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Episode 20: Upsides and Challenges in the Short Term Lodging Market – with Brett Appleton
592 Plays7 years ago
Investment property can be a tremendous source of residual income. Is it better to sign a lease with a long term renter, or should you think about your property as short term lodging offered through services like Airbnb? Questions worth digging into.
On this episode of the Uncommon Life Project Podcast, hosts Phillip Ramsey and Bryan Dewhurst talk with Brett Appleton about going from dabbling to all-in on using investment properties for short term lodging with Airbnb.
Brett Appleton and his wife own 3 properties listed with Airbnb. They went from experimenting with this concept as a newly engaged couple, to purchasing three properties, with plans to expand this as a major source of residual income. Brett talks about what it takes to balance great customer service skills with the ability to confront challenges when they arise, and avoid scammers and other unscrupulous people.
There are pros and cons, and this kind of investment is not for everyone. But the cash flow can be quite healthy with a bit more upfront cost to furnish and maintain. We walk through the numbers with Brett, and they show a lot of upside.
What You Will Learn in this Episode:
- How to look for the best financing for property purchases
- How Airbnb can be a great introduction to income property ownership
- What you need to know about having strangers constantly in and out of your property
- The upfront costs of providing short term lodging vs. a long term rental
- What to do when lodgers don’t respect your property
- Getting and giving good reviews for short term lodging
- Delivering great customer service from reservation to check-out and beyond
- The tremendous upside of short term lodging cash flow
- Best practices in furnishing a short term lodging property
- Why it is crucial that your spouse is on board with the idea of dedicating a property to short term lodging. This is not a “set it and forget it” source of income.
Recommended
Transcript
Introduction to the Uncommon Life
00:00:02
Speaker
Everyone dreams about living an uncommon life, but how we define that dream is very different for each of us. And for most, it's a lifelong pursuit. Welcome to the Uncommon Life Project podcast. We're going to introduce you to people who are living that life or enjoying the journey to get there. We're going to also give you some tools, tricks, and tips for starting or accelerating your own efforts to live an uncommon life.
00:00:27
Speaker
a life worth celebrating and savoring. Please welcome your hosts, Brian Dewhurst and Philip Ramsey. Welcome to the Uncommon Life Project. I'm your host, Philip Ramsey. And I'm Brian Dewhurst. Thank you so much, Holly, for that wonderful intro. Every time is spot on. We have an amazing guest
Meet Brett Appleton
00:00:45
Speaker
for you today. His name is Brett Appleton. And he is one of the coolest guys you'll meet. We get those kind of people on the show. He went to University of
00:00:54
Speaker
Iowa as a graduate of business. He's been in retail, has been in banking, and now he's currently in mortgages. And by the time this airs, he'll be married to the love of his life, Kenzie. Welcome to the show, Brett. Hey, thanks, guys. I appreciate you having me on. Really excited. Love to talk about this stuff and love what you guys do. So what he's talking about is Airbnb. The reason why we reached out to Brett is because he is an Airbnb
00:01:21
Speaker
Ninja so we're gonna call him today we want to talk through the transaction and what i get so excited about is he wasn't really thinking that he would ever get into real estate. And once he's got the edge now he's got two properties and they're both air be airbnb so we want to talk a little bit about it each one of those transactions.
00:01:42
Speaker
And we want to dive into the numbers of why this is profitable and how he got into it. I think he also shares a really cool perspective because he is a mortgage. That's what he does every day, is help people get mortgages. And so maybe a little bit of pearls or nuggets that he can show, tell people of how they can get into something like this and get their feet wet in real estate. So first question, let's just start at the University of Iowa.
00:02:10
Speaker
You're a Hawkeye. Did you ever think when you were in college that you wanted to come out and have real estate as part of your investment portfolio?
Brett's Real Estate Journey
00:02:19
Speaker
Not at all. It started out as more of, hey, I want to obviously have a house, just like everybody else has a dream of having a house. My idea was, Amy will grab a couple roommates and they'll help pay my mortgage, save a little money. That was pretty much my goal out of college. And it definitely spun into something that I never thought I'd be excited about and love to do. And it's been a lot of fun.
00:02:45
Speaker
Flash forward, his future is that he would just own a portfolio of these Airbnb's and rentals and that would be his whole income. Like three to five year goal. Yeah. Yeah. But I think that's interesting going from, I'm never going to do it. So there's a reason why, right? So let's flash forward. You've gone through a couple of jobs.
00:03:06
Speaker
Were you renting at that time when you decided, like, I want to get into real estate? Yeah. So obviously, you know, every kid comes out of college and is like, oh, you know, I want to get a house and do all this stuff. Well, then life hits you in the face and you realize, I've got bills. I've got this. I can't save up this much money for a down payment and all this other stuff. And so, you know, go by five years and you're like, OK, got, you know, my girlfriend at the time. Now it's my fiance, you know, going to be a wife by the time this airs.
