Retiring Early with 4 STRs Using the Path of Progress Strategy

0:00For you, what what makes it a deal? Because I know everyone looks at different metrics, cash on cash return, net cash flow, appreciation. And and a deal's different to everyone. So, for you, what what was it that made this a deal? — For my first one, I really wasn't even thinking about retiring yet. For my first one, I was really thinking about appreciation. What's this going to be worth in 20 years? And does it pay for itself at all? So, I really wasn't thinking about cash flow yet. And now it's really about portfolio.

0:34So, overall, does my cash flow pay for my life? And does the appreciation make my net worth go up every year? So, like you said, I think everybody's numbers have to be really personal to what their personal goals are. For for me, it's about that net worth number because I'm already retired. That net worth number needs to go up every year because I'm only in my 50s and I don't have a conventional W2 anymore. I need to be able to sleep at night. I need that net worth number to be going up every year and I need my cash flow to pay for my life.

1:08That's the two most important things, right? — Okay. — Other than those two things, it's not so important because I am not really making my portfolio get bigger every year. If there's one particular property that's not contributing to those two things, I'll get rid of it and replace it with something else. Right now, all four properties are contributing to those four things. They're all cash flowing and they're all appreciating at the rate that I would want them to. — So, I think I might might have just gotten lucky with the four of them, but we'll see. I also didn't buy them at the very best time.

1:40So, I think they need a little time to gel and see where they are. I'm only three four years in with these properties right now, so it's a little early to tell. Yeah. Yeah. Time is definitely one of the biggest benefits in real estate, you know. So how do you determine though in advance if if a property is going to appreciate in cash flow, — right? So I was just talking about that thing about kind of looking beyond the numbers and figuring out that Steamboat was going to be good because of what was happening in the market with Aspen just having bought Steamboat.

2:13I've tried to replicate that in every market because you can look at you can look at every market with the air DNA values and all of that because I've bought in these vacation markets. They all have that great data out there to see what we think that every market is going to cash flow on a certain property. But I've tried to look beyond the numbers in every single market. So let let's just go through them a little bit. So, I bought in Orange Beach next and that wasn't maybe the very smartest buy because I bought a new build there.

2:45So, maybe not the greatest. It barely cash flows, but long term it's a great fourbedroom with all on suite bedrooms on, you know, right backing up to the state park on a beautiful lot. So, longterm it's a beautiful home that's going to appreciate beautifully. So, right now it's just doing its job by paying for itself. It gets gets people in. But they just made the airport in Gulf Shores public and so my thing there was it's getting better and better. The Gulf Gulf State Park is the most beautiful thing and my house backs up to it.

3:19So I just kind of saw this long-term plan there that that that's going to be something. So again, that's just was a house that I thought would do its job in the long term. It's the prettiest house that I have. Right. — And then — low maintenance, too, being brand new. — Absolutely. Absolutely. And then I bought one near Asheville where kind of similar to Steamboat. It's right at the top of a mountain where there's a ski resort that was closed down when I bought it, but there was a company that was revitalizing the ski resort and reopening it.

3:49So, it just reopened last year. It's Hatley Point now. It used to be Wolf Ridge, I think it was called. And so, we're only a year into it being reopened, but I can see it right like it's coming back. I have already doubled my revenues from the first year to this year. Wow. — So, it's just one of those things, right? Like it it really got hit with Helen the first year. So, it was pretty rough. This year it's doubled. Well, it should have doubled, right? Because we had hurricane and now the ski resorts open. So, it's just one of those things. I try to look at the numbers and then see what's coming like what's going to happen in three to five years that's going to make this better than than the numbers should show.

4:26And then I've got one in Texas as well that's on the river that they hadn't built anything new there in many years. It's right by a dance hall that basically there's no Ubers out there. There's no way to get around for some reason. And so I was like, as soon as they build something new here, I'm going to buy a condo on this river because people are going to want to stay there overnight. Sure enough, you know, everybody performs there. It's just a place where country music stars go. And so sure enough, it's filled every weekend. It makes a lot of money for me. It's just a good solid performer. So things like that, just sort of knowing the markets enough to know what what could be a long-term performer a little bit beyond the what the AirDire DNA would show.

5:05— Yeah, I love that. Yeah, I I'm a big advocate for that as well. Like the the path of progress I think is so such a smart strategy. I think a lot of people are drawn to the place that has already been established. You know, the most popular, like you Google where's the best place to invest in real estate — or in in short-term rentals, and it's always like the same ones that pop up and it you could just replace where's the best place with where's the most popular place. That's what Google's going to tell you is the most popular because that's where everyone's investing. But it's like buying a stock that's already peaked, you know, instead of — buying one that has really sound fundamentals and you know there's like for a stock the company's doing things that are that are going to make it more valuable in the future.

