July 2023

By Beck Bamberger, founder of BAM Communications, a PR firm for VC-backed tech startups, as well as OnePitch, a pitch platform for journalists and publicists.

The research is undeniable: Employees love a four-day workweek. Around the world, from Belgium to South Africa, businesses are implementing four-day workweeks in pursuit of happier employees and productivity that remains consistent, if not better than it was with a five-day week. I hear a number of founders, many with client-servicing companies like agencies, grumble that the shift to a four-day workweek would “never work for ‘our’ industry,” or that “clients just wouldn’t get it.” We’ve implemented a four-day workweek here at BAM, a PR and marketing agency that works with venture-backed startups, often moving at the speed of light. It’s been in place for several weeks, and the results continue to be compelling. Here’s a step-by-step process we followed to make the four-day workweek a pillar of our culture and a highlight of our productivity:

Step 1: Ensure You Have A High-Flexibility, High-Responsibility Culture

High-flexibility, high-responsibility means no one, including founders, cares about where a person is located or when a person is doing their job. As long as individuals don’t drop the ball on deadlines and results, don’t focus on where or when a person works. For us, we flexed our muscles on high-flexibility, high-responsibility for years as our team grew all across the U.S.—and did so even more once the pandemic hit.

Step 2: Implement ‘Flex Fridays’ First

The high-flexibility, high-responsibility culture allowed us to first debut a “Flex Fridays” offering across the board. If you want to implement a similar offering, make sure no calls or meetings are ever scheduled (no one wants a meeting on a Friday anyway), and make it clear that people can choose to wrap up their work whenever they’re done. A few of our employees took entire Fridays regularly off but worked full Fridays as needed. Because of our high-flexibility, high-responsibility culture, Flex Fridays were easy.

Step 3: Establish ‘No Meetings Wednesdays’ For Deep Work

I used Flex Fridays for deep work, a concept coined by Cal Newport, a professor and author of Deep Work: Rules for Focused Success in a Distracted World. Deep work can be an immense work game changer, and aware of its benefits, I established No Meetings Wednesdays at BAM in 2022. This allows employees a full day for deep work. I’m a proponent of full days of deep work because even the distraction of one meeting throughout the day can trigger your brain into fretting about not missing a meeting, at least in my experience. If you’re like me, you may end up stacking Mondays and Tuesdays with up to 25 calls each day, but the No Meeting Wednesday will let you sink into big projects and hairy strategies you need to work on while also allowing you to catch up from the wave of work from those Mondays and Tuesdays.

Step 4: Tee Up A Generous Timeline

Following the establishment of Flex Fridays and No Meeting Wednesdays, you can showcase the benefits of a four-day workweek. Seize the moment and pitch your executive team by explaining why you can do this: this ludicrous (to many Americans) four-day workweek. One of our priorities of the year was to increase team happiness, which we measure monthly, and I believed that the implementation of a four-day workweek would be one way to increase happiness in addition to other initiatives. One important nuance: You shouldn’t lower the results, hours or responsibilities you expect people to achieve and put in. For us, our pilot, which ran in quarter two, hinged on the team being ironically more productive with fewer hours.

Step 5: Up Your Internal And External Communication

During the initial implementation, practice your “Chief Repeating Officer” skills. Communicate about your four-day workweek pilot via email, Slack, in-person meetings, social media and more multiple times throughout the pilot period. In addition, you should repeat this messaging frequently with clients but emphasize that it is a pilot (a trial period) and that you will maintain results. In our industry, very few clients care about the number of hours we work because the actual results are all that matter. Still, a number of people at our firm were hesitant about how clients would receive the message. Time quickly told us: The vast majority didn’t care or celebrated the move.

Step 6: Practice Enforcing Boundaries (Because You’ll Have To)

“Boundaries” are often gossamer guidelines at workplaces. If your team truly wants No Meeting Wednesdays and a four-day workweek, every person will have to state and hold their boundaries so they are upheld. It’s easy to “squeeze in one call” or “just fit in a quick meeting,” but the “just one” often rolls into “a ton.” Of course, PR blow-ups happen and client emergencies occur. Exceptions can be made, but they should be notably rare and well justified. As an example, we’ll often get requests for Wednesday or Friday meetings from potential clients. As much as we want to get their business, a quick note telling the prospect of our No Meeting Wednesday and four-day workweek easily finds us alternative times. Most people respect stated boundaries.

Step 7: Measure Ruthlessly

One of the great ironies I’ve heard people express about the four-day workweek is its ability to maintain, if not increase, productivity. We have found productivity to be better at BAM while also increasing our happiness inside and outside of work, both of which we measure. In our case, the results we deliver to our clients in the form of media placements, content and client servicing is our measure of productivity. Every organization needs to establish its “measuring stick” for productivity to suss out whether the four-day workweek works. Continue to measure both productivity and happiness because both can contribute to client retention and results overall.

Tony J. Robinson:
This is the BiggerPockets Podcast show 797, and I’m your host, David Greene. Wait, no.

Rob:
That was pretty good. I’ve got notes. Usually David goes, “Welcome to the BiggerPockets podcast show …” and then he does it. You didn’t do the finger, you got to do 797.

Tony J. Robinson:
Yeah, I’d do the hand.

Rob:
It’s okay.

Tony J. Robinson:
797. Yeah.

Rob:
So we’ll workshop it.

Tony J. Robinson:
Yeah.

Jenni Vega:
See if I had to do it over again, I would have probably just stuck to bigger luxury properties and probably less, maybe three to five luxury properties that would gross 100,000 a year. It should be quality, not quantity.

Tony J. Robinson:
Rob, thanks for having me, man. I’m excited to be here.

Rob:
Yeah, I am excited to always share the mic with you, especially when we’re talking about short term rentals and we are doing that today with our guest Jenni Vega, who’s absolutely crushing it. She’s crushing it in the world of unique stays and adding amenities and supercharging her revenue with these unique stays and also, buying cheap property and cheap homes and proving all the haters wrong that you actually can still make a lot of money on a $90,000 house. Wasn’t that crazy?

Tony J. Robinson:
Yeah. She also talked about how she bought a house for $400,000 that grossed about $100,000. So just a really amazing conversation with Jenni. I’m excited to get into it but Rob, I feel like maybe we should also just let people know who I am that I didn’t just hijack this podcast.

Rob:
That’s right. Yeah. Terrible, terrible host. I’m a terrible host.

Tony J. Robinson:
Yeah.

Rob:
And let me say I always get in trouble because people will come and talk to me and then my wife will stand there for 10 minutes and then they’ll leave. She’s like, “You’re horrible at introducing people.” I’m like, “I thought you knew them. I’m sorry, I forgot.” That’s just what happened right now. So tell us a little bit about yourself, Tony.

Tony J. Robinson:
Yeah, so my name is Tony J. Robinson. I am the co-host of the other BiggerPockets podcast, the Real Estate Rookie Podcast. And I’m stepping in today because like we said, we’re talking short term rentals and Rob and I are good buds and we love talking to all things Airbnb, especially when we can do it in front of the mic together. So I guess if you guys want to learn more about me, go over to the Real Estate Rookie podcast. If you guys wants to follow me on Instagram, it’s @tonyjrobinson, on YouTube or at the Real Estate Robinsons and yeah, I love talking all things real estate.

Rob:
Do you got any affiliate links you want to plug too, buddy? Dang.

Tony J. Robinson:
Yeah, man. Hey, if you want to sign up … No, I’m kidding.

Rob:
Well, yeah, so this is a good episode. What were some of your favorite parts?

Tony J. Robinson:
I talked about this a little bit at the end, but I think Jenni’s kind of got this fearlessness to her where she’s eager to just jump in and figure things out and I really love that part. And she also gives a little nugget at the end about listing optimization, and I wish we could have spent some more time on that, but we were so deep into the episode, we kind of breezed through it, but if you’re looking for ways to optimize your listing as a short term rental host, great topics on that. Then, just market selection in general, Rob. I think that’s one of the things that holds so many aspiring Airbnb investors back as their inability to select a market. And I think just between the three of us, you have a really good discussion on the framework you should be using when you’re making that decision.

Rob:
Yeah.

Tony J. Robinson:
So before we bring Jenni on, even if short-term rentals aren’t your thing, there’s a lot of discussion in this episode that just applies to real estate investing period. And you’ll pick up tactics and strategies and just a lot of mindset stuff too around being successful as a real estate investor.

Rob:
Love it, man. We got a lot to cover in today’s episode, but before we cover it, today’s quick, quick tip is next time you’re looking for a potential deal, see if it follows the Golden Triangle rule, and if you don’t know what the golden triangle is, then you’re going to want to listen to today’s episode because we talk all about how this rule can make you a lot of money on the short term rental game. A quick background about today’s guest, Jenni Vega. She owns seven units in six markets, acquired all of these in just the last three years, and part of her edge in the short-term rental market is unique stays, partnering and breaking the short term rental rules. With all of that said, Jenni Vega, welcome to the BiggerPockets podcast. How are you doing?

Jenni Vega:
Good, thanks for having me.

Rob:
Before we get into your backstory, what is the way that you would summarize your buying strategy?

Jenni Vega:
Part of my buying strategy has been to go into some markets that most short-term rental investors would never consider, and also buying less expensive properties than a lot of other investors would look at and also, diversifying a lot of investors by most of their properties in one area. We’ve actually spread out a little bit further.

Rob:
Yeah, okay, and how has that been assembling your teams? Do you have a bunch of different teams and all of your different properties, or do you have one big overarching umbrella that sort of runs everything for you?

Jenni Vega:
So every area has a different team and that actually hasn’t been very bad. We’ve organically found our teams through word of mouth, Facebook groups. That process has been pretty seamless. And as far as the markets that we’ve chose, every market has a totally different story. Right now, now that we have seven, I’ve gone really deep into Facebook groups and mastermind groups and it’s funny because now, I hear more and more buy in vacation markets, buy in vacation markets, but we didn’t know anything three or four years ago when we started, and because we didn’t know anything, we bought our first two rentals in totally non-traditional markets that if we knew better, we probably wouldn’t have.
So sometimes I think if you go off your gut, it serves you well. And knowing what we know now, maybe we wouldn’t have purchased those, but those first two purchases actually served us really well. And I think there’s different strategies for different reasons. Our first purchase was actually in a Midwest city that I grew up near Milwaukee, Wisconsin, which is certainly not a tourist market by any means, but it’s done really well for us and it was very inexpensive and at the time, we couldn’t really afford very much and it’s done well. It’s cash on, cash return has done well and going back I would’ve done it again. And I think the Midwest in general is a market that you don’t hear about much in short term rental land. It’s not very sexy and there’s nothing special about Milwaukee.
You could insert Columbus or St. Louis or Kansas City, and I think most of these bigger Midwest cities are really the same. The numbers are similar. So we bought our Milwaukee home for $160,000 at the very end of 2019 and now, it’s worth a little over 200 grand. So very affordable numbers and it’s crazy. I see a lot of my friends spend 700 grand on their first short term rental, these crazy numbers.

Tony J. Robinson:
Yeah or more people are spending seven figures, it’s insane. Jenni what I want to know, because I think it’s interesting and Rob, you’ve kind of gone with this kind of strategy also, all of our active short-term rentals right now are split between two different markets. And I have some friends who have 30, 40 units all in one city, and there’s economies of scale that you get when you, “Hey, we’ve built out our cleaning team. We’ve built out our rehab crew and our maintenance team,” and you can get really efficient with your operations when you stack multiple units into one market. There are some benefits I think that come along with kind of spreading things out. So what was your mindset? Why not go deep into this Milwaukee market if it worked so well for you initially? Why continue to spread yourself out?

Jenni Vega:
Yeah, so that actually was not a conscious decision. And I think it is smart to do the economies at scale. So we started in Milwaukee because we knew the area. At the time, we actually didn’t know for sure if we wanted to do a long term or a short term, and we wanted a market that can pivot to either, and it’s also a really good midterm market. So we like that rental because it has actually been a long-term during COVID. We actually might make it long-term again after the summer because it’s very old home and guests are actually very rough with it. Our handyman bills are pretty high, so that market could do both. Our second rental is in the middle of Oklahoma and we actually … to be honest, we bought that for the wrong reasons.
We’ve made so many mistakes and we still make a lot of mistakes in this journey, and we bought that one just because I went to college there, which to be honest is a really stupid reason to buy a rental. We bought that one the beginning of 2021. We pay $92,000, but the cash on cash return there is excellent. That one last year grossed $39,000 and it’s 2021 most investors were overpaying the situation in 2021. So we buy this in the middle of Oklahoma and we were short-term rental number three or four in this entire little city. And currently, there’s only I think nine or 10 of us of that. And there is not very much tourism in this city, and there’s actually not much numbers to prove either in this town.
So again, that’s totally another rule that was broken. Now we’re more savvy and if you’re going to buy a short term rental, you check your DNA and you check Rabbu and you do all these things. So we just went into it blind and we actually walked around stores and just little spots in the town, and I just actually walked up to people and I said, “Hey, what do you think about short-term rental in your town?”

