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Episode 23: The Art and Data of Short Term Rentals
191 Plays7 years ago
We say it often: short-term rentals are a great way to stick your toe in the water in exploring investment properties. But there are still a lot of unknowns as you start out. Like the basics – how much should I charge? What is your competition? Does this place even need short-term rentals?
First, the opportunities are greater than you might think. Second – the data is there to answer many of your questions. Our podcast guest has answers, and he is working hard to mine the data for even more detailed answers.
On our most recent podcast episode, we talk to Scott Shatford who started renting his home on AirBnB when he went away on extended travel. He immediately saw the potential. His background in data analytics gave him an idea: why not create a repository for data that can help short-term renters understand their market?
AirDNA.co was born. AirDNA is an aggregator of short-term rental data & insights to help owners succeed in the sharing economy.
What You’ll Learn in this Episode:
- Why good data about short-term rentals in your area can help you make smarter business decisions
- How and when to scale and automate your short-term rental business
- Revenue and channel management strategies for short-term rentals
- What people are looking for in a short-term rental
- Hotel industry efforts to regulate or outright squash short-term rental businesses and what to do about it
- What you can learn about a potential rental property from “The Rentalizer” beta testing on airdna.co
- Growing business opportunities that complement the short-term rental industry.
- How to locate the best places to invest in short-term rental properties
- How to create a unique guest experience for your ideal guest
Recommended
Transcript
Introduction to Uncommon Life Project
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. All right, well, let's just jump right into it. Scott, thank you so much for joining us today on the Uncommon Life Project.
00:00:42
Speaker
Really appreciate your time.
Meet Scott and AirDNA
00:00:44
Speaker
This is actually a really fun one for Brian because it was his due diligence that found your website, airDNA.co. So just want to give some kudos to Brian. He likes that. So welcome to the show. Let's jump right into it. Brian, go ahead. You can go with the first question since this is your due diligence that got him here.
00:01:02
Speaker
Yeah, thanks again, Scott. Thanks, guys. I probably have a hundred questions, so we want to be mindful of your time today, but I think you have a very... There's two stories we want to architect into this. It's kind of your background story of how you got from zero to 60 with Airbnb and your background there, and then actual AirDNA and how you're helping people go deeper and seize the opportunity in front of us.
00:01:28
Speaker
if you could just kick us off like you know high school maybe your upbringing and and where you got started um you know very high level and then we'll kind of go from there oh back to high school all right wow i was kind of shocked that he went there too
00:01:43
Speaker
Well, there's some interesting stuff. I was fortunate enough to have some entrepreneurs in my family. My father started a web company, really sort of an aggregator of businesses, kind of an original search engine back in 1994. So I was lucky enough to be surrounded at the dinner table by big ideas and technology and the internet from its infancy. So I probably have a little bit of a leg up from others that I had that sort of background and that I was able to convince my father to build my first web scrapers to get this thing off the ground.
00:02:13
Speaker
Yeah, so going way back, I've always been interested in just how the internet was disrupting anything.
The Airbnb Revolution
00:02:22
Speaker
And when I fell into Airbnb and thought about how many entrepreneurs out there were starting to think about Airbnb as an income source and how I could help propel them forward and give them information, it seemed like a no-brainer to me.
00:02:35
Speaker
Yeah, so always Airbnb like that. Is that the thing that took off? Or was it something, another idea that then just Airbnb fell into it? Or was it Airbnb that gave this idea of wings, I guess. Airbnb changed all of the dynamics of vacation rental properties. Vacation rentals used to be very hard to manage because you were having to take
00:02:56
Speaker
individual payments from people, you're having to manage a calendar, you know, your check in and check out processes were really bad. There was lots of things that they kind of solved for people to make this a very automated and very unlabor intensive sort of process. And so it is what gave this entire industry wings was saying like, we're going to give you all of the demand you need for people, we're going to make this instant bookable, we're going to take care of
00:03:22
Speaker
all of your payments, we're going to take care of all resolution issues with like problems with check-ins and how we're going to resolve all those issues. So it made it so easy that, you know, I had seven properties at one point in time and I was spending maybe 10 hours a week max managing the whole thing, cleaning check-ins, checkout, payments, everything. And so that's kind of what they unlocked for people was just the time savings to manage properties. The scalability. Sure.
00:03:48
Speaker
You weren't always in Airbnb. So can you kind of walk our listeners through your path through college and then how you kind of got into this?
Career Transition to Vacation Rentals
00:03:56
Speaker
Cause I think it's a really powerful story. Yeah, it's cool. Yeah. Um, so after graduate from university of Arizona, uh, you know, I dabbled in some industries like hedge funds and other things like that. I ended up getting into a much data heavier role, you know, really being a data analyst to start off with and evolving over nine years at a company called corn fairy international.