00:03:32
Speaker
And I said, you know, let's get a house, you know, let's start doing this. Like I said, I always had the idea of saying, hey, let's get a couple roommates. Well, what girl wants to move in? So not awesome. Yeah. So she wasn't really excited about that. So then I started thinking, okay, how can I do this? So I thought, Hey, how about a view price?
00:03:50
Speaker
Let's get something. We'll have runners on the other side, help pay the mortgage. And she was on board. So we started looking at that.
Airbnb Opportunities and Challenges
00:03:58
Speaker
And then at the time, her father was actually starting to do an Airbnb in Altoona, which is a little suburb around just outside of Des Moines. And we saw the amount of money he was making. And I was like, he's in Altoona. How is he making that money? Who wants to be in Altoona? Yeah. And so then we started looking at the numbers.
00:04:17
Speaker
And we were just like, wow, okay. And I was a little, to be honest, you know, talk about the nerves. I was like, I don't know about this. I didn't know the numbers. I didn't look at and say, hey, you know, who's, how much are people making? I like the idea of having residual income every single month from a full-time renter. And kind of the old way. Yeah. The old way of always looking at, hey, oh yeah, this is a great investment. Get into it and you're done. And Kenzie, you know, bless her. I was really kind of like, you know, let's give it a try.
00:04:47
Speaker
I said, even if we try for six months, it doesn't work out. We still have a full-time runner and then we got into it and it was probably the best decision we've ever made. I think that is a low barrier entry once you get the property. Why not try it? You can always go a different route.
00:05:06
Speaker
What are pros and cons versus a full-time renter steady renter versus Airbnb? Like let's go to the pros of having just a straight renter every month its consistency Chances are there's gonna be a lease that signed
00:05:23
Speaker
Yeah, you don't and then I say with full-time orders. You don't have to worry about it You pretty much said it hopefully for 12 months Maybe every once in a while you have to fix something something like that. You don't have to touch the property You shouldn't have to worry about it as long as they're paying the rent. You just kind of leave it alone. That's that's the pros It's minimal work Decent steady flow of cash flow. Yeah comms
00:05:48
Speaker
What if they trash it? What if they're bad runners? What if they don't pay their rent?
00:05:57
Speaker
We have weird laws when it comes to people kick them out, get them out of there and all that stuff. So there's definitely pros and definitely cons. With the Airbnb, the cons are you don't know when your next booking is going to come. It's a little bit more money up front. You've got to pay for beds. You've got to pay for extra furniture.
00:06:21
Speaker
You know all of the dishes you've got a piece that's fully furnished fully for I mean you're talking towels paper towels toilet paper, right? Everything so it's a little bit more money up investment. Yeah more investment up front. Um Just give me an idea that the house we just bought It took run around to your second. Yeah second house. Sorry. Yeah for the second house Because the first house I didn't keep his track. Well, cuz it's the first one right on the second one I kept a lot better track and we dropped about five grand in furniture
00:06:50
Speaker
So, you know, you're talking a little more investment than the regular guy and he goes and just says hey I'm gonna full-time runner they bring in their own furniture and you're done. So that was a little bit different in that aspect. Now also the pros is that you can change the basically the rate and Whenever you want now unless you have a person that's gonna stay there for three months and you had that as your first Airbnb. Yep
00:07:13
Speaker
But for the most part, you can be like kind of a hotel where you can change the rates. Like let's say there's a big venue coming on or coming up. You might be able to bump those rates up. So that's a plus.
00:07:25
Speaker
I would say maybe the negatives is that you have to clean it more. There's a little more time aspect there when you have to pull sheets, do laundry. If you don't have a cleaning lady, which we do, lovely, she's absolutely amazing. The downside is a little bit more time of your own spent taking care of the property.
00:07:52
Speaker
Can we go backwards? Yeah. Oh, man. We're doing it. Because I think you hit on something that's really important. Had you and Kinsey stayed at an Airbnb before you considered this? Actually, we had. We had not. We had never stayed at Airbnb. Like I said, her father had done it and had really good experience. You know, and he kind of walked us through like,
00:08:19
Speaker
Okay, the vetting process of how they let people stay there, you know, because it's strangers. You know, people aren't used to saying, I'm going to open my home up to some stranger to come stay for two days out of the way. He had a proven process. The reason I asked is it seems like a lot of people have stayed in an Airbnb, but it's almost a foreign concept to like open their own home up to Airbnb. It seems like there's a barrier there. So anyway, I just wanted to hit on that.
00:08:45
Speaker
Very much so. So what's this process I got to talk to? Because that's going to be important for our listeners who are thinking about getting into this. What is this process to make sure he's getting good people to come into his Airbnb? Yeah, the nice thing is Airbnb or whether you use another website is VRBO. A lot of people use that as well. Do you have, are you on both?
00:09:06
Speaker
I was, I just do Airbnb now. I can talk about that too while I chose one or the other for my side. But there's both. You can put both your on there and you get bookings from both sides. Nice thing is they do all of the processing for you. So I don't have to worry about payments. I don't take credit card numbers. I don't hold the deposit. I don't hold any of that money myself. I just get paid.
