Furnished Finder CEO: The Future of STR Is Mid-Term

Almost every place where short term rentals are illegal or capped or regulated is at the basis a monthly rental, like it becomes legal at 30 days. But here was a company with over 200,000 listings growing like a weed, you know, really serving this interesting niche. And we've got more inventory than either Costar or Zillow and we've got more 30 day plus inventory than Airbnb. Airbnb found a niche, exploited it, you know, and became a behemoth.

Welcome back to the Short Term Rental Riches podcast. I'm really happy you're here again and we have a fabulous episode for you today. We're with Jeff Hurst, this CEO of Furnish Finder. Jeff's got a ton of experience. He was with HomeAway for a decade. He was later the president of Vrbo and afterwards was the COO for Expedia. So a ton of experience. Jeff, really excited to dig into the details with you today. Welcome to the show.

Thrilled to be here and thanks for all you do for the category.

Yeah, yeah. So, gosh. Well, you're with Furnish Finder now. We've talked about Furnish Finder before on the channel, a really great tool for getting more midterm rentals. But why don't we just back up a step? Because before that you were with Expedia, you were their coo. Can you fill us in just with a few details there?

Yeah. So my short term rental career basically began in 2010. I joined HomeAway when it was a private company, was on the strategy team, kind of worked my way through HomeAway, helped with our transition to E Commerce, was eventually the chief strategy officer and helped sell the company to Expedia. I stayed on after the acquisition and was the chief commercial officer, basically our general manager and running all the sales teams for almost five years. After that, became the president of VRBO and had that role up until early in the pandemic when we reorganized and I became the brand marketing for a brief period but became the coo Expedia Brands. And so, you know, I've been around a long time and seen a lot of the short term rental game. I actually have three short term rentals on my own. I self managed one on a lake LBJ outside of Austin for seven years before getting a property manager, but also have a beach property in South Padre with a manager and a ranch property outside of Gonzalez with a manager. And so, you know, I've definitely been, you know, just kind of eating the dog food along the way and learning the game and the, you know, the, the Categories change so much, and the competitors have come and competitors have gone and they've, you know, Airbnb's changed immensely. You know, VERBA may be a little less so. And joining Furnish Finder was really an extension of, like, I see trends that are emerging in the economy and in the category that really made this an exciting moment to do something the most familiar and in some sense, you know, I think was a, you know, opportunity to do things better the second time around.

So was seeing that trend, you know, that midterm rentals, the growth in midterm rentals. Was that part of your reason for. For joining First Finder?

Yeah, I mean, absolutely. There were a few things in the decision process. So, first of all, you know, I left Expedia and really didn't think I'd get back into travel. I wanted to be a CEO for the next gig. I didn't think it was that likely I'd find something that was as enjoyable as what I did. Took a year off and got introduced to the founders of Furnish Finder. I couldn't believe this company existed. Like, I could. Like, I had never heard of it. Most people probably still haven't, in spite of our best efforts. But here was a company with over 200,000 listings. You know, this throwback subscription model that felt just like vrbo in 2005 actually was cheaper than vrbo was even in 2005, growing like a weed and, you know, really serving this interesting niche. And it reminded me. Reminded me a little bit of a handful of things. One, it reminded me how Airbnb was in this niche that HomeAway didn't care about. You know, that niche was urban room rentals. It was a much lower price point. We didn't think it was going to be possible to make money. We thought it was going to be a regulatory headache. And Airbnb found a niche, exploited it, you know, and became a behemoth. That's probably got more to do with luxury now than it does with, you know, affordable room rentals. So that was. That was the first thing I saw there. The second thing was, you know, the US Obviously has a housing shortage, and it also has, you know, a very, you know, relatively high interest rate compared to the recent past. There's an affordability crisis. And so furnished midterm rentals are solving two things there. You know, they're solving for someone who can't afford to buy, but they're also solving for someone who can't afford to buy furniture. And furniture is a really, frequently a pretty terrible Investment. And so it's a interesting opportunity to help do some societal good. And the third thing is short term rentals have had a regulatory headwind forever, you know, basically since Airbnb got into it. And that headwind is actually the midterm rental tailwind. Almost every place where short term rentals are illegal or capped or regulated is at the basis a monthly rental, like it becomes legal at 30 days.