00:04:17
Speaker
into really understanding data that is very fundamental core, like that's the database architecture, that's like how to create good visuals for executives that kind of synthesize and summarize information into really nice, comprehensible sort of dashboards. So I was in the nitty-gritty of data and business intelligence for about nine years before they let me go. In restructuring, they offered me a new gig, which seemed really boring, and I said, no, thanks. And they said, all right, well, I'll see you.
00:04:45
Speaker
But it's probably the best thing that ever happened to me in my life because of that comfort of climbing that corporate lot or looking for that next 5% pay raise and it's comfy and it's easy. We call it the golden handcuffs. Man, we are on board with that. You're right. Probably the best thing that can happen to you. And so, yeah, I took off from that gig and it was kind of this eye opening moment, right?
00:05:09
Speaker
I got a nice severance package of nine months and so that was like, all right, well, let me go travel the world and do things I was never really able to do previously. And so when I went to go travel, my neighbor told me about Airbnb as I was looking at storage units and where to put all my stuff. My neighbor was like, I heard about this thing, Airbnb, you can just like have people stay there and pay for your rent while you're gone.
00:05:29
Speaker
I was like, that's amazing. Yeah, I definitely will give that a go. And sort of the rest is history. I had my first booking. I took pictures from my iPhone and spent 20 minutes maybe writing up some marketing text. And within 24 hours, I had a couple bookings. And I got some grandparents in Wisconsin and some other folks in Florida. And I was like, wow, this is really, really easy.
00:05:54
Speaker
Yeah, while traveling, I just kept getting bookings. I was managing it from the middle of Cambodia. We just saw how easy it was to get people in, get them in and out of the place and get it cleaned. It was just really simple. I think in my second month, I did about $6,000 on an apartment that was costing me $3,000 all in with utilities. The lightbulb started to go off. I was like, man, this is really easy money.
00:06:21
Speaker
I won't ever go get a real job. And let's be, we're in Ankeny, Iowa and it's jury up. Where was your first Airbnb, just so our listeners can visualize? Yeah, I was pretty fortunate in that regard too. I had a really nice one bedroom right in the downtown of Santa Monica, California, right next to all the tourist beach and third street prom nod. And so I was kind of in this really nice epicenter for travel and surrounded by hotels that were going for
00:06:49
Speaker
400 plus dollars a night. Sure. And so there was a lack of hotel supply. All the hotels were four star plus properties. And so that was sort of the initial thesis of where I wanted to invest later on was like, you know, look at hotel prices, you know, where can you get a
00:07:06
Speaker
nice condo for a few thousand bucks a month, charged $300 a night, but that's still 20 to 30% cheaper than the hotels close by. And you're offering a balcony, offering a kitchen, a washer, dryer. So it was, you know, a great deal and a great value for people coming to the city.
00:07:26
Speaker
When you started realizing like, holy cow, I might never have to go get another job again. Like how long was that after you quit your, are laid off or whatever you want to say, decided not to go back to work. How far was that in the nine months of severance?
00:07:42
Speaker
If I took it longer than that, to be honest, I mean, it's probably right around nine months. Interesting. I think the biggest decision was that first investment in a property, right? You already have your property. It's already furnished. It's making money. It's printing cash. I moved in with my girlfriend and said, hey, let's travel some more. And so that was the easy part.
00:08:04
Speaker
The hard part was saying, okay, here's the first investment property. I'm going to furnish it from scratch. I'm going to put $10,000 on my credit card and I'm going to really hope for the best here. I've done my due diligence. I know it works. I know what the model looks like, but taking that first step is always the hardest.
00:08:21
Speaker
Yeah, and I think we see that a lot too. I was going to echo that in your previous comment of like, yeah, I'll just give that a go. I think that's the beauty of Airbnb in getting into real estate is like you already had a property. Yeah, I'm going to be going anyway. I'm locked into this lease. I might as well try to rent my place out while I'm gone and pay for my trip.
00:08:38
Speaker
It's a pretty easy toe in the water. And I think what's so powerful about what you've created, and I want to get to that, is that you help people make that investment decision of like, I want to do a second one. I'm going to do a third one. And it's calculated. There's data behind it. There's metrics. There's a plan. It's not just like, oh, man, I hope this works. You're giving people clarity into that decision. And so
00:09:02
Speaker
So then walk us through because I know, and again, I'm going to give you a shameless plug now and you can plug whatever you want at the end, but you have an amazing ebook on your website that kind of walks through your story and how you've built your Airbnb business and how you transitioned into AirDNA. And so walk our listeners through that if you would really quickly of how this shifted from like just renting a couple properties to like
00:09:25
Speaker
there's an opportunity here and I'm going to press in.
