Are Mid Term Rentals the Future of Real Estate? - Crazy ROI on a Simple Strategy - Vetted Homes

Hello and welcome back to the Owner Meeting Podcast by Multifamily Strategy. I'm Christian Osgood, your channel host today, joined by Jacqueline and Jason with Vetted Homes. They have a strategy that's not short-term, it's not long-term rentals, it's right in the middle, and it makes a crazy return if you can find the right property and follow the right strategy, which they seem to crack the code from. They've been on all sorts of major podcasts, so this is going to be a great episode. Jackie and Jason, welcome to the channel. It's so fun seeing you. Now, I often comment on other people's beards and I've got feedback on the, on this podcast before. I do have beard envy. If you guys are listening to the podcast, I strongly encourage you to hop over to YouTube because Jason's beard is the best beard that has ever been on the channel and the mustache is even better. So if you're listening, welcome. If you're driving, stay on the pod. If you're able to hop over to YouTube, it's worth the look. It's worth the look.

Sorry, I was born and raised in LA. You know, in the Valley. So this is just since Texas. I mean, this is not me.

He was never a beard guy before.

I thought you were gonna say I was born and raised with a mustache.

No.

Yeah.

I mean, honestly, the first time I grew this thing out, I was like, I felt so insecure everywhere I went. I'm like, this is not me. I, I just, I felt really insecure, but only because of Texas, because I'd walk into a restaurant and some dude would go, bro, love the beard. Or I'd walk in somewhere else and someone would go, Dude, that's so funny.

It's always men, by the way. It's always men who compliment.

Nope, I got it on a plane from a woman just recently and she's like, that's a great beard.

There we go. There we go. That, that is so funny. And it is, it is. I would say normally it's a guy thing. Men notice each other's beards. I, during COVID grew my beard out and had the opposite reaction. I was like, I love this thing. And my feedback was, dude, you cannot grow a beard. I envy you quite a bit. Wish I could do it. Definitely can't. Not in the cards, but I think you're doing all right. Amazing to have you guys on the channel. Funny enough, speaking of planes, I had, I met up with a mentee in Dallas recently, first time I've ever met him in person. And we were talking about social media, we're talking about real estate strategies, and he mentioned that he had flown with you guys back from some conference in California about a year ago. But he was like, oh, you know who's super interested, who has a great strategy? So I hear people talking about you guys unprompted in the wild. So then I learned you guys live just south of me. You guys are down in Fort Worth area, right?

We are.

That's right. That's amazing. Okay. Give everyone a little bit of the backstory before you found this midterm rental strategy. What was the pre-real estate starting point for the two of you?

Ooh.

Okay. Yeah.

So we got married back in 2010 in LA and immediately thereafter, almost in the first year of marriage, we moved to China. And so, and that's because—

Look at him. He's like, what did I hear that right?

That's wild.

We've been to China a couple times.

You guys are in China first year of marriage.

That's crazy.

Where in China?

Shanghai.

Nice. So we land there and we just start fresh. No families to convolute our, our marriage style or communication or anything like that. We just started ground zero learning how to do this marriage thing, and it was awesome. We ended up staying out there 6 and a half years, but we had this condo in LA. It was actually a condo that I bought previous to us even dating.. And in 2008, '09, it dumped. And just before that, I refinanced at the height of the market. And so I was nicely underwater. And at this point, at this point, we're both underwater, right? Because we're in this together now and we don't know what to do. People are saying, walk away, just like everyone's doing it. You know, there's repercussions can't be too bad, but we just trekked on and we did the best we could by just renting out rooms. You know, there was no PadSplit back then, but we just—

we were kind of the original creators of PadSplit. We should have done something with that.

We were just trying to bring in anything to help cover it. And our mortgage was probably, I mean, we had an adjustable rate first, which was terrible. And then we had a second on top of that. And then we had California HOAs, which is like $300 or $400 a month, you know?

And then utilities. And you're at the pinnacle of down real estate market.

So we would look up our place at like when you refinanced, it was like what, $350,000 or something?

$330,000 when I refinanced. It was a small under 1,000 square foot condo, North Bella County.

We'd look it up, the, the Zestimate for it was like $160,000. And we're like, oh my gosh, no, there's no way. How is it ever even going to come back?

Yeah, it dumped pretty hard. So, you know, we ended up ultimately renting it to my sister and her husband. They got married and they moved in.

And we just rented it to them for what they could afford to pay pretty much.

