Tony:
There are millions of short-term rentals in the United States. Now, whatever your market is, there’s likely going to be a little bit of competition in your area. So how will your Airbnb be a success? Look, whether you’re new to the game or a season host, mastering the ins and outs of managing your Airbnb can make all the difference in your profits and in your guest experience. So today we’re going to break down the top three ways you can make your short-term rental succeed from your first booking and beyond. So guys, welcome back to the Real Estate Rookie podcast. I’m Tony J Robinson, and sadly I’m not joined by Ashley Kehr because she’s away traveling. But we’ll be back together again in a few weeks. Don’t worry. But this is the podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today I’m joined by someone. Super special, my wife Sara Robinson.

Sara:
Thank you so much for having me. Hubby. Welcome to the Bob. I’m so bummed that Ashley’s in here. I thought I was doing this with Ashley. I’m a big fan.

Tony:
Oh yeah, it’s just me and you, Sue.

Sara:
I see him every day, guys. bp, what happened?

Tony:
So guys, we’re going to discuss today how to price your Airbnb, how to make your Airbnb stand out, how to streamline the management, really scale this business up. Alright, so I guess the first question that comes to mind is we’ve been in this business for about four years now. In the short-term rental side, specifically portfolios did just over 2 million last year. We’re probably going to do a little bit more than that this year with the hotel, especially now. We’ve made a lot of mistakes along the way. We’ve done a lot of things.

Sara:
So many. Yes.

Tony:
I guess in your mind, babe, what do you think makes a successful Airbnb today?

Sara:
You, that’s a really good question because I think sometimes I even doubt myself. I know I have this imposter syndrome that I struggle with often about am I even an Airbnb host? Am I an investor? I feel like I struggle with knowing that about myself because I feel like we messed up so much with all that I just said. What makes the most successful STR is doing your due diligence and really setting it up and doing all the things that I feel we didn’t do from the beginning. In the beginning, I feel like we have our YouTube channel and you talk about it on the podcast, we’ve truly just kind of learned as we’ve gone. And I think the most successful STR operators and just properties are the ones that really, really take their time, do their due diligence, research, take their time, setting it up, do a killer design from the beginning. So I think that’s

Tony:
The answer. I think especially now when we first started, there were a lot of not very good properties,

Sara:
Hundred percent

Tony:
Begins. But now we’ve seen the market shift where there’s a lot of new builds. Properties have been built specifically to be an Airbnb and those are tough properties compete against if you’re just taking a regular home and just putting nice furniture in. So the new construction I think has played a really big role, especially the markets they’re in. So like Joshua Tree, a lot of new construction in that market

Sara:
And they’re like cool properties, not just new construction. The architectures is cool, the details are elevated details,

Tony:
And even for us in our portfolio, our new construction properties outperform our rehabbed properties

Sara:
A hundred percent.

Tony:
So the new construction is a big piece. Same thing with Smoky Mountains. Now a lot of the new cabins have indoor pools and we have one with an indoor pool. We have four that don’t, and the one with the indoor pool is one of our better performing properties. So I think, like Sarah said, just having a really solid game plan going into it is super important. Now, I think the mistake that a lot of people make is when we talk about successful, I think people automatically assume that if you buy in a market that’s popular,

Sara:
That’s

Tony:
Automatically going to guarantee your success

Sara:
A hundred percent,

Tony:
Which is not the case.

Sara:
Do not do that. If you’re listening to this podcast, take that away.

Tony:
Anyone who I meet that’s like from the Midwest to the east coast and ask them where do you want to buy your first Airbnb? They almost always say Florida.

Sara:
Oh really? It’s

Tony:
Almost always, oh, we have kids. We love going to Disney. We think we want to buy in Orlando.

Sara:
Oh my God. And

Tony:
Orlando is by far one of the most competitive markets on the planet for

Sara:
Short term rentals.

Tony:
But people assume that just because there’s all the amusements there, because the travel and tourism is

Sara:
So strong, there’s just so many people that

Tony:
You’re going to do well. But it’s like how much money will you have to invest to be profitable in that market or be fully booked in that market? And can you do that profitably?

Sara:
Yeah,

Tony:
Some of the coolest Airbnbs we’ve stayed at, were in Orlando, and when I think about what they put into it,

Sara:
Yeah, go on Airbnb after this podcast and just search Airbnbs in Florida and they are insane what they do in those houses.

