VRBO The Good The Bad and The Ugly

And if you are not aware of what happened, you know, 52% of the VRBOs, Airbnb in Phoenix were not rented during waste management and Super Bowl. And there's a bunch of reasons for it. You know, one of them was that there was like a 90% uptake uptick in properties that people just threw out there thinking they were going to get rich over that time. Good idea. But I think people got greedy and, and it caused a lot of the, I think normal people that were renting VRBOs as businesses to lose business because there was all of a sudden this extra influx of properties. The one thing that we won't hear about is some things I've talked a couple of times about is the people's houses that got thrashed, that was like their home that they lived in and decided to rent out. And they're going to be sad when they find out that homeowner's insurance is not going to cover it when they rented it for a week to collect some income. And I've confirmed that with a couple of insurance agents that if you go and rent your house out with homeowner's insurance on it, homeowner's insurance is there to cover you as the homeowner, not a tenant. So if you didn't switch it over and your house got thrashed, you're probably in deep trouble because you didn't do that and you were more concerned about the money. Here's the cool thing about this, though. If you understood it, which is one of my purposes, like the tips and tricks behind this type of thing, renting your house out during the super bowl would have been awesome if you did it in the right way. And here's why is that. There is a tax loophole or rule that's called the Augusta Rule. The Augusta Rule allows you to rent your primary residence out 14 days a year without paying taxes on it. So you could collect if you rented your house out during the week of Super bowl for seven days for $10,000. That is income that's generated to you personally that is not taxable. So there is some good news when you do those things the right way and you kind of have a strategy around it. There are some things that I kind of looked at and said, well, maybe we could do this differently next time with some of our vacant properties. But, you know, we're going to go through the goods and the bads of this tonight, so let's dive in. I'm Steve Valentine. Thank you for joining me. I know a lot of you guys Shared this on your socials, different things and I appreciate it, it's always welcomed. And here's a little bit of my background. I've been a real estate agent for 24 years. I'm a third generation real estate agent turned real estate strategist and influencer in the real estate market. So a lot of what I spend my time doing is helping people build their real estate strategy both on the consumer side and on the real estate side. When I do a lot of real estate coaching with people and a lot of speaking is because I believe that having a real estate license is a great opportunity to build wealth. So I started putting these free classes on once a month just to kind of share the knowledge and share experiences and hopefully it gives you some ideas on different ways to build business inside your real estate business and be highly educated so that you are a greater value to your clients. So, you know, and over the last seven years since my dad passed, I've been on, I guess the warpath of hey, how do I figure this out? To build a massive wealth generating portfolio and then teach other people how to do it right. So over the last seven years we have owned VRBOs, we've owned short term rentals, but primarily we specialize in the long term space because I believe that the long term space is the long game. It's not instant gratification where some of the VRBOs, you know, they're generating some passive income but they're also generating some passive problems but the long term gain. So we've acquired what we've kept. You know, we've acquired about 80 single family homes in the Phoenix market and we do very well with that portfolio. It's not a huge cash flow. Right? I will tell you that right now and we will talk about that later. We're going to stick with the VRBOs. But you know, the long term passive is the play, right? It's not for right now. I've got a job, I create income. You know, I want those things to be paid off down the road. So that's really my purpose is really to impact as many people as possible, to show them what is possible with real estate. Because I think a lot of us that have been in the industry, those that have not been in the industry, had somebody showed us a different path on investing in real estate, I believe that everybody on this call would raise their hand and say, I wished I would have kept this or not sold this or bought that. Right. I've got lots of those regrets because I lived through 2008 when you could buy a house in Phoenix for 20,000 bucks. And I should have figured out how to do more of it. So those are the things that I'm trying to keep people from having as regrets 20 years down the road of I wished I would have. So let's dive in on the VRBOs. Let me share my screen here and get this rolling. So I'm going to go through this. One of the things Keisha and Cena are on, they've got to be off at 7, so I'm going to jam through. They are kind of special guests tonight. They are clients and coaching clients and good friends of mine. And they've got a little bit to say about what they've done with their VRBO experience. All right, let's jump in. Couple of things. Greatly appreciated. If you guys will do some screenshots on this, tag me on Instagram. I would love the share. Just trying to build my audience and I'm hoping that the value that this brings, you will share it with somebody else. That it will bring value. If it doesn't bring value, that's okay too. Right? Your choice. But I would greatly appreciate the follow the like the tag and referring somebody inside this space. All right, let's just go through definitions because there's so many of them, right. Everybody's throwing things out and nobody really knows what they mean or where they came from. You'll hear a lot of people talk about short term rental or people refer to as vrbo. So str, as is going to be referred to in this presentation is single or short term. Single family, short term rental. Right. That's what an STR is. VRBO stands for Vacation rental by owner. It was started in 1995 and it was really the company started by trying to connect families with affordable places to stay. Because if you're like me, you got two kids. As they get older, every hotel requires or every vacation requires two rooms. Now they don't have any vacation rentals on cruises, that would be awesome. But they don't. So still requires two rooms as the kids get bigger. Airbnb stood for, you know, air bread and breakfast, and it started in 2008. I was actually kind of surprised they started so much later than VRBO did. As I was kind of going through this stuff, they're virtually the same platform. There's several other platforms out there that you can advertise on or look for. Most of you have probably stayed in some. That's kind of what those are. Midterm rentals or short term leases are going to be rentals that are 30 to 180 day rentals. They're typically furnished. I know that like Haysha and Sina, they've got some experiences with a four plex they're doing right now, which there's a lot of traveling nurses that they're doing really well with. So there's some different spaces for this type of rental and it's kind of an in between, you know, long term and short term. And then you've got the long term lease which is, you know, usually a lease that's a year or greater. When you operate an str, you go from being a landlord to a hotel operator. And the expectations are much different in a hotel than they are in a single family long term rental. And they, they expect to be serviced, they expect to be communicated with and they expect nice stuff.

Right?