Developing AirDNA's Tools
00:09:28
Speaker
Sure. Yeah. I mean, so I got to I think the seven property mark and there were some rumblings about regulation in Santa Monica and it didn't look like it was going to be going my way. And so
00:09:41
Speaker
First thought was, I need to diversify where my properties are. So I'm limiting my exposure to one city and where I'm exposed. And so that led me down this scraper path, right? So scraping the Airbnb website, you know, convincing my father to go do it for me. And then, you know, looking kind of where were other opportunities, where were the other markets that were successful in Santa Monica so I could start to acquire new properties there.
00:10:04
Speaker
As I was doing that, I was also writing that ebook to try to get a name out there for myself as an expert in the space. I was talking to lots of guys and I just heard that that was a huge need for them. There was no competitive intelligence. There was no market insights. They weren't comfortable about
00:10:21
Speaker
their pricing strategy or their expansion strategies or anything. And so there was just a huge void in the marketplace for vacation run-ons on anything that was data-driven. And the platforms themselves, Airbnb, HomeAway, anybody else, wasn't really providing any insights to their host. So the light bulb went off, obviously having that 10 years in data, my mind was spinning about all the different ways to analyze and create the charts and the metrics and decision, help the decision processes along the way.
00:10:52
Speaker
So, yeah, I guess it was probably late 2014, you know, we decided to sort of really turn this into a business. It's about two years after I started the Airbnb stuff. And it was really kind of this thesis which, you know, like, you know, we know there's a gold rush and either you're gonna go out there and start mining for the gold, you're gonna start selling the shovels to everybody else, right? Yeah.
00:11:13
Speaker
times that shovel salesman does way better. Yeah, they sure do. That's so true. We use that analogy a lot actually in the Levi Strauss analogy and I totally get it. I actually spent quite a bit in data analytics too with Deloitte and Touche more on the audit side. And so I had a kind of a background in data and looking at company stuff and trying to detect fraud and that type of thing. And so a little bit different angle, definitely not on the programming side or anything like that.
00:11:42
Speaker
Yeah, it was interesting. I started looking at Airbnb and I think even when you look at the progression of what Zillow has done for the real estate market, there's so much. I think there's so much upside and I don't want to over-promote this because obviously real estate ebbs and flows in different markets and that type of thing. But with the data that you've been able to collect and the data out there with Zillow and some of these other sites,
00:12:02
Speaker
It's really re-shifting the real estate landscape, in my opinion, in this country, of how you can actually monetize a single family home or a vacation home. And so where do you see, what are you excited about now? You're what, three to four years in with AirDNA? You've done the Airbnb side. What are you excited about when it looks like in real estate?
00:12:24
Speaker
and where this is headed. Yeah,
Impact of Short-term Rentals on Real Estate
00:12:26
Speaker
it's really exciting to me. And I'm actually talking to, you know, head of corporate development at Zillow here in about two hours. So, you know, I think we're also trying to sort out kind of really what this all means to real estate, as now there is this new option, which is often much more lucrative for how to monetize real estate and all types of real estate, whether that's multifamily or single family or things that were previously commercially zoned, you know, and how you can kind of flip those into every new properties.
00:12:52
Speaker
But really, fundamentally, there's a new sort of way to monetize property. It's not just like a fix and flip or like a long-term rental. Now, there's this whole new category really backed by a million vacation rentals in the US alone that is this new way to think about investing and monetizing space. And what is really the best use case for space, I think, is changing. And the gray area between a commercial property and residential property is becoming
00:13:18
Speaker
bit more nebulous. All of these things are creating disruption, which creates a lot of opportunities for some and a lot of risk and headaches for others. In general, I think what we're trying to create is really valuation models for short-term rentals.
00:13:36
Speaker
I could get pretty nerdy on that, but at the core of what we're trying to figure out, what's the revenue generated by every short-term rental in the world? So that's the core problem that we were solving pretty early on. And now it is, how do you then take that information and then figure out what every property in the world is worth as a short-term rental?
00:13:57
Speaker
using a bunch of data sources and like, oh, similar amenities, similar size, similar location. What is the property anywhere in the world where it's a short term rental that's fairly decently managed? And so that's kind of the big three to five year sort of problem that we're trying to solve. What would you give like a elevator speech? Because some of our listeners probably don't know what AirDNA is at all. So could you give us just a quick synopsis of what you would say AirDNA is and what you were trying to achieve and what it is now?
00:14:26
Speaker
Yeah, sure. I think Air DNA is the largest aggregator of short-term rental data. What we're trying to achieve is really trying to empower entrepreneurship in the short-term rental lodging space around the world. What we're actually trying to do is do what I did is be a guy with 510 properties that's competing with the Hilton, Starwood, Marriott's of the world. And we do feel like there's gonna be a democratization of lodging as people want more unique personalized experiences.
00:14:55
Speaker
consumers have already spoken, they want really a unique experience that the hotels can't offer. And so we're trying to kind of empower that shift of lodging to the small guy. So what's that look like as you go on his website, airDNA.co, type in an address and you can see how many in a location wise, how many Airbnbs are in that location and what average price they're getting per night and how many nights per year.
