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Self-Managing Your Short-Term Rentals with Julia Spencer - heroicinvesting - heroicinvesting
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Self-Managing Your Short-Term Rentals with Julia Spencer



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Jason Hartman hosts Julia Spencer to discuss self-management of short term rentals. She starts by discuss how she used to invest in long-term rental homes and explains her shift into short-term rentals. Spenceroffers advice on how to self-management short-term rentals and explains why it doesn’t consume as much time as one might thing. Later she goes into the numbers and discusses the potential for short-term rentals as investment properties.

Announcer 0:04
Welcome to the heroic investing show. As first responders we risk our lives every day our financial security is under attack. Our pensions are in a state of emergency. A single on duty incident can alter or erase our earning potential instantly and forever. We are the heroes of society. We are self reliant, and we need to take care of our own financial future. The heroic investing show is our toolkit of business and investing tactics on our mission to financial freedom.

Jason Hartman 0:38
Hello, and welcome to Episode 163 of the heroic investing show. This is a podcast for first responders, for members of the military for veterans, and anyone looking to improve their financial future and gain some freedom with their time. We teach America’s heroes how to build passive income, build their startup business and safely grow wealth through real estate and other alternative investments. We help current and prior first responders put protections and systems in place to enable them to build a life where they can focus on their passion, that service or product that they’re uniquely gifted to share with the world. My name is Gary Pinkerton, and I co host this show with Jason Hartman. And it is our goal and our intent, our hope that you find this podcast inspiring that it gives you ideas on how to raise your game, how to reach and achieve your goals and share that unique genius you have with the rest of the world. I personally think most of us aren’t doing that in our w two jobs Some of us are. And that’s pretty awesome if you found a good fit there. But if you’re not, and you want some more freedom with time, and you want to be able to focus on that thing that you just know, deep down is that genius of yours, then you need time and you need financial capability, passive income to make that happen. And that’s what we try to talk about on this and the many other shows that we have that cover the concepts of passive income of building a strong financial foundation on this show, this is the second maybe I’ll take a break. This is actually the third discussing short term rentals. And this is Jason interviewing. his very first actually short term rental podcast guests, Julia Spencer. And Julia, I think is a longtime friend and has purchased quite a few properties and used to have them all as a long term rentals. So you can imagine they’re not as she mentioned, they’re not in vacation spots. They’re just kind of an urban or suburban areas. And she liked the model, like the lifestyle of self managing on Airbnb, and vrb o and other sites, and just took them over and started doing that. And sometimes she’ll do you know, a few days, sometimes she’ll do a few weeks. And the reason, as you know, listeners that I’m talking about this is that Sue and I recently got short term rental actually ours is in a vacation spot. And it’s actually built specifically for that their properties all around it that are longer term that the owner is living in, and also that longer term rental. But ours was specifically built to do you know, week at a time or a weekend, something like that. And so we’ve had some really good experience, we’re still kind of in startup mode with it. So I think you start to see the the higher occupancy and the higher rents coming in when it’s multi year right when people start to return, and there’s less vacancy, so you don’t have to offer those last minute lower deals. You know, we’re happy with what we have. So far, we have a great team in place down there. And looking forward to seeing what you know, the the longer term performance of the property looks like we actually rented it out for all of January through March for a longer term kind of thing here beginning to give us time to get marketing out there get some good positive initial higher feedback. So Julia talks about some really interesting stuff, she has seven different properties, one of them’s in Europe and the rest are here spread across the United States. And only one is in a deep urban area where you would normally think about doing Airbnb, and hers were as I mentioned, long term rentals that she just converted over. So the things I think you’ll get from this podcast, a little bit different from the other two that I’ve ran recently on short term rental focus is a discussion about adjusting the prices really like airlines do and that’s what we’re seeing with our properties that you know if you’ve ever stayed in Airbnb, you know that the prices adjust wildly depending on demand and and how quickly it’s being filled up how early and often you get really, really good deals real close to the turn. Another thing that doesn’t so much come back to me I think in this I mean they do talk about passing on the cost of cleaning and how to retain those services. But you’ll you’ll see it’s becoming very trendy now to pass on the the term cost or the cleaning in short term rentals to the tenant right and also the taxes the the hotel fees and taxes and stuff that the state typically charges pass those on as well. So it’s a much different mindset, much different model. Even for example, she doesn’t use property management, but I do and our property manager you know is more on The 1820 25% range, which seems totally crazy, right on the long term rental. But if you think about it, there’s no term costs with this. And you have to replace the furniture every few years. But there’s no like, you know, $5,000 to repaint, do all that stuff after each tenant, you know, annually or more frequently if you have to, you know, if somebody leaves early, so that’s really what has cut has built into our returns our profits on many properties. And that’s just not here. In this case, you also don’t have to pay a month lease up fee. Because it’s all in marketing. And at the same time, you have to realize that the property manager has some substantial marketing costs, with all the advertising they’re doing. And then it got a lot more oversight and overhead, managing the people who are going in and doing the cleaning, any maintenance. And then, you know, they’re doing all of the contact with these vacation or short term tenants that are in there, when they’re asking, you know, where’s the remote? And, you know, how do I turn this on? And do you have any extra of these things? Do you have recommendations for dinner, you all of the stuff that you see, with short term tenants, there’s somebody managing that, right? So I didn’t want to be that person. Julia does, and I think getting both perspectives is is really, really important. So finally, I’ll also say that there’s a great discussion at the end of this one on how to successfully retain maintenance people cleaning services, and then technology that you can use to your benefit. And that is similar to a couple of the other ones that that we ran here. But technology is really what’s enabling you to be a self manager from, you know, another continent away, as Julie was doing during the recording of this. So I found it to be fascinating. I think it’s a really good final addition to my focus on short term rentals. And we’ll be back with a bunch of different more traditional topics here coming up real soon. Thanks so much for listening to heroic investing. And please go over to our website and give us a rating or on iTunes. Thanks so much. It’s my pleasure to welcome Julia M. Spencer to the show. She was on one of my other shows a couple of years ago, she is a friend. And I is going to be sharing a case study with us today on her short term rental business, and how she does very well with it through Airbnb. And she really inspired me, you know, we had a good talk we, we’ve met up before, but the last time we saw each other, it was in Luxembourg in Europe, Julia was with her family in Germany. And I came over from Paris. And we met up and hung out for a day, and just had a great time. And us real estate people we love to talk shop, because it’s such a great business. And so we got to talking about short term rentals. And that’s what I want to share with you today. Julia, welcome back. How are you? I’m great. Thanks for having me back. It’s good to have you and give our listeners a sense of geography. Where are you located?

