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You want to start real estate investing<\/strong><\/a>, but where<\/em> should you start? Should you buy a course<\/strong>, join a mastermind<\/strong>, or do your own research<\/strong>? There\u2019s no one-size-fits-all approach to investing, but we can point you in the direction that aligns with your investing goals<\/strong><\/a>!<\/p>\n Welcome back to another Rookie Reply<\/strong>! In this episode, we\u2019re going to start at square one of your real estate journey<\/strong>. We also get into investing partnerships<\/strong><\/a> and how to work \u201csweat equity<\/strong>\u201d into your partnership agreements<\/strong>. Have you ever come across a property with red flags<\/strong><\/a>? Learn when to walk away from a deal<\/strong> and when to double down instead. Finally, stick around until the end as we bring repeat guest Nicole Rutherford<\/strong><\/a> on to talk about starting a co-hosting business<\/strong>, vetting co-hosts<\/strong>, and finding a short-term rental<\/strong><\/a> market<\/strong>!<\/p>\n Ashley: Tony: Ashley: Ashley: Tony: Ashley: Ashley: Tony: Tony: Tony: Ashley: Ashley: Tony: Ashley: Baker: Tony: Tony: Ashley: Ashley: Tony: Ashley: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Ashley: Tony: Tony: Nicole: Tony: Nicole: Tony: Nicole: Nicole: Tony: Nicole: Tony: Nicole: Nicole: Tony: Ashley: \u00a0<\/p>\n<\/div>\n https:\/\/www.youtube.com\/watch?v=daNh1J7EjwA123<\/a>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span>?<\/span><\/iframe><\/p>\n Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here<\/a>. Thanks! We really appreciate it!<\/p>\n Interested in learning more about today\u2019s sponsors or becoming a BiggerPockets partner yourself? Email <\/em>[email\u00a0protected]<\/span><\/em><\/a>.<\/em><\/p>\n Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
This is Real Estate rookie episode 380. Are you wondering where to start as a rookie investor? Should you pay for a course or should you self-educate? We\u2019re going to talk about that and so much more today. My name is Ashley Care and I am here with my co-host, Tony Jay Robinson,<\/p>\n
And welcome to the Real Estate Rookie Podcast where every week, three times a week, we bring you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And today we\u2019re going to be discussing a few topics, one of which being how do you structure a partnership split based on the amount of capital and sweat equity that someone\u2019s bringing? When should you walk away from a deal versus doubling down? And we\u2019ll also be joined live with rookie guest Nicole Rutherford, who you might remember from episode 3 73 to hear what questions to ask if you want to manage someone else\u2019s Airbnb as a co-host. And just general tips for getting into a new short-term rental market and more. But our first question up is about where to even start as a real estate rookie.<\/p>\n
Okay, so our first question today is from Spain. mk, super rookie question, highly interested in real estate investing. Where do I even want to start to learn? The last two years I\u2019ve immersed myself in the BiggerPockets of Money podcast plus others to get my money mindset straight. And this worked. First of all, congratulations. That\u2019s awesome. And if you haven\u2019t checked out the Money podcast yet, you can check that out on your favorite podcast platform. It\u2019s under a BiggerPockets umbrella. Okay, so to continue with our question, we have improved our family\u2019s net worth significantly. We started investing in index funds, that\u2019s pretty cool. That\u2019s also what I invest in outside of real estate. Now we are ready to take it up a notch and real estate investing makes sense to us primarily to buy and hold and take advantage of appreciation and tax benefits. However, where do I begin?<\/p>\n
I\u2019m a methodical person who wishes that I could just take a class. However, I know a lot of people are self-taught. Is paying for a course worth it? If it is, which course would you recommend? I need to learn terms, how to know I\u2019m getting a good property, where to get capital apart from saving a down payment, et cetera. Shell, I just start listening to all BP real estate podcasts. Would that be enough? Thanks so much. So what a great rookie question, and I think there\u2019s probably a lot of other people wondering the same exact thing as to how do I get started and is paying for education the right way to go. Tony, what are your thoughts on that? The first thing that comes to mind for me is that you can find everything free online. It\u2019s just the organization of it and kind of piecing it together that is the benefit of a paid course.<\/p>\n