00:09:30
Speaker
and they do all the background checks. But that costs money, right? A percentage of what? What is that? Yep, it's right around eight to ten percent. Okay. Which is healthy. Which is healthy from their side. You know, they take about eight percent from me and then they also have a fee that gets added on to the renter side. So they take a little bit cut from both and then they have a little payment processing fee or something like that. But it's about eight to ten percent. Gotcha.
00:09:59
Speaker
Wait, I want to go back to the process. So like I said, a lot of them get vetted through Airbnb. So I myself, I don't have to look up any of their information. I don't have to do background checks. I don't have to do credit checks. Whereas kind of a con of sometimes when you own that rental property is you have a renter who applies to stay at your place.
00:10:21
Speaker
I don't know what their work history is. I don't know what their, you know, do they have good credit? Do they pay their bills? They do all this stuff. So you may have to do a light credit pull on somebody. You may have to, hey, give me work references. Hey, you know, so you have to do a little bit more upfront work with Airbnb. I have so far trusted them to do that background check for me and it's worked out very well. And they have filters, right? Yeah. But you can kind of like set the parameters that people
00:10:49
Speaker
you're willing to accept.
Airbnb Hosting Strategies
00:10:51
Speaker
So I think another safety net is that you rate them, they rate you. So you can see maybe if somebody has a history of trashing things, you will know. Now if they don't have any history of Airbnb and they're coming in, I mean that's also a risk.
00:11:06
Speaker
Yeah, it's definitely a risk and I have the ability to decline somebody if I want. If I feel like, hey, I looked at some of your other reviews or they have zero reviews that just became a member two weeks ago and they're asking to come, hey, I want to look at your house before I come stay. Yeah.
00:11:25
Speaker
You know those type of things kind of are red flags for me to say and I'm not doing that or how does that process go? It's like they're a liability to you if you say no or do you just we're busy? You know different people I'll just straight up say hey
00:11:41
Speaker
No, we don't allow people to come beforehand. Pictures show it. If you want to know more information, let me know. And that weaves out a lot of people. There's not many people that try to come back at me. I've only had a couple instances where you can definitely tell it was some sort of scammer. Somebody saying, hey, I want to send you a personal check. Yeah.
00:12:01
Speaker
Which is a big no-no. It's all credit cards, debit cards. You have to payment process that way because they have to verify that that's a real credit card, that you're a real person and that they can process that payment. And so for me, that I like that side of being able to protect myself as well as, like I said, they hold a deposit for me.
00:12:24
Speaker
So if I ever have something wrong, something gets broken, something's bad, I can make a claim through Airbnb to say, hey, I want to get reimbursed for this, and then there's a process involved with that for me getting reimbursed for my stuff getting broken. Unlike full-time runners, yeah, you hold the deposit, then you're responsible for getting that back to them and all that stuff. That's handled by Airbnb. Airbnb takes care of getting them back a deposit if I don't make a claim, all that stuff.
00:12:53
Speaker
Okay, VRBO versus Airbnb. I became a fan of Airbnb. Number one, I started getting more bookings from Airbnb. I don't know if it was just more popular in this area. Number two was VRBO has an option where they allow you to pay upfront for a full year's prescription to their website. So for me, when I was running both,
00:13:19
Speaker
I first started, I was like, I don't know if I'm going to get enough bookings to make it worth my investment to pay your upfront full year. So I decided to do just, Hey, I'll pay a percentage just like Airbnb does. And then maybe the next year I'll look at doing the full year of prescription.
00:13:35
Speaker
Um, and then I was doing that full year and I was still getting more airbnb more airbnb a few vrbo And then they came back to me at such a time and they said hey, you're not doing enough bookings Um, you either have to pay your prescription or we're cutting you off. Oh jeez, and I said Okay. All right. Well, this made my decision very easy. So i've just been doing airbnb ever since and um, what was that fee for the
00:14:03
Speaker
Um, it was, they do, it's been going up. Um, the time it was like 400, 450 bucks, which was never, which is, which isn't too bad, but you'll get it over a year. But yeah, you look over a year. It was like, okay, I'll probably get my money back. But if I continue to get all Airbnb, who's only taking the eight to 10% versus paying $400 and not getting my, my investment back to say, Hey, this is now saving me money. Yeah. I see
Financial Insights and Property Management
00:14:30
Speaker
that's good.