Tony J. Robinson:
Man, you’re brave. That’s a brave question to ask, because-

Rob:
I hate them.

Tony J. Robinson:
Because you never know what response you’re going to get.

Jenni Vega:
Exactly.

Tony J. Robinson:
I don’t think it’s necessarily a bad thing. I think a lot of the markets that we’ve tried to move into, I’ve submitted offers all across the country and a lot of it is just relational, right? It’s like I have some kind of relationship to this market. So I don’t think it’s a bad starting spot, but you still want to be able to go back and validate that, okay, I have a connection here and now, let me make sure that it makes sense. Because Rob, how many markets are you in right now?

Rob:
Yes, that’s a lot. I want to say 10 or 12. Let’s see. Yep. Yeah, 10 or 12, something like that. I agree Tony. Honestly, Jenni, I don’t think it’s a bad idea at all, if you went to college there, I think that gives you an advantage. I mean obviously, there are so many ways that you can choose a market. I always say find something in your backyard. I like giving that advice for anyone that’s just getting started but I also like the idea of finding a market where you might have boots on the ground. So let’s say you have family in that city that might be able to help you or maybe can send packages to that family to hold while you’re setting it up.
I like finding markets that I have some familiarity with. You happen to know that city because you went to school there for roughly four years, I’m sure. I went to school in Austin and I’m a UT guy, so we might have some rivalries here. For me, I always loved the idea of investing in Austin because I knew that city like the back of my hand, even though I didn’t necessarily have any boots on the ground, all my friends moved away, I was just like, I know this city and I know what it could be. So I actually think it’s a pretty good strategy.

Jenni Vega:
Well, thank you.

Rob:
Jenni, tell us a little bit … paint us a picture of your life before you found real estate. Tell us about your job. What kind of income were you making, family, et cetera. Just give us the whole gamut here.

Jenni Vega:
Yeah, so actually my job is still pretty much the same. I know some investors, they quit their job and they ride on unicorns and everything after they find real estate. So I’m very fortunate, I have two great day jobs or day businesses. I’ve been with Cutco for many, many years, 21 years actually, and I sell closing gifts through that company to real estate agents, which actually is sort of indirectly how I found real estate investing. Then, I also published a magazine called Real Producers. And so my income do very well, a couple of hundred thousand a year and I’m still very active with both businesses. And I actually found real estate investing through a friend I met through my Cutco business. He wrote a national bestselling book called Hold, H-O-L-D and it’s a yellow book.
And what’s interesting is in my job selling, closing gifts to real estate agents, in a given week, I have conversations with maybe 10 to 20 realtors and I have for the past 13 years I want to say. So, in 2019, Steve Chader and Jennice Doty, my friends who wrote this book, they gave me this book and I read it. And the book is very easy and it’s a very simple to read and it’s all about just buying and holding real estate. It’s not about short-term rentals at all, it’s about just traditional buy and fold, long-term renting out a house. The premise of the book is that just through appreciation and tax savings, and even if you were just making a couple of hundred dollars a month renting out your house, that your average cash on cash return is about 28%.
So as I was reading this book in my backyard in 2019, I had a mix of emotions. I was excited, but I was actually pissed because I thought to myself … I talked to so many realtors on a given week and how is it that no realtor had ever mentioned real estate investing to me? I thought to myself, I thought back to the first house I had bought in 2009 and the second house I bought in 2018, and I’m like, “Wait a minute, how come those two realtors didn’t ask me if I was interested … my husband and I, why didn’t they ask us if we would like to invest in real estate? Why didn’t all the realtors, I speak to on a weekly basis on all my coffee days at Starbucks selling closing gifts, why wasn’t this ever brought up? I just don’t understand.”
So there is the retail side of real estate and there’s the investment side of real estate. And I just think realtors, I think it’s a huge disservice to their clients to not bring this up the real estate, “Hey, would you like to build wealth through real estate investing?”

Tony J. Robinson:
Yeah, but I think the challenge there, Jenni, is that most real estate investors or most real estate agents are not investors themselves.

Jenni Vega:
Exactly.

Tony J. Robinson:
So if they’re not educated on that process, it’ll be difficult for them to educate their clients, but something I want to go back to, just you talking about what you were doing or I guess even what you’re still doing right now, if you can tell people what Cutco is, and also like you said, for a lot of people their goal is I want to get out of my W-2 as fast as humanly possible. It seems like you’ve taken a slightly different approach where you’ve built this healthy W-2 income. So I guess what is Cutco and then why are you not as eager, do you think, as others to walk away from your day job?

Jenni Vega:
Yeah, yeah. Actually I’m not W-2, I’m 1099.

Tony J. Robinson:
Right.

Jenni Vega:
I’m not eager to walk away, for a lot of reasons. One, I really truly enjoy what I do. I’m doing this for a long time. Also, when you’re a real estate investor, you need to have income. If you want to buy properties, you can only buy, I think it’s maybe 10 properties or something like that with traditional financing before you have to look into DSCR loans and other financing which have higher interest rates. So we’ve been fortunate in that when we do buy property, we’ve never had a hard time because we’re able to show a pretty healthy income. I also know, short term rental, it might be a little up and down. We’ve been very fortunate that we’ve been very consistent with all of our properties, but I like having that safety net of my two-day jobs or day of businesses if you want to call them that. Because I am self-employed technically, but my income is pretty stable.

Tony J. Robinson:
There’s a lot of benefits too from having that healthy kind of 1099, W-2 income, whatever it is, but Cutco specifically, there’s a guy, his name is Justin Donald.

Jenni Vega:
Yeah, I know Justin.

Tony J. Robinson:
Yeah, he runs the Lifestyle Investor and he talked about the incredible alumni that have come from Cutco and like multi, multi-million. I think even one of them was a billionaire guy that started off working at Cutco. So just really quickly, not to get too off track here, but what were some of the things that you liked, or I don’t know, what are some of the skills you developed working at Cutco? Because it seems like there’s just a consistent number of people who come out of that company, just extremely successful.

Jenni Vega:
Yeah, so definitely you have to make it happen. Nothing comes to you. It’s really like what you create people skills, lots of phone calls. So reaching out to people. When I actually started with Cutco, I was a miserable failure and I was one of the worst sales reps in my office of 50 people. And I struggled a lot, but I decided when I started with Cutco that I was going to make it work and I was going to hit the top promotion no matter what it took. And I didn’t have any skill and I actually still with short-term rental. I am not the smartest cookie out there. I’m in a mastermind group with about 15 people across the country called Faster, huge shout out actually to Madeleine Blowe. She’s awesome. She’s our leader.
And I’m constantly asking, people probably laugh at me in our group because I’m asking the dumbest questions, but with real estate investing, you just have to decide that you’re going to do it and there’s no ifs, ands or buts and you’re just doing it. So when I started Cutco and when I started Real Producer, the magazine I run, you make that decision and you just say there’s no ifs, ands, or buts. You go into it knowing that it’s going to be really hard, but you’re just going to do it. And that’s like the end of the story. It’s more important to have mindset than skill because you can get the skill and you can get the training and listen to a podcast, but you just have to have the tenacity.
So with real estate, when we bought that first property in Milwaukee, we were extremely scared and extremely nervous, but I actually reached out to a realtor from the BiggerPockets forum, Marcus Auerbach in Milwaukee, and that relationship with him and having a realtor that was an investor himself and part of the BiggerPockets community, that was paramount to our success. So it’s like the who not how with real estate investing, masterminds the right realtors that come alongside you, the right lenders and making the right decisions is the key to success, not necessarily skill.

Rob:
Yeah, I think that’s the right mindset to have and honestly, I really can appreciate you coming on here and saying, well first giving us numbers about how well you do at your Cutco job, but it’s also pretty amazing that you still want to do that, and I think this is a mistake that a lot of people get into is they might make six figures at their job and they’re like, “Yeah, yeah, as soon as I make that in real estate I’m going to quit,” but it’s sort of like, why would you, right? Because you’re not just replacing your income, you need the extra income to keep investing into your portfolio. So I think the way you’re doing it is the best way because effectively your job is supercharging your portfolio in 10, 15, 20 years from now.
You’re going to have a giant portfolio that can help you retire. So I think that’s a great way to do it. You told us a little bit about this book that you read, Hold and kind of sparked this whole, why didn’t anybody tell me about real estate after reading Hold and now that you have the knowledge, what’s your motivation and what’s your why?

Jenni Vega:
So we have a four-year-old son and I know there’s other ways to build wealth and there’s like syndications and there’s multifamily and there’s other ways to do this. What excites us is to one day when we pass on, to leave him a bunch of cool properties that are going to be paid off. What I really like about the Hold book is just the whole … using other people’s money to pay down debt. And that’s why I really like single family real estate investing, even though … let’s just say worst case scenario, even if you’re breaking even, still other people are still paying down your debt. We actually didn’t intentionally set out to create this, but now our portfolio does happen to consist of some pretty cool properties across the country.
So it is cool one day for him, maybe he will tell his friends, “Oh, I own a beach property, I own mountain properties, I have a desert property and I have a lake property in Wisconsin, and that is kind of cool to think about.”

Rob:
So Jenni, you told us about your first short-term rental in Milwaukee. Tell us a little bit about some of the short-term rental rules that you broke with this property.

Jenni Vega:
So the Milwaukee property was our first one, and I guess the rule that was broke is we actually bought this property in a B minus C neighborhood because we were limited with what we could afford. I still would say it was in a golden triangle by my definition because it was five minutes to one of the biggest hospitals in town. It was eight minutes to the airport and eight minutes to downtown, and it was on a really nice street. So it actually worked out, and what’s interesting is to date, it’s our highest rate of property.

Tony J. Robinson:
Yeah, I mean let’s talk about that for a bit, Jenni, because I think that’s an important topic that your ability to get highly rated as an Airbnb host, a lot of it depends on your property and your ability to be a good host, but a lot of it also depends on the expectations of your guest, and if your guest is planning their once a year vacation with their spouse and their kids, maybe even their grandchildren, and this is the one time a year where the entire family gets together, their expectations of your property and the location are going to be pretty high because this is that one time a year, maybe they took time off of work, they cash in some vacation time.
If your guest is traveling for a week offsite working somewhere else and all they’re doing is going back to that apartment after dark and grabbing some takeout, eating, going to sleep and waking up and doing that all over again, their expectation of your property is going to be completely different. So I think the traveler profile of your chosen market plays a huge role in your ability to get, I think, better reviews.

Jenni Vega:
Exactly, yes. So again, no one is really coming here to vacation. They’re coming here because they’re working here. They might be going to a wedding. We get some bachelorette parties. There are some festivals in the summertime and the price is right too. We sleep 10 people, but it’s a really good price and the guest’s expectations are definitely met as well. So we’ve almost never had a less than five star review ever at this property.

Tony J. Robinson:
Great.

Jenni Vega:
Yeah.

Tony J. Robinson:
Awesome.

Jenni Vega:
It’s really interesting. So when you even compare that to our amazing storybook cabin that we have in this Smokies, we have a lake property in Wisconsin too that’s spectacular. We get more four star reviews there than we do in my Milwaukee property, which is very interesting.

Tony J. Robinson:
Rob, so we talk a little bit about breaking rules in the Airbnb short-term rental industry. Have you broken any rules recently that have worked in your favor? Because I can think of a rule that I broke that did not work in my favor, but I’m curious what’s happened for you recently?

Rob:
Yeah, so I think beds are overrated, so I stopped putting them in my short term rental. No, I’m just kidding.

Tony J. Robinson:
Who needs beds?