Yeah, excellent points here. The regulation one, you know, that's, we're definitely seeing a lot about that. And we've, we've talked about Furnish Finder before on this channel. We've talked about midterm rentals before. But maybe for those that are tuning in, that haven't heard of Furnish Finder before, what's the main difference between like an Airbnb and a VRBO and furnished father?

Yeah, I kind of describe it as we're in a valley between these peaks. You know, the peaks on one side are Airbnb booking.com and VRBO and they cater to short term leisure travelers. You know, average length of stay, you know, would typically be around five days. It's a, typically a pretty important experience. You know, it's somebody's spring break, it's often somebody's, you know, three night getaway. And so they're willing to splurge a little bit more on it. And you're mainly competing with hotels. Um, and really the short term rental value proposition for a long time was more for less. Now I think it's probably more for same. But that, you know, that's really what you're competing against. You know, those companies. Airbnb is worth $70 billion, booking.com $150 billion, Expedia $30 billion. Like huge organizations. On the opposite side, you've got Zillow, you've got the Costar Group with which runs, you know, homes.com, apartments.com, those, you know, those marketplaces, they're really focused on year plus product, different business model, but they also offer furnished monthly rentals. And in the middle there's us. And so we're this niche of, you know, flexible leases starting at a month. And we're furnished, we've got more inventory than either Costar or Zillow. And we've got more 30 day plus inventory than Airbnb. You know, they have more inventory overall, obviously, but most of it is that kind of, I call it like the Tetris game, where you might need to book three different places if you're trying to stay four months they built some features to facilitate that, you know, but people are really trying to make a higher nightly rate on shorter stays. So we've got this thing in the middle. What's the most different about it is really, I think it's kind of like the original Internet promise where we're a classified site. You know, you pay us $179 a year and then we turn, you know, we power inquiries, put your phone number out. We're giving you the control for who you want to book, how you want to book, how they want to pay, no commission, no service fees. And so it's different, it's a little more work, but you also keep a lot more of the money and have a lot more control over how when you book. And we think it's the appropriate model for that niche. Because if you're booking on Airbnb or VRBO and paying, you know, whether it's a service fee or commission, it doesn't really matter. It's coming out of somebody's budget. But you might be paying 10% and say you're a traveling nurse nine months a year, you know, it works out to over a week's take home pay. You're willing to do some work to not pay that platform fee. And we want to provide that service.

Yeah, great point. From the guest perspective, you know, those fees definitely add up. We've done a lot of midterm rentals before. I've also done long term rentals, you know, so I'm, I'm on all sides, sides of it. And I think one of the things for me that has been a little trickier and I'd love to hear your input and where you guys see this going is, is it is sort of. You mentioned this before call like mid farm rentals, kind of like Airbnb was like, you know, in 2008. Like it's sort of a new trend and there's maybe not as many tools built to help us facilitate these types of rentals. There are challenges potentially, you know, when a guest becomes a tenant. So quite a few things there, but why don't you take one and we'll, we'll run with it.

I mean, first of all, the, the tools perspective is why we're here. You know, this is not a, this is a known problem space. You know, you've had, you had Marcus from Hostaway on. You know, you frequently mention a lot of the different providers, like this is not an unsolvable problem. We just have to go build it. And so most of my tenure here, which is Almost two years now, has been hiring a technical team to rebuild our platform so that we can start to integrate with, you know, the hostaways, the guesties, the host fleece, but also the players on the long term side, the turbo tenants, the rent read and just make it easier. Like there's no reason this should be this hard. We're not trying to make it hard. We just have to rebuild our architecture so that we can make it easier for people to connect, surf messages, serve rates and power, better availability and get the content. And so we're going to do that. We're working on it. You know, I expect by the end of next year we will have made a whole lot of progress on it, but there were things we had to do first to fix the technology so we could be ready for it. So, you know, I would expect parity there. With the exception of I don't think it's as much of an instant book category. I think the booking cycle feels more like long term. You know, someone's going to be there for, you know, on average over 90 days. They often want to FaceTime tour or they want to actually talk to the landlord frequently. And I mean like very frequently, way double digit percentage. They want to visit the place and look around. And that is not at all compatible with vrbo, Airbnb and bookings business model because it's too easy to get around a commission when you do that. Which is why Zillow and Costar don't have that model for rentals except on the multifamily side. So we think we'll end up somewhere in the middle there. And we just want to go really fast and build parity tools so that people can put their inventory in the channel and make it basically make it more viable. So that's where we're going with it. I know that was the first part of your question. What was the second part again, Tim?

