How to TRIPLE Your Revenue

[ad_1]

Raking in twelve thousand dollars each month from only four rentals might seem like pie in the sky, but that’s the power of investing (and reinvesting!) in short-term rentals. Find the right market and property, and you can charge a premium for an unforgettable guest experience!

Welcome back to the Real Estate Rookie podcast! Today, we’re chatting with Zoey Berghoff, an investor who earns a significant amount of income from a small real estate portfolio. While other investors might use their profits to buy more properties, Zoey bucks conventional wisdom by reinvesting those profits back into her rentals—a move that has not only boosted her booking numbers but also allowed her to charge more for her unique stays. But that’s not all Zoey is doing to maximize her profits. By “land hacking,” she creates multiple income streams on one property while keeping her rental property expenses down.

What does it take to succeed in the short-term rental space? Stick around and find out! In addition to maximizing Airbnb profits, Zoey talks about how to approach new builds—from assembling the right team for the job to getting your county on board. Finally, she highlights the importance of setting reasonable expectations for your Airbnb guests—even if it means narrowing your pool of potential guests!

Ashley:
This is Real Estate Rookie, Episode 337. My name is Ashley Kehr, and I am here with my co-host, Tony J. Robinson.

Tony:
And welcome to the Real Estate Rookie podcast where every week, twice a week, we bring you the inspiration, motivation, and stories you need to hear to kick start your investing journey. Today, we’ve got an amazing episode. I feel like this episode could have gone on for hours. We’ve got Zoey on the podcast with us today. She’s going to be talking about glamping, about yurts, about unique stays, about land hacking, and all these different strategies that you might not know about but that are great ways to break into the world of real estate investing and really position yourself as a solid Airbnb host.

Ashley:
She ended up living part time in something which was not technically a house. When she no longer needed to live there anymore, she decided, “Let’s turn this into a short-term rental.” It ended up being more successful than she could have imagined happen to her. Then we’re going to go on and talk about her focus on unique experiences. Towards the end of the episode, she’ll give us a list of the top… I think there’s maybe five things that you need to put into your properties to consider them unique. When she says these things, they’re almost like light bulb things. It’s not like, oh, you need to have this crazy wild thing, like a tiger in a cage that’s on the property. It’s like things that you-

Tony:
Although that would help.

Ashley:
Yeah, that would. It’s these things that you’re like, “Yes, it’s actually not that difficult of a thing to do, and that little amenity really does help create that unique experience. Then one of my other favorite things, and then we’ll jump into the episode, is how she actually takes her money and, instead of buying another property, what she did with it to get an even greater cash-on-cash return.

Tony:
Last thing I’ll say, Ash, before we kick it over to her, we also talked a little bit about analyzing some of these unique stays. Yeah, she’s got her approach, but I’ve got a totally free Airbnb download. It’s a calculator I think I’ve shared on the show before, but if you guys just DM me the word calculator on Instagram, you guys will get it sent to you for free. It’s a good tool to make sure that you’re crunching those numbers before you dive off deep end here.

Ashley:
When I do short-term rentals, I use Tony’s calculator, too. It is super great. Zoey, welcome to the Real Estate Rookie podcast. Thank you so much for coming on with us today. Let’s start off with hearing a little bit about you and how you got started in real estate.

Zoey:
Thank you guys for having me. I’m so excited to be here. We actually got started, I like to say, a little bit by accident. We started off in the glamping realm, which is not the most common way to start, and we went right into short-term rentals. We had a yurt that we were kind of living in part-time and we weren’t in it all the time. So I told my husband, “We should rent this out.” He was like, “There’s absolutely no way. No way someone’s going to rent a tent. They’re not going to pay for this.” He’s like, “It’s not ready.” I’m taking iPhone photos as he’s telling me, like, “There’s no way.” I’m like, “I think it’s going to work.”
So we ended up putting it on Airbnb. It was our first go around. I didn’t know anyone that was doing short-term rentals. I didn’t have the podcast that everyone has today, the resources. We literally in a way made ourselves homeless that summer. We were living basically in a rooftop tent and letting people rent out the yurt that we were staying in. So that was our first intro to short-term rentals. After that first summer, I was like, “We are onto something. There is something here.”

Tony:
Zoey, you threw out a few phrases that hopefully you can educate our rookie audience. You talked about glamping. You talked about a yurt. What are these things? Break it down for the rookies.

Zoey:
Glamping is, in a sense, luxurious camping, I like to say. A yurt is a… We have a 28-foot dome, you could say, so it has that lattice. It’s a canvas tent. It is more durable than a tent you would take camping, and it does have some of those creature comforts. So there is shelter, there’s a roof, but you are not in a single-family home where those walls are standing, the drywall’s there. So it’s those that are looking to be out in nature, engulfed in that experience. That’s who our clientele is and was from the beginning, honestly.

Tony:
Let me ask a couple of follow-up questions here, if that’s okay. First, what location are you in? What city was this yurt in?

Zoey:
We are in Colorado. We’re about three hours from Denver, so we’re not in that metropolitan, but there are yurts there. We’re more so… It’s called the Western Slope, 45 minutes from Aspen, an hour from Vail, kind of centered in the middle of the ski resorts. So the Rocky Mountains have their own challenges as well to be hosting in. But Colorado, you get those nature-inspired folks as your guests already.

Tony:
I want to dig in just a bit, if that’s okay, on the yurt specifically because I do think it’s a creative way to get started. I guess, first, what was the total investment for the yurt itself?

Zoey:
We do kind of pride ourselves on land hacking as a term that you guys have used with Kai, and that’s a good way to put it. It’s multiple sources of income on one property. That’s what we really try to look for. With our yurt, it is on a property that has also other structures, so that gets factored in. But the yurt itself was about $40,000, let’s say $20,000 for the 28-foot dome. It comes in a box, and in 72 hours, that yurt was set up with three guys and then about a month to two months of build-out to make some walls, paint a little bit and make it a little nicer. Within the first six months of renting, we made $30,000.

Tony:
Wow.

Zoey:
So just taking the cost of the yurt and what the yurt brought in, it was definitely a profitable endeavor after year one.