Exactly. And then we would send back the difference to cover the mortgage and keep it going. We never went late. We just kept trucking ahead. And then we re-signed the lease with my sister. And then she came back and actually she didn't come back. My brother came back and said, hey, I'm probably going to be going to the UK. And I wanted to offer our sister my house, but I didn't want to step on your toes. But his house was a lot bigger, had a pool in the back, had a view. It was a single-family house, not a condo. And we just signed this lease. And so I'm thinking like, this doesn't make sense., but I had this weird peace inside of me that told me like, okay, yeah, this will be better for, for them. This will be better for all of them. And I don't know what we're going to do, but we'll figure it out. And so I just told him, I said, hey, let me talk to Jack and I'll come back to you and let you know, maybe we can work this out. So I was skeptical that she was going to respond the same way, but crazily, she had the same exact response. So we just cut my sister and her husband loose and we didn't know what was gonna happen. So we started posting on Craigslist again, Facebook, from any, anyone that we knew, letting them know our condo's available if anyone's looking for a place. Nobody.

I think we got like, it was like 2 people looked at it and they were like, eh, not really.

I don't even know if they looked, looked at it. They just responded. Yeah. And then, uh, and then this crazy thing happened. We were already back in China, but just before we left, Jackie's mom said, hey, you guys have to reach out to this organization because I don't know if you know, but there's this big insurance thing going on right now. The next valley down from us, there was a huge natural gas leak and people were getting nosebleeds, migraines, like aches and pains, all sorts of things. And they didn't know where the leak was. So it turned into this big insurance fiasco and they had— were relocating families by the hundreds outside of that area. And we were the next valley up. So we called and we're like, hey, it took a while to get through, but we finally got through and hey, we got this condo up in, you know, this area. It's right outside of, I think you're doing relocations because of the gas leak, right? And they're like, wait, what?

Hold on.

Where are you at? I think we might have a family for you right now, actually. So they asked us the details. Jackie's on the phone from China, you know, so we're opposite time zones. And they're like, what do you think? What would you, what are you asking for it? And Jackie's thinking, oh, I'm going big. Like, this is insurance. So I'm gonna ask, like, what'd you ask?

$3,300?

Yeah. Something like that. $3,000, $3,300, which would be, that was huge for us, you know, because our, our all in was probably around $24,000, $25,000 at that point. And, uh, you know, we were making $19,000 or something like that, $19,000 or $20,000 or $2,000. So $3,000 would be huge. He does, oh, I think I can get you at least $40,000, uh, $55,000. And she's like, per, per month? And he's like, oh yeah, per month. All right, cool. So he calls back later and says, hey, I, I got you this family. They have a dog, all fees, everything. It's $7,000 a month.

And this is the part that I want to emphasize too, because we've told this story before, but we haven't shared the part that it's always about integrity because we felt so blessed. We were like, A, blown away. Obviously it was 2 months to start.

Or 3. It was 3 months to start.

3 months to start. And we were like, oh my gosh, we're going to be making $21,000 over the next 3 months. That is more than we have made ever, ever, like in a year. Big bucks, right? Yeah. So, so what did we do? Well, we left it sparsely furnished because it was our sister's. So we're like, sweet, we don't have to sell everything when people leave to China. Like, we'll just leave our couches, beds, however you want to do this. But immediately Jason's like, you have to book me a flight. Like, these people are paying $7,000. I'm gonna fly back there tomorrow and I'm gonna make it really nice for them. So we spent, you know, $800 on your flight and then we— you spent probably a couple thousand of that money. Yeah. And went to Costco, got brand new white towels, all new bedding. Yeah. You know, spruced it up, some artificial trees, like changed the old wall sconces.

Like, you know, nice back then is different than nice now.

Yeah.

When you have no money.

Back then we honestly like Could have just been like, we're done. However it is, if you guys need something, let us know and we'll, you know, but it was like, I really feel like God honors that integrity. You know, like those are faithful with a little, you'll be given much. And so when that came through, I feel like gratitude was number one. And then we were just like, let us make sure that we make these people like feel like it's somewhat worth it. $7,000, like what a joke. You know, they're 900 square feet in this condo. So they actually loved it and they ended up extending 5 and a half months. 5 and a half months.

So that was a crazy, that's, that's where, so you went from, you know, a little negative to vacant to ludicrously cash flow positive.

Yeah.

Like, I mean, like your cash on cash return there is, is off the charts good.

At that point we were like, well, there's no way we can go back to LTR.