I mean none of us like to go stay in a Motel 6 versus you know, a Marriott. Right? You know what the difference is? In a short term rental you really don't know what you're going to get. And so it's really important to understand that that's what you're doing. And you can't chintz on expenses when you're going into that. You're now running a business, right? So short term rentals are miniature businesses that have to be run and operated on P. L's expenses, advertising, all those things. Unlike long term where you kind of set it, forget it. Other than maintaining the property with major repairs, that's really all you're doing on the long term. So that's some of the differences that we need to know and understand. Midterm rentals being a hybrid, right, you're going to have some furniture that has some wear and tear, but people are typically there longer so you're going to have less wear and tear on it because it's the same people in and out for a while and you don't have things like some of our VRBOs. I do not understand how barbecue utensils end up in somebody's carry on or suitcase on the way out the door. It just doesn't make any sense. But those are some of the things we experienced in ours. The stats are actually staggering that I was looking at this week as I was kind of researching some more things to share with you. Stayfi.com, great website. I rooted around in it for a couple hours this weekend and the stats are pretty awesome. So I would go there, just kind of look at things and see. So let's check out these stats from April 2019 to 21. So yes, we were still in the days of COVID But I want you to see some of the comparisons here. The 50 largest cities took a 41% hit on single family, on short term rentals, like that's how much they dropped. What's interesting though is the small cities and rural areas that they've increased by 67% as far as demand goes. Yeah, I was looking at some things, I was actually joking. Garrett, our media director here, he came from Rockford, Illinois and there was an article of 10 best places to invest in vacation rentals in Rockford, Illinois, which I think four years ago was the most depressed real estate market anywhere in the country. And now all of a sudden it's supposed to be a great place for vrbo. But why is that? Well, because you go to a Rockford, Illinois or where my wife's from in upstate Buffalo, these rural cities, they don't have a lot of decent hotels, right? So it's really hard to find a place to stay. So the VRBOs are kind of picking up where the hotels won't build. And so it's kind of interesting looking at some of those stats and some of those articles are on this website and also looking at destination resorts. This is a big part of the market that's had an uptick where you know it's destination, right? So Mexico has done really well like Cabo San Lucas and Tulum and some of those places where there's bigger properties, they're cheaper. A lot of different things go into some of those properties. But it's another place where the short term rentals are doing really well. The places that are taking the hit is that, you know, if you live in the average subdivision and you're like, hey, you know, like in Phoenix, I'm going to go buy a house in Surprise, Arizona. It's going to be our vrbo. Probably not a good plan, right? And I think a lot of people just have, they've either talked to somebody, they've watched somebody on YouTube or something that really doesn't know exactly what the plan is. And it just sounds good and you're going to make a ton of money and then all of a sudden they realize it's not great, it's a lot of work and they bail out of it. Interesting stats here. If you see these increases, you know US short term rental forecast from 19 to 22 available listings, you know, they were up 20%. And then you go look at the demand, the demand was up 23%. But then you Start seeing the supply and demand issue where there's more supply and it starts to decrease the average nightly rate by 7% and then the average rate of return down 8%. When it comes down to that revenue piece, there have been so many businesses started to manage vacation rentals because it's a pain in the ass. If any of you have owned them and tried to manage them yourself, you'll realize it's a pain in the rear. And I'm going to talk more about that with some of the stuff that we've owned. So there's a lot of management companies out there right now that are managing properties and there's some good, some bad. We tried it for a year. That was the goal with our South Scottsdale property. We rented it furnished for a year and then we turned it over to a professional company where it was 100% hands off. I only got a monthly reporting from them, but it was extremely expensive. I think we made $82,000 that year and we paid $27,000 to the management company that year for miscellaneous calls, trips. And it was only rented like 180 days that year. And I thought that they could have done a better job keeping it rented. I feel like it could have done better, but because it was a bigger company, I think it was just kind of off the radar. Right. So it wasn't a lot of attention to it. It did okay, but it wasn't what I expected when I turned it over to the bigger management company. So my suggestion on that, if you're going to look at a management company is try to find something that's more of a maybe midterm or growing company that might be managing maybe 20 to 40 homes to where you're really a priority. Because remember, the smaller companies, they rely on their income is relied on the gross monthly rent. So if it's not renting, they're not making as much money either. So it's important to them to keep that company going. There's a lot of small companies that you can research and look at that that might make a difference in that income. So management, if you're going to have management on vrbo, it's really important to take your time, do some interviews, get some referrals or references before you sign up with somebody and really see what it does. Crazy number again. Covid number 2020, right. It was kind of growing, you know, from 18 to 19 it was up about 2.9% in revenue growth. It dropped drastically, you know, in that first year of COVID dropped by 41%, then shot up to 33% as we started coming out of it. But now you start seeing where it's tapering back down to where, you know, if you go from 2019-23, it's really only about a 7% growth in income, you know, across. So it's down a total of 41%. You know, when you, when you look at it, audience is really specific. If you're going to do vrbo, right? What is your audience? What is your avatar? We use that a lot in the coaching business, the real estate business. You know, who is this property going to be utilized by? Right. So when you look at the age, class, you know, typically people 18 to 44 are your avatars. Those are people with kids, their families. Some of the younger generation, they'd prefer to stay in a VRBO than they do a hotel. So you kind of see to where, like the older generation, like my parents, they typically are not utilizing the vrbo. They'd rather stay in a hotel. And I think a lot of that has to do with just service and amenities. I don't have to cook, I don't want to cook. I want to go out to eat. And a lot of these other people, they're going places where they can cook for more people or they can entertain more people when they're there, rather than just being in a hotel room. So you really want to know your audience and kind of see and do the stats. The other website that's really good for this is Air DNA. They do a lot of statistical research. You can plug in an address and kind of see what it might do. So that's a good place to get some stats. It's kind of like Zillow for real estate. Please don't trust Zillow. Air DNA is probably a little bit better information on it when it comes down to it. So here's the thing that has changed drastically over the last couple of years is the rules, right? And here's why. For those of us that, you know, you know, I have a second home up in Munds park near Flagstaff, and then I have a home down in Peoria. Now, I think about neither one of those subdivisions or areas has an hoa, but all of a sudden somebody decides to turn their house next door to the one that I live in into a vrbo. And now every Friday night I want to go to bed and I want to put my kids to bed. Now we've got a party happening next door, right? It starts creating concerns for the general public that Bought to live in the property. So what you're seeing is you're seeing some city ordinances, you're seeing the homeowners really fight back against the VRBO stuff in order to regulate it. They don't want to kill it, but they want to regulate it. Right. And I don't think it's a bad idea from the standpoint. If any of you have ever stayed at spring break and in Mission Beach, San Diego, and if you were actually a residence there, you would be pissed for about four weeks, right? Because it's nothing but college kids partying in $900,000 two bedroom homes, trashing the places for a week. Right. I probably was one of those people for a little while. So I know exactly what happens there. It's where we used to love to vacation with the kids. So you start seeing where there's some things you need to be aware of as you start down this journey of I want to Invest in a VRBox. Where you choose is going to be what are the state restrictions, one of the county restrictions. And then they start getting into city permits and regulations and ordinances. And now you've got the hoas where like the city of Phoenix has turned it back over to the hoas and says you guys put the rules in place to govern the VRBOs. The new subdivisions that are coming out are 100% putting in their covenants, codes and restrictions that no short term rentals are allowed. Right. So you're going to see like in a lot of condo complexes, patio homes where