Tony:
Zoey, that is phenomenal numbers. To spend 40K, get back $30,000 in revenue, that’s a really good return on your investment there. One question that I have, and this is me never having stepped foot in a yurt before, but is there plumbing?

Zoey:
That’s where, as the owner, you get to decide what is the experience you’re going to give your guests. Are you going to have those creature comforts, or are you going to be more of that off-grid setup? What’s cool today is, with glamping, there are so many options. There’s the composting toilet. There’s vault tanks that you can set up a septic miniature in your yurt setup. Ours, because it was that land hacking, we were able to pull off utilities that the single-family home does have. So I do think that factors in our nightly rate, being able to offer water and a kitchen and a stove. We’re on propane, we have a little miniature septic set up, and then we pulled power from the main home, so we do have those creature comforts. But not to say you couldn’t do solar composting toilet and bring in those similar amenities.

Ashley:
Zoey, I want to know, what were you doing that you ended up living in the yurt? How did you get to here?

Zoey:
Yes, I ask myself the same thing sometimes. I like to say, my husband, he’s definitely the visionnaire of the two of us, and I kind of put things into action and the detail that he doesn’t want to do. So he had a unique vision to own a yurt before he even thought of a short-term rental. Sometimes, things, they fall into place and it makes sense. So when he purchased this land, the yurt was the first thing to go up to kind of be a home base while the build was happening. That happens with a lot of us that do… We only do ground-up builds, renovations. We don’t do anything, as of now, that has been a turnkey purchase. Sometimes I wish we did. That is something… People live in campers while they’re building. They live in yurts. They live in tiny homes. That’s pretty common, especially up here in the mountains. Almost every single neighbor we have has lived in a camper or a tiny home. It sounds crazy, but it kind of fell into where we were.
We were, like I said, going back and forth, and I just saw a huge potential that, when we weren’t in it, why couldn’t we try to make money? We were in it already. Because it’s on a land hacking situation, the utilities are very minimal for the yurt. I let the house pull the main expenses because that holds the mortgage, that holds the value, so really 100 bucks maybe every month and a half in propane and some cleaning supplies is about all we’ve got in terms of expenses. So you can deem glamping, sometimes it’s considered pure profit or however you want to look at it.

Ashley:
Zoey, you had mentioned that you do land hacking, like Kai Andrews who was on Episode 107. Can you define that for us?

Zoey:
Land hacking, I like to say there’s a wide variety of options with land hacking. You don’t have to do one way or the other to fall into that. But I like to think of it as, if you can generate multiple sources of income on one property, you’re in a way land hacking. Land specifically, that could pull into Christmas tree farms, lavender farms, apple orchards, putting a house on it. But I also like to give people the opportunity to think about maybe you have an ADU and a single-family home, that’s two sources of income on one property, or a single-family home and glamping. Or you could even think of it’s almost like a land hacking/house hacking duo where you could have an ADU downstairs and you could have a short-term rental up top, and that’s still two sources of income, whether you choose to short-term both of them or long-term/mid-term one and short-term the other. So we always try with every deal to get our best bang for our buck and get multiple sources on that investment. It’s nice, like plan A, B, C you can have with that property.

Ashley:
Before we go any further, what does your portfolio look like today?

Zoey:
We have four short-term rentals, all in the unique stay approach. We’ve kind of dabbled with a build ground-up single-family home. We have the glamping aspect. We’re doing a 1940s historic cabin that came down from Aspen, which is in pure shambles right now, but it’s going to be for a short-term rental for us, which will have two units in itself. So we have really kept into the mountains as our market. I think next market, we’ll try to offset our peak and low seasons with a different market so we can capture year-round consistence with our properties.

Ashley:
I definitely want to get into more of these different properties and their uniqueness. But when you first decided to rent out that first yurt, what did you have to do? What kind of steps did you have to take to get it rent ready? Was there anything you had to do different to the property compared to living there to have a tenant there? Also, did you just put it on Airbnb, throw it up, and you’re done? Talk us through that first initial process of “I’m going to rent it.”

Zoey:
I think there’s what we did do and now years later what I would suggest you do is looking a little different. When we first started, and this is such a blessing now that I look back on it, we literally just started, I didn’t have the what ifs or the fear, “What if someone steals this?” none of that crossed my mind. Maybe it should have at the time now looking back. I literally just took iPhone photos, made an Airbnb listing, made sure with insurance that we were good, no one could get hurt, we were protected there, and just let it go up and see what came. Now in today’s market, you might want to have those professional photos, make sure that decor looks on par. But it is to say that it worked.
I think a lot of us, when we get started, we think it has to be picture perfect. That keeps a lot of us from starting because it can cost a lot to have something professionally designed or everything picture perfect. That’s something we also like to do is we kind of consider properties in phases because that makes it a lot more realistic to start earning that revenue and understand that in a year you might do another round of improvements to the property. You don’t have to have every single dollar mapped out in the very beginning because that’s going to keep you maybe years from starting.

Tony:
Zoey, one of the things you mentioned was that you haven’t purchased anything that was turnkey, and instead, you focus more so on these projects and the, quote/unquote, unique stays. So first, I guess, define what a unique stay is, and why have you focused on that niche specifically?

Zoey:
So unique stay, I think everyone has a little bit of a different definition. Once upon a time, I think we might’ve only considered a glamping or a really unique structure as a unique stay. But I actually want to broaden people’s horizon, that I think a lot of things can fall into unique stay if you do it right and you market it correctly. It’s not everyone’s goal to own a yurt or a tiny home, but that doesn’t mean you couldn’t buy a single-family home that does fall into a unique category. So I want to expand people’s vision about what unique can be for them because I don’t think you have to be a builder or a contractor to really fall into that.
For us, it has looked like, location has been a big aspect. We’re big on the views or what the home is encompassing in terms of the environment. So Joshua Tree, people go to Joshua Tree to feel like they’re in that setting. They want to stay in a house that they feel like they’re in the national park in some degree. So we’ve really factored in that, and that has looked like for us a single-family home ground-up build, which is more of a modern… It’s a newer build, so it’s not super old or anything. It’s not some crazy shape. Then we’ve also done glamping. Then we’re doing a huge renovation to a historic cabin. It is a historic home in Colorado, so that brings in a unique touch in itself. So don’t think that you’re limited that if you don’t want to build something from the ground up that you can’t fall into that unique aspect.