And then Airbnb was like, just started around that time. And because he had flown back, we weren't thinking we're gonna do Airbnb, but because husband had flown back, made it so nice. Now they're leaving and we're like, holy crap, we almost have an Airbnb. Like we basically have an Airbnb. All we need to do is put on one of those like locks or something. And we pretty much have to find a cleaner and it's an Airbnb. So we, boom, we joined into that and it was super successful as an Airbnb as well. I mean, it just started. We didn't, we thought that insurance claims were going to be like a one in a million. Like we somehow hit this jackpot. God blessed us, paid for the adoption of our son, all these things. And we just thought it was never going to ever happen again. But then having it up on Airbnb, and I would every now and then get somebody to say, hey, is there any way we could take it for 3 months? Because our house flooded or this, that. And I was like, dang it, I can't say yes because my calendar is full next month. You know, I can't say yes because in 2 weeks I have this. I can't cancel on them. I'm going to lose my Superhost status, all these Airbnb things. But, but we slowly started talking like, I wonder how common this is. I wonder if we took the risk of an empty calendar, like, would this thing actually work out? Could this really be where one person checks in and they check out 5 months later and we make this kind of money? Like, is this really possible?

Well, especially if the insurance is paying between 2 and 3 times what the market rent was at the time. I mean, you could, you can afford to be vacant half the time and you're still making more money.

Absolutely.

Correct. So how common is this? Because I would think the same thing is like, okay, well, I mean, sure, there was a unique insurance disaster that happens, especially in California. They seem to have that happen more often than, than other markets. But you have this big insurance disaster. How common is it for people to get displaced and be backed by insurance to be placed into a short-term rental for 2, 3, 4 months?

So what we didn't know at the time is that majority of insurance placements are not natural disasters, not huge ordeals like this. They're actually just common house floods, house fire, car runs into the house. Like those are probably the 3 most common claims and they happen all the time, all the time. So it might be anywhere from 1 month to our longest was 15 months, you know, over doing this 11 years. We just recently had our, our longest 15 months and that was from a house fire. But that's where it comes from.

So it's super common and almost everybody listening probably knows someone, if not you yourself, that's been just like, yeah, my toilet flooded and we didn't find it for 3 days. So then by the time they found it, there was mold and then there was the drywall had to come out and blah, blah, blah. The kitchen, kitchen's so common. I mean, one thing goes wrong in the kitchen. Now everything needs to be gutted, new cabinets, and then they're on back order. So that takes 3 weeks to cut. Right.

I mean, yeah. Especially during COVID COVID was the craziest because nothing was moving. Yeah. Nothing was moving. So people were, were in houses for so long.

Well, and I have in my portfolio, I have about 400 units and I can, it's fairly common. It doesn't happen all the time, but I've had in the last 5 years, I've had 3 instances of someone driving a truck through their own unit. 2 of them was the same guy, a drunk both times, but You do have just having a whole bunch of residences. Occasionally there is a flood. Thank God I haven't had a fire. I have had a building, 20 units. We had the coldest winter we'd had in 50 years in Grant County, Washington. It got to like negative 10, which doesn't happen in Washington State. 19 of 20 units flooded, pipes burst all the, then once they started the rest of the cascading failure, all the toilets exploded. Like the whole thing. It just killed the whole building. The, it's on a heat pump system and when it gets that cold, the heat doesn't work. The everything failed. And I'm like, that's a full commercial, a small one, but a full commercial building. Everyone is displaced. This stuff happens. Sometimes it's a disaster like that. Sometimes it's the same idiot drove a car through his building. But I can tell you as someone who owns a lot of residences, it happens more often than you would think for those onesies, twosies, the flood, the vehicle, the whatever it is.

Pipes freezing is huge in the winter. Mm-hmm. Depending on where you are in the country.

Huge.

And one thing is, I, I think a lot of people, there's at least a chunk of the population that doesn't understand that when things like this happen, your insurance is actually obligated to relocate you. Yeah. Because I, I knew, I know growing up in a blue collar family, like if we had a flood or something like that, we're not moving out. Like dad's fixing it, you know, like insurance, like insurance isn't getting called because we don't want our dues going up. You know, all those things.

You don't want to get dropped. Yeah.

Or whatever.

And even if there was an insurance claim, like we're not asking them to relocate us.

We're, we're just, we're living in the mold and just like avoiding that part of the house.

Yeah, exactly. Yeah. But the fact is actually there is a part of everyone's insurance policy called ALE or additional living expense.

Yeah.

