And this is such a great thing about our online community and on our online systems these days and what you can do online, the review system actually deters people from trashing your properties. And I found that to be very true in the last four years that I've been doing it. And Airbnb is just one of the systems or one of the websites out there that lets you leave reviews. There are several other ones, but what I found is when hosts and guests come together and mutually have a transaction of an accommodation for however long the stay is, the review system actually really helps that both the host and the guests take excellent care of the property. And you would be very surprised how few complaints and how few unsatisfied guests I've had and also how few times people have disliked me as a host because we actually all really trying to work it because we really care about the reviews that are left for us.

Hosts and guests both, there's that sense of community is great. And the reviews, you don't see each other's review until both of you have done the review, you know, and that's a neat feature. So when I leave a review for my host, they're not going to see that until they review me. So they can retaliate, you know, or you know, maybe positively retaliate too. It's a more honest review, right?

It's very much honest. And actually over time it has evolved. It used to not be like that, but the rules have now changed that you cannot see the other person's review until you leave one yourself. So that kind of enables the honesty of things.

Sure, sure. When you switched from the traditional long term rental business to the short term rental business four years ago, did you switch with the same properties or did you change, you know, just recycle your whole portfolio and get rid of all your long term rental properties because those wouldn't be suitable for short term rentals. One of the things that I want to get at here is, is. And I've been studying the short term rental business for many years now. Surprisingly, the properties do not necessarily need to be in these sort of what everybody considers a vacation spot. And maybe you can speak to that a little bit because you've got a variety of properties in different spots.

Yes, that's true. And I had actually the same exact thought because my properties are kind of in odd locations. They're not quite at the beach, they're not quite downtown. And I even have properties that are in the middle of nowhere. Pretty and surprisingly all of them are pretty much booked 80 to 100% of the time. And I'm not exaggerating that percentage. And the thing is that it's not just vacation travelers that utilize these websites these days. It could be students that need a month and a half to stay somewhere while they're on a semester break or doing some extra research somewhere. I have a lot of people that are corporate rentals. I have people that are actually local visiting family. They just don't want to stay in their family's home. They want to stay somewhere separate. Also very understandable. And people with special needs. You know, I've had a lot of also people that are maybe handicapped, they need something on the first floor, but they've not been able to find anything without stairs. I mean, there's all kinds of different kinds of people that have come through my doors. And it's just amazing to see that despite the fact that I'm not really right at beachfront property, that my vacation rentals, I call them vacation rentals, but they're really called short term rentals. Pretty much stay occupied very solidly throughout the year.

Yeah, very interesting. And can you speak to that other question I asked you about? Did you change your portfolio or is this just the same properties but you just converted them from long term to short term?

So what happened in the beginning is I just did kind of like a prototype. I just used my own personal house because I had a lot of bedrooms and there wasn't a lot of people living there at the time and just did one bedroom. And that started going really well that in the end the whole entire house became a vacation rental and I just moved somewhere else.

Because you moved out of your own House.

I did, I did, I went ahead, moved someplace else. But I actually over time got rid of the non performing long term rental houses that were just either too far for me to manage or just not an area where I wanted to go to and bought additional ones in the areas that I knew were making money. And so now I kind of have a wash, rinse, repeat kind of structure that anything that's no good for a vacation mental portfolio the way I have it leaves and I add new stuff. That's a good addition. My properties currently are in Savannah, Georgia, close to the, like halfway between downtown and the beach. I also have one that's midtown Savannah. I have one that's in Macon, and obviously the one in Germany that belongs to my family as well. And Bay, that is also an Airbnb rental.

Of those, how many would you consider, if any, to be sort of vacation places or vacation type properties? I mean, of course, you know, you could say, well, Savannah's got a relatively decent tourist, you know, attraction. But you know, it depends where in Savannah. I mean, not all of it. Obviously. Midnight in the Garden of Good and Evil, book and movie didn't make the whole city a short term rental place. So just kind of tell us, you know, and I know this is a judgment call, right, but how many, if any, of your properties would be considered like vacation style properties?

