From Academia to Airbnb: Turning Data into Dollars with Short-Term Rentals

0:00So really I started So being in Texas, man, Texas is a it's a complicated market. — and it's one of those markets where if you have some money to get going, you're going to be great. Or if you had stuff established well before that that recession or even the housing, whatever, all that stuff, then you're gold. But really just here in especially in the metroplex, how much people make versus how much houses are valued at and the how much like interest rates, all that other stuff.

0:32It is a this is a hard place to to to get a good deal and cash flow, right? — You know, my my my big thing was was c I wanted the cash flow. — Yeah. — and so I really just put in some criteria. So I wanted to go off and I wanted to look where the just for the average income stable income right where and you can get this stuff all online. I just wanted like where is the income in the United States the most stable — and it's usually found in these smaller remote areas but not tiny towns but you know little certain parts of Tennessee.

1:08I found some in some in Arkansas. There's some a little bit out west up north but but really everywhere else is the income is very up and down and it depends on everything else right around them. Higher fire, you know, all this other kind of stuff. And then I wanted to look at the housing market. I wanted to know how much you know like what was the average rate of of how much would an average house a threebedroom two bath cost within these areas. So I just again I got on I did my research and and so I started finding these trends in the data that showed hey these places where people are just really that those great middle class upper to middle class neighborhoods people just aren't moving everywhere where the housing prices are staying relatively right relatively good and the population increase was

1:57gradual whereas like in the metroplex or some of these other places man like it's it hadn't stopped right it's it's a constant but it's a steeper constant So, like I said, just all with that data, I just sort of looked and I was like, man, here it is. So, I found a few places in Tennessee that I liked, but the problem with Tennessee was they they were very rural and I couldn't get it was and and the houses were needing way too much upkeep. Like I I was going to have to put way too much down. And I and and I'm a firm believer in private money, right?

2:29I don't have a job. So I you know I had I mean I I raised about 120,000 155,000 of private money and I I mean I had plenty I could have done but I didn't want to put all that into a Renault and so and so I yeah I was and then I switched to North Carolina because there were some areas right up you know north of the the research triangle there and you know rally and all that stuff that man and it's kind of far away from the ocean but there's some lakes in the area and you're close to this city but it's just this beautiful little population that's steadily growing, just great neighborhood and a lot and from what I found is people really commute from here to go other places.

3:07and so this was a great destination place. — And so I was like, "Oo, well, and then of course, mother nature had its way in, right? And we had that that that that hurricane came up and flooded that entire area." — and and I was just like, you know, and I mean, so, you know, you're just like, my gosh. And actually I didn't even look at Northwest Arkansas because a lot of Northwest Arkansas has a lot of really strict Airbnb rules. I'm near a city called Fagetville where the University of Arkansas is and yeah, you can't go off and make a new Airbnb.

3:42You can purchase one that's already an Airbnb, but there's no more licenses given out. Like you there's that's it. It's stuck. And there's a lot of places like that in Arkansas. — Sometimes can be a benefit, right? I mean, because — it was Yeah, it it was for me. Yeah. Right. Because now it's it's locked, but not only that, yeah, it stopped people from coming in and buying these houses with, you know, it really just sort of evened out the economy. So, yeah. So, again, and I one of my one of my biggest philosophies in life I've always tried to teach my kids when I was coaching is there is no win or loss.

4:15is there's always an opportunity and the most successful people in life, love, and happiness are the ones who find the opportunity, not the bad or good. And so I was like, hey, let's just look at it. So I, you know, I started looking around and and I went I found an amazing realer. He used and just by chance, a buddy of mine, his son was going to the University of Arkansas and they were up there and they bought a house for him to live in near campus and they used this guy and and I was like, "Oh, what's his name?" And so I went and started talking.

4:45Well, he he he did he had short-term rentals and he managed them for about 20 years. — And so I was like a smart investmentminded realer. I was like, man. And so, you know, I just started gathering these great people. And he found, you know, we found this literally he called me. He it was like 11:00 at night about this house. And like I said, it was it's it was kind of rule, but like I said, because of the data had showed me, you know, I I didn't even have to go run the numbers. I'd already recognized kind of the look and feel of all the data you can just pull up on, you know, online.