The other is the other name for it is coverage D. So Coverage D or ALE is the allotment for additional living expenses when a claim occurs. So that could cover—

And this is true of homeowners, so not renters. Renters though, like Christian, the people that were renting from you, if they had a renter's insurance policy, which they're required to have, there's also flex there, right? Like you could pay like $30 a month or $20 a month and it covers pretty much nothing, maybe like up to $500 of your personal items that were damaged. But if you want to pay a little bit more, and I mean like $20 more or $10 more a month, there will be a section in there that says if something happens where I can no longer live here, it gives me a couple months to find a new place to live. And so that could be 2 months in a nice place. It's $8,000 a month, right?

Could be a hotel, could be a comparable house. It could cover eating if your kitchen's out of commission, you know, anything like that.

But it's very rare for us, like Vetted Homes members hosting renters has been super sparse.

I think we've had 2, maybe 3.

Yeah.

In 12 years. Yeah. I, I could see where it wouldn't be as common, but I'll say as owning residences, place where people live, the accidents certainly happen. So I'd imagine it'd be a one-to-one for people who, you know, you're a homeowner or you're a renter. The frequency of these things happen out of a sample size of 400 in 2 states. It's a, it's 1 to 2% of them will have something happen where they get displaced at some point in a few-year period. So it, I have just enough sample size to say, hey, from my own experience, the accidents certainly occur. So if this happens at the single family level, I see where the market's coming from. This actually makes a lot of sense. Yeah, totally. Do markets get saturated with this strategy? I had heard of this first probably 4 years ago, and it was with the traveling nurses, which got really popular during COVID I just said the word. I remember to edit that during the thing that happened. We just broke top 100 podcasts. I'm not getting, I'm not getting banned on YouTube. It happened during the 2019, 2020 thing where everything shut down and traveling nurses were— They really still ban you for that? Allegedly, yes. My team says, hey, best practice, don't say it. Don't say it. Just don't say it. All right. It's just kind of like curse words. It's like, just censor them just to be safe. During that time is the first time I ever heard of this is like, hey, you have more demand for traveling nurses. People were loving this midterm rental thing.

Yeah, I think that's where Furnished Finder jumped in.

It's more consistent to me.

It is. It is. So Furnished Finder kind of made their, their name for themselves on traveling nurses. That's where we learned about them. Now they're open up to all, all of the midterms.

They're getting a lot better for what we do.

Yeah, they are.

Oh, it's awesome. But yes, so to give a timeline, we jumped into this, the story that we told you was in 2000. We called at the end of 2015. We booked them beginning of 2016.

That's when we started it all. This is why every midterm rental people, person I've ever talked to knows who you guys are because you guys were, you guys were like right ahead of the wave. You guys are the opening end of this whole midterm thing. That's so cool.

We were, we were, I'm sure someone was before us. We've never met anyone before us. We've met Jesse Vasquez does a lot in the MTR and he entered right around the same time. So we're all, we're all about that. I love that. So yeah, I think, I think this is what happened, honestly, as Airbnb got more and more popular and more competitive and insurance companies or placement agencies would reach out through Airbnb, people started realizing, whoa, this is a thing. I've gotten reached out to 3 times over the course of the last year or the last 2 years. Is there a way that I can kind of leverage this. And people started doing that.

This is, so as this has become more popular, do you see markets getting tapped out for mid— like, does this still work in every market? Are there markets that are actually saturated? There's too many players already in the space. Is this something that's open in every market in the country today?

It's open. Just like Airbnb, if you're good, you can make it happen. But that being said, at Vetted Homes, we've closed a couple of markets just because we feel like—

you've tapped a handful of markets because they're saturated with So many of our, like our community's homes that are super solid, high quality, nearly perfect insurance homes. So we want to be fair to other people that are like investors that are, we don't want you to invest in that market. You probably won't do very well. These people are doing it amazing. And there's so many of them that, you know, pick another market right next door, like go 20 miles south or whatever. There's still so many areas that we don't have vetted homes. So we're like, let's have, You know, 5 homes in every suburb.

Let's go.

Yeah.

And I think it's very much like when we started Airbnb, we thought, why would somebody Airbnb our place? Our second place was a place, it was a single family home in Southern Indiana. Oh yeah. In a city of 4,000 neighboring a larger city, but nonetheless a small city. And we thought, who, who would Airbnb our place?

There's nothing. There's no amusement parks here.

There's no— And our condo too. Who wants an Airbnb, a condo in North LA County?

Yeah. Like it just—

But it was wild. We're like, people are paying and we're making good money. Like, for what reason?

I remember I always ask them, why are you—

always ask— what brings you to town? I remember underwater hockey meets.

Underwater hockey. Never heard of it. Yeah, that's the thing. Funerals, meetup. I used to live there. I'm thinking about moving there.

Relocated.