Julia Spencer 7:48
I am mostly located in Savannah, Georgia. That’s my primary residence, but I do travel the world with my kids. Whatever chance I get Good stuff, good

Jason Hartman 7:58
stuff. Let’s talk a little bit about your short term rentals. Last time you were on my show, you talked about tax lien and tax deed investing. And that was fascinating. But on the short term rental side, I was impressed with how you are basically self managing your portfolio of properties that are on Airbnb. And you were doing that from a distance. You occasionally grabbed your phone and open the Airbnb app when we were together in Luxembourg for a day. But you know, you sort of proved the model that you did this for how long were you in Europe this time a month,

Julia Spencer 8:31
I was there for five weeks, and I added a couple more days out of the state. So all in all, close to six weeks being gone from home. Okay, from the rentals.

Jason Hartman 8:41
Yeah, fantastic. You have a certain number of units and a certain number of rooms because it depends which way they’re rented. So why don’t you give our listeners the just kind of the metrics on that. So we get a context here and tell us where they’re all located and so forth. So while

Julia Spencer 8:55
I was gone, things were actually changing a little bit. Generally, I’ve have about seven properties, six or seven properties depending on when you ask me, but the listings are close to about 30. And that’s because I rent houses out as a whole. But I also rent out individual rooms in the house, so the whole house doesn’t rent and I need to fill a spot during the week or something when it’s not so busy. That’s pretty much a summary. Okay,

Jason Hartman 9:23
so seven units, and then overall number of rooms is like what 30 or something,

Julia Spencer 9:29
it’s about 30 listings, I would have to go into my brain and count how many rooms but the point is that I also rent rooms individually or as a set of two. Sometimes a rent just upstairs sometimes just downstairs. So just depends. All in all the amount of listings are 30. But in all there’s only about seven houses and there are ranging from three to five bedrooms each. Okay, good. So

Jason Hartman 9:54
this actually leads to kind of my first question, since we’re on this point, we might as well tackle it now. How do you make Make the decision or you know, sometimes with my real estate, I let the market make the decision for me, sometimes when I’m kind of just sort of neutral about something, whether I sell a property or rent it again, and you know, sell it to 1031 exchange, or just rent it again, I’ll kind of let the market decide, you know, sometimes I’ll put it for lease and for sale, and just whatever comes in first is what I do. But with your 30 listings, if you rent a single room, and then someone comes along two hours later and wants to rent the whole house, which you could have made more money off of, you know, how do you sort of decide how to handle the listing our properties are always listed, or the listings or all all of the 30? listings are always listed. But if someone comes along and says they just want one room, how do you decide if you want to do that deal? Or not? Do you allow instant booking or not,

Julia Spencer 10:52
I have a variety. And this is actually where we get into the part that I do. This is a part that I do as an individual. And there’s a lot of other parts that I don’t do. And we can talk about that later. But I basically have the listing setup, that the ones that are most advantageous to me are obviously the Full House bookings, and the ones that are up for longer timeframe. So what usually happens is I kind of have an idea about my area of what are the High Times or The like hot times where people book most of the houses in the rooms. And those are the times that I don’t allow individual group bookings. This is when I will actually block my calendar for the individual rooms and only rent out the whole house listing. And this is something that will come from experience after doing it for a while. In the beginning, I had no idea. And so people were booking single rooms, and I would lose out on really good, expensive bookings. But later on a real life, okay, on this particular weekend, there’s an event going on, I’m going to block all the individual rooms and only rent out the whole house. Now you asked something else. And that is about and what if somebody had booked the room and all of a sudden somebody comes around and they want to book the whole house the three weeks in, which are much more lucrative? Yeah, so what I usually what I usually do is I have a set of my single room bookings set at a lower price and another set at a higher price. And so what I usually do is kind of offer the person that booked the room a different listing for single room also, but at the usual we higher rates. So they kind of think they’re getting a better deal. They are usually getting an upgrade, like private bathroom or like two sets of guests in the house instead of just several more. So they’re usually very happy to move. And that’s how I free up in the house and give that to the other tenants. Okay, good.