Well, in the traditional sense, vacation style properties, I would say that none of them are traditional. Every single one of my properties is in a suburban area, except for the one downtown, which is urban, I guess, is what they say. And everything else is also suburban. So it's not an area where you drive by and look at the house and say, okay, vacation house right here. It looks just like every other house in the street. And my next door neighbors are tenants, owners, everything in between. I mean, you would really not know that any of these houses were vacation rentals other than you'd see the cars outside with all kinds of license plates coming and going all the time. That's about it.

Yeah. Interesting. Okay, and have you had, speaking of that, have you had problems with any of the neighbors to your properties objecting that you're doing short term rentals there?

I have also worked on a very good system on how to alleviate any kinds of those problems because that's, that's one thing I was very, very concerned about in the beginning, especially because some of my houses are actually very close together, so there would be a lot of traffic here, obviously. But what I've done is I've pretty much tried and Started and opened these open communication channels with all of my neighbors to ask them what they thought, if they thought there was any issues, if they see anything when I'm not around to let me know immediately. I gave them my phone number, my after hours number, and as soon as there was any kind of problem, usually I or my manager would show up and we put an end to it very quickly. We've had some people that were partying and staying up a little bit later. Gladly. With some of the vacation rental websites out there, such as Airbnb, we get as hosts, we get a lot of support and we do not have to host people that are not following house rules.

Yeah, yeah. And that's actually a section on the website called House Rules. You know, whenever I've rented an Airbnb property, I always look at those house rules and they'll say, no noise after 10pm not suitable for parties, you know, blah, blah, blah. And so that's interesting. Have any of the neighbors objected though, or given you a hard time? I mean, I'm not saying that any of the tenants have been bad. I'm just saying, you know, there are some neighborhoods around the country that are experiencing, you know, legal battles over short term rentals and so forth. When I lived in La Jolla, which is a suburb of San Diego, California, I remember walking around some of the beachy areas there and there were signs in people's yards that say, this is not a vacation area. Or, you know, this is a neighborhood, not short term rental area. Or, you know, they had all. There were people like lobbying against it and trying to get legislation and so forth. Even though, interestingly, it's like my last couple of places in Europe after I saw you there, I remember the comment, when I was leaving Oslo, Norway, and I was going to go to the airport, I was at the hotel talking to the concierge. I said, well, what's the best way to get to the airport? Should I call Uber? And she says, Uber's illegal. I turned my phone around and said, no, it's not. I've used it several times here, so it doesn't matter if it's illegal half the time. But you know, they can make it tougher for sure. It's, it's illegal in New York City, yet you can rent an Airbnb in New York City all day long.

So I guess as a cautionary statement to your listeners, you can potentially get indeed into a lot of problems with your neighbors, and especially if you have neighbors that you don't have very good relations with, and they're just out to get you or just tried to complain. And I've had a neighbor like that, actually, and gladly, he moved away and I bought his house. That's where I live now. So that was the easy solution. But rest of the neighbor, I love it.

I just bought his house and got rid of him. I did.

I did.

It was perfect. He was selling his house. I bought it and moved it into it. No more problem. But this is not a solution for everybody, obviously. So let me tell you a little bit of my other neighbors. Everybody in this neighborhood. And because I live here also, I know everybody. I know what everybody does. I know their business, I know their kids. I know their likes, their dislikes. So I try to really have a relationship with every single neighbor here. My neighbor next door cuts my grass across the street. The girl was babysitting my kids when they were little. Anybody that sells Tupperware or whatever, I'm the first one there to buy something. I mean, it really is about having relationships with people around you.

You have some properties that aren't close to you, though, too. So, you know.

That's true. That's true. And the one property that's kind of far away, actually the furthest away from me, that's the only one that I've ever had any problems with. And the problems are with the hoa, with that. Unfortunately, the HOA president is a lawyer, and he throws the book at me regularly. But I know the rules as well. And so whenever he has a complaint, I tell him, well, why don't you take a picture and send it to me? Because I can't verify what you're saying is true. For example, he was complaining about a trailer being parked off the street, which is not allowed because of HOA rules or something. But I knew that my guest was leaving within, like, three days. So I told this lawyer after two days to take some pictures and send them to me. Well, obviously, you couldn't produce pictures because the trailer was gone. So you just have to kind of play it by ear.

Right, Right.

But you do have to follow the rules and the laws and just kind of. That's part of the management part. That is what I do.

Sure.

My job. My only job.

