The Step-by-Step Guide to Building a Medium-Term Rental

David:
This is the BiggerPockets Podcast Show, 780.

Jesse:
I talked last time that you want to have five or more properties. In this space you can have one property and start off. And the beautiful thing about the midterm rental space is that we’re charging 10k a month for that property when my mortgage is 2k. This is the prime time to get in this space.

David:
What’s up everyone? This is David Green, your host of the BiggerPockets Real Estate Podcast. If you didn’t know, it’s the biggest, the best and the baddest real estate podcast in the world and we are closing in on 800 episodes. And on today’s episode 780, we have a fantastic show with one of our most popular guests ever, Rob’s friend and my soon to be property manager, Jesse Vazquez, the medium-term rental expert. Jesse gave a show that was so good that this could probably be converted into a course and sold for $10,000, but you won’t have to pay that. You get it for free. Rob, what’d you like about today’s show?

Rob:
This is a very deep dive. It’s a much needed follow-up, right? We did a show with Jesse Vazquez not too long ago and that one went viral on YouTube, and that is one of our most popular shows we’ve ever done. I knew the moment we got done that we were going to need a follow-up and I’m so happy to have that follow-up because we were able to get really in there and actually dive into the systems and to the actual strategies of obtaining contracts for your midterm rental business and how to hybrid your business to be partially short-term rental, partially midterm rental, and how to basically just adapt your entire portfolio. So if you’re looking to get into this space, this will be a game changer for your portfolio.

David:
Absolutely. We’re going to get into the show in a second but before we do, one moment for today’s quick tip. Jesse has some content coming out for the BiggerPockets YouTube channel in July. You’ll get more tips about pricing and other medium-term rental strategies, so subscribe to us on YouTube now. You’ll be notified when that video comes out. Rob, anything before we bring in Jesse?

Rob:
No.

David:
All right, let’s get this thing rolling. Let’s bring in Jesse. Jesse Vasquez, welcome back to the BiggerPockets Podcast. For those who are unfamiliar with Jesse, he was originally on in episode 728 in February. Jesse is an expert in medium-term rentals, perhaps the expert. That’s a bit subjective but he’s our expert and he’s currently making over $80,000 a month from just nine properties. Yes, you heard that right.

Rob:
The MTR space is prime for growth but there’s still time to get in on it. You said last time we did this episode with you, Jesse, that it feels like we’re just chalking the field, which is a sports analogy that I definitely know what that means. But basically we’re just getting into this whole thing, right? Would you still say that’s true?

Jesse:
I would 100% say that’s true, and thank you guys for having me back. I really appreciate it. Yeah, man, there’s a lot of regulations happening all over the place. In California there’s a law that is hitting the assembly floor today, which is actually anybody that’s operating in California could have a 15% tax added on top of their short-term rentals. And so yeah, this is the prime time to really start thinking about building a medium-term rental. So there’s plenty of time to get started, and I think right now is the opportunistic time to do that.

David:
That’s actually my favorite thing about living in California. People think it’s the weather or all the activities like snowboarding and beaches or the amazing diversity in restaurants and food, but it’s not. It’s actually the taxes. Every time you think it can’t get better, they come up with another thing to tax. I love it. So on these short-term rental taxes, are they defining how long of a stay it has to be classified as a short-term mental versus a medium-term?

Jesse:
They are. They’re classifying it under 30 days, which is, obviously the medium-term space is over 30 days. And the thing about this too, David, that kind of aggregates me. Is that the wrong word? Aggregate. How do I say that word? Dang it.

David:
Aggravate.

Jesse:
Aggravates. There you go. That’s the word. What bothers me the most about this is that there’s a… Imagine having 15% tax, plus we have to pay 13% from Airbnb if you’re running through a property management system. So essentially 30% of the income of folks in California is going to go to the state. So it’s pretty rough. I’m curious to see what’s going to happen because again, it’s just hitting the assembly floor today actually.

David:
Well, one of the good things about California that they got right was they actually created legislation that stopped the government from prohibiting people from having ADUs, which is great because we don’t have enough housing out here and it makes it more expensive. So one of the ways that house hackers and other investors have been able to make California real estate investing work is by adding ADUs to the property. I have a framework of the 10 ways that people make money in real estate, and one of them is what I call forcing cashflow, kind of like forcing equity where you actually create units that you can then rent out and they, not coincidentally, happen to work very well for medium-term rentals and short-term rentals. This is how Rob had his origin story started, right? That’s when the radioactive spider bit him and he created another little rental which turned into him being super Abasolo for those that are unfamiliar.
But I’m just curious, Jesse, before we get into the interview, is this something you’ve seen people doing, creating units out of their real estate and then using it as a medium-term or a short-term rental to maximize cashflow?

Jesse:
Yeah, I have seen people do that. I think it’s one of the, besides house hacking, well, it is kind of house hacking in a way.

Rob:
It is, yeah.

Jesse:
Yeah. One of the best ways to get involved in the space and California just passed the SB 9 rule for those of you are not familiar with that, so you can essentially put a ADU, a junior ADU and even two other complexes on your lot line if you have that. So yeah, it’s a tremendous opportunity. I’m actually building right now in Modesto an ADU next to the tree house that I have that is a really funky kind of fun ADU as well.

Rob:
Yeah, that place is cool.

David:
I see why you and Rob are friends. Every time the word tree house gets brought up, you just see him perk up. The more weird something is, yeah, he goes Scooby Doo mode. He’s like, “I want to build the biggest potato in the world and run it as a short-term rental in Idaho,” or “I want to get the biggest cowboy boot ever.” Like, what was that old nursery rhyme? Old Mother Hubbard, didn’t she live in a shoe? He’s like, “I want to turn that into a short-term rental and put it on Neek Sleeps.”

Rob:
Are you giving promotion to my direct booking website? Thank you, David.

David:
Brother, every once in a while I drop you a little nugget there. Buy nice, not thrice. I see what you got going on over there. You’re brilliant. I mean, you’ve got the revenue up on our Scottsdale property. 25% simply by putting in a pickleball court or three of them.

Rob:
Three. Triple pickles as we call it in the industry. Well, I have a few things that I wanted to ask you, Jesse, because when we get into the actual midterm rental space, there are really two numbers that I guess I’m unclear on, right? So you said that a midterm rental really is going to be 30 days at a time. That’s the regulation, but I also feel like, I see 28 a lot. So which one is it? Is it 28, is it 30, or does it actually depend on the jurisdiction of the actual county what’s considered a short-term rental slash long-term rental?

Jesse:
Yeah, I’ve always looked at it as 30 days. If you look up Google, it’ll tell you that. Google’s always right, right? I mean, the internet is right about everything. Am I right? Yeah, exactly.

David:
I read that on the internet. Yeah.

Jesse:
I read that on the internet. So basically my assumption is 30 days or more. Airbnb always drops the word 28 days too. I don’t know where they get that number. Maybe it’s a roundabout number that they get. So just so everybody knows, I don’t know if I talked about this in the last episode, Airbnb’s grown significantly by literally 24% from stays that are 28 days or more. A quarter of the revenues come from those midterm, medium-term rental stays so that’s the number that they dropped. So for me it’s 30 days or more. That’s typically what I’m looking for and it does depend on jurisdiction as well. And again, if this does pass in California, you know, you want to have 30 days or more because then obviously you’re not going to fall under that umbrella.

Rob:
Awesome, man. Well, let’s get into it. I want to get into the actual strategy of midterm rentals. If someone is looking to either pivot to a midterm rental from a short-term rental or just go all in with this strategy starting out, what is an investor who’s trying to get into a midterm rental need in terms of time commitment? This would be to set up the property and then to manage and maintain.