00:15:22
Speaker
they're being rented. So you can get a pretty quick, I'd say a snapshot of, well, is this, cause a lot of, uh, I would say arguments that we would get our debates are like, well, my location isn't very good. Well, this air DNA can blow that out of the water. Well, yes, it is because there's three of them right around that same area. And this is kind of the analytic sport. So you've done a great job.
00:15:44
Speaker
This is what I think is yeah, totally. I mean, it's definitely an eye opener to most people because people think like, oh, I don't have like a courtyard in there like anywhere within five miles of me like nobody's coming to stay in my areas and like, we've definitely tried to debunk that sort of that thought process, you know, Airbnb is really spread, lodging every single tiny little town, everybody's got a mom, they got a visit and everybody.
00:16:06
Speaker
Most people don't want to stay with their in-laws. Totally. Yeah. So there's just like a lot of these little things like, you know, where hospitals are, where colleges are, you know, where your family lives, you know, like there's just people staying in every single looking cranny across. Yeah. And it's funny because back to that story that Brian said at the beginning of this podcast is that his mom was even looking at Airbnb's for his family. Like it's not just a younger generational thing. It's like, no,
00:16:32
Speaker
Like our parents are looking at this and almost every demographic that you can think of wants to, they would rather stay in a house than a hotel. So there's a lot of legs to this. Yeah. No, I mean, I totally agree. And I mean, the growth is it's fueled by the consumer, which is the, which is the cool part, right? It's, you know, if the consumers didn't want this, this thing wouldn't be growing so quickly. I mean, right.
00:16:54
Speaker
They're looking for a great value. They're looking for something unique. They're looking for a bigger place. They're looking to travel with their family and with groups. These are things that hotels historically have done a really miserable job of is catering to longer trips or family trips and something that Airbnb is going to fill the gap on really, really well. Can you give our listeners... I mean, you just have so much experience, Scott. Give our listeners, we meet a lot of people. You meet a lot of people and they're like,
00:17:21
Speaker
I kind of want to do this, but they don't maybe have the whatever the history or the risk profile to like take that first leap.
Getting Started with Airbnb
00:17:28
Speaker
Can you walk our listeners through like the first three steps you would recommend of like getting started in Airbnb and then maybe how your site can help demystify some of this or take some of the
00:17:39
Speaker
you know, wait a bit out. Sure. I mean, I think the first, like, easiest step to take is, you know, throw up a room in the house or rent it when you're on vacation or rent out that, like, in-law suite or whatever it looks like. Right. So you can just kind of get your head around, like, how hard is it to market? What do these people look like when they're at my door? Now, how am I going to, like, get my money?
00:17:59
Speaker
Like all these are basic really, I think just simple things that people just like always get a bit of heartburn about. And so that kind of just like shows you like, oh, these guys are cool people. This is easy. And it's not that hard. So once people sort of get that initial taste, then they start thinking about, all right, investment properties and maybe I'll move in with my fiance now and start this as a full-time rental. We see a lot of people sort of like transitions where they're like going to upgrade homes or move in with a loved one or whatever.
00:18:29
Speaker
It's a great time to dip your toe in the water and give it a go before you throw the place on the market or what it may be. So that's definitely one.
00:18:41
Speaker
You know, I don't think it's really, there's not that much to it, right? It's one of the things that takes very little investment, especially if it's a current property. I would definitely suggest people do that. You know, you're not going to make much money, if really much money at all with the private room in your home. If you do the process and make sure you understand kind of how it all goes and that there is demand before you know, you point down, you know, some money and make an investment property.
00:19:07
Speaker
I don't even think there's three steps to it. I wish I could come up to two and three, but there is. I'd say this from my personal experience and just that we have a house that we just moved into probably three or four months ago. It's pretty big, five bedrooms, five bathrooms. Um, and my wife and I are like fixing us up and renovating it. And at the end of it, she was like, Hey, we're going to be gone for Thanksgiving. What if we air Airbnb our house just to see if it's sold? Like, what do we have to lose? Like, we're going to be gone anyway. Like, and I was like, Oh, I love you so much.
00:19:35
Speaker
You know, like this is so amazing because now we can dip our toe into and if it's, if it rents, it rents. If it doesn't like not, I'm not out of anything. So it's like really just like this stranger danger and like, what am I going to do with all my expensive belongings? And you know, it's hard to get people across that. It's just, you know, it's in their nature that like anybody walking my door, I don't know. And that is scary to me. And you know, I had 2000 people come to my place in Santa Monica. You know, I met hundreds of them.
00:20:05
Speaker
And these guys are, they're doing all interesting people, right? Like these aren't like, you know, the weird crack head down the street.