00:14:30
Speaker
All right, so let's go to numbers. I want to know numbers. First transaction you go in, what kind of house are you looking at? What kind of ballpark? Yeah, we're looking at a duplex and we wanted to stay somewhere below 175. Okay. Which now in the Des Moines market would probably be very hard to do. Yeah. It's just been going up and up and up. And so we got with a real estate agent, never bought a house before. So that's a whole other process that if you know any sort of knowledge,
00:15:00
Speaker
Go there. You know where you're going. I believe you can buy it yourself. So that's my personal opinion. I felt like the person that I did it with, great guy, really does a good job. For somebody who doesn't know how to do that process, go get a real estate agent. They'll help you. They can do all that. Somebody who has some sort of idea
00:15:21
Speaker
Try it yourself, save yourself some money. Anyways. It saves the buyer money. Yeah, it saves the buyer money. It saves the seller money. All that stuff. So anyways, so we started looking and I actually, we found the house ourselves. I was just, you know, doing a lot of research, found this one and it only had pictures on the outside. So I was like,
00:15:39
Speaker
I just want to go look at this, you know, it was in our price range. It was price rate about 165. So all right, let's go take a look. And we got to take a look at it and the downstairs, it was like that moment where we both walked in and we're like, we love it. It had like
00:15:55
Speaker
The hardwood floors, the fireplace. You were thinking about Airbnb at this point. At this point, we're already on like, hey, this is what we're going to try to do. This is our plan. So we looked at it and we're like, you know, tile floors in the kitchen. It wasn't like last five years, but it was still tile in the kitchen, in the bathroom, and everything was pretty painted nice. I'm like, okay, this is awesome. Go upstairs. It hadn't been touched in 10 years.
00:16:23
Speaker
So, you know, it's still hardwood floors, still a lot of the character, still all this stuff, but yes. So those renters that were upstairs were leaving. So they knew that was going to be open. So it was perfect for us because we wanted somewhere to live. The renters downstairs were on month to month.
00:16:40
Speaker
that was also perfect for us. So started going through a couple different processes of kind of a long story, but trying to do like a renovation loan process took too long. It was not a great experience. And so we went away from that.
00:16:54
Speaker
Eventually got some help from Kenzie's parents to say, hey, there's so much money we have. We want to get to 20% down because we're tired of doing these construction loans. And then we're going to use our own money to do the renovations. They loaned us the money, the 20% down. We went to that transaction and over this renovation loan, about four month process, it was really long.
00:17:19
Speaker
We finally got the house. So right away we go in, redo the hardwood floors, paint all the rooms, do just a bunch of different stuff on the upstairs. A lot of that stuff. And then had to tell the balancers runners that we're not going to extend you a lease, which was also a tough conversation because
00:17:41
Speaker
The sellers had told them they were. Anyways, so that was a tough conversation. But anyways, so we get them out and we did our, we finally got it open. We closed in August and finally got it up. I forgot the runners on everything in about October for 2016. Okay. So you're three years in.
00:18:02
Speaker
Two years in. We're just about a full two years in. So got it up going October of 18. Now, backtrack a little bit. When we knew we were buying this duplex and doing Airbnb, we started knowing, hey, we're going to need two sets of everything because we have this duplex. So we started going Craigslist, Facebook Marketplace, just collecting furniture for months. And the main, the only thing we bought new was beds.
00:18:30
Speaker
and sheeting and everything else is used. You know, it's going to get used. You know, it's going to get, there's no point in spending. You could usually spend 20 grand on new furniture and, and it's just going to get used for everything. Can we frame in real briefly where your house is?
00:18:47
Speaker
next to drake university yeah it's about drake runs right off of thirty three first review history i'm just off thirty nine some just on the street your sandwich between downtown and the university. You know very similar to get a lot of other cities.
00:19:04
Speaker
Yeah. And one thing that we loved was just kind of what's around it. There's a grocery store two blocks away, coffee shop right there. The library bar, which maybe he knows is not for their nachos. They're right down the street. Get two gas stations on the corners, really close to the interstate. All those things kind of came to mind when we're thinking, okay, somebody coming from out of
00:19:29
Speaker
What do they need? What do they need when they stay for everything? What would we like if we stayed for everything? So those aspects kind of came to place where we wanted to be. Like a little experience.
00:19:39
Speaker
Yep. So sorry, back to the numbers. We ended up getting the house for 155. Wow. Which was, we thought was a really good deal. Put somewhere around 14 grand into it. Okay. Between the... That's not crazy. No, which was redoing the hardwood floors, painting. We redid the kitchen. We did tile floor in the upstairs kitchen. You know, redid the bathroom a little bit, stuff like that. So we put about 14 grand of our own money in it. So you're 169. Yeah. Which is under the 175 that you wanted.
00:20:08
Speaker
Yes, exactly. And after all this stuff, we also did a backyard renovation last year, which was part paid by the business, but total were probably about 174, 173 in. Today's market, I did kind of a little bit of market balance, we probably could sell it upwards of two for the amount of rent you could get for it, all that stuff.
00:20:35
Speaker
how much Airbnb income are you getting from that? So that particular property last year we did right around 30,000. But monthly what, so break that down. So monthly it's kind of hard because of the fact that the summer months are so busy. I mean, Iowa weather, the summertime is your busiest time. So I may make,
00:21:01
Speaker
four grand in the summer. I may make $4,500. I may make $2,500. The winter months, I may make $500. I may make $1,000. But the overall aspect is you don't spend the money that you haven't.