Tony:
Airbnb, I think it was last summer, they did their 2022 summer release where the app really started to highlight a lot of the unique stays that are found within the app. This is me theorizing, I guess, because obviously I don’t know the CEO of Airbnb, but my thought is that Airbnb, as they continue to gain market share from traditional hotel stays, I think they’ve realized that the unique experience is something that they have an advantage over when it comes to Hilton, Marriott, all these other traditional places. Because I can’t go to Hilton and book a yurt, or I can’t go to Hilton and book a tree house, or I can’t go to Marriott and book a submarine, all these crazy things that I’ve seen on Airbnb. So as a platform, I think they’re really trying to incentivize and encourage people to build more of these unique experiences because it draws more people onto the platform. So the fact, Zoey, that you guys are, I think, leaning into that before most people have caught on, I think it’s really going to do you guys well.

Zoey:
Yeah. That’s a big part of why we’ve stayed in the unique space. It has its pros and cons. It, I will say, brings its profit. When you’re in the renovation phase and you feel like there’s no end in sight, the profit will come in the unique space. Something we’ve been… We started in the pandemic. People like to tell me, “Oh, it’s not going to last during a pandemic or a recession.” That was when we started, and we still are doing it to this day. So I don’t think that’s a big excuse that I can listen to many times. But it is growing in the Airbnb space, and I do think it brings a level of protection for your short-term rental business knowing that you have that different approach. That’s why we’ve continued to go in that direction, and, like I said, it has looked like a different angle for every property we have.
But I personally believe the unique category is what’s growing. It’s keeping us apart from the rest. It’s not as easy as maybe it was a few years ago to just go buy that neighborhood home, furnish it, make it look cute, and call it a day. We’re seeing competition increase, and people are getting better at short-term rentals. They’re just getting better as hosts, better as investors. So that’s where we also have to level up our investing game as well.

Tony:
Zoey, you just said something I got to comment on because you said, “You can’t just go buy that regular single-family home, throw it up on Airbnb, and expect to still do well.” I think when you hear of the Airbnb bust, a lot of those hosts that are being significantly impacted are the ones that did exactly what you just said, where they’re just focused on, “Hey, let me buy a traditional single-family home. I’ll put a bunch of IKEA furniture in there and cross my fingers it all goes well.” Whereas now, in 2023, in order to be a good host, you really do have to focus on providing your guests with an experience, providing your guests with exceptional customer service, and reinvesting into your properties from before. Maybe they were just these big cash cows where you didn’t have to worry about trying to make them better for the next guest.
This last year has really been a year of retooling for us, where a lot of our properties, we’re going back and investing additional capital into them so we can make sure that, in 2024 and 2025, we can continue to be competitive in those markets. Because you have two options as an Airbnb host. You can either try and compete on pricing, where all you’re doing is pulling down your prices to try and be the lowest-priced option in your market, or you can compete on experience. Airbnb guests have shown time and time again that they’re willing to pay a premium if they can get the right experience. So you have to choose which host you want to be.

Zoey:
I love that you said that. Because reinvesting back into a property, I think some people might feel like, “Well, with that profit, I could go get another property.” But having two subpar short-term rentals or one great one can look a lot different in your portfolio and in your workload as an owner and if you’re self-managing. So we actually, about a year ago, chose to reinvest about $35,000 back into our property, which was all profit and that could have put us in another deal. But by doing that, we invested in professional design, professional photos for both of our peak seasons and a hot tub. When we did that, it took our revenue from about $4,000 to $5,000 a month to a consistent $10,000 to $12,000 a month. The house didn’t move. The location didn’t change. I’m not going to say there was much that could have factored in that difference besides the reinvestment we did, and that is proof that it really does pay off to reinvest.
I knew, just seeing what the market was coming into, investors were coming in with big dollars, that if we wanted to stay in the top 5%, we had to make that reinvestment. We couldn’t keep operating at a level where we just wanted to take that profit and go elsewhere. So I think it’s super important that people understand that it may slow your portfolio growth for a year or six months, but that property now generated double every month in revenue, like consistently. I have now year by year to compare. That’s definitely worth the reinvestment, I would say.

Ashley:
Yeah. People get so caught up on the unit count-

Zoey:
Mm-hmm.

Ashley:
…but if you would’ve went and invested that into another unit, that would’ve been another listing to manage, another rehab to manage, just more overhead. The fact that you went and you reinvested it into this property might’ve even had a better cash-on-cash return then taking it and putting it into another property even. I don’t think that we’ve actually had a guest that has come on here and talked about how they actively chose to upgrade and put a large chunk of money into one of their current short-term rentals instead of going and investing and buying, buying, buying, buying more.
We had Chad Carson on recently who wrote the book, Small and Mighty Real Estate Investor, where he talks about, “I don’t want a ton of units. I like my small portfolio. But I optimize my properties. I stabilize my properties.” And I think that’s great that you brought that up. For somebody who wants to get into land hacking, what is the first step they need to take? Is it doing market research? Is it determining their strategy? Walk us through that path they should take.

Zoey:
There’s a few ways I like to approach it. One, you do need to determine, what is your strategy? Are you a short term? Are you trying to go long term, midterm? That’s going to help you really decide your location and your market, which is kind of the next step of, “Okay, what’s realistic for me to purchase in? Do I want to own a property in California for a lifestyle and profit play, or do I want to invest in my backyard?” That’s really important to decide. When you decide if you’re going to do short term or long term, that’s going to look different in terms of markets.
But my biggest thing I tell people and the biggest misconception is land is created equal, which is not the case. You really need to understand when you go into these deals, whether you’re wanting to build or purchase a property that already has a structure and bring glamping to it or another structure, like in ADU, or you want to do a glamp site, you really need to understand when you look at land, what are you looking at in terms of the value it has? That can consist of understanding, is it raw land or is it developed land? Are the utilities already pulled to it? If not, what does that look like? Pulling utilities can be one of the most expensive parts of developing land if you don’t factor in that land location accordingly.
So I really like to encourage people, if you can look at a raw piece of land and feel confident at what that land can bring to you or what it’s capable of having built on it, that’s going to really be a great fundamental for you to get started in actually building or developing or putting glamp sites on it. That’s not to say you have to build. You can land hack with the current structure already on it and maybe put an ADU in it or bring glamping to it. But you have to know if that land is suited to support multiple structures with the county.