Yeah, I think like you said, Spain, there\u2019s so many different ways to go about this. You definitely can trudge through it yourself and learn from your own mistakes, and there\u2019s a lot of people who started off that way. When I bought my first long-term rental, when I bought my first short-term rental, I didn\u2019t go through any courses or anything. I just learned the ropes and did it that way. But like Ashley said, there\u2019s a benefit to having that kind of community behind you as well, because you can usually move a little bit faster, right? You\u2019re not wasting as much time searching for the information because the information is there in front of you and you\u2019re able to spend a little bit more time executing and then B, hopefully you\u2019re following a proven roadmap of what already works. So there\u2019s pluses and minuses to both approaches there. But I think the biggest thing Spain is because the bigger question here is where do I even start to learn? You\u2019ve already started that journey, right? You\u2019ve already started the learning process. I think what\u2019s most important now is deciding on the actual path you want to take because I think that, and actually ary thoughts on this, but I feel like that\u2019s where a lot of rookies get caught up is that they just never decide what exactly is that they want to do. So then they\u2019re just spinning their wheels forever.<\/p>\n
So I\u2019ve done a couple masterminds, I\u2019ve done a bunch of courses, I\u2019ve done a wholesaling course, I\u2019ve done all these different things that some of the things I\u2019ve never actually implemented, but the course was a reason for me to realize this actually isn\u2019t for me. So I think that\u2019s also a big benefit of taking a course is to understand if that specific niche is for you. So figure out, like Tony said, figure out what exactly you want to do and if you have time to do all the research, you can 100% figure it out yourself. So time is another variable. If you don\u2019t have a lot of time to listen to podcasts, to read books, to scroll Zillow and look at what prices are and what houses are going for and tracking all of that and doing your own research, then maybe that\u2019s where you do pay for a course to kind of fast track all of that.<\/p>\n
So one thing to look at is the cost comparison. If the cost is instead of going out that month for dinner a couple times or not door dashing for a month, then yes, that\u2019s probably worth it. But if this is your maxing out your credit card to pay for this course, I\u2019m going to say no, it\u2019s not worth it. Figure it out on your own and join some of the free Facebook groups because another great benefit of doing a course is the community, but you can get free community on BiggerPockets. You can get free community on Instagram, just follow other investor accounts, especially new people who are just starting out. Search the hashtag real estate rookie and connect with them, send them a dm. The first ever mastermind I was in was created off of Instagram and it was one girl messaged 10 of us and said, Hey, I\u2019d like to start a mastermind. It\u2019s just free. It\u2019s just to get together. And we got together I think once every six weeks or something on a Zoom call and there up maybe being eight of the 10 people that did it. But putting yourself out there, building that community, that accountability, that\u2019s a huge benefit when people pay for those courses is meeting the like-minded people. But you can do that other ways too without paying for a course.<\/p>\n
Yeah, I think a lot of golden legacy, you definitely want to make sure you\u2019re coming from a place of financial stability before you take that plunge into maybe committing more to education. Quick side story from my own personal journey. The first mastermind I ever joined, it was a $20,000 apartment syndication mastermind and asked me how many apartments I\u2019ve syndicated since then. The answer is zero, but I still do think I learned a lot from that because like you said, Ashley, when you kind of make that financial commitment, it does, I think take it depends on the person, but I think when you make that financial commitment, it does make it a little bit more real for you. Like, hey, this is something I\u2019m committed to, and you kind of put your money where your mouth is. So I think there is an element of that, but Spain said that you do just want to go about this without investing into an actual course.<\/p>\n
Like Ashley said, there\u2019s a lot of different ways to get active and get involved. I personally think you can get a PhD of real estate investing just by going through the forums on BiggerPockets. I first found BP by doing a search on Google, which led me to the forums, and I was blown away by the amount of information that\u2019s in there because there are timeless truths of real estate investing. So even if you find a post from 10 years ago, there\u2019s probably still a lot of truth in that post that still resonates today. So I\u2019d say take the time, really drill down where you want to go, but I think what\u2019s most important in Spain is choosing the strategy, choosing your niche, and then really getting focused on just consuming content around that strategy. Because when you first start, it\u2019s all about awareness and you just want to learn as much as you can about so many different things.<\/p>\n