00:21:18
Speaker
out through it. So last year we did we did read about 30 which was way over what I thought I would make you know and we live for free. I haven't paid a mortgage since we've lived there. So I did the numbers if we just run our downstairs so we rented that full time we lived upstairs at the top and we probably get 1200 bucks a month.
00:21:44
Speaker
So, you're talking a lot more money compared to what we would do if we just rented out full-time. So, that's been huge. So, fast forward, we've been able to buy another property, another number to give you for this year so far between bookings. I've already stayed and I've already booked. We're at just at the $40,000 mark.
00:22:07
Speaker
between the two between the two for the year holy cow and you're halfway through and we're halfway through now that's people that some have already booked after august i have one book sure so i still have room is that i have a lot of open dates yeah yeah that may or may not get full maybe it may or may not so it's not a true conversion of like okay double what you're making yeah yep my goal is to hopefully hit the 50 000 mark by the end of the year for both or between the both okay let's talk because i don't want to make this like
00:22:35
Speaker
to, like, there's expenses. Oh, very much so. So let's talk about the other side of the ledger, because you said it is more than, like, a traditional ledger. Yep. It's a little more time consuming. I did the numbers on average. We spent about 12 hours a month our own time.
00:22:52
Speaker
which isn't crazy at all. I mean, to make that much extra money, spend 12 hours a month. I mean, I'm doing the basic things that anybody would do if they owned a house. Both lawns, making sure everything's kept up, doing laundry, that type of stuff. What saves us a ton of time is we have a cleaning lady. Like I said, she's amazing. She actually used to work in the hotels. She'll even do like little designs with the toilet paper.
00:23:18
Speaker
And so she's just awesome. And so, you know, we first found her on Facebook and she's been great. Um, and then, so we, you know, after we got our first, well, we started getting our second probably, I just said, Hey,
00:23:31
Speaker
you let me know what you want, what it's gonna take to do the new house as well. Because all I'm gonna do is I'm just gonna put it on as a cleaning fee. So just let you know through Airbnb you can put on a cleaning fee. So I'm literally, any money I make for my cleaning fee, it's passed on to her. It's the same cost. And so I just said, hey, what would you take you to clean this?
00:23:54
Speaker
I went with does my cleaning fee to get passed on to you. And so she gave me a number and it was reasonable. And so we've just been wrote it ever since. And so she does both properties for us now. And you don't want to promote her because you don't. She does do a few other homes like since we got her, she now does.
00:24:13
Speaker
my soon-to-be father-in-law's house when he does Airbnb. He now has picked her up and she does a few other houses but she works a lot of mornings so then during the afternoon she just you know I tell her hey here's keys go in and get it. So yes back to the expenses. So I have the cleaning lady not only but you know we also have
00:24:36
Speaker
extra set of sheets for every bed. So for our current house, there's four beds. We've got eight sets of sheets just for that house. The new house, we've got five queen beds, a full bed, and a bunk bed.
00:24:53
Speaker
And we've got exercise sheets for all those. So you're talking 10, 12 sets of sheets. So there's an expense there, there's an expense for towels. You know, we make a Costco run once a month to get paper towels, toilet paper, that type of stuff. But the initial investment, like I said, was about $5,000 for the new house. Outside of that, everything the business is able to pay for. Let's talk about how you finance that second house.
00:25:18
Speaker
Yeah, so we bought it as a primary residence because we do flip-flop a little bit. We'll stay there sometimes. We'll stay at our other house. But as a primary residence, the mortgage program is right now.
00:25:37
Speaker
Go to your local credit unions, find out what you can do. We're able to do an in-house loan, 100% financing. I didn't put a single dollar down. Wow. So what they do is they do a 90, what's called a 90-10. A 90 on the front side, home equity with 10% on the back side. And it technically got two payments. Obviously paying for a wedding and all that stuff, we didn't have a lot of money. Sure. A ton of money to put 20% down.
00:26:03
Speaker
So we were able to go in there. I got the sellers to cover a good portion of the closing cost and pay for a couple upgrades. So at the closing table, I walked away with a $3,000 check.
00:26:18
Speaker
Thank you for letting me buy your house. Yes. So I put no money down, paid nothing for closing, and walked away with a $3,000 check to do some upgrades to the house because we wanted new carpet, things like that. Yeah. So we walked out with no money down, all this stuff. Now I got a couple mortgages, things like that, and very competitive rates. I mean, like I said, I'm in the mortgage business.
00:26:41
Speaker
I've looked at the rates, looked at the products, it's better than most of the big banks can do. The reason I can do that is they're in-house financing, they're holding on to that loan, they're not selling at all, so they can hold that. So anyways, so then we started doing the same thing as we did with the first house. Craig's List, Facebook Marketplace, friends, family.
00:27:01
Speaker
get all the furniture we can. Anybody who's gonna be doing this, do not go out and buy new. We've got free couches before, we've got a couch set for 50 bucks that's in great shape, tables, silverware, all that stuff. The only thing we usually buy brand new is the beds.