Jesse:
Yeah. Yeah, I think setting up right now, and Rob and David, you guys might have seen this before, but there’s a lot of issues with getting supplies and things like even couches. So right now we’re looking at at least four weeks to get started. So if you get a property, get the keys today, it would take a minimum of about four weeks to get that together from beginning to end. Some people have done it faster, some people go locally and buy stuff. I typically like to outsource stuff and buy from certain areas, certain companies, so it takes us about three to four weeks. So I would say that’d be the standard so you definitely want to have money aside and if you got to roll into the second month and not pay that mortgage or that arbitrage rent, so you’re looking at three to four weeks.
And as far as managing and maintaining, I typically like to look at about four hours a week as far as putting energy and time into this. Again, keep in mind the way that I operate is kind of unconventional. I go after the agencies rather than waiting for bookings on Airbnb or on Furnished Finders. So I do things a little bit different where it’s a little bit more work that is involved. It’s not passive starting off. It does take legwork and energy and time and obviously making phone calls.

David:
Yeah, well, I’ve got some medium-term rentals that I’m in the process of developing right now and trying to get furnished. It feels like furniture is on back order everywhere, but we’re trying to get that going and Jesse will be the one who’s going to be managing them. So this is pretty cool. We get to interview you and we’ll be looking for how some of these tips and techniques would apply to my own portfolio. So in terms of managing medium-term rentals, what does an investor need to know?

Jesse:
Yeah. From beginning to end, again, going back to the setup is three to four weeks, but to really get things going, and this is where I think this space, David, is really good is because as you’re getting ready to start listing your property, even three weeks or a month or two months before you get going, you can actually start reaching out to these companies like relocation companies, healthcare companies, and start building a network even though you don’t necessarily have the property itself. So it is really important to make sure you think about that. As far as the ballpark and budget and things like that go, you’re looking at, it really just depends on the size of the property. Operational costs aren’t super expensive in this space but it does take time to maintain and to set up and I usually look at between $13 and $15 a square foot per property. So if you have a smaller property, it’s not going to be super expensive. But our three bedroom, two baths that I like to operate are typically like 20, 23,000 to get up and going. So that’s usually what it costs.

Rob:
Yeah, that’s where we’re at too. About 20 grand for a three bedroom. I mean, it used to be $10 a square foot before inflation. Just kidding. It’s really actually the supply chain issues that you talked about, David. Back in the day, we could keep it pretty scrappy and get stuff designed and looking pretty good, but given that so much stuff is unavailable, there’s not quite as much deal shopping that we’re able to get like we used to where we used to be able to go to all the different websites. Now it’s actually a little bit of desperation it feels like where I’m just like, “Dude, I just need a brown leather couch and I’ll just buy the first one that’s available.” So it’s going to be a little bit more expensive for that reason.
And then also, Jesse, I’m curious to hear on your end, but it does seem like there is more to be spent on more quality sort of contractor grade furniture as well because typically midterm rentals I feel like actually get a lot more, well, I think, I think we may disagree on this, more wear and tear in terms of the actual furniture just being used every single day all day for the most part.

Jesse:
Yeah, I think we do disagree on that. And I’ll bring this up because I have short-term rentals too, and people, and I’ve been subject to this. I’ll walk into a house and I’ll just throw my luggage somewhere and it’s like smacking walls. I’m kidding. I don’t do that. Sort of. But with medium-term space, people are actually living there so you’re absolutely right on the furniture needs to be better quality, it needs to feel comfortable, it needs to have… A lot of Airbnbs will have these really cool looking things but you go sit on them and it feels like you’re sitting on a piece of plastic or something. People are actually truly living there for longer periods of time, so you want to have stuff that’s comfortable, that has cushion to it, that doesn’t necessarily have, obviously you want to have that amazing look but you also want it to feel really good that somebody’s there because they’re essentially going to be using that on a regular basis.
And one thing that I want to mention too, as you’re setting up, you want to make sure you have reserves because the average length for somebody to get booked on a medium-term rental, and just so you guys know, I had a medium-term rental summit a couple weeks or months ago, and Furnished Finder brought some really cool data. They said the average person that is on Furnished Finder, it takes about 14 days for them to get booked. So that gives us a little bit of leeway that okay, if you’re in a market that has a lot of people coming, you need to have reserves for at least 14 days. But me personally, I like to have three months of reserves because there has been times that I’ve been unoccupied for a month or a month and a half. And if you’re in that space and your place is not getting booked, you start to get nervous and you’ll actually take a lower amount. And that’s what scares a lot of people is they’re getting in the space.
And keep in mind, you guys. We’re making this exaggerated amount of money even on the short-term rental side because we’re doing things that are opposite than long-term rental landlords. We’re taking that risk of having vacancy and that’s why we make the bigger rewards at the end of the day. So yeah, have your reserves. It’s really, really important, especially if you’re going to go all in on the medium-term space.

David:
Well, you do make a good point about real estate investing in general and it becomes even more impactful when you’re talking about medium-term or short-term rentals. Having capital is a very crucial piece to being a real estate investor. It’s just not a good space for people to get into that don’t have money. You don’t buy stocks and then have Apple come to you and say, “Hey, turns out we ran a little low on cash. We didn’t sell as many iPads as we thought we were going to. We’re going to need you to bring a little bit more money in as a partial owner of this company.” It doesn’t happen. You only put in what you’ve got. Real estate can have that happen. It will have that happen. It could be something breaking in the property. It could be furniture that needed to be replaced, it could be a tenant who doesn’t pay. There’s a lot of things, and when you add more variables, more things will require money, like what you see in medium-term and short-term rentals.
So disclaimer, if you’re somebody who’s listening who doesn’t have any money and they’re like, “Well, I want to get into medium-term rentals because it’s safer than short-term rentals,” it’s probably true in many cases. That doesn’t mean that it’s so safe that you don’t need to have any capital set aside. Have you seen situations where, or maybe you could share some stories, Jesse, of things that you just would’ve never thought that you’d have to put capital into a property and then it does and people got stuck.

Jesse:
I can tell you right now that I just had two AC units go out. I’m in the Central Valley, you guys. Dave, you know how hot it gets here and it’s been warm the last, actually, it hasn’t been too bad but it warmed up maybe a couple weeks ago. Both of those units were 20 grand together. It’s 10,000 for each one. Luckily I have reserves. We put money aside from our earnings, I don’t take any of the earnings. I skim from it, skim from the top, but we put stuff aside. If I did not have money, that would put me in a really bad situation. That’s 20k in AC units that I essentially had to put together. So yeah, I’ve seen people do this many times and actually I’ve seen people get the property, whether they arbitrage it or buy it, then realize that they need to furnish it.

David:
People often refer to medium-term rentals as just for travel nurses, and my guess is that’s because they kind of came into prominence during COVID when there was a huge need for travel nurses and people realized this was a business opportunity, and that is probably the main profession that moves around a lot. But I’ve often thought, “Are there enough travel nurses in the country to support an entire industry that only caters to them?” There’s no way that can be your only tenant base is just travel nursing. There’s got to be other jobs that have traveling professionals or, like you mentioned, people that have been displaced from their home and they need somewhere to stay. In the same way that short-term rentals sort of replaced hotels, medium-term rentals have got to replace an entire need if they’re going to be a sustainable asset class. What are some of the professions that you see that use these that are not just nurses?