Right, right. Okay. So I'm glad you mentioned hoas, which stands for Homeowners Association. In case there are a few people wondering, you don't own properties, you know, in some of the categories I'm about to mention, but. Because I know what your portfolio is like. But I'd like you to Speak to Julia. What type of properties make the potentially best short term rental properties? I think that you can run into a lot of problems in high rise condos because those HOAs are like really hardcore. They can ruin your whole deal. If you have a garden style condo complex, yeah, you're still going to have an hoa, but that's a lot harder for them to exert so much control, you know, because there's not a central garage, there's not a central elevator. They don't know what's going on as much. Okay. But I've had friends that have, you know, rented properties as short term rentals in buildings, say in Las Vegas here. I'm think I'm actually looking at one out my window literally right now. And they were doing short term rentals and the, the bylaws, you know, the CCNR said no way, you can't do short term rentals at all. They would just do it anyway. And in fact, our mutual friend Steve, they do it in his building and it's not allowed. They can make it tough in high rise buildings. So I, generally speaking, and of course there's an exception to every rule, if the deal is good enough, I would shy away from high rise condos. Okay, would you agree with that, by the way?

Absolutely. High rise condos, condo associations, period. And HOAs are kind of red flags for the properties that are good candidates for vacation rentals.

Okay, so tell us, what kind of properties do you own? Are they all single family homes? Are they a mix of condos, townhomes, single family? And how many of them have HOAs? And you know, what percentage is HOA and not.

They are actually all single family homes and they're all freestanding, which means I don't have any common walls with anyone else. And you definitely need that. And you actually are best off too if you have a little bit of a yard around the house with a fence that gives you a little bit of added privacy. So those are the best candidates. What I usually look for is for homes that are at the end of the street, like a dead end street or cul de sac. And that way there's not so much through traffic and chaos going on in the street, which also helps me kind of monitor who goes and leaves the street and the neighborhood, because I live on one end and I can see who's coming and going and so can my manager. So those would be the ideal candidates. Now as far as how many of mine have HOA's, they actually all, except for one, are under some sort of HOA umbrella. But the one thing to remember, and if you've owned lots of real estate, of course, you probably know this, Some of them are a little bit more involved hoas, and others are kind of like laissez faire kind of hoa.

Exactly. So let me. Yeah, I'll address that for just a moment. I call it HOA Light. Okay. I don't like homeowners associations. I'm a libertarian. I don't like any buddy telling me what to do. Okay? But the HOA Light, you know, like, think of the commercial for the beer, a third less filling than your regular beer can actually be pretty good. The HOA Light, where they charge a low fee of, you know, $30 a month or something like that, and they. They keep the neighborhood up to an extent, but they don't exert a ton of control, versus at the opposite end of the spectrum is the high rise condo where the dues are $1,200 a month. That's absurd. I mean, that's just insanity. And they exert tons of control. So I agree with you. You know, and if you can get properties with no homeowners association at all, that could even be better. But the HOA Light concept, the laissez faire concept, you know, that can be fine, right?

Yeah, for sure. And the other thing that you may need to consider, or at least warn your listeners about, is the fact that you always need to check the laws in your particular county and whether you're in city limits, because city officials or city government, city officials, anyways, are the kind of offices that manage urban development or whatever it's called at any one place. They sometimes act as an hoa. And I've learned that the hard way with my project in the city. Downtown, they have rules and regulations against vacation rentals as well, and they will come after you if you don't follow those rules. And they can act like an hoa.

Yeah, yeah, I agree. You get some government bureaucrat or HOA bureaucrat, they can make your life difficult. No question about it. Okay, so what I'd like you to talk a little bit about more is our clients want to be able to invest in a diversified fashion. And they may not live in the bank, the best place to invest. Right? So they want to be able to invest in the optimum place. And that's why we always look at things on a nationwide scale. And in the traditional business, as you know, I'm repeating myself. I know you already know this, Julia, but just for the audience's benefit, when I talk about my ten commandments of successful investing. One is thou shalt diversify and diversify geographically. Take the most historically proven asset class income property, but diversify geographically into at least three markets but not more than five when you're looking at the short term rental business. You know, you made this comment to me before we started the interview today and you said if I can do it for five or six weeks like I did on my Europe trip, I could do it for a year and be remote. Speak to that a little bit if you would. And how there is so much support with technology nowadays. But what you really do need on the ground, I mean you need a reliable cleaning service that'll do a little spying for you maybe and report for you. And then maybe you need a second contact person because you don't have an actual manager for any of your properties. You know, you're in Europe and you were gone between Europe and Daytona beach for six weeks. How do you do that?

