Make Millions in Real Estate: How To Create A Short Term Rental System

Hello YouTube, we're back. It's Christian, and I'm here again with Sav. She is co-hosting every single Monday this month, so super excited to have you back.

Yeah, thanks for having me again.

Well, this week we're going to be talking about operations and automating your systems. This is something that you're going to be really diving into, uh, I'm really excited to hear what you're doing with your resort. Yeah, uh, Sav's done this with her Airbnb business with your rentals. We've— we're halfway through doing it at the Robin Hood. We've done it with our rental properties, property management. So I really wanted to dive into once you have the rental properties, you start to get this built, you lose all your time. Just realistically, if you're building anything to scale, you're going to get to a point where it's okay, I need efficiencies. I either need employees, systems, or a combination of the two. We're going to talk about what's worked for both of us. Let's start with your new deal. Talked about this in the last video, but the Packwood Resort, brand new resort, you closed Monday. You are renovating the crap out of this. It's going to be a beautiful property. How are you going to run that property? Did it come with any systems?

No. So since it's a long-term rental, it hasn't been a motel for years. There are absolutely no systems regarding short-term rental. The only, I guess, system they have in place is they have an onsite manager who I will have to do some more fact-finding to see if we can hopefully keep. I know that there's been maybe a few issues, so we'll see how that can go. But yeah, so absolutely no systems, starting from the ground up basically. Uh, definitely looking at doing a lot of automation because there isn't like a front desk area right now, and just simply wanting to eliminate as much overhead as possible. Looking to— and or to automate, um, check-in and booking that night of and things like that, not having to have a front desk.

That makes sense. And are you taking anything from your existing businesses? Because you have the Airbnb business and you have Do you own your own cleaning company or you just have a cleaner who works for that? What system are you taking from your other business and putting it—

Yeah, so I have an awesome cleaner who found me through Airbnb and I use her for absolutely all of my rentals. She's amazing. She has her own cleaning company and we decided to team up and start a short-term rental property management company together. So she is going to be handling the whole cleaning side of things. Her business will be a separate thing. They'll be like our exclusive cleaners. But when we do hire cleaners on staff for our short-term rental property management company for on staff for specific properties, bigger properties like the motel. She'll be handling all the day-to-day management of the cleaning staff and the quality control. So that's how we're going to be handling that aspect of it.

So you have a few core businesses. You have long-term rentals, you have short-term rentals, and you're now entering the resort. How do you manage each one? Which did you start with? How did systems go into that? Let's talk the long-term rentals. Did you start with long-term or short-term?

I started simultaneously with long and short-term because my first rental property was a duplex.

That's so cool.

Yeah, so I wanted to try both and I knew it would be an apples to apples comparison. Each side is identical. It was a new construction, so there wasn't one side that was more beat up than the other, anything like that. I just simply furnished one side and put it on Airbnb and then rented the other side long-term just to see how they would compare in a small market like Centralia, Washington, where no one has probably even heard of that place. And I found that the long-term rental did about half of the cash flow of a short-term rental. So it is a little bit more work obviously doing short-term rentals, but the cash flow's there. So if you have the time for it, then it's absolutely worth it in my opinion. And Airbnbs can work. I proved through doing them in Centralia that Airbnbs can work in most places, even places that aren't like typical vacation destinations.

Well, that's actually a fantastic case study. You have a duplex and you do one on one side, one on the other. On that duplex, which did you prefer? I know one made more money, but so the passivity of the other one, was that awesome or do you wish you did it all Airbnb? What was your takeaway from doing a duplex first?

Yeah, I actually got lucky just being a novice investor, a novice landlord. I got really, really lucky with the first long-term tenants I placed. I still have them years later. They, it could have gone really bad because they weren't the typical like family who like has the white picket fence. Like they pay, You know, it was a group of 20-something guys all together, and it was their first time living outside of their house. They were all like 20 to 22 years old, and I got some people warning me that, you know, maybe they might be a little hard on the rental, but I just— I got a really good vibe from them, and I just got really lucky. They are the best renters ever. They are so considerate. Um, so I really like that long-term rental, um, and I really like the short-term rental because I do kind of like the hospitality industry. I know that not everyone loves that, but I think it's fun to do that. So I really liked both, honestly. That's why my portfolio right now is like a true mix of long and short term.