But when it comes time to take action, you want to narrow your focus. And I heard this phrase, it was on a marketing podcast a long time ago, but it was called just in time learning. Just in time learning. And it comes from the production world of just in time production. But anyway, it\u2019s about only consuming content that\u2019s needed for your next action. So if you decide span that you want to become a house flipper, then your very next step, the only content you should be consuming is about how do I find deals as a flipper? And then once you find the deals, okay, how do I create my scope of work and estimate my rehab costs? Okay, how do I fund it now that I\u2019ve figured out what the rehab costs and each piece of content should help you take that next step? So that\u2019s my advice.<\/p>\n
Yeah, the last thing I would add is how do you learn? How do you educate yourself? What\u2019s the best learning environment for you? So if you need to look back to high school to college, did you hate sitting in class watching videos? So maybe a lot of courses won\u2019t even be for you because you won\u2019t actually sit and watch the videos. I\u2019ve started the real estate exam probably four times and it\u2019s been like five years since I actually started it, but I just can\u2019t stand sitting and watching videos of someone instructing me. So I would just start it. I would never finish. And now I realize I don\u2019t even need my license or want it, but I know that about myself is that if I\u2019m paying for a course, it needs to be more interactive than just watching videos where someone else, they may prefer a more self-paced where at any time they can choose which videos they want to watch.<\/p>\n
So also look at what kind of course you\u2019re signing up for and how you\u2019re going to learn from it. What is the learning environment? Is it live or is it even in-person events? Not even on Zoom. Are they doing in-person events? Which that is actually the most beneficial to me and hands-on. Is it hands-on where it\u2019s workshops? That\u2019s even more beneficial to me. So also think about what your style of learning is and how you will learn the best, but I also learn really well from just Google searching and like Tony said, going on the BiggerPockets forums and I know exactly what I need to know to get to the next step and going and doing that research. But if you don\u2019t even know what those steps are, that\u2019s where shameless plug here, you can join the Real Estate Rookie Bootcamp and you can learn what those steps are to get your first deal and then from there you can go on to find your niche and take different courses like that. But I\u2019m going to recommend a course. It\u2019s going to be checking out the BiggerPockets bootcamps. You can go to biggerpockets.com\/bootcamps. There\u2019s a whole bunch of different ones that you can actually choose from<\/p>\n
Guys. The bootcamps really can be life-changing. Ash and I have both had the pleasure of hosting these and we were together a couple of weeks ago in Denver Ash, we had this big meetup and someone came up to me and he said, 10, I just want to thank you because I took your short-term rental bootcamp and a few months after that I closed on my first Airbnb and I\u2019m under contract on my second right now. And guys, when I hear those stories, it just goes to show the, and it\u2019s not because of me, right? I did my best to provide the value, but it\u2019s because that person came in and they executed on what they learned. They made the most of that opportunity. So just to put a bow on this, it doesn\u2019t matter what course you pay for, it doesn\u2019t matter what coaching program you sign up for. It doesn\u2019t matter what books you read if you never take action, there are people out there who are just course junkies who just jump from course to course event to event, but never take action. Don\u2019t be that person, be the person who takes action and who implements, and that\u2019s how we get the highest chances of success. Fan<\/p>\n
Tony dropping bombs. And with that explosion, we\u2019re going to go to our short break, but when we come back, we have a video submitted by Baker in North Carolina who is asking about investor payout strategies. So make sure you stick around. Okay, we are back from our break and we have a video question today from Baker McGinness and Charlotte, North Carolina. If you want to submit a question on the show, be sure to do it at biggerpockets.com\/reply. Now let\u2019s hear what Baker has to say.<\/p>\n
Hey, Ashley and Tony. My name is Baker McGinnis. I\u2019m in Charlotte, North Carolina and me and two very close long-term friends. We plan on investing in a short-term rental property in Boone, North Carolina, so that\u2019s the mountains of North Carolina. So I\u2019ll be providing sweat equity in a small down payment around $8,000, and I was curious as to what a ideal payout would be, whether that\u2019s a percentage of what we charge for rent or just wondering what you guys would recommend. Also, I want to thank you guys so much for all your fantastic information you provide on the podcast. Have an awesome day, guys.<\/p>\n