Rob:
So I think for me, the biggest rule I ever broke was just being sort of a pioneer in a market that didn’t necessarily have comps. Now there are a lot of comps because I opened my mouth on YouTube, but I often will just throw a dart out there, hope it lands, and just hope that it books with the research knowing that the traffic goes through and the market is underserved, and that’s a really scary thing. It’s a really, really scary thing, not just when you’re investing with your money, but when you’re investing with an investor’s money, it really changes your parameters because you can’t look an investor in the eye and say, “Hey, there are no comps. I think it’s going to work.”
You have to be a little bit more conservative when you’re partnering up or working with someone else’s money. Whereas when I just do my own things, I like to experiment and I like to just buy stuff. That’s why I’m in so many markets. I like buying stuff in different markets and sure, I might be the only one in that market, but at least, it tells me that my hunches are correct, and I just like having a little bit of confirmation to know if you set up a really nice awesome amazing short term rental, will the people come to it? And I think the answer is most of the time, yes. What about you?

Tony J. Robinson:
Well, Rob, you bring up a really good point man, and honestly, both you and Jenni are far braver and more courageous than I am because typically, we don’t go into a market if we don’t see at least triple digits when it comes to the number of listings in that city. I’m too afraid to be number four, like you mentioned you were, Jenni because like you said Rob, it is hard to really comp and kind of understand, I don’t know, I guess is it actually going to work? So I usually … I don’t want to be the pioneer in a market. I want to see some proven people go before me and then, I just want to go in and do my best to outperform them.

Rob:
Yeah, yeah. So Jenni, so you mentioned, you told us about this Milwaukee property and you told us that one of the rules you broke was buying a beer or in a C class neighborhood. Now, I know that some of the other parameters that you’ve set when you’re buying your properties as investing in the golden triangle, can you tell us a little bit about what that is?

Jenni Vega:
Yeah, So just making sure that there’s … in that area, you’re close to a couple hotspots, so for that particular city, it was really close to a major regional hospital, really close to the airport and really close to downtown.

Rob:
It’s a sort of being in the middle of a culmination of things, right?

Jenni Vega:
Exactly. Yeah.

Rob:
In between traffic. Yeah, this is something that I talk about a lot. I like being in between two major hubs. Triangle is even better if you can be in the middle of three, but this is a reason why one of my properties works is because it is outside of three major cities and you sort of have to drive through it to get to those other cities. So sometimes I think secluded and being out there, and a little bit outside of the metropolitan areas is okay when you know that people are sort of a captive audience on their travels, they have to go through your city to make it to the other destination, right? So, you can be that pit stop for them. I would say an example of this would be in between Austin and Dallas, there’s Waco.
Waco is a very popular spot. Chip and Joanna Gaines have made it popular and it’s like the mid midway point in between. So, I’ve always said that’s a really great rental market because people stopping in.

Jenni Vega:
Yeah. Exactly.

Tony J. Robinson:
Me ask one follow up question. Since both of you’re such pioneering trailblazers here, what do you guys need to see to make you feel comfortable to invest in some of these further out markets? If I’m far enough, can I just throw in enough hot tubs and game rooms and all these cool amenities to make up for it or is there something else that you’re looking for outside of what you guys just said to really make you feel confident?

Jenni Vega:
One thing I look for my buy box is I’m trying to look for homes under 400,000 that are going to gross 100,000. So going on price labs, market dashboards, and seeing … in that immediate area, seeing if homes are doing that. It doesn’t always have to be exactly that but that’s ideally what I’m looking for. I really look for the overall home price is what I’m looking for or I’ve never spent more than 400 grand on a house.

Rob:
Okay. Yeah, and if you ever find any of those $400,000 homes that gross 100,000 and you decide not to buy it-

Tony J. Robinson:
Please send them my way.

Rob:
Please send them our way.

Jenni Vega:
Well, pretty much all my homes are in that ratio or similar to that ratio and not too far off from that or the projections are somewhat close to that. They don’t have to be spot on, but they’re in that ballpark or I don’t do it.

Rob:
I think for me to answer your question, Tony, I don’t think you can just over amenity and overly design a place to be bookable in some markets, right? If you’re out in the middle of nowhere, there’s still has to be a compelling reason for people to go. I think what I’m always looking for is, I don’t know, for example, a college town. There’s a lot of people in a college town and if I look on Airbnb and there’s only 10 short term rentals on there, and then those 10 short term rentals were … the photos were taken with a Blackberry, the first Blackberry that ever came out and then furnished with Goodwill Furniture, then, I get really excited about that because I’m like, “Wow, just one nice Airbnb can sort of scoop up the competition.” And so for that reason, you still have to be within reason.
I don’t think you can just buy a place in the middle of Kansas where the nearest city is three hours away and expect people to go, but I’ll give you an example of a place. Unfortunately, I did not end up closing on this property, but I was in escrow on this amazing dome home about 30 minutes south of Denver in Castle Rock, and I was so excited about it because it was a destination for people that live in Denver and that are going to the national park and stuff, they would be willing to drive 30 minutes out to get here, and it is in between two cities and it was super unique, had amazing views and I just thought for me that one really checked a lot of boxes. And at that one, I was going to do a lot of stuff, design hot tubs, game rooms, everything, because I knew that there was an immediate need in that market.
All of the Airbnbs out there were sort of travel destination type of Airbnbs, but they don’t really have any amenities and the views weren’t as good. So I’m getting sad talking about it because I did end up not closing on it, but to me, that one did check the box because it was so close to Denver.

Tony J. Robinson:
Yeah, I think it’s definitely a balance that you want to be able to strike, and that’s basically what both of you all have spoken to is how do you get close enough so that it’s not inconvenient for your guests to get to where they’re trying to go, but not so close that now you’re beating or breaking that ratio of being able to get 100K on a $400,000 purchase price, but I think one thing that does make it easier to be on the outskirts is not just the amenities, but also just kind of the uniqueness of your property. If you have something that’s really cool that people can’t really book somewhere else, it makes them more willing to make that drive.
So Jenni, I’m curious, you talked a little bit about having some of these unique properties. Can you walk us through, when you say unique, what does that mean? What do those property structures look like? What are you offering guests?

Jenni Vega:
Yeah, I actually want to ask you guys about this too. So it depends on the market and this is what I want to get your thoughts on. So take the Smokies for example. I have two properties there and one is this Hansel and Gretel style cabin, storybook cabin. Super cute. We don’t have a view. We are about 20 minutes from Pigeon Forge and Gatlinburg, but it’s very unique and very small, very cute, but very … has very antique feel, guests feel like they walk into Snow White’s cabin. There really is truly no other … that I’ve seen no other cabin in the Smokies like it. So very rustic. A lot of cabins in the Smokies are going modern and it does very well. Then we had Leon’s across from that cabin that we just completed a build on back in February.
And I thought our build was pretty unique. I still think it’s pretty unique, like floor ceiling, windows has a really cool look to it. So we put this on Airbnb and then I look on Airbnb and I’m like, “Oh man, it appears that everyone in the Smokies has just also completed a new build.”

Tony J. Robinson:
Yeah.

Jenni Vega:
What are your thoughts on a market like the Smokies. It’s quote-unquote saturated, would you buy more property there in 2023? Would you advise anyone that you’re mentoring to buy more property there? What do you build there? What would you do in a build there to make it stand out? And I’m sure you get this question a lot, so what is your take on that? And also how do you make your properties stand out in markets like that? In markets like Joshua Tree, in those sort of markets? I’m not talking about … I have properties too in Central Wisconsin where the masses are not flocking to, but in a place. The Smokies where you both own property in what’s your take on that?

Rob:
Tony you go first.

Tony J. Robinson:
Yeah. There’s a lot of layers to this. I think the first part that I’ll answer is on, okay, does it still make sense to kind of buy in a market like the Smokies that’s quote-unquote unsaturated or that’s oversaturated. Just really quick on the whole saturation piece, and I know Rob, you talked about this before too, that I think people throw around the word saturation kind of too loosely. There was a big fire in the Smokies back in 2016 and even in 2023, we’re still not up to the number of cabins that were present in that market in 2016. So demand has continued to increase in the Smoky Mountains, but supply still isn’t where it was back in 2016. So I think we probably have some ways before we can call that market saturated.
I do think that we’ve seen in the last 24 months a big run-up on prices in that market, and I think that’s where the challenges come. My cabin, the first cabin that I bought during COVID, it’s doubled in value, but our revenue has not doubled, right? So what does that mean? It means if I’m paying double the amount of money for the same amount of revenue, I just cut my return in half

Rob:
At a 7% interest rate.

Tony J. Robinson:
At a 7% interest rate, right? So I think that’s where the challenges are in that market where you’ve seen revenue kind of stay steady, which is, it’s strong revenue in that market. If you buy a cap in there, you’re probably going to do well from a revenue standpoint, but it’s how do I get my purchase price low enough or my interest rate low enough for it still to make sense? So I think that’s the bigger challenge in that market. However, if I was going into a market where there’s heavy competition, I think your ability to compete … first, it comes down to your ability to buy, right? You want to make sure that you’re not overpaying in that market, that you’re getting a good deal, but second it comes down to your ability to give the guests something that they’re not able to get at other properties.
So I’ll give you an example for our properties in Joshua Tree, a lot of people say that Joshua Tree is oversaturated and “Hey, I shouldn’t go buy in this market.” It is true that supply has increased, but if you’re a professional host, that’s what you expect to happen and it’s on you to try and identify ways to increase your revenue. So what we did at one of our properties in Joshua Tree, we took our garage, which was just … it was locked to guest and we just had our washer and dryer inside of the garage. And Sarah, my wife and I, we had stayed at an Airbnb in Orlando and Orlando, if you want inspiration for really cool design and amenities, go to Orlando. And we stayed at this property that had this really cool Mario themed game room in the garage.
And we looked at Joshua Tree and like, “Man, there’s not a lot of properties that have cool game rooms in Joshua Tree.” Most of them are like … there’s like yoga studios and maybe a Peloton or maybe a pool table, but to do something really, really cool just wasn’t happening out there at a high level. So we took one of our garages, we spent $12,000 to convert it into this really cool Mario theme game room, and as soon as we did that, our revenue skyrocketed for that property. So I think what you want to identify in whatever market you’re in is what is the experience that’s missing here? What’s something that I’ve seen work well in other markets that isn’t present where I’m at right now?
Last example for Joshua Tree, and I convinced Rob after months and months of trying to get him to do this, but was like hot tubs. Initially in Joshua Tree, hot tubs weren’t a big thing and then, I’d say like 2021, you start to see more properties doing that, and now, it’s almost like par for course if you want to compete in Joshua Tree. So I think that’s my approach. That was a mouthful. Rob, I’ll shut up, man. What do you think?

Rob:
I agree with all of that. Next. No, just kidding. Yeah, so Smoky Mountains is a love-hate relationship. I think that there’s a run-up in prices with high interest rates. It makes it tough to get the good old days of 93% cash on cash returns. I got a property out there, I actually think it was probably a 95%. I think we got all of our money back in that first year, pretty close anyway. We would not be able to replicate that today. I think it would still be a good return. I just think it’s probably a little bit more normalized in terms of, yeah, I just don’t think you can expect your initial down payment back in the first year if you’re doing a second home loan or anything like that. What I would say is I think that the Smoky Mountains is actually of excellent starter market simply because a lot of the houses for sale, I would say like 95% plus, if not more, already come fully furnished.
And because they’re fully furnished, it makes the job so much easier to get that up and running because you can buy the property, fly out there, change maybe some art, maybe change out a couch or an accent chair, maybe some linens, but for the most part, you can get a property up and running extremely quickly because you’re just optimizing what’s there versus having to figure out how to ship 15 to $25,000 worth of furniture to the Smoky Mountains where all the driveways are super steep, and the only way you can get a hold of furniture is by going to local store. It’s just so hard out there to set something up from scratch. So I think it’s a really great starter market for that reason.
I just think that maybe it’s a little bit … we’ve calibrated a little bit. Like you said, Tony, I think revenues are actually relatively consistent. Demand seems to be relatively consistent. So yeah, I wouldn’t say yes or no. I honestly haven’t even looked on Redfin in the Smoky Mountains particularly in the last year, because I just got tired of losing on every bid because everyone was bidding like 50 to $100,000 over and now, we’re seeing price cuts every single day. Now, I think maybe we’re starting to return to normal times again. Would you agree with that, Tony or am I off base?

Tony J. Robinson:
No, no. I totally agree with you, man. I think in a lot of these big vacation destination markets, our friend Avery Carl calls them Blue Chip Markets, the Destin’s, the Joshua Tree, the Smoky Mountains, the broken bows. You saw massive run-up in prices over the last two years, and I think we’re starting to see them kind of come back down to reality a little bit. Jenni, I’m curious for you, so you heard our perspective on it. So when you think about your own property, I guess what lessons did maybe you take away about your ability to try and compete in these markets that you’re in with the unique experiences at least?

