Data Driven Design for Higher Short Term Rental Income

0:00you mentioned that you've got a formula for Designing short-term rentals that guarantees bookings and Roi is this like a actual mathematical formula or is there is it like more of a theoretical formula or how how does how does this work it's it's pretty much just a theory so we've kind of already touched on knowing that ideal guest so it's three parts when you know your ideal guest then you can design for to offer value and that is a really important part because value is what you are charging your guest for but I will come right back to that so when you know your ideal guest you can design for value and create a unique experience so those three things put together is what's going to make your vacation rental profitable because you know your

0:49numbers so before you purchase this property you already put together like okay if I can rent it out at this X Y and Z per night then this is going to work for me so you know that number when I work with clients I always ask them what do you want your nightly rate to be because that's how I know how much value to pad into your vacation rental under the guise of a unique experience so when guests are booking you're seeing the number but the guest is like I'm going to pay whatever they're asking for because there's value there for me and there's a unique experience tailored to this specific property so with those three things the guest the value unique experience the investor can get what they want out of the property and the guests get what they want out of the property so that's my designing

1:37For dollars formula in in a nutshell there's so much I can say to go you know into detail about it but to to get started just know your guest know the type of value you need to offer for your nightly rate and know how to transform your property into a unique experience so like don't feel like oh look at the stunning view there's other properties near by with a view but how can you change maybe your deck area to offer an experience of that view that only your property can give that that those are the three things that you really need to know and once you do that in your design it's kind of just I don't know I don't want to say but you do make a lot of money when you do it that way as opposed to like oh this is cute this is cute this is cute

2:25Because it's cute to you but not for someone who's coming because they're Grand mother died they need somewhere where the family can gather not somewhere where they can take a picture on Instagram so it's really important to know about that value got it interesting and how does somebody who's analyzing a prop a potential property go about knowing in advance what they should budget for for something like this you know we tend to buy with with the strategy I have it's it's typically Ty Al more affordable locations just outside of larger cities typically multi-unit properties and you know those can obviously be a very different rule of thumb in terms of cost for design

3:15than you know the multi-million dollar luxury vacation rental so is there a way that you recommend people come up with a budget for for design so it really depends on you but for me just like in general my clients I always say budget about like 5K for bedrooms and then 6K for any common areas but that's like working with me based on like my quality and what I know how to do but if you are doing it yourself like I used to do many years ago the number one key is whatever your budget is before you start spending you want to kind of allocate what is going to go where the reason I say that is sometimes I see where clients will come to me with this huge property because

4:04they want to sleep a lot of people but they don't have the budget to offer value to all those people so although they can sleep 12 15 people they're not going to be able to charge as much as they're imagining because the design we can't offer that value so before you pull the trigger on any major purchases you want to kind of outline like okay if I know my target market is I don't know nurse nurses travel nurses and I know I have a budget of $155,000 for this three-bedroom property am I able to offer value to this nurse am I able to put in a comfortable sofa a comfortable bed so knowing the musthaves for your ideal guest is

4:53is important but it starts by knowing who your ideal guest is so once you know who they are then you know what things you must have for them to come and so when you look at your budget like okay I have enough to make sure they have all their musthaves then you can start splurging on like okay maybe I have one a couple extra Grands that I can throw in a hot tub because an a travel nurse will probably want to relax in a hot tub that would be something I can charge more for but just knowing how to divide your budget so that you make sure you offer that value is important so even if you don't have a large budget I have designed when I first started I have designed properties with like 7K 10K so it wasn't a lot but because I knew who the

5:41Target market was I knew what areas to save and what areas to splurge so I wasn't spending a lot on say a coffee table because that's not valuable to that guest when they're looking through properties they're not looking for what property has the nicest coffee table but they'll probably look at what coffee table has the nicest this bed so just knowing who they are what they value you can figure out where to save and where to splurge so that you don't miss out on offering that value but you're still able to design something nice got it that makes sense and just to clarify so when you you you gave the example of like if you you could sleep like 15 people but you can't offer value for 15 people what when when you like are you referring to like maybe having areas