5:20I was like, "No, this this actually this fits my little my little graph." — Yeah. — Yeah. So, yeah. So, it really just worked out very fertuitously that I was able to find this this market. The other market I was looking at was in Alabama. But but that was I was a little far. So, yeah. So, that's how I found this market. I don't know if that answered the question or not. — Yeah. Yeah. No, and I think that's that's such a great point. Once you once you start to get familiar with a market, and this is why I'm I'm a big proponent of economies of scale in one market and and focusing on on one market or or a few markets, but not just like, you know, searching 50 different markets and and buying in all these different places because you get to know the market and then as soon as properties pop up, you can know at almost a glance, is there potential

6:08Here to spend more time or just pass it by, you know, and and so — it allows you to move. Move so much quicker and and have this competitive advantage. — Oh, yeah. — And you know, I I think to your point about the the realtor too, like a lot of times we use the listing agent to to purchase a property because that gives you a leg up. — But if you know the other scenario that works really well is to use a realtor that has short-term rentals because — the the thing you don't want to do is is just pick a random realtor who has no experience with short-term rentals.

6:42They're used to showing clients beautiful properties that appeal to your emotions and that exactly, — you know, is not what you're looking for as an investor. And so, you have to have somebody who understands, — you know, short-term rentals and understands the numbers to recommend them or just go directly to the the listing agent. So, I think that was — and and and that's perfect. Yeah. And that's also and I think you even said this I believe it was on one of our little Monday night things but like realators go to little meetups — you know like you know you know and so you these meetups these realtors go to — like-minded always attracts like-minded and so the realtor that we actually worked with he knew from a meetup and she was also investment friendly which made the negotiations a little — it it made

7:30It kind of fun but also it wasn't it wasn't going to be a shoot, you know, it wasn't a pushover, but you know, but so yeah. So really Yeah. So having just somebody who really is knows the area that just didn't get into it because man, my my mechanical engineering degree didn't work out. I'm going to go be a real litterer. Yeah. — No. No. Like you know, like these people actually know and like I trusted his judgment. — Yeah. So — yeah, that that makes sense. Yeah. — so I want to talk about the the actual deal itself then you decided on.

8:01So, if you can kind of just walk me through the the highle numbers, you know, and and why this one appealed to you over the others. You kind of said that when you first looked at it, you knew that, you know, it just made sense. — yeah. — You know, what what was it that made it make sense? — so like I said, it one it's I wanted it to be different and this was different. One it was a duplex, but it's a duplex that's stacked, right? It's one on top of each which I know I' I've never seen those before.

8:32I was like fascinating. That's just really interesting. And then beyond that the house and I and I I don't want to get anyone in trouble, but I've even had issues with like the water company and stuff because before I bought it, everything was under one bill. — I don't Right. And so and and I don't know how I don't know what, but it's it's literally it has two addresses. But the guy I bought it from sold it as a single unit — and it was priced as a single unit.

9:04So really I you know I mean so I mean really 290 it was it was actually they asked 300 and I said no I don't want anything at face value but I was like but it appraised at 360. So I was like let's let's try 290. And so I shoved and threw it out there and he and I was like, "Yeah." Cuz I I just saw I was like, "Man, I have a duplex, a two a three bed, two bath, right? And then a total unit of six bed, four bath for 290." — Yeah. — So each unit is three bed, two bath, which is the size of a lot of single family homes, — but you're getting basically two houses — for 290.

9:41— Yeah. And and the and and as I looked at the other, you know, houses around there, most two bed, two baths were going for around 250, 260. So, you know what I'm saying? So, I was I was really like it was almost like buy one get one 90% off. So, so yeah, so I was like so yeah, I did I was like, "Hey, man. I I will give you cash today. Let's get this off the market. Let's do this." and so yeah, so I I don't know why, you know, like I said, just sort of that that gut instinct. I've already and I wasn't working out of fear. I was pretty frustrated with this process and like and and we can talk about that later, but it's the but I wasn't acting out of the frustration like this truly felt like a great deal, right?

10:22I wasn't settling for just this this house. And so yeah, so I I I I pulled the trigger and everything worked out amazing. So yeah, so that those are the big numbers. I you know, like I said, I got the house for 290. I put down about 72,000. It almost fell through the day before the bank we were using said it was too rural the day before we closed — and they backed out. But luckily my realtor knew a broker in Little Rock, Arkansas called him and dude within 24 hours he found me another guy and was in a place called Rogers Arkansas which is just like 45 minutes away and the bank funded me and literally we did all the paperwork like over the weekend.

11:04and so Oh, I know. It was so Yeah. So, I mean, because like I said, this was just such an amazing deal and the the bank was like, you know, for the DSCR that he was like, this is going to cash flow like crazy. I was like I was like, it could sit bank and it may cash flow. I don't know. — Yeah. And and just to that point, too, I want to just point out to people, you know, I think people have heard me talk a lot about buying small multi-unit short-term rentals. And I think this is a big reason why what you're illustrating here is like most people assume that if you're buying a two-unit or threeunit, it's going to be close to two or three times as much as a single family.