Ashley:
What’s the first step to figure that out? Who should you be talking to? What do you need to research? What do you need to learn?

Zoey:
I always like to understand, when you’re looking at land, are you looking at raw, which means completely undeveloped, so that is just dirt on the ground? That’s what we all probably think of when we think of land. Or are you looking at somewhat developed land? Meaning, there’s utilities. Maybe there’s power nearby. Maybe there’s been power pulled. Is there a well already drilled? Is it city water, and are you working with city sewer or septic? So when you look at a price tag on land, I want people to understand why it’s priced that way. When you see something that’s $5,000 or $150,000, it could look a lot different in terms of if there’s utilities pulled on the one that’s more expensive, and that could save you a lot in the long run. So I always like to encourage people, start framing the way you look at parcels and listings a little bit different in terms of what are they capable of. Then also, your county is going to be a super helpful resource in terms of what’s legal to actually do.
I had someone who asked me about this land parcel. It was in a floodplain, and it was completely not buildable. But to them, it looked like a great deal because it was a great location. It was right near where they wanted to be. I was like, “But if we checked with the county, we would understand that this can never be built on. So this investment is not going to support the vision you have for the property.”
Your county’s a great resource. It’s always good to go online, check with what the county’s stating about that property or where it may be. Does it fall within city limits? Unincorporated? What is available to be built on the structure? You can always call them. Your county’s not scary to deal with or your potential county before you invest. We always call, if we can, we’ll go in person, because those are the people you’re going to be working with before that property is actually live in the short-term rental phase.

Ashley:
The property I’m actually sitting in right now, when we purchased it, there was a lot of site work that we had to do. Site work can get very, very expensive, very fast. Just to put in a driveway… because it was literally just grass. There’d been a driveway at some point in time, but the grass was growing. There was no gravel brought up anymore. It was $27,000 for the new driveway, for a gravel driveway, not even blacktop. It is a long driveway. But then also the well was dry, so we had to dig a new well, and that was another $7,000. These things can all add up.
Because you can look at the actual property, you’d be like, “Okay, I need a roof. I need siding.” But you got to think about everything that’s around it, too. We also had flooding. There was a pond here, and the pond actually flooded into one of the cabins, so now we got to put drainage tile in. Even the animals, we’ve had to have trappers come for beavers and stuff that were damming up the ponds and creating more overflow. All these things that, when you are dealing with land, especially acreage, there’s maintaining… There’s a dead tree, dead tree. You got to take those down or else they’re going to fall on the house. All these different things that come into play and they can be very expensive if you are not considering them into your budget and you’re just looking at the building as whole. Now that we kind of talked about where you can find out about the utilities, things like that, what’s kind the next step in your development phase, after you’ve done your research, you found out your information?

Zoey:
That’s where, what is the vision or what is your strategy that you have in mind? The property you’re looking at, is there already a structure on it? Would you have to put budget into that property to then also do the second structure you want to do? Or are you doing complete ground-up builds? I honestly will say I do think, in the next five to 10 years, we’re going to see more builds for short-term rentals. I think it’s just a reality that, as the unique space grows, these homes that are oddly shaped in triangles and whatnot, no one has built 30-year homes to live in for their own primary residence to look like that. But now there’s a market that you can actually make income off those.
Builds, even though they have their pros and cons, I do think it’s a huge tool in your toolbox to be able to take that on because we’re going to see more of them. So if you are looking to build, that’s where you’re really going to work hand in hand with your county in terms of, what does that permitting look like? What do you need to get that build into the county to get approved? Every state, every county is going to be completely different.
This also can fall into a renovation as well. So we’re on a recent renovation with the same county we also built in, and we almost had to go through the same process of getting an architect, a structural engineer in there. We had to get the entire… To me, it’s a renovation, how complicated can it really be? But we had to do almost the same steps we had to do for a ground-up build in terms of having the engineering and the architecture done, the building plans submitted. The county had to approve those for a 25-day window. Then once those come back redlined and approved, you have the go ahead to just go. But there’s also counties in Montana that they don’t have building code, so you are literally able to put whatever you want up there. That’s why I tell people, if you’re going to invest in those counties, you might be better off building than buying because you’re kind of buying someone’s word of mouth.

Ashley:
Yeah, that’s true, no permits. This is how it’s going to be done.

Zoey:
Right. It was not built to code. There was no permitting. It’s like, who knows if that thing’s going to stand. So counties, they’re going to be your best friend, sometimes your enemy at times, but you have to know they’re in it to ensure that their structures are safe, they’re sound, nothing’s going to collapse. It’s your benefit to build to code.

Tony:
Zoey, let me ask one question. In terms of playing nicely with the county or expediting that process of getting your plans approved, have you found anything that, okay, if you do this on your first submission, the chances of you getting revisions back is decreased?

Zoey:
There’s a few tips we’ve learned. One, if you can try to work with an engineer or architect that is more local in that county and has worked in that county before, that’s going to help you a ton. If you go to our county, they work with the same 10 builders. They could list off their main builders in the area that are building houses. Those are people that are in your benefit to try to get in your team because they know what the county’s stickler’s on, what they’re probably going to come back with. They can try to keep those redlines from happening.
So when we went to find an engineer, we wanted to find one more local that has worked in this county. We also, with an architect, made sure they had experience in the Rocky Mountains, so like snow load, wind load. We can’t even buy the same windows that other states can. We had a glass slider on order and it’s not legal to have in the state of Colorado. These are things that you want your team to know of. Because we’re dealing with elevations, we had a fireplace that we were about to order, and the head of the Building Department called us and he said, “That fireplace is not legal at our elevation because it will not act right. It’s not going to operate the same way a fireplace in zero elevation is going to act.”