Jason Hartman 12:41
Good. Yeah. So so that was a little bit of a sideline. But since we were on that issue, I thought we might as well tackle it right then. So thank you for sharing that. So how long have you been doing this? When did you first do your first short term rental property? How long ago?

Julia Spencer 12:56
I did about four years ago. And what inspired you to get into the business Did you have long term rentals regular, you know, one year lease type properties. Before that? I did. I did. All my properties were long term rentals at the time and I just grew tired of people destroying my houses. I wasn’t very good at picking long term tenants and the property managers have chosen were just as bad the ones that I had any ones I’ve had some good ones too. But I was just tired of every time somebody turned my house around after a year and they would not even stay very long. I would have to remodel and it was just I was tired of it. I wanted to just quick turnarounds I wanted people that I didn’t like that they would leave quicker. You know and people that are liked you know usually vacation rentals. You think of it as vacationers and it is most of the time vacationers, but when they come stay at your home, they are usually in a good mood. There’s that they’re relaxed, they’re on vacation, they’re chill. They’re just better tenants to have now.

Jason Hartman 13:54
Okay, so let me stop you there, Julia. That is most people listening are probably thinking what I used to think that is really counterintuitive, because most people think well, gee, you know, how well do you treat a rental car? When you’re renting a car for two days? You know how well you treat it? usually not very well, right? You don’t care. But if you lease a car for three years, you know, you treat it well, because it’s like it’s your car, right? And that’s the thing. But oddly, with the short term rental business, that can sometimes not always be different, because we’ve all heard the stories of people that rent your Airbnb place and throw a huge party and thrash it. But the thing that’s interesting, and you know, please comment on this, the mutual review system, where the host and the tenant are both rated by each other. You know, when you get into the Lyft or Uber car, you know, the driver rates the passenger in the passenger rates the driver, it’s a two way street. And I’m thinking why aren’t all my long term tenants and all my long term properties raided, you know, yeah, we do check their credit report and if they have a criminal record and unlawful detainer notices, but I would like to just see a rating, like how many stars get, you know? Yeah, so to speak to that for a moment, if you would,

Julia Spencer 15:15
oddly enough. And this is such a great thing about our online community and on our online systems these days, and what you can do online, the review system actually deters people from trashing your properties. And I found that to be very true in the last four years that I’ve been doing it. And Airbnb is just one of these systems, or one of the websites out there that lets you reproduce, there’s several other ones. But what I’ve found is when hosts and guests come together and mutually have a transaction of a commendation for however long this day is, the review system actually really helps that both the hosts and the guests take excellent care of the property. And you would be very surprised how few complaints and how few unsatisfied guests I’ve had. And also how few times people have disliked me as a host, because we actually all really trying to work it because we really care about the reviews that are left for us. The guests books,

Jason Hartman 16:12
there’s that sense of community is great. And the reviews, you don’t see each other’s review. And to both of you have done the review, you know, and that’s a neat feature. So when I leave a review for my host, they’re not going to see that until they review me so they can retaliate, or, you know, maybe positively retaliate do it’s a more honest review, right?

Julia Spencer 16:34
It’s very much honest. And actually overtime, it has evolved, it used to not be like that, but the rules have not changed that you cannot see the other person’s review and to really you leave one yourself. So that kind of enables the honesty of thing? Sure, sure. When you switched

Jason Hartman 16:49
from the traditional long term rental business to the short term rental business four years ago, did you switch with the same properties? Or did you change Do you know, just recycle your whole portfolio and get rid of all your long term rental properties, because those wouldn’t be suitable for short term rentals. One of the things that I want to get at here is and I’ve been studying the short term rental business for many years. Now, surprisingly, the properties do not necessarily need to be in these sort of what everybody considers a vacation spot. And maybe you can speak to that a little bit, because you’ve got a variety of properties in different

Julia Spencer 17:29
spots. Yes, that’s true. And I had actually the same exact size, because my properties are kind of an odd location. So they’re not quite at the beach, they’re not quite downtown. And I even have properties that are in the middle of nowhere, pretty much. And surprisingly, all of them are pretty much booked at 200% of the time. And I’m not exaggerating that percentage. And the thing is that it’s not just vacation travelers that utilize these websites these days, it’s, it could be students that need a month and a half to stay somewhere while they’re on a semester break or doing some extra research somewhere. I have a lot of people that are corporate rentals, I have people that are actually local visiting family, they just don’t want to stay in their family’s home and want to stay somewhere separate. Also very understandable. And people with special needs, you know, I’ve had a lot of also people that are maybe handicapped, they need something on the first floor. But they’ve not been able to find anything without stairs. I mean, there’s all kinds of different kinds of people that have come through my doors. And it’s it’s just amazing to see that, despite the fact that I’m not really right beachfront property that might have vacation rentals, or I call them vacation rentals, but they’re really called short short term rentals. Pretty much they occupied very solidly throughout the year.

