Lower one of your biggest Airbnb expenses | The STRR Podcast #84 | Tim Hubbard

We have a lot of costs that go into our short term rentals. A lot of those are fixed, like maybe our mortgage or our lease payment, but most of them are variable, like our housekeeping costs that change periodically. And I want to talk about one this week that is variable that I'm hoping we can shave down and save you a little bit on. And we're talking about utilities this week, how to cut our costs with our short term rentals when it comes to utilities. So jump right in. Welcome to Short Term Rental Riches. Quick actionable ideas to help you along your real estate investment journey, but with a specific focus on short term rentals. Welcome back to the Short Term Rental Riches podcast. So this week we've got a important topic. Well, I think they're all important, but this one is important when it comes to our finances, with our short term rentals and our expenses, the goal is to have as little, as little expense as possible running the best rental as possible, which means we're going to make the most revenue. Right? So we're going to be talking about utilities this week and a few things I've been considering with my own rentals, a few things that we can do right now to maybe cut some of those costs, and just a few recommendations in general. So I started thinking about this topic today. Actually I was talking with a good friend who lives in South Africa, runs an awesome, awesome portfolio of amazing properties out there. Actually met him in a conference in Israel, a short term rental conference. So just goes to show you, short term rentals work everywhere in the whole world. They're growing popular in popularity everywhere. But the amazing thing is that the operations are all the same. We were talking about the same operations and this topic of utilities came up and some of the things that he's working on to cut his utility. So I thought it'd be good. And today I want to just break down a few different areas of utilities. So I'm going to jump in a little bit about solar, some smart home devices, some fixtures we might be able to put into our property, and just some guidelines to maybe help our guests understand the expense side of it and maybe get them to use the utilities a little more efficient, efficiently. So before we jump into that though, I just want to break it down in a nutshell, just the numbers really quickly here because let's just say we're, we're making $2,000 net on a short term rental before expenses. So $2,000 net after our mortgage, our property taxes, insurance, housekeeping costs, receptionist management software. So $2,000 net after all those expenses, except for utilities. So our utilities are going to be our water in our electric and our gas. Those are the ones I want to focus on this week. So let's say that those are $200 a month out of that $2,000 that we netted. That's 10%. So that's a lot. Imagine if we can cut that down to $100 a month and save 5%. Remember, this is going to be ongoing, right? This is when we save on utilities, when we implement some of these things, we're going to save these costs for the long run. Foreign.

So this whole idea has really got me thinking about solar because solar has made a lot of advancements in the recent years. It's much more available now, there's more financing options, and it's just more of a realistic option now to get electric to our properties. Of course, this depends where you are, how your house is positioned, how much sun you get, where you are in the world. You know, some places have much more options than others, but in the US we have quite a lot of options now and it's becoming more regular. In fact, a lot of the new construction is being built with solar panels. So for me, quick example, you know, with some of mine, I own these smaller multifamily apartment buildings which all share the same roof, right? But if I'm paying the utilities for all these different apartments, it really adds up. So you know, I've been considering it putting, putting in solar panels on top of some of these buildings and just eliminating the electric cost. Now obviously we gotta, we gotta price in how much the solar panels are gonna cost and we can kind of calculate a payback period here, right? So if you've got $200 a rental and electric expenses per month, for example, and you have, you know, even if you just have one, but if you have five or you have 10 or you have 20, the more you have, the more this really starts to add up and it can, can be very, very expensive. So we got to calculate the payback period. But we got to remember on top of that payback period, you know, maybe that takes three, four, five years or whatever to get our recoup our expense that it costs to put the solar panels in. We got to remember this is also adding value to our property. So if we wanted to sell our property later on, it's going to be worth more. And if for some reason we decided we didn't want to do short term rentals anymore in this property and we want to put a Long term tenant back in it. Well, we still have our electric costs covered, right. If we're running completely off solar. So we can either charge the new tenant more or we can bill back a little bit for the electric expense. So, you know, there's also in the US this is different everywhere in the world, but in the US we have some great tax benefits for doing this as well. So I think there's a lot of positives to solar might be worth looking into for your properties. So you might want to consider that foreign.

So the second thing we can do to cut down on some of these expenses and probably one of the biggest draws is going to be our heating and air. Depending on how that's done. If you have a central heating air system or you have window units or you have the mini split systems, no matter what it is, a lot of times, you know, most of the time these are working off electric. So if we can lower the usage of these, well, then we'll lower our bills too. So smart home devices are more readily available than ever. Smart thermostats, to be specific. So they have the Nest thermostat. Honeywell has them. I mean, there's lots of options we can just find on Amazon now, but those aren't going to do us any good if they're just being used as a normal thermostat. So what we can do in the short term rental world is make sure that all these air conditioning systems are turned off while we don't have guests in the property. And now if these are set up for wi fi and remote, then, then we can turn them off wherever we are or our team that's helping us can turn them off to make sure that the usage goes down and helps cut our costs. So if you don't have smart thermostats yet, consider putting them in. They're relatively cheap now, 100, 200 bucks and they can really, really help with your expenses and cut down on costs. Little bit of investment up front, but as long as we're monitoring, I think it's going to shave a ton of money off of our expenses. Remember, this is for the long run too. The other flip side of having the smart home thermostats is that of course you can make sure your temperature in your property is perfect for when your guest arrives and you could turn it on a few hours before. So that's another advantage there. So we have tons of smart light options. I'm not going to really go into the smart light options because I don't think they draw A whole lot of usage on your electricity bill. We use LEDs most of the time now and they're very inexpensive to operate.

So another big bill that you might have is your water bill. And there are lots of options to help conserve water. Now this is also like a global environment thing, right? And we shouldn't be wasting water really. So there's some easy things we can do. Your shower heads, for example, you can simply unscrew your shower head, go get one at Home Depot, go get one at your local home goods store and that can really cut down on the water usage. But we can also do that with sinks and kitchen faucets, the little nozzle thing that goes underneath, you can swap those out for a water efficient one as well. So consider that. And then the other piece of this are toilets. So toilets back in the day, they used to flush with a ton of water. Now some of them arguably don't flush with enough water, but there's a, there's a good balance in there. So there's some great toilets we can get that are very water efficient. Some cities, some counties have tax benefits for this too, so check that out. But all these little things will really add up to help lower your costs on your expenses. And this is for the long run, so keep more money in your pocket.

So we've got solar as an option. We've got, you know, that's probably the, the most difficult option obviously. But with the biggest and best long term return, we've got lots of options for smart home devices, water saving devices, and then lastly that this last piece that we can do is just to ask our guests to help us out a little bit and when they're not using the utilities to turn them off. Now this is the last step here because most guests aren't really going to read anything. It's just the truth. But the more we have it posted, you know, in a polite kind way, the more effective that's going to be. So you can put the, these notes in your digital guidebook, for example. It just says if you're not home, if you wouldn't mind just turning the air conditioning down or off. We put this in our checkout instructions. So when a guest leaves, just please just turn, turn everything off when you leave. You can also leave it on the devices themselves. So if you have a AC remote, for example, for your mini split, you could pull a little label on the back. We see this a lot of times in hotels as well. We might see a little sign in the bathroom that says in regards to the water, you know, and conserving water and not using more towels than we need to. All these things are really going to help cut down our usage. And if we can cut down our usage, then we're going to cut down our expense. And that means more money is going to go into your pocket. So hopefully that helped. Just a couple ideas around the utility subject. It's something that we all as short term rental operators have to pay for. And so it's a really important one. Hopefully you got a little bit out of that. Hopefully you guys are having a fabulous day out there and I'll talk to you next time. Sa.