Jesse:
Yeah. So nurses are a big piece of the puzzle, but again, it goes on demand. So I could tell you right now in the Bay Area, there’s a ton of clinicians going, there’s always been a demand, there’s been a huge nursing-to-patient ratio, there just hasn’t been enough. There’s a lot of places like that all over the US but we also have insurance agencies who have, if somebody loses their home due to a fire or flood or some kind of catastrophic event, will move into a space. Here in California, we have a lot of crazy weather that happens here so there’s people that lose their homes due to fire. We saw what happened in the Bay Area and even Santa Cruz and the mountain areas during all the rain that we had, so there’s a lot of stuff that happens here.
But you also have, and I’ll just give you guys a quick story. Gallo Winery, David, are you familiar with them? They’re in the Central Valley, the biggest winery. So I actually connected with them probably about a year ago and I was wanting to work with them directly because they have these engineers that come from all over the world, like Europe, France, all over the world to come work in these specific areas. I think this is where it’s important for everybody to take note of this is that you can have a big company and they’re doing things internally that you wouldn’t necessarily think about. They have people that come here that will live here for a month or two months at a time, three months at a time. I went to that agency and said, “Hey, we have X amount of houses here. I would like to partner with you. Is this something you guys are open to?” And they were like, “100%, we would love that.” And a lot of my properties happen to be near Gallo Winery, so I had bikes there and things that were available so people can actually just ride into work.
So that’s the stuff that I really want everybody to think about is that there’s so many companies out there and if you’re able to save them money, this is a tremendous opportunity for you to grow. And again, it’s just thinking outside of the box what you typically would think about what the guests are. But yeah, I mean there’s people that travel, there’s all kinds of different people that travel for more than 30 days at a time. It’s very common, especially post-COVID.

David:
So are those companies typically putting their employees in hotels?

Jesse:
Yeah, they’re typically putting them in. So this is the other thing too, like extended stay hotel or Extended Stay America, which is the largest corporate contracting hotel in the US, they have all these big contracts with people. This is where us little people can actually go and reach out to these individuals that are at these places like I talked about before in the last episode where you drive by at night, 7:00 PM like a creeper and you take pictures of the work trucks that are out there and you just say, “Hey, we have 10 properties here. How many folks do you have staying in your properties or in the hotel?” You figure out how to save them money. And if you’re able to save them substantial amount of money over time, 100% they’re going to use you because that’s what these companies care about. And a lot of times they’re spending $200 a room and say they have 10 guys there, do the math on that per month. That’s a crazy amount of money. And if you have a house that can supply or two houses that can have five bedrooms or whatnot that you’re able to put these guys in one space, then there’s a really good amount of income you’re able to make, plus you’re solving a problem, plus you’re able to get these folks every single month and every opportunity you get because that contract comes together there. So those relationships are incredibly important to think about and to build over time because that’s what’s going to put you ahead of the game in a lot of ways.

Rob:
I’d love to talk about winning some of these contracts and how you’re able to get your foot in the door with these companies, but before we do, I do want to ask, because you could buy a place anywhere, right? And so I feel like one of the things that you probably want to consider, it’s not like you’ll know what contracts you’re going to get and then you pick your Airbnb. Most of the time you pick the Airbnb and then you go out and get the contract, so it seems like location is that first step in the process. And so we’ve talked about hospitals, that’s one segment of it, but let’s say that you’re not close to hospitals. How do you figure out if your rental might work for corporate medium-term housing in general?

Jesse:
Yeah, you kind of look at it the same way you would when you’re investing in a new market. You’re looking at job growth, you’re looking at the potential of what those cities are going to look like in the next five to 10 years. You’re looking about how much money people are making there. There’s a lot of places in the Midwest right now that, we just talked about California earlier, people are moving out of California, going to other places. So are companies. And when you drop a big company somewhere in the middle of nowhere, people have to go there. So that’s a good opportunity right there for people to start working, start building those networks, start looking at those companies. If they’re building new hospitals or you read in the paper that they’re going to be adding a Tesla station or something somewhere in one of those areas or they’re moving Oracle to a certain part, that’s your opportunity right there to really start thinking about the migration of where people are going to be heading. Because normally when you have one big company like that, people follow suit and they’ll start building little hubs like that, and we’re seeing it now with Austin and a lot of other places. So it’s really important to think about the trajectory and the growth of these overall cities in general when you’re looking at them. And again, that goes back to those specific types of clientele.

Rob:
Sure. Well, let’s talk about the order of operations. So I did sort of say I think most people are going to be looking at location before developing the contract, but do you actually, what’s your opinion? Should you be developing the contract relationship first? Is that a strategy? Or should you just buy the property first and then figure it out? Is there a specific way that you approach this?

Jesse:
Yeah, there’s not really a specific way. I like to think about if I’m going to be investing, let’s just say in Austin, Texas, I’m going to want to look at what’s going to be there. I’m going to set my sights on that market and I’m going to start doing outbound calls, outbound sales calls essentially. You’re connecting with them, you’re trying to figure out what they have going on, you know what type of property you’re going to get, you’re going to purchase already. And that’s where it’s important to know your buy box. Are you going to buy a single family? Are you going to buy multifamily? What are you going to go after? So that’s where it gives you, you get more of an idea of this is exactly who I need to go after, these are the companies I connect with, so you can actually start building your Rolodex ahead of time before you even purchase a property.
But essentially as you start building this, you want to make sure that you talk to them and say, “Hey, my plan is to…” Rob, you and I have talked about this before, picking up a 20 unit in the middle of Texas somewhere and putting those contracts together, and then all of a sudden, by the time I’m done putting that together, I now have contracts in place so I’m ready to go. The banks are actually lending me on the contracts that we already put together so that’s important because we’re going to get higher yields. The bank will lend us money based off the contracts that we’re getting.
And I think that’s where a lot of people are having problems right now with the multifamily is that their rents aren’t necessarily making enough to get these loans together. So for us, we’re able to look at these properties, get contracts ahead of time, then all of a sudden go into a space, buy it with those contracts already in hand and then boom, we’re able to create this pretty cool book of business already from day one without even having all that stuff lined up yet. Essentially the doors.

Rob:
Yeah. And David, I mean, you’ve got a couple properties hitting the market pretty soon in terms of the midterm market and everything like that. What kind of location are these properties in? Have you thought about the renter pool or the avatar of the people that might be a good fit in the midterm rental space?

David:
I did some before I bought that. I think Jesse will probably have a lot to contribute to that conversation. But one of them is in a city called Moraga in Northern California. It’s close to St. Mary’s College so there will be traveling professionals that are going to that area just because it’s a nice place to stay. It’s kind of up in the hills. And then I was thinking for some rich parent who wants to send their daughter to St Mary’s College but doesn’t want them staying in the dorms, that it’s super close, they can just put them in their own private unit, they can feel safer about that.
And then the other one is in Pleasant Hill, California, and there’s a lot of traveling professionals. It’s right next to Walnut Creek, there’s a lot of jobs in that space, and this is a neighborhood with a really high walk score. So the same idea would be just traveling professionals, nursing, but I didn’t know for sure how it would work out. I had it set up to where some of the units can be rented out traditionally while others can be medium-term rentals so I had the fallback plan. But I’m curious, what are some of the things, Jesse, do you just go to a map and pull it up and look at what businesses are around there or hospitals? Do you have a system for this or is it sort of instinct and gut feel?

Jesse:
Yeah, well, when you’re in an urban market like where you’re at, there’s places all over. You can literally throw a rock and hit somewhere. So yeah, we’ll look at level one and level two hospitals, which I talked about, I believe, in the last episode, 728, where you’re looking at those bigger hospitals tend to have a lot of people that are going there. So anything in the Bay Area I think works well, especially in the medium-term rental space if you’re able to get it at a decent price or you’re able to make multi-units out of say a single family or something like that. But yeah, we go in and look at what jobs are there, what companies are there, are there companies that are international? We look at the hospitals, we look at insurance claims, and before I talked about going deep in these markets, and I want to take that a little bit further. I mentioned that you want to have five or more properties, that’s not necessarily the case. You can have multiple different properties, say a single family, a multifamily, and really build in this space and really build something.
So I think it’s important to really think about building those relationships ahead of time and really connecting with these companies. Again, I think that that’s where the opportunity lies and I think that’s where it scares most people is like, they’re not used to making these outbound calls, they’re not used to making these phone calls. And again, you have to think about real estate in a completely different lens when you get into this market.