00:20:13
Speaker
Like really interesting people and I never really had a serious issue in 2000s today. So that's usually one of the hurdles you got to get people across and that people are good. Strangers are not danger. You know, these are just fellow world travelers or people that are coming back to their hometowns. They're people you're going to want to meet and sometimes they're going to be friends for years to come. You know, I had like the quarterback of the Bronco to stay with me. I had a president in the Starbucks stay with me. I had some like really cool, influential people that, you know, I still keep in touch with today. Yeah.
00:20:40
Speaker
That's so cool. We just had a guy on the podcast. He just was Airbnb and half of a duplex. And then he and his wife were living in the other half. And then they would go stay at a hotel if somebody wanted the whole thing. They were kind of putting both on. They don't have kids. And they're like, this is the time to try to make it work. And they actually had a couple get married in half their duplex and then ended up running out the whole thing so their family and them could stay. And so he's just like, you know, people just don't appreciate
00:21:08
Speaker
People want unique experience, like you said, and it's right in your backyard. They don't need a Hilton or a Marriott. They're looking for real houses, real people, and real experiences. And so now he's like, they just got their second property.
00:21:25
Speaker
He's going to gross 100,000 on two properties in Des Moines, Iowa. People are just blown away by that. These aren't tricked out mansions or anything. These are average, I would say, properties. What advice do you give? What is there in terms of automation or scalability, maybe even outside of Airbnb?
00:21:44
Speaker
an air dna cuz i know there's a lot of there's just gonna be a lot of businesses starting up to help cleaning booking can you kind of talk about that of managing five to ten properties sure i think it's right around ten properties we gotta figure out some automations and ways to sort of scale things like just like communications and how to automate responses to the question you've heard a hundred thousand times
00:22:05
Speaker
and the cleanings and make sure all the maintenance stuff is being managed and make sure like late checkout requests or you know, there's some things when you get to scale and you, well, one, you just, it drives you crazy every time somebody asks you a question and you're like, I got to automate this. And then that's kind of what happened to me.
00:22:20
Speaker
There's a couple of tools out there. Like I said, around five, you're going to think about new marketing channels is definitely the one thing you start off with. Yeah, Airbnb may do really well and it might generate 80% of the demand for your property, but there is HomeAway and VRBO and booking.com. One, how do you take that property and push it across all 40 platforms that have any sort of people looking to book those properties?
00:22:45
Speaker
So those are called like, you know, channel managers, like a Rentals United, Booking Pal. There's a good handful of those guys. Or there's property management systems. Like there's a lot of those as well. You know, Guestee is one of the more well-known one. And so this just helps you sort of automate all your processes, see everything in one place, have a calendar receipt where everybody's coming and going and be able to manage everything in one place. I would say, yeah, around 10 properties that starts to make sense to invest in.
00:23:12
Speaker
I think the one thing that most people just don't get right is just the turnover. This is the cleaning in between gas, making sure everything's there. All your toiletries have been purchased. Just that basic piece. If you really master that and automate your checking and checkout processes, your life is going to be very much easier. This is lock boxes, digital keys, paying your cleaner a lot of money. I would pay my person. Market rate was $50. I'd pay him $100.
00:23:40
Speaker
And I'd say, yeah, I'll go also and buy my toilet paper and paper towels, and I'd give her some tip on all that stuff. And so just finding that right support to kind of help you with the turnovers is really key to get to that sort of five to 10 stage. And then at that point, yeah, you're talking about revenue management strategies, you're talking about channel management strategies, and then just more sophistication in your operations. But again, it's not brain surgery here. There's lots of different tools out there to help you out, ours included.
00:24:09
Speaker
Let's talk about some of the obstacles that you ran into at Santa Monica.
Regulation Challenges for Airbnb
00:24:14
Speaker
And like some of these counties are starting to put some restrictions on or trying to limit the Airbnbs in the county or city. What have you heard of that? I'm sure you have. And two, can you speak into that a little bit?
00:24:28
Speaker
Sure. It's a hot topic right now. I was in Chicago last week with the head of public policy on Airbnb and the head of public policy from HomeAway. And the hotel is a very concerted effort to get short-term rentals. Where they're investing all their money is how do they squash short-term rentals? Yeah. It's impacting their business. It's impacting their profitability. And if left unchecked by 10 years from now, it's a pretty doomsday story for the hotels. So that being said,
00:24:56
Speaker
We know why people are regulating it, right? Hotels don't like it. They're a very protective business. And so one of the things I work with on a daily basis is to help deconstruct their arguments about affordable housing or fears of this and that, and really empower the occasional managers, hosts,
00:25:14
Speaker
and all these OTA platforms really kind of articulate a good story about why this is good for residents, why it's good for property owners and property rights, why it's good for local economies, especially in secondary and tertiary cities that are looking for more visitors, more spend in local coffee shops and local restaurants.
