Wealth Podcast Post

Short Term Rentals with Tyler Weaver

George Grombacher May 8, 2022

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Short Term Rentals with Tyler Weaver

LifeBlood: We talked about investing in short term rentals, what criteria you should use to evaluate deals, who it’s good fit for, and how to get started, with Tyler Weaver, home builder, real estate investor and blogger.  

Listen to learn how to find the sweet spot for real estate investing!

You can learn more about Tyler at RelentlessFinances.com and Twitter.

Thanks, as always for listening!  If you got some value and enjoyed the show, please leave us a review wherever you listen and subscribe as well. 

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Our Guests

George Grombacher

Tyler Weaver

Episode Transcript

ome on

george grombacher 0:11
one level, this is George G. And the time is right to look at today’s guest is drawing a powerful Tyler Weaver. Tyler, are you ready to do this? Yes. All right, let’s go. Tyler is homebuilder, a real estate investor, a short term rental operator, he’s working to help real estate investors build their portfolios and make sense of their first deals. Tyler, we’re excited to have you on tell us a little about your personal lives more about your work and why you do what you do. All right, well, I’m a home builder. And that’s, it’s pretty fun. Like, basically, we do infill development. So we’re going into neighborhoods, finding lots that are available, and really kind of improving the neighborhood by creating new housing inventory.

Tyler weaver 0:54
So a lot of fun to be able to kind of create those opportunities for families to move into I

think what most of your listeners probably be interested in, is that I’m also a real estate investor. And I’m really into

Airbnb and short term rentals as they can really impact the average person’s finances, where, let’s say you’ve got a single family investment. And you’re, after all the expenses and saving, you think, okay, that’s going to cash flow, you know, 100 to $300 per house. Well, that’s not going to impact most people’s

Unknown Speaker 1:38
financial lives in a dramatic way, where an Airbnb might cashflow for the same property, maybe 1000 to 1500 a month, which there’s a lot more work involved to manage it. But that does have a tremendous life changing impact on somebody’s financial picture.

Unknown Speaker 2:01
Yeah, there’s no doubt about that. So

Unknown Speaker 2:04
have you always been how long have you been a home builder.

Tyler weaver 2:10
We’ve been a home builder about three years before that I was flipping houses. And kind of, after a while, it kind of built into becoming a full home builder, after we’ve done projects where we did each individual piece. So like one, we did some foundation repair, the next one, we might have didn’t build an addition on the back or something like that. So after we started getting every single trade, and every single project, some experience with it, we just decided to move into building a full house from the ground up. And that turns out to be much easier to plan and project for. Because there’s there’s not really any surprises. Everything’s you know, you’re working on

Unknown Speaker 2:55
pieces that you’ve already built. And it’s 100% Your project at that point. It’s not like you’re coming into somebody else’s work and finding out that, yeah, 50 years ago, somebody did something tremendously incorrectly. And

Unknown Speaker 3:10
yeah, that’s interesting that that makes sense. You probably wouldn’t have thought about it that way. But when you say it, it definitely makes sense. So

Unknown Speaker 3:20
how long has this is a stupid question, but how long has Airbnb been a thing? And when did it sort of switch for you? Like, wow, this is a pretty real thing and a great way to make pretty substantial money. Yeah, I mean, I don’t know when Airbnb itself started. I think it was like 10 years ago, maybe.

Unknown Speaker 3:41

Unknown Speaker 3:42
I got into it about two to three years ago.

Unknown Speaker 3:48
One of my rental properties they moved out, one of my friends had an Airbnb, and was telling me that it worked out well for him. And I was just, I went on to some tools like smart DNA, that kind of project how much money it would make. And I was very surprised that I had this rental property that rents out for, you know, maybe $1,200 a month, and that it would generate $3,600 of revenue as an air b&b. And the $1,200 was just just covering the mortgage and a couple $100 Extra, where the air b&b was significantly better. So I got into it a few years ago. And the market has been pretty, pretty stable, actually, which, if, you know, through the pandemic, you know, that’s kind of a worst case scenario. I really still had bookings from most of the time. It was only fry.

Unknown Speaker 4:54
So it really happened in March, and that’s when things start to heat up from the winter. So it was really

Unknown Speaker 5:00
Just like another few months of kind of the winter season where you’d expect it to get better. But if that’s the worst case, doesn’t get much worse than global pandemic and shutting down the economy and advising people not to travel when you are, in fact, hosting people traveling.