Yes, exactly. So the way I did this, and you're right, I do not have a manager. I'm like a self manager, but I don't really manage that much. It actually doesn't require very much of my time at all. But what you really, really need is exactly what you said. You need a very reliable cleaning service or cleaning lady or best yet, several that can switch each other out whenever they can't do it. And they have to be in constant communication with you. I mean it's imperative that they can speak to you on the phone and text you or call you, whatever. It's really imperative. If you can't get a hold of someone, you're dead in water.

This is for the, what did you call them? The management. What do you call that person?

I would call that, that's the cleaning staff. That's kind of like the spine of everything. Without cleaning, nothing works right. Cleaning and laundry, I kind of put that all in one. Then you need and this is somebody. The cleaning people obviously have to be there every day. I mean they are almost every day. They were really need to be local and they need to be available at the last minute. Notice the second person that I had available to me in my six week trip and she was only there for a total of two weeks. So out of the six weeks she was at the property for two, she wasn't even there full time. But her job was to come every other week or so and just to verify that everything is still standing, make sure that no crazy stuff has happened that the cleaners didn't notice. So basically like a second look of eyes. And this needs to be like a mature English speaking person. I say English speaking person because you just have to be able to communicate with them and tell them exactly what you need. This is also somebody that can take care of guests that have special requests, which we had several while we were gone, and be able to communicate with both the cleaners and by third support person, which is my maintenance guy. And the maintenance guy is really just there for on call, like your shower breaks or the door doesn't work, the battery's empty, and the keypad for entry in the house or something like that.

Yeah. Okay. Okay, good. So no property manager, but a three person team. The house cleaner, the cleaning service, the maintenance guy. What do you call the middle person? What did you give them a name?

I would call her the assistant or the girl for everything.

Okay.

Or the person for everything. I mean, definitely like the overseer, I guess you would call them.

Okay. Okay, good. How do you pay any of these people? Like, you know, are using a cleaning service or just a person you found on Craigslist that you trust or. Or what?

So my maintenance person has been working for me for 15 years, so I pay him via PayPal. Just regular online payment methods per job. The overseer girl, she's on the salary, so she gets paid the same every month anyways because she has other things for my business as well. And the cleaners get paid for each job, and the cleaners are paid in cash and they're paid by my personal assistant. So the overseer lady, the manager, she takes care of that.

Okay, good. So what else about doing this remotely, you know, in terms of technology has made this a lot easier nowadays. You know, electronic door locks and. And then, you know, whatever web platform you're using, whether it be Airbnb or vrbo, they've got some great features to their website and that help you do this, some great tools. What else would you like people to know about doing things remotely?

So I guess the one thing that kind of worked in my favor in this trip is the time difference. That just means that I was up way earlier than anybody in the United States, which meant that I could take care of things before anybody woke up. And everybody had their instructions and everything that they needed to know, and any messages were sent when they got up in the morning. The flip side of that is obviously at 6pm Eastern US time, I'm already asleep because it's midnight. And if there's any emergencies happening after 6pm in the United States, I won't get them until the next morning. So the other additional thing that I had to worry about is to have an on call person and a phone number available for my guests that guests could call in case there is an emergency for those six hours that were flipping the sunlight.

So were there any emergencies?

Not anything that couldn't wait till the next day. I mean, I can tell you the worst emergency that happened is that somebody took two pots or three pots out of one of the houses and the next guest that came didn't have enough pots to cook with.

They stole cooking pots.

Yeah, but I, you know, actually they probably just didn't find them because they were in the bottom of the stove or something like that. Anyways, they couldn't find them and I needed to send somebody to help them find them or get them new ones. It wasn't really a big deal. But that's the worst emergency. I mean, if that's all that happened in some six weeks, I'm totally happy with that.

Yeah, right, right. That's not an emergency. Okay.

Yeah.