Ashley:
Oh, that’s interesting. I never knew that was even a thing.

Zoey:
When he said that, it made sense because we’ve had guests tell us that our oven will sometimes act up. At 9,000 feet, we’ve literally come to the conclusion that it’s not the oven, it’s the elevation. It’s just a matter of temperature outside and what they’re working with.

Ashley:
Oh.

Zoey:
So these are things that, especially if you’re doing this from afar and you’re not engulfed in that county or in that area all the time, you really want to have people on your team to know these things. We also try, every time we talk with the county, we obviously call them, but if we can and if it’s possible for you, go into the county and actually shake their hand, get their names. Our head… Building Department, he calls my husband by first name. He leaves him voicemails. They’re like buddies. It sounds silly, but that’s the guy to know, and we didn’t have one round of revisions on our renovation. Given it was a 1940s cabin, we were ready for them. My husband’s convinced that, because of his relationship with the Building Department, they let it go.
We called them. We explained our situation being so old and historic, and they really said, “We want to work with you and keep the history. We appreciate you’re not just tearing it down, so we’re not going to hold you to the code of a brand new build in 2023, but we need to increase the R-value. We need to increase the insulation.” But they still worked with us, so I’ll take it.

Ashley:
Yeah, definitely.

Tony:
You mentioned a few times, Zoey, about if you’re doing this remotely or even if you’re somewhat local about having the right team. So who exactly is that team that you need to build out, and what is your recommendation for finding those people?

Zoey:
Great question. So depending the strategy and vision you have, I’m going to say most of these people are going to be pretty common to meet on your team give or take, so don’t take my word for it exactly, depending on what your situation is. An architect is definitely someone to have in your back pocket, especially if you’re doing a build or an extensive renovation that you’re taking structural walls.
This was a learning curve for me was at one point I was so confused what the engineer and the architect is doing and what’s different and why I’m paying for both of them that I literally was like, “Can you explain to me what you do and what he does and why you’re not the same because I don’t get it at all?” So don’t think that you have to be a master at this. They’re professionals in this field. So an architect is great to have in your back pocket. They do a lot of the work in terms of the build or the renovation, getting something together. The engineer, surprisingly to me, was way cheaper, and he was way quicker. He was like a four-day… He just makes sure the thing’s going to stand. It’s not going to fall down. It can support the load of snow, wind, whatever you may have.
Then you’re going to want to have that contractor, unless you’re the GC, but most aren’t, especially if you’re doing this from afar, is that contractor’s going to be your right-hand man. He knows how to read plans. He knows how to read those redlines. He is really going to be the central part of that build or that renovation or that glamp site. You’re going to bring in plumbers and electricians. They’re going to come in, do their job. They really have their moment for a two, three-day window, and then they’re out of there
The biggest thing I once heard actually at a conference, Robuilt, was the best way to find a contractor is going to Home Depot at three or four in the morning and seeing who’s in that parking lot. That’s who you work with, and that’s who you go up to because those are the guys working. Finding the contractors or the drywall installation guys or whatever it may be on Google, you’re finding the people that are smart enough to market their business, but they’re not in it every single day working as hard as the guys that are at Home Depot at six in the morning. It was kind of a funny way to hear it, but he was like, “I’m not kidding. I’ve done tens of builds and renovations, and that’s how I find my guys.”
It’s very word of mouth. We found our contractor because we had to do log exterior work on this cabin. The log guy said, “Hey, you should talk to this guy. He’s a really good contractor for log homes.” We called him. He’s the one we’re now using. So you really do have to pick up the phone and get those chain of commands going to find the right guy. It doesn’t mean you have to do it, but that’s been the way that we found everyone.

Tony:
I love the idea of putting yourself out there. I’ve never done the 6:00 a.m. Home Depot thing to find potential contractors. But what I love doing is when I see other active job sites, no matter where I’m at, I always try and stop and get that person’s phone number. Sarah and I, we’ll do walks to the local Starbucks, it’s across the street from our house, and there was construction going on in the unit space next door to Starbucks. So us being real estate investors, what we do? We walk over there, and there’s two guys who were drilling out the concrete to put the plumbing in, and we reached out to them. We said, “Hey, we’re real estate investors. Do you guys do residential stuff too?” They were like, “Yeah, we do residentials.” “Do you guys do just plumbing?” “No, we do plumbing, we do electrical, we do drywall, whatever you guys need.” So now we’ve got a contact that fast from just sparking up a conversation.
So if you’re a rookie and you’re struggling on, “Where can I find these people?” Home Depot is good, but just pay attention as you’re driving around your neighborhood to see where those jobs are being done and just hop out of the car and introduce yourself because most people aren’t going to turn down an opportunity to get a new client. What about the architect and the engineer, Zoey? Just really quickly, what’s a good way to source those people?

Zoey:
There’s a few different ways you can find them. We honestly started kind of similar to that. We knew of someone who was building, so we called him. We walked by and said, “Who’s your engineer on this project?” We had two different quotes from two different engineers. I always try to encourage people, if you can, if you have the resources in your area, to get two to three quotes for any job if you can, because you are going to get a wide variation of the workload, the timeline, everything that’s going to consist in that bid. So we found our engineer, I literally think, through just word of mouth. We picked up one phone call. They said, “Hey, you should call this guy.” We called that guy. He said, “I’m completely booked out, but this person might be able to.”
The engineers in the area know the other engineers. There’s only so many that really are working in that area. With an architect, we actually called… We knew we wanted to go towards a metropolitan city because there’s going to be a lot more availability. We had an architect that was local come out, and we had an architect that was about a two and a half hour radius. He came out. We got bids from both of them, and it was astronomically different the responses we got. Same with engineers. We had engineers come in that were like, “You’re going to have to put beams in this thing, steel beams. You might even just want to tear it down.” Then we had an architect come in, an engineer that was like, “This thing has been standing for 80 years. It’s probably not going to fall down. Let’s just support it a little bit more and call it a day.” I could not believe the difference of the two. That’s an example of always get two to three if you can, because obviously you can probably assume who we worked with.
But even with another big job we had, we were quoted $25,000 to $45,000, and we didn’t pick the cheapest. We picked the one in the middle, but it was a good gauge on the scope of work. Was the first bid a fair bid knowing that that second one came in? So if you can get a few different bids for a lot of different jobs, that’s going to be in your best interest. Even with contractors, they’re going to quote you a lot different. Always ask for their past work. Please look at what they’ve done. Don’t take their word for it. If you know someone that they’ve worked with or they have a client that they’re like, “Oh, I just finished a job. Call that person,” ask them how the experience was working with them because that can really make or break… Someone’s word is great, but knowing how their actions were in that job is way more important.