00:25:35
Speaker
And so, I mean, I think when you do lay out the pros and cons of short term rentals, I mean, there's a very clear winner in terms of overall benefit to residents, tourists, travelers, property owners. And so, you know, the hotel lobby has been around for 25 years and very well funded, so they got out the gate pretty strong. But I think what we see is the pendulum starting to swing the opposite direction, where, you know, property owners, small businesses are starting to speak up, and like the politician are saying like, yeah, that was pretty short-sighted and pretty stupid, and then like less pullback from its restrictions.
00:26:04
Speaker
It's going to be a long battle. No doubt about it. 10 years from now, we'll still be talking about the same thing, I think, but I don't think it's going to go overly to banning short term rentals in cities. There's always going to be a caveat or a cap on days or whatever it's going to look like. It's going to take a while to shuffle.
00:26:22
Speaker
Anyway, there's a lot you can talk about. Regulation, it could be an hour by itself. I think there's some good sources for it. I think there's something called strpolicy.org. Airbnb themselves has a lot of documentation on local policy. So definitely before making investments, definitely look at that. See what's on the agenda for your city council. If you've heard any wind of it.
00:26:43
Speaker
You know, the best and brightest investors in this space are really thinking about it almost as a policy first strategy. Like, where do I think policy is going to open up? Or what do I think a state's passing that doesn't allow a ban on short term rentals, and really thinking about where they're confident about the regulation landscape moving forward.
00:27:03
Speaker
You travel a lot. You've lived in different places. You're looking at all this data. If you're the home guy who's got one or two properties or you're in your 50s and 60s and you're like, man, I want to do this. Are there any areas in the country that you think are like, wow, this looks really undervalued here? Your site does an amazing job of showing
00:27:26
Speaker
You know, kind of the hot spots, you know, Memphis, Tennessee, Florida. So yeah, I'm just curious, you know, kind of from an entrepreneurial sense, if there's a few zones in the United States that you look attractive to you. Yeah, sure. I mean, the way I think about is a little bit more generally is
00:27:44
Speaker
I think the urban markets are a bit sort of oversaturated at this point in time. So you can't just get into like a DC or LA or New York or Chicago regulation and just because it's been a known thing for three, four, 10 years. Yeah. Really what I like is like sort of these drives
00:28:00
Speaker
people where people drive to for a long weekend are typically like really great opportunities. So like maybe San Francisco, like a Monterey, a Sonoma, Napa, those are all markets that crush it. Or in Los Angeles, Palm Springs, like Arrowhead Lake, like places where, or like even like in Paso Robles, like a little wine country close by, place properties very undervalued because there's never been investment properties. There's not really a huge second market there.
00:28:26
Speaker
And so those sorts of markets, it's definitely one way to think about that good markets. There's a lot of stuff though in the Midwest that just is kind of not been tapped into like the Cleveland's and Cincinnati's and Pittsburgh. None of the major like investors have moved into these spaces because they're not like on paper, the most like they're not the most sexy, right? Yeah. I'm square is going to do $22,000 a month and something in Pittsburgh is going to do four.
00:28:48
Speaker
So it's a bit more like, you know, legwork as a little bit more, you know, you got to have 20 properties to make a nice, you know, earning. But it is a bit untapped at this point. So there's a great blog post, it's called best places to invest vacation rentals, I think it's just recently posted. So it goes through hundreds of markets kind of shows where we think are the best places to either buy rent or even rent a room in your in your property. So I definitely got to kind of employ people there. Very cool. Like Des Moines, Iowa. I don't know.
00:29:17
Speaker
didn't even say that when awesome awesome midwest cities nothing nothing come on you know it's kind of like you know it's my knowledge on that all those areas isn't the greatest even know what where i was i'm totally kidding okay so i want to ask you something about your father so would you say he was your mentor in getting this or like where who's your mentor now do you have one
00:29:41
Speaker
I really wish I had a better answer to that.
Scaling AirDNA and the Role of Mentorship
00:29:44
Speaker
I've definitely been looking at this. I don't even have like an abortive advisors. I don't really have anybody who I'm going to for help at this point in time. So I'd say I'm kind of actively looking for somebody in this sort of real estate market or hospitality lodging, you know, that I can sort of lean on for strategic advice and also personal advice on how to scale a company. You know, we're like 35 people now and probably, you know, 70 in 12 months, you know, really kind of all this organizational growth and health stuff. But I'd say,
00:30:11
Speaker
I don't now, but I'm actively searching. Man, that is the hardest thing. Brian and I are the same way. We need to scale this practice, but how do you do it in a wise way where everyone feels still connected? It is a million dollar question. The entrepreneur's challenge to scale and to build a business.
00:30:32
Speaker
I am just fascinated with this market. I'm fascinated with your site. Any new tools or anything you're working on for the next 12 months with AirDNA that we should be looking for?