Tony:
Yeah, it’s literally like they took the theme park and put it into the Airbnb and that’s a big investment. So even if you’re going to be booked, even if you’re going to generate a lot of revenue, can you do it profitably? So I think what makes it super successful, going back to what you said, having a really solid game plan going into it, understanding that a popular market isn’t necessarily a profitable market, and then not treating the design and the amenities as an afterthought, but really doing that at the beginning of the property as well.

Sara:
A hundred percent. Yeah. I think like you said, back in 2020 to 22 era, so many people got into the Airbnb space, bought a house in a popping area, like I said, like Joshua Tree slapped the Airbnb logo on their property and we’re like, heck yeah, we have an Airbnb now, but it’s not that simple.

Tony:
Alright, so stay tuned after this break for more on how to make your Airbnb stand out, we’re going to take a quick break. Now look, if you’re looking for a short-term rental, you need to find the right market first. So go to biggerpockets.com/find a market. Okay? That’s biggerpockets.com/find a market to identify the best locations for your first or your next Airbnb. Alright guys, welcome back to the show. Those are some important things to consider just at a high level of starting your Airbnb business. How do you go to foundational level, set yourself up for success? Well, let’s go into the first step, which is pricing and analyzing your Airbnb correctly. And we touched on this a little bit, not going into a market just because it’s popular and it’s going to make it profitable, but really looking at the data and saying what does the data say about this specific market and the level of foot traffic, how popular a market is is just one of many data points that you should be looking at as you’re evaluating different cities and markets to invest into.
So in addition to the popularity, you also want to look at the price point. If this is a super popular market, how much do I have to spend to even get into this market, right? Because maybe it makes more sense to go into a less popular market where the price point is half than going into a super popular market where the price point is double. I’ll give you an example. There’s an investor that we know, he bought a four bedroom property on the western side of the Smoky Mountains and the Smoky Mountains, one of the biggest short-term rental vacation markets in the United States. And if you were to buy a four bedroom cabin as nice as his on the eastern side where the Pigeon forge in Gatlinburg is, it’s a million bucks easy for that nice cabin. He got his for about I think $600,000 just by going on the other side of the mountain range. So it’s little decisions like that to say, can I get maybe more bang for my buck by choosing the markets that maybe are a little less popular but have a little bit more room for profitability? Another super important part, and guys, the analysis piece is really kind of my jam, which is why Sarah’s,

Sara:
I’m not a numbers girly, he overspend whenever we do a new design. So yeah, math is Tony’s jam, so it only makes sense that he’s telling you guys what he does.

Tony:
So that’s the first piece, right, is looking at the data, not just the popularity, but looking at the price points. Another important thing too, and we’ll talk about this in a bit, but it’s also looking at the saturation and I’ll give you guys some actual data points to look at to gauge the saturation piece, but we’ll talk about that in a bit. And then just also understanding how affordable is this market for me personally? If you say that you get approved for $500,000, does it make more sense for you to go out and get a two bedroom in a popular market at half a million or does it make more sense for you to go get a five bedroom and it may be slightly smaller market and what gives you the better return? So looking at that piece, and then we always try and make sure that when we start drilling down to specific properties that we’re using data from tools like Aird NA, we’re using data from tools like Price Labs to pull comparable Airbnbs in that market and get actual cold hard facts on the type of revenue that those listings generated. The worst thing that you want to do is go out and buy an Airbnb and the only data you have for the revenue is what your realtor told you it was going to do,

Sara:
Which I feel like a lot of people did. A

Tony:
Lot of people did or they did nothing at all, right? They just said, Hey, I like coming here, it’s busy. I’m going to assume that I’ll stay pretty booked. You never want to go into a purchasing decision with that type of data. You want multiple data points to support your ability to confidently buy that deal. So just some of the things you want to keep in mind as you’re searching for Airbnb markets and within those markets, which properties to buy data. Data. Alright. Okay, so the second step we want to focus on here is how to make your Airbnb stand out in a crowded market. Now let’s talk a little bit about the saturation piece, babe, because I think that’s something that especially, maybe not as much this year, but I feel like last year the Airbnb bus was a popular thing for people to talk about, but what do you feel in a more maybe saturated market? What can folks do to really try and stand out?