Unknown Speaker 5:21
Right? You theoretically speaking have survived the most difficult time but we’ll just wait for the other shoe to drop here at the moment, Tyler.

Unknown Speaker 5:30
So alright, we can’t look into the future. We obviously we have no idea what’s what’s going to come next. But assuming that things are a little bit more predictable and smoother and sort of businesses usual. How do I

Unknown Speaker 5:41
just owning a single family long term rental and a couple 100 bucks 100 bucks a month or whatever? You can make a lot more doing Airbnb, but it’s a lot more work. So how do you coach people on evaluating which which is right for them?

Unknown Speaker 5:58
Yeah, so

Unknown Speaker 6:00
the biggest, the first thing to check into if you already own the property as kind of the market research of whether this will make sense for you or this property.

Unknown Speaker 6:10
So there’s a few tools for that you can go on to air DNA, and they’ve got a rental. It’s called like a rental iser, and it gives you some stats and, and tells you about what to expect. And Airbnb also has a tool that kind of tells you the same thing, they’ll tell you how much you can expect for rent. I think every time that I’ve done Airbnbs tool, it has been lower than what I’ve actually received, and what the air DNA rental iser has shown.

Unknown Speaker 6:43
So there’s first figuring out if you’ve got a fit for it. And then the second thing is actually getting up and going. And I’ve written some articles about

Unknown Speaker 6:55
getting furniture and selecting furniture. But I’ve always gone for this minimalistic approach where I use things like air,

Unknown Speaker 7:04
Amazon furniture, and IKEA style items, that it’s very minimalistic, it’s very sleek, it’s very cost effective.

Unknown Speaker 7:14
And I’ve purchased mostly new furniture, I do know a lot of people that go on a Facebook marketplace and have a ton of success doing that. I just do not believe it’s scalable enough and it takes it’s too much of a time suck for me personally.

Unknown Speaker 7:31
Yeah, that certainly does make sense. And that’s something that you do need to take into consideration if I just bought a full house, and I’m not going to do a long term rental, I need to actually furnish the entire thing. And so going on Amazon or Facebook marketplace and doing it one at a time, you might save some money, and it might turn out great, but it’s gonna take a lot more time.

Unknown Speaker 7:50
Yeah, so just deciding which is best for you, because you will save probably $1,000 By spending some more time on it. And if you do the hourly breakdown, that could be a great opportunity for you. If you’re not earning a ton on your hourly up beforehand.

Unknown Speaker 8:09
Other than that, the next thing to think about is how you’re going to manage it while you are operating it. So having a cleaner lined up is the most important thing Airbnb lives and dies by having a cleaner setup.

Unknown Speaker 8:24
And having that sorted. If you do it yourself, then you can that’s obviously an option.

Unknown Speaker 8:32
And then having somebody you can call for maintenance problems, because almost inevitably, any maintenance problem will occur on a time when you can’t just swing by and solve it. So having somebody that you can call and they can go over there and fix something or, or look at something and evaluate it and see if they can fix it at the time that the guests is over is pretty key.

Unknown Speaker 8:59
I I would recommend to find some like don’t try to don’t try to save money there.

Unknown Speaker 9:08
Or be too cheap, I guess. Has there been has this has the fact that so many people are now short term rental investors has that increased the number of cleaning services that do this as this increase the number of for lack of a better term handy people

Unknown Speaker 9:27
I don’t think the Handi people that’s a pretty big industry to start with but the the cleaning services, I don’t know if the industry itself got bigger, but there’s definitely more options for Airbnb investors and people that specialize in scheduling and doing that than there were when I when I first started even

Unknown Speaker 9:50
now, if you lived in a town that’s always had short term rentals, like a beach community or somewhere that is very vacation oriented. There probably was always that industry.

Unknown Speaker 10:00
there, but I’m in Cincinnati. So there’s not. There wasn’t a latent industry of, you know, vacation rentals and services related to that.

Unknown Speaker 10:16
That’s a so you’re, you’re in Cincinnati, and you’re having success doing this, does that suggest that you can be successful in any market? Yeah, I read somebody say that anywhere that they’ve got hotels, there’s demand for short term rental. Good. And if you think about that, there’s hotels basically everywhere.