So Baker first, kudos you man on leveraging partnerships, and obviously this is my time to plug our real estate partnerships book. So if you head over to biggerpockets.com\/partnerships, you guys can pick that up. We\u2019ve had a lot of questions since that book released about how to structure partnerships, right? Ash, and I think you and I always say the same thing. There is no right or wrong way to do this. Bigger really comes down to what you and your potential partners feel is fair for that partnership. Now, the common mistake I think that we see from Ricky Investors is that they devalue. They undervalue the person who\u2019s putting in the sweat equity and they overvalue the person that\u2019s bringing the capital. Yes, the capital is necessary, yes, getting the mortgages is necessary. However, that is a one-time event, right? You\u2019re going to sign those loan docs one time.<\/p>\n
You\u2019re going to wire in the money for down payment and closing costs one time. And it sounds like Bick, you\u2019re also going to be contributing at least something towards that down payment and closing costs as well. So you\u2019re putting financial resources into this deal, but you\u2019re also going to be putting your time resources into the deal, and that\u2019s what equity, that\u2019s something that\u2019s going to be going on day after day, week after week, month, month after month. So I think my recommendation is always to start with just a 50 50 and see how your partner responds to that because I do think it\u2019s fair, right? If someone\u2019s going to be doing all of the work and the other person\u2019s just going to be cashing a check, you got to balance that out over the life of that deal. So for me, 50 50 seems pretty fair. What do you think, Ash?<\/p>\n
Yeah, I agree with checking into what is each person responsible for, what are the roles and responsibilities and putting some weight to it? And one other thing they can do is actually pay yourself for those job responsibilities that you\u2019re doing and then go ahead and do your equity percentage. There\u2019s a lot of different ways you can do it, but think about what is your goal, your outcome first, what do you want out of this deal? Is it cashflow? Is it equity so that you can cash out down the road? Is it you want to make more money now? So maybe you want to get paid directly for your sweat and your labor on the property. Then you can tailor it through the negotiation and figure out what your partner wants. What is the reason that they\u2019re investing capital of those same things that I listed?<\/p>\n
What is important to them? Then you can kind of structure it to make sure that it\u2019s a good deal for both of you, because really you could say we\u2019re going to be just 50 50 partners on it, but that may not be enough cashflow for you for the actual work that you\u2019re going to be doing on the property. So I think defining roles and responsibilities is the first step, setting your goals, what you guys each want out of the property, and then from there negotiating how much equity is given up, and then if you\u2019re going to be paid separate for any kind of task, and you can be paid as the property manager overseeing it, but also the other partner could be paid a percentage every month of the capital they put into the deal too. So that\u2019s what I did with my first partner was he was given equity, but also he was paid back a percentage. Maybe he gets less equity but gets percentage back, a guaranteed percentage back on his money now too, almost as if he was part private money lenders too.<\/p>\n
Yeah, it\u2019s a really good point. Ash should say, define those roles and responsibilities upfront. One of the very first partnerships that I ever did, it was a similar situation where I brought 25% of the capital needed for to acquire the property, right down payment, closing costs, furniture set up, et cetera. The partner brought together 75%. So because I contributed 25, the partner contributed 75, I kept 25% equity in that property, and the partner kept 75%, right? So our equity stakes matched our capital contributions. However, since I was going to be the person managing the property every day, I also got a 15% management fee for doing that work, which was slightly lower than market rates at the time. If we would\u2019ve hired someone else, it would\u2019ve been 20, 25, maybe 30, 40%. So I gave a break on the management fee, but I was renting the property myself. So you\u2019re absolutely right, Ashley, in saying that, maybe separate that a little bit, your equity from the work you\u2019re doing daily inside the property,<\/p>\n
And really to take it even further, really notate and document what is the role of the property manager too. So if you guys need to go and refinance, does that mean you as the property manager are in charge of talking to the loan officer, quoting rates, filling out all the documents because you actually hired a property management company? They most likely would not do that for you. They\u2019ll send you your profit and loss statement and your rent roll and things you need, but they\u2019re not going to do that for you. Who\u2019s going to get the taxes ready to collect all your W nine or not your W nines, but yeah, even your W nines and your 10 90 nines get your 10 90 nines. So all of those things, who\u2019s going to do all this stuff at tax time? Even if you\u2019re having somebody do it for you, somebody still has to hire a person to do it, gather all the information to give to them to take care of it.<\/p>\n