I mean, hospital. Yeah, whatever. I mean, all sorts of reasons. And it just opened our eyes to like, there really is a market for just traveling people.

Yes. Everywhere. Yes. And I don't think every market is good for IMTR. And that's because not every market has a lot of homeowners or owner-occupied homes, right? Mm-hmm. You know, you might have 80 doors that are all owned by Christian Osgood, but he doesn't live in any of 'em. So you have to make sure owner-occupied. And when you do that search, it's really different because you might not wanna buy a place in, you know, downtown Detroit or downtown Chicago for a vetted home to be an insurance midterm rental. Yeah. You might wanna go in a suburb outside of Detroit that has really good schools and an 80% owner-occupied ratio. And that way, you know, you're gonna be surrounded by thousands of homes that are most likely lived in by the owner. And you know, but from what you said, 2% of them are going to have a problem this year. So here you go.

Yeah. And it's from both sides. You got both from the policy side. You want, you know, renters, as we said earlier, don't generally take ALE coverage, but homeowners do. You want to be working in areas where there's lots of homeowners, but on the second side, on the second side of things, you want to be— those homeowners want to be in an area where there's other homeowners. They don't want to be in a rental neighborhood.

That's a great point. And you can check this on, the way I always check this for rentals is worldpopulationreview.com will actually show you percentage of homeowners versus rentals. And so I like to do the exact opposite. There are small markets in this country where everyone has a house and a white picket fence. It's the classic, like old school American dream. And you try to do rentals in that market and you're like, wait a second, nobody wants to rent an apartment here. It's not culturally A thing that people do. You guys are the opposite end of the spectrum. It's like, hey, we want to invest in those markets where everyone has a house and that's, we want to be in those neighborhoods. But you can find that information for free. It takes 2 seconds. ChatGPT can do it for you, or you can even go through all the trouble of typing in worldpopulationreview.com. I'll find all the markets. Oh, that's awesome. If you want to stack the deck for appreciation, you can even go one step farther. And have your ChatGPT prioritize those markets in order of population growth. So I can be like, hey, where's a growing market where there's even more housing need year over year? And come on, they tend to be a high cash on cash return. Great idea. I'm a dork, by the way.

So the AI stuff, I love it, dude.

It's insane. So if I was taking this to a 101 level, so I'm a listener right now. I have a goal. I love this idea. I absolutely love this idea. I love the high cash on cash return. Maybe I don't want to go for the biggest portfolio possible. I want to just focus on what is the highest cash flow I can get with the least amount of transactions, which I think your strategy really lends itself to. So my goal is I want the simplest way to get to $10,000 a month of passive income. We'll call it passive, technically passive real estate income. Yep. What would my first steps be?

First step would be to determine whether you want to jump into it straight away with an arbitrage. And not have to invest the down payment and the furnishing because you don't have it. Or you got the money and you want to acquire your own place that you're going to own. Then you make a decision there. If it's a, if it's an arbitrage, you're going to make quicker cashflow. It's going to be easier. It's going to be less initial investment. You can get moving. And that's how we started. We started, well, that's not how we started, but that's how we started scaling. And that's how many of our community members Don't do it. However, if you got the money and you're really looking like, yeah, I want to buy a place, I want to have my own investment property, then you want to start looking at these factors. Where are there a large percentage of homeowners? What are some nice areas that those homeowners would want to live if they were displaced? And then start looking at that investment. And then we're looking at—

Can you go a little bit more with the arbitrage idea? Can you break that down really quick of what that is and what needs to be negotiated to be able to do that?

Super simply, arbitrage is rent to rent. So you're renting and you're subleasing. You're, you're signing a traditional long-term lease, like a 1-year or 2-year, and then you're getting the owner to okay for you to sublease to somebody else, in this case to insurance companies or placement companies or someone who's displaced, and you're making the margins. So you're taking care of the property, you're paying generally the utilities, you're furnishing the place, and then whatever the margin is between what you're paying for all that stuff and what you're making. From the placements is what you're taking home. So if you have, you mentioned you want $10,000 in passive income, which this is actually pretty passive because for those listening, we're doing air quotes on passive. Yeah, we're doing air quotes.

Yes.

Nothing's passive. Long-term is pretty passive, right?

Yeah. Even that though, there's decisions and things that come up. It is passive income is a tax designation. It's a low time-consuming, but definitely still a job. Yes.

So I will say this is more passive than Airbnb because you don't have constant turnovers and constant replacements of sheets and towels because of those constant turnovers. Yeah. And it's not as passive on the day-to-day as a long-term. However, I would say it's less of a headache because when you turn over a long-term rental at year 2 or 3, you don't know what you're going to get. And sometimes, no, not sometimes, oftentimes It is bad.