Tony:
I guess as you’re doing the analysis phase of these unique stays, I found that to be a challenge at times. Because it’s like if you’re building something that’s really unique for that area, how do you accurately comp out or project the revenue for that property if you’re the only 1920 log cabin in that area, if you’re the only yurt that has the creature comforts in that area? So what are your steps for projecting the income on some of these unique stays?

Zoey:
That’s a great question. I think we’re going to see the analyzing of unique stays get better, so that should give everyone some hope, if you’re diving into the unique stay space. AirDNA just did a huge update, and there’s actually a way to filter by unique homes in searching on AirDNA and what they’re bringing in. So we’re just starting to see more come to the table. But what I always like to do is take into account, let’s say, if you’re running a yurt, you’re probably going to be a one-bed/one-bath, maybe if you have that bathroom, spot. So start there. In that market, start looking at what is your competition of one-bed/one-bath. You do need to take into account that you are bringing the unique aspects, so you can consider that more in your nightly revenue. Maybe you look at locations. There’s no unique stay around you, but there’s a few houses in that area or region that you would be hosting. You kind of have to take the pieces you can get and really piece it together.
Then I also like to look at… There’s no dome within 75 miles of us, so obviously I don’t have a direct market to compare to. But what I will do is I will go into the state of Colorado on Airbnb and look at the domes that I do have insight on and start really analyzing those listings. Even though they’re not in your specific market, if you’re confident that your clientele in that state or market is going to want that type of experience, you can take that as market research.
That’s why I also encourage people, please think of your climate and your temperature and your environment. Before you are sold on a dome or a bubble, let’s make sure that your region or market is going to support that. Even for us for the yurt, it can be all year round, and I 100% will not host all year round in a yurt. It’s my host boundary that I know it’s going to sound good, it’s going to look good on paper, it’s going to sound good in photos, and it is going to be treacherous of an experience to be in 30 degrees in a yurt in the Rocky Mountains. It is not ideal. So maybe an A-frame would’ve been a better build for a short-term rental because it could have been all year and still withhold the snow load and everything.
So please think of, one, your logistics you have with your market and location, but also, what does your clientele want? I have seen in different markets, some people really attract domes and some really attract storage container homes and some love A-frames. So that’s where you need to know who is your demographic and what are they willing to pay for and what do they want, because they all fall into unique stays. But which one is going to do the best for you?

Ashley:
I have this vision of staying in some kind of dome where it’s snowing out and just pretending that I’m living in a snow globe. So if anyone has that kind of short-term rental, let me know, because I’d love to stay there where it’s just the clear dome and it’s just the snow falling. You’re in the middle of nowhere. I would probably go and try and stay at one and it wouldn’t end up snowing the whole time I was there anyways.
Zoey, what are some of the unique things that you have done to your properties that make you stand out? You had mentioned earlier in the episode hot tub. I was actually at Tony and Sarah’s conference, and Sarah got everybody to chant, “Say yes to the hot tub! Do the hot tub.” So that is one amenity, but what are some of the unique things that you are doing?

Zoey:
So hot tub, I’m on Sarah’s wavelength with that. Do the hot tub. I have never seen it hurt someone, and it always increased the revenue. I will say something I learned as a host was, please, if you can, professionally maintain the hot tub. Because I got it and I was like, “Oh, we’re good. We can train our cleaners on this and whatnot.” I got burned one time, and it was the one time I needed to be burned, and I won’t do it again. The hot tub was down. We couldn’t get the chemicals to just balance out. So I was like, “We’re draining it. I’m not risking that.” That was a $500 refund that I was just like, because I wasn’t willing to professionally maintain it for $50 a week, I had a $500 refund that I went through. The guest didn’t request that, but it was a big reservation that I was like, that was a huge bonus for her to have that. She even said she wanted the hot tub. So please, if you can, professionally maintain it or have someone who is trained to do hot tubs so you don’t backfire. Because having that thing down could really hurt you in reviews and just future stays.
But also something we are doing… For example, our cabin is on a 40-mile infamous bike trail, so we are doing e-bikes that will be with the stay. So if you stay with us for seven days, you’ll get those e-bikes for free. If you’re less than seven days, you can pay, I haven’t mapped out the number yet, but let’s say 100 bucks for your stay or something.
Also, we are doing a sauna, which I do think saunas are going to see a big growth, similar to hot tubs just because hot tubs are becoming so mainstream that you can go to Costco and buy one for $4,000 or $5,000 and put it at your property. I think the barrel saunas are going to be really cool. Cold plunges, that’s something we’ve talked about at the yurt is doing a cold plunge tank.
These are things that you, as a consumer and as an owner and investor, you are also consuming and choosing where you want to stay and what you like. So please, it’s not as complicated as we might think it is. Yes, look at what your competitors are offering. That’s a big thing too. But there can be amenities that you would also enjoy, and there’s no reason why someone else probably wouldn’t enjoy it as well. So that’s a big thing that I like to factor in.
Also, when you’re doing a unique stay, there’s things you’re going to learn as a host that you have to treat differently than a traditional stay in your listing before your guest books with you, which we can touch on that if need be. You don’t just treat every guest… It’s not as turnkey as you might think when it’s unique. You’ve got to do your due diligence to make everyone’s experience a lot better.

Ashley:
Let’s touch on those little things real quick. We have a little time left. What are some of those things that you were talking about that you put into your listing?