Jason Hartman 18:48
Yeah, very interesting. And can you speak to that other question I asked you about did you change your portfolio? Or is this just the same properties, but you just converted them from long term short term.

Julia Spencer 18:57
So what happened in the beginning is I just did kind of like a prototype, I just used my own personal house because I had a lot of bedrooms, and there wasn’t a lot of people living there at the time, and just did one bedroom. And that started going really well that in the end the whole entire house became a vacation rental and just moved somewhere else because

Jason Hartman 19:15
you’re out of your house.

Julia Spencer 19:17
I did I did. I got went ahead with simplicity. But I actually am over time got rid of the non performing long term rental houses that were just either too far for me to manage or just not an area where I wanted to go to and bought additional ones in the areas that I knew weren’t making money and so now I kind of have it a wash rinse repeat kind of structure that anything that’s no good for a vacation rental portfolio. The way I have it leaves and I add new stuff. That’s a good addition. My properties currently are in Savannah, Georgia close to the like halfway between downtown and the beach. I also have one that’s Midtown Savannah. I have one that’s amazing. And obviously the one in Germany with that belongs to my family as well. And B is also an Airbnb restaurant, both of those,

Jason Hartman 20:08
how many would you consider if any, to be sort of vacation places? or vacation type properties? I mean, of course, you know, you could say, well, savannahs got a relatively decent tourists, you know, attraction. But you know, it depends where in Savannah I mean, not all of it obviously, midnight in the garden of good and evil book and movie didn’t make the whole city short term rental place. So just kind of tell us what you know, and I know this is a judgment call, right? But how many if any of your properties would be considered like vacation style properties?

Julia Spencer 20:43
Well, in a traditional sense, vacation style properties, I would say that none of them are traditional, every single one of my properties is in a suburban area, except for the one downtown which is urban, I guess, is what they say. And everything else is also suburban. So it’s not an area where you drive by and look at the house and say, okay, vacation house right here, it looks just like every other house in the street. And my next door neighbors are tenants owners, everything in between, I mean, you would really not know that any of these houses were vacation rentals, other than you’d see the cars outside with all kinds of license plates coming and going all the time. That’s about it. Yeah,

Jason Hartman 21:23
interesting. Okay. And have you had speaking of that, have you had problems with any of the neighbors to your properties, objecting that you’re doing short term rentals there,

Julia Spencer 21:32
I have also worked on a very good system on how to alleviate any kinds of those problems, because that’s one thing I was very, very concerned about in the beginning, especially because some of my houses are actually very close together. So there would be a lot of traffic here, obviously. But what I’ve done is I’ve pretty much tried and started an open is open communication channels with all of my neighbors to ask them, you know, what they thought if they thought there was any issues, if they see anything, when I’m not around to let me know, immediately, I gave him my phone number, my after hours number. And as soon as there was any kind of problem, I usually I or my manager, we show up and we put an end to it very quickly. We’ve had some people that were partying and staying up a little bit later, gladly with some of the vacation rental websites out there, such as Airbnb we get as hosts to get a lot of support. And we do not have to host people that are not following house rules.

Jason Hartman 22:28
Yeah, yeah. And that’s actually a section on the website called house rules. You know, whenever I’ve rented an Airbnb property, I was looking at those house rules, and they’ll say, no noise after 10pm not suitable for parties, you know, blah, blah, blah. And so that’s interesting. Have any of the neighbors objected, though, or giving you a hard time? I mean, I’m not saying that any of the tenants have been bad. I’m just saying, you know, there are some neighborhoods around the country that are experiencing, you know, legal battles over short term rentals and so forth. When I lived in La Jolla, which is a suburb of San Diego, California. I remember walking around some of the beach areas there. And there were signs in people’s yards that say, this is not a vacation area, or you know, this is a neighborhood, not short term rental area, or, you know, they had all day there were people like lobbying against it and trying to get legislation and so forth. Even though interestingly, it’s like my last couple of places in Europe after I saw you there. I remember the comment when I was leaving Oslo, Norway, and I was going to go to the airport, I was at the hotel talking to the concierge. I said, Well, what’s the best way to get to the airport? Should I call Uber? And she says, Ubers illegal? I turn my phone around and said, No, it’s not. I’ve used it several times here. So it doesn’t matter if it’s illegal and half the time but you know, they can make it tougher. For sure. It’s, it’s illegal in New York City yet, you can rent an Airbnb in New York City all day long. So

Julia Spencer 23:53
I guess as a cautionary statement to your listeners, you can potentially get indeed into a lot of problems with your neighbors and especially if you have neighbors that you’re don’t have very good relations with and they’re just out to get you or just tried to complain. And I’ve had a neighbor like that actually in gladly, he moved away and I bought his house. That’s where I live now. So that was an easy solution. But rest of the neighbors

Jason Hartman 24:19
just bought his house and got rid of him.