Jenni Vega:
Yeah. Yeah. So my first two rentals just to be honest, are really not unique at all. They don’t really have to be because they’re not in the markets that are flooded. So the third rental was the Hansel and Gretel style and because it is the Smokies, we actually did acquire that fully furnished, but it wasn’t living up to its potential. It was furnished, but it really needed a little bit of sprucing up. So we took the base that was already there, and then we spent about three or four grand and we enhanced it a little bit more. So we really played up that more. So it doesn’t have any extra amenities that other cabins don’t have, but it has this old world rustic vibe, old wood green strove, this super like fairytale-esque look, whimsical look to it.
The new build across the road has … it’s not a tree house, but parts of it do have a tree house look, where you go upstairs, it has floor, wall, windows where you look outside and you’re kind of like in a tree house, big wraparound deck. It has a rustic meets modern look. We did not want to go to modern, but we didn’t want to go to rustic. We wanted to have a Smokies look with a little bit of modern and then, we have another property near the Grand Canyon where we actually built a little custom golf course, but we actually had a really bad experience with our contractor and he made the golf course look really bad. It looks kind of homemade hodgepodge, not really well put together.
So what we did in our listing is we actually embraced that and we kind of made fun of it, and we called it the redneck golf course because we know that it looks bad, and we had some people look at that and say, “Oh my gosh, you have to get rid of it.” We’re like, “No, we’re not getting rid of this.” Let’s just embrace it. Let’s make fun of it and guests love it.

Rob:
Okay. Cool. Yeah. Yeah, I love it.

Tony J. Robinson:
That’s so smart. It’s like, let’s just purposely do things really poorly and inexpensively and then, we’ll call it the bootleggers version of whatever it is. That’s super smart-

Rob:
Now, and this is what we call marketing, and you are an expert marketer. Congratulations.

Jenni Vega:
Well, I am a veteran salesperson, but actually, and what’s funny is a week ago and then … so actually, if I can plug someone else, I actually pay someone. Her name is Kate Chelyn. She’s amazing. She is an Airbnb listing optimizer, and I just hired her for two of my properties and a few weeks ago, she goes, “Jenni, are you doing lifestyle photos for your properties?” And I’m like, what the heck is a lifestyle photo? I never heard of such a thing. So what she’s recommending is that you hire a model to go to your properties and kind of take these cool pictures where the picture isn’t about them, but they’re enjoying your property. So we went up to my Grand Canyon property and we had a model set, but they had canceled day of.
Well, there is no one else to be in the picture, so my four-year-old and I, and my husband, we went up there and we had to be in the picture. So we went on the redneck golf course, me and my four-year-old, and the photographer got a picture of my son playing on the golf course, and I was in a distant background, you could barely see me, which is the point of it. So now we have pictures of our listing with my son on the redneck golf course. So on the Airbnb listing, the caption is cheer on your kids who widely play on the redneck golf course. And so we kind of embrace it even more, and it actually fits our listing because that’s a … speaking of breaking the rules, that listing is a manufactured home remodeled.

Rob:
Okay.

Jenni Vega:
People told me not to do that, but the numbers work, and the guests absolutely love it. And no one has ever said in their review, “Oh my gosh, it was a manufactured home. It was a trailer.” People don’t even know their state of the trailer, but it does kind of fit. It’s a rural kind of farm redneck golf. Those totally fits and people love it.

Rob:
That’s cool. Yeah. I’ve often considered asking Tony Robinson to come and model for all of my Airbnbs, so I’ll take that tip and convince him to do that. I’m actually building a mini golf course in one of my properties too, so I’m glad to hear that you’ve gotten good traction from it. I’m going a little extra with it and it will be a full on … well, man, to be honest, you got me a little scared because I’m like, I’m pretty sure my contractor’s going to pull this off, but now I’m like, what if he doesn’t, because it is somewhat more complex than it needs to be, but I don’t think that there are really a lot of mini golf courses out there, and I think that’s just a really cool amenity. Yeah, that’s cool. I’ve never thought about the lifestyle photos either.

Jenni Vega:
Yeah.

Rob:
I’ve considered it, but I just don’t know anyone that’s done it and it’s sounds like it’s working for you, right?

Jenni Vega:
So one helpful hint too for any listeners, apparently there are lifestyle photographers out there. They’re extraordinarily expensive, so we just found a local photographer, a photographer that just like they take wedding photos, graduation photos, and he actually offered to bring them model himself. So that would be probably the easiest way to find the right photographer for this. So not a listing photographer, just a people photographer. Then, a couple other listings, what we did to make them stand out, we bought an off-market house in Florida. We bought this house and there’s … apparently, what we learned about this market is in Panama City Beach, you have to have a pool, apparently. No one told me that.
We can’t put a pool in because of our yard. We’re on septic, so we are getting a cowboy pool, and we know that it’s not ideal, but it is what it is. So we’re going to do mini golf with the cowboy pool, and then we also turn our garage at that house into a really cool game room and then, we have another property in Central Wisconsin, and we converted that garage into a game room, and then we made our yard at that property at night. It turns into this whimsical, almost like fairy land. We have solar lighting everywhere, hot tub, all that. So those are some ways that we kind of make our properties stand out and moving forward, I really liked themed Airbnbs. I think that’s a really smart idea too.

Rob:
Did you add all of those different amenities after the Airbnb had been running or did you launch with those amenities?

Jenni Vega:
Yeah, so for the Central Wisconsin one, we did add that a few months after the game room and the hot tub, and we did see a pretty big difference in bookings. Yeah.

Rob:
Really? Okay. Do you have any … the redneck mini golf or whatever that you didn’t launch with that either, right?

Jenni Vega:
I did launch with that, yes.

Rob:
You did launch with that one. Okay. Then, was there another property that you added the … I guess the Panama City Beach, did you add the cowboy pool, which is basically one of those horse troughs that are above ground. They’re relatively small. They can be big.

Jenni Vega:
Yeah.

Rob:
Pretty cost and effective, I’d say, but did you launch with that as well?

Jenni Vega:
Yeah, we’re adding that next week, but we already started marketing that we were going to add it. So we put a picture of what it’s going to look like. And we did see a pretty big difference in bookings once we added that we’re going to have it, and that one, it’s actually pretty big. There’s a company called Gypsy Pools in Florida that provides it, and they have four different sizes, so hopefully it might attract more people with toddlers.

Rob:
Yeah.

Jenni Vega:
That’s okay.

Rob:
Cool. Yeah, I don’t know if you know this Tony, but I just added a pickleball court to my Scottsdale property.

Tony J. Robinson:
Dude, you’ve been talking about that for a while, man.

Rob:
I know. I know. I finally convinced David to let me do it. Okay, so it increased the revenue for June so far, 25% from last year. Then, yeah, we already booked so much more money, I would say so much faster. Last year, it just didn’t launch as fast as we thought. It did fine, but now, the bookings are rolling in, like every single booking basically … every single weekend is going to be booked for us forever and then, we just found this other website called Swimply, where you can rent out your pool, but they just added pickleball courts to the actual amenities that you can rent out individually outside of Airbnb. So we’re going to try to actually rent out our pickleball court for a $100 an hour during the weekdays, and then we’ll have pretty massive like $2,000 a night bookings for our week, like Friday through Sunday basically.

Tony J. Robinson:
Dude. Congrats on the pickleball court. Like you said, it has a measurable impact on revenue, on profitability. So I guess that leads into my next question, Jenni. In terms of your portfolio, when you look at what you’ve seen so far, what do your numbers look like? Give us the nitty-gritty on what kind of revenue we can expect to generate with the portfolio like yours.

Jenni Vega:
Yeah, so Milwaukee grosses about 40 to 50,000 a year. Keep in mind, I think most short term rental investors would say their net is about half of their gross. That’s pretty typical. So that’s Milwaukee. I should say though, had we spent a little bit more, there are properties that will gross like a hundred thousand a year there. The right property is a five bedroom downtown, those types of things. That I think can be achieved in, like I said, any Midwestern city. Then we, the Central Oklahoma one. Again, that was 92,000 purchase price, 39,000 gross last year. The third property was storybook on the hill in the Smokies, and that’s about 20 minutes from Gatlinburg and 20 minutes from Pigeon Forge that was purchased for 350,000 and it came with an extra lot. So that was a goodbye. That was in 2021.
That grossed 78,000 last year. Then, the new build all in, across the road, that was launched last February, that with furniture, with landscaping, with my $10,000 kitchen that I had to get with all the extras, the build was 371,000 but with all the extras, it was 450 out the door. That is projected to … I’m hoping that’s going to gross 90,000 in 2023. We might get to 100,000 maybe, so maybe I say in the 90s is my best guess for that one. Then, the fourth property was Grand Canyon, I think that was number four. We remodeled this 1984 trailer. This all with the remodel, I believe was about 280, so 280 all in and 12 month cycle, 50 to 60,000. Then, Panama City, Florida, we just bought and launched it in April. We bought it because we found this through a wholesaler and it was $100,000 under value.
So it’s worth 425. We bought it for 290, and then we put like 25,000 into it to rehab it. So a little over 300,000, and we’re hoping that one grosses like 75,000. I’m missing something. I’m missing my favorite … well, one of my favorite properties is our Central Wisconsin resort property out in the country. So this one was 371,000 before furniture and everything, and this one grosses a little over 100,000. So this is my golden standard property, and any featured properties, I would want to have more look like this property that we have there.

Tony J. Robinson:
That’s pretty good. So ballpark, you’re going to do about 530, maybe 550, depending on where you’re at in that range. Like you said, if you’re holding an expense ratio about 50%, you’ll net a little over 250,000 bucks, which is pretty good, especially for that number of properties. So I guess it’s a really good return, I think, for the cash you put into the business. So I’m curious Jenni, what, if anything, would you … looking back now, say you were starting over today, what, if anything, would you have done differently as you built out this portfolio?

Jenni Vega:
I would’ve bought a little bit less and done more properties like my favorite, the one in Central Wisconsin. There’s nothing special about this area. It’s a little bit bigger. We sleep, eight people. It’s just, I think working smarter, not harder. Again, I really like the Midwest.

Tony J. Robinson:
Yeah. It’s a great market.

Jenni Vega:
It’s not talked about a lot in the short term rental space, and you can get cheaper properties,

Rob:
Don’t tell people.

Tony J. Robinson:
Yeah.

Jenni Vega:
I heard a lot of good things about the Northeast, like Pennsylvania, kind of those areas too. Ohio, lots of good stuff in Ohio, places like that, because you can get big, nice properties for, in the 200s, 300s and this particular property, we’re not in a big city like Milwaukee. So we don’t deal with crazy property tax. I would’ve probably … if I had to do it over again, I would have probably just stuck to bigger luxury properties and probably less, maybe three to five luxury properties that will gross a 100,000 a year. That would be my recommendation, definitely. I think when we started, for some reason, I think some investors think it’s a game of how many, like three, five, 10, whatever. It’s not a game of how many. It is not like a race. You don’t get a prize because you have how many. It should be quality, not quantity.

Rob:
100% agree. Tell us. I mean, it seems like you’ve sort of figured this thing out, what would you say some of the keys to success are for the people that are getting into the Airbnb in short term rental game in 2023, and why are they different from what people think?

Jenni Vega:
Well, I’ve absolutely not figured this out. I’m still figuring this out.

Rob:
I think you’re pretty close though.

Tony J. Robinson:
Yeah.

Jenni Vega:
Thanks Rob. Some of the keys to success are joining mastermind groups, having friends in the space, that can be pretty lonely and actually, your friends that are not doing this will not understand you. Not everyone is going to be super happy for you and super thrilled for you. It’s really going to be important to form friendships with other investors. That’s going to be really key. Other big tips would be to really think about what you want the end to look like. A couple of years ago, we just took things that were thrown at us and came at us that we didn’t really think enough about what is the end goal here. If we would’ve thought more about that, we would probably have three or four luxury properties like our lake property in Wisconsin.
And just done things a little bit more strategically and a little bit smarter. So really, I would say anyone starting this journey or even if you’re a little bit a year in or two years in, or no matter how experienced you are, I would recommend taking a step back and just ask yourself a year from now, five or 10 years from now, where do I really want to be at? What is my strategy? And say no more often, and just realize that when you say no to things, you’re actually saying yes to something else.