It's funny you even call it an emergency. Julia, did you ever use a. You know, a lot of people with short term rental properties, they use a traditional property manager, not a, not one that necessarily is a long term property manager, but they use a property manager that does short term rentals. Did you ever do that or did you always do this yourself?

No, I've never done it, but I have considered it a few times and I've made the inquiries and asked. But what the deciding factor was that I wasn't going to use these people was just the cost. I mean, it's just an exorbitant amount of cost to get somebody.

Tell us about the cost. How much do they want?

One company that I called wanted something like $200 to switch a home. And that would have included everything including laundry service and cleaning. That's just more than my guests will pay and that'll keep my places empty. And I didn't want that. So it was much cheaper for me to just hire my own people and pay them hourly wages or small salary or part time salary. It just didn't make financial sense because I wanted to keep my places occupied and make the maximum amount of profit. So I didn't. It wasn't worthwhile.

What's the average length of stay for you?

Well, and this is a really cool thing about vacation rentals, you can decide that as a host. So while I was gone in Europe, my average length of stay was seven days to four weeks. Normally it's somewhere between three to four days. And I think when we talked, you actually saw one of my reservations. It was for three weeks, I believe.

Yeah, I did.

Yeah. And I kind of kept it that way because I knew I was going to be out of the country and I didn't want to deal with too much stuff. So for the month of July, I made sure that everything was long term or longer term, seven days or longer.

You required longer term rentals while you were gone because you wanted less. Less turnover. Interesting. You, you could totally control that on the website. $200 doesn't seem that exorbitant when it includes the cleaning to do the switch every time the tenant turns, especially if it's at least a three day stay. If it's two days, that's exorbitant. Is that all they charged the professional manager or did they charge a percentage or anything else?

You know, I didn't even go into any further than that because that was already over my top shop. So it was already a non factor for me. And I'm sure they have different services as well, but included the laundry. Like they actually have a professional laundry service to pick everything up and bring you brand new white sheets. Oh yeah.

Part of that is expensive.

Yeah, laundry rental or sheet rental, which is, you know, that's, that's expensive.

That's really expensive. Yeah, that's like hotels have contracts like that and that can get pretty pricey if it doesn't scale on a big, big thing where you can get a good price. So anything else about the remote part? And then I want to ask you about furniture and we got to wrap it up here. Tools, you know, for doing things remotely or any other comments on that? Maybe there aren't any. I don't know, maybe we covered it.

I mean just a basic thing is you have to have an Internet connection and computer and if you're out and about, like I was most of the time a cell phone that has international data plans and very good data plan and that's, that's all you need.

I was just so surprised at how little time you actually spend on this. My perception was that there would be a lot more management involved, that it would take a lot more of your time. But it really, it really doesn't take that much time, does it?

Not at all. And everything can be streamlined as well. A lot of the messages that I sent every day and I think you may remember I told you this, right, But I have standard form letters for just about every check in and every checkout procedure and any questions that has ever been asked, I have a form response for it. So for all intents and purposes, I could have somebody else send the messages for me. I just like to do it myself because I like to stay on top of things. Yeah, so once you streamline the whole process, it's really not that difficult to do. You just kind of have to stay on top of it.

Actually, there's two more things I want to ask you about. Okay, good. So that's good to know. I want to ask you about furniture real quick. You know, you've got to furnish these places and you've got to keep the utilities in your name, obviously, and so forth. But with the furniture, I mean, it's so cheap to furnish places really quite nicely nowadays. You know, home decor is very inexpensive. You know, what's been your experience there? And you know, you talked about like the pots that may have disappeared or may have just been in the cupboard where they couldn't find them. Any things you want to say there?

Yeah, the reason I don't get too upset about furniture when, you know, and I have, have obviously things that break and sometimes things get destroyed willfully or unwillfully, one never knows. But these things come from Goodwill or from secondhand stores or I pick them up on Craigslist. I mean, these are very inexpensive items like you just mentioned. So to furnish a place is extremely cheap. To replace any one or two items is extremely cheap. Now, if you are a real estate owner, vacation rental owner, the furniture is tax deductible. You can depreciate it over, you know, a short amount of time. So it's furniture is like a non issue. I don't even worry about it at all. Somebody else manages that and they love decorating. There's plenty of people out there that want to be home decorators. It's not hard to find them.

