20+ Rentals in 2 Years but “Stuck” with the Wrong Strategy? (Rookie Reply)
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Okay, let's get your questions answered. My name is Ashley Kerr, and I'm here with Tony J. Robinson. And welcome to the Real Estate Rookie Podcast, where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today, we're diving back into the BiggerPockets forums to get your questions answered. And we're also doing it live in person here in Southern California. So I dragged Ashley halfway across the country to come answer your questions. All the way across the country.

All the way, that's true. So a couple of things we're going to talk about today, guys. We're going to talk about what to do when you feel stuck and you don't know the best strategy to continue when you feel that you kind of tried them all. We're going to talk about the tools and technology to use to hide your personal information as a landlord from tenants. A little bit of anonymity can be a good thing. And then we'll also talk about how important it is to study pricing in your short-term rental market and what you can do to maximize revenue and your nightly rates. So with that, let's get started.

Let's get into today's questions. Yeah. So I'm excited to do an in-person rookie reply. So I went ahead and I picked out the first question. And this one is from the BiggerPockets forums. OK, if you're not already, make sure you go to BiggerPockets.com, get active into the forums, connect with other investors, answer questions or submit a question to have it answered.

So this question is, my fiance and I will be wrapping up our second year of investing part-time in a couple months, and it seems to be getting less clear on where to head. Maybe you guys can help.

Yeah, that is amazing. Two years. Yeah.

She works for the business now and I work in blue collar trades. But as of the last six or so months, I seem to be losing direction. Where to go from here? How do we truly grow? We haven't found that one thing that has really worked great to catch a ride on the momentum.

Flips have done good, not great. Airbnbs are going good, not great. And rentals all were bird perfectly. But like most, they cash flow just enough to pay the bills and cover expenses. I feel a loss of direction and that makes it really hard for me to focus and build.

Do we keep at building a portfolio of small multifamily, very abundant in my market, very rare to find anything above a triplex for sale with plans of selling the portfolio and 1030 wanting into larger properties? Do we focus on flipping? Currently, we actually have been trying to do this, but we physically can't find enough contractors in our smaller market.

Do we branch out of our area and try to do bigger deals now? These are just ideas I've been asking myself. I think if I could just pinpoint a direction I am confident in, it would make things so much easier to focus and really strive forward. When looking at deals, learning, getting better, and thinking smarter as an investor, right now it feels like we are aimlessly investing and it makes it hard to see the end goal and even harder to see how to get there.

I know there's a lot of details missing to actually give an accurate answer, but I'd love to hear some of your advice and or experience anyone has. Thank you. First off, congratulations. Yeah, that's so much to accomplish in two years, 21 properties, two Airbnbs, and a dozen flips. And...

What a situation to be in as to you have all these different opportunities you have experience in these things Which direction do we take this? I think for me it always comes down like the first question is well What are your actual goals and I don't think that this person stated what the goals are

But you've got active income with the flips. You've got maybe the longer term appreciation play with very little cash out of pocket with the BRRRR strategy. And then you've got kind of the juicier cash flow with the Airbnb strategy. So I think for you guys, the first question is why are you doing this?

It sounds like he said his fiance, I think, is already full-time in the business. He's still working his day job. So is the goal to also get him out of his day job? Okay, well, maybe then it is the flipping. And maybe if it's not in your backyard, we just interviewed Dominique. And she was RVing across the country. And she had, I think, 12 flips at the time going on in New Orleans. So it is possible to do it, especially if you've done it remotely. But I feel like that's the first question we have to answer is what is your actual goal in doing all of this? Yeah.