there's a minimum of a 30 day lease or some of them will require a minimum of 90 day leases. So there are some rules and regulations that you want to research before you go. Choose an area as to is this going to work for my vision and my plan. And the problem with that is that, you know, those people, the cities, the ordinances, they can change at any time. So here's Scottsdale. Okay. Scottsdale is like the Mecca of vrbo. There's a lot of people that did it over the last three, four years. There's a lot of people that are gonna get out of it. And here's why. Because they're not operating as a business like we talked about earlier. They're operating in a capacity of, I'm just trying to make money off of this property and it's not truly being run like a business. Well, Scottsdale is going to change that. And they did so in October they passed a law that by January 8th of this year you had to apply for a permit it's $250 for the perm for the permit application. If it's a condo, which most people, you're not getting a lot of VRBOs and condos unless you're trying to do it under the radar. You have to notify by mail, with proof every single residence on that floor that this unit is now a vrbo. You also, as a single family, you have to notify all the residents that are within your distance. Right. So next door to you, behind you, diagonally from you, and across the street from you, that this is now a vrbo. You also have to prove specific liability insurance that you have and carry for the vrbo. So we really need to understand, like what am I about to step into before I venture into the long term of owning a short term rental and the work that's that has to be done on it. Nashville has some interesting rules and regulations. We were there a couple of years ago, love Nashville. But their VRBOs, as we toured the city with some friends and real estate agents, they said that Nashville put in a certain number of permits that are grandfathered in. You have to renew them every year. So it's definitely an income generator. But those permits are all tagged back to the houses. Right. So as municipalities get complaints, I think after three or four complaints, your permit can be revoked and that home can no longer be a vrbove. Right. So they've really taken it to extreme to kind of crack down on it and really make the owners responsible for their guests. And one of the things that we see a lot of, I saw a lot of it up in munds where people would buy a cabin and like, yeah, I'm just going to rent it out for the weekend. They would do no research on the tenants. They wouldn't call and have a conversation. They wouldn't tell them what the expectations were. They weren't setting it up so that it was still quiet enjoyment of the community. And they were allowing, they weren't allowing, it was just happening, you know, big parties to happen, they were disturbing the neighborhood, all the things that happened. And so this is why some of the cities have cracked down on this. Because there's those of us, if we're at home, we don't want to be disturbed by somebody throwing a party every weekend. So Nashville, the certain number of complaints could result in revocation. And then they also had something where you could not buy a house and just go get a permit. You either had to live in it, it had to be a long term rental. So they were trying to do is slow down people from jamming into the Nashville market and buying a VRBO and setting it up that way. There had to be specific use of the property in between getting a vrbo. Those are just a couple of states and cities. There's numerous ways to manage. Like we talked about earlier, you can get the bigger, bigger companies, bigger pool of properties, and you're going to pay between 18 and 25% of gross monthly rents, depending on what they include in their services. So the management company that I used was 20%, but then it was $140 for every 15 minute phone call that a tenant pulled in. Right. So there were some months we paid and they broke it down where it was like, I don't know, $40 of every 15 minutes. So if it was only a 15 minute call, but they were billing me like an attorney, so some months I'd have like $500 worth of calls that tenants made to the property management company that I have no idea what they were for, but they were just billing me for me. You really didn't have any way to track it. So you got to be careful with what's included, what's not included. If it were me personally, I would want somebody that managed it top to bottom that wasn't charging me in the smaller fees on different things. So that's where some of the companies will get you. They will charge you 10% of gross. But then there's all these fees that are, I don't want to call them hidden because they're all in plain view sight, but they do kind of hide them in there. And then you realize, like by the end of the year, I really paid like 27% of gross income on the management fee. So you got to be careful with what you're doing, really look at their contracts and really walk through it with them and interview from that process. So just a quick example, right? If the property brings in $80,000 of annual income, you're going to have about $20,000 of management fees, right? 20%. And that $60,000 of annual revenue is what you have left over to service debt, utilities and repairs on that property. One of the ways you can do this, if you have time, which I'm going to let Keisha and Sina talk here in just a second, is you can manage it yourself. If you do it right, it will outperform any management company whatsoever. But you are buying yourself a job, right? So you want to make sure that that property, you know, if I was looking at it and I was like okay, if I have to manage this or hire somebody to do it, here's an example. You're going to advertise it, you're going to put it on social. You're really going to work it. And all of a sudden, you found a way over your expenses to make, you know, I'm probably getting ahead with Keisha and Cena to make five to $10,000 a month in passive income. They're working it now with working it, they can probably afford to maybe hire somebody to help them with some of the stuff. But at the beginning, you want to know every nook and cranny of that house and how it's set up, how it's sleeping, what it looks like, how it feels, right? Some people will go and furnish a vrbo, but they'll never stay there to see, well, how does it feel? Is anything missing? Or getting their friends and family to try it out, to get some reviews at a cheaper rate so that they know everything is done on it before they really put it out there. Because once reviews start coming in, if they start coming in, and the 1 and 2 stars and negative comments, you're instantly going to the bottom of the pile when people are looking for a VRBO in that place. So it's really important to kind of experiment with it. If you're just setting it up to make sure you have everything. But this is, you know, where you get a better quality tenant that's renting it is when you're checking people in and out, maybe you're leaving. I know one of the gals that Rachel Drummond that has a property Muns, you know, she has a service that delivers hot cinnamon rolls before their arrival. And I'm like, that is just way too much work for me. Right? I don't have the time or the patience for it, so I'm out on that. But she runs as a business, right? So you have to make that choice as to how are you going to run it. Also, if you're going to do it yourself, you could hire some of these concierge services to help you with this stuff. There's virtual assistants. There's all kinds of different ways. I mean, we've automated so much of technology these days with this type of stuff that it can really help you run it if you want to operate it as a business and kind of work through it. But the goal then is like, you're advertising your marketing, you're checking people in and out. So there is ways that you can start to hire people out as you start to get it more functional, and it's really working and generating revenue. Okay, here's all the logistics, the hurdles, the stats. It's a great investment. It works well, depending on how you do it, but you should really know the numbers. So I want to introduce you to Keisha and Cena. These are some of my favorite humans on the face of the earth, and they. I met them at Chris Harder's Mastermind two years ago, and we have been through a lot from buying their first rental property here. Cena was on a fast track. I think he actually was a dentist, and he decided he didn't want to look in people's mouths for the rest of his life, and it wasn't making him happy. So I coached with Cena and Keisha on their first investment and then coached him on where to get it. Now, Cena is a real estate agent and an investor with Real Brokerage up in Colorado. And Keisha is an empowering woman on the woman influencer side. And hope you don't mind Keisha, but she's my best friend, Tigger, on crack on always, all the time. She'll probably show that right now. But they have gone from all this stuff to, I think, about $2 million in acquisitions in a year. Their themed VRBO called Peach House in Denver is crushing it beyond anything you could imagine. But they worked it. They did a great job with it, and now they're working on a fourplex for midterm rentals. So one of the things I want to point out is just look at the combination of what they're doing and investing. They don't have all their eggs in one basket, so they're doing some different things. So, Keisha, Cena, I'd love to hear how I got to stop share here. I'd love to hear how you guys are doing with Peach House. I know we've talked a little about, but I would like you to share kind of your experience with doing it. The work, the ins, the outs, the good and the bad. And maybe anything that you've learned along the way that somebody might take away from this.