00:27:20
Speaker
I don't think it's right for somebody to sleep on a mattress that's been slipped on for the last five years. Bed buns, all that stuff. And then brand new sheets, towels. Nice stuff. Doesn't have to be the top of the line, but just something somebody's like, hey, it's hotel quality or it's above.
00:27:40
Speaker
And so those are the things and I said it's just a little over five per name is what we put into it of our own my own money How how much scrutiny would the banks get to make that your primary residence? Like you know what I'm saying? Like what how what do you have to do to show that? It's got to make sense. So if you go to a lender and say I'm doing Let's say you were going from a single-family house to a duplex
00:28:05
Speaker
they're probably gonna be a little suspicious of that, saying, it's an investment property, we know, we understand what you're doing here. If you go from, hey, we have a duplex, you know what, we're trying to get out of this duplex, we wanna go to a single family house, they don't bat an eye at it once. So it's gotta make sense. Don't lie to them, our true plan is that we are living between the two, so technically, we spend a lot of time there, spend a lot of time here, so typically it's technically our primary.
00:28:34
Speaker
But the other thing I'd say is I think so many people are conditioned to just like bow down to the banks. Very much so. And two, from a risk standpoint, they want good loans. And so the better loan they give you, the less risk they have, right? Like now you're in a better financial position. You're getting the extra cash flow. You have another asset. You're in a better financial situation.
00:29:00
Speaker
with the way they constructed that loan versus like, now you're not doing that, we're making you pay an extra percent, or we're not gonna do this, bring 20% to closing, now you're kind of bent over. Yeah, to go back a little bit, so as I said with the first house, we put 20% down with the help of my fiance's, my wife's family, and we were able to, the same company that we financed our second house with,
00:29:26
Speaker
went to them for a second mortgage, said, hey, we want to get them paid back. I don't like owing people money, especially family. Even though they're great, they wouldn't care about it. I just don't like it. So I went to them and they're like, oh yeah, we can do 100% financing. We'll put a second mortgage on here and we can go up to whatever is needed to pay them back.
00:29:47
Speaker
Okay. Great. So they did it and it's on, you know, it's a, it's a five year second mortgage. Well, I'll have it paid off by three years less, um, with, with how much we're making payments on it. So I was able to pay them back. Um, I technically got two mortgages on each house, but I'm still cash flow is way over what my mortgages are. Sure. What's been the biggest like, Oh, or.
00:30:11
Speaker
obstacle or challenge that you've had with this Airbnb. Sometimes it's trying to balance handling the requests with the questions and things like that because I'll be at work and my phone just goes off because I get message updates and things like that. So I'm trying to do my own work. Don't tell my work this. Do my own work plus take a break and say, hey, I've got to respond to this person. I want to be proactive.
00:30:36
Speaker
Because it's money. Yeah, exactly. It's constant, very easy with the technology. I'm able to respond within five minutes, if not less. And people love that. If you are ultra responsive, they love that. I mean, if you take
00:30:54
Speaker
you know, they message you 8 o'clock in the morning, you don't get back till 8 o'clock at night as any business that people don't like that. So if you can be ultra responsive, which this type of process makes it very easy for you to be ultra responsive. So that's been kind of the headache because people will ask just ridiculous questions. But give me a example. There's craziest questions. I don't have a clue what this could be. I'm trying to think. People ask, I don't want to rent your house. I just want to rent it for about an hour.
Guest Management and Communication
00:31:24
Speaker
okay it's like it's like uh you know or you know people ask like you know people who maybe not have stayed here before they're like we have to bring our own blankets do we need our own pillows do we need this it's like it's like
00:31:40
Speaker
No, it's fully furnished. You're going to have everything. Bring your food, bring whatever you want, but that's all you need to bring. The greatest that I loved actually was we actually had somebody do a wedding ceremony at our downstairs. No way. They're like, hey, we just want a space that we can do a quick ceremony with family and friends and have a little reception down there.
00:32:04
Speaker
And and they're like, well, you know, we'll do the two-day booking because we'll come in Friday night, stay Saturday afternoon afterwards. And they were taking, it was so crazy. They were like in their full wedding dress, full tux, doing pictures outside and all this stuff. It was super cool. So do you have a minimum of you have to say two days? Two nights. So yeah, two nights. I don't like to do one night, mostly because I still have to pay my cleaning lady to come. So I know you're going to pay for that, but
00:32:31
Speaker
the time and the money is just not as much. You know, two nights is like perfect, makes it worth my time to switch all the sheets, do laundry, take the time to clean the place and do that. So for money-wise, I always do two nights. I have a lot of people that ask for one night. And I'll straight up come back to say that's fine, but it's going to be more money. It's got to be worth the money for me to do it. Most people don't like that because it ends up being more than a standard hotel. So typically I don't. What's your rate like average?
00:33:01
Speaker
For the new house, weekends are about $3.75 a night. But it's a much bigger place. We can house up to 16 people.