And, uh, you know, it's pretty rare for someone to check out of a long-term rental after years and you walk in and go, dang, this looks as nice or nicer than when I gave it to them several years ago.

No, it's always like, well, okay, a few thousand dollars. You usually have a few months of income.

Yep.

Yeah, sure, there's security deposit, but it's like, hey, you usually have to allocate a few thousand dollars to update, to fix. Yep. It's There's some money in the turn.

Yeah. But midterm, because you, you have eyes on the property more often, but not as often as short-term, there's not really as these, these big surprises and unexpected expenses.

Plus they're giving you the same amount of a deposit pretty much that they would be giving you for a year lease. Mm-hmm. And they know they're leaving in 2 months or 3 months and that they think they're leaving in 2 months and it might extend a month, extend a month. So if they damage something, they're pretty much like, hey, texting us, hey, my toddler, you know, drew on your table. I'm so sorry. Where did you get it? We'll fix it. We'll replace it. It's like they're on top of it cuz they're like, I want my deposit back. And they're just in general good people, homeowners, responsible.

So, so I own in, I own in Texas and Washington. This has been, this is the number one thing that would scare me about this strategy. In Washington State, it's really hard to get squatters out of a unit. If I'm signing a 2-month lease, how do you vet these people and what are your options? Does the insurance company, when they place these? Do they help you get them out? Are there any insurances? That scares me in a California, Oregon, Washington, New York, even Colorado, where it can be hard to get these people out in these traditionally landlord-unfriendly states.

How do you handle that? So California is the same, right? And that's where we're from, so we know it well.

Whole West Coast is basically the same set of laws. Everything you hear about California. Yep. North to south, whole thing.

That's right. So number one, you're working with homeowners. Homeowners generally don't want to be out of their home. So they, they're trying to get back to their home. So you, you don't really have the squatting issue. I mean, I guess you could like conjure up a scenario.

Let's say it this way. We've never seen it in 12, in our 12 years. And we don't know anybody in vetted homes, the over 90-some people in our community that have multiple homes each, they've never seen it. And I think the reason for it is they're not paying for their stay. Insurance is. So, It's not like the squatter mentality. Well, I already, I paid for last month. They have my deposit. I'm just going to rock this thing out, whatever. I don't even know that mentality, but there's that. And then also insurance is also paying to fix their home and they're getting to make all these choices like new tile and get this, and they're all excited to go home. So they're going home to a stunning, whatever they've just chosen and redesigned. So they're always like, we have it way often where they leave a couple of days early. My home's done. There's a month of overlap, you know, and we get, we call that a double booking because we can still rebook it to a different insurance family because they're already out.

And that's a great point, right? The, the, because you're not renting to renters for the most part, there's not, you don't really run a whole lot of risk of, of that. Like maybe the, the, the odd chance that you do have the renter who has the insurance that, you know, that right. 1 or 2% where they're like, I don't know. My current place is kind of nicer than the other one. But generally speaking, do you get, do you still get the normal screening and decision-making that you'd have with any other tenant?

You can, you have the option to.

Yeah.

We don't do a lot of that. A lot of people advocate for it. It's an individual decision. Now let me tell you this, two things. When we had renters, the ones that I can remember, they did not leave it very nice. One of them was placed by the homeowner and the homeowner lost their deposit. So there still seems to be a mentality difference even when there is coverage for a renter versus a homeowner.

And you know what it comes down to? I just realized why would somebody squat? Because they don't have anywhere else to go. So they have no need to squat because they have a home to go to.

Yeah. Oh, that's true. So you're right. As soon as you said it, I was like, of course that is, that makes sense. They're, they have a nice new place that they're getting back. Ostensibly, probably still paying a mortgage on place. Of course they're gonna leave.

Yep.

Yep. Of course.

Why would they stay? Absolutely.

Now, that being said, homeowners tend to take better care of spaces than renters. It's not that it, it's just a, a human thing. If you haven't owned a place, you just don't take the same care of it as the one you're renting. Respect.

Yeah, that's right. It's like your parents buying you stuff versus you buy 'em as soon as you buy your own jeans. Yeah. You're like washing 'em and keeping 'em all nice.

Now, that being said, Christian, if there was a squatter situation and you had to deal with it, we are huge promoters of the insurance that we use for our midterm rentals. We promote it to our entire community. There's a company that we work with called Proper Insurance and they have squatter insurance. So if somebody does squat, is it an add-on or is it just come? I believe it comes to a certain extent. Sweet. But anyway, it's there.