We love it. Little different doing than you have, Steve. We're having a good time with it. And I. I think you mentioned this earlier. It's a business. It's not a passive income stream. But there's a lot of ways to outsource a lot of that stuff. Automate it. Automate it. Yeah. Now there's. I mean, there's apps that can do check in, guest messaging, asking for reviews. Like, we're Almost. I mean, we've cut down a lot of the communication just to automated messaging. So that's the first thing like. But you got to go into it thinking of a business and it is definitely more work than a long term rental. But the, the amount that you can collect is just way beyond what, like we have weekends that pay our mortgage and then the rest of the month we're in the green. Like, it's, it's crazy what can happen. Although you have to set it up and you have to treat it like a business. I think the biggest thing that we went into this with is, is really thinking about who is staying there and what they would like. And the Peach House, we, you know, you can get into it too with women's groups, but we really wanted somewhere for like a large group together, probably going to be women. They want to get together, have enough room. So make sure that the table can fit everyone, make sure you have enough beds, make sure, you know, everything's there for them to create that experience. And we went into that mindset of just like, let's really think about who's staying there. And I think that's why we're off to a good start on the house, right? Yeah.

So I think like one of the things that used to work with Airbnb or VRBO early on was just renting out like a room or renting out a house and just kind of throwing some furniture in there. On Facebook Marketplace. And to Steve's point, there are just, there's a lot more opportunities for people to stay at different places. Like there's just more out there. And the people that are going into it, like Sina and I did, with the intention of, like, this is going to be a business. So if we're going to treat it like a business, we have to think of who is our customer. Like, who's the person that we're going to really cater this property toward so that that person can go through the listings when there's a lot of competition and they see estate and they're like, this is definitely for me. And we knew going into it, when we, when we got our first property, Peach House, we knew that we were going to cater it towards bachelorette parties and girls trips. And because of the price point and the quality of the furniture that we put inside of it, we actually have very little, like people that are reaching out to us weekends wise of like having complaints. We haven't had anyone like break anything. It's because it's almost like we've catered we decided to make more of a luxury property. So a luxury property is attracting a luxury clientele that's just treating things nicer. Like Cena got a message from someone that was like, hey, we were wondering if you had a broom because we wanted to sweep up something that we like spilled on the floor. And we're like, what?

Ask for cleaning supplies?

But we have a great. And we live in Denver just for, just for context, but we have a lot of friends that are also in the Airbnb space here too. And we've noticed that there is a correlation of like the price point in terms of how much the guest is communicating with you. A higher price point. You just don't hear from them that often. Like we've had people that have checked in through the app and then they've checked out and we've never even talked to them. And then our cleaner goes over there and then they leave a review. So there is a little bit of that angle to it. But I think the reason why we are like why Peach House is doing so well. And actually we're under contract for our next one, which we're really excited about closing on in 12 days. Here, shout out to Steve for teaching us creative finance strategies because we got a seller finance deal on an off market Airbnb. Wild. Anyways, that's another side tangent but like we were really already thinking about this property of like who is going to be the target demographic, what is this person going to really care about and how are we going to market it to them? So we definitely treated it like a business straight out the gates.

Yeah, it takes a lot of thought. And like Asia said, you know, there was that time where you could throw it up on Airbnb, but like those stats are showing. It's, it's not oversaturated, but guests definitely have more options. Demand is up. Like if you look at the numbers and take out the crazy Covid year up it is up and it's only growing. And I know I forgot the Airbnb owner's name, but he came out with a report saying like they're anticipating like major growth. A lot of the big banks and people are calling for people to keep traveling like it's going to happen. There will be a period where some of those non business minded hosts will be weeded out for sure.

And actually just for context of this to the property that we just went under contract on, it was a guy who was a software engineer. He did a flip on his house. He saw that there was a lot he had a little bit of, I think maybe shiny object syndrome, which I can relate to, but he had, he had that and he decided, I'm just going to turn this into an Airbnb because we can make great money doing this. But he didn't cater like his furniture is like as if it was his own house. It wasn't really catered towards any specific demographic. And right when we walked into the property, we were like, ooh, we can tell why this isn't doing really well on Airbnb. But if we come in and we put our own design and spin and really target it towards a specific demographic, we know that it will crash. And so that's why we ended up going and deciding to buy this property. But I think it's, it's really important like, like we've been talking about of like knowing who it is that you're wanting to serve. But then like Steve mentioned at the beginning, every single state and city has different legislation. So one of the things that we live in Denver and Denver City, like the actual city itself has some strict regulations. But we were able to look at the regulations of different neighboring cities and we purchase properties there where we can get long term licenses. For example, this property that we're about to close on in 12 days, it's literally like it's right next to Denver. It's a five block by five block little like town.

What do you even call it?

Like it's a town, it's a mini.

City, it's called Mountain View, but it's right there. And there's very few opportunities for, you know, any Airbnbs to pop up because it's such a small area. But we knew because of their positive like short term rental policies and their licenses that we could get a three year license there. And just for sake of numbers, to be fully transparent, I mean our Peach House is doing, you know, it's doing 10k profit every month after paying our $4500 mortgage. So I mean, how did you guys.

How did you guys buy that?

That was a conventional investment loan.

I did. Conventional, that one?

Yeah, we had to do a conventional on that. We were trying to work something else to just. It was when those rates were changing and we just had to like do the whole.

So real quick, what are the stats on Peach House? How big is it? How many bedrooms? How many does it sleep?

Yeah, so it's, we bought it, it was a 4, 3. We added a bedroom. They had like this weird like sub pump room that we move the wall and created a Bedroom put an egress window in. So we got five bedrooms, 3,000 square feet, multiple living spaces. That's what we loved about it. We walked in, it's super open. And that was why we were really looking for a place where people can gather. So if our, if our target demographic wants to get together with, with groups of girls, they need to have a space to do that. So a lot of the houses we sell like this doesn't work. And we would go, if we were to go buy those, it wouldn't fulfill the demographics needs that we're going after.

Right.

We walked in, this one's perfect. Like big living room, big downstairs, big common spaces, big outdoor areas. Like this is perfect. So it has a big backyard. We made a tv, like a movie room, living room, big dining table, they can sleep. Or your dining table needs to sit. Everyone that can stay at the house, I hate when you go it sleeps 12, but your dining table fits eight. That doesn't make any sense. Right.

And well, and even with the pricing, like if you look in the chat, maybe you can talk about price labs and like the pricing.

Yeah, so.

And maybe some of the tools that we use too, that'd be helpful.

So automation wise, we use Guesty, which is our property management software. You can automate so many messages. Your cleaners can get messages when guests leave. Everything can. So many things can be automated through there. You can even have like full blown responses when people ask repetitive questions like what's the WI fi? You can already have a response already dialed in. You can upload your guidebook which answers all your questions there. We use Rank Breeze. I saw that in the chat. That's how we can monitor how well our properties doing on the search function of Airbnb. So rankbreeze's website, you go in and you type in your listing and you can see, oh, it shows up on page one or shows up on page three. And then you can tweak your listing until you get it showing up on page one. And it shows you what, it shows you what properties are doing page one. And then you go look at those properties. Okay, well they have a good picture, they have a good title, they have this, this and this. Well, let me change mine around and track it. So that's a good one. And then we use Price Labs. So you need to use dynamic pricing. Where Price labs does is it goes in and it sees the demand and supply for every single day and it adjusts your prices. You set your boundaries like minimum and maximum and average what you want to hit. But it goes in and say, oh, holiday weekend. Well, it's going to go up. It's going to automatically increase your price. Oh, there is a concert in town. It raises your price. Oh, there's lots less supply of other Airbnbs in the area. Raises your price for you automatically. So you're have to go in and manually do it. And that's a really big one. And we've seen just that one helps a lot. What else we use tech wise?