David:
Yeah, it’s really more of a business than it is just investing. And I’ve said this many times, real estate investing’s becoming more complicated as more competition moves into the space. Is this a thing that you’ve seen people maybe lose money because they get into this with the same framework as if it’s real estate investment as opposed to a business?

Jesse:
100%. You hit it spot on right there. Yeah, a lot of people don’t look at this a business. They’ll hear Rob talk about it or me talk about it. It sounds easy but they’re not realizing the compounded years that we’ve done in this space that makes it seem easy. It is not easy. I’ll be the first person to say it is not easy. It’s very difficult. But again, yeah, people don’t think that there’s, they’ll just buy in a random place and expect to get medium-term term folks there. And say they’re investing in a market that has 5,000 people in it, you might have a refinery there or something where people are going, but at the end of the day, it’s like you have to have a pool of people to choose from. And I think this is what separates the short-term rentals investors and the medium-term rentals investors is in the medium-term space, you can have seven different avatars that you’re going after where in the short-term space, you’re kind of trying to get families or you’re building pickleball courts to get more people in a specific space.
So it’s different in the medium-term space. You can have seven different avatars at the exact same time and really connect with those individuals in those companies. So yes, people need to think about this 100% like a business from day one. And it can be humbling really quick if you get in too quick without actually doing a little bit of research and understanding your markets a little bit more.

David:
So from a business perspective here, let’s talk about some of the ways that you can win contracts, because that’s really going to be sort of the bread and butter of where your revenue comes in. And with any business, the first question you have to ask is, where are we going to make money? And then you figure out now how are we going to service that money we’ve made? So what tips do you have for establishing relationships to win contracts so you can get these units filled?

Jesse:
Yeah, it’s really just, again, going back to find the need. I’ll give you an example here in Modesto. I saw that the clinicians came, right? We talked about Barbara and I saw that there was a need there in the market. I wasn’t thinking about it at the time but I saw that there was clinicians that were coming into my market that were staying in crappy Motel 6s. Gallo Winery, another big, big contract that we had. That contract was, obviously there’s people coming from all over the place. This is me thinking outside the box. Where are people coming from right now? You guys heard me talk about the Dave and Buster story. I don’t know if I mentioned that before. I literally had, they were building a Dave and Buster’s in the Central Valley. I saw the truck there, had different plates. We called, ended up getting a contract. Four engineers ended up staying at a four bedroom house that we had. We were charging 10k a month for that property when my mortgage was 2k. So again, it’s like thinking outside the box, looking at where the opportunities are at.
I talked about going by Extended Stay Americas. So there’s different ways of doing that. So there’s a lot of ways to build relationships. And again, a lot of it is just actually doing outbound calls, connecting and saying, “Hey, this is the operation that I have going right now. I’m willing to be able to help you guys. Are you sending clients to this market? Are you sending clinicians? Are they coming in groups? Are you talking to a construction company? They’re doing demolition in a certain market. Is there six or seven or eight guys together? How much housing do you need? Are you currently staying in a different place?” So you’re really able to understand their needs and that’s where we flip the script and we put something together that will essentially help them in the long run, save them money because every company wants to save money.
So that would be my goal is to really think, again, outside the box, think about having things like amenities, like a car in your property, grocery delivery services. If people are working 12 to 15 to 20 hours a day, you got to think outside the box. Or again, bikes. Like somebody that can bike from my property to the hospital in seven minutes or bike from my house to Gallo Winery in 10 minutes. So it gives them different options and you’re also check marking the boxes that, again, these travelers, they’re wanting to save money too themselves so if you’re able to get a car for them, say, using Turo or something, you’re able to make money, you’re obviously being able to solve their problem and you’re also able to get the price a lot lower than if they were to go to Enterprise Rent-A-Car to get something.
So it’s really, again, thinking outside the box. What kind of amenities can I have? How can I help these people out? And again, at the end of the day, it’s like who you’re going to serve and how am I going to be able to serve them and make their stay here better and save the companies money.

Rob:
Yeah, so let me ask you this. When you’re starting the conversations with potential corporate and hospital partners, can you just rapid fire off a few of the questions that you might ask them whenever you’re sort of just making sure that you’re a good fit for them and vice versa?

Jesse:
Yeah, so we’ll ask, just like I mentioned a second ago, how often are you having travelers come? Is this a once a month kind of thing or is this a once a quarter kind of thing? How frequently do they travel? Are they coming in groups or is it one individual? So that gives you context, like, okay, if they’re coming by themselves, I might want to have a studio or a one bedroom. If they’re coming in groups, I might want to have a two bedroom or three bedroom or even a four or five bedroom. And I think a lot of times we get stuck on what size property should I buy? There’s not one size fits all kind of thing. Again, it’s like what avatar are you going after? How can I solve their needs? And those questions right there are going to give you pretty good answers on how you’re wanting to build your portfolio over time, so it’s really good to think about those things. So again, we can choose from a bunch of different properties, right?

Rob:
Totally. So let me ask you this. I mean, I sort of want to boil this down because you gave a bunch of really good tips, right, things like go to the parking lots of extended stay hotels and be like, “Let me give you a better deal than this,” and buying coffee. I think that was one that you gave an example of for an exchange for five minutes of their time on a Zoom call. So if I’m a newbie investor, let’s say I buy my first property, my first, and I want to midterm rent it, what is my very first step? Who am I calling first? How am I trying to lock down that very first contract? Because obviously there’s a ton of different ways but what’s the first thing you do whenever you’re getting your property listed?

Jesse:
Yeah. First thing I’m doing is looking at what the needs are in that market. Again, if it’s like travel medical professionals, I’m going to look at, I’m going to call the hospitals and find out which companies they’re working with. I’m going to find out what the recruiters are that are in that market, what specific clients are coming to those specific areas. So I’m really trying to determine what the need is in those specific markets, and I think a lot of times people are just like, they’re only going to go after nurses. But again, what if that clinician, that market goes away, they decide to hire. So you need to have different pools of folks that you’re connecting with.
So you want to think, again, outside the box, you want to find out are they traveling with kids? Is there a car, is there budgets they’re looking at? How many hours are they typically working? So you really want to break down actually what the needs are of the guests that are coming and that’s when you formulate, okay, now I can create a kind of a package for this company. Again, this is exactly what David said, this is a business. You have to really have that mindset of who am I going to serve and how am I going to solve the problems?

Rob:
Okay, and so you’re not necessarily calling a hospital first. You might call another type of company first. That’s not necessarily your go-to.

Jesse:
Yeah, I might call, yeah, there might be new buildings that are being built in my market and I’ll call a construction company that’s out there and just see what they have going on, see if they’re staying at a hotel, seeing how much money they’re spending. Again, at the end of the day, it’s my question to them is, “Would you be willing to work with me if I’m able to save you money? Do you mind if I just ask you a few of these questions to uncover what you guys are doing, how you’re handling right now your lodging, and if there’s a way that I can help save your money, would you guys be willing to work with me?” Nine out of 10 times, those simple words right there will give the attention to the other individual you’re talking to.
Again, at the end of the day, these companies need to save money. They want to save money. We talk about inflation and if you’re able to save a company thousands of dollars, I mean, they’re going to use you all day long. Again, it just takes legwork, it takes perseverance. There’s something that [inaudible 00:32:06] says that I like a lot. He says that we don’t make money in the hello, we make money in the hello again. And this is 100% accurate when it comes to the medium-term space, especially if you’re going after these agencies because it’s all about the follow-up, the connection, building those relationships. And they don’t happen overnight. Some people get lucky where it does happen, but most of the time you’re making calls on a weekly basis before you actually get that opportunity.