Zoey:
The first year, which… Obviously, we have winter seasonality, and what I like to tell hosts is what’s obvious to you is not obvious to someone else who’s traveling there. You might have been traveling to Joshua Tree for the last 10 years. You’ve been there yourself. You’ve actually stepped foot in Joshua Tree. That does not mean your guest has. So something that you may think is obvious to you is not to them. For example, in our listing, which I was fearful in the beginning of doing this, which is why it didn’t because I thought it was obvious, but in the long run it paid off, to in our listing say, “A 4×4 is required in the winter seasons from November to March. If you don’t have a high-clearance vehicle, we’re not the property for you.”
To me, in the beginning this felt like turning guests down and bookings down, which why would we want to do that? But after the first season, I actually learned that by giving that education and giving that disclosure in the beginning actually made for a way better hosting experience that season and for the guest. I know Robuilt, he touches on that too. He’s like, in your glamping units saying, “Please read the entire description before booking because WiFi could get spotty or there’s solar, so it’s not always going to charge every device you have.” When your guest knows those things before booking, it leads for a way better experience for them. They know what they could be getting into. As a host, you’re not getting burned with those reviews and those mentions and those problems, your job gets a lot easier.
So we disclose a lot of that. We’ve kind of learned our pain points that directions are… Our house doesn’t even come up on Google Maps, so I had to find a way to direct people to a house that doesn’t have an address. We don’t even have a mailing address to ship things to. So there’s just little things like that that you might not think of going into the unique space that a normal home does have those creature comforts. So disclose that to your guest.
Also, anytime a guest has an issue or something keeps coming up, I always take note, is this an issue that more guests and future guests are going to have, or was this a one-off? Like, was this just the person I’m working with who’s just not getting it? Once you get something a few times, that’s your sign as a host that you could be doing a better job to educate them before those questions come up. So when people leave feedback and questions, take those into consideration to improve the experience for everyone and improve your business.
Yeah, there’s just little things that… We’ve even had to put a red solar light at the end of the driveway because people come up so much at dark that now I say turn right at the red light because I’ve literally got so sick of answering phone calls about, “Where is it? I can’t get there.” I tell people, “Arrive during the daylight. The mountains get really dark. There’s no light. That’s the point of the mountains.” So those things seem obvious to us or someone who’s living there or hosted there, but it’s not to a guest that’s coming from across the country.

Ashley:
I recently had an experience, it was actually this past weekend, where a guest checked out early because they heard a critter or a mouse or something in the cabin, and then they found mouse droppings. They sent pictures and everything, and they said, “We understand this is a cabin, but we’re going to leave. Would you mind refunding us for the two more nights they were going to stay?” I refunded them for the whole trip. I felt so awful, so bad about it. So my manager and I, we went into our listing, and we just put a full disclaimer in there: “This is a cabin in the woods. There are…” We didn’t use the word mouse. We said, “There are critters and bugs that may be around.”
It ended up working out kind of nice. Once they left, the cleaner was able to come right in. Then me and my kids went and stayed there for the weekend. It was our first time staying in our fully furnished A-frame. But I had somebody come in and seal everything in spray foam, and we set traps in areas where people and pets can’t get into that are locked, like some of the closets and things like that. But it was just terrifying to me, like, “Oh my God, what are we going to do?” So I posted a Reel about it, and there was a lot of other investors that gave really good advice. One of those was to just put that full disclosure, like, “This is an old, old cabin. Yes, it’s been renovated to the tee, but there still may be that little tiny crack or something that a mouse is coming in at.”

Tony:
It’s a really good point, Ash. I think what a lot of people forget, that your listing, your digital guidebook, your automated messaging sequences, those are living, breathing documents that should be updated based on the feedback that you’re getting from guests through messages, through your reviews. I have a meeting with my team every Tuesday, and we review our reviews for our properties on that Tuesday meeting. It’s very common for me to say, “Hey, we need to update the listing so people understand this,” or, “Hey, we need to update the digital guidebook so people see this before they get there,” or “Hey, we need to update the…” whatever it is.
You’re always trying to make sure that you’re setting clear expectations for your guest. Because it’s not always the lack of an amenity or the lack of something at your property that gets you to have a bad review. It’s the failed expectations that lead to bad reviews. So as long as you’re setting really clear expectations upfront of, “Hey, the WiFi’s spotty. Don’t come here if you’re trying to stream whatever, Fortnite, and watch your favorite UFC fight. Don’t come here if you’re afraid…”

Ashley:
You’re being interviewed on this podcast.

Tony:
Yeah, “If you’re being interviewed on a podcast.” So it’s setting those expectations up front. Man, Zoey, what an amazing conversation so far. I feel like we could keep going for hours here. But I want to take us to our next segment, which is the Rookie Request line. For all of our rookies that are listening, if you want to potentially have your question featured on the show, head over to biggerpockets.com/reply, and we just might use your question for the show.
Today’s question comes from Miranda Weber. Miranda says, “We are planning on getting a cash-out home equity loan on our paid-off home for about $240,000 to use as down payments across three to four rental properties. Our goal is purchase those rental properties this year. We have excellent credit. But my question is, what does this do to my credit each time we take out a loan for the investment? I know it will lower, but will it affect our interest rates as we take out more loans?” Zoey, I’m not sure what your experience is here with the home equity line of credit, but what would your advice be to Miranda in this situation?

Zoey:
It’s a great question and definitely a dynamic question. There’s multiple different situations that are going to answer that, I would say. But I will give an example with the HELOC. This might just challenge what they’re thinking of doing with it. I think in real estate it’s always good to hear what everyone’s doing and then decide what’s best for your strategy. We actually chose to take out a HELOC. We put it into a property that we knew the main goal of that property was the equity and appreciation we were going to get with that property, because we wanted that property to then appraise for a lot more than we purchased it for so then we could take out money from that property to do a next property.
Something that’s interesting is you guys want to do maybe three or four properties, but this is where kind of what Ashley was mentioning earlier is, as an owner and self-managing, that’s three to four listings, properties, units that you’re now going to have to worry about. Where, if those are just, let’s say, three subpar units that are bringing in $8,000 total, $2000, $3000 each maybe, maybe it could be a better investment to take that whole HELOC and put it into one property that could be a stellar property for you guys. This is just where you guys get to decide what’s best for you.
We took, let’s say, a $350,000 HELOC and put it into a property that was $395,000. We actually had the appraiser, this just happened, it happened yesterday, the appraiser walked down the street. I don’t know how many times that happens in life. But he walked down, and he actually said, “Oh, is this your guys’s spot?” He knows everything. “Oh, you bought it for $395,000. I can see when you bought it.” He said, “I just appraised a cabin down the street for $760,000, and they don’t have one renovation that’s been done. It’s full 1920s still. If you guys call me when this is done, this should be appraised well over $800,000 to a million dollars.