Yeah. And then we got to kind of look at the returns that are happening. So we said the, you know, the long-term rentals, the BRRRS, they're not cash flowing a lot, but what's the equity that's in there? If you pulled all your money back out, is there a lot of equity to actually go and do a 1031 exchange? So I'd like to see that piece of it because the, the stack method is a very valuable tool of, of,

getting these rentals, doing a 1031 exchange into something bigger that cash flows more, and then just continuously doing that. So I think that key piece we need to know is how much equity is actually in those rentals to do that. If you've already perfected the BRRRR method, and even if you're not getting a lot of cash flow on each deal, like BRRRRs are hard to do right now, like a 7%, 8% interest rate. And if you're doing that,

Maybe you just need to continue to focus on that strategy and just go from 20 rentals to 200. Maybe that gets you to the volume that you need for it to actually make sense. So it seems like there's a lot of good options here that are at play. But I think the one thing that I will call out is that maybe part of the reason that none of these have really struck the way that you want them to is

is because you have your attention divided in so many different areas. And are you flipping at like a C level, doing the Airbnb thing at a C level, doing your burs at a C level? And if you kind of removed some of those distractions, could you take that from a C average to a B average to an A plus average? That's a great concept. So think about the long-term rentals. I'm assuming, you know, his wife is the property manager. She's running the business. I'm just going to say that that's one role she has assumed running their business.

If she didn't have to also be the project manager on the flips, things like that. So think just in the property management, are there different operational pieces? And I know this goes a long way with short-term rentals too, that you can tighten up, tune up to actually increase your revenue or decrease your expenses. So you're actually making more money and it's actually a better return now by just changing those operations, by putting more focus on

on that too. I think that's a great point that you have. - Squeezing more out of what you already have. I think the last piece here too is like, what will you actually maybe enjoy? It's like you try to, and each one of these I think is a slightly different skillset. Flipping, long term, short term. Like which one do you actually see, like if I had to really buckle down and only do this thing for the next five years?

Is this something that you would actually enjoy waking up every day and doing? And if the answer is no, maybe if it's not the most lucrative, maybe it still makes more sense for you to go do something else. And I think, too, one other thing to kind of look at, especially in the long-term rental side, is, okay, you've got these properties that maybe they have some equity. Maybe they don't have that much equity. Keeping these long-term, like,

even though they're not doing great right now. And even the short-term rentals,

when is your immediate need for that money? So like if he wants to quit his job, is it now or is this your retirement? So just holding on to those rentals and not buying anymore. Maybe you're actually going to go and buy the blue collar business you're working in or something like that and just holding them for the long term. He says, I think if I could just pinpoint a direction that I'm confident in, it would make things so much easier to focus.

And as much as I wish that we could tell him which area he would be most confident, it's hard for us to do that. I think just a little bit of self-reflection, asking yourself what your big focus is here, asking yourself what you actually enjoy will allow you to make that decision. But again, one huge caveat here, one thing that I want to call out is that they've done the work that a lot of people would never be willing to do. And it's actually a good problem to have to say, hey, in the last 24 months, we've tried

all of these different things, they all seem like viable options. We just can't decide which one we want to go down. It's actually a good problem, I think, for a rookie to have. And I think you're right on with picking one strategy and sticking to it, which is what they want to do. But you'll be able to spend so much more time getting experience, learning,

researching on that one strategy that maybe you will get better numbers because you're so focused on that. I think it was Warren Buffett, some like super rich guy. It was a story where he was talking to like his car driver or his pilot maybe even and his advice, Warren Buffett's advice to this person was like, hey, I want you to write down the top five things you want to accomplish in life.

Circle number one and scratch off numbers two through five and write never try these things because it just distracts you from that thing that's most important. So, yeah, I can just buckling down, saying no and focusing on just one of them. So, OK, let's let's look at this as to say his scenario is to quit his job. So he wants to maximize cash flow right now.

So between flipping long-term rental, short-term rental, what would your opinion be? Mine is going to be the buckling down on the short-term rentals and finding out how to maximize your daily rates and things like that.

Or I guess the flipping, too, because you're bringing in capital, but you're also getting taxed really high on that, too. I would say because, I mean, he's got his wife from a tax perspective who should be able to get relative professional status. So hopefully they can offset the tax side. But honestly, he's already in the trade, it seems like. So maybe flipping actually might align better with his current skill set. Yeah.

If I'm in his situation, I might just go all in on the flips. And you've already done, what do you say, 12 in the last 24 months part time? Yeah. So how many could you do if this is all you really focused on? And could you get to a point where maybe you're doing, you know, you got four or five, six flips going at one time. Now you've got all this cash and then you can go deploy that into the buy and hold real estate.