Unknown Speaker 10:38
And I actually like that middle market approach of instead of competing at the million million plus dollar, beach resort kind of thing to focus on these other markets where it’s got a probably a steady demand still, but things are a little more achievable for the average investor. Yeah, that’s a great way to think about it. So when you’re looking at do you think about, from a percentage standpoint, different margins? Because obviously, I don’t want to hire a cleaner that’s going to eat up 25% of my revenue, I’m not sure what those numbers ought to be.

Unknown Speaker 11:21
Yeah, so the cool thing about Airbnb is, it’s typical to include the cleaning fee in the reservation itself. So there’ll be a nightly, you’ll have a nightly rate, and then you’ll have one cleaning fee per stay, and it gets passed on directly to the guest. And depending on where you are, there’s different strategies on whether you make that exactly what your cleaning fee is expected to be, or whether you make a little bit of a margin on that, or whether you eat some of the margin, just so that you get more bookings.

Unknown Speaker 11:57
Yeah, that that certainly makes sense. So how much of this is is going to be a trial and error? Is that we probably not going to get it perfectly right the first time.

Unknown Speaker 12:08
Yeah, I think the important thing is finding other people that have done this before, and especially finding people in your market. And if you go to like a local RIA meetup that Real Estate Investors Association, or find other real estate investors meetups in your area, chances are somebody has done this in your area, and is willing to go through a lot of the numbers, I found that most real estate investors are very open with sharing how they’re doing, and kind of comparing tips and tricks and figuring out what the markets like. And being able to see that firsthand what’s working in your market is going to really be a great advantage before you just jump in and invest 1000s of dollars in furniture and start out without knowing what’s going to happen. Does that make sense? As you’re as you’re reading the tea leaves and interest rates are potentially Well, we know that they just did increase as they’re going to increase. How is that impacting your business and your your your Outlook?

Unknown Speaker 13:16
So my specific? Well, on the homebuilding side, that’s it’s got a huge impact. And you know, that will impact the demand because the low interest rates have certainly helped a ton.

Unknown Speaker 13:31
It it will probably impact

Unknown Speaker 13:35
on the acquisition side for Airbnb trying to buy more properties, it might make things a little more

Unknown Speaker 13:43
a little less competitive, a little less frenzied with purchasing.

Unknown Speaker 13:49

Unknown Speaker 13:52
the actual demand side, the there’s just such a varied demand when when you’re doing

Unknown Speaker 14:00
a rental and neighborhood like in an area like Cincinnati where, you know, there’s not a strong single reason why people come visit, there’s just such a very

Unknown Speaker 14:12
demand that that shouldn’t impact too much. Yeah, that makes sense.

Unknown Speaker 14:19
So how how are you know that you’re looking and you like doing infill work, and that’s for is that for homebuilding? Or are you building homes with the intention of of turning them into short term rentals?

Unknown Speaker 14:36
We’ve built a few homes that we turn intended to turn into short term rentals. We haven’t been successful because we list them on the market first.

Unknown Speaker 14:45
Basically, we’ve got this model where we say okay, if it doesn’t sell for X dollars, yeah, it makes more sense for us to keep it and so far we’ve been doing pretty good at getting that

Unknown Speaker 15:00
price market fit for selling the house. So we just, we haven’t actually built a house and

Unknown Speaker 15:08
retained it yet.

Unknown Speaker 15:10
I imagine that’s going to happen shortly. Right? It’s got to happen sometime, maybe? Who knows? What are the we think we’ve talked about some really, really important things. Are there other big mistakes that you see people make when they are? Maybe it’s the first time or even second time just common mistakes? You see?

Unknown Speaker 15:29
Yeah, so I discussed during that clean, minimalistic vibe. I’ve seen a lot of people use kind of old Hamadan furniture and sheets that don’t they like with like a floral print, for instance. And, and that works and maybe certain markets where like, there’s a certain level of charm that that people will look for.

Unknown Speaker 15:51
But when I look at the competition, I see some places that do that. And their calendars are basically wide open. So they’re, they’re kind of dropping, dropping, missing out on a ton of income, just because they were using kind of outdated or Henry down furniture, things like that.

Unknown Speaker 16:14
Yeah, yeah, I can see where that would.