Rob:
Okay, so let’s talk about the construction side of it. Just tell me if it’s really this easy. Let’s say I’ve got my house in LA and let’s say that there is a, I don’t know, a little building, a commercial building or something being built, and then there’s that wooden sign at the front that says, “Robuilt Construction Co,” and they have their information on it. Do you just call that number on that little billboard or are you doing something crazy like going and, I don’t know, calling the office and trying to go up the ladder that way? What step would you actually take to actually get in contact with that construction company?

Jesse:
Yep, I would just call. I would call that number that’s on the front of that company. I find out if they’re local, if they’re out of state. There’s an infrastructure bill that passed in 2023 at the beginning of the year so there’s literally hundreds of thousands of dollars being deployed all over the US and these contractors that are taking these jobs are coming from different states. And you can go look that up on the gov site. I wish I had it, maybe you guys could put in the show notes, I can give it to you afterwards. But there’s literally hundreds of thousands, millions of dollars being sent to these different cities to help with infrastructure and there’s a lot of people that are traveling to do these jobs.
So those are things to think about too is just making those phone calls, connecting and finding out who’s where, what markets are they in? Are they in your market? Are they outside of the market? Again, if they’re in your market, you’re probably not going to get an opportunity to house people, but if you’re coming from a different state and there’s a group of people coming together, that’s where the opportunity is. But again, you have to make those calls to figure that out.

Rob:
That’s pretty interesting. I had a buddy who, he had a bunch of long-term rentals in New Bern, North Carolina. Fun fact, that is the setting for The Notebook. And there was a hurricane that hit there several years ago and on top of that, they were building a giant highway through that city or around that city and all the contractors were all booked up for a year in advance. So they were starting to bus people in from all the different cities and everything like that. There was no place to house them, and so that to me, it sounds like, this was really before the big sexy term where a medium-term rentals were super popular, but that’s exactly what a lot of people were doing. A lot of these guys were booking some of these Airbnbs for 30 days at a time because there just weren’t any hotels available. So that seems like construction is such a huge niche that is probably not really, because I would imagine it is relatively underserved.

Jesse:
Oh yeah, totally. And if you look at Hilton Marriott, all these companies are now shifting, and everybody Google this when you get a chance. A lot of these companies are looking at extended stay models. Blackstone just raised $30.4 billion, right? Guess what they’re going to be doing with that money? They’re actually going to be getting involved in the medium-term space. They own a bunch of hotels. They’re starting to look at extended stay models. So that’s what I want everybody to realize. Smart money, institutional money is getting into this space right now, and when you start seeing smart money and institutional money getting into this, they’re like 5, 6, 10 years ahead of the curve so they know where this market’s heading, which is why they’re investing in this space because traditional assets haven’t been working the right way.
And Google this and look this up, everybody can do that. So when I start seeing institutional and smart money get involved in these spaces, that’s where I know we’re onto something five to seven years ahead of time. So right now, I think again, going back to what we talked about initially, it’s like, this is the prime time to get in this space.

David:
You know what else that usually means? When they moved into buying foreclosures at auction, everyone criticized them. They were like, “What? They’re overpaying for that thing. I wouldn’t buy that thing with anything less than a 40% cash on cash return to flip.” And they came in and said, “We’ll take a 25% return or a 20% return and we’ll just hold it for a lot longer and it’ll become bigger.” And sure enough, they look smart and all the people that said they were overpaying looked foolish. And I would not be surprised if seven to eight years later, you see a lot of people looking back to podcasts like this and saying, “I wish I would’ve got in. I wish that I would’ve bought in the best locations, planned ahead, understood it might take a year to ramp up my business, to get consistent bookings, to put systems in place to really make good money,” instead of looking at it and saying, “That looks like a lot of work,” or “I’m not going to cashflow right off the bat, so I’m going to keep looking,” as those opportunities dry up. Is that a pattern you’ve seen as well, Jesse?

Jesse:
Yeah. Not only that, but, and Rob, you can attest this. Airbnb was… You can literally have four walls, a TV and a window and be able to kick ass five years ago. What other business can you even think of right now that you can literally get a house, put it on the Airbnb and all of a sudden make money from it? That’s gone. You have to be creative now. The same sense in this space is that we have to start thinking differently moving into the next environment of real estate investing, and I have a good feeling that this kind of model is going to be utilized by larger investors. They’re going to start figuring out how to do this stuff, they’re going to start creating opportunities, and again, when you go see institutionals get into this, institutional money, smart money, these people that have Harvard graduates that work, literally all they do is look at data all day long. This is where the market is heading.

David:
Yeah, I hear the Star Wars empire theme playing in my head and I see mounds of stormtroopers. There’s all moving into our space right now and BiggerPockets is all of us little rebel fighters that are trying to use the force to kind of combat that because, man, it’s a force to be reckoned with. It’s no joke.

Rob:
Well, dude, I think you just hit a really important thing, and I’ve been shouting this from the rooftop for the past six months because I’m realizing it and I’m seeing it but I’m trying to adjust for this. But we have a lot of people in the short-term rental space that are, in 2023, they’re in this space right now, that are playing by 2017 rules where they are basically just having a nice design place and boom, and that worked for so long. But for a long time you could have a very well beautiful designed place and you would book and you would make a ton of money because there were so many people that were just slapping goodwill furniture, taking cell phone photos. Then you had all these YouTubers like Robuilt and Jesse Vasquez talking about design, design, design. And now I really do think that the standard is to have a well-designed Airbnb. It’s the standard. Everybody has it now.
And so if you just walk into an Airbnb thinking, “Hey, I’m just going to do nice photos and have a nice couch and this and that,” you will be really at the average with everyone else and so you really have to think about ways to pivot your portfolio. One of those ways is I am moving a lot more into midterm rentals, but another one is I’m actually going all in on amenities big time. This is something that we’ve been talking about quite a bit. We just got that pickleball court in Scottsdale. It was a $22,000 investment. It’s a big investment. It’s not really something that we can be like, “Yeah, let’s get a pickleball court.” It’s like, we had to work up to that for an entire year. And then I’ve got a beach house in Crystal Beach that is really beautiful and it’s pretty much the same as all the other houses, performing decently but not what I wanted and so I’ve realized the places out there that are booking have amenities and so I’m spending a decent amount of money on a mini golf course in the back.
So that’s how I’m pivoting my short-term rental strategy but I’m also moving more into midterm rental because I think that that is another untapped market. So I just think that we’re in a different place in 2023 than we were in the past couple years, and you really kind of got to sprint to keep up. It’s kind of moving at a pretty alarming rate, wouldn’t you say?

Jesse:
Yeah, I mean I talked about this I think last time. If we look at baseball terms, Airbnb’s like in the seventh inning, right? It’s done. It’s already been around for the last 15 years. It’s really cool. They’ve shifted certain things. We’re in different parts of the Airbnb world. You got to have experiential homes. But yes, now as an operator you have to be thinking outside the box. You got to be thinking about amenities. You got to curate stuff specifically for the guests coming in. And I can’t wait for the day for AI to literally, where we just type in something where Rob Abasolo is going to be coming to my property and all of a sudden it’s going to pull up all your data. It’s automatically going to order your favorite beer that you posted on Facebook. It’s going to have your favorite… You’re literally going to have that stuff and that essentially is going to come at a certain point. Whoever out there that has a software together, that’s the million-dollar idea right there. But yeah, it’s curating specifically to the guests individually. I think that’s where we’re heading in the space. We’re seeing it right now.