No, I think those are like the main ones. And the thing is, like, it can feel really overwhelming when you're just getting started, but, like, it's really helpful. We were actually just talking about this today where once we got in the game of doing Airbnb and we started to work out like the first one is the hardest. Right. It's very labor intensive on the front end because you're doing design and you're like, that takes the most time. You're installing everything, you're getting it all ready to go. Of course, you can outsource some of that to contractors that can do it all for you, but that part is really important so that you get a good ROI on your investment in general. But also, like, once we did it the first time, now when we just saw this next property, we knew right away and instantly had ideas of how we could do this. And now, like, I mean, we're not even worried about hitting those numbers with our second property or even more. So it's like the ROI is there if you want to treat it like a business. That being said, there are also other people that we know that have more experience in this space that take very little time, you know, even weekly managing their properties. So that is possible. But expect the front end of it to take a lot of time. That's just unavoidable because, like, I mean, you're fully furnishing a house, you're trying to think about it from the guest experience. I love Steve that you mentioned, like staying in it beforehand. Yeah, My best friend actually did her bachelorette party at our house before we launched it. And it was really awesome because I stayed in the house as a bachelorette attendee, which is literally our exact target demographic, which is that 25 to 45 year old woman range. And I, yeah, I stayed there. So I was able to see like, what are the kinks. And that was a really awesome way to kind of just make sure that we had a good flow of it all.

Yeah.

Because I think you guys make a good point too, because as You're. I think it's so interesting because we've bought VRBOs where it came with the furniture and then you're like, you got to throw half the furniture away because it's crap. Right. And you're like, oh, this isn't going to work. Right. So. But you have a massive investment up front that you have to be aware of. Do you guys have a percentage or a number that you guys took to furnish Peach House?

Yeah, yeah, we probably spent like $60,000. Okay. Furnishing and all that stuff we got.

Yeah, that's really decent because I mean that's about 6, 7% of what your purchase price and I've seen anywhere from 10 to 15% on average. But you know, you go back to certain things like you don't buy cheap beds and you don't buy, you know, cheap stuff. But then you guys themed it so you bought specific things around your avatar to where maybe if you're doing it and you're thinking about family staying there, like up in Munds park, we knew it was going to be more families. So we were doing things like high chairs pack and plays board games, like different things that were going to be based around the family. So you really have to think forward about what you're doing to run that business and think about like, hey, this is a startup business. What do we want to do and how do we want to do it? So congratulations on your success with that. I can't wait to see the next one. And Wendy and I will definitely be up to Denver to see you guys this year at some point in time. So we're looking forward to all that. But I appreciate you guys jumping on and just kind of talking about your successes with it. And I'm super grateful that you've been able to do what you've done with it because even the conversations. Right. I had different opinions about it. But you guys have the time and that's really what you guys are doing is in that space to where my time is so limited. The only time I have is really to hire somebody else. And I still. Until you, you guys have done it and now you can potentially hire out other pieces of it as it becomes more profitable, which is awesome. And as you have more properties, you might even have a full time employee that does nothing but service those properties and then the time is off your hand. They're kind of managing a portfolio. So that's the growth that you kind of. That anybody in here that wants to do it on a bigger scale is really awesome. I mean, Wendy and I have talked about, you know, going back to the Muns as we start to build some of our spec homes up there. Do we want to turn them into a collection of luxury VRBOs and just keep them? Right. Because they're going to be new and you start thinking about, okay, we could afford to hire somebody. So the VRBOs really is. Is very much a business when you're getting into it. So thank you both for all of your input and congratulations on your success. I know you guys got to run in a few minutes, so thank you. Thank you, thank you.

Also thank you. One other thing, because I do think it is really helpful that we started with buying a long term rental with you, and we bought a quadplex that we're doing midterm and we're doing short term. So we're kind of like testing out a bunch of different methods to see what we like. And it feels very diversified. So it is something that, like, I'm really happy that we're getting the experience to dabble in all of these things and not having to just pick, like, oh, we're just Airbnb or we're just long term or whatever. Like, that's been really a cool, like, it's fun learning opportunity. So.

Yeah.

Anyways.

Yeah. And I think. I think you guys have gotten great experiences, too. Granted, I was here to help you with the purchase of that rental, but it's been pretty seamless and hands off from the standpoint of the man.

I don't even know who is out there.

Right. It's just to set it and forget it. Right. And there's differences in the different investment types depending on what you have the time for and what you have the awareness for. Right. Like, how far. The other thing, too, that I think is critical here. How far is Peach House from where you guys live?

10 minutes.

Okay. Very easy to service. One of the reasons that our VRBOs were hard to service is they were an hour and a half away. Right. So if there's a problem, you have to have somebody there to do it. And in smaller towns, it's harder to get somebody out there to actually get it done. Right. So it's great that you guys are only 10 minutes away because you can solve a lot of problems in 10 minutes. Right. Even if it has to be you.

Yeah, for sure. You're awesome.

Thanks, Steve.

