Getting to 80 short-term rentals in just a few years

0:04Patriot family homes is a short-term R Rental Company it's also tied heavily in with the military can you kind of explain what the company does I know there's many facets to it and then you know kind of what the mission is of the organization yeah yeah so the we are in the short-term rental industry you know this is this is kind of the the area that Joe Joe actually did start trying to do longterm and as he told me the story years ago he's you know the demand for short-term rentals at the time he was in Columbus Georgia and he had just a couple of few homes but he said you know the demand is just incredible you know at that time Airbnb was starting to come on board and so he was listing through there and he he couldn't get

0:52Them emptied long enough to to find a renter for long term so you know he he just you he didn't he didn't didn't fight the trend he went with it and so yeah we we started off in Military and he was originally that was you know just a little background on Fort Benning Georgia it is the kind of the the biggest initial entry training facility in the United States Army you've got all your enlisted infantry soldiers and then army or armor soldiers that go through Fort Benning Georgia and then also on the officer side so you're commissioned officers as well for both armor and infantry and so there are a lot of graduation ceremonies that take place there and as a part of that that drove I

1:41Think you know this demand or in part at least this demand for folks to to come down and visit Fort Benning Georgia and so Joe saw that he saw the demand he thought well hey if I can do this here for Benning let me look at some of the other military markets and you know obviously being in the military and having kind of the background and insights there that's where he started so that's kind of our foundation and then also too you know Joe had a strong desire to employ other veterans and then he also saw you know probably in in our Workforce one of the most under served and very highly talented and skilled forces out there is are our spouses in the military and so he kind of tapped into that and started offering remote work opport unities

2:30For some of these spouses it was portable exportable they could go wherever they want and so you know we kind of just pulled all that together but then after a while you know you know the military Market you know he decided he wanted to Branch out a little bit further from that and started going into places like Montgomery started going into Huntsville Birmingham some of those other locations that were kind of off the beaten path you noticed that this you know the the Airbnb phenomena was growing Beyond just your typical vacation rental markets it's really a demand that is everywhere now this is how people want to travel and then you know interestingly enough you know again I was watching Joe from the sideline very interested to

3:18See how this was going to play out you know because you know we we had talked about this he's like I'm gonna build this big company I was like okay yeah sure you are a young man you who are you you know I'm I'm much old than you I've been around the block I know so much more than you but you know when the when the pandemic came around I actually called him up and I said and it was you know early on in the pandemic I said Joe you know how do you think this is GNA play for you he's like okay you know I'm really concerned but in true fashion you know not only did he turn it around they actually grew through the pandemic and in some ways the pandemic may have helped with you know the remote work you know increasing people's mobility in the workforce a lot of people now can work from wherever they want to I don't know

4:07You maybe a lot of your viewers that are into this have have seeing what Airbnb is doing and just the incredible response they've they've received for people seeking employment through them now that they allow them to work from anywhere in the world right so I think the pandemic actually kind of you know propelled the you know the the short-term rental industry if you will so it's it just continues to grow it's it's it's a it's incredible I can't you know I I would have never thought that places like Montgomery Alabama Huntsville some of those places would do as well as they do short-term rentals yeah cap rates are phenomenal yeah yeah it's outside the box way of thinking when it comes to short-term rentals you know I've had similar realizations it's funny when

4:55I I just recently kind of learned about Patriot family homes and and then in talking to Kate like it was it's like really funny how similar the realizations have been to to Joe's experience obviously he scaled it much bigger than I have but but I I have pretty much all military spouses that work on my team as well and it has been phenomenal you know a couple couple that helped me with the airbnbs and then my EA as military spouse as well and they're just amazing individual super talented often underemployed and so yeah I I agree on that and then also buying in the non-traditional markets you know they're so overlooked everyone rushes to dtin Beach