Regulations. So from the tenant or guest perspective, you know, right. When someone has landlord right or.

Yeah, the. I think it is, it's an issue. I don't think it is a. It's not something we hear a lot about because the tenant rights aren't sneaking up on you like they do in a short term rental. You know, you have a signed lease, you have done a tenant screening, you have frequently met them in person, you have managed the payments in a different method than that they're being held by Airbnb or VRBO and hopefully coming to you at some point in time. And so I don't think the tenant Rights is any trickier than on the long term side. And what I think might makes it a little bit, you know, probably less risky than long term is that the tenant profile of someone who's staying through Furnish Finder is a different profile than someone who's living there, has a permanent resident. So in order, you know, our top category, and this has changed a lot from where people might have tried Furnish Finder 2, three years ago in the pandemic. The platform was basically all traveling medical professionals. That's, that's how we grew up. It's not that way anymore. Over a third of our travelers are corporate and that's some combination of skilled trade, maybe building data centers or skyrises. And then it's also more, more white collar. You know, it's a traveling salesperson, it's an entrepreneur, it's somebody who's relocating for consulting. So that's over a third. The next biggest use case is traveling medical. That's about a quarter of it. The next use case is actually relocating families. And this is the fastest growing and I think the most interesting because it's someone who might be moving from, you know, from Arizona to Austin. They don't know the neighborhoods, housing is expensive right now. They may not want to move their furniture twice. And so they're going to rent a place in the school district they like for six months and then look to buy. And that's growing over 100% year on year. And so that dynamic is changing a lot. And then the last use case is really academic and it's mainly grad students and professors. They have to move around a lot, especially professors, and they're on a budget. And so when you think about those tenant types, it's definitely a different risk profile than one, you know, the bachelorette party, which is who you, you know, bachelor bachelorette party or extended family reunion on the short term side. But it's also a different risk profile than a long term tenant who you may be more worried about, you know, basically squatters rights or are they going to leave? Because in general, the majority of furnished finders tenants are definitely trying to leave. You know, they're there for a defined period of time for a contract when they're on a stipend and then they want to go home.

Great insights. It's always really interesting hearing the data points and how things change over time. And so, yeah, we haven't had any issues with Furnace Finder. In fact, most all of our midterm rentals, you know, we have had really good results I think the challenge for some people out there though that are considering midterm rentals coming from the short term rental world is that they don't do the background check. What would you say to those folks?

You got to do it? I mean, I think that's all there is to it. You know, I mean I don't encourage people to be. Many of our most successful customers are single channel with furnish finder. Many of our customers come from the short term side and they're, they're not spending enough time on two things. The first thing is, is midterm actually a good idea for this? And a lot of short term properties, it's just not a fit. You know, a five bedroom on 30A is not a great fit for most of the use cases I just described. And so you've got to be sure one, you've got a property and price point that works. You've got to really think through who's my customer and how I'm going to do it. But the second thing is you've got to have a slightly different operating. You've got to be more willing to engage and talk to people, not just to market your property and get them in the door, but also to be sure they're right for your property and then to do the things that help it be secure for you. And that's definitely a tenant screening, it's often a credit check and it's definitely a signed lease. And so we power products to make those things easier. But you've got to embrace a different workflow and we've had some of the larger short term managers have done pilots with us and I think the main reason it didn't work was because it was incompatible with their internal operating model. And you know that's going to be some of the discord that, you know, managers work through. And I think the smaller managers and especially the furbos are going to be more nimble in how they embrace that and make this possible. And then the tech and the tools and frankly our platform will catch up to make it easier. But you've got to treat the booking process more like a long term because you know that that tenant risk is more like long term. It just is for sure.

Totally agree, totally agree. Curious. You know your thoughts on you mentioned the different sort of profiles, guest profiles, the corporate travelers, travel nurses, which is, you know, what you guys started with. And then also some short term rental operators where it didn't really work. And maybe that's because the properties didn't fit. Do you see Certain types of properties that just do a much better job on furnish finder. I mean, is it like urban or can you, do you have any other sort of insights around that?