Very cool. Thank you, guys. All right, let's go back into this. Weren't they awesome? They are some of my favorite human beings. That slide was supposed to be deleted. Okay. So where is the str mark doing really, really well. So the high end luxury, these are like destination spots. If you aren't familiar with things like masterminds or collaborative groups, corporate retreats, these higher end properties are doing very, very well in the space. In fact, I've got a client right now that has acquired a property from us that my wife is actually doing the renovation on. Here's the difference in it. We are renovating and building that property specifically for the needs of that market. We're not going and buying a five million dollar house that was somebody's family home and converting it into a vrbo. We're building it very specific with media rooms, with cold plunge, with different fitness things so that it really conforms like the Peach house to what that clientele needs. And if you guys aren't familiar with masterminds, these are people, some masterminds are multiple six figures a year. These people rent these crazy houses and they go together and they mastermind, right? They go through and they do different business collaboration and they rent houses like this for 20, $30,000 for two or three days so that they can bring everybody together and it not be in a hotel setting. And so there is, if you understand that part of the market, there is some very good money to be made in that market. Destination places, you know, I talked about like Tulum in Phoenix, you know, there's Flagstaff, there's Muns park, there's different areas here show low pinetop where they are destinations because during the summer in here it's hotter than hell and and families are looking for a lower price point of vacation to where they can drive somewhere, get out of the heat and have a great weekend, right? So you kind of look at some of those things, rural cities, cheaper properties. Some of the cool stuff that I've seen if you look on VRBO in the rural cities is like some of these barndominiums that have been built which is a cool experience similar to Peach house, right? So it's conforming in some of these destinations. In fact, one of my partners stayed in Georgia recently. This tiny tree house, right? She said it was really cool, it had a little kitchenette, but it was like a little studio apartment in a tree. So there's all kinds of these crazy ideas that can be executed in this space. So I just want you guys to understand, I am not saying don't do VRBOs. I just thought it was really good to have all the information so you can really make an educated decision on whether or not this is a Great investment strategy for your future. There's also some insane themed VRBOs, Disney, Star Wars, Bachelorette like Keisha and Cena's that charge in a massive amount of money that people are willing to pay for some of these houses that are super themed. All right, here's a really cool strategy I wanted to share with you because it's my experience and while all of us would love to maybe have a second home or a vacation home and we'd also might like to be in the VRBO space, well, there's a strategy that you can combine and do both. So. And I'm going to combine this with one little piece that's really cool too to get you to see this. The second home market, which you just heard Sina and Keisha mentioned, because I walked them through the seller carry on their new deal is that a second home community is prime for creative financing. Right? To where maybe you can get a seller carryback. Seller carryback is when the seller carries the note and you pay them payments, they play the bank. That's the simple part of it, right? We're not going to get into too many details on that part of it right now, but it's an option, right? It's also an option to maybe take over somebody's mortgage. There's different ways to do it in the second home community because a lot of people that sell in that may not need their money, nor are they moving into another home, so they're willing to make some concessions and maybe do something creative. That is how we bought our first home. So the home that you see on the slide was our first home in Munds Park. We bought it on seller carry. They were going to reduce the price, they were going to take it off the market. It was an older couple, they just weren't using it anymore. So we were able to buy it at a 5% interest only payment. Buy that house, right? We bought it with a partner as well. So there was two things that kind of helped us with it is, hey, if you have another family or another family member that you get along with, go partner with somebody on something like this. Because here's what happens. We would use it one weekend, we would rent it out the second weekend, we'd use it the third weekend, rent it out the fourth. So what we were doing was testing the property, cleaning it up, putting a tenant in it for a couple of days, going back up, checking it out. What it was doing was is it allowed us to afford our dream of having a second home by partially vrboing and partially living in so way that works is you just block off the calendar with the dates you're going to use it. The other dates are available and we were able to earn enough income to pretty much break even on the property to where we didn't have to pay anything to use it on those weekends. It is a great strategy to utilize when you want to get into potentially the VRBO market. I've also had multiple clients that have bought in South Scottsdale in certain areas with the future use in mind of, hey, we're going to buy this house, we are going to furnish it and we are going to make it so that it is ready to be a VRbox when we're ready to move on to our next property. So they did things intentionally. We looked at properties intentionally with what it was going to look like for that future investment, which is a great way to kind of lead and guide clients in what's one of the things I always ask, right, Is what is the future for yourself and your family? Is this property going to be anything different than you just seeing it as a home to live in for a long period of time? Time, or can it be a potential future rental? And so there's a lot of strategy and when I sell clients properties to make sure that they're looking at is, could this be a long term rental, short term rental, or are you going to be here forever? Right. Because there's different strategies and different approaches and you don't want to go two years down the road and go I wished we would have. Right. I try to keep as many people from having regrets as possible. So we ask a lot of questions, not just for the right now purpose, but for the future purpose of the property. And there's a book by Keith Cunningham called the Road Less Stupid. And I live by this saying is that it's not what you see, it's what you don't see. So, like, what Keisha and Cena saw in Peach House was something that nobody else saw. What they're seeing in this new deal is something that nobody else saw. Because it's not what is there right now, it's what it could be. And how can you turn it into that? This is just kind of the roadmap. You know, we bought that home in a cabin community. We did sell it in the height of the market. Part of the reason we're for some of these things, right, we purchased in a cabin community. There was no hoa, no rules, no guidelines. So we were clear there. It was only 125 miles away from the home. So not we didn't have to rely on a lot of people outside of it, you know, so we could kind of service it. Same thing. We rented it, blocked it off, and then the rents were just helping us build reviews over time until we built it into a full time VRBO until we bought another house. And again, strategy of the house hack is going from one property to the next. So while that one was working, we were always looking for the next property. And when the right opportunity came up, we bought another house that we weren't going to rent and we kept this one when that one started producing enough income because it was rented all the time, it now is pretty much covering the second house that we owned that we lived in full time and didn't rent out. So it's a way to kind of, you know, move money and collect more assets, which is the goal. Right. So why'd we sell it? Well, the small community was really hard because of lack of labor. And you have snow and you have roof leaks and you have propane going out. And like this year we had record snow and it was a disaster up there trying to get things done. And I was really grateful we didn't have any VRBOs and guest checking in and all the chaos that was going on. So you do have to think about what am I in store for? Is there enough people, look around, get references, what's it going to take to do it? Right. The other reason was it was only a three bedroom, two bath. Most of the time when people go up there, that's really only going to fit one family comfortably. If they've got the normal family, you know, two adults, two children. And you try to share that with four adults and four children doesn't work really well, at least not comfortably. So when you're looking at a VRBO that might be family oriented or you know, multiple guest oriented, you really want to try to look at that four bedroom, three bath or four bedroom, two bath so that two families can comfortably share it and split the expense of it. And that's what we found does a lot better. As we looked at Munds park in a lot of different areas. And when we started designing, we have seven lots in Munds park that we're building specs on over the next two years. We started designing these. We designed them specifically for VRBO use. Right. Because we knew that that was going to be a lot of it. Whether we sold them or we kept them. We designed all of them with four plus bedrooms and four plus Bathrooms. So there's actually four master suites. So, you know, four couples could go up and rent it if they wanted to, which will give us a higher price for that vrbo. And again, we don't have the restrictions up there. So again, it's not what you see, it's what you don't see. So you start thinking about the future of, well, what could it be? So some of you might be looking in different areas. Where is it possible to build a house that would really work for a VRBO in that area, and what's it going to take and what's it going to look like? So it's kind of fun to dream about that and think about it from that standpoint. The other thing, too, is think about this. Maybe you want to own a place, you know, like in Flagstaff. I keep bringing it up because it's local. It's easy for me to talk about. Right? Maybe you're buying a lot, and maybe you're building a home as a second home that you will eventually keep as a vrbo. So, again, it's kind of looking at future and not just looking at right now and what's going to work and what won't work. We covered a little bit with Keisha and Cena on the furnishing costs. I know the first one we did, we threw 90% of the furniture away, and it cost about 10% at the time. We paid $250,000 for that house, so it was about 25 grand in furnishings. You just start going through things. You're like, well, this is used and gross, and this isn't going to work. And these skillets from 1970 aren't going to work. So you don't want crappy stuff in that there. You know, 95 trips to Ikea when we furnished the Scottsdale house, you don't want to buy cheap stuff furniture and things from Ikea because it's just going to break, and you're going to spend 95 hours putting it together, and your kids will put it together wrong. Because if you read IKEA instructions, they're terrible. Furniture is extremely important. The better quality it is, especially the quality of the mattresses. None of us like to go to a hotel or somewhere and have a crappy night's sleep because the bed's uncomfortable. And we've all had them, right? You're like, God, if somebody would just spent an extra $200 on this mattress, I would have slept a lot better last night. Kitchen's really important. And actually, one of the stats that I read was that 64% of the VRBOs are rented based on the kitchen, right? So if the kitchen is not appealing to people, people rent VRBOs because they want to be able to cook and entertain while they're there. They don't want to go out to eat. So you got to do things like the little things, like, hey, do you have the normal spices that would be in a random kitchen to make food, right? So somebody's not trying to buy spices and reinvent the wheel. Do you have the right utensils to bake or to cook? Do you have good cooking utensils and pots and pans? All the things I know recently one of my clients rented a vrbo or a furnace rental.