They even cover homes you're arbitraging, which is crazy.

Yeah.

Oh, that is wild.

So there's really just no, no issue.

So one thing I ask, and I ask this in every episode, the stupid tax. This isn't saying that everyone's an idiot, but the dumbest you'll ever be is when you start because you learn a whole bunch of things along the way and you get better and better. As I've shared many times on this channel, my highest stupid tax cost me $1,100,000 and it was the first $1 million I ever made liquid. So I had done all of the work to hold the million dollars and I lost it fixing, fixing my early mistakes. So it could be the loss of a friendship. It could be just like, hey, this was personally or stressful, expensive. It could be just a straight up, this cost us a lot of money. But I find even better than the cool success things, if people can avoid that stupid tax that everyone pays to get into a new business. Where can we save people money? What was the highest stupid tax you have paid in building this business?

Dang, 2 come to mind.

What you got?

We can do 2.

We can teach twice as much.

I'm fine with that. Proper. I mean, we had somebody in one of our homes and they were staying, I think it was 3 or 6 months to start. So we knew it was gonna be a while and they had 2 massive dogs and it was a pretty small house. So I'm like, okay, we're gonna add in, we're just gonna tell insurance that we're gonna build in a cleaning fee. So that every month your house is gonna get cleaned. And the cleaner went the first month. She, she, you know, we like that secretly, obviously as the homeowners, we also like that the cleaners like just left. Just so you know, you're gonna have to really get that upholstery clean when they leave. The dogs are, you know, you get the kind of inside scoop. And month 2 goes and she's like, yeah, there's some scratches on the walls. Hopefully we don't need to repaint the house. I'm like, ooh, we're only in month 2 here. This is getting not looking good.. And then as, as they continued extending, I'm like messaging, I haven't gotten any updates. She goes, the cleaner's like, I'm so sorry. I just wanted to tell you they keep rescheduling. They're like pushing me off. I'm keep trying to go. I'm like, you have a free cleaning. When can I get to you? And they finally let her go, but they like closed every door to every bedroom. They're like, we don't need any of the bedrooms, just the main areas. For us, that should have been like red flag, red flag. But we just let them keep on renting and the money was so good on that particular house. We were getting $6,800 a month and our, our all-in bills are like $1,500. So we're like, dude, just let them keep going. Okay. In this small town, this is just, what could it possibly be to clean this place up when they get out? That's a proper insurance claim because after 13 months of them in there, they were doing something. We still don't know fully. Um, thankfully we don't think it's drugs because we did that test, but all the walls covered in black soot. Every single thing in every room— I mean, even our TV and stereo had smoke damage inside. Just weird. Like, running the— we definitely found deep frying oil, multiple gallons of it everywhere. But then also, like, we think that the— what's it called— fireplace was just running like 24/7. Don't know, very strange. But I think the The tax or whatever, like the thing that I learned is follow your gut. And when you have this little red flag, you're the homeowner. You're allowed to be like, hello, we've negotiated a cleaning. It's in the contract. The cleaner needs to be granted entry to the home. It needs to be, you know, we need to see it because we could have probably stopped a lot of this. But honestly, at the end, proper insurance is so amazing because we haven't been out a penny. I mean, they cover loss of use. So every month that we've been Putting the house back together. They've still been paying us the $6,800 and we're redoing everything. It's just all gonna be even better probably than before.

So yeah, it's lemonade for sure. Yeah.

Well, I think for most of them, what an easy fix too. It's like, okay, just make sure the cleaner sees every room. That's part of the thing that gets you guys eyes on the property without you guys having to go see the property. That's, I mean, it's perfect.

Absolutely perfect.

You said you had a second, a second stupid tax that was also expensive. Jason, what's the, what's, what's number two?

You talking about the taking over property on scene? Yeah, we have done a couple of properties, 2 properties. We've taken 2, we've taken over 2 Airbnbs as arbitrage. They were preexisting as Airbnbs and we tried to run them as MTR, as iMTRs. And I will say we, it was close on both of those, whether or not we turned any profit. I think we, we may have been just under, just in the red or just in the black, but it wasn't worth it. By like $100 or something. It, it wasn't worth it. It was a lot of work for for nothing, for no return. Basically the situation is we put out a good product and when we're, when we're outsourcing what makes our product good, you know, the service is one thing, but when someone walks into a house, you can't replace what that feels like. Mm-hmm. You know, we, we put a lot of pride and, and put a lot of time into furnishing the homes and making them look and feel a certain way. We really want our homes to have high-end furnishings. And we want it to feel like when someone walks in, I want to stay here. And you can't rely on someone else for that to take place. And that's what we did in both of those cities, which were both out of state. We're both in urban area, way more urban than we— both urban areas. Yep. We learned that lesson too. Urban areas are, are just not optimal for IMTRs, for insurance midterm rentals. But thankfully we had good relationships and we learned. It was a learning experience. I mean, you gotta learn something from it.