You know, think about the. You know, obviously I know VRBO and furnish finder best. You know, I always said VRBO was best at lakes, rivers, beaches, mountains and then urban core. You know, is it close to downtown? Is it Austin east side? Is it a place where there's a ton of leisure activity? The use case we always talked about complex family. You know, it was typically either large groups of friends, you know, four couples, or it was three generations. It was grandparents, parents and kids. And so you were serving typically five to seven nights, typically five plus people. And you know, I'd say the sweet plus was sweet spot was three or more bedrooms with some interesting amenities. You know, foosball table, pickleball, multiple TVs, great view, whatever that looked like. And you know, the weekly rate would have been on average probably somewhere between 2,500 and $3,000. So think about that on one side. Now think about furnish finder. You know, the average tenant is going to be closer to two people. I think it's actually about 1.8. You know, 70% of our inventory is two bedrooms or less. And we do not do well on lakes and rivers and beaches and ski in, ski out. It's around hospitals, it's around good school districts, it's around commuter corridors, and it's in a lot of places that I'd call our small mid cities or suburbs where there are not as many leisure options or hotel options. So a lot of what we compete with, you know, I'd say a good barometer. How close are you to an extended stay America? How close are you to one of the extended stay properties from Marriott or Hilton that's designed for somebody trying to stay 30 days or more and if there's one of those nearby, you know, which are frequently 2,500, $3,000 a month instead of a week. Can you provide a way better value with your studio or one bedroom than a, you know, 610 foot efficiency apartment that doesn't have an oven? Usually you can, you can actually usually make a lot of money on a duplex or a quadplex in one of these tertiary markets compared to that hotel model? That's what feels like 2010 to me, is that, you know, in 2010, short terms were three bedroom houses competing with a Hilton and it was like 40% less money for 50% more space and privacy and you save Money. That's what midterm feels like right now. But you can't plug and play any short term with a pickleball that has a slow season and say, oh, I'll make it a midterm, I hope it works out. Like maybe, but you just can't count on that. Every time I actually see more success with people coming from long term to midterm, it's just there's less of it because they've got to buy the furniture.

Yeah, that brings up another, another question. You know, obviously you can go on Furnish Finder, you can see what local properties might be renting for. Go on Zillow, you know, and check the furnish box and see what furnished properties on Zillow might be renting for. But if there's someone out there and they have their long term rentals, maybe they're near hospitals. Like what would be your advice to them on whether or not they should try the furnished finder or furnished rental model or midterm rental model versus leaving those long term?

Yeah, I mean my two things, one, we, we, we publish a lot of content also. So we've got a podcast called Landlord Diaries and we recently did an episode with Price Labs and we've also done a lot of episodes on long term conversion. So I'd encourage people to just learn more. The, the, the cheapest way to dip your toe in the water is to put your unfurnished property on Furnish Finder. And in the description write that you're going to furnish it for the first tenant. Just tell them, hey, if you sign a 90 day lease, we'll furnish this for you and describe what you're going to furnish. And then, you know, it's, you do turn off a few tenants because they're wondering how serious you are, but you bring in quite a few more who maybe they really need a two bedroom, but in the second bedroom they're going to try and have two or three kids because it's a relocating family and they want to bunk with a trundle and that would be pretty uncommon and a lot of our. And but you'd be able to solve that for them and so they get a little bit more control over it. You know, the other way is you can rent furniture and then the third way is you can, you know, basically call landlords on Furnish Finder nearby and ask what their experience is and how it's going and use our stats page to learn more. You know, for, I'd say most serious real estate investors this is not like furnishing a short term rental. You know, this is a fraction of the outfit cost. You know, you're usually doing it for way less than $10,000 to fully furnish the midterm rental. And you know, you're paying that back within a year and then you're making, you know, 30 to 50% more rent than a long term, you know, until the furniture needs to be fixed or replaced, which is usually years. It's, it's a great payback if you've got the right place and you know, for the, for the tenant type you're looking for.

Great suggestions there. Yeah, I think just in general there's just a lot more flexibility with it. You know, the standards aren't completely set like they might be in Airbnb. So let's imagine someone decides to put the property up. You know, you mentioned price lapse there and pricing becomes, you know, a little more tricky because in my opinion, you know, short term rentals, we're dynamically pricing those every day the prices are changing. And then a long term rental, you've got a pretty much fixed price and it equals your neighbors. But midterm still kind of in the middle there, you know, and there is some, some difference and maybe there's some seasonality or some peak periods. And Price Labs does have a few options in there to help price better for midterm rentals. But do you have any just suggestions on determining the best pricing?