Fantastic. And how many long-term and short-term rentals do you have, by the way?

Yeah, I have 7. So I have 15 units and 7 are short-term rentals.

Oh, perfect. So you are really just about as half and half as you get.

Yeah.

Now, this resort, is the whole thing going to be resort when you're done with it? Are you going to keep any of that long term?

Yeah, it'll all be resort unless I do put a property manager one of the units. But the plan right now is to have all of those 15 units being short-term rentals. So that brings it up to, I guess I have 30 now. And I guess, you know, I have more long-term rentals right now because that's what the motel is being operated as.

But that's awesome. So let's, let's break this automation and systems into 3 silos then. Let's do long-term rentals, short-term, and then I want to talk just a little bit more about the resort because I'm really excited about that project for you. And we have learned a lot about optimizing the hard way because, yeah, we bought a resort that was optimized for people living on site and Jodi and I don't live on site, so we have to redo everything.

I'm so glad I have bought a resort like 4 or 5 months ahead of me so I can like learn from them, you know.

Yeah, I'm excited to learn from the mistakes that you make because it will not be perfect. And that is how these work. Okay, so let's go long-term rentals. Do you self-manage all those or do you have them in property management?

Yeah, I self-manage all of them. I use just an online property management software just because it's, it's pretty simple. I, from now on, if I, if I acquire more long-term rentals, I'll probably outsource to a property management company. Money, but just, you know, long-term rentals are pretty passive. So once you get them leased up and you have a good online software, it's pretty easy to do it myself. So I just— that's what the route I've been going so far.

We always recommend that for people in their first 10 units, just self-manage them, even if you have a full-time job. If you don't have a full-time job like Cody and I, up to 30, pretty easy. That's the point for us where we had to actually start a property management company. We put it in property management, they stole a bunch of money, it was a disaster. And I went, okay, We could find a good property manager or we can just become a good property manager. Yeah. And so we brought on employees and staff and that was how we chose to tackle it. As you scale long-term rentals, does outsourcing, because you have a lot of different facets to your business, is it find a property manager, set it and forget it?

Well, so not so much because the most recent long-term rental I bought was with a partner who is like kind of my mentee and she wanted to get into her first rental. She had an off-market deal seller finance but didn't know how to take it down, didn't have the cash to take it down. So we kind of join forces and my role is, you know, the financial, you know, I secured the down payment and things like that and got us into it like monetarily. And now she is going to run it, manage it, and do all the things on that side. So I definitely would be looking for more of that in the future where I can just be like the money partner and have another partner be 50/50 and be working the deal for us. So that's something that I really like doing. So far done it once. Like it so far, be looking for more of that. And then short-term rental-wise, we are starting a short-term rental property management company because I did feel kind of capped at 7 and I didn't want to stop there. I didn't want to feel like at my capacity I couldn't go anymore. I didn't want to have that feeling. So that's why we're doing the short-term rental management business so that I won't have that feeling on myself. I can keep growing that as well.

Biggest learning lesson we've had with running employees is there has to be a point person. There are different people in different businesses. Cody is the— I say this all the time— he is the best buyer of real estate. I really believe this in the entire world. He is amazing at buying real estate, lining up deal, the debt and the equity. I do a lot of the hiring and it is a brutal task.

Yeah.

For your company, who actually manages the people? Because as you expand, you're going to need more humans.

Yeah. Right now I have a couple people who work for me as like Airbnb stagers because I— it takes, you know, a couple of weeks to set up an Airbnb and I just didn't have that time anymore. And then I have you know, just a Rolodex of subs. So I don't have like an assistant or a full-time person on staff right now. I just have a lot of like people I delegate things to. Um, but I think my next hire would be someone who's like on staff, an assistant who is able to kind of handle even all that subbing out of things.

That is fantastic. That's going to take so much off you.

Yeah.