00:30:46
Speaker
Yeah, I'm actually glad you asked. So I think the latest thing we launched, which is pretty cool and really simplifies and dumbs all this stuff down, is what we call the rentalizer. It is you just put in an address and it just fits back like what your comps look like, how much they earned over the last 12 months, what we project your property to earn over the next 12 months. So that's kind of our latest tool that we are kind of working on new iterations for, making sure the accuracy of that is great as possible. I think there's two other main projects we're working on. One is,
00:31:15
Speaker
how to have a customized experience for everybody. So once you've got one property, just load up your URL. We're going to tell you everything you want to know in the easiest way possible and tell you what you're doing right, tell you what you're doing wrong, give you tips about upcoming events, tell you just about what your comp's doing, how you're performing against them, help you curate some new stuff. So really the goal of our tool is to make it as custom as possible. So no one person, two people have the exact same experience in the tool.
00:31:45
Speaker
And then three, the next big challenge is really doing pricing, revenue management, as they say, is dynamic pricing. Basically, what is your property work every single day of the year? And how is that changing day to day based off of new information about supply and demand in the market? It's really hard. Hotels don't even do it very well. Every vacation rental is unique. And so we've been looking at solving this problem for a couple years now. And so we'll get there in the next 12 months, but it is not an easy task.
00:32:15
Speaker
Yeah, it's like there's a lot of data out there, but it's got to be crazy to try to get it all, if that makes sense. Like, you know, just all the county assessor's pages and all the transactions that are happening and, you know, all the people that are paying through Airbnb and all the transactions Zillow is trying to pick up. I think in the next five to 10 years, especially with, you know, AI and automation and just the expansion of all this, the access to information and synthesizing that is going to be extremely valuable.
00:32:44
Speaker
And that's what we're trying to lead. I mean, at the core of what we're doing, I mean, we are really a data aggregator. So we are trying to figure out how to get as many data sources piped into us as possible, whether that's scraping data or partnerships with other software providers or whether individuals are giving us data themselves.
00:33:00
Speaker
We're going to get it all from all those sources. That's the biggest thing. You can't really build out any good AI unless you have a really solid flow of data that's updated every single day and accurate. That's the first problem. That's the first step. We're still in the first inning, as we say around here. That is just getting good data, and then the power of that stuff will be unveiled over the coming years.
00:33:24
Speaker
Where is your company headquarters, Scott? So we're a headquarter here in Denver, Colorado, and we also have an office in Barcelona. That sounds terrible. Yeah. It's not a bad place to go visit a company.
00:33:38
Speaker
Get away from the family and kids and tell them it's a business trip. So one of our other residual streams, we focus on seven sources, real estate, obviously what we're talking about today and with you. But your business is set up as a subscription model and it's set up, it seems like by zip code or by territory that you want access to. Sure.
00:33:58
Speaker
Can you walk our listeners through just the basics of your site, how it's priced, and how Rentalizer seems like that first step of what's my spare bedroom worth or what's that suite worth in terms of getting started with Airbnb? Can you walk our listeners through that in your platform?
00:34:15
Speaker
Yeah, of course. Yeah. So our flagship product is called MarketMinder. Rentalizers sort of rolled into as a feature of MarketMinder. MarketMinder is the market intelligence tool. What is the occupancy rate monthly for every property type and size? And what's the average daily rate? Like seasonality, like basically any geeky stat you want to know about your specific city or a neighborhood zip code within your city is available there. And that price is anywhere from 20 bucks a month to 100 bucks a month, depending on the size of the marketplace.
00:34:46
Speaker
And so what there is a need for in the real estate investor community is more of a top-down approach, which means like, hey, I'm looking at all of Iowa. Just tell me where the best place to invest in Iowa is. And so we have another product. We're rolling into MarketMinder eventually, but it's called Investment Explorer. So you can subscribe to any state
00:35:06
Speaker
It's a couple hundred bucks a month, but it really does this sort of, I want to invest in California. Where's the most profitable zip code, right? And so we're solving that problem. That's my Explorer and market miners. More of that. I am about to buy a property. Let me do all my due diligence on like all the competition, what I'm expecting, what does my pro forma look like? And that's sort of like for the deeper analysis of the market and also the operational stuff.
00:35:31
Speaker
How are the comps doing? How am I performing versus them? How should I be pricing for that upcoming event? That's all a market minder. There's a lot there, but I hope that clears it up a little bit. Definitely. That's very helpful.
00:35:46
Speaker
like property types, I know, you hear all the time, like, oh, these people have a tree house and it's rented out, it's booked out four years in advance, you know? Are you seeing that as you travel around them, you're exposed to a lot, like what, you know, if somebody's gonna get into this, is it more unique? Is it keep it simple? Like kind of, any ideas there?
00:36:04
Speaker
I think it depends on the market. I am a big believer that you have to have something that stands out a little bit. It has to have maybe a theme or you have to have a certain customer in mind. If there are 5,000 other 1 and 2 bedrooms around you, you got to figure out a way to stand out.