Rob:
Yeah, yeah. So let me tell you this, or let me ask you this, because you talked about amenities and that’s obviously something that’s in the midterm rental space. I imagine that’s something that you use to pitch yourself to these different partners, right? Corporate housing, hospitals. You also mentioned a package that you send them, right? You put together a package for their property. So does this mean that you’re putting together a brochure? Are professional photos still something that you even need? Could you take quick cell phone photos, put it on a flyer, send it to these companies? What’s that whole process?

Jesse:
Yeah, you definitely got to have professional photos. You can’t use an iPhone. It doesn’t matter if you have the iPhone 14. Most people take iPhone photos. If they’re taking them on iPhone 7, so you definitely don’t want to do that. Spend the 250 bucks to have a professional come out and take photos. But yeah, we’re putting packages together. As I mentioned before, if we have nurses coming in and they don’t have vehicles, or even Gallo for instance, they’re coming here for overseas, don’t have vehicles, we’ll actually provide vehicles for them. You can use Turo which is an app that is pretty easy to use where you can have a vehicle put on there and people can rent it a month at a time and you’re insured. The bikes, another amenity. Blackout curtains, noise machines, things that people aren’t necessarily used to where you’re creating something specifically for them.
Hobbies too. This is another important one. Have you guys heard of ecotourism? I actually like to do that with my medium-term guests. I’ll connect with Dust Bowl Brewing Company. That’s one of the companies we’re connected to. We’ll have beer in the fridge, we’ll have a QR code that they can scan where they can go have 15% off a meal. So you’re connecting with these different companies in your market, or even a gym. That’s another thing we do. We’ll connect with a local gym and we’ll say, “Hey, this is what I do. Here’s how I operate. We’re actually going to have travelers coming from overseas or from different areas that come work here. Do you have an exercise package for them that they can essentially get a deal where they can use your equipment for X amount of time?” So not only am I helping myself out, I’m helping the small businesses that are in my community and also bringing those folks in to have this, what the community gives to these other individuals.
So again, they don’t know anything. They’re coming here blindly. So to be able to have a package that shows here’s what you have, here’s what you get, here’s the flyer that’s involved, and as you’re talking to these relocation specialists or HR department, they’ve never heard anybody ever talk like this, so when you bring these things up to them, they’re just like, “Oh my gosh, you’re thinking five steps ahead of where our clients are.” Those are the people that are going to be successful in this space where they’re actually curating these packages. You don’t have to do it from day one. I think a lot of people are like, “I need to get this together first.” Just get the property first. Everything else will follow later. But those are things to think about as you get involved in the medium-term space, if you want to be successful and have a long roadway in the business.

David:
So with this being considered how competitive it’s getting, is professional listing photos still an advantage or is that a necessity at this point?

Jesse:
It’s a necessity, hands down. You have to get professional photos and you guys can all go look on Airbnb, 79%, I just made that number up, have pretty decent pictures. And the other, what is that? The 12, 13%, they’re not good at all. They’re not good at all. So same if you look on Furnished Finder. A lot of people have crappy pictures on there. They don’t look good. You want to have something that stands out that grabs people’s attention. Professional photos, by far, if you’re going to do anything, please get professional photos. Just please do it. Rob will pay for it. Just send him a message.

Rob:
That’s right. Yeah, I’ll send you Jesse’s Venmo information. Man, yeah. Dude, honestly, yeah, it sounded crazy. I’m not going to lie. It sounded crazy at first when you were like, “Yeah, negotiate with the gym,” because in my mind I’m like, “Dude, I’m not going to spend two hours going back and forth with the gym to get a discount for one set of guests.” But once you kind of spun that to say you’re saying that to these corporate housing partners and that they’re super impressed with this, that makes so much sense because now they’re like, “Whoa, this guy knows what he is doing. No one has ever said that before. We have to use him.” That’s a pretty good idea. That’s a pretty, pretty… I’m going to give you that one, Jesse. That one is pretty good.

Jesse:
I’ll take it. What the crazy thing is when you hear a corporate housing specialist or even a relocation specialist or somebody on the other line hear you talk about that, I remember the first time I mentioned that, they were just like, “Oh my God.” It was this lady named Annie, and she’s like, “I can’t believe you guys are actually doing that. Is this a business that you have?” And I’m like, “Yeah, this is exactly what I do. I’ve been doing this for a couple years now. I’ve seen the potential and what these guests are needing, which is why I’m asking you all these questions so that I can curate something specifically for that.”
And you know, you can go get a Peloton. You can provide small weights there. Those are small things that you could do to continue to build amenities in these properties, so you don’t necessarily have to get a gym membership but it’s a good idea to, again, for me, I like to be able to bring my community into this space and also have business that’s sent to them. I’m really big on small business, so for me that was something I wanted to make sure I took care of.

Rob:
Well, I know that that is an amenity that Mr. David Green would appreciate because we went on vacation in Mexico a couple months ago and he was doing two-a-days, and I was like, “What are you doing, man? You’re making us all look bad over there.”

Jesse:
Dang, getting up at 5:00 AM too, David, just like Rob over here?

David:
No, I’m not. I mean, I appreciate the kind words Rob, but if you guys want full transparency, it’s because the food is so good at that resort. The more that I work out, the hungrier that I’ll be. It wasn’t all purely… I do like to work out twice a day when I can, but when you’re there, it’s like, “Oh, I’m going to work out twice a day because we’re going to be eating so much food and it tastes better when you’re super hungry.”

Rob:
That’s true. That is true. It definitely does.

David:
Plus it’s just more fun to work out when you’re in tropical locations. Like when I’m in Hawaii, I always work out even more. All right, back to you, Rob.

Rob:
Well, and I’ll say you also ran in Scottsdale when it was like 100 degrees outside and I was like, “You’re just a Mr. Fit over there.”

David:
You would think I’d look a lot better than I do for as often as I work out. I will totally agree because there’s no weights to lift in Scottsdale. Maybe we need to add a gym to that facility while we’re at it.

Rob:
Okay, so let’s get onto the listing side of things. How would you guide new investors to think about pricing, right? There’s sort of a little bit of a formula for long-term rentals, medium-term rentals, short-term rentals. How do you approach it in your business?

Jesse:
Yeah, so I look at it, I look at the top performing Airbnbs, and I’m actually going to be recording a YouTube video with BiggerPockets and I think it comes out at the end of July so we’ll have literally 20 minutes where I’ll talk about this specifically. But what I look at is a top performing Airbnb, so say I have a three bedroom, two bath, I’ll actually go on Airbnb, I’ll go on Mashvisor, I’ll go on AirDNA, all these different sources that I can look at the pricing. I’ll find what my property is going to look like, and say it’s $1,000 a month, which I see the top performing properties that are making $1,000 a month, I’ll decrease by 10 to 15% on that end and that’s how I’ll get a roundabout number on how much my property can rent out per month.
And again, the short-term rental numbers are obviously a little bit higher, but it’ll give me a general idea. If I’m talking to a corporate company, I’ll have this idea of being able to rent my property for 10 to 15% less. And there’s times that you can actually go more than that. You can get the short-term rental rates or even higher than that. It really just depends. But the rule of thumb is to really look at the top performing properties, get your comps, just like a realtor does when they’re looking at spaces, they’re getting comps. Pick three places that are same and similar, and then you drop that 10 to 15% on top of that and that’s going to give you your overall number.

Rob:
So isn’t there… Okay, so I’ve understood… So that seems like a pretty easy way to run your initial comps. My understanding is when you go the insurance route with these insurance displacement companies, I’m always told that’s the goldmine. That’s where you get the real payouts. Is there a formula for calculating your price whenever you’re dealing with some of those companies? Because that’s usually a lot higher, right?