And.

And he called me. He's like, dude, this thing was a furnace rental because there's not even a frying pan in here. There's not even a set of knives. Like, all these things were missing, and nobody really told them they were missing. So you want to make sure that all those things are there, because if you don't, you start getting crappy reviews and people don't rebook it. One of the things that's nice about having places like in San Diego, and I don't know if any of you have done this, but when we rented a beach house in San Diego, we rented the same house for seven years. We always came back to it. So you do get some destinations where people frequent. You want them to keep booking, right? You. You know, our deposit stayed on file with that management company for seven years. Every year we rebooked for the next spring break, and it was always just set in stone. That's what we did until they demoed the house and it's no longer there, which was kind of sad. You start thinking again about, you know, things like depending what you're looking to do, is it going to be families? Is it going to be bachelorette? So do you need high chairs, pack and plays, yard games, board games, those types of things, depending on your avatar, that you're going to be renting to. Okay, here's a couple of things just to kind of consider when you're doing this. Do not take iPhones and put them online for iPhone photos of your property. You need to hire a professional photographer. You need to have video that really kind of talks about the property, maybe shows some of the community features, all those pieces, because video is really going to be a highlight. It's something you can use anywhere for a long time. You only have to do it once. Unless you really change the furniture out, but you've got to make it high quality because that's going to appeal. Because if you've ever looked at Zillow or MLS photos, you're like, this house really stands out because you look at the pictures before you read anything. And if somebody's looked at the pictures once they've shown them to four other people before they go do it. So pictures are really important. Spend $1,000 if it's going to be a VRBO. You spend the thousand dollars up front for professional photos and video and then you have a great, great resource to advertise and show people that property. Make sure when you're getting homeowners insurance is a landlord policy. It's not homeowners insurance and it has a furniture rider on it, right? So you want to make sure and talk to your insurance agent that if you do have it as a second home, are you able to rent it out under that policy or do you need to go to a full landlord policy? And you want to make sure you have a furniture rider on it. Because if you just tell them, hey, I need a rental policy, they're not asking you, well, is there furniture in it? Because if you don't have a furniture rider and the property burns down or it gets thrashed, the furniture is not going to be covered. Because a landlord policy only covers the structure of the property. It's not going to cover the interior. It's going to cover the interior stuff, kitchen cabinets, bathrooms, those types of things, but it's not going to cover the furnishings. So make sure that you consider that insurance is a big thing and then just kind of know your market. What's going to make the house stand out and what is it going to look like? So, whoops, sorry, I'm having to move some stuff around on my screen here. Pools are great in the Phoenix area, but people are going to expect them to be heated at least if you're going to rent it out during the winter. People are coming here from the cold. So you want to spend some money on having a heated pool. Again, knowing your audience and knowing the area you're investing in. Four beds, two baths, which we talked about, the kitchen we talked about, and what's surrounding it, right? What, what is it close to? What is it? What does it appeal to people? Right? Like in Scottsdale, all the activities and amenities. Like, we have one client that does a VRBO similar to our strategy, where they use it and they rent it and it's just down the street from the Keerland now, they dodged A bullet. Just like we did with our luxury VRBO that we're doing for a client right now. Same thing Keisha and Cena were talking about is understanding where the boundaries are. So the luxury VRBO we're doing is actually in the city of Phoenix by one block from Arcadia and Paradise Valley and Scottsdale, who all have the restrictions, but Phoenix does not. But it's in the same zip code as some of the bigger stuff that's not going to have the restrictions. So we're skirting around the rules because we know where the placement is. Same thing with this other property in Scottsdale. It's a city of Phoenix property, but it's on the border of Scottsdale. So it still resides in Scottsdale, but doesn't abide by the same rules. These are just things like in the Munds park, they're looking for cabin stuff side by side communities to know the community you're going to invest in. And I want to show you one thing before we get to the takeaways, I want to show you the numbers because here's where people get confused. A lot of people think that the VRBOs are just like, oh, they're going to make so much money because that's what everybody says. But I want to show you the difference here. In my actual property in South Scottsdale, we did it both ways. We did long term and short term. And these are the actual numbers. So check this out. Long term, short term. This third one is if you bought it as an owner occupant and converted it. The only difference there is you have to put less money down. So I used all the same examples on this just to show you these are real numbers. Right now my property is rented for $3,900 a month on an 18 month lease. Okay. When I rented it on a short term rental, $5,600 a month. Great income. Until you get down to here, the short term expenses. Remember, in short term you're still paying for utilities, garbage, gas, electric, pool, all that stuff, right? So you see, my operating cost is almost quadruple from a long term income's great, right? From an operating. But then you go down here. So that property's worth 650 right now because that's what it appraised for. So if you're buying a $650,000 property, this is the example, right? As an investment, you'd have to put $130,000 down for long term or short term. The difference here on the short term is you're going to have about $40,000 in furniture. So additional cost. I did this rate just kind of an average, they're a little bit higher right now. I currently have a 5% interest rate on this property for a 30 year fixed. So that's why I used it. So it gave real numbers. So what you see here is your annual debt service. Here's where it changes a little bit. You know, if you bought it as an owner occupant with 10% down or I'm sorry, yeah, 5% down, you're going to have a lower rate, you're going to have less of a mortgage, we're going to have a higher mortgage. And then when you come down here, here's the crazy thing. So your cash on cash return, which is that 5.72% number down below, is higher on a long term than it is on the vrbo and you have more cash flow, but you also had $40,000 additional cash out of pocket when it came down to furnishing the property. Here's where the big difference is. If you were to bought it with future in mind, you got a lower rate. Your actual cash on cash return is 17%. So big difference in your numbers as far as seeing what's actually making a lot of money versus not banking a lot of money.

Right.

Obviously this number increases drastically if you're not paying a management company and if you're doing a better job of managing it on your own, like what Keisha and Sina were doing. All right, I will actually one more thing on the slideshow. Let me get to that. Thank you for all staying on. I hope this has been informative. Just a couple of takeaways. Don't ever purchase a STR for that sole purpose. We have to have exit strategies. Right. Can it still be a long term rental? Can I sell it? Right. We want to know what it's going to be. Right. Rural cities are getting higher rates of return, lower prices, so you may want to check into some of those areas. Create a buy box around your STR based on the city you want to invest in, which means know what your target is. Right. What does it look like? What's my demographic? Who am I appealing to? So you really want to know that before you go into it? Second home with option to str. Right. Like the example that I gave, how we bought our first one. And that's what I got for tonight. So I'm going to open it up for questions, answers, and any takeaways that you guys have would be fantastic. Garrett's going to unmute Everybody. And we'll go from there. Oh, unmute yourself. Sorry.