Sara:
I feel like we are prime examples of putting too many eggs in one basket. So for those of you guys that dunno, we have I think 22 total in Joshua Tree specifically. So girl, when it was good, it was good, we were booming, but when it did get too saturated, like Tony said at the beginning, they started to pop up left and right, really cool new construction properties like luxury and ours is good. They were super cute tiny homes, but now we’re competing with bigger and better products in a ton of ’em at that and some really cheap hacks to making your property look more upscale is lighting. I feel like a lot of people undervalue lighting and you can get, I think it’s like two 50 foot string lights from Costco. I think it’s for like $40. So string lights. What else? I feel like there’s really cool scon lights that you can get on Amazon, on Wayfair,

Tony:
Uplights in the backyard,

Sara:
Like landscape lights on any steps if you have stairs in your outside area, whether the front yard or backyard put these cool little, I think you can use adhesive, something super cheap to get them up there and it just elevates your space so, so much. So yeah, lighting I think is a super easy way to elevate your space. Another really simple and cheaper way to stand out in your market I’d say is by the design. I feel like design is the very first thing that catches someone’s attention when they’re scrolling on the app. It’s the photos that are going to catch someone’s attention and either click into your property or continue scrolling. So the design really needs to be worth stopping the scroll. So I’m big into color. If you guys look at our listings or our Instagram, we share a lot of our properties and I’ve never been one to shy away from color. I feel like color is fun and stands out and is bold compared to the neutral modern, which is stunning also. But I feel like that is just the more popular route or safer route. So we like to use a lot of color, a lot of accent walls. So whether that’s just painting the wall, doing some cool design, I’m big into wallpaper. What else do I

Tony:
Do beyond signs, strip lights?

Sara:
Yeah, kind of like our background. Things like this that make it feel like if you guys watch Love Island, I don’t know if that’s the audience that’s listening right now, but just think of really cute hangout spots. If you and your friends want to go dress up nice, go hang out at a cute coffee shop and take photos. That is the way I like to think as an operator. And the way I like to set up our properties is these people are coming to vacation. So even if you don’t have the big bucks and money to start a pool or a cool game room, you can still make really killer hangout spots that can show so cool on a photo. You can even have lifestyle photos done where you can really sell those cool spots in a regular home. So yeah, if you don’t have money for, what did we just say these crazy game rooms and installing the pool. Yeah, our pool costs us like how much a hundred and no more. It was like 120 K. So I get that’s a lot of money. So design is also a super easy way to just focus in on that and still kill it in that market.

Tony:
You did mention photos, I think that’s one of the super low hanging fruit that we see a lot of new hosts get wrong where they spend all this money getting the property ready, but then they want to skimp the

Sara:
Photography, which can be expensive. So just know when you’re getting quotes from these photographers. Back when we started in 2020, it was like three, 400 bucks and back then we’re like, oh dang, that’s a lot of money. We just redid a property and that same photographer four years later charges $1,200.

Tony:
But it’s well worth it because

Sara:
It

Tony:
Is, you’re not going to photograph your space as well as a professional will so that that’s something that’s super low hanging that you can go out and get done correctly.
But guys, just one thing I want to challenge you guys on because if you’re hearing this and you’re like, well Tony, Sarah, I don’t have the money for a game room, I don’t have the money for a hot tub, I don’t have the money for a whatever it may be. I would prefer that you buy a slightly cheaper property. So if say that you have, let’s use round numbers, say that you have a hundred thousand dollars instead of using 80 of that on your down payment and having 20 leftover to get this thing set up, I would prefer that you use $40,000 for your down payment and then spend the other 60 getting it set up and really nailing the design and the experience. So you always want to gauge your decision on not just your down payment and your closing costs, but the setup costs as well,

Sara:
Right? Yeah.

Tony:
Your design, your furnishings are probably going to run you 15 to 20 bucks per square foot. So if you have a thousand square foot home, expect to spend between 1500 to $2,000 for furnishing, right? I’m sorry, 15,000 to 20,000.

Sara:
I was going to say what the math guy guys, I just give credit, huh?

Tony:
15,000 to 20,000 for furnishing and obviously as a property gets bigger you’ll spend more, but a lot of people treat that decision as an afterthought whenever you look at your pile of cash, it’s not just down payment and closing costs, it’s down payment, closing costs and your setup. So that’s a super important one guys. So that’s I think a good framework for how you stand out in a market design amenities experience to set up your packaging, how you show your listening to the folks that are shopping. But let’s talk a little bit more about the scaling piece and maybe things that people should keep in mind as you’re looking to go from rookie with one property to maybe multiple because I think you and I, again, we scaled super fast.

Sara:
I still cry at night over it.