00:36:20
Speaker
And that can be as simple as really marketing to people traveling with kids or marketing to people that are musicians and you have a piano and a guitar in the place. Sure. There are little things like that you can do to focus on a core customer that you want to stand out with. But in some smaller markets, it's really just about getting it up, getting five stars, having it look clean, and just having it look well-designed. People really do...
00:36:47
Speaker
I'm always surprised people buy a half million dollar piece of real estate and then they throw $7,000 of furniture in the place. It's like, man, the design, the features, all that stuff really does pay dividends. Don't skimp on some artwork or some other things because that's where I see a lot of people falling short.
00:37:07
Speaker
So can I dig a little deeper on that? Sure. So you're saying like you instead of getting the half a million dollar property, get the $400,000 property and put a hundred grand into it more so or? Sure. Yeah. I mean, I think that's a general way to think about it. Yeah, I don't. Yeah. I think, um,
00:37:22
Speaker
That's exactly right. 95% of the pictures are of the inside of the house, not the outside of the house. None of them are of the neighborhood. Focus more on what are people actually looking at, which is the bedspread and what kind of stuff you've got in the house and just fine little design features. I always find people just skimp on that. It always ends up buying them at the end of the day.
00:37:46
Speaker
I want to go to like, let's talk about your challenges and your obstacles from getting to where you're at now. What has been like the moment we were like kind of itching your head like, Oh no, like, did I really do this? Has there ever been in that moment? Maybe there hasn't. I hope there hasn't, but it seems like there always has an entrepreneurs. What is that moment for you and how did you push through?
00:38:07
Speaker
Oh, we all have those moments. I think I've been pretty fortunate not to have any of those game ending experiences quite yet. I had my original CTO leave me about nine months ago. We just didn't have the same sort of vision of where this company was going. We didn't have real alignment and we were just having problems. He wasn't going to move to Denver and he was still in LA working in his basement.
00:38:30
Speaker
There's some of those things that you go through where you're like, man, this could be a real problem. He knows everything about the architecture, the scraping, the website, all the security risks, all the passwords. You're like, all right, well, here we go. But we've come out the other side. We've hired 10 people to fill his role and do much more. And we just finally process a buyout of all of his equity.
00:38:53
Speaker
And you know, I think we're bigger and better and stronger now that you had to kind of go through that and figure out how do we reduce this risk in the future? How do we really hire a real diversified team that's committed to hiring? And so I think that's really the only one I've had so far and I'm fortunate and I'm crossing my fingers as we speak.
00:39:12
Speaker
Yeah. No, you know, I think it's funny because you said exactly what I was kind of shooting for is you're better on the other side. And I can't tell you, we've done this a lot, but we've heard some obstacles and they all would say, no, I'm better because of it. You know, like it sucked why we were going through it. But now that we're on the other side,
00:39:28
Speaker
man, it's something that we've learned from and we're better because of it. So that's cool. So let's quick talk about your personal life. So how do you, are you married kids? Yep. Married, uh, maybe for four years with a four year old and a two year old. Um, so yeah, man, I started all this business out in necessity to be honest with you. Like I went to do that traveling. I met my wife in the middle of that trip and she was pregnant, you know, nine months later and married a few months after that. And so, you know,
00:39:57
Speaker
There's nothing more motivating than a pregnant wife and a job. Yeah. How do you balance all this with your family life and how do you do that? It's good. I mean, I got to say the first two years are always going to be a bit hard. I worked out of my garage for almost two years, doing the 16-hour sort of days.
00:40:18
Speaker
And so it's not easy, I tell you that much, but you do get to that point where you can start to hand off things. And my life's much more kind of standard sort of like eight to six sort of work day, which is totally acceptable to me. How do you balance it all? Dude, I don't know. I don't know what the answer is. I lost all my hobbies, I lost most of my friends, and I worked to hang out with my family.
Reflections on Entrepreneurship
00:40:44
Speaker
That's how I balanced it. So I got rid of anything that wasn't extra.
00:40:50
Speaker
Well, Scott, I am so grateful for the time today and you just getting on here with our listeners. And like I said, I think you are ahead of your time. And I think if people are very serious about Airbnb, which to us is maybe the easiest way to get started in dabbling in real estate, I think your tool and the company and the mission that you're on.
00:41:12
Speaker
is a great asset and tool for people to leverage in order to make that more predictable path. Is there anything else you'd like to share today or highlight about AirDNA or your story? No. We were working on tons of things all the time. We're putting out a lot of great content soon, a lot about investing as well. Just stay in touch at airdna.co, check out our blog, subscribe to our newsletter, and I think we'll be
00:41:41
Speaker
surprising you with even more cooler stuff in the next year. I love it. We're huge fans, Scott. Keep doing what you're doing and know that we're right here from us. Thanks, Scott. 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.