And he did say that like getting contractors was a problem. But if you're focused on any of these strategies that he picks, you're able to spread out overhead throughout them. So like the long term rentals, your software, you know, price can decrease if you have software that's capped at, you know, a certain amount of spend. Your overhead is going to decrease no matter which strategy you end up choosing.

And if he does do the flips, you know you're having a problem finding more and more contractors. But maybe there are contractors out there that will only take...

you know, larger investors that have more projects or, you know, you're getting the same contractors you have not take other projects because they're just going to, you know, know that you're having more projects coming in too. I think the other piece too is that allows you to go so much deeper. It's like, you know, he was saying like, Hey, it's been hard to find contractors and wherever he said it in here, but it's like, I wonder how much time he's actually invested to try and find those people. And like, if this was your full-time thing,

maybe not that it becomes easier, but maybe you have now the time and the bandwidth to actually go find those. So I think maybe some of the challenges that he's facing

not go away, but they become easier to solve if you have more time to focus on fixing them. And I think look at us as examples too. So when you had your tree port, free port, property is those were your only two long-term rentals and you were building this massive short-term rental portfolio. For me, I'm dwindled down to, I have two short-term rentals now and my long-term rentals.

As in my short-term rentals get no time, no attention. Like you could probably come in and look at it and be like, do these things, blah, blah, blah, like implement. And the same with if you had two long-term rentals that I could do that with. So like just shows that, you know, you can have these other side things, but they will

not suffer, but not be as great as they can be without having your soul focus. Fantastic point. Yeah. Fantastic point. It's like having that favorite child. Yeah.

Okay, before we get into our next question, we're going to take a short ad break. Tony, since we're live in person, Tony's going to act out the ads for us here today in person. But if you haven't already, make sure you head over to the Real Estate Rookie YouTube channel where we are trying to reach 100%

We'll be right back after a short break.

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All right, guys, welcome back. So the next question we're jumping into is about returning security deposits. So let's read the question here. It says, is there a way to send security deposits back via certified mail where I don't have to show the tenant my return address? Rent ready app does not have a feature to return security deposits as far as I can tell. So Ashley, you are our resident long term rental queen here.

What is your typical process for returning security deposits to tenants? Well, I just have to address something to the camera first for anyone watching on YouTube. Tony and I have our phones so we could see these questions that we pulled up. And I noticed on the screen that everyone can see the back of my phone. And I just wanted to explain.

My phone, before I went on vacation, I dropped my phone in the airplane or the airport parking lot. And it has survived a seven-day cruise and another whole week. So it's still holding on strong before the whole back of it completely falls off and is like ripped off. You can see like...

The microchips inside of it. So you just not use a case ever? Well, another thing that happened was the charging port broke. So I could only charge my phone if it was setting on something. And I just, the case I had didn't work for that. So I just took the case off. I never got another one. And now I'm being punished. The truth is Ashley landed in LA last night and had one too many tequilas. Actually, I requested an 8 p.m. bedtime at Tony's house.

Okay, so back to security deposits. Okay, so even though this question is very specific to security deposits, I wanted to talk about this more generally as to how to hide your identity or personal information from your tenants. Okay.

This was a really big thing for me the long time. Like I always just thought, oh, my God, if the tenant doesn't like me, they're going to come up to my house and yell at me or whatever. Has it ever happened? No, it's never happened. No, no, no. The first thing is I want to address some different software's resources tools that you can use online.

So the first thing is in this situation, having a security deposit, when you're mailing anything to your residents, most of the time you want to put a return address on it, even if it's certified or not, opening up a P.O. box online.

Pretty simple, not that expensive to have. Your tenants can also send rent checks there. You can get all of your bills sent there. To take it a step further is you can use a virtual mailbox where they are all these different locations where your mail is sent to a mailbox there. So

And then once they receive your mail, they'll actually scan in pictures of the envelopes for you. And you can go online, you'll log into your account, you'll see each envelope pop up. Then you can have them actually open your mail for you. And they'll open the mail and scan what's in the inside. So then you can take whatever needs to be filed,

file it. You can have it forwarded to your house if it's like an actual rent check that you physically need. So it gets rid of a lot of clutter, but also gives you another address that you can use as a return address for like a security deposit.