Tony:
Yeah, we went from three properties at the end of 2020 to I think 15 at the end of 2021. So we added 12 properties. It’s basically a property a month in that one year. And obviously we’ve kind of scaled back on growing that aggressively. But yeah, we five x our portfolio pretty much in one year. What do you think were some of the biggest challenges that we saw as we went from three to 15 in 12 months?

Sara:
Good question. While it’s super exciting to scale and every time you get a property it’s like, oh my god, you just want to tell everybody in the world it’s truly so exciting and something to be proud of. It is also very stressful. At least for me. That’s how I took it. I was like with this excitement also, I felt a lot of weight on my shoulders because now it’s set up time. So like we talked about in the beginning, there’s different steps to becoming a successful short-term rental operator and properties.

Tony:
Have you stayed at an Airbnb based on the amenities that they’ve offered? If so, submit your answers in Spotify or on the YouTube app during this ad break. Alright guys, we’ll be right back. Alright, hey, let’s jump back in. Alright guys, so the third step, Sarah and I are going to focus on teaching you the things we’ve learned, scaling up our Airbnb portfolio and give you some tactical things you can focus on as you scale yours up as well.

Sara:
You knocked it out the park with the analyzing, you got a good deal, you found the perfect market, now you have to set it up correctly. And that takes a lot more work than I think people understand. So I feel we underestimated that and I feel like we just scaled and we’re just kind of wham, bam, knocking ’em out and now we’re 15 properties deep and we don’t have our SOP set up the way a true business should be set up. I think if you want to get into this space and take it seriously, you need to understand that this is going to be a business, treat it like a business, not like a little side hustle because if you treat it like a side hustle, that’s what it’ll be. It won’t be as profitable, it won’t be as streamlined, it won’t be as hands off as you thought. So really implementing SOPs and just documenting everything from the very beginning I think is so critical if you are interested in scaling your short-term rental business.

Tony:
Yeah, I couldn’t agree more. Right before we started this call, before we started recording, we just got two new reviews that came in. They were both five stars and Sarah and I didn’t talk to either one of those guests and it’s because now we built out the right team, the right systems and the right processes, but we made it so much more difficult on ourselves to start building that team out because we didn’t have those things like the best practices and what do you do in this situation documented? It was just all in my mind and Sarah’s mind. It was like this tribal knowledge that we knew what to do, but even for us sometimes it was confusing. It’s like, what did we do last time or how did we handle that situation?

Sara:
So

Tony:
My big, big encouragement for all the rookies that are listening is that it’s so much easier to lay a solid foundation when you have one property than it is to do it when you have five or 10 or 15.
So really start to drill down on how are you going to handle things like guest refunds, what’s going to be your process for quarterly maintenance? What’s going to be your process for managing your cleaners? What’s going to be your process for whatever pops up during the day? Document those things on property number one. That way when you do add property number two or property number three, or maybe one day you hire a virtual assistant or you hire a pm, whatever it may be, you’ve got everything kind of dialed in already. But I think for us, that was probably one of the biggest things for

Sara:
Me, biggest mistakes truly because such a headache. I am the one between the two of us that handles the day-to-day operations and we waited until I would say we were in the tens to really focus in and treat this a true business. So for those of you listening, if you’re even considering getting into this Airbnb space, you need to go into that with the intention of treating it like a business, setting it up like a business from the very beginning, having Google Drive and spreadsheets where you can literally document everything from top to bottom.

Tony:
Now one of the other things too, when we talk about scale, and it is not one of those things that comes to mind, but it’s something that we found to definitely be a challenge as our portfolio grew, but it’s really making sure that you also focus on the admin things for your business. And when I say admin things like your bookkeeping process, figure that out really solidly on property number one, ESSA’s free software. That’s what we started off using. Now we use QuickBooks, you have a bookkeeper, but really dial in your bookkeeping on day one, making sure you understand the local laws and regulations. We actually had one of our short-term rental permits lapse because we missed a deadline or something. I don’t even remember what happened, and we had to file a petition with the county to get the whole thing undone. So just make sure you understand, hey, what is the process for not only applying for the permit initially, but for the renewal processing. So really dialing in on some of those admin things I think caused some headaches for us as we were scaling up as well.

Sara:
Yeah, we’ve had a lot of headaches guys. We’re here to teach you so you guys don’t have to go through those same issues we went through.