Tony:
Wow.

Zoey:
That was why we bought it. We knew our short rental’s going to do great, it’ll look good, it’ll be a cool property, but we’re in this for appreciation and equity because we want to then take that property to leverage the next property. So it’s a great plan, and I think you guys have the great credit you mentioned. But something to think about is, as an owner, what are you taking on logistically and what can you? Can you take on three properties in the next six months physically? It’s not for the faint, by any means.

Tony:
Let’s go to our next segment here, which is the Rookie Exam. Zoey, these are the same questions we ask every single guest that comes onto the Rookie Show. Question number one, what is one actionable thing rookies should do after listening to your episode?

Zoey:
I would encourage any rookie that is in the short-term goals of unique stays is go out there and actually explore and research what your ideal, unique short-term could look like, so kind of build a vision for yourself. A lot of people, they’ll ask me, “What do I do?” I tell them, “Go on Airbnb, the platform you’ll eventually host on, and search those categories that Airbnb is pushing. Where can you actually fall into those? What is your ideal vision?” Like you said, Ashley, you guys have an A-frame. That didn’t just pop up out of nowhere. You had a vision that you wanted that to be an A-frame.
If you really feel this unique space, you’re aligning with it, it’s growing, I can confirm, the category is just going to keep getting better and better, you need to understand where is your place in that because I believe there’s a place for everyone. If you’re not that builder or you don’t have a desire to bring something to life, then maybe you’re the rehabber of a property or you’re really focusing on a certain location or something. So really do your research, spend time on it because it can be a lot of fun. Some of my favorite time passing things to do is go on Airbnb and find those unique stays. I always like to encourage people, create a wish list so you have those on your Airbnb account, and just start favoriting properties you really like. Whether they’re doing a great job with photos or their listing description or their actual stay is phenomenal, go and actually start favoriting those so you can build your dream portfolio that you want to go off of.

Ashley:
Zoey, what is one tool software app that you are using in your business right now?

Zoey:
I would say the biggest thing for short-term rentals is a property management tool, a PMS system, that’s really going to help dial in your business. I talked to some people who say, “I’m so burnt out after the summer season. What do you do to recoup a little bit?” My response honestly is, “You shouldn’t be that burnt out.” If you have the processes in place for your businesses, I’m sorry you feel burnt out, but you shouldn’t because they really take a lot of the heavy lifting off of us as hosts. There are so many different ones out there that you can use, but really making sure you have one that integrates with your business well is going to take a lot of that weight off of you so your time is better spent working on the business, not in the business. I use Guesty For Hosts right now. I’ve seen a few more pop up in the industry. Some are integrating with AI, which I think we’re going to see AI really play into the short-term rental space in managing your businesses. But I’ve heard great things from quite a few of them.

Ashley:
Yeah, I use Hostfully, and Tony, Hospitable?

Tony:
Mm-hmm, yeah. Zoey, are you using any virtual assistants in your business?

Zoey:
At the moment, we do not. I’m on the verge of… Winter is our toughest season, so I’m like, “Okay, is it time to bring someone in as we approach winter?” But with our software and processes, we’ve been able to really keep those expectations to what the guest is expecting, and we really don’t have a lot of those one-off nuances. Because we’re in a unique area, remote locations and stuff, we really rely on our boots-on-the-ground team more than our virtual team per se, because we own two plow trucks, a skid-steer, snowblowers. There’s a lot in the back end of the business to keep something like this open all year round.

Tony:
All right, final question for you, Zoey. Where do you plan on being five years from now?

Zoey:
Five years from now, we would like to continue to grow our unique stay portfolio. We’re young, we have the energy, we have the desire to keep going. We’ve been lucky and very fortunate that our business allows us to travel basically full time and do this when we want. Short-term rentals are very ebbs and flows. You work really hard for a few months, and then you get those months back in your pocket and you get to do what you want. So we really do enjoy, even when the days are hard, being in it and building something and seeing it come to life. There’s really nothing that humbles you more than looking at a half-built house and you’re like, “It looks so good. This is so good.” To most people, this looks like a tear down. So we want to keep scaling that portfolio.
I heard a funny thing, Kristie Wolfe, she’s huge in the OMG category space, and she literally said, “I build stays that I think are cool, and people come to them.” She is probably not like the most of us. She says, “I don’t run numbers. I don’t look at markets. I find things that are cool, and I would want to stay at and that’s how I build my portfolio.” I’m not encouraging that. Run your numbers. But I just thought it was such a great way to… It’s not that complicated. We’re all consumers out there. I thought it was so funny. She’s one of the biggest ones in the space of Airbnb for OMG stays, and that was her response on how she finds properties to do.

Tony:
She’s braver than I am because I got to run some numbers before I do anything. I don’t know if I have the courage just to let my heart sing in that way.

Zoey:
Yeah.

Ashley:
Well, Zoey, thank you so much for coming on and taking the time to share your knowledge and your experience with us. Can you let everyone know where they can reach out to you and find out some more information about you?

Zoey:
You guys can find me on all social channels, Zoey Berghoff. Feel free to shoot me a DM if you have questions, if you’re developing. I’m right there with you in the thick of it, so I would love to touch base with any of you guys. I do have some free resources if you’re interested. Just DM me BiggerPockets, and I’ll send them your way. Those are just the kind of things that have started in my business.

Ashley:
Cool. Thank you so much. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. We will be back on Saturday with a Rookie Reply. (singing)

 

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected].

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

[ad_2]

Leave a Reply

Your email address will not be published. Required fields are marked *