11:40But like you just said, there were sing smaller single families than one of your units selling for about the same price. And I see that all the time. I see single families and multi-units selling for about the same price. — But then when you look at the nightly rate in in occupancy, it's not that much different. So like, you know, maybe it's a 10% dip because they're attached, — but you got times two then. So like your net is so much higher. — Oh yeah, it literally I mean it's it's it's automatic and Yeah. And it's Yeah. So that's literally I mean and that's what I was like I even turned to my wife like Kirby would be so proud.

12:14I was like cuz I mean because it's in especially in Texas a duplex in Texas they don't last long because they're so just like that they're such good financial deals. — I mean you have to be like you have to have all of it down almost. I mean, these things go for. But yeah, so it was just an amazing and I I don't expect every every you know, the one I've looked at several since then. We're about to make a deal on another one and it wasn't as easy to find, but it's it still was in that same market. But yeah, this was just a really really great find. But it didn't just, you know, it wasn't out of a magic hat.

12:47It took a lot of work to find it. — Yeah. Yep. — Yeah. Exactly. Yeah. They're not going to just like fall off a tree, but yeah. You did the did the research and so when it comes to the performance I mean the the property itself was pretty turnkey right I mean you didn't have to do a lot and then — you know actually I didn't and then we were I was replacing the floors and the countertops — okay — and the water was shut off and then the city came by and turned the water on — over over the Christmas holidays and so for four or five days and and all the sinks, everything, right?

13:25It was just straight pipe. There was no nothing. So, for almost a week, water ran into the house. So, my little $28,000 renovation turned into actually a $92,000 it was Yeah. And it and we missed I missed almost half of the the high season, but it didn't matter actually. And that's part of the the story in the end. Like I I I so I take I opened up in like the first part of August, middle part of August and I have been booked every weekend since — and I'm booked all the way to the actually the week of Thanksgiving.

13:59And so yeah. Yeah. But it but it was pretty devastating how much money I had to I had that and I I really it was a little devastated because I wanted to go and get another deal. But I had to use all of my private money for for that construction which was and and then even had to and I even had to fire my general contractor because he was taking his time and I had to get another one out there. And well he was taking pictures of what they had they had done only fixed up one unit and sent pictures. Hey, the place is looking great. But the other unit had been touched.

14:31And so I was like, "Oh man, like I thought we were done." So it was Yeah. So there was, like I said, there was a lot of setbacks. But you had to be like, like that's it's like it's like a wedding at Kirby. I mean, it's like if something doesn't go wrong, then it's not a wedding. — But but but whatever doesn't go wrong, if you've done your research, if you've if you followed the plan that you've put down in in your course, right, then you're going to be safe enough where you're going to be okay. — Yeah. — It's just it's just not, you know, it's just frustrating. Does that make sense? — Yeah. — but yeah, but like I said, I mean, now I'm I mean, I'm operating probably even higher.

15:06I think my I don't even remember what I put down as like my what I was going to ask. Oh, I was do low season is $120 a night. — Mhm. — I'm actually at my high season rate. I'm actually $20. I'm I'm 265 for the bottom unit and 285 for the top unit. And I've been booked every weekend. And I have my had my first entire unit booked this weekend. So they both somebody booked both units for a golf tournament. — Yeah. — Yeah. And then over Thanksgiving somebody booked the entire Monday through Friday the entire unit. So I mean that that that'll take care of rent for three months right in just for that one week.

15:41So yeah. So I mean because the way I the way I did I I brought in a a designer. I wanted to make it unique, right? I wanted like you you know like you you preach it like make it memorable, make it an experience. So man, I you got this little I'm off in the woods like I'm on an island. It's literally an island, one one way on and off. And there's two golf courses and other than that you got a marina, you know. Other than that, but there's a small little town close by called Eureka Springs, which is pretty much just like this, you know, it's like this artsy town and it's built into the mountain and it's just absolutely gorgeous.

16:15So, there's so many things to do there besides just playing golf on the island. But I brought in an interior designer and the inside looks like right it because I looked at all the pictures of all the Airbnbs around me and I was like those guys are going to garage sales for the last 20 years and that's what it looks like. — I was like I that's so that's I was like so that's my first key how I want to be different. — The second key is I went to Eureka Springs. They do a lot of local wine, a local coffee. They do all their stuff. Well, I I actually buy that and I give it away in my unit.

16:48So when you get there, you get to you get a bottle of wine, you get this basket, but then you also get this local grown coffee that you get to take home when you're done. So yeah. So it's Yeah. So no, it really did it really did work out. I was I think my occupancy rate, like I said, every weekend I only get banked on like a 10 to 15% occupancy in the off, but no, it's clearly and I'm so far above I'm I'm above price level. I know I don't know if that's breaking the rule. But my my PMS, everything was telling me, "No, you need to be around 200." And I'm like, "No, if I'm booking at this price, I'm I'm not lowering I'm not gonna lower my Yeah.