But some locations actually give you an address that is a physical address too. So that, you know, if you need to use, like I fill out any government paperwork, sometimes they require an actual physical address. And is the address local to like, is yours in like near Buffalo? Yeah. So you can pick where you actually want the location to be. So if you really want to get tricky with your tenants, you could live in New York and pick a PO box in Oklahoma and then just

you know, we'll view your mail online, I guess. But my, um, location is pretty close to my house, like 20 minute drive, I would say, but I never have to actually go there. They'll forward any mail I need to my house if I actually need anything from there. Yeah. I think the other piece here too, I love the virtual mailbox. I mean, we've talked about this before and I still haven't implemented it. I'm not sure why. Um, but I think one of the other things too, right. Cause say you have a savvy tenant who knows how to look up, um,

like public records. Maybe they're like, well, Hey, I know the address of where I live. Let me just look up the owner and see what that looks like. I was actually just talking to Amanda Hahn about this not too long ago, where there's a misconception around like why people open up LLCs and States like Wyoming or Delaware, there's no tax benefit for,

to going to a place like Delaware or Wyoming, it's more so for anonymity. So that if someone looks up 123 Main Street and sees it's owned by Ashley's LLC, it doesn't necessarily give all the owner's information. Now in states like California, you can look it up and you can see the registered agent and the owner and all this different information.

and some of those other states you get more anonymity. So if you're really worried about that, then open up your LLC in a state where there's a little bit more anonymity, Delaware, Wyoming, some of those other places. But then also just know that if you get sued, the

the anonymity doesn't matter. Like you're still going to have to show up in court and represents yourself. So it doesn't protect you from a lawsuit, but it does protect you from just like any Joe Schmo on the street, being able to look up your information. Yeah. And then the next thing would be your phone number. If you want to disclose your phone number, but still need a way to communicate with your residents, open a Google voice account,

It's free to get a phone number. You can connect it to an app on your phone. You can have it on your computer. You can create your own voicemail greeting. So, you know, it's not like, hey, what's up, my friends? You know, like you would have had back in the 90s. You play the music. Yeah, yeah. It's your girl, Ashley. Leave a message at the beep.

So that's your actual voice. I don't remember. Probably. It's probably dorkier than that. I'm currently reading my 50th, the third book of the month. But, um,

So setting up that Google Voice and then you can see text, you can read the voice messages and you can also assign it to someone else. So, hey, I'm going away. I'm going out of the country. I won't have cell service. Tony, I need you to take all my tenant calls. He just has to download the app, log into my Gmail account it's associated with. Now all the phones are going to...

We're actually looking at a new phone software to replace Google Voice. It's called Open Phone. Have you heard of this one before? No, I haven't. So it's like Google Voice but on steroids. And one of the reasons that I like it is because it has better call routing functionality. So it can route the calls in a little bit more sophisticated way than Google Voice can. So I can make sure that it rings my VAs first and it rings Sarah, then it rings me. So we're not all... Like priority. Exactly. So Sarah has to take care of it before you do. Yeah.

Sarah, who's pregnant and at home with her other child. You guys take these call three. Or inverse order. Sarah last. But you can choose the routing. But the other piece is really cool is that you can have multiple phone numbers tied to the same account. Oh.

And the way that we plan to use it is that each property will have its own phone number. So you know who's calling. So now we'll know which property. Because a lot of times we'll get a call from a guest and we'll say, well, hey, I'm sorry, what property are you at? Because they'll just say, hey, I'm at your property. They'll just assume that we only have one. But now we'll know, hey, you're calling from 123 Main Street. How can I help you? So we're looking at incorporating that. And also because of the hotel, we have –

on-site management there. We have the VAs that helps being able to route the calls correctly between those two. So anyway, open phone is another option if you're looking for like a digital voice

phone type solution. Yeah, that's really cool because like before I hired a VA to actually take the tenant calls, I had the Google voice hooked to my phone and then to Daryl's phone. And like we, you could set Google voice up where the person had to say their name before it would actually ring to you. So it would show up who it was, but I just thought that wasn't like very friendly. So, um,

We just said it is that any time that phone number would ring, it would say our management company name. And it got to the point where like the phone would ring and we would see him like, oh, like that girl that every should. So, yeah, those are just a couple of things that you can do to kind of protect your privacy and to who you are.