Hey Steve, I have a question. Yeah, this is Rachel. We recently bought a second home, also up in months. And so we started running it as a short term rental in June. So as of right now we're.

Where'd you go?

Well, we don't, I mean we're trying to go back and forth between. Do we want another vrbo, that midterm rental maybe down in Phoenix somewhere like for the traveling nurses and etc. So we're just trying to, I mean, we're just looking for advice as far as maybe what the next best thing. Because in months you've said it a few times that there's no management companies up there, it's hard to find cleaners and you know, we have to make these random trips to, to head up there if something breaks or whatever. So I, I don't know, I'm just, I'm just looking for.

So Rachel, you need a favor? Your phone cut out. Will you go back to the first part of your question like what the actual question was? Because you totally cut out and we didn't catch all of it.

Sure.

Sorry, I.

It must have switched over to my phone. So we, we have a second home up in months that we started doing the short term rental as of June and we're breaking even or we pay out of pocket a little bit each month depending on how well we rent it out. But we're looking to buy a new property this year and we're just trying to determine what we want to do, whether it's going to be that midterm rental for, you know, the, the one to six months, whether it's the long term rental or do we go, you know, out of state and try to find another short term? Because when we retire the goal is to be able to, you know, go between these homes.

Right.

So I just, I, I'm just looking for advice. Sure. As far as like if you were in our shoes, what would your next step be? What would you try?

Go. Do you guys currently own any long term rentals?

No.

Okay. I would always do a mix. I would always do a mixture of long term and short term. I've seen too many people go one direction or another on the long terms are kind of a set it and forget it. And the good news is in the long term space, if you generate your buy box like in the Phoenix area, you know, you're not having to do a bunch of work towards it. Right. And you also, I think, have a little Bit more negotiation power right now in the current market. Even though the rates are a little bit higher, you can still probably get a pretty good decent deal on a rental property. And you just kind of have to work through the numbers on it. And just keep in mind too that you might be a little negative like in the Munds park property. But you know, as long as you're classifying that property as a rental property and you're getting to depreciate it, you're probably not negative when it comes back to your taxes. Right. That's where a lot of us don't factor in the, you know, even though it's negative, we don't factor in depreciation and some of the other things that we get out of it when it comes time to our taxes. Right. So it may look like you're paying into it, but you're getting it back on the back end. So I would really look and focus on hey, what's my next rental? And I would be looking more towards a long term that's kind of a set it and forget it or you know, the other short terms, which I've heard a lot of the traveling nurses and things. And the cool thing is is that you skirt around all the hr, all the STR rules when you go into the midterm rentals because you can go into the condo complexes and there's a lot of them out there right now that you can do a minimum of 30 day lease. So you skirt around all the rules to where they wouldn't let you rent it on a weekend basis or a week, a weekday basis, but you're doing 30, 60, 90 days and they do much better. The only thing that I don't like about the condos obviously is the, the expenses of an hoa, right? So you have more of them. But here's, here's one of the things as I had a conversation with a property manager on vrbo, she said the one thing that's doing really well that a lot of people don't see is the one bedroom, one bath condos which are hard to sell on the open market because typically people want two, two twos. But the one bedroom, one baths are working phenomenal for those traveling nurses and people that are looking for basically a studio apartment that they don't have to rent month by month and they can go live somewhere at a condo complex. So those are something you might want to look at from that investment side because you might be able to get something in the 200, $225,000 range in a decent part of Scottsdale that has that lower outgo and you could utilize it for that midterm rental. All right, anybody else have any questions or want to add to the conversation? Got about five more minutes here.

Yeah.

Hey Steve, Brock Bidley here. How's it going man? What's up, Brock? Not much, I guess. Excuse me, kind of a two part question here. If you are thinking of doing kind of the way you talked about going in with family members on something, how would you kind of divide up responsibilities? You know, I guess the monetary. Monetary part. How would you go about having that conversation with family members and then just the last part of it. Your thoughts on the Prescott area for. I've heard Prescott has done really well in the vrbo. Depending again what your long term use is going into it. Let's just take family out of it and just say you're gonna go do it with a partner. Right. Whether it's a family member or a person. And Brock, you knew who I partnered with on the floor. First one. Right. Somebody has to take the lead on it and sometimes you bring a partner into it more for financial and you may want to take control of those things. I'm always a control freak. I want the partner that's just like, hey dude, just let me know how much money we need to put into this thing. And I'm good. You take care of the rest. I'm okay with that. Right. If you're not that person, then you want to make sure the other person is that person. But you also want to make sure you align on things. Because if you're like, hey, I really think we should redo the kitchen, like we don't have any money to do that. Then you're like, well then we can't do it. And so it's always going into the agreement of every time money is needed, it's 50, 50 every time it goes into the bank account and kind of go through that process of setting responsibilities. Some people want to be that silent partner in it and they want to bring more, more finance to the table and somebody will want to do a little bit more work to it. You can also, if you're doing it, say, hey, I'm going to manage it and I'm going to take 10% of the income for my time and expenses in doing this. You still get use of it, all those pieces. And you also have to kind of think about the other piece of having partners is are you always going to use it at the same time or are you going to Split times, right? So what does the calendar look like for you guys to use it as separate families or together? That was one of the things that we had to overcome is it was like, hey, is it okay if we use the cabin this weekend? And you guys can't come? Because we want to have friends up there. So either you have a big place that holds everybody, which, by the way, can get a little complicated over time. So if you're buying a partnership, it would be like, hey, we're going to rent this out two weekends a month. You get one weekend, I get one week weekend. The other two weekends generate money so that you kind of have a set. It's kind of like going in with divorce in mind. And I hate saying that, but that's the truth, right? It's like, hey, let's lay it all out so we're in agreement. And the other piece that I would do, Brock, that was really. I screwed up again. I learned so much as I go on, and that's what I like to share, is a lot of people will go into a partnership like that, and they'll make a new LLC that you guys are both managers on. You know what the problem with that is? When we sold that property, I wanted to 1031 exchange my equity into something else. He did not. And I didn't have an option because it was in a joint llc. So I had to just pay the taxes on the gain on it rather than being able to 1031 it. So if you're going to do it, you would do it with maybe two entities. So say it's Biddle and Associates and Valentine and Associates. You guys are on there as a married couple, basically. When you sell it, each one of you can 1031 exchange your interest into whatever you want. But if you own it in a joint entity, you cannot. The entity has to be the purchaser in the next one. So that is one thing that I learned, like, because again, we want to plan for the future. It's not right now. We want to look at what happens if we sell this. And I want to reinvest it and you don't. What does it look like? That is one of the advices that I would have from there.

Perfect.

Makes sense.

I appreciate it. Cool. Absolutely. All right, thank you everybody, for joining. I hope this was super helpful. Again, if you don't mind tagging, sharing anything that you took away from tonight, I. I would greatly appreciate it. And I will see you next month. You'll get an email recap on this and some websites that you can link. And then also an invite for next month, which I haven't scheduled. What? That's going to be so. Surprise. It'll be a surprise. Have a good one.