So really define as deep as you can, how many roles and responsibilities that property manager is actually going to have too. Okay, if you guys are enjoying this episode, if you\u2019re watching on YouTube, we\u2019d love for you to give it a thumbs up or if you\u2019re watching on your favorite podcast platform, make sure to leave us an honest reading and review. So we actually have Tony asking some co-hosting questions coming up, but before we get into that, we have one more question about walking away. So this question is from Chantel. When do you walk away super excited about first property under contract set to close in a week? Tentatively inspection showed end of life for roof insurance is having hard time getting an underwriter due to roof of age. My issue number one, my agent asked if I wanted to keep tenants month to month. I said yes, get response that, oops, they went to a 12 month lease that\u2019s under market. My issue number two, I will not cashflow, I\u2019ll need to put in about $300 per month to pay off my home equity line of credit payment each month, stay the course or say I\u2019m out.<\/p>\n
There\u2019s a lot to unpack here,<\/p>\n
Right? We\u2019ve been in situations like this before.<\/p>\n
Yeah, lots to unpack here. I think maybe let\u2019s take a, okay, first, I think the first thing that we need to clarify Ash is like Chantal, what are your motivations when it comes to investing in real estate? Again, you\u2019ve got cashflow, you\u2019ve got appreciation, you\u2019ve got the tax benefits, and if you\u2019re doing short-term, you\u2019ve got the vacation rental piece, right? When you\u2019re buy and hold real estate. So I think Chantal, the first question for you is what are your motivations? Is it maybe you\u2019re trying to get rep status, like real estate professional status and you want to be able to write off this cost segregation and apply that towards your W2 income or whatever it may be? Or do you want appreciation, right? Is this an appreciating market where maybe you\u2019re not super concerned about the cash flow and it\u2019s going to appreciate 5% a year for the next decade or whatever it is, but if it\u2019s just cashflow, then I think that kind of changes things. So I think that\u2019s the first piece, Ash, but maybe if we take it step by step and just kind of break down each issue, so what do you think about the roof issue? Would the roof by itself make you walk away from the property?<\/p>\n
Well, that was my number one question as to what do the numbers show? So she had issue number two of I will not cashflow. Is that with her paying for the roof expense or does that not even include the cost of adding a new roof on and now you have to come up with another $12,000 or whatever it may be to pay for the new roof? So first question is do you have money to cover the roof cost? Is that going to cut into your negative cashflow even more because maybe you have to take more money off your HELOC to cover that, and now you\u2019re paying $400 per month out of pocket for the heloc. So that is my first understanding is how does the cost of that roof factor into the numbers on the property? And the next thing would be can you still negotiate? Are you still in that due diligence period where the inspection showed end of life for roof, where you can actually negotiate a decrease in price to help cover the cost of the roof or ask the sellers to replace the roof before you close on the property and then you\u2019re not coming out of pocket for any money at all?<\/p>\n
Yeah, I\u2019d agree with you on that piece. I think my first objective would be like, Hey, let\u2019s have the sellers fix the roof before I even take possession of this thing. That way I can make sure it\u2019s done correctly, even if you have to push out closing a little bit. The motel that we just closed on, we had to push out closing because they had to fumigate the motel because we found some issues like, Hey, you guys need to take care of this and show us that it\u2019s done before we\u2019re willing to close on it. So you\u2019ve got a little bit of leverage there, Chantal, I think, to hopefully get that roof completed or that roof issue completed by the owners. So moving on to the next issue here. We\u2019ve got this Oopsie 12 month lease that\u2019s below market rents. What are you doing in that situation? Ash? You\u2019re the long-term rental queen here. What would you do in that situation?<\/p>\n
Well, that was part of the negative 300. Is that negative 300 cashflow only because they\u2019re in below market rents and after 12 months are you able to increase the rents and you\u2019re actually cash flowing on the property? Because at that time, I may consider it as to yes, I can afford that $300 per month payment. So think about that first. Can you actually afford to make that $300 per month payment and still have your reserves in place for 12 months and after that 12 months will you be able to cashflow on the property? So making sure it\u2019s not a financial burden on you and also what happens in 12 months, what can you increase it to and what does your cashflow actually become after their leases are up? Also, I would want to kind of look more into who the actual tenants are since you are inheriting them for a month, asking the seller for just to show that they have actually paid for the last year that they\u2019ve been living in the property, that they\u2019re good tenants and you\u2019re not going to be stuck in a 12 month lease with a tenant that hasn\u2019t actually paid in the last three months anyways, and a seller can tell you they\u2019re up to date on the rent rider part of the sales contract, but sometimes it\u2019s necessary to ask for proof, and that\u2019s okay to do is literally ask for the bank deposit showing that that person paid each month, or if they\u2019re using some kind of property management software or property management company, you can easily print off that report to send to you as the buyer that this person has consistently paid on too for the last 12 months.<\/p>\n