Tony:
Yeah, I think guys, there’s a lot of new people who think about investing in Airbnbs who feel that they have to do it in their own backyard. And this isn’t just Airbnb investing, but this is all general investing. But Sarah and I bought our first Airbnb, it was over 2000 miles away from our home. Our first long-term rental was over 2000 miles away from our home. So I think for us, we just naturally jumped into long distance investing and a good chunk of our portfolio is far away from our house. We just renovated the 13 unit motel that was two states away from where we live right now. But when you focus in on having a repeatable process, having good checks and balances within your business, it really does give you the confidence to do this remotely without having to give up. In the short-term rental space, property managers cost 10, 15, 20% of your revenue. So you’re able to build that same kind of foundation without giving up 20% of your revenue from the top.

Sara:
Yeah, I love that you say that, and I just want to share my personal experience. When we first started in this space, I am not a real estate guru. I am very confused what the market, and that’s just not naturally what I’m interested and good at. So I was very, very intimidated with the idea of getting properties so far away and I knew I was going to be the one dealing with the day-to-day management of it. So it was just so intimidating to me. Tony has no fear in the world and is just down to do crazy things like investing in pigeon. We’d never heard of Pigeon Forge before. He was like, Hey babe, I’m buying this cabin. I was like, where the heck is Pigeon Forge? And

Tony:
I was like, I don’t know,

Sara:
But we’re buying it. So that just shows two different kinds of personalities. So if you are listening and feel more afraid of the idea of investing from afar, please take my words of advice, it is way easier than you think. We were speaking at a conference recently, we just had a baby and I told the audience, if you’ve had a baby, I promise having a baby is harder than investing out of state, way harder. So yeah, I hope you guys, you can hear me in my voice and my story and know that you can do it too. It’s way easier than it sounds.

Tony:
Yeah. Well guys, we hope you got value from that. Again, Sarah and I, ups and downs in building up our portfolio. We’ve obviously done a lot of things the right way, but made some mistakes getting there. And our hope today is, again, maybe it’s tactical, but more so just giving you guys the 30,000 foot view of the bigger thing you need to focus on as you’re going down that path of getting that first short-term rental. So what are the things you should think about as you’re choosing cities and analyzing deals? What are the things you should be considering when you are talking about systems and processes? How do you make your property stand out and how do you make that decision before you buy as opposed to trying to squeeze it in after the fact, right? So those are the big things you guys want to focus on. So

Sara:
Definitely the software. I think not using the tools, there’s so many incredible software out there specifically designed to help you be successful and run smoother as an operator. And it still blows my mind that people aren’t using these tools. You 1000% need a property management software. This software helps you sync all of your calendars from different listings. So instead of going on different apps yourself and managing, oh, did Airbnb get booked that day? Let me block it on vrbo and vice versa. These systems exist out there and I feel like there are still so many people we meet that are like, oh yeah, I just do it back in the 18 hundreds and write it down in my notebook. Like, what the heck? I do want to add one thing. I feel like there is so many different, we just named so many things right now that you have to think about for this space, and it can be overwhelming, like decision fatigue, analysis, paralysis because you’re like, oh my God, the market, the design, there’s so many different areas you need to consider, but just know you are going to make mistakes. We have made thousands of mistakes and each time we’ve gotten better and not made the same mistake with each property, but I truly feel like we are better operators because we’ve learned from all these mistakes. So don’t wait until you’ve made every perfect, you feel like it’s a perfect time, perfect decision. You have the perfect amount of money, you are going to still make mistakes, and I promise you it’ll make you better for the next property. So don’t be afraid of the mistakes you’re going to make.

Tony:
Well, great way to end the episode, babe. Thank you for joining us today.

Sara:
Thank you so much for having me, guys.

Tony:
Yeah, it feels like on the Real Estate Robinson YouTube channel. No, so cute. We haven’t done a solo episode with just the two of us before bp. So thank you BP

Sara:
For letting us decent.

Tony:
Hopefully the listeners have got some dive from this as well. So guys, if you enjoy the Real Estate Rookie podcast, I have just one small ask. Please do, subscribe or follow on whatever podcast platform it is you’re listening to. Or if you’re on YouTube, make sure to subscribe there. And if you’re not yet a part of the BiggerPockets forums, guys, make sure you go check that out. There is so much great information for Ricky Investors just like you on the BiggerPockets forums to go check it out. But that is it for today, guys. My name’s Tony Robinson and I will see you guys on the next episode of Real Estate Rookie.