Julia Spencer 24:23
selling his house I bought it and moved into it no more problem. But this is not a solution for everybody, obviously. So let me tell you a little bit of my other neighbors, everybody in this neighborhood and because I live here also I know everybody I know what everybody does. I know their business. I know their kids, I know their their likes their dislikes. So I tried to really have a relationship with every single neighbor here. My neighbor next door cuts my grass. Across the street. The girl was babysitting my kids when they’re little. Anybody that sells Tupperware or whatever. I’m the first one there to buy something. I mean, it really is about having relationships with people around J unit,

Jason Hartman 25:01
you have some properties that aren’t close to you though, too. So yeah, that’s true.

Julia Spencer 25:05
That’s true. And the one property that’s kind of far away actually the furthest away from me, that’s the only one that I’ve ever had any problems with. And the problems are with the HOA with that, unfortunately, the President is a lawyer, and he throws the book at me regularly. Yeah, but I know the rules as well. And so whenever he has a complaint, I tell him, Well, why don’t you take pictures and send it to me, because I can’t verify what you’re saying is true. For example, He was complaining about a trailer being parked off the street, which is not allowed because of Hoa rules or something. But I knew that my guest was leaving within like three days. So I told this lawyer after two days to take some pictures and send them to me, Well, obviously, you couldn’t produce pictures because the trailer was gone. So you just have to kind of play it by ear. Right? But you do have to follow the rules and the laws and just kind of that’s part of the management part. That is what I do. Sure.

Jason Hartman 26:02
Josh, my only job Right, right. Okay, so I’m glad you mentioned Hoa A’s, which stands for homeowners association case, there are a few people wondering, you don’t own properties, you know, in some of the categories I’m about to mention, but because I know what your portfolio is like. But I’d like you to speak to Julia, what type of properties make the potentially Best Short term rental properties, I think that you can run into a lot of problems in high rise condos. Because those Hoa A’s are like really hardcore, they can ruin your whole deal. If you have a garden style condo complex, yeah, you’re still going to have an HOA but that’s a lot harder for them to exert so much control, you know, because there’s not a central garage, there’s not a central elevator, they don’t know what’s going on as much. Okay, but I’ve had friends that have, you know, rented properties as short term rentals in buildings, say in Las Vegas here, I’m thinking I’m actually looking at one out my window literally right now. And they were doing short term rentals. And the bylaws, you know, the CCR said No way, you can’t do short term rentals at all. They would just do it anyway. And in fact, our mutual friend Steve, they do it in his building, and it’s not allowed. They can make it tough in high rise buildings. So I generally speaking, and of course, there’s an exception to every rule if the deal is good enough. I would shy away from high rise condos. Okay. Would you agree with that, by the way?

Julia Spencer 27:34
Absolutely. High Rise condos, condo associations, period, and HOA fees are kind of red flags for the properties that are good candidates for vacation rentals. Okay, so tell us

Jason Hartman 27:46
what kind of properties Do you own? Are they all single family homes? Are they mix of condos, townhomes single family, and how many of them have HOA fees. And you know, what percentage is Hoa are and

Julia Spencer 27:57
they are actually all single family homes, and they’re all free standing, which means I don’t have any common walls with anyone else. And you definitely need that. And you actually are best off too, if you have a little bit of a yard around the house with a fence. That gives you a little bit of added privacy. So those are the best candidates. What I usually look for is for homes that are at the end of the street, like a dead end street or cul de sac. And that way, there’s not so much through traffic and chaos going on on the street, which also helps me kind of monitor who goes and leaves the street and the neighborhood because I live on one end and I can see who’s coming and going and so can my managers. So those would be the ideal candidates. Now as far as how many of mine have a choice. They actually all except for one are under some sort of Hoa umbrella. But the one thing to remember and if you’ve owned lots of real estate, of course, you probably know this. Some of them are a little bit more involved. h res and others are kind of like laissez faire.

Jason Hartman 29:02
Exactly. So let me anymore. Yeah, I’ll address that for just a moment. I call it Hoa light, okay, I don’t like homeowners associations. I’m a libertarian. I don’t like any buddy telling me what to do. Okay, but the HOA light, you know, like think of the commercial for the beer a third less filling than your regular beer can actually be pretty good. The Hoa light where they charge a low fee of you know, $30 a month or something like that. And they keep the neighborhood up to an extent but they don’t exert a ton of control. Versus at the opposite end of the spectrum is the high rise condo where the dues are 1200 dollars a month. That’s absurd. I mean, that’s just insanity, and they exert tons of control. So I agree with you you know and and if you can get properties with no homeowner’s association at all. That could even be better but but the HOA light concept, the laissez faire concept, you know, that can be fine, right?