Yeah, I think you bring up a good point, Ash. It\u2019s how under market rents, are they right? If you brought it to market rent, are you going to be breaking even at that point, right? Or if you got to market rents, does it become a juicy deal, right? Our market rents at 2,500 and they\u2019re paying a thousand. Okay, cool. Then there\u2019s a lot of room there, but our market rents 1750 and they\u2019re paying 1550. Then it sounds like you might still have a bad deal in your hands either way. I think based on what I\u2019ve seen, Ash, I\u2019m curious what your take is. I think based on what I\u2019m seeing here, assuming that long-term cashflow is somewhat important to you, Chantal, I\u2019m probably going to be walking away from this deal.<\/p>\n
My first thing to do, and I think you would agree, Tony, is to try to negotiate first. I mean, now that they have the 12 month leases, if they put this property back on the market, they\u2019re going to have a really hard time selling it. Nobody\u2019s going to want to be locked into a 12 month lease that\u2019s below market rent. They\u2019re going to completely eliminate anybody that wants to house hack because nobody can move into it to house hack. So their buyer pool has just diminished, and I think there\u2019s a lot of room for negotiation on this to decrease the purchase price with the roof and it being locked into 12 month lease agreements that are under market too. So I\u2019m going to say negotiate until the numbers work. If not, then I\u2019m out. Maybe we should make that into a new show segment where people bring us their deals and we say whether we\u2019re out or we\u2019re in,<\/p>\n
We\u2019re in bringing the capital. It\u2019s like Shark Tank, huh? Yeah, I\u2019m with that. I\u2019m out.<\/p>\n
Alright guys, so coming up after this outbreak, we\u2019re going to be joined by Nicole Rutherford. You guys might remember from episode 3 73, but her and I are going to talk a little bit of insider tips for creating a co-hosting business. So Nicole, welcome back. Super excited to be chatting with you again. You and I were on episode 373 together where we talked about transitioning from Airbnb arbitrage to building out this co-hosting business and the producers, and I thought it\u2019d be cool to bring you back to ask a few more questions about Airbnb co-hosting. So welcome back to the Real Estate Rookie podcast.<\/p>\n
Thank you so much, Tony. Pleasure to be here again with you.<\/p>\n
Alright, Nicole, so first question I want to ask you is, if I\u2019m looking to hire a co-host, right? Say I own a property that I\u2019m thinking of renting out as a vacation rental as an Airbnb, or maybe I already have one and I\u2019m not happy with my current property manager, what should I be asking this new potential co-host?<\/p>\n
The first thing would be just checking the rates that they\u2019re going to be charging. There are co-hosts that will charge a flat management fee or there\u2019s going to be host that will do a percentage. We opt to do a percentage for our business. You\u2019ll see most co-hosts charging from 15 to anywhere up to 30% of the gross nightly rates is typically what you\u2019ll see most people charging and knowing their communication, what they\u2019re going to be abled to do if overnight emergencies happen, seeing if they have a team or if it\u2019s just them. Are they going to be available 24 7 to communicate with guests and making sure that everything is very transparent of who\u2019s going to be responsible for ordering supplies, who\u2019s going to be responsible for leaving guest reviews, making every single detail announced and known to both parties, who\u2019s responsible for what aspects of running the business and making sure that as a co-host that your property is something that they\u2019re comfortable doing. We have turned down properties of, we\u2019re not familiar with condos and not working with the HOA regulations, so making sure that your co-host is comfortable with doing that. If you have extra amenities at your property, such as pools, hot tubs, grills, who\u2019s going to be changing out the propane in between guest stay or when a propane tank runs low in the middle of a guest stay. All those little details asking who\u2019s going to be responsible for what aspect of running the business?<\/p>\n
Love that, Nicole. And I guess the inverse of that question is what questions should a potential co-host be asking a new client<\/p>\n