00:33:13
Speaker
I've got beds for 13 to sleep in, then couches, air mattress, whatever. The other house, we are at about 200 a night. Four beds, I sleep up to about 10. Between the beds I can sleep eight and then couches, air mattress, I say another 10. I've had up to 12 down there before, but it gets kind of tight. Does he get allowed upstairs? Is that annoying?
00:33:38
Speaker
We've only had a couple times, you know, when people come home, drop from the bars, slam doors, things like that. That's really the only thing that we've heard because it's an older house, it bangs and it shakes the house. Did you ever give a better review?
00:33:57
Speaker
great question I've never given a bad review have I wanted to yes there's some sort of like psychology I just about all yeah unless you really do bad I won't I'm getting the benefits of the Dow
00:34:13
Speaker
What made you want to? I had to make my first claim this last month. Almost two years I have yet to make a claim. That's amazing. That was my first one for $100. So I was a little frustrated. We came in and there was just
00:34:30
Speaker
typically with Airbnb, you need to respect it like at your own house. And so there was stuff everywhere, wrappers, water bottles, an apple with a bite taken out of it, just sitting on the nightstand, an apple found underneath one of the beds, just weird, just weird stuff. They were there for three nights. They filled my trash can. They, I don't know if they had like a wedding party there or what, they filled the trash can and furniture was moved and things like that. And so we're starting to put the house back together. And my couch wasn't where it was sitting. I'm like,
00:35:01
Speaker
Okay, so I started pushing it back. There's a stain on the carpet. They had made, I think it's curry, something that had that yellowish color to it and a stain. Somebody had gotten sick in one of the bedrooms on the side. They didn't clean it up. So that for me was just like, it was just more disrespectful than anything else.
00:35:23
Speaker
So I put a claim in and said, I told her, told her from, Hey, I, this is what happened. The house is in pretty bad shape, blah, blah, blah. Well, she had booked it for her family. Family's telling her, Oh, we left it in great shape. We cleaned everything. We cleaned everything besides just not vacuuming.
00:35:40
Speaker
And I'm like, no, that's not true. So I said, you can still give your family the benefit now. I just want to pay for the carpet cleaning and a new set of sheets. So I put, I didn't go overboard. I said, here's a hundred bucks. Will you pay? Airbnb then goes after the person I rented it. So yeah. So actually the way that works is I put in the claim, they have the ability to accept it.
00:36:01
Speaker
If that person says, alright, I own it, alright, I'll pay that, it's done and over with, I get my money. If they deny it, then I send pictures, there's investigation, it goes through all that stuff. So luckily, she said, yep, go ahead, you know, I understand, I'm not gonna, I just got married, I'm not gonna, you know, fight with my family, that's fine. And, you know, family's telling me, oh, you should, you know, you should,
00:36:24
Speaker
eat them up on Airbnb. I'm like, I'm just not gonna leave any review. I just don't feel, I just didn't feel right about it. Especially because it might not even hurt. Exactly. She just got married. I'm gonna give her the benefit. So that's the worst thing is just sometimes coming in and
00:36:44
Speaker
seeing how somebody's gonna trash the house. But if you look back on, if you have full-time renters, they could do the same thing. And you wouldn't know it for two years. Yeah, you wouldn't know it for six months to a year and things get past repair. What would you tell our listeners? What would be like their words of advice or your encouragement for those who are kind of thinking about looking over this cliff of rentals and Airbnb?
00:37:14
Speaker
just be ultra-respective and responsive to people. People, I mean, what you're doing is you're typically in like a customer service role. You're taking care of, you're like a hotel. And it is gonna be more work, it is gonna be frustrating. People are going to leave cigarette butts outside sometimes. People are going to do things that you're like, wow, that's super, yeah, why would you do that?
00:37:40
Speaker
But you have to think of the fact that, okay, people aren't, not everybody's is like you, not everybody's going to be respectful, not everybody's going to keep the same way as you are. That's part of running this business is you have got to be understanding of things that are going to happen and then you deal with them and you move on. Um, so that's number one is, is, is you have to be a people person, um, in a relationship, me and Kenzie, I am very, she's,
00:38:06
Speaker
Sweetest girl in the world, but I'm the person that deals with everything. I'm the one that deals with the customers I do our questions. Yeah, cuz you know You know, she just gets stressed, you know, she's doing her playing a wedding do all this stuff She had to deal with Airbnb as well. Yeah, I think it would be
00:38:22
Speaker
So I deal with it all and I think if you are in that, you have to be that type of person that can handle that stress. Thicker skin. Yeah. Thicker skin, be able to handle the stress of, all right, I got this Airbnb. I got my own stuff going on. I've got this because it is different than a normal rental property. If we had a full-time runner in there right now,
00:38:41
Speaker
I wouldn't be dealing with it at all. But there's stuff that's like, hey, I had a booking come in last night for yesterday. So they, you know, you've got to be like, oh, okay, I got to go over to the house, make sure it looks okay. Get them instructions, forget the keys. Plus I'm doing my, you know, I got my own stuff I'm dealing with. So there's a little bit more time in there, but I mean, the money, you know, I think I'm like, I think $1,200 for three days.