Julia Spencer 29:58
Yeah, for sure. The other thing that you may need to consider at least warn your listeners about is the fact that you always need to check the laws in your particular county and whether you’re in city limits because city officials or city government, city officials anyways, are the kind of offices that manage urban development or whatever it’s called at any one place. They sometimes act as an HOA. And I’ve learned that the hard way with my property in the city downtown, they have rules and regulations against Vacation Rentals as well. And they will come after you if you don’t follow those rules. And they can act like an HOA,

Jason Hartman 30:36
no, no, I agree. You get some you get some government bureaucrat or Hoa bureaucrat, they can make your life difficult, no question about it. Okay, so what I’d like you to talk a little bit about more is our clients want to be able to invest in a diversified fashion, and they may not live in the best place to invest, right? So they want to be able to invest in that optimum place. And that’s why we always look at things on a nationwide scale. And in the traditional business, as you know, I’m repeating myself, I know you already know this, Julia, but just for the audience’s benefit, when I talk about my 10 commandments of successful investing, one is thou shalt diversify and diversify geographically take the most historically proven asset class income property, but diversified geographically into at least three markets, but not more than five. When you’re looking at the short term rental business. You know, you made this comment to me before we started the interview today. And you said, If I can do it for five or six weeks, like I did on my Europe trip, I could do it for a year and be remote. speak to that a little bit, if you would, and how there is so much support with technology nowadays. But what you really do need on the ground, I mean, you need a reliable cleaning service, that’ll do a little spying for you, maybe, and report for you. And then maybe you need a second contact person, because you don’t have an actual manager for any of your properties. You know, you’re in Europe, and you were gone between Europe and Daytona Beach for six weeks. How do you do that?

Julia Spencer 32:08
Yes, exactly. So the way I did this, and you’re right, I do not have a manager. I’m like a self manager. But I don’t really manage that much. It actually doesn’t require very much of my time at all. But what you really, really need is exactly what you said you need a very reliable cleaning service or cleaning lady are best get several, they can switch each other out whenever they can’t do it. And they have to be in constant communication with you, I mean, imperative, they can speak to you on the phone and text you or call you or whatever. It’s really imperative if you can’t get ahold of someone, you’re dead and water.

Jason Hartman 32:43
This is the What did you call them the management, what do you call that person,

Julia Spencer 32:49
I would call that that’s the cleaning staff that’s kind of like the spine of everything without cleaning nothing work, right cleaning laundry, I kind of put that all in one, then you will need and this is somebody the cleaning people always have to be there every day. I mean, they are almost every day, they were really need to be as local and they need to be available at the last minute notice the second person that I had available to me in my six week trip, and she was only there for a total of two weeks. So out of the six weeks, she was at the property for two, she wasn’t even there full time. But her job was to come every other week or so. And just to verify that everything is still standing, make sure that no crazy stuff has happened that the cleaners didn’t notice. So basically, like a second look of eyes. And this needs to be like a mature English speaking person as a English speaking person because you just have to be able to communicate with them and tell them exactly what you need. This is also somebody that can take care of guests that have special requests, which we’ve had several while we were gone and be able to communicate with both the cleaners and by third support person which is my maintenance guy. And the maintenance guy is really just there for on call like a shower breaks or the door doesn’t work the batteries empty and the keypad for for entry in the house or something like that. Yeah, okay.

Jason Hartman 34:15
Okay, good. So no property manager, but a three person team. The house cleaner, the cleaning service, the maintenance guy, what do you call the middle person? What did you give them a name?

Julia Spencer 34:27
I would call her the assistant or the girl for everything. Okay, but the person for everything I mean, she’s definitely like the overseer. I guess you would call them okay.

Jason Hartman 34:37
Okay, good. How do you pay any of these people like you know, we are using a cleaning service or just a person you found on Craigslist that you trust or what

Julia Spencer 34:46
so my maintenance person has been working for me for 15 years, so I pay him via PayPal or just regular online payment methods per job? Yeah, the overseer girl she’s on the salary so she gets paid say Every month anyways, because she does other things for my business as well. Yeah. And the cleaners get paid for each job. And the cleaners are paid in cash. And they’re paid by my personal system. So the overseer lady, that manager, she takes care of that.

Jason Hartman 35:15
Okay, good. So what else about doing this remotely? You know, in terms of the technologies made this a lot easier nowadays, you know, electronic door locks and, and then you know, whatever web platform you’re using, whether it be Airbnb or VR, Bo, you know, they’ve got some great features to their website. And if it helps you do this some great tools. What else would you like people to know about doing things remotely.

Julia Spencer 35:40
So I guess the one thing that kind of worked in my favor in this trip is the time difference. That just means that I was up way earlier than anybody in the United States, which meant that I could take care of things before anybody woke up. And everybody had their instructions and everything that they needed to knew and any messages were sent when they got up in the morning. The flip side of that is obviously at 6pm. eastern US time, I’m already sleep because it’s midnight. And if there’s any emergencies happening after 6pm in the United States, I won’t get them till the next morning. So the other additional thing that I had to worry about is to have an on call person and the phone number available for my guests that guests could call in case there was an emergency for those six hours that were flipping the sunlight.