For us? We have a whole list written out when we are potentially going to be bringing on a new client onto our, we always say team, and we have it listed out at first. We need to know the property address if there are short-term rental regulations in that area because most people aren\u2019t familiar with those if they\u2019re brand new to real estate investing and going from there of seeing what the bedroom count is, what the bathroom count is, and we take a look before we even say yes or no to this client, we take a look and see if that property is something that fits our portfolio. We tend to work with larger homes, not that we\u2019re not able to work with smaller homes, but just for ourselves and the time that we dedicate to each property, we\u2019ve set it out to match what our profit goals are and we make that clear to owners of after we do an analysis on our end of what we think their property can bring in, we let them know, honestly, if we think that it might do better as a long-term rental than a short-term rental because some owners don\u2019t have the budget to really furnish their home as it might need to be in their particular market area.<\/p>\n
And so talking to them and being very transparent at all times of how much do you have to put into furnishings? Are you willing to add these amenities to your home? If it doesn\u2019t have these amenities, we\u2019re not sure if it\u2019s going to be able to meet your overall profit goals and seeing what owners are willing to do for their properties if it needs a hot tub to be able to pull in any sort of profit from doing your own market research, making sure that it fits your portfolio of what you want to be adding into it.<\/p>\n
Alright, next question I have for you, Nicole, is what are your need to knows when helping a new co-host move into a new market?<\/p>\n
The first one is going to be really analyzing that particular property that they\u2019re looking for. So looking at the market analysis and seeing if they have amenities at the property, what their monthly payments of including insurance and taxes and their estimated monthly utilities to make sure it makes sense. As a short-term rental. Most people aren\u2019t doing co-hosting for long-term rentals. And when you are taking that percentage, we like to make sure that the owners are at least going to be breaking even or profiting on their rent. And from there, knowing exactly what the owners are willing to put into their property for furnishings, if it\u2019s not currently a functioning short-term rental. And then you can start building out your team if it does seem like it\u2019s something that\u2019s going to be mutually beneficial for yourself and for the owner. From there, you start the ball rolling with finding your cleaners, your handyman, your full team, and everyone else that you need to be running a successful short-term rental<\/p>\n
And qua. I love that process, and I guess what\u2019s the timeframe I should be expecting to be able to complete something like that?<\/p>\n
A lot of people do take a month to get their properties ready, but the longest it\u2019s ever taken us is two weeks time. So from day one of talking to the owners, and that\u2019s been even with a renovation going on, our last property we just set up, we were able to design the property in usually less than a week. We take a few days to really get the design knocked down and have everything ordered and ready in our cart and take one week from start to finish of when we go into the property and to when it\u2019s ready for its first guest, which is usually eight to 12 hour days of being at the property. We set up all the furniture ourselves, install closet racks if needed, hang up the TVs. We\u2019re extremely hands-on, and we will, during that same week, we are meeting cleaners and interviewing cleaners because a lot of these markets we go into, we\u2019ve maybe visited before the area, but we don\u2019t have connections in a lot of these areas.<\/p>\n
So we\u2019ll at least interview three cleaners to come by the house for them to see the property. Same thing with handyman and pool teams if needed, having long guys come by and provide quotes for the owners. So it is a very hectic week usually that we\u2019re getting properties set up, but a lot of people, the owners will connect with us and say, what is it going to take about a month time to get ready? Which for people working full-time jobs, understandably, it will take a lot more time to get it set up, but with the proper team in place, we\u2019ve been able to get things usually set up in a week time at most two<\/p>\n
Weeks. That is incredible. I\u2019m super impressed by that. For us, usually when we\u2019re launching a new property, if it\u2019s starting from zero, somewhere in that four-ish week range is good for us, but two weeks you guys are crushing it. So Nicole, appreciate you coming back on to the Ricky Podcast to answer these questions. For our audience here and for everyone that\u2019s listening, if you want to get in touch with Nicole, check the, if you\u2019re on YouTube, check the description of the video here. If you\u2019re listening on your favorite podcast app, check the show notes down below the player and you can find all of Nicole\u2019s contact information there.<\/p>\n
Thank you everyone for joining us for this week\u2019s rookie reply and we will see you next time.<\/p>\n