6:30For 15 people or what what do you mean by being able to offer value for 15 people so offering value would be when 15 people a group of 15 they're looking at different rent vacation rentals the ones that are going to stand out are the ones that for example they have enough seating in the living room area so you say you sleep 15 but you only have a little sectional in the living room and then maybe one accent chair well there's another property nearby it may be a little more but at least we all can sit in the living room so that's what guests are looking at when they're trying to pay they're not just necessarily looking for the cheapest or the closest to where they're going but they're thinking of when we're there are we all going to be able to sit and hang out together which was the whole reason we were traveling which was the main experience

7:19We're looking for if you have an outdoor space and instead of putting enough seating for 15 people on the deck you put a dining table that only six they're going to want to pay more if there's another property nearby that has seating for15 so value is just thinking about what they are looking for if you put yourself in their shoes as that guest what are they looking for and don't worry about like the costs I know sometimes people look on like air DNA or rabu and they're like oh they say I should make this much a night or this much a month you can make whatever you want as long as you offer guest value because guests want they want an experience so if what you're giving them is worth the

8:07Cost like okay this this property is 100,000 and this property is I don't know these are just outlandish numbers but 150,000 and the The Experience here is just better they're going to pay for it so it's just really important when you're thinking about your guests to really think about them that's that's that's the big thing for when I'm designing properties I'm not doing any extra like detective work but I'm always thinking about the guest I'm putting myself in the position of the guest like okay I know this property in the Poconos is for families so if they're going to drive all the way up the mountain then this property needs to have a game room that's entertaining in case they're rained out and they have to stay in the house the whole time sometimes

8:56They don't even want to spend money in other places so they're looking for a house that they can stay in the whole week but if you only designed it for a group to sleep they're going to pick another house that has in-house entertainment so that's what I mean by offering that value a good example when I used to when I had my own vacation rental it was at the bottom of a duplex property a two bedroom with a living room a game room and a dining room so it wasn't anything fancy but air DNA told me I forgot the amount that they told me I think they said it was about 1,500 that I'd be able to make a month because of the area it was in downtown but what I did was I changed the dining room and turned it into a game room because I

9:45Knew that guests who come downtown they want to have fun but what happens when downtown ends at 2 a.m. The fun doesn't end because now their property has a game room inside so whatever I wanted to charge I was able to charge up to $300 a night for a two-bedroom duplex property without private parking and people booked it because I knew they were coming for fun so they want to continue having fun even when they've dropped off by The Uber now they can go in their own private Game Room in their pajamas and continue having fun that was the value in that so instead of them just booking a vacation rental they were booking a vacation rental a trip fund their own own private Game Room those were all the different unique experiences that

10:33Were layered into that vacation rental so it yeah that's you just have to think about the guest I always emphasize thinking about your guest and all your problems will be solved honestly it's such great advice because I think you know I and I I've struggled with this coming from the world of real estate investing yeah more traditional real estate investing you look at properties as Commodities you know because a three-bedroom is going to rent for what a three-bedroom rents for a long-term rentwise it doesn't matter what the experience is like or what amenities you have or any of that stuff it's like three bedrooms rent for this amount and so you come into short-term rentals kind of carrying that mindset with you and it's hard to break that and understand that no actually like you could get 300

11:21bucks a night for a small apartment and the same property right next door could get a hundred bucks a night because it just doesn't have that same experience and and it makes a massive difference to the value of the property and the the income it can bring in so that's it's such a great Point I'm I'm curious one thing people ask me about a lot is how much time should they budget for for this process because obviously people buy a property they want to get it on Airbnb as soon as possible they want to start bringing in income so what do you generally recommend to people in terms of the time between purchase and having it all set up and ready to be rented it really depends on your time so for me my Niche or my clients are