5:51And so you can apply that same thing to locations and where are they building more infrastructure, more amenities, more like, you know, opening a new ski resort or if you buy right after a hurricane when everyone's like, "Oh, you know, I want to get rid of my property." — Like, you know, things are going to get better from there. And so I love that strategy. It makes it that makes a ton of sense. — Sure. — Like where are they expanding a college? Where are they putting a new company in? Like there's all kinds of ways that you could apply this and maybe find somewhere to invest, right?

6:23— Exactly. Yeah. Yeah. I I was curious like a lot of people ask me about like what h what do you do if like something unexpected comes up. I know like for the Rockies this winter didn't get much snow at all. You know it was like one of the driest winters from what I understand. Did that impact your steamboat property or how, you know, what did that look like for you and how did you navigate that? — You know, not at all. It should have. I don't I cannot even explain why it didn't.

6:54You know, I think that that they said it was down in terms of visitors by 15 to 20% overall. My revenues were up 20% or something like that. Now, now I'm not proud. I'm not ashamed to price mine where it's going to rent. You know, I don't care if I have all fives, you know, really good reviews. I'm still going to price it where it's going to rent. I don't need to be the highest. I just need to be the one that rents. — Yeah.

7:25— So, no problem. I just want to be theospitable one that gives my customers the best vacation. I, you know, so, but I didn't have any problem at all. I may have just gotten lucky. I had some really nice long reservations. I didn't have a lot of cancellations. So, I don't know what happened, but I had a really good season. So, — that's amazing. Yeah, and that's a great point, too. Manage that's part of being a good host is just not setting and forgetting your your pricing, but managing based off of what the supply and demand is and managing your your calendar and pricing and all of that.

7:58It's it's an art and a science. So, that's that's great. And and sometimes it's better to have higher occupancy and lower rates. You you know you make more revenue like you said you're up 20% which is incredible on a a year like that. So — well and I'm curious how you do it. That's the one thing that I outsource completely is my revenue management. That's even though I've told you about my background and how much I love numbers. I don't love the detailed nature of Price Labs. — So I've hired a revenue manager and they are on it for me.

8:31That's the one thing I really splurge on is somebody to manage the revenue. Got it. Yeah. Yeah. I It's funny. I actually used a revenue manager for a little bit just to kind of get their perspective and we would meet weekly and go through all the numbers and you know all the metrics and they I learned a lot but — ultimately it wasn't as big of a bump as I would have liked for what I was spending on that. And so so it was good perspective to learn and it was worth the cost. I used them for probably about six months.

9:02And then I went back to managing it myself and but we we maintain like I'm with you in terms of you know pricing it right and so we maintain on a lot of our properties it's a 90 plus% occupancy rate which — wow sounds crazy. Yeah, it sounds crazy for across like slow season, but we do a hybrid model where, you know, we'll give a 20 30% discount for a 30 plus day stay in the off season. — Yeah.

9:32— When otherwise we would have just had the weekends booked, you know, and so then we're making way more money even though it's a 20% discount. And sometimes people book six months in the offseason, fill up our whole off season — with one booking and then you know we're booked up completely during the peak season. So it's like we maintain almost 100% occupancy then on that property by kind of doing that hybrid approach and understanding what the supply and demand looks like. So — yeah that's great. That's really smart.

10:03— Yeah. Yeah. And and one thing too you mentioned is or I've heard you say before is is hospitality is the most important part of the business. Like — what exactly do you mean by by that when you say that? Well, I I think it's the most important part. And maybe I just mean it's the most important part to me. Maybe it's the most fun part to me. But I think it also might be the part that I'm afraid is going away. I think people still want to be reached out to when something is wrong like immediately.

10:36I am the person who still much to the chagrin of my friends and family has my phone up on the table if I go to dinner, right? Like if somebody has a problem, I'm going to respond to them right away. Like if my air conditioner has gone out, they're going to get a message from me right away and I'm going to be the one calling the AC guy and getting them over there, right? I just think people want to be taken care of if something goes wrong. And I don't think that AI can do that for the industry.

11:08So I I am of the opinion that that's how we keep the five star reviews. And I think sometimes the small owner operators might have the edge on the really big guys if we keep the hospitality at the forefront. — Yeah. Yeah. Yeah. That I mean it goes handinhand with with high reviews I think having that approach which are are super important I guess. Is there anything you do specifically that drives those high reviews or or maybe some some things that are outside the box or something that's not fully intuitive that you feel like you do that kind of sets you apart and makes make sure you always get five star reviews?