Rob:
Yeah, that’s great. So have a vision for five to 10 years, find a community, find a mentor in this space, and then one that you didn’t list, but is obviously just a really great recurring theme of the episode, break the rules. I think that’s one that people should really digest because I think breaking the rules when it comes down to it just means taking a bet on yourself that you can get through whatever rules you’re breaking in that is going to be a successful result. So I appreciate you sharing all that to. Tony, anything else? Did I miss anything? I mean, I feel like we can both probably take a page out of Jenni’s book here.

Tony J. Robinson:
Yeah.

Rob:
You have taught us.

Tony J. Robinson:
No. Yeah, I mean, I’m going back and looking at my notes. I think the other thing too, Jenni and again, I don’t think you explicitly said this, but it’s giving yourself grace to make mistakes, because you said you made a lot of mistakes at the beginning, but you’re a better investor because of it. I think for a lot of people who are starting … and I’m putting up my rookie hat here, I think for a lot of people that are starting, part of what holds them back is that fear of just royally messing things up, but I think we all have to remember that in order to be great, you have to be good, and in order to be good, most people start off bad. In order to be bad, you at least got to try and you’ve got to go through those steps to really get to a point where you’re confident and you’re comfortable.
So I appreciate you sharing both the highs, obviously, half a million bucks in revenue, but also the lows, the mistakes you made and how it made you a better investor.

Rob:
Yeah, totally.

Jenni Vega:
Well, thanks for having me. It was such an honor.

Rob:
Yeah, of course. Well, tell us where can people find out more about you if they want to connect, if they want to find you on the socials, on the innerwebs, where can people reach out?

Jenni Vega:
So they can connect either right on BiggerPockets app and my username is jenniV1. So that’s my name with an I, capital V, the number one or on Instagram. My profile is jennivega_az. AZ stands for Arizona. And if you want to email me, you can reach me at Sharp Vega. Sharp, S-H-A-R-P, my full name, [email protected].

Rob:
Awesome. Okay, and what about you Tony?

Tony J. Robinson:
Yeah, people can reach me on Instagram @tonyjrobinson. Also, obviously on the BiggerPockets Real Estate Rookie Podcast. We put out episodes every Wednesday and Saturday. And if you’re a rookie, looking to get started in the world of real estate investing, come hang out with me and my co-host Ashley Kehr on that side of things.

Rob:
Cool, and we will end, it’s a good … I mean, I’m waiting, waiting for the invite, but that’s okay. It is one of the best … it’s the top five for me. I listen to that one more than I think every other podcast. So thank you Tony for teaching me as well.

Tony J. Robinson:
I appreciate that.

Rob:
And you can find me over on robuilt on YouTube and on Instagram as well. And you can also find me on the Apple platform, where you can leave us a five star review. So please go and do that. We read all of them and we love your feedback and we love the five stars and it helps us get served up to new audience as well. So with that, thank you so much, Jenni. We appreciate you coming and sharing your knowledge with us and we’ll catch everyone on the next episode of BiggerPockets. This is Robert for Tony, “The Airbnb model” Abasolo out. I’m pretty sure I did that wrong, but it sounded cool in my head. Not only did I mess that up by saying Tony’s first name, but I added my last name to it. So yeah, it’s just what happens when David Greene is gone. Things go crazy. Bye everyone.

Conor Flynn, Kimco Realty CEO, joins ‘The Exchange’ to discuss strong demand for small business real estate, the impact of higher interest expenses, and robust growth in net operating income.

In 2022, countries around the world saw near-record-breaking rates of inflation. The Consumer Price Index in the U.K. reached 11.1%, the highest since records began in 1997. The U.S. saw inflation hit 8% – the highest rate since the early 1980s.

The rate of inflation affects all businesses and all consumers. As purchasing power decreases, the cost of everyday goods and services rises.

As well as less consumer spending, this can lead to elevated prices for materials and services, higher wages and increased operating costs for businesses.

Although rates of inflation are slowing in many regions, owners will do well to think about the impact that any rate of inflation has on their business.

Knowing how to weather all storms will ensure the business has a higher chance of existing and growing for years to come.

This article will discuss strategies to inflation-proof small businesses.

Monitor Economic Indicators

Staying informed about trends by monitoring key indicators is important. This data can help with making decisions about pricing, wages and inventory management.

The main indicators to watch are Consumer Price Index (CPI), Producer Price Index (PPI) and wage growth rates.

Review Pricing Strategies

As operation costs rise, raising prices for customers might be necessary in periods of high inflation. The question is by how much? It is a delicate decision, as raising prices may exclude spenders that the business has already captured. Competitors may also gain the upper hand. Additionally, some corporations take advantage of inflation to drive profits and not to offset business costs. Behaving in this way could damage a small business’s reputation.

Strong Supplier Relationships

This strategy is one that should be employed from a small business’s inception. By having strong, positive working relations with suppliers in ‘easier’ times, those same suppliers will be more inclined to help in uncertain economic times. They may offer bulk discounts, more flexible payment terms and competitive pricing which will help with managing costs more effectively. Also, to reduce the impact of potential supply chain issues, it is a good idea to have a diverse pool of suppliers.

Efficiency, Productivity and Streamlining

Looking at all systems and processes to identify areas for improved efficiency, productivity and streamlining is a powerful tool for combating the negative effects of high inflation. Automating where possible and upskilling employees can reduce costs and increase output.

Long Term Contracts

Consider negotiating long-term, fixed-price contracts with suppliers and customers so that external inflation does not have as much of an effect on outgoings and revenue.

Hedging

Hedging strategies such as forward contracts or currency options can minimize the risk of volatile exchange rate movements. This strategy is for small businesses that import materials from foreign suppliers or conduct international transactions.

Customer Loyalty

A business is nothing without its customers. During times of high inflation, customers may have less disposable income. This provides a great opportunity to engage deeper with customers by enhancing the customer experience and creating personalized solutions to their problems. Customers remember businesses that provide an extra layer of care, even if the price they have to pay has increased.

Inventory Management

If a small business holds inventory, then reducing the amount of stock held to the optimal quantities for good operations can help to minimize holding costs and the risk of stock becoming obsolete. Sales data and customer demand patterns should be analyzed to effectively do this.

Innovation And Marketing

To be seen is to be known, and to be known is imperative for continued sales. It’s best to keep an emphasis on brand visibility during inflationary periods to attract new customers and stay in view of old customers.

Perhaps new products or services can be developed that are in line with your customers’ current habits and pockets. Maybe a more expensive product or service of higher value would be appropriate to sell during high inflation. There are still opportunities for growth when things seem to be ‘harder’.

Inflation is a challenging reality and it’s key for small business owners to not panic. By embracing an attitude of open-mindedness and strategic planning, all businesses have the chance to adapt to ever-changing economic trends.

Similarly, operational decisions need to be made with care and it is advised to seek advice from relevant experts where needed.

You spend way too much time on Instagram (and TikTok and Pinterest and…), and guess what—your potential short-term rental guests do too. Why miss an opportunity to get in front of them when they’re dreaming about their next getaway? Why miss an opportunity to remarket to your past guests by reminding them how awesome your place was? 

Don’t leave your fate up to the Airbnb algorithm alone. Take matters into your own hands and start building out and developing your own organic audience. While you do need to devote some time to channel upkeep, you shouldn’t need more than a few hours a week once you get going. Track how many people view your bio, and click through your booking link to make sure you’re getting ROI on your efforts. 

Here’s what else to keep in mind:

Make a Business Account

When you set up your STR on IG, you can decide the type of account you want to create. We won’t go into how to actually launch a handle on Instagram here (we know you know how to do that), but when you build it, make sure to select a “business” account (as opposed to “creator” or “personal”). This way, you get access to the extra business features that will help travelers better find and interact with you, like your contact information and STR address.

Make sure to fully optimize your bio within the 150-word character count. Craft a few words about your amazing rental, making sure to include a few relevant hashtags, and make sure to link out to your booking site in the URL field, whether this is a stand-alone site or an Airbnb/Vrbo listing. 

Post Regularly and Lean into Reels

Your shiny new account won’t do you much good if you never post. Your goal is to get into potential guests’ feeds with videos and images of your incredible STR, showing how much fun current guests are having there and what sets you apart from your competition. Drive that FOMO. Make sure your posts support your property’s brand. 

In order to appear regularly in followers’ feeds, the IG algorithm wants to see you posting regularly, too. Try to focus initially on reels: Unlike stories and feed posts, which mostly go to your existing audience, reels are designed to be seen by people beyond your follower list. This is a great way to acquire new followers and build your audience.

Hashtag Wisely

Pick 10 to 12 hashtags that make sense for your post each time to help with reach. Vary them so the algorithm doesn’t start to see your posts as spam (repeated words can sometimes trigger this). See what your already-established competition is using, and steal some of those hashtags, too. 

You can also create a bespoke hashtag for your STR—if you do, make sure to use it in every post and in your bio, too. 

User-Generated Is the Best Content

If a guest tags your account in a photo they’ve taken on your property, this is content gold. This is real-life evidence that your guests are having the time of their lives at your place, and the very best kind of advertisement to convince future guests to book. 

When Instagram alerts you that you’ve been tagged in a guest post, you can repost this content on your stories. This makes the poster feel special and heard and is the best kind of marketing. Make sure to go to your guests’ original post and comment there too.

One way to encourage more UGC (user-generated content) is to make an Instagram wall in your STR—something memorable and feed-ready inside or out that will inspire guests to snap a pic and post. If you do this, include a small sign next to it with your Instagram handle and STR hashtag so guests will use it when they post. 

Share Stellar Reviews

Don’t do it every day (you want your channel to feel like a content channel, not a big advertisement), but every once in a while, when you get a great one, share it! Post it as text underneath a beautiful image of your place or the amenity they’re highlighting, or even as text on an image if it’s short and sweet. 

Showcase Great Local Vendors

Let future guests see what makes your area so great. Post videos of the little cafés, parks, and restaurants nearby. Share your favorite order when you go to the coffee shop on the corner or the best place to grab lunch at the beach. Make sure to tag these businesses, and you will likely see them tag you in return!

Ask Questions

In addition to things like posting cadence, the Instagram algorithm also prioritizes engagement. When your audience engages with your content, that’s a signal to Instagram that you’re posting worthwhile content, and you will show up in more feeds. 

You can help stack the deck in your favor by asking questions when you post or by asking your audience to weigh in on something fun you’ve been considering, like: 

What amenity should we add next? 

1. Hot tub 

2. Pool table 

3. Firepit

You get the idea. 

Whatever you do, make sure it’s authentic, relatable, and fun. 

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

Don Peebles, CEO and chairman of the Peebles Corporation, joins ‘The Exchange’ to discuss a change in sentiment toward the commercial real estate sector, the company’s recent loan, and the cost of borrowing in private credit.

While it’s important to find balance throughout the year, the summer months are a great reminder to make more time for fun activities and personal or family time outside of work. A determined focus on one’s career or budding business can be necessary to achieve your goals and grow as a professional, but if left unchecked, it can also leave you feeling unbalanced, tired, stressed and like you’re missing out on precious time with your loved ones.

If you think you may be letting your work life get in the way of your personal one, consider these other signs of overwork, as listed by the members of Young Entrepreneur Council. Here, they discuss these red flags as well as what you can do to finally achieve work-life balance.