Jason Hartman 36:30
So were there any emergencies,

Julia Spencer 36:32
not anything that couldn’t wait till the next day? I mean, I can tell you the worst emergency that happened is that somebody took two parts or three parts are one of the houses and the next guests that came didn’t have enough pots to cook with. They stole cooking pots. Yeah. But I you know, actually, they probably just didn’t find them because they’re in the bottom of the stove or something like that. Anyways, I couldn’t find him. And I needed to send somebody to help them find him or get the new one. So it wasn’t really a big deal. But that’s the worst emergency. I mean, if that’s all that happened in six weeks, I’m totally happy with that.

Jason Hartman 37:09
Yeah, right. That’s not an emergency. Okay.

Julia Spencer 37:12
Yeah, it’s funny,

Jason Hartman 37:13
you haven’t call it an emergency. Julia, did you ever use a, you know, a lot of people with short term rental properties? They use a traditional property manager, not a, not one that necessarily is a long term property manager, but they use it a property manager that does short term rentals. Did you

Julia Spencer 37:28
ever do that? Or did you always do this yourself? No, I’ve never done it. But I have considered it a few times. And I’ve made the inquiries and asked, but what was the deciding factor was that I wasn’t going to use these people was just the cost. I mean, it’s just an exorbitant amount of cost to get some girls another car, what do you have? How much do they want to one company that I called one, it’s something like $200 to switch a home. And that would have included everything, including laundry service and cleaning. That’s just more than my guests will pay. And that’ll keep my places empty. And I didn’t want that. So it was much cheaper for me to just hire my own people, and pay them hourly wages, or small salary or part time salary. It just didn’t make financial sense for me, because I wanted to keep my places occupied and make the maximum amount of profit. So I didn’t wasn’t worthwhile. What’s the average length of stay for you? Well, and this is a really cool thing about vacation rentals, you can decide that as a host. So while I was gone in Europe, I average length of stay was seven days to four weeks. Wow. Normally, it’s somewhere between three to four days. And I think when we talked, you actually saw one of my reservations. That was for three weeks, I believe. No, I did.

Jason Hartman 38:44
And I kind of kept it that way. Because I knew I was going to be out of the country. And I didn’t want to deal with too much stuff. So for the month of July, I made sure that everything was long term or longer term, seven days or longer. You required longer term rentals while you were gone because you wanted less turnover. Interesting. You could totally control that on the website. $200 doesn’t seem that exorbitant when it includes the cleaning to do the switch every time the tenant turns especially if it’s at least a three days stay as it’s two days that’s exorbitant is that all they charged the professional manager or did they charge a percentage or anything else?

Julia Spencer 39:23
You know, I didn’t even go into any further than that because that was already over my top so it was already a non factor for me. And I’m sure they have different services as well. Pudding included the laundry like they actually have a professional laundry service to pick everything up and bring you brand new white sheets. Oh yes.

Jason Hartman 39:41
That expensive Yeah.

Julia Spencer 39:42
Laundry rental or she rental which is you know, that’s, that’s

Jason Hartman 39:46
expensive. That’s really expensive. Yeah, that’s like hotels have contracts like that. That can get pretty pricey if it doesn’t scale on a big big thing where you can get a good price. So anything else about the remote part and then I want to ask about furniture and We got to wrap it up here, tools, you know, for doing things remotely or any other comments on that maybe there aren’t any other I don’t know, maybe we covered it.

Julia Spencer 40:08
I mean, just basic thing is you’d have to have an internet connection computer. And if you’re out and about, like, I was, most of the time, a cell phone that has international data plan, and very good data plan. And that’s, that’s all you need.

Jason Hartman 40:23
I was just so surprised at how little time you actually spend on this. My perception was that there would be a lot more management involved, that it would take a lot more of your time. But it really, it really doesn’t take that much time does it?

Julia Spencer 40:37
Not at all. And everything can be streamlined as well, a lot of the messages that I send every day. And I think you may remember I told you this, but I have standard form letters for just about every check in and every checkout procedure. And any question that has ever been asked, I have a form response for it. So for all intents and purposes, I could have somebody else and the message is for me, I just like to do it myself, because I like to stay on top of things. Yeah. So um, once you streamline the whole process, it’s really not that difficult to do you just kind of have to stay on top of it.

Jason Hartman 41:08
Actually, there’s two more things I want to ask you about. Okay, good. So that’s good to know, I want to ask about furniture real quick, you know, you’ve got to furnish these places, and you’ve got to keep the utilities in your name, obviously, and so forth. But with the furniture, I mean, it’s so cheap to furnish places really quite nicely nowadays. You know, home decor is very inexpensive. You know, what’s been your experience there. And you know, you talked about like the pots that may have disappeared, or may have just been in the cupboard, or they couldn’t find them. Any things you want to say there. Yeah, reason I don’t get too upset about furniture when you know, and I have, obviously things that break and sometimes things get destroyed willfully or unlawfully one never knows. But these things come from goodwill, or from secondhand stores, or I pick him up on Craigslist. I mean, these are very inexpensive items, like you just mentioned. So the furniture place is extremely cheap to replace any one or two items is extremely cheap. Now, if you’re our real estate owner, vacation rental owner, the furniture is tax deductible, you can depreciate it over, you know a short amount of time. So it’s furniture is like a non issue. I don’t even worry about it at all. Somebody else manages that and they love decorating. There’s plenty of people out there that want to be home decorators. Not hard to find them. They’re very easy. You could find a home stager anywhere, but that’s just pretty easy. It’s inexpensive. It’s just not a big deal. People think it’s a big deal. And and you know, notice this myself, because when I had a second home for a couple of years, you know, I just furnished the whole thing in like, a couple of days. And it was so inexpensive to buy plates and silverware and they that stuff just cost them nothing nowadays, it’s amazing. Okay, so the thing we didn’t ask you, Julianne, this will conclude with this. Show me the money. Okay. So speak to before we go, the kind of revenue you’re looking at here. And the kind of people that are running these places, they’re not all vacation people, what do they pay you? How do these properties perform in terms of money.