12:10very busy people so that's me I am an interior designer for very busy people so it can be when they work with me full service it's four to six weeks from setup you know the whole time from design to completion and for a digital design which is virtual online it really it usually takes them about four to six months and that's because they're not working on it every single day like me you know that's my full-time job but they have other things to do so they'll usually do it like on the weekends or after work or after you know all their meetings so it you can imagine you know but if you've never done it before it does take a lot a long time it takes a lot of effort too so I would say just depending on how you plan to go about it if you're going to work with an expert then

12:59you can get it up and running quickly but if you're going to do it yourself well just know that however long you're imagining it's probably going to take four times as long to get it done so yeah that that's what I'll say I also want to mention it's it's easy to think that like oh it's not a lot of effort because you've designed your own home before but what you don't put into consideration is you were living in your own home when you were designing it you could take however long long you wanted you could Finance whatever you want you're not thinking about cost it's just do I like it do I love it and that's it but when you're Furnishing and designing a short-term rental you are always thinking about your Roi like is it worth it buying this sofa am I going to make enough money from it how soon is it going

13:47To take to come in when they all start coming all the pieces start coming in you have to worry about bringing them into the property checking it for damages assembling it yourself installing it yourself so there's a lot of moving Parts I'd say if you have a very busy schedule and you couldn't take on designing your friends home your friend's brand new home yourself definitely work with a designer but if it's something that you know I could take some time off and help her Spruce it up then you can think about working with the designer to do it virtually but I would never advise especially in this market and it's not because I'm a designer just pretend I'm not especially in this market Market I wouldn't advise anyone to just go into it blindly thinking they can throw anything into a property and

14:36Make some money because it's easy to list it on the platform it's easy to list it on the platform but it's also easy for you to get lost among all the competition you know you're not just it's not just your platform it's here's your property and here's everybody else's property yours needs to stop the scroll to even start the conversation of getting bookings so it's it's a lot to think about yeah yeah there's a major difference between just a typical listing and a really good listing I mean it just when you look at it the the feeling it evokes is is totally different and to your point around timeline it's funny because we we still underestimate this so so much we just went down to Florida we live in Indiana we went down to Florida to set

15:24Up two separate duplexes that we had built down there and we did it all four units in three weeks and we had you know pretty much a full-time crew there putting stuff together and hanging TVs and curtains and I mean and we were exhausted I mean we thought oh well you know three weeks is plenty of time we've done this so many times and we were just I mean sun up to sun down working our our butt off so yeah it's definitely it's a lot of effort and I do want to point out now too like a while ago or at least when I first got into the short-term rental field airbnbs vacation rentals they were supposed to be cheaper than

16:13Hotels you know but now they're kind of not some are even rivaling or even being more expensive than the property so I'm sorry my dog is going crazy if you can hear that's all right but so now when people are looking at vacation rentals they're okay with spending more but they're expecting a like personalized luxury experience for themselves so that's also something to consider now because before you could throw in whatever and people are just like ah you know cheaper than a hotel so they didn't mind but now they're like if I'm paying all these fees cleaning fees and I can just get a hotel I need to have an experience like it needs to be better than my property that I live in at home home and that's why again it brings me back to

17:01the point it's important to know your ideal guest because maybe your ideal guest lives differently from you perhaps you're trying to hit a luxury market and you're not really a luxury person so you may think having one n stand in the bedroom is okay but if your ideal guests are luxury people they have their own homes designed by interior designers they're expecting more they're expecting two nightstands a wallmounted lighting Source they're in USB Outlets that are convenient so just knowing your guest knowing your guest is going to solve any problem you have any design dilemas you have any overwhelm you're dealing with just know your guest think about when you're buying a gift for your friend unless you don't really know your friend it's not that hard to buy their gifts because

17:49You know like oh he likes this so he'll probably enjoy this and that's just kind of how designing a vacation rental is I know it's all about numbers but if you don't know who is going to give you that money you don't know what you need to provide for them so that they'll want to pay you so think about it yeah