Unknown Speaker 16:17
Where that would not be very appealing. If I were to get ready to crawl into bed, and it looked like I was crawling into something from the 1950s or something like that. I don’t even know what era flower floral sheets were really popularized. So

Unknown Speaker 16:32
let’s let’s just say that. All right. And then in terms of

Unknown Speaker 16:39
in terms of the amount of money, I guess it’s all sort of dependent on on, I guess the question is, how do people really get started? How do I know if I’m ready? What are the factors are things that I should have lined up.

Unknown Speaker 16:53
So if it’s, there’s a whole gamut of areas where you can get started.

Unknown Speaker 17:00
If you do not have, if you currently rent, one of the best ways to get into it would be what, on bigger pockets, they’ve coined us the house hack, which is essentially where you, you turn your housing situation into an investment. And this strategy works great for Airbnb because you’re right next door, then. So that basically means you’re using FHA or a low downpayment loan to buy a duplex, or a quad or triplex, or some sort of multifamily house.

Unknown Speaker 17:36
Or a place that you could actually have a dedicated space for Airbnb, if it works that with your zoning laws.

Unknown Speaker 17:45
And that way, you only need three and a half percent down payment. So it could be, you could be talking about less than $10,000, depending on where you are, as an initial investment. If it was if you already have a house and you’re not moving and you’ve got a family, that’s not an option.

Unknown Speaker 18:02
It was probably more like a 20% down payment. And you’re in most kind of mid tier markets. So I mean, not a giant city,

Unknown Speaker 18:15
or maybe investing 30 minutes out of the city and sub market of your city.

Unknown Speaker 18:21
You’d look at maybe a $200,000 home, and that would probably have it. You’d want to save up about 50,000 to get that with a traditional mortgage.

Unknown Speaker 18:33
Yeah, that makes sense. Nice. And how do you I imagine that when people are going through this process, there’s fear. And there’s procrastination, because they don’t want to make a bad decision? How do you help people be more confident? If that’s the right question?

Unknown Speaker 18:52
Yeah, um,

Unknown Speaker 18:54
I think having going to those local meetups would be my biggest suggestion, which sounds like how are you going to meet an expert? Maybe not, maybe you just meet somebody that’s got one or two properties that they’re doing this with? And you can, you can get some first hand experience. And you can see what that really looks like in your market because what does well and each market is a little bit different in which neighborhoods have demand and things like that. So finding, finding some local expertise is pretty critical before you make your first move. Yeah, that that makes a ton of sense. And just being able to see oh, look at that guy or gal they’re doing it. I can absolutely do that to them. If that guy could do it, for goodness sakes. Like

Unknown Speaker 19:43
what Tyler That was a really really solid one. But people are ready for that difference making tip What do you have for them?

Unknown Speaker 19:49
So I would say don’t go after the big audacious investment, or like the the beach house or

Unknown Speaker 19:57
or on the other side.

Unknown Speaker 20:00
If you’re investing in real estate, maybe not go for the the warzone. I prefer that middle market

Unknown Speaker 20:07
bread and butter kind of approach.

Unknown Speaker 20:11
Well, I think that that is great stuff that definitely gets Come on. Yeah, we don’t need to be on Manhattan Beach, nor do we need to be a slumlord. So somewhere in the middle is probably. Yeah, I like it. Well, Tyler, thank you so much for coming on where can people learn more about you? Where can they engage with you? Okay, so I’m on Twitter, I’m Weaver ki J. And that’s where I post a lot of my writing and articles on there anyways, so and, and I can answer lots of questions, if you have it about real estate. And then I blog unrelentless finances.com. And I’ve got plenty of articles that I’ve written about

Unknown Speaker 20:51
the about Airbnb, how to furnish it, what the first property could look like, how to how to renovate a house or how to do the

Unknown Speaker 21:03
Get your budget right for renovations. So there’s a lot on there that you can learn about real estate. Excellent. If you enjoyed this as much as I did, so tell your appreciation and share today’s show with a friend who also appreciates good ideas. Follow Tyler on Twitter, his handle is Weaver we AVR TJ and then check out the blog at relentless finances.com Take advantage of all the wisdom and knowledge Tyler puts up there. Thanks again Tyler.

Unknown Speaker 21:34
Thanks. And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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