5:44Florida instead of you know looking at right in their backyard where it could just work phenomenally well we call them utility markets okay okay and and again what we try to do is we try to look for a cross-section between you know little bit of like Regional travel something that would be attractive to folks to bring them in for whatever reason whether it's you know maybe an amusement park water park a national forest anything like that and then you're also looking for industry right so give you an example of that would be you know maybe FedEx in Memphis Tennessee I think drives a lot of of folks into that area you know in Huntsville you've got a huge Aerospace industry a lot of people may not

6:33I didn't know this but you know highest concentration of phds anywhere in the nation is in Huntsville Alabama you know interesting yeah I would have I would have thought you know somewhere up here in the Northeast yeah Mi or something yeah right yeah something like that but then you know with with Huntsville there's you know tremendous amount of growth going on there and so you know I think that's just an example of you know like you said you don't need to be near the beach you don't necessarily need to be in the mountains or your traditional travel vacation Market yeah and how many properties are you guys up to now 370 is is where we're at right now okay and so and what's the ratio of of owned properties that you guys have purchased compared

7:21To managed yeah so I would say that it's a very small percentage of managed in fact I was just talking to our account manager today and she's at 52 with the total that she oversees and kind of keeps track on how revenues how the performance the homes reviews all those sorts of things then we have about an equal number of leased properties so we we do rental Arbitrage in fact that's a way that we kind of test out new markets rather than doing a huge Capital allocation and then having to maybe sell a year later we go in with with a lease and and test out the market that way and and then the vast majority you know about half of the the homes or more are owned okay now with that they're split because we also have

8:10Investors to come in with us okay and kind of dive into that a little bit the the company is there's two parts to it there's pfh management Co LLC which is where I work and the vast majority of the of the folks do do work and then there's the Patriot family homes LLC that's like the Holdings company okay and inside that Joe is partnering with other investors to set up portfolios which is really kind of where we're we're you know Joe's going everywhere you know he's get a grand plan to dominate the world but you know we'll do we we'll work with with management clients we'll do rental Arbitrage but you know where we' really like to focus is on the investment side so we'll create a essentially

8:58A fund of one and and build out a real estate portfolio for someone I see okay so so how do how does that work when they partner with you on that so if somebody's listening to this and they're like that that sounds cool I mean right you guys know what you're doing you know let's let's partner together what what does that structure look like well I'll start with capital generally when you're coming in it's going to be about 2 million in capital or Equity that you're going to bring into it that you're willing to leverage at least two times okay so we own the leverage to at least 4 million and then from there we'll set up an operating agreement you will partner with Patriot family homes LLC you will Joe will work a small Equity stake with that so that goals are aligned with the investor

9:48And then from there we will you know sign off on the operating agreement create the Ein get the Articles formed for the LLC of the entity and then we'll go to work finding acquiring renovating if necessary Furnishing and setting up and then we will put it in with the pfh Management LLC to to manage the day-to-day and then Joe goes back and just manages that portfolio over time he'll watch the performance if there's a particular Market again depending on what the the investors buy box is you know we could be all over the southeast maybe they just want to focus into particular state of the 13 that we're in U but Joe will go back and monitor that performance and then he'll make recommendations to

10:37It's really the lp but you know it's it's you know the the the lp the partner has 90% or more share in the company so they get to decide whether or not they sell off a particular property or if they go and acquire more in a certain area so he's doing all of that and we're also chasing in the books and making sure that everything's done properly on the accounting as well and it's you know and one of the things that I I thought was really interesting with this is if someone's doing maybe a 1031 exchange and they'd like to start diversifying and and leverage you know a really good opportunity this is a way to do that if someone is selling a business and they know they're going through any sort of liquidity event you can you

11:26Can significantly reduce again I'm not Tax Advisor and I would recommend that that someone seek tax advice on this but I have seen us do this for another investor you can significantly reduce the tax burden in a given year by shifting into real estate and specifically with short-term rentals a lot of it has to do with the startup cost associated with putting together you know a short-term rental which you know that ffe is you know the Furnishings are not cheap so and then you can do accelerated depreciation and then you can also do one time one first year claims as well so to me that's a huge opportunity for folks that are you know that I didn't even realize again this is one of the gaps in my swing and I'm learning a

12:27Lot