Jesse:
Yeah, it could be four or five x, six x long-term rental rates. But the problem, the difficult part about that is that every single client has a different loss of coverage. There’s a loss of coverage D and every single person has a different standard on that end, so it’s really hard to get an exact amount. Just like I talked about before, you’re having to have these negotiations with these relocation specialists, so I’ll start out four x rental rates. So again, if my rental rate is 2k for a long-term rental on my property, I’ll start at eight grand. And if they’re like, “That’s way too much,” and I’ll say, like, “Well, what’s the budget?” Again, keep in mind these insurance companies have to go to these adjusters, the insurance adjusters, they’re actually the one setting the price. The relocation specialists are just the middleman between us and the adjusters so they’re trying to go back and forth, which is where it becomes difficult sometimes and even time-consuming because you’re waiting to hear back from them, they’re waiting for the adjuster to come back.
So it really just depends on the specific type of property that’s lost, which is questions you want to ask. Where was the property loss? Where’s the zip code? So that gives you a good idea, okay, this is a zip code, there’s million dollar homes, they’re going to have a higher price point. So there’s really a lot of ways, a lot of variables in that space. But you’re right, the insurance claim industry, not only are you serving clients, you’re helping families that have lost their home, but you’re also able to make a substantial amount of income. And again, it’s about building relationships with these individuals because that’s how you want to build a long roadway and build an actual business where they keep coming back to you every single time.
And one thing that I talked about, I want to make sure I hit this, I talked last time that you want to have five or more properties. In this space, you can have one. You can have one property and start off. And the beautiful thing about the midterm rental space is that I can go to you, Rob, and I can find you on a Furnished Finder or Airbnb, message you and say, “Hey, I’m creating a business. Are you willing to be kind of an ally? If I get a booking from one of these agencies, I can pass it off to you if my place is booked,” and nine out of 10 times our properties are going to be booked for three to six months or a year even, so I can then go to David now, I get an opportunity to help somebody else.
So that’s the cool thing about the medium-term rental space is that you want to have that anti-scarcity mindset, unlike Airbnb operators, right? They just want their place booked and that’s it. The medium-term space is like we’re booked all the time. I want to create a network of people that work with me in my own market. So if I get these relocation specialists or a corporate contract, not only do I look bigger to these companies when I’m having conversations with them, but I’m also able to help people, I’m able to help my community, I’m able to help the people that I’m working with and the folks that are coming in. So it’s like you’re solving all these different problems, and I really want everybody to think about that as you’re building your business.

Rob:
Wow. Yeah, dude, you just nailed it, man, because from my understanding, it’s basically if a hospital reaches out to you, the last thing you want is to say, “Ah, sorry, I don’t have anything,” because then they’re just like, “Oh, okay.” And then they move on and they find another person that might have 10 listings or whatever, and now they’re always just going to go to that person. You want to always keep feeding their machine, and so if you can place someone, whether it’s your client or not, if it’s a buddy’s or someone else within your network, you at least get to help someone else. Maybe you can get a referral fee, but you’re always looking like you have listings available for that hospital. Is that basically what you’re saying?

Jesse:
That’s exactly what I’m saying. So you’re solving the problem of the clinician that’s wanting a home. You’re solving the problem of the agency that’s looking. You’re looking like a badass by being able to help them, you’re helping whoever your counterpart is in that space, and obviously you want to make sure they’re good operators and they have a nice home, but then yeah, you can get a referral fee on that. That’s what we do all the time. I have people in my market that don’t have properties available, I’ll pass it off to the people that are connected to me and guess what’s going to happen when they’re booked and they get somebody that reaches out to them? “Hey Jess, you gave me a referral last week or last month or six months ago. Hey, I have an opportunity for you right now.” So it’s really this give and take relationship where again, we’re collectively working together, and this is why I love the medium-term space is that, we can all be booked and there’s always somebody to help on another end.
So as people listen to this, really have that mindset from day one, and it’s not hard to make these connections and outreach with people. When I first started doing this, Rob, I was messaging people on Airbnb as a creeper, like, “Hey, I have property. I just want to know if I get a place booked, are you willing to give me a percentage of that? And also, this is what I’m doing.” So you really just start creating these allies in your own market and it’s really not, you’re helping each other at the end of the day.

Rob:
Yeah. Well, hey, if you get my LA property booked, Jesse, I will give you a referral for you, okay, pal?

Jesse:
Yes, I’ll take it.

David:
All right, let’s move into managing these things once you’ve got them. What are some systems that you leverage to manage the property? Stuff like maintenance, cleaning, et cetera?

Jesse:
Yeah, so we have cleaning crews. I’ve hired all my cleaning crews myself. You can use apps like TurnoverBnB, Angie’s List, I don’t even know if that’s still around anymore, TaskRabbit to find cleaners. That’s the easiest way to do that. I’d probably say TurnoverBnB. And the cool thing about this too, you guys, is when you think about cleaners, they’re only cleaning once every three months. So typically you got to have a deep cleaning. It depends on if you have pets and stuff like that, which we’ll probably talk about here in a minute. But as far as managing, again, these are booked out for more than 30 days at a time. I use a company called IGMS. And IGMS is essentially, I can block out my calendars, but you can use like Hostfully. Rob, what are you using for your calendar management?

Rob:
I use Guesty for Hosts.

Jesse:
Guesty. Okay, cool. Yeah, you’d be able to use that too. But for me, IGMS has worked because I also property manage for people, so it gives me the breakdown of the individual homeowner. For transparency it shows how much money they’re making so they can see the property’s being booked, what’s available, what’s not available. So that’s what I’ve been using now for probably the last three or four years and it’s worked relatively perfect. And I do expect more software to come out in this space. As we know, we’re pretty early in the whole medium-term space, but I know that there’s people that are working on better systems and better operations and people are starting to think about the medium-term space. IGMS did that so I know there’s a lot of companies that are doing that right now.
As far as maintenance issues go too, I want to make sure that… So we’re looking at this just the same way as the long-term rental space. So we’ll put together a crew that handles maintenance, so we’ll have two or three guys that are available, we’ll have a handyman available. Again, it’s about building relationships with these folks and if you’re investing out of state, you want to talk to a investor-friendly agent just like David that probably has a Rolodex of people that do painting, handyman, all that kind of stuff. So that’s going to help you tremendously as you’re starting to build, especially if you’re not even in your own markets. Find an agent that can help you as far as resources go.

David:
If you have bookings coming in, the property’s profitable, it’s going smooth, do you still look for ways to add amenities or is that something that doesn’t come up unless you’re having trouble getting bookings?

Jesse:
Yeah, I still always think about amenities. And to be honest with you, I’m going to say something right now, everybody’s probably going to be like, “What, dude?” I actually like having vacancies in my property and I actually will underwrite my deals at a 20% vacancy. Just like Rob said a minute ago, how he’s kind of going back and reinventing the wheel in some of these places, we’ll do that every time we have vacancies. So if we have a three-week vacancy, we’ll let the house breathe. We will go in and do a little revamp. We’ll look at what’s necessary. We’ll ask the guests that left a questionnaire. We actually send them a questionnaire. What could have been better? How could we have made your stay better? What amenities do you think could have been more successful or made your place a little bit better, made the place a little more comfortable?
And they’ll actually give us feedback. And that’s where I got the box vans, the blackout curtains, the vehicles, the bikes, the gym membership, all that feedback is we have to think about this again as a business and I think that a lot of people don’t do that. But those vacancies will actually allow us to go in there, refresh paint, fix a little bit of things, fix some damages, let the house breathe, and then obviously have that mindset, “Okay, here’s things that we can improve on and we can add on,” and I think that a lot of investors don’t do that. They’ll just let their place go and then in two years they’ll redo the whole thing again, and it’s like, they’re not actually changing with their clientele that they’re having. They’re not adding those extra things. So I think it’s important to do that from day one.