I mean, you can keep a lot of communication with residents through email, through text messages where you don't even have to talk to them on the phone, even if you don't want to. But I think having a PO box or the virtual mailbox and then a different phone number, too. Do you think the day will ever come where we have like AI landlords?

Yeah. There's like at Folio has an AI. I think her name is Lisa and she's like a leasing assistant. So like she answers all the questions about the leasing. So like anybody that inquires, she takes care of all that. That is so cool. Imagine getting evicted by artificial intelligence like that is. I'm sure they'll be better at it than me. Yeah.

What about going back to the actual question, right? So the security deposit, are there tools or like, you know, appfully or rent ready? Do they offer ways to collect and then remit back the security deposit? Yes. So in some of the software, when the tenant puts in there saying they're going to move out, they can actually select to have their security deposit direct deposited into their account so that you're not even having to send them a physical check, which it

Anything I do, I completely avoid physical checks altogether. So...

She said that, so in this situation, if you had software, you could see if they have some kind of feature like that where you can direct deposit it or your online banking, asking the tenant to send you a voided check with their check number. And then you can take their bank account information off of the check, input it to your bill pay and have it directly sent to the tenant's bank account too.

So there are options. Yeah. Or even if you did a bill pay check, I think it shows like the bank's return address and not yours. But I'm not sure on that. I know my business bank does that. I believe that's how it's set up as well. So that could be an option as well. Yeah. Well, let's take our last short break and we'll be right back with our final question. Music.

If you haven't yet, make 2024 the year to protect your rental properties with an LLC. Skip the paperwork. Corporate Direct will get your LLC done right. Like they manage all of the state filings. They draft your operating agreements and act as your registered agent. Plus, they ensure compliance with the new Corporate Transparency Act. Founded by Garrett Sutton, a Rich Dad advisor, and now run with his son, Ted, Corporate Direct has over 35 years of experience and they've helped

thousands of investors protect their assets. Visit biggerpockets.com slash direct for a free 15-minute consultation. And don't forget to mention Real Estate Rookie to get a $100 discount. That's biggerpockets.com slash direct.

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Okay, everyone. Welcome back. I've got our final question here today that we picked out.

So I am new to short-term rentals. Currently, I do have my property listed at a very competitive rate, as I believe. Yet I still do not see a lot of exposure on my listing on the map in Airbnb. Please give me some advice on the best approach. Also, can you share me the best software to manage pricing? Currently, I am using Airbnb Smart Pricing. Thank you so much.

Okay, so this is definitely a Tony question here. So let's start off with the first part of it. They don't see a lot of exposure on their listing on the map in Airbnb. What does that mean?

I'm assuming that like as she's searching for different dates that her property is just not showing up. So it's like not on the first page of the search results. I think the first thing I'll say is that sometimes there's not a lot you can do after you've purchased the property. And I think the bigger focus, and this is really for the rookies who maybe haven't yet bought that first short-term rental, but the bigger focus has to be

making sure you really nail your numbers down before you buy. Because the last thing you want to do is have to purchase a property and the only way it gets filled is if you drop your rates super low. Probably not going to be super profitable at that point. So just first thing, guys, don't buy properties blindly. Make sure you do your analysis. Make sure you dig into the numbers here to make sure that it all checks out. First, get some software to manage your pricing. Yeah, let's start there as to where do you actually find the numbers to analyze your property. Airbnb hasn't said this publicly yet.

They actually kind of have in a roundabout way. But Airbnb's goal is to remain competitive in a pricing standpoint to traditional hotel stays. That's a big part of what made Airbnb attractive in the beginning was that historically you could get a property cheaper on Airbnb than you would just getting a hotel room from like booking.com, whatever it may be.

they're still trying to lean into that. And they very clearly stated that listings with lower prices tend to rank higher. So they are pushing the cheaper listings on the platform. So what does that mean? It means if you rely on Airbnb's smart pricing feature,

Typically, they're probably going to suggest pricing that's actually lower than what you could actually charge. So we like to use third-party software. We use Price Labs. There's Beyond Pricing. There's Wheelhouse. There's several options out there to help you price your Airbnb. Get one of those software tools because it's going to give you so many data points to help you make the right decision around what your price should be on different days and

And it'll automatically up adjust or down adjust your pricing based on demand, based on seasonality, based on events that are happening. I was looking at a property for someone that I knew and there was a Jelly Roll concert coming into town.