1. You’re Constantly Checking In

If you find yourself constantly checking in on work when you’re out of the office—whether it’s while you’re at your child’s baseball game, during family game night or while you’re on vacation—it’s time to reassess. You should be able to disconnect and enjoy time with your family without worrying about work or feeling guilty. Stepping away is the best way to recharge and almost always makes for a happier, more productive employee. By creating boundaries—like implementing an email curfew or committing to a “no cell phones during dinner” rule—you can ensure you’re striking more of a balance between work and home life. – Samuel Saxton, ConsumerRating.org

2. Your Friends And Family Are Worried

I find that those who are closest to me (friends and family) will usually signal to me when I’m out of balance. So, I try to listen to them when they are telling me that I’m out of balance and spending too many hours at the office or traveling for work and not devoting enough quality time to spend with them. – Jeff Cayley, Worldwide Cyclery

3. Your Productivity Is Waning

One common sign of an unbalanced work and personal life is the lack of productivity. When work life runs amuck, productivity tends to decline. Summer is a great time to reset this balance as most businesses have a higher expectation of PTO, flexible hours and remote working during the sunshine months. You don’t have to take a vacation to reset this balance. Even something as small as incorporating a daily walk outside during your lunch break can help reduce that “go, go, go” mindset. – Leila Lewis, Be Inspired PR

4. You Have Difficulty Concentrating

It’s natural to want to spend more time outdoors and pursue fun activities as the weather gets warmer. When you’re a kid or student, this is called “spring fever,” and it can affect people of all ages. While adults can’t just drop everything and take vacations whenever they want, they can make some changes in their routines to improve work-life balance. A sign that you need to make some changes is when you’re having difficulty concentrating. If this happens, try to spend more time outdoors and be physically active. Some people can work outside with their laptop. Even if you’re confined to an office, you can make an effort to get out more as days are longer in the summer. Even taking a walk before or after dinner can boost your mood. – Kalin Kassabov, ProTexting

5. You Are Dissatisfied Despite Your Success

One sign that you may notice if you need more work-life balance is a feeling of dissatisfaction and emptiness despite achieving success in your career. The constant grind can be draining and leave you longing for a more balanced lifestyle. That’s why it is important to reconnect with your passions and interests outside of work. Make time for activities that bring you joy and fulfillment, whether it’s pursuing a hobby, spending quality time with loved ones or engaging in personal growth endeavors. Remember to set goals and aspirations beyond your professional achievements, and to strive for a more balanced and fulfilling life that encompasses all aspects of who you are. – Ismael Wrixen, FE International

6. You Feel Physically And Emotionally Drained

A sign that someone needs more balance is when they feel constantly overwhelmed, exhausted, stressed or are struggling to meet deadlines or are feeling physically and emotionally drained. They may notice a decline in their overall well-being, such as disrupted sleep patterns, increased irritability or neglected personal relationships and hobbies. If you start feeling this way, you should reflect and prioritize. Take a step back and evaluate your current commitments and responsibilities. Determine what truly matters to you and identify areas where you can make adjustments or set boundaries. Prioritize your time and energy accordingly, focusing on what aligns with your personal values and goals. It also helps to establish clear boundaries between your work and personal life. – Rachel Beider, PRESS Modern Massage

7. You’re Not Leaving Time For Fun

If someone asks you what’s happening and you can’t think of anything besides work, then you need to get more work-life balance. If you’re using your summer well, you should be seeing places, spending more time with your family and building relationships. So, don’t get stuck with work; make use of your summer and have fun. Innovation, creativity and productivity need breaks and changes in environments to happen. Don’t dismiss work but ensure that you make time for fun. – Blair Williams, MemberPress

8. Work Has Become A Chore

Burnout shows up in many ways, but many who experience it report feeling that they’re no longer energized to show up each day. They start to see work as a chore or obligation. This is a problem for any employee but especially for entrepreneurs who have more at stake and who need to give it their all every day. Any slippage in productivity or performance quickly shows up on your balance sheet. If you’re starting to feel this way, build more breaks into your schedule. Depending on your business, you might not be in a position to take a full week off, or even two days in a row, but you can still schedule time to completely disconnect from your day-to-day—even if it’s just for a few hours at a time. – Andrew Schrage, Money Crashers Personal Finance

9. You Feel Guilty For Taking Time Off

One sign is when you’re feeling guilty for taking a holiday while your colleagues are at work. It’s a red flag for a declining quality of life. Neglecting your personal relationships for the sake of your business has its repercussions. A way to counter this is to have an accountability partner who will remind and advise you when you are overextending yourself. Make a conscious effort to schedule personal time and stick to it like you would an important investor meeting. Also, celebrate victories. Reward yourself and your family for all the sacrifices you have made to keep your business running at top speed. You need this change of scenery to stay inspired, creative and anchored to your purpose. You’ll gain renewed energy and perspective that you can bring to your business. – Bryce Welker, Crush The EA Exam

Dave:
Hey, everyone. Welcome to the BiggerPockets podcast. I’m your guest host today, Dave Meyer. Me and my friends from the On The Market podcast are taking over the BiggerPockets feed.

Kathy:
Woo-hoo!

Dave:
Yeah. This is going to be very fun. We are here taking over the BiggerPockets feed to give you a little taste of what we do on the On The Market podcast where we focus on real estate just like this show, but more on the economics, more on current market conditions. Our whole goal is to provide you, the investor, with data and information and news to make informed decisions based on what is going on in the market today. So what strategies are working best, what markets are seeing the best conditions, that type of information. Today, we’re going to get into all of that. We’re going to start with a recap of the first half of 2023 and talk about what’s been going on in the economy and the housing market for the first six months of 2023. Then I’m going to force our panelists against their will to make predictions, even though it’s very difficult, about what’s going to happen at the second half of the year. Don’t hold us to these predictions, but I promise we’ll have a good conversation about what might happen over the rest of this year.
Then we’re going to go into a conversation about different markets across the US. If you know anything about the housing market right now, you know that certain markets are doing really well, certain ones are doing poorly, and we’re going to break this down for you to help you understand which markets are going in which direction, which ones work with what kinds of strategies so that you can adapt your strategy to the right market conditions. So that’s what we got for you today. It’s going to be an awesome show. If you’ve not listened to the On The Market podcast before, we are a guest panel type of show. I’m joined by three co-hosts. I’ve got Kathy Fettke with me. Kathy, how are you?

Kathy:
Great.

Dave:
Can you introduce yourself to everyone listening?

Kathy:
Sure. It’s Kathy Fettke. You probably don’t know, Fettke, I think, means little fatty in German, but anyway.

Dave:
I did not know that. How have we done a hundred shows together and you’ve just told me that for the first time?

Kathy:
You just have to know German, I guess.

Dave:
You’re just dropping bombs like this right out the gate, wow.

Kathy:
Right there.

Dave:
All right. Well, now everyone’s going to remember you.

Kathy:
Yeah. Never forget that name. I am a co-founder of RealWealth where we’ve been helping investors buy investment property nationwide for, well, actually 20 years. This is our 20-year anniversary. Of course, I’m a BiggerPockets huge fan and just super happy to be here.

Dave:
Nice. We also got James Dainard. James, how are you?

James:
I’m doing good. I’m excited to be back on the BiggerPockets main channel.

Dave:
And for people who haven’t listened to the episodes you’ve been on so far, tell us a little bit about your investing experience.

James:
I’m a full-time investor out of Seattle, Washington. We’ve been investing since 2005, very active fix and flipper operators, developers, multifamily buyers, but we are backyard investors in Seattle, very active, addicted to the deal guys, deal junkies up there.

Dave:
Awesome. Well, thanks for joining us. Then Henry, I know you’re on this show a lot, but we also got Henry Washington. Can you give us a little intro?

Henry:
What’s up, guys? Yes. I’m Henry Washington and Henry actually is German for large fatty.

Dave:
I didn’t know that.

Kathy:
I didn’t know that either. Wow.

Henry:
Yeah, just magic. Yeah, I’m a real estate investor. I’m based out in Northwest Arkansas. I’ve been doing this since about 2017. Got about a hundred rental properties. We focus mainly on single families and small multi-families.

Dave:
All right. Well, thanks for joining us. My name is Dave Meyer. I host this show with David as a guest host every once in a while, but if you don’t know me, I work full-time at BiggerPockets. I’m the vice president of data and analytics. I also host the On The Market show with these fine people and I’ve also been investing in real estate for 13 years or so. So first up for the show today, we’re going to recap what’s been going on in the housing market for the first half of the year. To me, the biggest story is that housing prices have corrected a bit, but despite a lot of news and media attention to a potential crash, they have definitely not crashed. It depends on who you ask. There’s a lot of different data sources. You can look at the Case-Shiller or Redfin or Zillow, but most of them agree that housing prices are down year over year, somewhere between 1% and 3%. We were all talking earlier and saw that the median home price in the US dropped from 449,000 to 441,000.
So it hasn’t been a huge adjustment and honestly, this is a bit of surprise to some people who thought with rising interest rates, we would see a big correction or potentially even a crash. I’m curious, Henry, what are you seeing in your market? Are you seeing this correction type environment or something else?

Henry:
Yeah, Dave. I’m actually seeing the exact opposite. When I look at housing prices over the last six months in Northwest Arkansas, we’ve actually been seeing an increase to the tune of $10,000 to $15,000 monthly. So the opposite is true here.

Dave:
Yeah, that’s super interesting. Why do you think that’s going on? Is there anything particular about your market that you think is unique?

Henry:
Yeah. I think one of the most unique things about my market is the corporations that are here. The economy is based around about three or four major corporations who happen to be pretty recession-proof corporations and they’re actually butts in seats corporations as well. So they’re requiring everybody who works for the company to relocate back to the area and so there has been this trickle of people moving back here, plus they’re continuing to hire through this. So we’ve got new people moving and that is increasing demand and that demand is really increasing in that mid-tier home, to that luxury home price because you have high salaried individuals who are coming and they don’t want to start a home. They want something a little nicer.

Dave:
I’m sure you’re seeing this in your market, Henry, but to me, the major reason that we’re not seeing housing prices crash and they’re more in a correction mode is because of low inventory. We talk about this a lot, but there’s not a lot of homes for sale. We actually saw the most recent data in May say that inventory was actually down, which is the opposite of what normally happens. Usually when interest rates go up, there are less buyers and there’s more houses just sitting on the market, so there’s higher inventory, but we’re seeing the opposite of what normally happens. Kathy, do you have any thoughts on why that might be?

Kathy:
So many thoughts.

Dave:
Lay them on us.

Kathy:
It’s really shocking to a lot of people who thought that inventory would absolutely spike when interest rates went up last year, but when you really look at the bigger picture and go back say almost 18 years to 2005, there was about four million homes on the market. Fast-forward to 2015, about 1.2 million. It’s been on a decline for a really long time, but in 2020, wow, inventory just tanked. Obviously, people weren’t excited about putting their homes on the market during a pandemic, but then it really hit bottom in 2022. Oh, my goodness. It was 240,000 homes in inventory and that is an all-time low. Now we’ve gone up since then. Once rates went up, inventory levels have gone up as well, but still historically low. What we just saw towards the end of June was that again, context is everything because numbers don’t mean too much unless you know what to compare it to.
In 2022, active listings grew by 30,000 at the end of June. In 2023, this is just last week, active listings grew by only 5,848. So why? What is going on? It has so much to do with the lock-in effect when interest rates are now close to 7% at least while we’re recording this show. That keeps people in their homes. But markets move when people exchange things, when people sell and buy and all that. But if you have a huge group of people who just are not willing to sell because they’re not going to find another house that makes sense at 7% when they’re in a 2%, 3%, or 4% rate and probably a much lower price because many people bought homes a while ago, not just last year. When there’s people not selling, that’s also people not buying because people who sell usually buy. They still need a place to live. So it’s just locked. It’s just the housing market is locked and if interest rates come down, we’ll see that loosen up, but in the meantime, we’re not there yet.

Dave:
Yeah. I think probably the biggest thing that’s impacting the housing market right now is just this low inventory that no one seems to want to sell and it seems like we’re getting back to the point where we were last year where there is a lot of competition for homes. I was expecting things to be sitting on the market at this time of the year, but I just saw something that days on market, which is a really good measure of the balance between supply and demand, had been going back up as you would expect given these economic conditions. But then they peaked at 27 days, which may sound like a lot, but would be low during a normal time and have come back down to 14 days. That means the average house right now, even with higher interest rates across the whole country is sitting on the market for just two weeks, which is incredibly low in historical context.
James, I’m curious, are you seeing these levels of competition? Because if you don’t know, James invests in Seattle, which has seen one of the bigger corrections in the country, relatively speaking. I’m curious if you’re also seeing an uptick in competition.

James:
Yeah. 12 months ago, it was looking pretty hairy. The market was dropping rapidly. We saw a 15% to 20% drop off-peak and days on market skyrocketed from under eight to it went up to 42 days in January. What we’ve seen is this, in the last six months or last seven months, days on market have dropped down to eight days in the Seattle market. That’s a huge change in turnaround and we are definitely seeing it. Almost every property that we are listing right now we are selling in the first five days, unless it’s in that really upper echelon pricing and the consumption rate’s there, the buyers are there. To Kathy’s point, I didn’t think the lock-in effect was going to be that impactful, but it is a real thing. There is nothing for sale and the stuff, honestly, if it’s remodeled product, I think the days on market would be even less than eight days. It’s like there’s weird junks in the market that’s actually bringing that eight days up.

Dave:
All the way up to eight days, yeah.