Julia Spencer 43:10
So generally, the kind of profit margin that I look for is to make about four times as much as I would any one house with a traditional rental. So let’s say if you rented a house for $1,000 a month for rent, I can get four, sometimes even $5,000 a month for that house, wow, four to five times as much. And I gladly pay for the utilities and for the furniture and for the plates and even the two missing parts. It does not matter.

Jason Hartman 43:41
Yeah, that’s great. That’s awesome. Okay, so so if it rents, you know, we talked about in the traditional long term rental business, we talked about the ideal rent to value ratio, or our view ratio being 1%. Sometimes you get a little more, mostly nowadays a little less, because the market has gone up, you know, prices have appreciated quite a bit. And so that reduces the RV ratio, but the hundred thousand dollar house that rents for 1000 a month. Now, are you talking about $100,000 property? Or was that just an example you gave? Can you give us maybe a real life example of one of your property last

Julia Spencer 44:18
example. Okay, so I have a house that I bought for $150,000. About seven years ago, it’s worth about 220,000. Now, okay, so 220 Today 220 is the value. Okay, go ahead. That one is a five bedroom house and did usually rent for about $8,000 a month.

Jason Hartman 44:38
Wow. And it’s just a single family home. That’s worth 220 grand, and 8000 per month

Julia Spencer 44:46
you get out of that? Yes. And that’s gross. Of course I have to pay utilities and all that other stuff. Right? It’s not very much

Jason Hartman 44:53
it’s all very expensive. You running that mostly room by room or the whole house at a time.

Julia Spencer 44:58
Usually that one is run by Bring in.

Julia Spencer 45:01
Like Bob has gone, the whole house was rented for the three weeks that you saw

Jason Hartman 45:06
who rents that house for three weeks. And who rents room by room, like what

Julia Spencer 45:09
kind of people are those? You know, the people that rent the whole house are usually people with families and kids. So they kind of need to have peace of quiet from other people. They don’t want to go in hotels, because they’re afraid to make too much noise. Or they’re large groups of students sometimes, you know, 810 students that can fit easily in a five bedroom house.

Jason Hartman 45:29
What kind of students What do you mean? Like, what do they did, they’re

Julia Spencer 45:32
like, there might be like, say, because I’m in Georgia, so mighty people from the city from Atlanta that come down to go to the beach, and they have a group of people, friends from college, that my rent the whole house and just kind of split the cost between them for a weekend or for six, seven days or something on spring break, something like that.

Jason Hartman 45:51
Okay, so that’s more of a partier type group. So that those that are getting a little wear and tear on your house, probably right? Yeah, yeah. Okay.

Julia Spencer 45:58
Yeah. But then I have the corporate rentals, too. For example, next week, I’ll have a group of eight or so workers who have a contract doing some construction work and one of the hotels downtown and they wanted that house just because it had a lot of TVs in a lot of rooms and two separate entrances, and they just wanted that rather than staying in a hotel because it would have cost them as just as much or even more.

Jason Hartman 46:21
Yeah, yeah, the hotel thing gets really expensive when you need to eat. That’s, that’s where the hotels get you, you know, so people that are staying for any length of time, or if they’re a family, you know, they want to be able to cook, you know, that’s just going to save them a fortune, of course. So yeah, good. Good stuff. Julia. That is really amazing. Congratulations on all your success with this. Your website is Julia m Spencer, calm. You do a bunch of different things in real estate, as we mentioned, at the beginning, so people can check that out. Any final thoughts? Maybe anything? I didn’t ask you anything you want to share with people? Um, no, I think it’s really fun thing to get into, you kind of have to

Julia Spencer 47:01
reserve a little bit of space in your day to kind of stay on top of things that will give you a better peace of mind. It’s not, it’s not like large long term Vacation Rentals where you kind of just put it away and you don’t have to worry about it for two or three months. You really kind of need to stay involved even though you may not have to do anything every single day or very little. It’s a little bit of more of a hands on business. But you know, if you’re interested in that you have the time. It’s very well worth it financially.

Jason Hartman 47:29
Good stuff. Well, Julia, thank you so much for sharing your wisdom and experience with us. We appreciate it.

Julia Spencer 47:34
Sounds great. Thank you for having me on.

Jason Hartman 47:38
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