And the calendar for price lapse literally said jelly roll concert on this one, right? So it can even pick up on that kind of nuance. So get the software. I was telling somebody about this software and they told me, okay, well, what if the software is looking at the other bookings, right? And adjusting your price compared to that. What if you're one of the first ones that gets booked before the spike is seen?

So I didn't know the answer either. I was like, I guess that's a risk you're willing to take because they're like, why wouldn't you go in ahead of time and look at the calendar events and you adjust it so that you're ahead instead of waiting for the software to see all these spikes and then adjust yours because of that? Yeah, that's a good that's a good question. But I think the challenge here is that.

You always want to somewhat move with the market. And if everyone else is still holding their prices here and you're like, hey, I think that we're going to see it. So I'm just going to push them up here. And well, now there's an opportunity. It's like, well, would you rather be booked out here, you know, 60 days out?

Or would you rather be booked out here because you have to drop your – because you started up here and you've got to drop your prices all the way down to here because it's a week out and you still haven't gotten booked. Yeah. So that's a big change that we've made in our portfolio is that we're willing to take a slight discount on a longer time horizon to make sure that we have less holes in the calendar. Yeah. At PPCon –

You mentioned to somebody when we were in one of the Rookie Network events about a company that you could actually hire that would help oversee your pricing. 1,000%. What is that? How is that different than the software? Yeah. So we just hired a company. They're revenue managers at their title. They take over the pricing strategy for your Airbnb. Now, they're still using Price Labs, but they just have a deeper knowledge of the tool and how it works. And

Because they're doing this at scale, they've had a better opportunity to kind of test their strategies and theories and see what works and what doesn't work. So we've been using ours for about, I think, almost 90 days now. It's been about three months. And there's a little bit of like a learning phase thing when we first started. They had to get to know our portfolio. But I feel like we've kind of found a good rhythm now where –

I honestly never really have to go in and check our pricing anymore because they're running everything for us. And I think the level of detail that they've given me about how to really create an effective program around pricing really expanded my knowledge about what a good pricing strategy looks like. That's interesting.

So, okay, so we got software, actually revenue managers that you can bring in. And what are the costs of these things? If you have one short-term rental, is it worth it to pay for the software? Is it worth it to hire this company? The software, yes, 1,000%. Even if you only have one property, even if you're only making like $40,000 a year on your short-term rental, get the software because it's like –

like 10 bucks a month. Everyone should get the software. The revenue manager, I think, will vary from market to market, from property to property. Like, you know, I've seen revenue managers that maybe on a single listing, it's a few hundred bucks a month.

And if you have a property, this may be only netting six, 700 bucks a month. That could be 50% of your potential profit. So maybe not. But if you've got one property and you're doing, you know, 100K plus a year, okay, well, yeah, it probably makes sense. So I think it depends on how much revenue potential your property has. Okay, well, that was a great little masterclass on pricing. And there are some options there if you are struggling with how to price your short-term rental to really look into some of these different options.

to kind of outsource this and kind of take it off your shoulders. Because for a long time, you did the pricing, I remember. And it was like so much weight on your shoulders. It was so much weight. And I realized that I wasn't doing it as effectively as I should have been because I just wasn't spending the time that I needed. And the kind of breaking point for me was when we bought the hotel because that added 13 additional Airbnbs at once. And I was like, okay, this is too much for me to handle.

Well, thank you guys so much for joining us on this episode of Real Estate Rookie. If you have questions that you would like to get answered, you can head over to Facebook and join us in the Real Estate Rookie Facebook group. You can also go to biggerpockets.com and find us in the forums along with millions of other investors that are members in the community. We'll see you guys next time. I'm Ashley. He's Tony. This is Real Estate Rookie.