James:
Yeah, it’s outrageous, right? There is not enough product for people to buy. That is the underlying factor right now, but we are definitely seeing a turnaround in our Seattle market.

Dave:
So there you have it. I think those are some of the major stories for the first half of the year in the housing market. Prices are coming down a little bit year over year, but they have not crashed. Inventory is incredibly low, which is contributing to why prices are doing what they’re doing, and competition is heating back up. On a macroeconomic level, I’ll just say that obviously, you’re probably aware of this, but interest rates, the Federal Reserve had hiked rates three different times. We’re now at a federal funds rate above 5% and that has pushed mortgage rates up as of this recording, like Kathy said, to the low sevens. As of right now, the economy is still growing. We only have GDP numbers back from Q1, but it did grow 1.1%, which is not super exciting growth, but it did grow. There’s something actually called GDPNow which helps you estimate what GDP is in real time and it’s predicting 1.9% for Q2, so we are expecting to not be in a recession at least at this point of the year.
Now that we’ve recapped what’s going on, it’s time for you guys to do some predictions. It’s our prediction addiction game because everyone loves listening to people make predictions and we’re going to see how good you all are at it. Our first question is in mortgage rates. We’re sitting right around 7% here in the beginning of July. Where will they be by the end of 2023? Think about the new year and we’re heading into 2024. Where are mortgage rates going to be? James, start with you.

James:
I think they’re going to end about six and a half percent, which is higher than I thought at the beginning of the year.

Dave:
Okay.

James:
I’m not seeing the rates slide as much as I thought they would be at today.

Dave:
All right. Kathy.

Kathy:
I am swinging out there with 5.9%.

Dave:
Whoo!

Kathy:
Maybe it’s wishful thinking, but we have seen inflation trend down and I think by the end of the year, it will be trending much further down. Fingers crossed.

Dave:
All right. I like your optimism. Henry.

Henry:
Yeah, I am not as optimistic, not because that’s what the data is saying, just because the Fed has said they’re going to continue to raise rates until inflation gets under control. They have indicated that they might do two more rate hikes and I’m going to take them seriously because they’ve done everything they said they were going to do thus far. So I’m at 7.75, seven and three quarters.

Dave:
I’m with Henry. I am in the higher for longer camp now. They’ve said they’re going to keep them higher for longer and I don’t have any reason to believe them, so I’m saying 7.5. So Henry and I are close here, but we’ll have to steal this show again at the end of the year and see who’s right. Okay, so we got a pretty widespread there. There was more variance between the four of us than I thought there was going to be. All right, how about year over year housing prices? Just as a recap, right now, we are at about negative one, somewhere between negative one and negative three depending on who you ask year over year housing prices. Henry, start with you. What do you think?

Henry:
My gut tells me I think we’re going to continue on the same path, so I think we’re going to stay flat and maybe come down 1% if that. I don’t think it’s going to come down much at all.

Dave:
All right. Kathy, are you going to be optimist again?

Kathy:
I am. I do actually think that we’re going to see year over year prices increase, but ever so slightly. I’m going to just go with 1% for fun, but I actually think it’ll be higher than that. If indeed my prediction of mortgage rates comes down, then we would see more people coming in the market and bidding. They’re already bidding right now. There’s bidding wars again, guys, it’s crazy, even at 7% rates.

Dave:
James, what do you think?

James:
I actually think with the trends that are going on right now and the fact that we’re having multiple offers with a 7% rate and if rates do come down to six and a half like I think, I’m actually predicting about 5% growth.

Dave:
Whoa.

Kathy:
Wow.

Dave:
Okay. You think we’re going to stay-

Henry:
Wow.

Dave:
… on this trajectory, okay.

James:
This is bizarre world to me, but I’m just going to go with the bizarre.

Dave:
Well, I was thinking earlier today that I was going to revise my forecast, but about, not a year ago, in September 2022, I said I thought in 2023, the housing market would go down 3% to 8% and I’m just going to stick with it. There’s so much confusing data, I’m just going to stick to my guns and say I still think the housing market is going to decline slightly on a national level by the end of the year. All right, for our last prediction, it is GDP growth. If you guys don’t know what this means, it’s just gross domestic product that is basically the aggregate sum of all of the economic production of the entire country. You want it to go up normally. If it’s down for two consecutive quarters, that is what many people believe to be a recession. So I’m curious because I want to know if you think we’re going to be in a recession basically where you think GDP growth will be. Kathy, the optimist, what do you got?

Kathy:
Well, I think the first quarter was like 2% or something and it was very shocking that the economy was growing in spite of all the efforts of the Fed to kill it. So I’m going with 1.2% as an annual, as the GDP of the year of 2023. So I think there’ll be no recession in other words.

Dave:
Okay. I just want to clarify that when we’re talking about GDP, I’m talking about “real” GDP, which accounts for inflation. We are saying that the economy will grow even in excess of the inflation that’s going on. Henry, what do you got?

Henry:
I’m similar to Kathy again and similar to my last. I think we’re going to be flat or up about 1%. If you look at the factors feeding into GDP, the jobs report came out. That looks great as far as there’s more jobs available. The consumers are comfortable and are spending money and I just think that that is saying that the economy is strong and it’ll go up a little bit.

Dave:
James, are you going to dissent?

James:
You know what? I’m actually in the herd on this one. I think there’s no recession, but minimum growth at 1%. I think people are still consuming right now. It is slowing down. I just think people have a tough time turning off the faucet right now. They all turn on the faucet during COVID. It’s like I’m going to buy everything. A smart guy told me one time, he’s like, “Don’t ever turn that faucet on because it’s really hard to turn it off. Keep control your expenses.” I feel like America’s having a problem turning it off right now.

Dave:
I love how James is telling us not to turn the faucet on while he is recording on his yacht and that is literally what he’s doing. That is not an exaggeration. He’s literally sitting on his yacht telling us not to turn the faucet on.

James:
You know what? Last yacht, I turned the profit on, Dave.

Dave:
Okay.

James:
After three years, I sold it for more than I bought it for, so-

Dave:
That’s pretty good.

James:
… I will flip anything.

Dave:
Nice. Well, I’m with you, guys. I think it’s a little early to say there won’t be a recession, but I think if it’s going to happen, it’s probably not going to happen in 2023. We had a pretty famous economist named Mark Zandi on the On The Market show a couple of months ago. He coined this term the slow session where it’s basically like we never actually see that negative GDP growth, but it’s this anemic, really slow growth that we’re technically not in a recession, but some people, at least, will be feeling like we are in a recession. As of right now, it does feel like that, so I’m sticking with that. All right, so those are our predictions. Please don’t hold us to them. These are for entertainment purposes only. No. I do think it’s really helpful to just at least talk through why we think these different things are going to happen. Obviously, we’re all just making our most informed, educated guesses and we’ll just have to see what happens in this very confusing economy.

Kathy:
Educated guesses, but the jobs report was 497,000 new jobs, double what was expected, doesn’t sound like a recession.

Dave:
Yeah, it’s wild. If there’s going to be a job loss recession, it’s going to be a while. We’re seeing it go in the opposite direction. It would take, in my mind, quite a while for the unemployment rate to get up to even 4% at this point. It’s going to take at least several months and 4% is still relatively low unemployment.

Kathy:
Yeah.

Dave:
All right. We’re going to move on to our next part of the show where we’re going to be discussing different markets. In preparation for this, I did some analysis over the last few days to just help everyone understand what is going on in the housing market because the stuff we were talking about earlier is all national level statistics. These are aggregations about what’s going on with days on market inventory, but the reality on the ground is very different depending on what market you’re in.
So I looked at the top 137 markets just because those are the ones I felt had enough data for us to make some inferences about it and 41% of them declined over the last year and 59% went up. So there’s a real break in the country right now where it’s not exactly 50/50, but there’s a sizeable portion that are going in one direction and a sizeable portion that are going in the other direction. The spread between them is honestly crazy. The worst performing market over the last year, I’ll actually give you guys a guess. Anyone got a guess? Single worst over the last year?

Kathy:
San Francisco.

James:
Boise

Dave:
Henry?

Henry:
Yeah. I would say Boise or Seattle’s been rebounding, but that would’ve been my guess.

Dave:
All right. Boise was second worst of the top 137 largest. Austin, Texas was the worst with 15% decline in sale price in Austin, which is very significant. Boise was the second worst with 14% and Oakland came in there, but San Francisco, Sacramento, Phoenix, Vegas, those are all up there, a lot of West Coast cities.

James:
And Seattle came off. We were like number five for a second.

Dave:
Yeah. Seattle is doing a little bit better now, but it’s still definitely… Yeah, Denver’s moved up a little bit, but they’re still not doing the best. They’re still negative. But on the other side of the equation, we have Fayetteville, North Carolina is up 16%.

Kathy:
Wow.

Dave:
So the spread between the worst and the best market is 30% right now. This is why it’s so important to understand what’s going on in your local market and listen to shows like On The Market where we tell you all about this kind of stuff. Because of this spread, and we have this really dramatic difference between markets, I asked each of our panelists to give us an under the radar market that they want to share with the rest of you. We all know what’s going on. A lot of us know it was pretty easy for them to guess what’s going on in big cities like Austin and a lot of the pandemic darlings like Boise and Reno are having the big retractions, whereas a lot of the southeast is known to be going up right now.
But we want to provide you with markets that you don’t know about, maybe you’ve never even heard of these places, that you can look into for your own investing or it’s also useful to just go look at what are some of the underlying factors that are driving the behavior and the conditions in this market and see if they relate to the places that you invest because that could really help you understand what direction your market might be going. So Kathy, I’m going to start with you. What market are you bringing to us?

Kathy:
There’s no chance anyone’s heard about this market.

Dave:
All right.

Kathy:
Very much doubt it. Are you ready? Thackerville, Oklahoma. This is my-

Dave:
What?

Kathy:
Yes.

Dave:
Is that a place? No offense to anyone from Thackerville, but I’ve never heard of that city. Is it a city, a town?

Kathy:
It is just over the border from Texas. So much growth is spreading out out north of Dallas. The core is getting expensive. DFW is getting expensive, so businesses are moving out and so our people to more affordable places. One of the areas that has grown so much is Gainesville, Texas where home prices were actually up 10% year over year, median price is 305,000. Thackerville is just over the border, 12 miles. So a lot of people will live in Oklahoma and commute to their jobs in Texas because in Oklahoma, the property taxes are much lower. They’re 0.85 versus double, triple or even quadruple that if you just go over the border into Texas. And home prices are lower. The problem is there’s no inventory. There’s hardly anything there. I think there’s 16 homes on the market. So we’re actually starting a build to rent fund there and building some new supply just over the border in Oklahoma to capture those lower prices, lower building costs, lower taxes, and yet rents are pretty high because it’s Texas money going there.
Anyway, that’s my little hack for 20 years, 25 years now have been searching where the puck is going, so to speak. Once you’ve already heard about an area that’s growing, it’s probably too late, so I just like to see where the jobs are going, where population is growing and get right outside of that. Right in front of the path of progress is my favorite.

Dave:
That’s a great lesson, Kathy. Just for everyone listening, why did you pick this particular town, first of all, and of all the places where Dallas can expand, Texas is a pretty big place, why this direction? What about it do you think is so compelling?

Kathy:
Well, Dallas is growing in all directions and like many places, the urban core has become very expensive and there’s higher regulation, whereas when you get out into the suburbs you can get more work done and your employees can live cheaper so businesses move there. But that particular area, we’ve just seen so much growth with businesses moving north that we think that the next frontier is just over the border in Oklahoma. So that’s why. There’s also a casino, WinStar Casino with 3,500-

Dave:
Oh, I’m in now.

Kathy:
… employees.

Dave:
Okay.

Kathy:
Those employees have no place to live, so they’re actually living in Texas. If there’s housing near them, they’re going to be stoked about that, not have to make that commute and it’ll be cheaper. You also have distribution centers for Walmart, Liberty Energy, Lowe’s. It’s, again, lots of growth, lots of space to grow and for companies to come in and be able to have a cheap headquarters or industrial space or warehouse space and still have a massive metro nearby.

Dave:
I like it. Henry, I think I owe you an apology because I used to think that where you invest is obscure, but Thackerville, Oklahoma might beat you on the obscurity index. But that’s what we asked for, so Kathy, A+ on the assignment. This is great. Well, with that, let’s move on to Henry. Tell us about what under the radar market you want to talk about.