As a manager of people, my goal is to learn the role well enough to do it myself so I can teach someone else to do it, and then I will learn new roles for our next thing and I teach it. That's a lot of people say that's an inefficient way to do it. I just really like managing and leading somewhere that I've actually been myself. That's been a thing for me. It sounds like you're doing the same thing. You've run this business before, you know the different facets. You bring on someone, you train them up, and now they can bring on people. Yeah, it's a good— I think that's the right model.

Yeah. Hand it off.

For the resort, we talk a little bit about our systems. If anyone's looking to do large-scale short-term rentals or you're looking to do a resort property like this, even a small motel, one of the most important things, your point of sale system is everything. For us, that integrates Airbnb, it integrates with VRBO, having the right system and the right websites, that front-end funnel is so important because that means bookings. We had a system in place here that did not work well for how we wanted to market this. So the first thing we had to do, which is pain, it's not what I wanted to do, but the right thing for us was we totally took out the old system and used something called Logify software. Solved a lot of our problems for how do we market it, how do we collect money, integrate it with Paywall, and ta-da, It's done. Ton of work, but once it's done, it's done. Then we had to work on the personnel. We were overstaffed going into the winter, which is our slow season. We also didn't have everyone on staff on board with having new management, and that will happen.

Yeah.

That's going to be one of my next questions for you is your existing staff, and we're going to dive more into that. But the next thing we had to do was lay off someone, which was a bummer.

Yeah.

Right after that, we have a role that we actually need to hire for, which is the maintenance, which has always been done by the owner. So for us, it was just one at a time. What are the roles? What needs to be done? And it's software. Paywall, personnel. And we found we had to have someone in charge who can make decisions on site. That was the one thing I didn't think we needed, and we learned really quick, you— I cannot have everyone ask me everything for a yes or no. There has to be someone at the end of the day. It doesn't even have to be the right decision. They need to make a decision.

Yeah, the most— the momentum needs to start getting going in a direction.

Yes, mistakes are allowed, but non-decision was killing us. So having a decision maker who is present on site was the other big system thing that we had to do, and we definitely have the right person. For your resort, you You said that either it comes with one on-site person. Is that the on-site person or?

Yeah, it's the person that came with the property, I guess you could say, the property manager who was already there. We're definitely going to have more conversations and see if they are willing and able to like adapt to the new system that's going to be put in place. And hopefully it's a good fit because of course we'd like to keep existing people. But for the renovation and things, I will have someone who is my Airbnb stager right now be staying on-site a couple nights of the week to manage renovation and be able to call some shots on my behalf. So that'll be nice. But yeah, hoping to keep the current onsite manager, but we're going to have to do some more like discovery and see if that's going to be feasible.

That is going to be very fun. Setting up the systems for these is so much more involved than small multifamily. Yeah, we learned that the hard way. It's just a lot. Robinhood right now we manage, I think we have 8 employees. I'm bringing on a 9th here, then we'll have 4 who have been here forever simultaneously move. And I'll have new people moving in. So it's, it's a lot of personnel management. Are you going to have people on site doing turns? Is that just your cleaning company? You're going to keep it contracted and they, they drive in, drive out? What does that look like?

Yeah, so we haven't decided yet, I guess. My partner on the short-term rental property management company who owns the cleaning business, she was— we were discussing if she wanted to hire more people for her business out of Packwood or if she wanted to just oversee a cleaning company in Packwood. Would where I was going to, you know, have more communication with her on that and see what she thinks is the most feasible because she knows the space. And I want to trust people who know the space so I don't do more work than I need to, you know. So yeah, that's more of a conversation that's going to happen to just seeing what's going to end up working out the best in that kind of rural area.

Fantastic. And for everyone who wants to follow this story, your Instagram is @investor_sav. There we go. Easy to remember because she is Sav and she is an investor.

Yeah.

But follow the story there for what system she adds. If you guys have any questions on systems that you can add to your business, anything that I do to run our businesses, you can reach out to me directly at Christian Osgood on Instagram. Till then, if you haven't yet, like and subscribe, and we'll see you guys next week.