They're very easy. You could find a home stage or anywhere, but that's just pretty easy. It's inexpensive. It's just not a big deal. People think it's a big deal. And, and you know, notice this myself because when I had a second home for a couple of years, you know, I just furnished the whole thing in like a couple of days. And it was so inexpensive to buy plates and silverware and this stuff just costs nothing nowadays. It's amazing. Okay, so the thing we didn't ask you, Julia, and this will conclude with this. Show me the money. Okay, so speak to before we go, the kind of revenue. Revenue you're looking at here and the kind of people that are renting these places, they're not all vacation people. What do they pay you? How do these properties perform in terms of money?

So generally the kind of profit margin that I look for is to make about four times as much as I want on any one house with a traditional rental. So let's say if you rented a house for $1,000 a month for rent, I can get four, sometimes even $5,000 a month for that house.

Wow.

Four to five times as much. And I gladly pay for the utilities and for the furniture and for the plates and even the two missing pots. It does not matter to me.

Yeah, that's great. That's awesome. Okay, so, so if it rents, you know, we talk about, in the traditional long term rental business, we talk about the ideal rent to value ratio or RV ratio being 100%. Sometimes you get a little more, mostly nowadays a little less because the market has gone up, you know, prices have appreciated quite a bit and so that reduces the RV ratio. But the hundred thousand dollar house that rents for a thousand a month. Now are you talking about $100,000 property or was that just an example you gave? Can you give us maybe a real life example of one of your properties?

Real life example. Okay, so I have a house that I bought for $150,000 about seven years ago. It's worth about 220,000 now.

Okay, so 220 today. 220 is the value. Okay, go ahead.

That One is a five bedroom house and it usually rents for about $8,000 a month. Wow.

And it's just a single family home that's worth 220 grand and 8,000 per month. You get out of that.

Yes, and that's gross. Of course I have to pay utilities and all that other stuff, but that's not very much.

That's not very expensive. You're renting that mostly room by room or the whole house at a time?

Usually that one is room by room, but while I was gone, the whole house was rented for the three weeks that you saw.

Who rents that house for three weeks and who rents room by room? Like what kind of people are those?

You know, the people that rent the whole house are usually people with families and kids. So they kind of need to have peace and quiet from other people. They don't want to go in hotels because they're afraid to make too much noise. Or they're large groups of students. Sometimes, you know, eight, ten students that can fit easily in a five Bedroom, house.

What kind of students? What do you mean? Like, what do they do there?

There might be like, say, because I'm in Georgia, so might be people from the city, from Atlanta that come down to go to the beach and they have a group of people, friends from college that might rent the whole house and just kind of split the cost between them for a weekend or for a six, seven days or something on spring break, something like that.

Okay, so that's more of a partier type group. So that those, they're gonna put a little wear and tear on your house probably, right?

Yeah.

Yeah. Okay.

Yeah. But then I have the corporate rentals too. For example, next week I'll have a group of eight or so workers who have a contract doing some construction work in one of the hotels downtown. And they wanted that house just because it had a lot of TVs and a lot of rooms and two separate entrances. And they just, just wanted that rather than staying in a hotel because it would have cost him as just as much or even more.

Yeah, yeah. The hotel thing gets really expensive. When you need to eat. That's. That's where the hotels get you, you know, so people that are staying for any length of time or if they're a family, you know, they want to be able to cook, you know, that's just going to save them a fortune, of course. So. Yeah. Good, Good stuff. Julia, that is really amazing. Congratulations on all your success with this. Your website is juliamspencer.com you do a bunch of different things in real estate as we mentioned at the beginning, so people can check that out. Any final thoughts? Maybe? Anything I didn't ask you anything you want to share with people?

No, I think it's, it's really fun thing to get into. You kind of have to reserve a little bit of space in your day to kind of stay on top of things that will give you better peace of mind. It's not, it's not like long term vacation rentals where you kind of just put it away and you don't have to worry about it for two or three months. You really kind of need to stay involved even though you may not have to do anything every single day or very little. It's a little bit more of a hands on business. But you know, if you're interested in that, you have the time. It's very well worth it financially.

Good stuff. Well, Julia, thank you so much for sharing your wisdom and experience with us. We appreciate it.

Sounds great. Thank you for having me on.

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