Balancing Airbnb with Full-Time Work
00:39:07
Speaker
Okay, I'm gonna go over there. Okay, I can do this. Dang it. Yeah, is that, ah, shoot. So there's, you also think that, you know, money doesn't rule everything, but okay, I'm putting a couple extra hours in and I'm gonna make $1,200.
00:39:22
Speaker
All right, you put through it. You put through a lot more on your own jobs than you do with Airbnb. You're more stressful than what this is. So many people say that like, I couldn't do that with real estate or it's so much work. It's like, how much work are you doing right now? The one thing I wanted to hit on too is kind of the Kinsey thing, but also we call it like family economics where
00:39:49
Speaker
You know, so many people are looking at different ways to make money, and you've got this guy, your future father-in-law, who's got this idea. What's it been like as, you know, entering into their family still? You're not married, but what's it been like for you and Kinsey in that relationship of just learning about another way to make money?
00:40:07
Speaker
and kind of mastering that together. Yeah it's been super great especially when you know we're on the same level. Definitely if you're going to get into this you need somebody who's going to be on board. You can't in my opinion you can't do this and think that oh I can do it and maybe she doesn't like it but you know she'll get over it.
00:40:31
Speaker
Any little time that you have a problem, that person's going to be upset about it because they're not on board with it. As soon as they get on board, something comes up.
00:40:39
Speaker
Okay. Whatever, you know, we'll deal with it, you know, because she wants to do it just as badly as you. Um, and then growing this is really brought like me and her parents, we have a great relationship. It's probably even closer. Um, you know, I'll sit down with her dad and we'll talk about, you know, you know, what'd you do with this week in Airbnb? You know, what have you been doing differently? What have you found? Um, what events are coming up? Would you, you know, like he may get a booking for such as an event that we didn't know was going on in the morning and I'll be like, Oh,
00:41:06
Speaker
That's coming up. Okay. Well, maybe I need to, you know, wash my pricing a little bit and do that. So, you know, he's, they've helped us out with our properties. Sure. We've been turned help out with them. And it's been just a super growing thing. And sometimes we don't always agree on the things that he may do or that him and his wife may do. And so we do it differently.
00:41:26
Speaker
You don't have to do everything the same. Like we talked about before, find out what works for you and go do it. Not everything's going to be right for you. Maybe investment in properties isn't right for you. Doesn't mean some other type of investment that you guys are covering on the show isn't going to help them or make them want to do it. So figure out what's going to work for you and what you guys can grow together.
00:41:48
Speaker
How do our listeners get a hold of you? And how do they look at your properties? Yeah, definitely can go on Airbnb as well as I put them up on Facebook, Fred Appleton, look for a Des Moines. And I've got our properties up there. So you'll see three listings. So we do do our current house that we live in. We do the downstairs, plus we do the whole house. So there's times that we'll rent the whole house, even our own stuff.
00:42:15
Speaker
And you know we stay at the the new house and then we also have the new house list. There's a total of three listings that they can book And and they can find me on there that I don't do Instagram. I don't doing that stuff. So
00:42:29
Speaker
So definitely, if you can look us up, look at our properties. We love having new people, love hosting. We have different events from weddings to family get-togethers to, sadly, funerals. Had a family book last minute because
00:42:48
Speaker
you know, a family member had somebody pass away and they're coming to town, you know. And so if you can be, you know, always being, you know, very sympathetic and things like that, if you can have something that's very nice, that's comforting, that feels like home when they're not at home, it is nice, which I love doing. So it's a great feeling. Yeah. Well, thank you so much for your wisdom. I think a lot of people will get a lot of good stuff out of this and I think even push people towards like, let's try it. Like what's the worst that can happen?
00:43:17
Speaker
When you look at real estate and the different ways to monetize real estate, I think this Airbnb mechanism is the safest.
00:43:26
Speaker
an easiest way to kind of tip toe into real estate. Very much so. I'm able to maintain my property and I may have it for two, three years and it's going to be in better shape than if I had a full-time renter in there for two, three years because of the fact that any small issue is able to get fixed right away. Whereas some people that let properties go and then those things
00:43:51
Speaker
It could have been a very easy fix, turns into a large fix. So that for me has been a big problem. Super huge wealth of information. Thank you so much for being on the show today, Brett. You've been listening to the Uncommon Life Project. I am your host, Phil Bramsey. And I'm Brian Dewhurst. We are with the Uncommon Wealth Partners. If you have any questions, please reach out to us via email at philip.com.
00:44:13
Speaker
at uncommonwealth.com. We're here for you. We're encouraging you guys to take control of your finances and really be uncommon. Thanks again, Brett.
00:44:33
Speaker
That's all for this episode of The Uncommon Life Project, brought to you by Uncommon Wealth Partners. Be sure to visit uncommonwealth.com to learn more about our services. Don't miss an episode as we introduce you to inspiring people who are actively pursuing an uncommon life.