Right. And you know what, sometimes on a project it does hurt as an entrepreneur when you put in a bunch of work and you're like, and our profit was nothing. We worked for free. Yeah. Yep. A lot better than it feels to, uh, go through a project and be like, wow, we burned a lot of money. So getting out of it, uh, for labor and about breakeven, not the most expensive a stupid tax can be, but a great lesson. 'Cause those are some of the most painful when you look at 'em and you're like, well, we had a bad year.

'Cause your time's valuable, right? And especially because we basically chose those properties because we thought this is so much easier. We don't have to put in any time. They're already furnished. They're ready to go. We're just going to kind of rebrand them under our name and we'll just see if we can get them, make some money off of them. And then at the end of the year, you realize you actually put in way more time and got $0 versus had we just freaking flown out there and refurnished it, or honestly, one of them we would have flown out and been like, whoa, this area is not going to work.

For IMTR, but we didn't even go. Yep. That, that's one of the, that's one of the things that I've found is, is every time I do any deal, the deal itself has to make enough money to merit seeing the property. Yes. Sometimes there's, sometimes, you know, there maybe there's the best duplex that you could ever buy in the middle of Ohio. Like just this stellar deal. It's never gonna be worth me booking a flight to check on that duplex once a year personally. And so it's, that's, that's off the list for me. I'll, I'll buy a more expensive, less less crazy good deal in Dallas where I cannot make the mistake of buying it and not seeing it. That has been my policy from early on. I've had friends who've had contractors fall through the top floor to the bottom floor after they closed. They're like, well, I got an inspection. I'm like, did you attend the inspection? They're like, well, no. It's like, yeah, you might want, nothing replaces seeing the property.

For what you do, it makes so much sense with multifamily, but it's so tempting on our end. If you could just pick up an arbitrage across the country and it's only going to cost you 3 grand a month or $2,000, it's like, no-brainer. I'm not even gonna go. Yeah. But no, you should go.

It's a scaling mistake, you know, because we were in the process of scaling. We didn't know how we were gonna scale. And this is kind of how one of the ways that we tested. And this, that's not a pro— it's not a great way to scale. We don't, we teach our community, don't do it that way.

What makes it a little bit more fun, my wife and I have a huge map of all the places we've been together. So for if we are in a new market, I'm like, you know what? We get a new pin on the map when we go out there. It's another place in the US that we travel together. Love that. And it's great. And so I just put a pin in Abilene, Texas for buying a deal there. And I'm There we go. It's just far enough from Dallas where I can actually fit a pin next to the Dallas pin on the map.

This is great. We'll talk about Abilene after this call, 'cause I have something for you there.

Love it. Yeah, we're buying the biggest deal I've ever done. It's gonna be a little north of 200 units.

You are gonna love me.

Okay. I am, I am so excited. Well, we will, I'm excited for where that's, this is about to head. There's obviously so much more to cover with this strategy, and I think a lot of people are really excited about learning more because the margin on the, this is more consistent than an Airbnb, especially in today's market. Airbnb is having some struggles, much more consistent than Airbnb, much higher yield per unit than a long-term rental. And you get to have a good blend of, it's a competitive thing. Like you can create a nicer space and you can actually outcompete your competition, which you can't do in multifamily. You can be a little nicer than your competition, but I mean, ultimately the market's going to determine what you can get. You guys have a very unique strategy. If someone wanted to learn more about this, they wanted to do this right, they want to check out Vetted Homes. How do they best get in contact with you?

The best way is jump on our site. You can check out our socials. We got a lot of information on what we do.

She's up there.

YouTube, Instagram. Yeah. All that.

VentedHomes.com. VentedHomes.com.

Yeah. That's where it's at, baby. There we go. Everyone check that out. This is a really cool strategy. I'm still trying to figure out where I implement this in areas of my own portfolio because I'm invested in some of these towns and we have some smaller properties that We absolutely could be making more doing the strategy. So super exciting. Huge privilege to have you guys on. We still need to go get barbecue here soon, so we'll get that on the schedule.

Let's do it. Let's go.

I'm going to go shut this thing down so we can talk Abilene. Everyone else, we'll see you on the next episode.

Peace.

Bye.