Henry:
Yeah. Obviously, guys, I’m going to talk about my backyard. I invest here. I’m talking about Northwest Arkansas. This is a small, I call it a little bubble up here in the northwest corner of Arkansas. We’re about three and a half hours northwest of Little Rock. So we’re sitting right on the border of Missouri and Oklahoma. This area, for several reasons, makes it a phenomenal real estate market. So to talk about some of the economics, we have very large corporations here, recession-proof corporations like Tyson Foods, JB Hunt transportation, and then Walmart all headquartered right here in Northwest Arkansas. These are companies that are going to do well if we do go into a recession. Walmart is the place people shop when money gets tight and you have to get stuff to places, so transportation’s always going to be a thing, and everybody eats chicken.
So you’ve got just these recession-proof companies, but the key there is these companies are butts in seats companies. They want people living in the community where these companies are headquartered and so people have been moving here at a crazy alarming rate. I think the last statistic I saw was about 35 to 38 people per day-

Dave:
Wow.

Henry:
… move to Northwest Arkansas. What that does from a real estate perspective is it creates the things that you want as an investor. You get cashflow and depreciation. You get cashflow because we’re still Arkansas. So you can buy on the lower end of the housing price scale, but you can rent on the higher end because you’ve got people who have large salaries that are moving here. Some don’t want to buy a home here, so they’re renting and so rent prices are high. You can buy low and then inventory is so low. So if you’re going to turn properties or flip properties, you’re able to capture pretty good profits doing that. We’re getting multiple offers. But to give you some of the numbers from the real estate perspective, we have about 1,500 homes on the market right now. We would need to be at about 5,000 active listings for our market to be considered a buyer’s market.

Dave:
Wow.

Henry:
The average days on market seems high at 94 days, but we would need to be at 120 days. But if you look at the median eight days on market, the median days on market is 56. So that means between when a house is listed and then when it goes under contract, it’s typically about 21 days. So it’s pretty quick. Now, things that are rehabbed and are rehabbed well are trading a lot faster. Things that are crap are trading a little slower, but that’s just a sign of a healthy market. That’s what should be happening. Our rent vacancy across Northwest Arkansas, 1.5%. So there’s demand for anything that’s available to live in. If you have a rental and it looks halfway decent, somebody’s going to be living in it and we’re at about, for an apartment, average rent is a thousand dollars. But that’s an apartment. If you’re looking at single family homes or duplexes and things like that, average rent somewhere between 1,200 and 1,500.
I call it a real estate investing unicorn. There’s great economics. There’s affordability. You get appreciation. You get cashflow. We have just been seeing an increase in buyers entering the market, decrease in days on market. It’s not done what a lot of these markets seem to be doing across the country.

Dave:
Wow. It’s unbelievable. Every time you talk about it, I want to fly over there and check it out for myself. All right, let’s move on to James. What market are you bringing? You can’t say Seattle because that is definitely not under the radar.

James:
No, it’s definitely not under the radar. I’m so impressed with Kathy’s pick though. The population is 440 people in this town. I like her approach though because it’s like, oh, the population grew by 20%. It’s like, okay, but it’s got upside in here.

Henry:
One family moved in, 20% increase.

Kathy:
Yeah.

James:
I actually picked a place and it kind of caught me off guard when I was researching this was Green Bay, Wisconsin.

Dave:
Titletown.

James:
Yeah. The reason I pick Green Bay is because it was ranked on numerous places the number one, best place to live in the US and that’s what they’re predicting for the next year. One thing that I’ve realized, the pandemic has changed everybody’s mindset so much is they just want to live where they want to live and be comfortable. What it did is it took Americans off this grind mentality that we had before where it was like go, go, go, go, go. People have realized they just want to live in a nice place that’s affordable. So I do think that’s a big factor in my decision. Right now, the median home prices are still up 9% year over year, so it’s constantly growing. The average home sells for 5% to 11% over list right now.

Dave:
Wow.

James:
The 11% is more like those hot homes that are renovated and the ones that are more duds are still selling for 5% over list. The sale of the list is at 105% right now. I like the affordability of the market. One thing I’ve learned is when rates started skyrocketing, I actually thought the more affordable markets were going to have more issues because it’s going to really affect the bottom line, but it’s been doing the opposite for the last six months. The median home price is 240,000. It’s a cheap, affordable place. It’s a great place to live besides the weather. That’s why it caught me off guard. That cold, cold weather would be my only hang back. One sneaker stat is it’s a huge cheese industry and the average price of cheese is 32% higher on a five-year average. So the cheese-

Dave:
Did you just go and look up cheese futures or something?

James:
I did because I was struggling to find the economy in there. I was like, well, I know they like cheese and I know they produce a lot of cheese. I do think we’re in the shift of globalization slowing down and we’re going to be buying a lot of stuff. Hopefully, we’re buying a lot more American-made products and that’s what the train could be and cheese could be a factor in that. But I’m coming back to it. It’s affordable. It’s a quality place to live. I do think some of these metro cities in Milwaukee, Chicago, the livability has dropped a little bit and people just want a simpler, easier lifestyle. There’s a lot of migration from those two metro cities going up that way and we’ve seen that across the board in all these markets is like the metro cities, people are getting a little bit away from them right now.
It’s almost like the ’80s where people are starting to leave the metro and they want to be more in the suburbs. They want peaceful living and that’s why I’m basing my prediction on that. But it’s currently growing. It’s growing and number one livable place to live,-

Dave:
Wow.

James:
… except for me, because I want no seasons. I like sun only.

Dave:
Yeah. Well, I think we’ve hit the peak of this show now that we’re talking about cheese pricing on it. I’m very pleased this is how this has evolved. Well, it is great. James, I do want to call this out because I agree. One of my investing thesis is that affordable cities are really going to pave the way for the next couple of years, but I think it’s important because people ask me all the time, they’re like, “Oh, this so-and-so city. It’s really affordable.” You can’t just buy anything just because it’s affordable. There has to be a draw to that area. When Henry’s saying it’s affordable, but there’s a huge economic engine. James is saying, yeah, maybe cheese prices are going up, but also, that it’s a really high quality of life place to live that’s going to attract people.
So I do think there is some logic that affordability is going to drive some future housing market trends, but obviously, you need to make sure whether it’s economic, quality of life, weather, taxes, something that is going to draw people to the city because at the end of the day, it all comes down to supply and demand and you need to be able to measure where demand is coming from.

Kathy:
Well, remember, Thackerville has a casino.

Dave:
Okay, Thackerville, it is. I feel like we should go on a roadshow and go to all these places. I want to see Thackerville. We’ll double the population. Well, just-

Kathy:
That’s right.

Dave:
… the four of us show up. Well, thank you all for bringing these under the radar markets. Some of them, Kathy, a little bit more under the radar than other, but this is really helpful and hopefully it’s helpful to all of you in trying to understand how you can find your own markets. You don’t obviously need to invest in these three markets, but I think that the logic and reasoning and research you did is really applicable to really anyone who wants to invest in real estate. That is our show. I do want to thank David Greene and Rob for allowing us to take over the show. Hopefully, you like this. If you do, pop over to the On The Market podcast. You can just find it on Apple or Spotify or wherever you listen to podcasts. We come out every week on both Mondays and Fridays and bring this type of data, news-focused information for real estate investors. So come check us out there. If you want to connect with the fine investors and host on this show, I will help you do that. Henry, where can people connect with you?

Henry:
Yeah, Dave. Thanks. The best place to catch me is on Instagram. I’m @thehenrywashington on Instagram. Also, the same on Threads now because that’s a thing. So check me out on Instagram or Threads or you can check out my website at henrywashington.com.

Dave:
James, where can people connect with you?

James:
Best way to connect with me is probably on Instagram @jdainflips or jamesdainard.com. I just found out about Threads, so I’ll try to figure that whole thing out.

Dave:
So James will be on it in two or three years given his pace of technological adoption.

James:
That’s about right.

Dave:
Okay. And Kathy, what about you?

Kathy:
You can find me at realwealth.com or Instagram, Kathy Fettke. Remember what that means.

Dave:
And I am @thedatadeli on Instagram or you can always find me on BiggerPockets. Thank you so much for listening. Hopefully, we’ll see you next time on the On The Market feed.

Stephen Kim, Evercore ISI, joins ‘Power Lunch’ to discuss the state of the housing market and if it’s safe to bet on homebuilders.

Every generation has had its share of successful young entrepreneurs; now, it’s the turn of Gen Z, launching innovative startups from their bedrooms and transitioning to the boardroom.

Buying and selling is something that Ryan Amoils has been doing since high school. His passion for dirt bike riding goes back even further, to the tender age of four. Combining the two sparked the idea for MX Locker, the P2P marketplace for buying and selling motocross riding gear, bike parts, and dirt bikes that he launched straight out of college.

Amoils says: “I was always fascinated by buying and selling, especially e-commerce, and being able to reach customers worldwide. At school, I sold everything from sneakers to snapback hats; I was always at the post office shipping out boxes. That ended when my parents stopped me selling sneakers almost full time and made me focus on getting into college.”

He went on to study marketing at the University of Florida but never gave up on his entrepreneurial ambitions. Still a serious dirt bike rider, he knew from personal experience how expensive the gear and equipment could be, so he decided to apply what he had learned from selling sneakers and apply it to the dirt bike industry.

He says: “My dad would never buy me the top pair of bike boots, so I made it my goal to get one. I knew that companies sponsored many top athletes in this industry, who got to keep their gear at the end of the season, and would then sell it. As I did with sneakers, I would scour eBay for opportunities to buy in bulk and sell two or three sets for a profit, which covered the cost of keeping a set for myself. It made me realize there was a large market for this, and the idea for MK Locker was born.”

On graduating from college in 2020, Amoils’ parents gave him a year to make his fledgling business work or find a job. He teamed up with his college friend and computer science graduate Andrew Walker and, together, built a new e-commerce platform. The following year they launched MX Locker.

The biggest challenge in their startup journey, says Amoils, was hacking supply and demand. “Sellers aren’t going to sell on your platform if you don’t have enough traffic, and buyers aren’t going to find your platform if you don’t have enough sellers,” he says. “What helped was that we had our own supply, albeit a pretty small one of around 200 items.”

They knew their business had traction when it started earning $100,000 a month. Walker joined the business full-time, and within two years, MX Locker’s user numbers had grown from 7,000 to the current 160,000. Registration for sellers is free, and revenue is generated by taking 11% from each sale.

A lack of experience in running a marketplace was another challenge. “All I had was a basic knowledge of how money should flow between users, how a checkout process should work, and how the selling process should work as a seller,” says Amoils. “Perfecting the model has involved a lot of learnings this past couple of years. Fundamentally it’s about listening to our customers, getting their feedback, and then building tools that enable them to create their own mini website within our platform to succeed online.”

The business was entirely bootstrapped until last year when Amoils raised a pre-seed round of $750,000 with the help of family, friends and business angels. He has his sights set on venture capital for their next funding round.

With the global off-road motorcycle market valued at $103.53 billion in 2022 and expected to reach $151.80 billion by 2030, MX Locker is moving into a new growth phase. The business has a team of six and an increasingly global community, with users in the U.S., Europe and the Far East. New projects include shipments of dirt bikes sold via the marketplace and expansion into crossover markets.

“Our users aren’t just into their bike riding; they’re into many other sports,” says Amoils. “Given the marketplace, we have created, it makes sense for us to expand into some of these crossover industries.”

In as much as Amoils’ entrepreneurial success has been very self-driven, he has rallied support from a legend of the bike riding business, Jeff Emig. One of the top AMA Motocross and Supercross riders of the 1990s, Emig has partnered with the industry’s top brands for decades as a racer, ambassador and influencer, making him an ideal mentor and advisor for Amoils.

Emig says: “MX Locker fills a massive void in the circular chain of motocross products. For decades, people have had limited options for selling goods, used apparel, parts and motorcycles. Far too many have their shops and garages full of good stuff that other consumers want, only for it to end up collecting dust. MX Locker is a cutting-edge online marketplace created and run by MX riders who know the space inside and out. I have no doubt that under Ryan’s leadership, MXL will become one of the most important consumer retail businesses in the motocross industry around the globe.”

Meanwhile, Amoils’ best advice to other youngsters with ambitions to launch a successful business is to be bold and unafraid of taking risks. He says: “It’s tough, but you must be prepared to take the risk. When you have a clear vision, you have to focus on it, but first, you have to put something out there to consumers and the world to ensure it will work.”