11:48— I think there's some really simple things. When when I started in the industry, I got some training from from somebody who has really great really great reputation in the industry. And he told me, you know, you've really got to train your guests pretty early that if something's in the guide book, send them to the guide book. And I just thought, oh, no, no, no. If someone ask Yeah. And maybe it's because I'm southern, maybe it's because I I've been trained in this industry that I grew up in that the customer's always right. But if the customer asks me a question, I don't send them to the guide book. I just answer the question.

12:19You know, I would never send them to the guide book. So, I just answer the questions. And then the other thing is I stock the house with all kinds of stuff. I don't give them one roll of paper towels, which maybe that's the smart thing to do to be honest, but I put 20 rolls of paper towels in the pantry. I stock all the cleaning stuff that they might need. I try to make sure that a guest has everything they could ever need for their stay. I put the kitchen together as if they're going to cook a Thanksgiving meal. And granted these are larger homes, but if it's a three or fourbedroom home, I think you should put it together as if they're going to stay there for a while.

12:56So stocking the place as if they're going to stay there for a while, giving them all of the toiletries that they might need. I learned some early lessons about that. My ski condo that is a fourbedroom. My cleaners stocked the toiletries at first and they were the small bottles and someone stayed and they were paying $2,000 a night and they just said, "Look, lady, you know, you gave us these tiny little shampoos and conditioners. We're traveling with suitcases. Do better." And they were right, you know, and they they still gave me a good review. And so right away I was like, "Okay, I got to I got to get the big good stuff." And sure enough, you know, so learning some early lessons like that and just, you know, little stuff like that, going above and beyond for customers is kind of what I look at as hospitality.

13:38And then being available to them with only four properties, that's easy to do. I think it's a real different game when you get to 10 or 20. — Yeah. Yeah, it does make a difference. Every time a guest turns around, if they're searching for something, it it just consistently leaves a little bit. It erodess the the satisfaction, you know, if if there's if it's not there. — But if they turn around and it's like, "Oh, wow. They thought about this thing above and beyond a little bit even and it's just super convenient." they're they're they're so happy at the end and and those reviews come.

14:13— what I guess what does your team look like? You know, so having four in four different locations, is it difficult to manage in four different locations or, you know, how do you how do you set up your systems? — I think it's probably significantly more difficult worth it to me because frankly now I have four vacation homes in four different places that I get to take my family. So, that's really cool. But four different cleaners and four different handymen. Now certainly the technology makes it all so much easier these days.

14:46And even taxes have gotten so much easier with the project project management software that handles some of that for us. But four different cleaners and four different handyman is the real basic. Just making sure that you have really good people in each location. I try to go to each place twice a year at least. There there are some good new cool things that you can do. I used AI a couple weeks ago to go through all of my messaging for the last six months over one of my properties and build me a maintenance list.

15:20Said, "Go through all of my messages for Whiskey Hills and pick out every message that had a problem and tell me everything I need to do at Whiskey Hills that might be broken." I was like, "What a cool application from between Claude and Hospitable to tell me everything that's wrong with the property." — Yeah. Wow. That is interesting. That was — Yeah. So you you mentioned about AI and how some people are using it the right way and then there's others that you know you feel like it's going to maybe come back and bite them.

15:52What what's the difference in your mind and where do you think the the industry is heading with with the advent of AI? — Well, I think it's pretty wonderful to start with. I mean, I'm a I'm a big proponent of using technology and I've loved h seeing how AI is starting to connect to all of these different pieces and make it easier for us to manage our properties. So, starting with the really positive, I've got Claude connected into Hospitable, which I use to manage my properties, and I'm using it to mine data, do pacing dashboards, three month look aheads to just get all of my data into one place, which is incredible.

16:31I'm using it for guide books now that are just so much slicker than the guide books that I was frankly paying a lot of money for. And this is much less expensive because now they're web pages. I'm using it I'm using it for house guides, for emergency numbers to put on the front door. Just so much so much slicker than things I used to do. And all of that is great. I have some concerns about the companies that are using AI for all of their messaging. We'll just see where that goes. I think I think it could bite people.

17:03Now, that said, I think it's changing every day and I think, yeah, I'm I'm the one who could look silly in three months when it's way better than the humans, right? So, so who knows? But so far, I'm thinking that the human touch still has something. I mean, the way you and I are talking today, I just think there's something to how humans are still running things. Oh no.