You know, the biggest thing I'd say is it's while it's tricky, it's nowhere near as complicated. And you know, a couple things I listened to your, you did some wonderful midterm rental episodes. I think it was 203, 211 and 212 to catch up your viewers. But one of the things I think you may be has changed a little bit that I'd clarify is that there's not really a forward rates dynamic in monthly. The most successful people in monthly rentals are taking a rental at a time. And so if you're using it as a short term and you're trying to fill a shoulder season in Michigan, you know, you need to really think through what's the right rate because you're going to block the calendar and take that booking. But for people who are midterm only, you're really doing it one booking at a time. And the reason for that is over 50% of midterm rental leases extend. And so you don't want to have, you know, something that's booked 10 days out or somebody that's coming in for a week, 10 days out, you really want to be in a position to where you've got a conversation ongoing with your tenant and you know when they're going to check out. And you've got 20 to 30 days notice to lease up so you can book it two days after they check out. And so you're really, if you're doing this well, you're picking a price four times a year. And so four times a year you're going in there and looking three to four weeks out and using a tool like price labs or I think more frequently using furnish finder and seeing what people's rates are and whether you think you can charge more or less and just picking the price point, you don't have the same. You know, I always, when I get in fights with my property managers, it's because I think they mispriced a peak date and it's like, oh, how did you let this book for this date seven months out? You should have known there was a music festival and now we're stuck with it. And like, you know, we could have done better. And that dynamic doesn't exist in midterms because you get to look out and say, okay, I'm comfortable with a monthly rate of what starting in three weeks. And you know, you might need to think about, are you really going to be disappointed if they book for nine months instead of three? Probably not. Like that probably feels like quite a victory in the midterm rental game. And so, you know, we want to build, you know, whether it's price labs or wheelhouse or beyond pricing or whoever we want to partner with people to where they can help solve this problem. But is a much simpler problem because of the nature of how to calendar works.

Someone's decided, yep, I want to try this out. I want to put my property up as a, as a midterm rental. I can furnish it. You know, the difference between them being more profitable as a midterm rental than a long term rental sometimes could come down to a month or maybe a couple months. One of the challenges with midterm rentals is that they are a minimum of a month. And so we want to have really good communication with the person staying there so we know when they're checking out. But any other suggestions around trying to minimize those gaps? Especially if you're in a place where there is like a 30 night minimum. You don't want someone to book on day 29, for example, and, and have a 20.

Yeah, if you, this is the reason you have a lease. And so your lease needs to have terms around how much notice they need to provide and what the penalties are if they provide less. And you need to have a mechanism to enforce the penalties. And so, you know, typically I'd say that you're, if you're collecting rent three days before the term ends, you've got more risk. You either need to be collecting rent earlier or have a deposit or really gotten to know the tenant well enough to where you understand the risk so that you've always got the tenant there giving you enough notice to where you've got. I think, you know, I think three weeks is pretty sufficient, four weeks, ideal for a lease up period. And so the most important thing is you're going to be able to talk to this person. It's not going to be an instant booking, you know, unless it comes from Airbnb. And so you're going to be able to talk to them, you're going to be able to set the terms, you're going to have a lease and you're going to have the money in your bank account down. And that, I'd say, prevents most of it. You know, the separate thing is that you need to have done your homework on what is the seasonality. If you assume in a low scenario you're making 25% more than in long term, you can still lose months of rent and end up better off in the average scenario where you're more like 30 to 50% more. Same thing. And what we hear from landlords is they're typically more than 90% plus occupied. And the really good ones are, you know, not occupied 10 days a year. You know, they're really on top of this and managing it so that the occupancy is way more like long term, you know, and vastly superior to short term. And you're using those tools to understand how the cash flow is going to help you manage the calendar. Instead of what I feel is often the case on short term, where really price is your lever, I'm going to go discount heavily, I'm going to run a promo, I'm going to reach out to my repeats because I've got a vacancy, I've got a cancellation, I've got a book. You don't have near so much of that, you know, basically hair on fire dynamic with midterms.

Yeah, great points. The lease can go a long way in preventing those gaps if you have that three week period or making sure that you have enough notice. If they do want to extend another situation that might complicate things a little bit. Curious to hear what you think about places where.