David:
Yeah. An unpopular opinion here. Disclaimer, everybody plug your ears if you don’t want to be triggered. I think a lot of that comes from people wanting to live off of cashflow. They’re like, “I want to quit my job. Let me buy some real estate. I got cashflow. Yay. I don’t have to work anymore. I can travel. I can go to a beach. I’m 28 years old and now I’ve succeeded in life and I don’t have to work.” And then you get deferred maintenance, you realize, “Oh, this is competitive. I have to continually reinvest capital to stay near the top.” You don’t have it because you’ve been living off of it, and so I know it makes people mad when I say cashflow is not easy to live off of. It’s not intended to replace your income. It’s intended to keep a property afloat so that you can hold it for a long period of time and it goes up in value and you make money that way.
But I’ve seen a lot of people get themselves into bad positions where they need to update their Airbnb, they need to update their short-term rental, like Rob was just saying. He needed to put a mini golf course in his beach house. Well, for a long time, having a house on the beach was all you needed. Now there’s a lot of houses on the beach that people are doing this with, and he’ll get a very good return on his investment for what he puts in there. Rob’s very good with this stuff. He doesn’t miss very often when it comes to what he’s going to do with the property. But you have to have the capital to get the return on said capital. That’s one of the key ingredients of investing in real estate. So if you’re hearing this and you think this sounds good, please, if you’re considering quitting your job so that you can live off of rental income, wait. Wait till you have way more rental income than you could possibly need because you never know when you’re going to dump money back into properties.
Another controversial thing I’ve heard people go both ways has to do with pets. I’ve had tenants that I let have pets in my property and the dogs have chewed through doorframes. Cats are obviously rarely messy. I mean, I could tell you stories of people that swear up and down their pet is amazing, just like every parent says their kid would never do that. And then you look at it objectively and you’re like, “That is a hell-hound. Where’d that come from?” But if you don’t allow pets then some people won’t books, so what’s your stance on this whole pet civil war thing that we have going on in America right now?

Jesse:
Yeah, so I just read a stat that Furnished Finder had put out and they’re doing their own, they spent hundreds of thousands of dollars to pull this data. Only 38% of their listings are pet friendly. So that’s a huge opportunity for us right now in this space to continue to allow pets. I allow pets. I will have a non-refundable pet deposit. I as a pet owner will pay more to stay at a property that will allow me to bring my pet. I don’t want to do things unethically and if somebody doesn’t have a pet policy, bring my pet anyway and hide the ring doorbell camera. I’m not that guy that’s going to do that, although there are people that do that and I would suggest not doing that. But having a pet, it just opens more doors. Especially as travelers come, they bring their pets with them. Travel nurses will have their pets with them. Okay, that’s fair.
Yeah, they have to be two-year-olds. Most two year old dogs are not going to piss in the house unless it’s a chihuahua, which we don’t allow chihuahuas in the property so I apologize to any Chihuahua owners out there. Terriers, same thing that you mentioned before, the Target dog? You guys know what the Target dog is? I had one of those dogs stay at our property and they were there for three months, David and Rob. I went back and literally every single corner of the house was chewed. Those dogs need a lot of attention. So if you’re going to allow pets, what about having a dog walking business? What about connecting with a dog walking company? These nurses are working 12 to 15 hours a day. Hey, somebody can come pick up the dog and take it for a walk so it doesn’t chew your baseboards up.
So those are things to think about as amenities. It could be something very simple but you’re catering specifically to that specific person. I think that, again, pets are a great option. They can be a pain in the ass, I will admit that. But also there’s only 38% of people that are allowing pets in their property, so there’s a large opportunity for people in this space, so I’m pro pets.

Rob:
Well, okay, well this was… I’ve been wanting, I’ve been saying since your episode, Jesse, because I knew it. There are certain episodes where I’m like, “Oh, that’s viral material right there,” and your episode came out or we did your episode, I was like, “This one’s going to be a winner. This is going to be a winner,” and I just knew as soon as we got off that recording, I was like, “Dude, we got to have a part two,” and so just for everyone at home listening, a reminder, Jesse has got a pricing video coming out on the BiggerPockets YouTube channel and it comes out July 29th, okay, so go to the BiggerPockets YouTube channel, hit the subscribe button, hit the little notification bell so that on July 29th, you can hear Jesse break down all of his goodness in 20 minutes on how to price your strategy. Anything else over there, guys? Did we miss anything? I feel like we really did cover the full gambit here.

Jesse:
Yeah, we did. I mean, I think I will leave you with this. Everybody that listens to this right now, there’s a lot of work that goes involved in it. We were skimming the surface on it. Really educate yourself in the space, really understand the market, really think about, like David had mentioned this a while ago, think about this like an actual business from day one if you’re wanting to get into this space. You can list traditionally, go on Airbnb or go on Furnished Finder and expect to get bookings, that could happen. But if you build a Rolodex and build a business, like an actual business where these people come to you on a regular basis, you don’t have to rely on these online travel agencies, you don’t have to rely on these rules that are coming out or these certain regulations that are coming. It gives you flexibility and it gives you exit strategies, even if you’re a short-term rental operator now, just like Rob does a hybrid model of both. I think that’s such a good play if you have the option for that. So yeah, I appreciate you guys.

David:
I would add, if you’re going to get into something like this, make sure you have a passion for it. There was a time where you could be like, “I’m a doctor and I just want to put my money somewhere and not deal with it, and real estate investing offered a lot of opportunities.” There’s still some asset classes that work that way, but not the ones we’re talking about today. You are competing, you’re entering into a competition and it’s only going to get hotter as more people learn about this and as institutional money moves in. So if you’re going to do this, make sure that you love doing it. Make sure you’re passionate about doing it well. Make sure you have a mind that’s always looking for how to improve, not a turned off, “Hey, I’m at the beach drinking a Mai Tai, that check should just be rolling in” type of an attitude because that works when there’s not competition. We are in an era now where there’s a lot of competition. So I think this was great, Jesse. I love the passion you have for it. Thank you for joining us today. For people that want to find out more about you, where can they go?

Jesse:
Yeah, you can head over to Instagram, @therealjessevasquez. I also have a YouTube channel, it’s @JesseVasquez as well. So yeah, that’s where I’m available. That’s the best places to get me. And again, I appreciate you guys for having me here. It’s been awesome. I love working with you guys. And David, I obviously am looking forward to working on your units, man.

David:
Thank you for that. Rob, where can people find out more about you?

Rob:
You can find me over on Instagram, @robuilt, or on YouTube on Robuilt. But if you’re going to go to YouTube, then go over to Jesse’s channel first. Can vouch it’s very amazing content and it’s where I’ve learned most of my midterm rental strategies. I’ve been stealing from his brain and he doesn’t even know it. So thank you for that, Jesse. What about you, David?

David:
If you want to get actual content and learn how to build wealth, yeah, you could follow me. I’m DavidGreen24, and I only have like 10,000, 12,000 YouTube subscribers. So after you go check out their channels, please go to mine and give me a pity follow. I am not too proud to beg. Jesse, this has been fantastic, man. Love having you on. And also, can I just say as a fellow 209er, it’s nice to see someone from the Central Valley making it, and I love how humble you’re staying. All right, guys, this has been a blast. Jesse, thanks for being here. I’m going to let you get out of here and we will see you on a future show as well as with my properties once they are finally furnished. The story of my life. This is David Green for Rob [inaudible 01:02:57] Abasolo signing off.